Cohu, Inc. Q2 FY2025 earnings call

Key Highlights

• Test cell utilization increased by 3 points quarter-over-quarter to 75%, indicating industry recovery.
• Orders improved quarter-over-quarter, driven by the mobile end market. Secured first system order from India for silicon carbide test.
• $20 million revenue stream opportunity in precision analog with Ultra-S contactor qualification.
• Introduced the new Eclipse handler model, a configurable platform for test subcontractors, with a $28 million design win from an existing customer for mobile and automotive end markets.
• Landed $3.5 million in new customer wins in Q2 for testers, handlers, and inspection systems.
• Launched PD3x instrument for high-density flat panel display solution, deployed by leading display driver IC vendors.
• Software business booked $360,000 in Q2 with an annual recurring revenue opportunity of $530,000.
• Manufacturing team completing transfer of product manufacturing to Asian factories for efficiencies.

In the second quarter of 2025, Cohu's revenue was just under $108 million. Recurring revenue represented 63% of total revenue, while the balance was from systems. For the third quarter, guidance is for revenue of approximately $125 million, plus or minus $7 million, with the revenue mix expected to be approximately 47% from systems (mainly test automation systems for the mobile market) and about 53% from recurring revenue. The gross margin for both the second quarter and third quarter is projected to be around 44%.

Q3 Outlook

• Q3 revenue guided at approximately $125 million, plus or minus $7 million.
• Gross margin projected at approximately 44%.
• Revenue mix expected to be ~47% systems and ~53% recurring revenue.
• Q3 operating expenses projected at about $50 million, including ~$2 million for variable R&D.
• Onetime year-to-date tax true-up in Q3 due to tax provision methodology change, with full-year 2025 tax provision unchanged but quarterly amounts differing, and Q4 effective tax rate expected 30%-35%.

Q: Can you give a sense of the timing across 3Q, 4Q for the $28 million order and how much it contributes to the sequential revenue increase?

A: In Q2, about $4 million of the order was shipped and recognized. We will ship and recognize about $12 million in each Q3 and Q4. This is digital in the mobile space, a business expansion at an existing customer.

Q: Why is the $28 million order happening now? Any tariff implications?

A: No tariff implications. It's related to edge AI deployment in the mobile space and continued expansion of ADAS and infotainment in the automotive space. Some was installed towards the end of Q2.

Q: Characterize the change in customer conversations over the last 3 months and implications for 2026?

A: Customers in auto and industrial markets view a steady, progressive recovery. Computing is an area with energy to get design wins. Mobile expected to have progressive improvements. Customers in China have struck new deals for automotive supply.

Q: What does the Eclipse Gen 2.5 new product release enable and where is uptake expected?

A: Enables configurability to span passive to active thermal control applications and power dissipation up to 3,000 watts for high-end compute requirements like GPUs. Uptake expected with OSATs looking for flexible capability on products, as they want to maximize capital investment.

Q: Any geographic regions with higher utilization rates?

A: Overall utilization up 3 points to 75%. IDMs increased 5 points sequentially and OSATs increased 1 point sequentially quarter-over-quarter.