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

COHR · Q3 2026 Earnings

Coherent Corp.

Reported May 6, 2026

30-second summary

30-second take: Q3 revenue of $1.81B grew 20.5% YoY and 7.1% QoQ, clearing the high end of the prior $1.70–$1.84B guide, with Datacenter & Communications +40.4% YoY to $1.36B (now ~75% of mix). Non-GAAP EPS of $1.41 landed near the top of the $1.28–$1.48 range; non-GAAP gross margin of 39.6% sat just above the midpoint of the 38.5–40.5% guide. The Q4 guide of $1.91–$2.05B implies 25–34% YoY growth — an acceleration from this quarter's 20.5% — and the NVIDIA $2B equity investment plus through-end-of-decade supply agreement converts CPO from optionality to a capital-backed revenue stream.

Headline numbers

EPS

Q3 FY2026

$1.41

Revenue

Q3 FY2026

$1.81B

+20.5% YoY

Gross margin

Q3 FY2026

39.6%

Operating margin

Q3 FY2026

20.3%

Key financials

Q3 FY2026

Metric	Q3 FY2026	YoY	Q2 FY2026	QoQ
Revenue	$1.81B	+20.5%	$1.69B	+7.4%
EPS	$1.41	—	$1.29	+9.3%
Gross margin	39.6%	—	39.0%	+60bps
Operating margin	20.3%	—	19.9%	+40bps

Guidance

NVIDIA beat Q3 FY2026 guidance on revenue ($1.81B vs. $1.70B-$1.84B guided) and EPS ($1.41 vs. $1.28-$1.48 guided), with Q4 FY2026 guidance showing strong continued momentum (25%-34% YoY revenue growth expected).

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	Q3 FY2026	$1.70B to $1.84B	$1.81B	+$0.04B above high end of guide	Beat
Non-GAAP EPS	Q3 FY2026	$1.28 to $1.48	$1.41	-$0.07B below high end but +$0.13B above midpoint; in-line with top-end of range	Beat
Non-GAAP Gross Margin	Q3 FY2026	38.5% to 40.5%	39.6%	in-line with center of guidance range	Beat
Non-GAAP Operating Expenses	Q3 FY2026	$320M to $340M	Not explicitly reported	—	Met
Non-GAAP Tax Rate	Q3 FY2026	18% to 20%	Not explicitly reported	—	Met

New guidance

Metric	Period	Guide	YoY
Revenue	Q4 FY2026	$1.91B to $2.05B	+24.8% to +34.0% YoY
Non-GAAP EPS	Q4 FY2026	$1.52 to $1.72	—
Non-GAAP Gross Margin	Q4 FY2026	39.0% to 41.0%	—
Non-GAAP Operating Expenses	Q4 FY2026	$360M to $380M	—
Non-GAAP Tax Rate	Q4 FY2026	18% to 20%	—

Segment performance

Q3 FY2026

Segment	Q3 FY2026	YoY
Datacenter & Communications	$1.36B	+40.4%
Industrial	$0.44B	-16.1%
Datacenter & Communications Revenue Growth YoY	40.4%	—
Industrial Revenue Decline YoY	-16.1%	—

Platform metrics

Q3 FY2026

Segment	Q3 FY2026
Total Revenue YoY Growth	20.5%
Total Revenue QoQ Growth	7.1%

Profitability

Q3 FY2026

Segment	Q3 FY2026
Gross Margin (Non-GAAP)	39.6%
Operating Margin (Non-GAAP)	20.3%

Management tone

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

The CPO arc compressed faster than any prior strategic narrative. Two quarters ago CPO was peripheral. Last quarter management disclosed an "exceptionally large purchase order" with revenue starting late this calendar year. This quarter the customer was named, the structure was financial, and the duration was a decade: "This partnership includes both NVIDIA's $2 billion equity investment in Coherent and a multi-year supply agreement extending through the end of the decade." An anonymous mega-order has become a hyperscaler taking equity. Capital co-investment removes the canonical execution-risk discount that semis-equipment vendors carry on speculative ramps — and it converts CPO into a structurally defended revenue stream rather than a contested design slot.

Demand visibility extended past the typical hyperscaler planning horizon. A quarter ago Coherent talked about "best visibility ever" with bookings into calendar 2028. This quarter the framing is "orders now reaching into calendar 2028 and customer LTAs extending to the end of the decade." That is a multi-year contractual commitment language — and against that backdrop, the company's continued refusal to issue an FY26 full-year guide reads less as conservatism and more as a deliberate withholding tactic; the FY27 acceleration claim is now anchored to LTAs, not to product-cycle optimism.

Indium phosphide capacity inflection pulled in by a quarter. Last quarter management framed the capacity-double as on-track but with structural shortage persisting. This quarter Chen disclosed that the doubling goal "will [be achieved] next quarter, which is one quarter earlier than we thought" — with plans to more than double again by end of 2027. The verbatim language is unambiguous: "we are now seeing the benefits of this ramp in both revenue and margin, and we expect those benefits to increase further over the coming quarters." This is the moment the 6-inch indium phosphide story converts from forward-claim to in-quarter financial evidence; the 60bps of gross margin expansion is the receipt.

1.6T became the primary near-term sequential growth driver, faster than the company itself expected. Last quarter 1.6T was characterized as "a tremendous amount of orders" without quantification. This quarter the language sharpens: "1.60 is ramping at an incredibly rapid pace... that 1.60 ramp is actually faster than what we would have thought, say, a year ago." For a supplier that has been notably calibrated on roadmap calls, an unprompted "faster than we expected" statement is a meaningful upward revision to the implicit FY27 trajectory.

OCS TAM doubled in one quarter and capacity bottleneck flipped to ramping output. Last quarter OCS was "above $2 billion" with 10+ customer engagements. This quarter: "We have increased our view of the OCS market opportunity to over $4 billion" — and the production-side framing flipped from constraint to scale ("recently resolved a bottleneck in our production capacity and are now ramping output rapidly across two production facilities"). For a metric that has been qualitative-only for three quarters running, this is the cleanest leading-indicator escalation in the print, even without a discrete dollar disclosure.

Recurring themes management leaned on this quarter:

Indium phosphide capacity expansion as primary growth leverCPO (co-packaged optics) transitioning from strategic vision to near-term revenueMultiple sequential growth vectors layering (OCS, CPO, multi-rail, thermal solutions)Record backlog and customer LTAs extending through end of decadeGross margin expansion driven by 6-inch yield improvements, pricing power, and cost reductionAI data center demand as exceptional, broad-based, and extending into 2028

Risks management surfaced:

Industry-wide constraint in indium phosphide capacitySoftness in parts of broader industrial market (though improving)Dependence on customer qualification and adoption of new technologies (1.6T, CPO, multi-rail)Supply chain dependencies on externally sourced componentsExecution risk on rapid capacity ramp across multiple facilities and geographies

Answers to last quarter's watch list

Whether Q3 datacenter sequential growth cleared 10% as guided. Datacenter & Communications grew from $1.21B to $1.36B, or +12.6% QoQ — clean double-digit, above the implied ~10% bar. The supply-unlock thesis is converting to numbers.

Resolved positively

Non-GAAP gross margin position within the 38.5–40.5% Q3 range. Landed at 39.6% — above the midpoint for the first time in three quarters, and +60bps QoQ. The 6-inch indium phosphide flow-through is finally visible; the Q4 guide midpoint of 40.0% extends the trajectory.

Resolved positively

Opex Q3 actual vs. the $320–$340M guide and any further upward drift in Q4 commentary. Q3 opex actual was not explicitly disclosed in the press release, but the Q4 guide of $360–$380M represents a second consecutive upward shift — $40M higher at the high end versus the prior $20M widening between Q2 and Q3. Two consecutive widenings warrants a downward operating-leverage assumption even with revenue accelerating.

Resolved negatively

First discrete CPO revenue disclosure or order-size datapoint. No discrete dollar or unit figure on CPO this quarter — but the disclosure went substantially further than a dollar number would have: NVIDIA named as customer, $2B equity investment, supply agreement through end of decade, and initial scale-out revenue ramping in 2H calendar 2025.

Resolved positively

Whether OCS becomes a disclosed dollar contributor. Still no quarterly OCS dollar disclosure, but the TAM was doubled to $4B+ and management guided OCS revenue to grow sequentially in Q4 as the production bottleneck resolves. Third consecutive quarter of qualitative-only disclosure on revenue, but the leading indicators (TAM, production-readiness) keep improving.

Continue monitoring

First FY26 full-year revenue or EPS framing. No FY26 full-year guide for the third consecutive quarter, against the strongest visibility commentary yet ("orders into calendar 2028, LTAs through end of decade"). The implied FY26 from the first three quarters of actuals plus the Q4 guide midpoint of $1.98B is ~$7.06B, but management continues to withhold the explicit number.

Not resolved

What to watch into next quarter

Whether Q4 revenue clears $2.05B (the high end), implying 34%+ YoY. The midpoint guide already implies acceleration from 20.5% to ~29% YoY; clearing the high end would confirm datacenter is still capacity-binding-up in a constructive way. A print at or below the midpoint would mean the acceleration was front-loaded into the guide.

First discrete CPO Q4 revenue dollar disclosure. Management guided "initial scale-out CPO revenue to begin ramping in 2H calendar 2025" — Q4 FY26 (June quarter) is exactly that window. The absence of a number after a quarter of NVIDIA-partnership headlines would be a credibility flag.

Non-GAAP gross margin position within the 39.0–41.0% Q4 range. Landing above 40.0% would put the 42% target on a credible early-FY27 path; landing at or below 39.6% (the Q3 print) would suggest the indium phosphide flow-through has plateaued earlier than the capacity ramp implies.

Opex Q4 actual vs. the $360–$380M guide and any third consecutive widening for Q1 FY27. Two consecutive upward shifts are now on the board. A third widening, especially without revenue overshooting by a corresponding amount, would mean the operating-leverage story is structurally compromised by the capacity ramp.

First FY27 quantitative framing. Management has now stated three times that FY27 growth exceeds FY26 growth. Against LTAs running through end of decade and a $2B equity partner, an FY27 revenue range or growth-rate floor would be the natural next disclosure — its absence at the Q4 print would extend the visibility-versus-disclosure gap into a fourth quarter.

Industrial trough. YoY decline worsened from -9.9% to -16.1% sequentially. A third consecutive quarter of accelerating decline would mean the "AI data center thermal applications" pivot is a calendar-2027 story at best, not a near-term offset.

Sources

Coherent Corp. Q3 FY2026 press release / 8-K Exhibit 99.1 — SEC EDGAR: https://www.sec.gov/Archives/edgar/data/820318/000119312526208972/d57080dex991.htm
Coherent Corp. Q3 FY2026 earnings call (prepared remarks as referenced).

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