Coherent (COHR) Q2 2026 earnings summary

Executive summary

• Q2 FY26 revenue reached $1.69B, up 17% year-over-year and 22% on a pro forma basis, driven by strong AI datacenter and communications demand, supported by capacity expansion and portfolio optimization.

• Non-GAAP EPS grew 35% year-over-year to $1.29, with non-GAAP gross margin expanding to 39%; GAAP EPS was $0.76, up 71% year-over-year.

• Book-to-bill ratio exceeded 4x in data center, with bookings visibility extending into 2027 and long-term supply agreements in place.

• Completed sale of Munich-based materials processing tools division and aerospace & defense business, streamlining operations and improving margins.

• Rapid expansion of six-inch indium phosphide production capacity, targeting a doubling by year-end to support margin and volume growth.

Financial highlights

• Q2 FY26 revenue: $1.69B, up 17% year-over-year and 22% pro forma, with non-GAAP gross margin at 39% and non-GAAP operating margin at 19.9%.

• Non-GAAP EPS was $1.29, up from $0.95 year-ago; GAAP EPS was $0.76.

• Debt leverage ratio reduced to 1.7x from 2.3x year-ago; Q2 capex was $154M.

• Operating cash flow for the six months was $104M, down from $340M year-over-year, mainly due to higher inventories and receivables.

• YTD FY26 revenue: $3,267M vs. $2,783M YTD FY25 (17.4% Y/Y growth).

Outlook and guidance

• Q3 FY26 revenue expected between $1.7B and $1.84B; non-GAAP gross margin between 38.5% and 40.5%.

• Non-GAAP EPS guidance of $1.28–$1.48; operating expenses $320M–$340M.

• Fiscal 2027 revenue growth rate expected to exceed fiscal 2026.

• Continued double-digit sequential growth expected in data center for March and June quarters.

• Q3 FY26 non-GAAP tax rate expected between 18% and 20%.