erent (US:COHR)2025-02-06 02:05Financial Data and Key Metrics Changes - Revenue for Q2 fiscal 2025 reached a record $1.43 billion, increasing approximately 6% sequentially and 27% year-over-year [7][25] - Non-GAAP gross margin improved to 38.2%, up 146 basis points sequentially and 363 basis points year-over-year [9][26] - Non-GAAP EPS grew over 40% sequentially and more than tripled year-over-year, reaching $0.95 [10][28] Business Line Data and Key Metrics Changes - Data center and communications market revenue increased 6% sequentially and 58% year-over-year, driven by strong AI-related datacom transceiver growth [11] - Telecom revenue grew 16% sequentially and 11% year-over-year, marking the second consecutive quarter of sequential growth [17] - Laser segment revenue increased 8% sequentially and 6% year-over-year, primarily due to demand for Excimer annealing lasers in display capital equipment [25] Market Data and Key Metrics Changes - Datacom revenue achieved record Q2 growth of 79% year-over-year, driven by AI data center demand [11][24] - Revenue from industrial-related applications increased 7% sequentially but remained flat year-over-year [18] - Display capital equipment saw growth due to increased OLED adoption in larger devices, contributing to demand for Excimer lasers [19][95] Company Strategy and Development Direction - The company aims for a durable gross margin of over 40% through pricing optimization and product cost improvements [8][9] - Strategic portfolio optimization is underway, including divesting non-strategic product lines and assets [22] - The company is investing in new technologies, including a new Optical Circuit Switch platform, which is expected to expand the addressable market [16] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the telecom market, expecting continued sequential growth [36][39] - The company anticipates fiscal 2025 to be a strong growth year despite near-term softness in industrial markets [23] - Management highlighted the importance of supply chain resiliency and adaptability in the current market environment [84] Other Important Information - The company paid down $132 million in debt during the quarter, strengthening its balance sheet [24] - Guidance for Q3 fiscal 2025 includes expected revenue between $1.39 billion and $1.48 billion and non-GAAP gross margin between 37% and 39% [29][30] Q&A Session Summary Question: Thoughts on the telecom market and sustainability of improvement - Management moved from cautious to cautiously optimistic regarding telecom, expecting continued sequential growth [36][37] Question: Addressable opportunity for the OCS platform - Initial revenue expected in calendar 2025, with more details to be shared at the Investor Day [46] Question: Co-packaged optics (CPO) impact on business - CPO is expected to drive growth in optical networking and data centers, with Coherent well-positioned to benefit [55][56] Question: Customer concentration and AI consumption - Revenue in datacom is well diversified across multiple hyperscaler customers [61] Question: Market landscape for VCSELs, EMLs, and Silicon photonics - Coherent has a broad portfolio of ingredient technologies and will invest where it provides a competitive advantage [67][70] Question: Gross margin outlook and initiatives - Gross margin improvements driven by volume, cost reductions, and pricing optimization [76][77] Question: Impact of tariffs on business - Current quarter results are not expected to be significantly impacted by tariffs, with a resilient supply chain in place [82][83] Question: Prospects for the laser and materials business - Cautious outlook for industrial-related markets, with some growth in display capital equipment and semi-cap equipment [94][101] Question: Update on 200 gig per lane VCSEL - Progress continues on engineering efforts for 200 gig VCSELs, with a robust roadmap for various technologies [104] Question: OpEx expectations for the upcoming quarters - R&D spending is expected to increase, while SG&A expenses are being managed for efficiency [120][121]