Coherent Corp. (COHR) Earnings

metirFinance

Sep 2026upcoming

Next quarter

Reports Nov 4, 2026.

Consensus is $1.77 EPS for Sep 2026 across 8 estimates, ranging $1.72 to $1.84.

COHR Jun 2026

Reported Aug 12, 2026 · after the close

: 2.80%
: -7.99%

: $1.43
: $1.47
: —
: —

Highlights

AI-driven demand: Fourth-quarter revenue reached $2.05 billion, up 34% year over year and 13.3% sequentially, with Datacenter & Communications revenue rising 58.6% year over year to $1.62 billion.
Earnings beat: The reported EPS benchmark was $1.47 versus consensus of $1.43, a 2.8% surprise; the release separately reported GAAP diluted EPS of $1.19 and non-GAAP diluted EPS of $1.74.
Margin expansion: GAAP gross margin increased 277 basis points year over year to 38.5%, while non-GAAP gross margin rose 215 basis points to 40.2%; non-GAAP operating margin reached 21.8%.
Profit growth: GAAP net earnings attributable to Coherent were $240.5 million versus a $95.6 million loss a year earlier and $191.4 million in Q3; non-GAAP net earnings rose 82.7% year over year to $351.2 million.
Datacenter concentration: Fiscal-year Datacenter & Communications revenue grew 40% to $5.27 billion and segment profit grew 47% to $1.33 billion, while Industrial revenue fell 10% to $1.84 billion after divestitures.
Strong initial FY27 outlook: First-quarter revenue is expected at $2.2 billion-$2.4 billion, with non-GAAP gross margin of 39.5%-41.5% and non-GAAP EPS of $1.85-$2.05.
Capacity investment: Capital expenditures were $1.10 billion in fiscal 2026 versus $440.8 million in fiscal 2025, mainly supporting higher customer demand; year-end PP&E increased to $3.00 billion from $1.88 billion.
Cash conversion pressure: Fiscal-year operating cash flow fell to $79.5 million from $633.6 million as inventory increased to $2.58 billion from $1.44 billion, despite year-end cash and short-term investments of $1.99 billion.

Analysis

Coherent’s fourth quarter was a strong AI-infrastructure growth print, with revenue of $2.05 billion up 34% year over year and 13.3% from Q3’s $1.81 billion. The reported EPS benchmark was $1.47 versus consensus of $1.43, a 2.8% beat. The release’s own measures show GAAP diluted EPS of $1.19, compared with a $0.83 loss in the year-ago quarter and $0.97 in Q3, while non-GAAP EPS was $1.74 versus $1.00 a year ago and $1.41 sequentially.

The defining feature was the acceleration in Datacenter & Communications, where revenue rose to $1.62 billion from $1.02 billion a year ago and represented roughly 79% of quarterly sales. Management tied the demand to AI datacenter build-outs and the shift from copper to optical connectivity. Operating leverage and manufacturing execution also mattered: GAAP gross margin expanded to 38.5% from 35.7%, and non-GAAP operating margin reached 21.8% from 18.0%. The company is investing aggressively to meet demand, including $1.10 billion of fiscal-year capex and expanded InP capacity, but working capital absorbed cash as inventory climbed $1.14 billion year over year. The $2.2 billion-$2.4 billion Q1 FY27 revenue outlook implies continued momentum, with non-GAAP EPS guided to $1.85-$2.05.

AI optical connectivity

Datacenter & Communications was the center of the quarter. Revenue increased 58.6% year over year to $1.62 billion and 18.6% sequentially, driven by datacenter transceivers, data-center interconnect and telecom demand. Fiscal-year revenue rose 40% to $5.27 billion, while segment profit increased 47% to $1.33 billion. Coherent is positioning its transceiver, InP, silicon photonics, co-packaged optics and optical circuit switch portfolio for the transition from copper to optical links in AI infrastructure.

Customer commitment: Coherent’s multi-year strategic agreement with NVIDIA includes a multi-billion-dollar purchase commitment and future access and capacity rights for advanced lasers and optical networking products.
Capacity expansion: The company is expanding 6-inch InP manufacturing in Sherman, Texas and Europe; it also received a $50 million preliminary CHIPS Act memorandum of terms related to the Sherman expansion.
New growth platforms: Management identified co-packaged optics, optical circuit switches, multi-rail solutions and higher-speed transceivers as platforms beginning to ramp beyond the current transceiver business.

Margins and earnings

Profitability improved materially as revenue growth combined with lower input costs, improved manufacturing cycle times, yield gains and pricing optimization. GAAP operating income rose to $253.9 million from $6.1 million in the year-ago quarter, taking operating margin to 12.4% from 0.4%. Non-GAAP operating income increased 62.1% to $445.8 million, with operating margin up 152 basis points to 21.8%.

Gross margin: GAAP gross margin was 38.5%, up 277 basis points year over year and 82 basis points sequentially; non-GAAP gross margin was 40.2%, up 215 basis points year over year.
Cost structure: GAAP SG&A declined to 13.0% of revenue from 16.0% a year ago, while non-GAAP SG&A fell to 8.2% from 10.3%, partially offsetting higher R&D investment.
Reported earnings: GAAP net earnings attributable to Coherent were $240.5 million, versus a $95.6 million loss in Q4 FY25 and $191.4 million in Q3 FY26. Non-GAAP net earnings were $351.2 million, up from $192.3 million a year earlier.

Fiscal 2027 outlook

The initial fiscal 2027 outlook calls for another sequential step-up, although the midpoint of the revenue range implies growth of about 12% from Q4 FY26. The guidance also indicates that the company expects to sustain much of the recent margin improvement while continuing to fund capacity and product development.

Revenue: Q1 FY27 revenue is guided to $2.2 billion-$2.4 billion, versus $2.05 billion in Q4 FY26.
Profitability: Non-GAAP gross margin is expected at 39.5%-41.5%, compared with 40.2% in Q4, and non-GAAP operating expenses at $400 million-$420 million versus $377 million in Q4.
EPS: Non-GAAP diluted EPS is guided to $1.85-$2.05, compared with $1.74 in Q4 FY26.

Industrial portfolio

Industrial was weaker on revenue but more profitable on a segment basis. Fourth-quarter revenue declined to $430.5 million from $511.1 million a year earlier and $444.0 million in Q3. Fiscal-year revenue fell 10% to $1.84 billion, primarily because Coherent sold its aerospace and defense business and its Munich tools business. Despite the lower sales base, full-year Industrial segment profit rose 4% to $423 million, helped by the divestitures, pricing actions and lower manufacturing costs.

Portfolio actions: The aerospace and defense sale generated approximately $400 million of proceeds and a $115 million gain in fiscal 2026; the Munich product division sale produced a $96 million loss.
Restructuring: Fiscal-year restructuring charges fell to $63 million from $160 million, though Q4 still included $6.1 million of restructuring charges and $44.3 million of held-for-sale impairment.
Demand backdrop: The filing cites strong demand in semiconductor capital equipment, but Industrial remains less exposed to the current AI-led growth cycle than Datacenter & Communications.

Capacity and cash

Coherent is converting demand visibility into a major manufacturing and inventory build, but near-term cash generation was weak. Fiscal-year operating cash flow was only $79.5 million, down from $633.6 million, as the company built inventory and receivables ahead of higher production volumes. The investment is supported by the NVIDIA equity financing and additional borrowing capacity, but it raises execution and utilization requirements.

Capital spending: Additions to PP&E reached $1.10 billion, versus $440.8 million in fiscal 2025, and net PP&E rose to $3.00 billion from $1.88 billion.
Inventory: Inventory increased 79.5% year over year to $2.58 billion, including $1.56 billion of work in progress; the increase accounted for $1.18 billion of operating cash use.
Liquidity: Cash and cash equivalents were $1.16 billion and short-term investments were $825 million at June 30, 2026. Total debt was $3.22 billion, while revolver availability was $664 million.
Funding: NVIDIA’s March 2026 investment generated approximately $2.0 billion of cash proceeds, which Coherent is using for R&D, capacity and operations.

Customer and execution risks

The growth opportunity is accompanied by concentration, supply-chain and execution risks. Two customers each represented more than 10% of fiscal-year revenue, and the NVIDIA agreement may require substantial future equipment, labor and working-capital investment through 2030. The company also has approximately $11.8 billion of vendor purchase commitments as of June 30, 2026.

Demand risk: Management notes that AI datacenter demand may be cyclical and that customers can delay, reduce or cancel orders, potentially leaving Coherent with excess inventory or underutilized capacity.
Supply risk: Products depend on complex manufacturing processes and limited sources for materials including InP, rare-earth materials and other specialized components.
Regulatory risk: Coherent stopped shipping products to Huawei while cooperating with a Bureau of Industry and Security inquiry into past sales; the company cannot currently estimate any potential loss or penalties.
Valuation sensitivity in the accounts: The Lasers reporting unit carried $3.1 billion of goodwill and had only approximately 8% estimated fair-value headroom in the April 2026 impairment test.

Coherent Corp.

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