Cohu (NasdaqGS:COHU) Q3 2025 Earnings Call October 29, 2025 04:30 PM ET Speaker3Good day and thank you for standing by. Welcome to Cohu's third quarter 2025 financial results conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, ...

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was approximately $107.7 million, in line with guidance, with a non-GAAP gross margin of 44.4% [14][15] - Recurring revenue represented 63% of total revenue, indicating a stable revenue stream [15] - Operating expenses for Q2 were $47.7 million, also in line with guidance [15] - Cash and investments increased by $8 million during Q2 to $29 million, primarily due to $16 million of cash flow from operations [16][18] - Non-GAAP EPS for Q2 was $0.02 [15] Business Line Data and Key Metrics Changes - Cohu's systems revenue saw a sequential increase across mobile, computing, and industrial segments [7] - The Eclipse handler received a $28 million design win order, expanding presence in mobile and automotive end markets [9][10] - The software business booked $360,000 in Q2 with an annual recurring revenue opportunity of $530,000 [12] Market Data and Key Metrics Changes - Estimated test cell utilization increased by three points quarter over quarter to 75%, indicating a potential industry recovery [5] - Orders improved across all segments in Q2, particularly in mobile and automotive, with a significant increase in the automotive and industrial segments [30] - The company secured its first system order from a customer in India for silicon carbide test, opening new geographical opportunities [6] Company Strategy and Development Direction - Cohu is focusing on capturing new customer opportunities and investing in new products to address future market needs [13] - The company is in the process of transferring product manufacturing from the U.S. and Europe to Asian factories to drive efficiencies [13] - The introduction of the new Eclipse handler model aims to expand market share at test subcontractors [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about prospects for 2026, despite acknowledging potential seasonal slowdowns in Q4 [13][31] - Customers are rationalizing inventory levels and showing signs of a steady recovery in the automotive and industrial markets [47] - The company expects a 16% increase in revenue quarter over quarter for Q3, driven by recent system orders [19] Other Important Information - Total debt remained flat at $18 million, and capital expenditures for Q2 were $2.7 million [17][18] - The company is maintaining an annual CapEx target of $20 million [18] - A one-time year-to-date true-up for tax provision will be recorded in Q3 due to changes in capitalized R&D [20] Q&A Session Summary Question: Can you break down the $28 million order and its timing? - Cohu shipped and recognized about $4 million of that order in Q2, with $12 million expected in both Q3 and Q4 [24][26] Question: What is driving the recent order increases? - Orders improved across all segments, particularly in mobile and automotive, with significant increases in the automotive and industrial segments [30] Question: What seasonal slowdown is expected in Q4? - A mid-single-digit pull down in Q4 is anticipated, but it is too early for full guidance [42] Question: How are customers viewing their business for 2026? - Customers are generally optimistic about a steady, progressive recovery in the auto and industrial markets, with no expectation of a V-shaped recovery [47] Question: What are the capabilities of the Eclipse Gen 2.5? - The Eclipse Gen 2.5 offers configurability across various applications and can dissipate up to 3,000 watts, catering to high-end compute requirements [52][54]

Financial Performance - Q2'25 revenue reached $107.7 million[8, 15], reflecting a year-over-year and quarter-over-quarter increase[23] - Non-GAAP gross margin for Q2'25 was 44.4%[9, 22], compared to 44.2% in Q1'25[9, 22] - Adjusted EBITDA for Q2'25 was 3.6%[10, 22], an increase from -2.0% in Q1'25[10, 22] - Q3'25 revenue is projected to be $125 million +/- $7 million[27], representing an approximate 16% increase compared to Q2'25[29] - The company's cash and investments increased to $209 million in Q2'25[24], up from $201 million in Q1'25[24] Business Highlights - Orders increased by 26% quarter-over-quarter, primarily driven by the Mobile end-market[13] - Recurring revenue accounted for approximately $68 million of the Q2'25 revenue[16], representing 63% of the total revenue[15] - Systems revenue was approximately $40 million in Q2'25[16] - The company estimates test cell utilization increased by 3 percentage points quarter-over-quarter to 75%[11]