Cohu, Inc. (COHU) Earnings

Management highlights

• Started the year with strong momentum across multiple product lines with orders up 57% YOY. • Cohue's thermal capabilities highly valued by customers. • Computing segment opportunity pipeline ~$750 million. • Fiscal 2026 HPC revenue outlook increased. • First quarter benefited from rising device complexity, higher power density, and accelerating AI adoption. • Software platform gained traction. • Highlighted customer wins in test handler, inspection and metrology, and interface solutions groups. • Accelerating R&D investments and expanding production capacity.

Guidance

• Q2 revenue expected to increase 15% sequentially and 34% YOY to ~$144 million ± $7 million. • Full-year 2026 revenue outlook increased to 20% to 25% growth. • Q2 gross margin projected ~44%, full-year 2026 gross margin mid 40% range. • Operating expenses expected lower than Q1 at about $53 million, remaining in low 50 million range. • Net interest income in Q2 projected ~$2 million. • Q2 tax provision expected ~$5.3 million, diluted shares ~$52.6 million.

Segment performance

Compute segment opportunity pipeline approximately $750 million, including ~$650 million in test handlers and ~$100 million from HBM inspection. HPC revenue outlook for fiscal 2026 increased to ~$80 to $100 million. Test handler orders up 54% YOY with two major Eclipse orders. Inspection and metrology orders up 64% YOY, forecasting revenue growing 80% YOY to ~$20 million with Neon HBM platform and ~$70 million this year. Semiconductor test orders up 163% YOY. Interface solutions group saw increased adoption of higher current contactors for AI power applications and received multi-unit order for new silicon photonics solution.

Analyst Q&A

• Q: Breaking down Q2 guidance, how much of the 15% Q1Q growth is from ramping new HPC customer business vs broader base?

  A: Quarter over quarter increase in HPC systems revenue was about $10 million, just under half of the increase.

• Q: How to think about system margin contribution relative to blended average?

  A: Q1 gross margin split was roughly 50% on recurring, ~40% on systems; system's revenue percentage will increase, leading to Q2 gross margin hitting a headwind and full-year mid 40% gross margin.

• Q: Pipeline of $100 million, is it this year's spend or multi-year?

  A: Qualified $100 million is this year's spend from customers, not all to be captured this year.

• Q: On HPC customers, are they equal size?

  A: Not all equal size, with 10 to $40 million spread annually.

• Q: Lead times for thermal test handler?

  A: Operating at about 14-week cycle time, but depends on backlog size.

• Q: Customers talking about AI data center business ramping, are they getting larger volume purchase orders?

  A: Pivot towards CPU, ASIC, accelerators, and network processing demand spreading out.

• Q: $750 million TAM, what is it?

  A: SAM of defined list of customers and customer device classes.

• Q: Silicon photonics application and business size?

  A: Beachhead business, sold contactors, working on providing solutions with handlers, not including in $750 million yet.

• Q: Drivers to increase in HPC system revenues?

  A: Successful qualification of Eclipse at an account catching next round of orders.

• Q: Orders up 62% QoQ, where's strength?

  A: Roughly 30%-40% increase YOY, with computing up ~211% YOY.

• Q: Shipment timing of orders?

  A: Ramp in Q3 and some in Q4.

• Q: Engagement activity into qualification and conversion in 2026 vs 2027?

  A: ~$200 million opportunity to complete qualification in 2026, remaining $450-$500 million likely to move into qualification later 2026/early 2027.

• Q: Software opportunities and ARR?

  A: ARR about $1.2 million, attachment rate low, but growing fast with high lifetime value.

• Q: Automotive and industrial market strength and back half pick up?

  A: Industrial utilization at 79% at end of Q1, Q2 revenue increase half from non-compute markets.

• Q: RF test business seasonality?

  A: Typically late year Q4 to early Q1, but seeing pickup in Q2.

• Q: M&A update?

  A: Continue to look at opportunities in recurring space, disciplined, valuations elevated.

• Q: HPC forecast increase, breakdown of remaining?

  A: Most relates to Eclipse handler, NEON for HBM inspection higher end of range, also participating in HBC revenue with testers.

• Q: Q3 and Q4 revenue cadence?

  A: Q3 expected similar to Q2 ~$144-$145, Q4 slightly weaker single mid single digit QoQ.

• Q: Further engagements with US and Korean customers?

  A: Inspection metrology business up 64% YOY, ~$70 million revenue this year, driven by HBM and large orders from US and Korean customers.

• Q: Gross margin drivers and dip?

  A: Cost driven by ramping Eclipse supply chain and production, also small impact from higher energy, freight, and memory IC costs.

• Q: R&D intensity for rest of year?

  A: Q2 operating expense ~$53 million, low 50 million range to persist through second half.

• Q: Pipeline of 150-200 million, what's the split?

  A: All eclipse thermal handler application to processor devices