erent (COHR)2024-08-16 01:17Financial Data and Key Metrics Changes - Revenue in Q4 increased by approximately 9% both sequentially and year-over-year, reaching 4.17 billion, with unrestricted cash increasing to 899 million in the prior quarter [24][25] Business Line Data and Key Metrics Changes - In the communications end market, Q4 revenue increased by 10% sequentially and by 19% year-over-year, with datacom revenue growing 16% sequentially and 58% year-over-year [16][17] - The materials segment revenue increased 17% sequentially but decreased 3% year-over-year [20] - Laser segment revenue increased by 1% sequentially and by 7% year-over-year [20] Market Data and Key Metrics Changes - Strong sequential growth in 800G datacom transceiver revenue in Q4, with increasing orders in backlog for current and future quarters [17] - Telecom revenue declined by 6% sequentially and 38% year-over-year due to end market weakness, with expectations for continued weakness in the near term [16][17] - Industrial end market revenue increased 2% sequentially and 5% year-over-year, with expectations for soft demand in the near term [18] Company Strategy and Development Direction - The company is focused on three key areas for improvement: culture, strategy, and execution [9][15] - A portfolio review has been initiated to assess each product line across strategic and financial criteria, with plans to shift investment to areas of greatest opportunity and divest underperforming assets [10][11] - The company aims to improve operational efficiency and effectiveness, with a goal of achieving a sustainable gross margin level above 40% [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the potential for shareholder value creation based on innovation and market opportunities, particularly in datacom [19] - While some near-term softness persists in telecom and industrial end markets, fiscal 2025 is expected to be a solid growth year for the company [19] - The company is taking a cautious view on the telecom market, expecting continued softness in the near term [45] Other Important Information - The company plans to hold an Investor and Analyst Meeting in the coming quarters to lay out its strategy, market growth opportunities, and operational strategy [11][15] - The search for a new CFO is ongoing, with both internal and external candidates being considered [15] Q&A Session Summary Question: Early reads on the strategic assessment and core vs non-core criteria - Management is pleased with the portfolio assessment work and is categorizing businesses into growth engines, profit engines, long-term bets, and nonstrategic or underperforming businesses [27][28] Question: Gap between current gross margins and aspirations - The gap is attributed to underperforming businesses and opportunities for pricing improvement and cost structure enhancements [31][32] Question: Glide path to achieving gross margins above 40% - Management plans to discuss the timing of gross margin improvements at the upcoming Investor Day [37] Question: Update on the optical opportunity and transceiver business - The growth trajectory for the optical transceiver business is stronger than initially expected, with significant demand from AI data centers [41][42] Question: Current state of the telecom market - Management is taking a cautious view on the telecom market, expecting continued softness but has new products ramping that could provide growth [45][46] Question: Performance of the materials business - The materials business saw improvement due to catching up on silicon carbide production issues from Q3 [49] Question: Engagement with hyperscale customers in datacom - The breadth of customers for 800G continues to grow, with improved order visibility extending into the next calendar year [52] Question: Impact of NVIDIA's product schedule on order book - Management cannot comment on specific customers but notes overall strengthening in the order book [55] Question: CapEx priorities beyond expanding 800G - The primary CapEx priority is to support growing demand in the datacom business, including building out 1.6T capacity [70]