erent (US:COHR)2025-08-13 22:00Financial Data and Key Metrics Changes - Full year revenue for fiscal 2025 increased by approximately 23% year over year to a record $5,810 million, driven by strong growth in data center and communications business [5][25] - Q4 revenue was a record $1,530 million, up 2% sequentially and 16% year over year [25] - Non-GAAP EPS for Q4 approximately doubled year over year to $1 per share, while full year non-GAAP EPS was $3.53, representing a 191% year over year growth [5][28] Business Line Data and Key Metrics Changes - Data center and communications revenue grew by 51% in fiscal 2025, with Q4 revenue increasing 39% year over year [7][13] - Communications revenue increased 23% for fiscal 2025, with Q4 growth of 42% year over year [13] - Industrial related markets saw a revenue decrease of 2% for the year, with Q4 revenue down 8% year over year [15][16] Market Data and Key Metrics Changes - In the data center market, full year revenue increased by 61%, with Q4 growth of 38% year over year [7] - Strong demand for AI data centers and communications was noted, with significant bookings and demand forecasts [7][8] - The industrial laser products segment experienced growth driven by display capital equipment and semi-cap equipment markets, despite a decline in silicon carbide demand [15][16] Company Strategy and Development Direction - The company is focused on photonic technology, which is critical for applications in AI data centers, communications, and industrial applications [6] - A strategic decision was made to sell the Aerospace and Defense business for $400 million to streamline the portfolio and concentrate investments in areas of long-term growth [17][29] - The company plans to use proceeds from the sale to pay down debt, which is expected to be accretive to EPS [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand signals for data center and communications, expecting sequential growth in the upcoming quarter [38][82] - The company anticipates continued growth in fiscal 2026, driven by innovations in photonic technology and strong customer demand [22][23] - Management noted that the current tariff policy environment is not expected to significantly impact operations, with potential competitive advantages from recent semiconductor tariff announcements [18][20] Other Important Information - The company has ramped up indium phosphide production capacity, which is expected to enhance supply chain resiliency and lower costs [10][46] - Initial revenue shipments of new optical circuit switch products began, representing a $2 billion expansion of the addressable market opportunity [12] - The company has entered into a multiyear agreement with Apple for VCSEL products, expected to contribute to revenue starting in 2026 [11][65] Q&A Session Summary Question: What is the growth outlook for the data center business in fiscal 2026? - Management indicated strong demand signals and expected sequential growth, with specific drivers including 800 gig transceivers and initial revenue from 1.6T transceivers [38][40] Question: What is the status of the six-inch indium phosphide platform in Sherman, Texas? - Production began in August, with expectations for increased capacity and lower costs as the ramp progresses [45][46] Question: What product categories might be down sequentially at the midpoint of guidance? - Industrial markets are expected to be flat to down sequentially, with caution due to macroeconomic factors [56][96] Question: How much incremental revenue is expected from the Apple relationship? - Revenue from the expanded partnership is expected to begin in the second half of 2026, with a multiyear partnership structure [65][66] Question: What are the competitive advantages of the optical circuit switch technology? - The non-mechanical digital liquid crystal technology offers higher reliability and performance compared to traditional MEMS solutions [71][72] Question: What is the outlook for gross margins in fiscal 2026? - Management expects improvements in gross margins driven by ongoing cost reductions and pricing optimization, with a long-term target of greater than 42% [87][88]