Coherent Stock Earnings Reports

Coherent delivered a strong start to FY2026: Q1 pro forma revenue grew ~19% year-over-year to $1.58B (3% sequential), non-GAAP gross margin expanded to 38.7%, and non-GAAP EPS was $1.16 (up 73% YoY). The Datacenter & Communications segment is the primary growth engine driven by exceptionally strong demand for 800G and accelerating 1.6T transceivers (silicon photonics and EML ramping first; VCSEL-based 1.6T expected later). Indium phosphide laser supply was a near-term constraint but management is aggressively expanding internal capacity via 6-inch IP production (Sherman, TX and Jarfalla, Sweden), expecting to roughly double internal IP capacity over ~12 months. Optical circuit switches (OCS) have meaningful early customer traction (systems shipped to 7 customers, backlog growing) and are viewed as a multi-billion dollar TAM opportunity. Communications (DCI and telecom) also saw strong demand and component bookings. Industrial revenue was stable; company is pursuing portfolio optimization (A&D divestiture closed; Munich product division sale announced) and has exited/exited or sold 23 sites recently. From a financial/capital-allocation standpoint Coherent paid down $400M of debt (leverage to 1.7x), completed debt refinancing (lowered cost of capital, larger revolver), and intends to use proceeds from the Munich sale to further reduce debt. Q2 FY2026 guidance: revenue $1.56B–$1.70B, non-GAAP gross margin 38%–40%, operating expenses $300M–$320M, non-GAAP EPS $1.10–$1.30. Management reiterated a longer-term gross margin target >42% and plans continued capacity builds (transceiver module assembly in Penang, Ipoh, Vietnam) to meet strong, multi-quarter customer demand. Risks noted include supply constraints (temporary), macro/regulatory/FX and execution of capacity ramps.