Coherent Posts Record $2B Quarter, Forecasts First $3B Quarter by End of Fiscal 2027
The photonics leader reported 42% pro forma revenue growth in Q4 as AI data center demand drives aggressive capacity expansion and new product ramps.
Record Quarter Caps Exceptional Year
Coherent Corp. reported fourth-quarter revenue of $2.05 billion, up 13% sequentially and 34% year-over-year, capping a fiscal 2026 that saw full-year revenue reach a record $7.12 billion (earnings call, 2026-08-12). On a pro forma basis excluding divested businesses, Q4 revenue grew 42% year-over-year, while full-year revenue increased 28%.
The company's non-GAAP earnings per share grew approximately 59% for the full year, more than double the rate of revenue growth, driven by gross margin expansion of over 150 basis points and operating leverage improvements (earnings call, 2026-08-12). Q4 non-GAAP gross margin reached 40.2%, up 215 basis points year-over-year.
Aggressive Growth Guidance for Fiscal 2027
CEO Jim Anderson projected that Coherent would achieve its first quarter with over $3 billion in revenue by the end of fiscal 2027, following the milestone of exceeding $2 billion in Q4 (earnings call, 2026-08-12). Anderson attributed the company's confidence to three factors: continued record bookings, expanding supply of critical components, and multiple new revenue streams expected to ramp.
"AI runs on compute, but it scales on optical connectivity," Anderson said, positioning Coherent at the center of optical networking infrastructure expansion driven by AI growth (earnings call, 2026-08-12).
Data Center Segment Drives Performance
The data center and communications segment, which represented 79% of total Q4 revenue, grew 59% year-over-year in the quarter and 40% for the full fiscal year (earnings call, 2026-08-12). Data center revenue specifically increased 56% year-over-year in Q4, marking the third consecutive quarter of double-digit sequential growth.
Anderson noted that customer orders now extend into calendar 2028, with long-term agreements stretching through the end of the decade, providing "exceptional" order coverage through calendar 2027 (earnings call, 2026-08-12).
Capacity Expansion and New Products
The company remains on track to double its internal indium phosphide output capacity year-over-year by the end of the current quarter, one quarter ahead of its original plan (earnings call, 2026-08-12). Coherent plans to more than double this capacity again by the end of calendar 2027, with additional expansion planned beyond that timeframe.
Optical circuit switching (OCS) revenue increased sequentially in Q4, with the company estimating a market opportunity exceeding $4 billion (earnings call, 2026-08-12). Coherent expects to begin revenue from co-packaged optics (CPO) in fiscal Q2, consistent with planned production ramps.
The company plans to unveil "Coherent Photon Link," a new platform for integrated optics spanning CPO, near-package optics (NPO), and other optical integration forms, at an industry event in September (earnings call, 2026-08-12). This platform addresses what Anderson described as a more than $15 billion incremental addressable market opportunity.
Balance Sheet Strengthening
CFO Sherri Luther reported that the company reduced debt leverage to 0.7x from 2x at the end of fiscal 2025 while continuing to invest in capacity expansion (earnings call, 2026-08-12).
MarginX data shows recent insider activity including tax withholding transactions by executives Luther, Place, and Anderson, as well as a 1,000-share sale by CFO Luther.
This article was generated by MarginX from the earnings call on 2026-08-12. It is not investment advice.