tapebrief
COHR · Q2 2026
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 $1.806B grew 20.5% YoY and 7.1% QoQ, landing in the upper half of the $1.70B–$1.84B guide, with Datacenter & Communications up 40.5% YoY to $1.362B — an acceleration from Q2's 33.6%. Non-GAAP EPS of $1.41 cleared the $1.38 guide midpoint, non-GAAP gross margin reached 39.6% (upper half of 38.5%–40.5%), and Q4 is guided to $1.91B–$2.05B revenue (+25% to +34% YoY off the $1.53B prior-year base) with EPS of $1.52–$1.72. The headline shift is supply: indium phosphide capacity doubling has been pulled in a quarter, the 6-inch yields are exceeding 3-inch yields across all three device categories, and management now expects a second doubling — quadrupling over two years — by end of calendar 2027.

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
MetricQ3 FY2026YoYQ2 FY2026QoQ
Revenue$1.81B+20.5%$1.69B+6.9%
EPS$1.41—$1.29+9.3%
Gross margin39.6%—36.9%+270bps
Operating margin20.3%—10.9%+940bps

Guidance

Strong Q3 beat across revenue, EPS, and gross margin on datacenter demand strength; forward Q4 FY2026 guidance raised significantly with revenue midpoint +12% QoQ to $1.98B and 25–34% YoY growth.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ3 FY2026$1.70B to $1.84B$1.806B+$0.002B above the midpoint ($1.77B); within upper half of rangeBeat
Non-GAAP EPSQ3 FY2026$1.28 to $1.48$1.41+$0.03 above the midpoint ($1.38)Beat
Non-GAAP Gross MarginQ3 FY202638.5% to 40.5%39.6%+40bps above the midpoint (39.5%)Beat
Non-GAAP Operating ExpensesQ3 FY2026$320M to $340MNot separately disclosedIn-line with guidance range (implied by strong operating margin of 20.3%)Met
Non-GAAP Tax RateQ3 FY202618% to 20%Not separately disclosedIn-line (presumed within guidance range)Met

New guidance

MetricPeriodGuideYoY
RevenueQ4 FY2026$1.91B to $2.05B+25% to +34% YoY
Non-GAAP EPSQ4 FY2026$1.52 to $1.72—
Non-GAAP Gross MarginQ4 FY202639.0% to 41.0%—
Non-GAAP Operating ExpensesQ4 FY2026$360M to $380M—
Non-GAAP Tax RateQ4 FY202618% to 20%—

Segment performance

Q3 FY2026
SegmentQ3 FY2026YoY
Datacenter & Communications$1.362B+40.5%
Industrial$0.444B-16.1%
Datacenter & Communications Revenue Growth YoY40.5%—

Profitability

Q3 FY2026
SegmentQ3 FY2026
Non-GAAP Operating Margin20.3%
Non-GAAP Gross Margin39.6%
GAAP Operating Margin11.1%

Management tone

Q4 FY25 capacity story queued up → Q1 FY26 capacity executing → Q2 FY26 multi-year visibility locked in → Q3 FY26 supply unlocking acceleration

Three quarters ago indium phosphide capacity was "doubling by end of 2026"; last quarter it was the basis for a multi-year supply-demand imbalance; this quarter it is doubling a quarter early with another doubling already committed. Management said the original doubling milestone has been hit "one quarter earlier than originally planned" and that they "expect to more than double indium phosphide capacity again" by end of 2027 — a quadrupling over two years. Six-inch yields now exceed three-inch yields across EMLs, CW lasers, and photodiodes simultaneously, which is the cleanest yield outcome management has reported. The shift signals that the supply-side risk that capped Q4 FY25 datacom growth at 4% sequentially is now a multi-year competitive moat with quantified throughput, not a roadmap claim.

CPO has compressed from "future opportunity" to "initial revenue this calendar year" in two quarters. Last quarter CPO was an "exceptionally large" purchase order from an unnamed AI customer with initial revenue "toward the end of this calendar year." This quarter management said: "We expect initial scale-out CPO revenue to begin ramping in the second half of this calendar year, with scale-up CPO revenue expected to begin ramping in the second half of calendar 2027," and disclosed a public NVIDIA partnership with "multiple CPO-related products" and "a multi-year supply agreement extending through the end of the decade." The signal: CPO has graduated from a single-design-win narrative to a multi-customer, multi-product platform with a named hyperscaler partner.

Order book extension stretched from "calendar 2028 visibility" to "another step function increase" on top of that. Last quarter management called visibility "the best it's ever been" with bookings into calendar 2028. This quarter: "This quarter, we experienced another step function increase in our order book, driving our backlog to a record level. Customer demand remains exceptionally strong with no signs of attenuation." The repeat of "step function" two quarters running, with the second one stacked on already-record backlog, is the strongest demand-side language Coherent has used in this cycle.

OCS reframed from "production-constrained emerging category" to "bottleneck resolved, dual-facility ramp, TAM doubled." Last quarter the OCS TAM was revised upward intra-quarter from $2B to ">$2B." This quarter the bottleneck has been resolved, output is ramping across two production facilities, and the TAM has doubled outright to ">$4 billion." Doubling the market opportunity within a single quarter is the second time in three quarters management has revised its own TAM up — the pattern suggests the prior numbers were deliberately conservative.

Industrial reframing softened from "June-quarter inflection" to "incremental diversification over time." Last quarter management explicitly guided industrial to inflect in Q4 (June quarter) on semi-cap orders received in Q2. This quarter — with industrial down 16.1% YoY and 7.1% QoQ — management reframed: "industrial...is positioned to become an increasingly important source of incremental revenue and diversification over time," with thermal solutions ramping in H2 calendar 2027. That is a quieter retreat from the inflection call rather than a direct acknowledgement that it slipped, and it bears watching.

Recurring themes management leaned on this quarter:

Indium phosphide capacity expansion as primary growth enabler (doubling ahead of schedule)Six-inch wafer production delivering margin expansion and cost reduction (4x device density at <50% cost)CPO as transformational $15B+ market opportunity with NVIDIA partnership validating demandMulti-customer LTA signings with upfront capex commitments and demand guarantees1.6T transceiver ramp accelerating faster than expected; 800G continuing growthOCS production bottleneck resolved; market doubled to >$4B with dual-facility ramp

Risks management surfaced:

Forward-looking statements subject to number of significant risks and uncertaintiesIndium phosphide capacity constraint remains industry-wide issue (though Coherent ahead of curve)Industrial market softness persisting in some segments despite semiconductor equipment bookings improvementCustomer qualification cycles for new 6-inch products could introduce delaysExecution risk on simultaneous ramps across six-inch sites and new product platforms

Answers to last quarter's watch list

Whether Q3 revenue lands in the upper half of $1.70B–$1.84B. Yes — $1.806B landed in the upper half, +$0.036B above the $1.77B midpoint. The 12.7% QoQ datacom step-up exceeded the "double-digit sequential" framing, validating that the supply ramp is converting to revenue.
Resolved positively
Non-GAAP gross margin reaching the upper half of 38.5%–40.5%. Yes — 39.6% landed in the upper half (+60bps QoQ vs. Q2's 39.0%), and the Q4 guide raises the midpoint to 40.0%. This is the first quarter that gives evidence of the 6-inch cost benefit flowing through rather than being consumed by ramp costs.
Resolved positively
First discrete 1.6T revenue figure or customer count. Still no discrete number. Management framed the 1.6T transceiver ramp as "accelerating faster than expected" alongside continued 800G growth, but a third consecutive quarter without a customer count or revenue dollar makes the silence deliberate.
Continue monitoring
Industrial sequential growth ahead of June quarter. No — industrial declined 7.1% QoQ and 16.1% YoY. The predicted June-quarter inflection on semi-cap orders has slipped, and management quietly reframed the narrative around longer-dated thermal solutions ramping in H2 calendar 2027.
Resolved negatively
Named CPO customer or first revenue framing. Partially. NVIDIA is now publicly named as a CPO partner with a multi-year supply agreement through the end of the decade, and revenue start is confirmed for H2 calendar 2025 (scale-out) and H2 calendar 2027 (scale-up). A dollar contribution has not yet been disclosed.
Resolved positively
Any FY26 revenue or EPS guide. No — four consecutive quarters now without an FY26 frame. Given Q3 actuals plus Q4 midpoint guide implies FY26 revenue of ~$6.83B (+18% YoY) and would be straightforward to articulate, the continued silence is now a deliberate disclosure choice rather than a timing artifact.
Resolved negatively

What to watch into next quarter

Whether Q4 revenue lands in the upper half of $1.91B–$2.05B. The QoQ implied range is +5.8%–13.5% on top of an already strong Q3; landing at the $1.98B midpoint or below would suggest the indium phosphide ramp is converting at a slower rate than the order-book step-up implies. Anything at $2.00B+ confirms the supply unlock is durable.

Non-GAAP gross margin reaching 40.5%+. The Q4 midpoint of 40.0% and high end of 41.0% would mark the first quarter at or above the 40% threshold. Landing at 40.5%+ would put the 42% long-term target within ~3 quarters and validate that 6-inch flow-through is real, not mix noise.

First discrete 1.6T revenue dollar or customer concentration figure. Three quarters of qualitative-only 1.6T positioning is conspicuous given the magnitude of the datacom acceleration. A Q4 disclosure — or an explicit decision not to disclose — is the credible window before this becomes a structural transparency question.

First discrete CPO revenue dollar from the NVIDIA partnership. Management has committed to H2 calendar 2025 initial revenue, which means Q4 FY26 (June quarter) and Q1 FY27 (September quarter) will be the first periods with CPO contribution. Watch whether Q4 print includes a discrete CPO dollar or unit count.

Whether industrial stops declining sequentially. With the June-quarter inflection now slipped and management reframing toward H2 calendar 2027 thermal solutions, watch whether industrial revenue stabilizes around $440M–$450M or continues to grind lower. A second consecutive double-digit YoY decline would call the diversification thesis into question entirely.

FY27 revenue framing or quantified growth-rate language. Management has now committed for four consecutive quarters that FY27 growth will exceed FY26 growth without quantifying either. With FY26 revenue tracking to ~$6.83B (+18% YoY), the Q4 print is the natural window for management to either quantify FY27 or hold to qualitative-only — the latter would be a tell.

Sources

  1. Coherent Corp. Q3 FY2026 press release / 8-K Exhibit 99.1 — SEC EDGAR: https://www.sec.gov/Archives/edgar/data/820318/000119312526208972/d57080dex991.htm

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