Coherent Corp. delivered a strong start to fiscal 2027, exceeding expectations on both revenue and earnings. Performance was driven primarily by record demand in the Datacenter and Communications segment, which benefited from the industry-wide transition to optical connectivity in AI infrastructure. The company also improved its long-term profitability outlook, citing operating leverage from pricing optimization and manufacturing scale.
Key Highlights
- Revenue for the first quarter grew 56% year-over-year on a pro forma basis to $2.37 billion, surpassing the consensus estimate of $2.30 billion.
- Datacenter and Communications segment revenue reached a record $1.95 billion, representing 82% of total company revenue and a 79% increase compared to the prior year.
- Non-GAAP gross margin expanded 184 basis points year-over-year to 40.6%, leading management to raise its longer-term target to over 45% non-GAAP gross margin by calendar 2028.
- Internal Indium Phosphide (InP) output capacity doubled year-over-year in the first quarter, achieving management's expansion goal one quarter ahead of schedule to alleviate supply constraints for high-speed transceivers.
- The company secured a five-year PhotonLink supply agreement valued at approximately $20 billion, with revenue beginning to ramp in early calendar 2028.