Coherent Corp.

Coherent supplies lasers, optical components, transceivers and other photonics technology for data centers, communications networks and industrial applications. Its shares trade on the New York Stock Exchange under COHR. The fiscal year ends June 30.

Latest financial results

Adjusted operating profit excludes share-based compensation, acquired-intangible amortization, restructuring and integration costs and specified other items. The year-earlier reported operating result included a business-sale gain. Adjusted earnings also use a normalized tax rate of 19%.

Growth and earlier expectations

Current revenue was within August's $2.2 billion to $2.4 billion forecast. Adjusted earnings of $2.09 a share were slightly above the earlier $1.85 to $2.05 range. Adjusted gross margin was 40.6%, within the 39.5% to 41.5% forecast.

The datacenter and communications business generated $1.952 billion of sales, compared with $1.090 billion a year earlier. Industrial sales were $418.6 million, compared with $491.4 million, reflecting divestitures as well as business conditions. Pro forma comparisons remove the sold businesses; some business units also moved between segments at the start of fiscal 2027.

For fiscal 2027, Coherent expects pro forma revenue growth above 60%, excluding the former aerospace and defense and Munich businesses. It expects its first $3 billion revenue quarter by that fiscal year-end and its first $4 billion quarter in fiscal 2028.

The December-quarter forecast is $2.55 billion to $2.75 billion of sales, adjusted earnings of $2.28 to $2.48 a share and adjusted gross margin of 40% to 42%. The longer-term goal is its first quarter with adjusted gross margin above 45% before calendar 2028 ends.

Manufacturing and customer agreements

Management said internal indium-phosphide manufacturing capacity doubled from a year earlier, one quarter ahead of plan, with another increase of more than double expected by the end of calendar 2027.

The company expects PhotonLink revenue to exceed $100 million in the March 2027 quarter and reach $250 million a quarter before the end of calendar 2027. Separately, its presentation describes a five-year PhotonLink agreement with an estimated value of approximately $20 billion, expected to begin ramping in early calendar 2028.

NVIDIA invested $2 billion in Coherent common stock in March 2026 to support research, manufacturing capacity and operations. A multiyear capacity agreement extending through 2030 may require further investment in equipment, labor and working capital as production increases.

Cash resources and financing

At September 30, cash and cash equivalents were $1.553 billion and short-term investments $200 million, compared with $1.162 billion and $825 million at June 30. Restricted cash of $583.4 million is separate from those balances.

Inventory used $737.1 million of quarterly operating cash, receivables $255.3 million. Accounts payable contributed $429.8 million and contract liabilities $269.3 million. The company spent $775.5 million in cash on property and equipment and reported another $527.7 million of property and equipment additions included in accounts payable.

The cash-flow statement recorded $773.4 million of proceeds from other credit facilities and $625 million from short-term investment maturities. Total debt at carrying value reached $4.001 billion, compared with $3.222 billion at June 30.

Foreign subsidiaries had approximately $205 million drawn on $475 million of local-currency lines and $598 million drawn on a separate $950 million facility. These borrowings mature in 2029. The parent does not guarantee the facilities. Coherent's separate revolving credit line had $669 million available at September 30.

Completed divestitures

Coherent sold its aerospace and defense business on September 2, 2025, for approximately $400 million, subject to closing adjustments. It completed the sale of its Munich materials-processing tools division on January 30, 2026. Both businesses were part of Industrial and are excluded from the company's pro forma revenue comparisons.