Coherent Projects $1.425B-$1.575B in Q4 Revenue on Back of Telecom and Data Center Expansion

Mei 13, 2025 Posting Komentar

Insights from the Earnings Call: Coherent Corp. (COHR) Third Quarter of 2025

Management View

CEO Jim Anderson emphasized a 4% increase from the previous quarter and a significant 24% rise compared to the same period last year, resulting in revenues of $1.5 billion. This growth was fueled primarily by robust demand in the AI data centers and telecommunications sectors. Additionally, he mentioned advancements toward meeting the targeted non-GAAP gross margin exceeding 40%; however, the current quarterly gross margin stands at 38.5%.
Strong advancements in the data center market were emphasized, including a 46% year-over-year growth in the data center and communications end market. AI data center revenue grew by 54% year-over-year, supported by new product introductions like 1.6T transceivers and developments in 3.2T transceiver technology.
Anderson announced collaboration with NVIDIA on co-packaged optics for AI infrastructure and noted the expansion of indium phosphide capacity, tripling year-over-year, with plans to begin ramping a 6-inch production line next quarter.
CFO Sherri Luther revealed that $136 million of debt was settled in the third quarter, increasing the year-to-date reduction to $386 million. She detailed the restructuring costs amounting to $74 million for the period and emphasized significant advancements in cutting expenses and optimizing prices.

Outlook

The management forecasted the Q4 2025 revenues to fall within the bracket of $1.425 billion to $1.575 billion. They also projected a non-GAAP gross margin spanning from 37% to 39%, along with anticipated operating costs ranging from $290 million to $310 million. Furthermore, they estimated the non-GAAP earnings per share (EPS) to lie between $0.81 and $1.01.
Anderson expressed a guarded outlook for the short term regarding industrial market segments but forecasted sustained robust expansion in both the data center and telecommunications industries. The initial revenue from 1.6T transceivers is expected to come through by 2025.

Financial Results

The third-quarter earnings amounted to $1.5 billion, marking a 4% growth from the previous quarter and a substantial 24% rise compared to the same period last year. The networking segment saw an upsurge of 10% sequentially and surged by 45% yearly, primarily fueled by increased demand for artificial intelligence solutions.
The non-GAAP gross margin enhanced to 38.5%, up from 38.2% in the second quarter. Operating costs climbed to $297 million, primarily due to heightened research and development expenditures.
The Non-GAAP earnings per share were $0.91, marking a substantial increase from last year’s figure of $0.38 yet showing a minor decrease compared to the previous quarter at $0.95.

Q&A

Samik Chatterjee from JPMorgan asked about how recent product launches would affect revenues. The CEO, Anderson, clarified that the 1.6T transceivers are currently going through customer validation processes and should see increased production this year, with wider acceptance anticipated as time goes on.
Simon Leopold from Raymond James inquired about the progression of the co-packed optics (CPO) market. Anderson indicated that CPO technology will speed up the use of optical connections within data centers and highlighted Coherent’s robust presence in pluggable transceivers as well as key supporting technologies such as indium phosphide and silicon photonics.
Thomas O'Malley from Barclays asked for more details regarding the effects of portfolio optimization measures. In response, CFO Luther clarified that reducing costs and discontinuing the unprofitable silicon carbide module operations will influence margins and operational efficiency in the longer term.

Sentiment Analysis

Experts expressed worries over broad economic instabilities, especially within industrial sectors. They remained guardedly positive regarding the expansion of telecommunications and data centers.
During their prepared statements, management conveyed an assured demeanor, highlighting advancements in product development, decreases in costs, and growth in profit margins. Nonetheless, when responding to questions from analysts, they exhibited a more reserved attitude towards the current state of demand within the industrial sector.
In comparison to the prior quarter, the managers' attitude showed a stronger emphasis on tackling difficulties within industrial sectors while still expressing assurance in fundamental growth regions.

Quarter-over-Quarter Comparison

The revenue climbed from $1.43 billion in the second quarter to $1.5 billion in the third quarter, accompanied by an increase in gross margin from 38.2% to 38.5%.
There was an ongoing emphasis on both the data center and telecommunications sectors, marked by notable progress in artificial intelligence-driven offerings as well as enhancements in transceiver tech.
The management tone adjusted somewhat to tackle the macroeconomic uncertainties, whereas analysts kept a wary perspective on industrial sectors.

Risks and Concerns

The management attributed macroeconomic uncertainties as the cause for adopting a careful short-term perspective within industrial market sectors.
While analysts voiced worries over possible tariff effects and supply chain disturbances, management highlighted the strength and broad geographic distribution of their supply network.
Ongoing funding for key expansion sectors along with efforts to streamline costs were emphasized as ways to alleviate risks.

Final Takeaway

Coherent Corporation announced impressive third-quarter financial figures for 2025, showcasing significant advancements within both the data center and telecommunications sectors, largely fueled by increased demand related to artificial intelligence along with recent product launches. The firm achieved an all-time high of $1.5 billion in revenues, emphasizing strategies aimed at boosting margins and enhancing operational efficiencies. For the fourth quarter, Coherent projected earnings ranging from $1.425 billion to $1.575 billion; however, executives expressed reservations regarding industrial sector performance due to current economic instabilities. While experts voiced apprehensions about trade barriers and stockpile sizes, they also commended the organization’s strides in technological breakthroughs as well as maintaining a prominent position in their respective marketplace.

Review the complete earnings call transcript here.

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