Cohu, Inc. Q4 FY2025 earnings call

• Recurring business remained strong, making up about 60% of total revenue in Q4, and recurring bookings saw a 34% sequential increase.
• Systems demand surged 47% quarter over quarter due to higher equipment orders from major global customers.
• Ten customers contributed approximately 63% of Q4 bookings, indicating a healthy level of diversification.
• Full-year revenue of $453 million was up 13% year over year, confirming market recovery and design win successes.
• Estimated test sterilization improved, with computing at 78% and automotive at 75% in December.
• Design win activity was strong in Q4, including securing key wins with analog and mixed-signal customers, and bookings for handler and inspection systems.

Fourth quarter revenue was $122 million, which is a 30% year-over-year increase. It was split as 40% systems and 60% recurring. Recurring revenue grew 4% quarter over quarter and 25% year over year. Full-year revenue reached $453 million, representing a 13% year-over-year increase. Recurring business accounted for about 60% of total revenue in the fourth quarter. Estimated test sterilization was 76% in December, with the computing segment at 78% and the automotive segment at 75%.

• Q1 revenue is expected to be seasonally flat with Q4, around $122 million plus or minus $7 million, with recurring revenue projected to be about 60% of total Q1 revenue and systems accounting for 40%.
• Q1 gross margin is projected to return to the corporate average at approximately 45%.
• Operating expenses for Q1 are expected to be flat compared to Q4 at about $50 million.
• Target for total capital expenditures in 2026 is about 2% of revenue.

• Q4 gross margin of 40.8% was lower than guidance due to one-time inventory charges from discontinuing certain product lines.
• Q4 tax provision was higher than guidance because of a $5 million increase in tax reserves against tax assets.

Q: Talk about order activity, conversion to revenue A: Systems orders were up 47% quarter over quarter, with about 70% of guided revenue in backlog coming into Q1, and the majority of the balance being shipped in Q2. Recurring orders, including large service contracts, will spread out throughout 2026 Q: Neon HBM revenue, 2026 expectations A: Exited 2025 at $11 million in HBM revenue, and forecast HBM revenue in 2026 to be between $15 and $20 million Q: Eclipse activity, ramp in 2026 A: Booked a first configuration of an Eclipse handler for a customer's AI device roadmap, shipped an initial unit, and have capacity to meet demand for the Eclipse handler in 2026 Q: Gross margin profile A: For Q2/Q3 revenue of approximately $130 million, gross margin is projected to be in the high 46% range. For $150 million per quarter, gross margin is around 48%, and at a normalized run rate of $160 million per quarter, gross margin is expected to be 48% Q: Customer activity change A: Seeing an increase in demand for systems from traditional customers and strong forecast for the Eclipse product line in compute and mobile applications Q: HBM inspection, customer, step change to HBM4 A: Same customer is doing 100% inspection with the platform, and as new generation HBM devices come up, the inspection intensity increases due to larger devices and higher interconnect counts Q: IDM vs OSAT utilization, segment color A: In Q4, IDMs were a little over 76% and OSATs a little over 75%. Going into Q1, OSATs may see faster utilization increase compared to IDMs. Compute was at 78%, auto 75%, industrial 77%, mobile 72%, consumer 76% in Q4, with mobile potentially crossing 75% in Q1 Q: Analog/mixed-signal color A: Won an order from a top automotive semiconductor manufacturer, with an order qualification from one of their business units, expecting acceleration in digital controller side design wins towards the middle of the year