erent (US:COHR)2024-05-07 16:11Financial Data and Key Metrics Changes - The company reported a nearly 7% sequential increase in revenue, reaching $1.209 billion, and a non-GAAP EPS of $0.53, which was above the high end of guidance [135][160] - Guidance for Q4 fiscal '24 is set at approximately $1.123 billion to $1.32 billion in revenue and non-GAAP EPS of approximately $0.52 to $0.68 [137] - For the full year, revenue guidance is approximately $4.62 billion to $4.7 billion, reflecting a $70 million increase at the low end of previous guidance [137] Business Line Data and Key Metrics Changes - The company experienced strong AI-related demand for 800G datacom transceivers, with projected revenue for Q4 exceeding $250 million [163] - There was a slight unexpected yield issue impacting the 800G ramp-up in Q3, which has since been resolved, leading to expectations of significant margin improvement in datacom [48][210] - The silicon carbide segment faced operational issues due to a power failure, but corrective actions are in place, and a strong Q4 is anticipated with over 50% growth from Q3 [52][175] Market Data and Key Metrics Changes - The market for 800G and above is projected to grow at a 60% CAGR over the next five years, indicating strong demand in the datacom sector [22][210] - The sub-800G market is expected to remain flat over the next few quarters, while the overall datacom transceiver market is projected to grow at 21% CAGR over five years [171][210] - The company noted mixed performance in the telecom market, with strength observed in the China market due to new C+L network build-outs [215] Company Strategy and Development Direction - The company is focusing on diversifying across product, technology, and regional markets to mitigate risks and capitalize on growth opportunities [136] - There is an ongoing transformation with a new ERP implementation and the introduction of AI tools aimed at achieving higher margins [12] - The company is committed to innovation, particularly in the optical circuit switch market, which is expected to create new opportunities worth billions [67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth for FY '25, particularly in the 800G segment, despite a more normalized order pattern from customers [7][163] - The company anticipates a recovery in the industrial market and stabilization in instrumentation and electronics markets, which are expected to return to growth [136] - Management acknowledged the challenges in the telecom market but highlighted pockets of strength, particularly in China [215] Other Important Information - The company has successfully reduced interest rate margins on its $2.4 billion secured term-loan B, resulting in annual savings of approximately $9 million [159] - The company has achieved a credit rating upgrade to Ba2 by Moody's, reflecting its leadership position in the AI market [159] Q&A Session Summary Question: What are the key growth drivers for the 800G or datacom business in FY '25? - Management indicated strong growth in overall 800G and AI-related demand, with customer interactions improving and significant revenue projections for Q4 [163] Question: Can you provide clarity on the silicon carbide segment and its development? - The silicon carbide segment faced operational issues but is now on track, with pre-production quantities being supplied to multiple customers and positive feedback received [188] Question: What is the outlook for the telecom market? - Management noted mixed areas of strength and weakness in the telecom market, with significant build-outs in China and differentiated products providing strength [215]