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COHR · Q1 2026
COHR · Q3 2026
Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

COHR · Q2 2026 Earnings

Coherent Corp.

Reported February 4, 2026

30-second summary

30-second take: Q2 revenue of $1.686B (+17.5% YoY, +6.6% QoQ) cleared the high end of the prior $1.56–$1.70B guide; non-GAAP EPS of $1.29 landed at the top of the $1.10–$1.30 range, and non-GAAP gross margin of 39.0% sat at the midpoint. Datacenter & Communications grew 33.6% YoY to $1.21B and management secured an "exceptionally large" CPO purchase order from a market-leading AI customer — framed as orders-of-magnitude TAM expansion on top of the 1.6T ramp. The Q3 guide of $1.70–$1.84B (mid +4.9% QoQ) with gross margin guided to 38.5–40.5% extends the sequential growth story, but FY26 full-year revenue and EPS targets were again not issued, and opex guidance widened $20M higher.

Headline numbers

EPS

Q2 FY2026

$1.29

Revenue

Q2 FY2026

$1.69B

+17.5% YoY

Gross margin

Q2 FY2026

39.0%

Operating margin

Q2 FY2026

19.9%

Key financials

Q2 FY2026
MetricQ2 FY2026YoYQ1 FY2026QoQ
Revenue$1.69B+17.5%$1.58B+6.6%
EPS$1.29—$1.16+11.2%
Gross margin39.0%—36.6%+240bps
Operating margin19.9%—16.4%+350bps

Guidance

Q2 FY2026 beat prior revenue and EPS guidance; Q3 FY2026 forward guidance implies sustained but moderating sequential growth with margin expansion, backed by strong datacenter demand outlook.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ2 FY2026$1.56 billion to $1.70 billion$1.686 billion+$0.016 billion above guide (at top of range)Beat
Non-GAAP EPSQ2 FY2026$1.10 to $1.30$1.29$0.00 below high end of guide; within upper half of rangeBeat
Non-GAAP Gross MarginQ2 FY202638% to 40%39.0%in-line (midpoint of range)Met

New guidance

MetricPeriodGuideYoY
RevenueQ3 FY2026$1.70 billion to $1.84 billion—
Non-GAAP EPSQ3 FY2026$1.28 to $1.48—
Non-GAAP Gross MarginQ3 FY202638.5% to 40.5%—
Non-GAAP Operating ExpensesQ3 FY2026$320 million to $340 million—
Non-GAAP Tax RateQ3 FY202618% to 20%—

Segment performance

Q2 FY2026
SegmentQ2 FY2026YoY
Datacenter & Communications$1.208B+33.6%
Industrial$0.478B-9.9%
Datacenter & Communications Revenue Growth YoY33.6%—

Profitability

Q2 FY2026
SegmentQ2 FY2026
Non-GAAP Operating Margin19.9%
Non-GAAP Gross Margin39.0%
Non-GAAP EPS$1.29

Management tone

Customer optimization hangover → AI capacity build → Supply unlock & 1.6T ramp → Multi-year visibility & CPO TAM expansion.

The supply-constraint narrative has inverted across four quarters. Two quarters ago indium phosphide was framed as the bottleneck capping FY25 growth. Last quarter Chen announced 6-inch yields exceeding 3-inch and called the constraint resolving. This quarter management extended the timeline in the opposite direction: "we could be in a very sustained long period of supply demand imbalance on indium phosphide" — not easing through next calendar year. The arc is from "constraint we can't fix" to "constraint we're fixing" to "constraint that's structural and we benefit from." For a vertically integrated supplier, structural shortage is pricing power.

Visibility language has escalated from "record bookings" to "best it's ever been." Last quarter the phrase was "record bookings...step function increase." This quarter: "the visibility of the business is the best it's ever been, which gives us just kind of great confidence in terms of the go-forward growth," with bookings extending into calendar 2028. The signal is that customer LTAs and forecasts are now multi-year contractual rather than rolling quarterly — and the FY27-exceeds-FY26 growth claim is anchored to that visibility, not to product-cycle optimism.

CPO transitioned from emerging optionality to a discrete major design win. A quarter ago OCS was the strategic story and CPO was peripheral. This quarter management disclosed "an exceptionally large purchase order from a market-leading AI data center customer for a CPO solution" and reframed CPO as orders-of-magnitude TAM expansion: "the scale up CPO opportunity will dwarf the opportunity in scale out. It will be orders of magnitude larger." Initial revenue lands late this calendar year; meaningful contribution in calendar 2026 and beyond. This is the most concrete forward design-win disclosure Coherent has made.

OCS sizing was explicitly called too small. Last quarter management framed OCS as a $2B TAM with seven customers. This quarter: "we now have over 10 customer engagements...we likely undersized it. And if we reassess it now, it would be well above $2 billion." The customer count grew ~40% in one quarter and the TAM frame was repudiated as low — that's a leading indicator, not a revenue datapoint, but the trajectory is clean.

Forward growth language elevated from "throughout this fiscal year" to "exceeds fiscal 26 in fiscal 27." Last quarter management guided strong sequential growth across FY26. This quarter the framing extended a full year: FY27 growth rate will exceed FY26. That is the most aggressive forward statement Coherent has made in this cycle, and it's the reason the absence of a full-year FY26 guide is notable — management is willing to commit to FY27 directional acceleration but unwilling to put a number on FY26.

Recurring themes management leaned on this quarter:

Indium phosphide capacity expansion as primary bottleneck and multi-year growth enabler1.6T transceiver acceleration outpacing 800G with sustained dual-growth trajectoryCPO as major design-win inflection point with scale-up TAM expansionGross margin expansion through 6-inch production ramp, cost reduction, yield, and pricing optimizationOCS optical switching platform broadening from niche to multiple network layers with 10+ customer engagementsDCI and communications business acceleration with 44% YoY growth and new multi-rail product ramp

Risks management surfaced:

Supply-demand imbalance on indium phosphide persisting through next calendar year and potentially longerExecution risk on rapid capacity ramps across multiple sites and technologiesCompetitive capacity additions from Broadcom and other suppliers narrowing differentiationMix headwinds from gross margin if higher-margin CPO revenues delayed relative to transceiver mixOngoing portfolio optimization requiring site exits and potential operational disruption

Answers to last quarter's watch list

Datacom sequential growth vs. the ~10% Q2 guide. Datacenter & Communications grew 6.6% QoQ in aggregate to $1.208B (+33.6% YoY); management did not break out a discrete datacom-only sequential figure in the print but reiterated "double-digit sequential growth in data center" for both Q3 and Q4 ahead. The supply-unlock thesis is intact but the segment-level QoQ is below the 10% bar implied last quarter, suggesting some binding capacity remains.
Continue monitoring
Non-GAAP gross margin position within the 38–40% Q2 range. Landed at 39.0% — exactly the midpoint, not the 39.5%+ upper half that would have validated faster 6-inch flow-through. The Q3 guide midpoint of 39.5% pushes the validation one quarter forward. Status: Resolved negatively — incremental, not step-function.
Discrete 1.6T revenue disclosure. No discrete 1.6T dollar or percent-of-datacom figure was disclosed. Management characterized "a tremendous amount of orders on 1.6T" with ramp driven by both EML and silicon photonics, and Vixel-based 1.6T transceivers ramping in 2H calendar 2026. Second consecutive quarter without a discrete number.
Resolved negatively
OCS revenue scale. Still no quarterly OCS dollar disclosure, but customer engagements grew from 7 to "over 10" and management explicitly said the prior $2B TAM was undersized. Leading indicators improving; revenue disclosure still pending.
Continue monitoring
Six-inch indium phosphide capacity-double milestone. No revised timeline or capacity datapoint was issued, but management's "sustained long period of supply demand imbalance" framing implies the capacity-double is still tracking but insufficient to meet demand.
Not resolved
Free cash flow inflection. Free cash flow was not disclosed in the extracted figures for Q2; with capex still ramping and opex guided $20M higher into Q3, FCF likely remained pressured.
Continue monitoring

What to watch into next quarter

Whether the Q3 datacenter sequential growth clears 10% as guided. Q2 segment QoQ of 6.6% sat below the implied ~10% datacom-only bar; a clean double-digit print in Q3 would confirm "double-digit sequential" is durable, not aspirational.

Non-GAAP gross margin position within the 38.5–40.5% Q3 range. Landing above 39.5% would finally validate the 6-inch cost flow-through; a third consecutive quarter near the midpoint would suggest the 42% target is slipping further into FY27.

Opex Q3 actual vs. the $320–$340M guide and any further upward drift in Q4 commentary. The $20M upward shift between Q2 and Q3 guides is the only visible cost-discipline crack; a second consecutive widening would warrant downward operating leverage assumptions.

First discrete CPO revenue disclosure or order-size datapoint. Management said initial revenue lands "toward the end of this calendar year"; the Q3 print is the natural place to hear a unit, dollar, or customer-count breadcrumb on the CPO mega-order.

Whether OCS becomes a disclosed dollar contributor. Customer count is now 10+ and TAM was upsized; the third consecutive quarter of qualitative-only disclosure would limit how much credit the market gives OCS optionality.

First FY26 full-year revenue or EPS framing. Two consecutive quarters without a FY guide against "best visibility ever" language is the cleanest tension in the print. Either an explicit FY26 figure or an explicit reason for withholding one would resolve it.

Sources

  1. Coherent Corp. Q2 FY2026 press release / 8-K Exhibit 99.1 — SEC EDGAR: https://www.sec.gov/Archives/edgar/data/820318/000119312526037556/d101115dex991.htm
  2. Coherent Corp. Q2 FY2026 earnings call (prepared remarks as referenced).

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