Coherent, Inc.

Fiscal 2026 revenue was a record $7.12 billion, up 23% from FY25 and up 28% on a pro forma basis. Q4 revenue was a record $2.05 billion, up 13% sequentially and 34% year over year; on a pro forma basis, Q4 revenue was up 14% sequentially and 42% year over year. FY26 non-GAAP gross margin was 39.4%, up 152 basis points from FY25; Q4 non-GAAP gross margin was 40.2%, up 66 basis points sequentially and 215 basis points year over year. FY26 non-GAAP EPS was $5.61, up 59% year over year; Q4 non-GAAP EPS was $1.74, up 23% sequentially and 74% year over year. FY26 non-GAAP operating margin was 20.5%, up from 17.8% in FY25, and Q4 non-GAAP operating margin was 21.8%. Cash ended FY26 at $2.59 billion, debt leverage was 0.7x versus 2.0x at the end of FY25, and capital expenditures were $556 million in Q4. For Q1 FY27, management guided revenue to $2.2 billion-$2.4 billion, non-GAAP gross margin to 39.5%-41.5%, non-GAAP operating expenses to $400 million-$420 million, the non-GAAP tax rate to between 1.82 thousand% (as stated on the call), and non-GAAP EPS to $1.85-$2.05.

Jim Anderson framed FY26 as an outstanding year and said Coherent is entering FY27 with exceptional demand, record visibility, and multiple new revenue streams about to ramp. He emphasized AI data center connectivity as the core driver, citing 6-inch Indium Phosphide expansion, CPO, OCS, multi-rail, and advanced thermal materials as major growth engines. His tone was confident and constructive, repeatedly saying the company sees no sign of demand attenuation and expects growth to accelerate materially in FY27.

Sherri Luther highlighted record FY26 revenue of $7.12 billion, gross margin expansion of more than 150 basis points, operating margin expansion of nearly 300 basis points, and EPS growth of 59%. She pointed to gross margin improvement to 40.2% in Q4 and 39.4% for FY26, driven by lower input costs, better yields, 6-inch Indium Phosphide progress, and pricing optimization. On capital allocation, she noted $2.59 billion in cash at year-end, $513 million of debt payments during FY26, leverage down to 0.7x, and $556 million of Q4 capex supporting data center and communications capacity; she also said capex is expected to rise again in Q1.

Analysts focused on the 6-inch Indium Phosphide ramp, CPO/NPO timing, import restrictions on optical transceivers, gross margin trajectory, and whether management’s $3 billion revenue target by the end of FY27 is driven by 1.6T, OCS, multi-rail, backlog, or pricing. Management said the 6-inch ramp is ahead of plan, with output capacity set to double this quarter and more than double again by the end of next calendar year, while 6-inch yields are better than 3-inch. On CPO, management said it has seen no pushout in demand and expects initial CPO revenue in the December quarter, with scale-up CPO later in calendar 27; on LTAs, management said many agreements include both volume and pricing commitments and extend through the rest of the decade.