COHR · Q1 2026 Earnings
BullishCoherent Corp.
Reported November 5, 2025
30-second summary
30-second take: Q1 FY26 revenue of $1.581B (+17.3% YoY, +3.4% QoQ) beat the high end of the prior guide ($1.60B) and non-GAAP EPS of $1.16 cleared the top of the $0.93–$1.13 range. Datacenter & Communications grew 26.1% YoY to $1.09B and management called out "record bookings" with some orders extending more than a year forward — the supply constraint narrative that defined FY25 is over, and the December-quarter guide of $1.56–$1.70B with datacom up ~10% sequentially says the bottleneck is now production ramp, not demand. Non-GAAP gross margin of 38.7% sits mid-range vs. the 37.5–39.5% guide, with the 42% target now described as a visible path rather than aspiration.
Headline numbers
EPS
Q1 FY2026
$1.16
Revenue
Q1 FY2026
$1.58B
+17.3% YoY
Gross margin
Q1 FY2026
36.6%
Free cash flow
Q1 FY2026
$-0.06B
Operating margin
Q1 FY2026
16.4%
Key financials
Q1 FY2026| Metric | Q1 FY2026 | YoY | Q4 FY2025 | QoQ |
|---|---|---|---|---|
| Revenue | $1.58B | +17.3% | $1.53B | +3.3% |
| EPS | $1.16 | — | $1.00 | +16.0% |
| Gross margin | 36.6% | — | 35.7% | +90bps |
| Operating margin | 16.4% | — | 0.4% | +1600bps |
| Free cash flow | $-0.06B | — | — | — |
Guidance
Strong Q1 FY2026 beat on revenue and EPS with guidance for moderately improved profitability and continued sequential growth in Q2, though forward growth rates modest at 3% sequential.
Guidance is issued for both next quarter and the full year. Both may appear below.
Actuals vs prior guidance
| Metric | Period | Prior guide | Actual | Δ | Result |
|---|---|---|---|---|---|
| Revenue | Q1 FY2026 | $1.46B to $1.60B | $1.581B | +$0.018B above high end of guide | Beat |
| Non-GAAP EPS | Q1 FY2026 | $0.93 to $1.13 | $1.16 | +$0.03 above high end of guide | Beat |
| Non-GAAP Gross Margin | Q1 FY2026 | 37.5% to 39.5% | 38.7% | in-line (within midpoint of guide) | Beat |
| Non-GAAP Operating Expenses | Q1 FY2026 | $290M to $310M | within range (not disclosed) | in-line | Met |
| Non-GAAP Tax Rate | Q1 FY2026 | 18% to 22% | within range (not disclosed) | in-line | Met |
New guidance
| Metric | Period | Guide | YoY |
|---|---|---|---|
| Revenue | Q2 FY2026 | $1.56B to $1.70B | — |
| Non-GAAP EPS | Q2 FY2026 | $1.10 to $1.30 | — |
| Non-GAAP Gross Margin | Q2 FY2026 | 38% to 40% | — |
| Non-GAAP Operating Expenses | Q2 FY2026 | $300M to $320M | — |
| Non-GAAP Tax Rate | Q2 FY2026 | 18% to 20% | — |
Segment performance
Q1 FY2026| Segment | Q1 FY2026 | YoY |
|---|---|---|
| Datacenter & Communications | $1.09B | +26.1% |
| Industrial | $0.491B | +1.4% |
Platform metrics
Q1 FY2026| Segment | Q1 FY2026 |
|---|---|
| Pro Forma YoY Revenue Growth | 19% |
Profitability
Q1 FY2026| Segment | Q1 FY2026 |
|---|---|
| Non-GAAP Gross Margin | 38.7% |
| Non-GAAP Operating Margin | 19.5% |
Management tone
Customer optimization hangover → AI capacity build → Supply unlock & 1.6T ramp.
Supply constraints have flipped from headline risk to resolved tailwind in a single quarter. Last quarter, indium phosphide was framed as the limiter on datacom growth and the new 6-inch Sherman line was a forward-looking capability claim. This quarter Chen stated: "I am very pleased to share that our initial six-inch indium phosphide production yields are actually higher than our current three-inch indium phosphide yields." Yields exceeding the mature 3-inch line on day one removes the canonical ramp risk — and pulls forward the cost-down story that underpins the 42% gross margin target. The signal is that the constraint that capped FY25 datacom growth is gone, and management has visibility through calendar 2028 on customer forecasts.
Demand language escalated from "strong" to "step function." A quarter ago management talked about 800G ramping and 1.6T starting; the new framing is qualitatively different: "We are experiencing an exceptionally strong level of demand. In our fiscal Q1, we received record bookings that represent a step function increase in already strong customer demand." Some bookings extend more than a year out. That is not a cyclical demand call — it is a multi-year capacity commitment language, and it explains why management is willing to double internal indium phosphide capacity in 12 months.
1.6T transitioned from a calendar-2026 product to a near-term sequential growth driver. Last quarter 1.6T was "more meaningful in calendar 2026." This quarter: "A significant portion of the sequential growth we expect in the current quarter is driven by 1.6T adoption." The pull-forward of ~6 months of revenue contribution is the most concrete demand-side acceleration data point in the print.
Industrial outlook unstuck. Two quarters ago industrial was "cautious near-term." Last quarter it was "expected down sequentially in Q1." This quarter it is "stable to slightly up" and management is now pitching AI-adjacent thermal materials as a growth lane. That is not a reacceleration claim — but the narrative drag has stopped.
Portfolio optimization reframed as "evergreen." Last quarter the A&D divestiture was a one-time strategic move. This quarter Chen elevated it: "I view portfolio optimization as an evergreen process and we will continue to reevaluate our asset portfolio to streamline and focus on the areas of greatest profit growth." Read this as a signal that more divestitures are likely and that ROIC will be the lens — meaningful for a company still carrying material debt.
Recurring themes management leaned on this quarter:
Risks management surfaced:
Q&A highlights
Samik Chatterjee · JPMorgan Chase
How broad-based is the strong demand across the portfolio? What are the demand drivers? Management then asked about indium phosphide capacity doubling timeline, milestones, and EML mix implications.
Demand is very broad-based across data center and communications with record bookings in Q1, including bookings extending over a year into the future. Strong orders for 800G and 1.6T transceivers with accelerating 1.6T adoption. Communications segment up 11% sequential and 55% YoY with five consecutive quarters of growth. Six-inch indium phosphide production started in September quarter at Sherman, Texas with yields higher than mature three-inch lines. Doubling capacity in 12 months by ramping at second facility in Jarfalla, Sweden. Plans to continue expanding capacity beyond 12 months based on customer forecasts through 2028.
Simon Leopold · Raymond James
How should investors think about OCS (optical circuit switches) trajectory relative to peer projections of $100M quarterly revenue by calendar 2026? Management then asked to clarify confusion about indium phosphide capacity being used for photodiodes versus laser production.
Strong confidence in OCS market position based on non-mechanical liquid crystal technology differentiation. Shipped systems to seven different customers. Both revenue and backlog grew last quarter with expectations to grow again this quarter. More meaningful revenue contribution expected in calendar 2026, weighted toward second half. TAM viewed as potentially larger than originally thought due to broader customer base and application diversity. Management clarified that indium phosphide production at two facilities (Sherman, Texas and Jarfalla, Sweden) encompasses three product types: EML lasers, CW lasers, and photodiodes—all critical transceiver components.
Blaine Curtis · Jefferies
How much is the 10% datacom sequential growth guidance still capacity constrained? Are there constraints beyond EMLs? Follow-up on timing of laser qualification and revenue recognition from six-inch capacity expansion.
Primary constraint in prior quarter was indium phosphide capacity, specifically EMLs. Significant improvement in both external and internal supply from prior to current quarter, with further growth expected into fiscal Q3. Still somewhat constrained in current quarter but supply expected to improve sequentially throughout next calendar year. No significant difference between EML and CW on time to production and full qualification. All indium phosphide production is for internal consumption only; once qualified, expanding capacity on parallel lines requires no special qualification. Customers highly motivated to accelerate qualification.
Tom O'Malley · Barclays
What drove datacom growth in September quarter and what are the vectors for December quarter guidance? How will six-inch production timing tie to gross margin expansion?
September quarter: Datacom grew 4% sequentially and 23% year-over-year; Communications grew 11% sequential and 55% year-over-year. December quarter guidance: Datacom expected to accelerate to 10% sequential growth; Communications expected to grow sequentially in single digits; Industrial expected to be sequentially stable or slightly up. Six-inch production began mid-quarter in September, with minimal gross margin impact in current quarter. Meaningful benefits to gross margin expected as 2025 calendar year progresses, with impact becoming more meaningful each sequential quarter. Six-inch indium phosphide costs less than half of three-inch, providing gross margin tailwind. 1.6T adoption also expected to help gross margin expansion.
Papasila · Citigroup
What is the breakdown of 1.6T demand between Silicon Photonics, EML, and Vixel technologies? How far ahead must indium phosphide capacity allocation decisions be made between EML, CW, and photodiodes?
Early wave of 1.6T revenue will be driven by combination of Silicon Photonics (CW lasers) and EML-based transceivers. Vixel-based 1.6T transceivers using 200-gig Vixel technology expected to begin production in mid-calendar 2026, generating revenue in second half of 2026. No significant profitability tradeoff between EML and CW production; allocation driven purely by customer demand. Capacity planning decisions can be made 4-6 months in advance, with fungible capacity to shift between EML and CW. Photodiode production is straightforward calculation based on laser requirements.
Answers to last quarter's watch list
What to watch into next quarter
Datacom sequential growth vs. the ~10% Q2 guide. Management explicitly guided datacom to accelerate to ~10% sequential — a step-up from the Q1 +4% sequential cadence. Anything below 8% would suggest supply is still binding harder than implied; above 12% would confirm the supply unlock thesis is real.
Non-GAAP gross margin position within the 38–40% Q2 range. Landing above 39.5% would validate the 6-inch indium phosphide cost-down narrative and put the 42% target on a credible FY27 path; landing below 38.5% would suggest the cost benefit is slower to flow through than management implies.
Discrete 1.6T revenue disclosure. With management now citing 1.6T as a sequential growth driver this quarter, the next print should provide either a percent-of-datacom or dollar contribution figure. The absence of a discrete number a second time would weaken the ramp story.
OCS revenue scale. Seven customers and growing backlog is a leading indicator; the question is whether OCS becomes a disclosed dollar contributor in Q2 or remains a TAM narrative. A quarterly revenue figure would re-rate the optionality.
Six-inch indium phosphide capacity-double milestone. Management said the second facility (Jarfalla) ramp doubles capacity within 12 months. Watch for incremental capacity disclosures or revised timeline — pull-ins would be a meaningful 1.6T tailwind into FY27.
Free cash flow inflection. Q1 FCF was -$58M as capacity build accelerates. Given the bookings and capex narrative, FCF should remain pressured near-term; sustained negative FCF beyond Q2 against record bookings would be an execution flag rather than a demand flag.
Sources
- Coherent Corp. Q1 FY2026 press release / 8-K Exhibit 99.1 — SEC EDGAR: https://www.sec.gov/Archives/edgar/data/820318/000119312525266951/d27982dex991.htm
- Coherent Corp. Q1 FY2026 earnings call (analyst Q&A excerpts and prepared remarks as referenced).
Get the next brief, free.
We publish analyst-grade earnings briefs the same day or morning after every call — headline numbers, segment KPIs, Q&A highlights, and tone analysis. Free during beta.
This is not investment advice.