Coherent Corp. Q4 FY2025 earnings call

• Fiscal 2025 was strong with full-year revenue at $5.81B (+23% y-o-y) and non-GAAP EPS up ~3x. Q4 2025 revenue was a record, with non-GAAP EPS doubling y-o-y to $1.
• Data center and communications saw 51% full-year growth, with Q4 2025 up 16% y-o-y. Key products like 800-gig transceivers, 1.6T transceivers, and Optical Circuit Switch are ramping.
• Industrial-related had 2% full-year revenue decline, but industrial laser products grew, with recurring services revenue growing faster than product sales. Silicon carbide demand stabilized.
• Sold Aerospace and Defense business for $400M, plan to use proceeds to pay down debt, expected to be accretive to EPS.
• Expanded partnership with Apple for VCSELs, revenue to start in H2 2026 from Sherman, TX facility.
• Inaugurated 6-inch indium phosphide line in Sherman, TX, first of its kind, providing cost and volume advantages.

Data Center and Communications: Full year 2025 revenue grew ~51% y-o-y. Q4 2025 revenue increased 16% y-o-y, driven by AI datacenter and communications. Industrial-related: Full year 2025 revenue decreased 2% y-o-y. Q4 2025 revenue decreased 8% y-o-y, with industrial laser products growing but silicon carbide a headwind. Aerospace and Defense: Sold for $400 million, contributing average quarterly revenue ~$50 million over the past 4 quarters with a gross margin below Coherent's average.

• For Q1 FY2026, expects revenue between $1.46B-$1.6B.
• Non-GAAP gross margin expected 37.5%-39.5%.
• Total operating expenses non-GAAP between $290M-$310M.
• Tax rate non-GAAP 18%-22%.
• EPS non-GAAP between $0.93-$1.13.
• Sale of Aerospace and Defense business excludes ~$20M in revenue.

• Geopolitical risks and tariff uncertainties could impact industrial markets.
• Macro-economic conditions may affect near-term outlook for industrial segments.
• Fluctuations in customer demand and supply chain dynamics could impact sequential growth rates.

Q: Samik Chatterjee asked about growth outlook for data center business in FY2026.

A: Jim Anderson responded that demand signals are strong, with 800-gig, 1.6T transceivers and Optical Circuit Switch ramping, expecting sequential growth and strong long-term growth.

Q: Simon Leopold asked about segments down sequentially and OCS pipeline.

A: Jim Anderson said industrial-related is down sequentially, OCS pipeline is healthy with strong customer engagements.

Q: George Notter asked about Apple relationship.

A: Jim Anderson said revenue from expanded Apple partnership starts H2 2026, multiyear partnership, and VCSELs manufactured in Sherman, TX.

Q: Vivek Arya asked about sequential growth slowdown in data center.

A: Jim Anderson said quarter-to-quarter fluctuations are normal, but full-year growth was strong and future growth vectors are positive.

Q: Christopher Rolland asked about Vietnam facility and silicon carbide.

A: Jim Anderson said Vietnam facility opened, focused on materials including silicon carbide, which has stabilized and not a headwind in FY2026.