Coherent, Inc. Q3 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Coherent Q3 FY2026 Earnings Summary

Financial Highlights

  • Revenue: Record $1.8 billion, +7% sequentially from Q2 FY2026 and +21% year-over-year. On pro forma basis (excluding sold Aerospace & Defense and Munich businesses): +9% seq and +27% YoY, accelerating from prior quarter's YoY growth.
  • Non-GAAP Gross Margin: 39.6%, +57 bps sequentially and +105 bps YoY (vs. 38.5% in Q3 FY2025), driven by cost reductions, 6-inch InP yields, and pricing optimization.
  • Non-GAAP Operating Expenses: $348 million (vs. $321M in Q2 FY2026, $297M in Q3 FY2025). R&D at 9.9% of revenue; SG&A improved to 9.4% of revenue.
  • Non-GAAP Operating Margin: 20.3% (vs. 19.9% prior quarter, 18.6% YoY).
  • Non-GAAP EPS: $1.41, +9% sequentially and +55% YoY, with profitability growing faster than revenue.
  • Balance Sheet: Cash rose to $3.0 billion (from $1.5B in Q2) due to $2B NVIDIA equity investment. Debt leverage ratio improved to 0.5x (from 1.7x in Q2 FY2026 and 2.1x YoY). CapEx: $290M (vs. $154M prior quarter, $112M YoY).
  • Other: Record backlog with orders extending to calendar 2028 and LTAs to end of decade. Exited low-margin Munich business ($8M revenue in Q3).

Segment Performance

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Operator: Greetings, and welcome to the Coherent Third Quarter Fiscal Year 2026 Earnings Call. It is now my pleasure to introduce your host, Mr. Paul Silverstein, Senior Vice President of Investor Relations for Coherent. Please go ahead. Paul Silverstein: Thank you, operator, and good afternoon, everyone. With me today are Jim Anderson, Coherent's CEO; and Sherri Luther, Coherent's CFO. During today's call, we will provide a financial and business review of the third quarter of fiscal 2026 and the business outlook for the fourth quarter of fiscal 2026. Our earnings press release can be found in the Investor Relations section of our company website at coherent.com. I would like to remind everyone that during our conference call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. These are subject to a number of significant risks and uncertainties, and our actual results may differ materially. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's earnings release, our most recent Forms 10-K and 10-Q and the reports that we may file on Form 8-K with the Securities and Exchange Commission. All our statements are made as of today, May 6, 2026, based on information currently available to us. Except as required by law, we assume no obligation to update any such statements. During this call, we will discuss non-GAAP financia
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