Coherent tops Q1 profit estimates, shares rise 8.6% after hours

Coherent (COHR) said on Nov. 4 that revenue for its fiscal first quarter rose 50% from a year earlier, to $2.37 billion, and that adjusted earnings topped expectations. Shares rose 8.6% in after-hours trading as of 4:46 p.m. ET, from a regular-session close of $195.22.

The results cover the quarter ended Sept. 30, according to the company’s press release. Coherent sells photonics technology to datacenter, communications and industrial customers.

Here’s how the company did:

• Revenue: $2.37 billion vs. $2.35 billion consensus estimate, $1.58 billion a year earlier
• Adjusted EPS: $2.09 vs. $2.01 consensus estimate, $1.16 a year earlier
• GAAP EPS: $1.90 vs. $1.19 a year earlier
• Non-GAAP gross margin: 40.6% vs. 38.7% a year earlier

Adjusted earnings of $2.09 per share topped the $2.01 consensus estimate and were above the $1.85 to $2.05 range the company gave on Aug. 12. Revenue of $2.37 billion was in line with the $2.35 billion consensus estimate.

Pro forma revenue, which excludes divested businesses, rose 56% from a year earlier, according to the company. Revenue has risen in each of the last three quarters, from $1.58 billion to $2.05 billion, according to its SEC filings.

GAAP net earnings were $384.7 million, or $1.90 per diluted share, against $226.3 million a year earlier.

CEO Jim Anderson said: “As AI datacenters transition from copper to optical connectivity, Coherent’s broad photonics platform and manufacturing scale position us to help customers meet rising needs for bandwidth and energy efficiency.”

Segment results

Datacenter and Communications revenue was $1.95 billion, up from $1.09 billion a year earlier. Industrial revenue was $418.6 million, down from $491.4 million.

The company said a PhotonLink agreement is valued at about $20 billion over five years, with revenue beginning to ramp in early calendar 2028.

The company expects Industrial revenue to return to growth in the second quarter, citing semiconductor capital equipment bookings.

Second-quarter outlook

For the second quarter of fiscal 2027, the company expects revenue of $2.55 billion to $2.75 billion. It expects non-GAAP gross margin of 40% to 42%, non-GAAP operating expenses of $430 million to $450 million, a non-GAAP tax rate of 18% to 20%, and non-GAAP EPS of $2.28 to $2.48.

The company expects its first $3 billion revenue quarter by the end of fiscal 2027, and its first $4 billion revenue quarter in fiscal 2028. It expects fiscal 2027 pro forma revenue growth to exceed 60%.

CFO Sherri Luther said: “This margin strength gives us the confidence to raise our longer-term target.” The company expects to achieve a first quarter with non-GAAP gross margin above 45% before the end of calendar 2028.

Cash and capital spending

Net cash used in operating activities was $92.7 million in the quarter, and additions to property, plant and equipment were $775.5 million.

Restructuring charges were $8.6 million. Cash and cash equivalents were $1.55 billion at the end of the quarter.