Coherent (COHR) 7 May 242024 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Coherent Corp. Fiscal Year '24 Third Quarter Earnings Call.

[Operator Instructions]

Please be advised that today's conference is being recorded.

to Paul conference Investor Silverstein, go like first to Relations. now ahead. today, speaker Senior would hand over the your Please I Vice President,

our everyone. Victor, you good you, fiscal morning, Thank for earnings and joining third call. quarter XXXX Thank

we call, and Chair a Coherent Mattera which Chuck CEO; senior of Coherent have leaders Chuck will and the On Dr. number introduce shortly.

of and the issued market press release, X-K. section letter closed, Investor shareholder to presentation we Form a website these an after furnished investor Yesterday, a updated a and documents our Relations posted in This the key regarding visibility, morning, we filed our earnings our in information XX-Q. outlook, The performance, trends shareholder and financial letter historically press contains operating detailed developments. statements releases and our included

could about shareholder refer respective make statement statements. letter results speak SEC about the We Before The forth materially. results including reports outlook. statements as to in a statements, forward-looking to set and factors performance statements, our differ we and/or assume and their market may forward-looking obligation future of forward-looking to cause Actual only differ short which may update actual forward-looking those dates. We no statements. that from risk begin,

are GAAP both measures. We'll included limit we to non-GAAP non-GAAP in present non-GAAP financial During in shareholder We reconciled historical that we the may measures the reconciliation our of this call, on discuss financial If is a letter. measures. and do, GAAP shareholder those letter. discussion

turn Chair CEO, Mattera. and pleasure that, With Coherent's it Dr. my the call to to over is Chuck

solid segment Coherent quarter. delivered The we at another continues Paul. you, Thank where

process. briefly comment I Before diving the details, on the into CEO search will

candidates. evaluate to establish committee search a a leading disclosed, external a both previously has to our from identify and As candidates of and firm pool help internal selection executive Board CEO retained

our With comment and performance focus on ensure experience and I knowledge QX sustainable for call. year growth QX successfully with focus necessary the seamlessly during new Our I said, and CEO not super to fiscal exciting Coherent's me it to on that further for today's Rather, a on in and and and help success. setup the selecting 'XX. will preparing and will remarks brief is my skills, succeed exciting

leadership As have our among previously, stated important development CEO's is I most responsibilities.

shareholder Officer; organization the disclosures, Transceivers; the who Marketing Chief sales the Dr. Khan, leads came and Carbide Financial acquisition; Officer, Sohail and Xu, Mason, extensive following Rich Martucci, leaders Lee Silicon of Julie Telecom. Chief asked call: through the Beck to Dr. EVP Given participate global Datacom the Chief President Chief Parthasarathi, senior Q&A EVP Materials Bengtsson, letter's the Magnus Sanjai in Officer; have Coherent I of segment; Commercial Barbarossa, EVP Technology Officer Sheridan Dr. today's and Chief Strategy Interim Mr. Dr. Giovanni to our service portion Officer; and LLC; who us Eng,

XX have privilege measure. been I team the working in industry small management last the with the For years, experienced of most one the as blessed with

Those years have experience. XXX us collective of call today's of on

depth and the of operations provide overall rich and breadth business. about source of markets, will a our We information investors technologies,

that operating our we quarter, with and below deliver primarily revenue of in controls the of non-GAAP but allowed our end margin or above line solid delivered guidance the in For unexpected came guidance. guidance. resolve, us which non-GAAP to sequential rigorous and expense in EPS, margin expect soon operating was to gross the discipline to both high issues already improvement Due resolved we've

non-GAAP EPS. third quarter almost The X% increase of and revenue in sequential our almost include XX% sequential an increase a or highlights $X.XX in

telecom 'XX. XXXG AI-related revenue. of for the strong fiscal lines which to in A now current fourth and of another XX% market, continue Datacom -- our outlook industrial Datacom our accounts demand total we our quarter for strong in strength into improving continuous for transceivers, expect approximately markets, slower-than-expected Another of recovery quarter this

million of improve. of of AI the interest rating approximately $X basis and to in an a term million XX of that and position annual our points, margins expectation which performance their repayment Moody's, and savings will by financial rate reflecting the by the The our secured continue upgrade results credit outstanding B, completion our leadership debt exciting BAX $XX loan of market reducing our $X.X to repricing billion in of

AI-related markets regional well. demand Our diversification serving is across strong. remains Datacom product, technology and us

stabilization with further still expect eventually we backdrop, the Despite markets, our in While demand diversification us to our industrial pack. signs we rest return Instrumentation strategy quarter of has in and early, saw Electronics from helped also the growth. improving the of further along signs also which distinguish our market, the macroeconomic of in will

our million. debt. For $XXX the non-GAAP revenue high and of $XX guidance, of million we guidance. flow end cash the quarter, $X.XXX million in posted and of we EPS which which was billion, We of our capital of $XX above was was also Operating the high above equipment, invested end returned $X.XX,

to our Turning guidance.

to of 'XX, $X.XX approximately billion $X.XX the $X.XX. guidance. and $X.XX up to a end $X.XX of the Non-GAAP at for to of $X.XX guidance. year, guiding previous earnings $X.XX, $XX fourth approximately billion was low previous million the $X.X increase quarter EPS for are billion the is non-GAAP Revenue from we our fiscal share to of to which year, approximately our which per $X.XXX For of approximately $X.XX for of revenue billion

tireless are industry broad Before the most to of employees appreciative how the the beyond. turning is Opportunity transforming setting of leadership one in a of early on. things to to I whose and proud other Coherent life all say stage like would leaders to am and now, next for difficult recognize questions, and dedication I our senior

year and the I track when truly that confidence to record with old yet come. However, we best a I point believe to have XX-plus say faith to, that is

to over it Paul? Paul. turn I'll back that, With

a scheduled Please open and question decide that Chuck. that ask to questions. limit is you as to we respond. analysts for your XX the Chuck, who will We'll best questions full call direct company, approximately analyst we one have you, Thank now cover follow-up. yourself call one of who the to hour This each for is

please open to questions. up it Victor,

[Operator Instructions]

first Chatterjee of from the JPMorgan. question line Our come Samik will from

strong Congrats I here. your results And benefit a visibility start you which on can orders of has impressive, the did pretty lot just on the from ramp, customers. into If started of this with you have the Datacom. been when

that year's at in think like almost point, based communicating orders. of about orders had visibility I you're terms on how you a

what visibility our move relation or fiscal of total demand customers business times now are do lead we just And you for the growth in are have gig Datacom think giving FY when in into key 'XX As drivers curious I a XXX 'XX? to for the in 'XX? What coming fiscal follow-up. down, kind you

you, you Thank Lee, to? like would Samik.

the Xu. This question. for Lee is Thanks

change. you QX, project versus did also million. close little $XXX ramp-up improving. from over not than the to still growth FY 'XX to this overall outlook see, in can ago $XX past in a we bit strong quarter interaction And Our in has few AI-related And our million is and and been $XXX We $XXX reported $XX a we million XXXG in million, of quarters, quarter, see QX. QX million XXXG more in our as and customer demand our

prudent. But lead more would also of said growth in 'XX, XXXG So in broader, and our But we transceivers going why further we forecast in our to the are our XXXG say, -- we terms even is for order down. the people broad. XXXG revenue, we 'XX. field, from FY still And being is that broadening in are we the it's And be I are there key we our -- time coming when more that And customer it's basis. change. that's trend, see to customers, we see now our no FY much forecast

the around fiscal Any see you Datacom or bottlenecks in around just ramp for either ahead supply how the of quickly my managing you I can VCSELs lot the of need any supply? you asking that on 'XX into growth you or on transceivers, the going as investors follow-up, are the supply that about And are those sort there get fiscal resolve? in a to visibility constraints other particularly ask questions for We 'XX, if from key of side. components if plan

internal Thank it's you constraints, for that key material or question. We whether external. resolved all largely the

feel confident capabilities. we So our on

Our line next the of James. question comes from Simon from Leopold Raymond

the the to margin the Could gross I little The the you about mentioned a sort levers first wanted as it remarks, can had what a key utilizations then what drivers it are softer and little getting in targets? understand anticipating. help and improve more unpack follow-up. you expectations was is And Help prepared see Is of reduction key how over us sort for than if us up? bit you margin the gross a understand as and synergies? of Chuck, thing Or been simple time? cost I've being got you could bit the

Okay. Simon, ready question. for thanks is your to Rich go.

a The the QX. We in our the was management in obviously, QX Simon. little transitory onetime margin. team the in disappointed you, out on Thank performance -- detailed really items

the margin still we margin. a there's with really As XX% positive have incremental that, 'XX. of that mix well. half operating we second volume are quarter mentioned, achieve versus we and over targeting by And as we FY as and first a gross the -- many XX% forward drivers move And to this the

Without will that materials buying revenue come supply as or and increase key through a our Instrumentation the factor. through doubt, typically we're a segment Those need chain strengthen our sales the margins as is markets. are in our that that comes strength as that well well as to going power, also laser our Industrial in and networking --

synergy We longer just our midst started a we for implementation, on at a We of and are system, did new a the implementing ERP we're AI new and to just But pace a tools. term, in mentioned transformation. plans which for. are design even of global have past, we restructuring in beginning you the the

reaching culminate will a factors us those all So margin. higher in

vision opportunity follow-up, can the like get to of then sense your go. sort I'd as of some where And my of AI

above 'XX. about your and So evolving of give little it expected to gig exceed us this maybe on business some could thinking beyond a you're you bit next guidepost fiscal expectations fiscal XXX to prior for imagine the if quarter? But looks you're I it's if us the how give year. details early as

Simon, we're to back the lead thanks. take I step market. a and talk the market about Simon, think we'll expecting because

you a why Sanjai, just So summary? don't quick give

for thanks Simon, question. Chuck. Thanks, Okay. the

the So in we inflection presentation, market, chart a talks that's that our the and AI. about growth happened with investor just -- have we

growth a at XX% years, growing Over -- CAGR. the the over a it's that's we see X and XXXG. in It's strong And few beyond. still years, very next XXXG next

X.X. and XXXG So

for growth great. healthy So market. mean market very is the the strong. are It's today, -- we it that's where And is I projecting that's

Our will from next Ruben the of question come Stifel. line from Roy

I -- congrats, CAGR the overall previous your around expectations, Sanjai's solid shareholder on up follow been the team around Datacom which longer-term execution letter night, I the sort of question, on And in down And the guess, has guess, XX%, and think would little which wanted great, of kind CAGR. in I the Chuck, it's be -- on transceiver but expectations last from commentary to the is assumption. it's moving a I bit is results.

Datacom Or on And moving parts any parts growth you are is CAGR? of longer-term how how that? what you're about detail would longer-term additional about just of would the telco in helpful. are so guys question -- thinking of I sort thinking be kind it there the are considering? that And guess you're Is the that be, and

Thank the Sanjai? Thanks you, for Ruben. question,

have the little the we bit Thanks we last And anticipated. question. originally Ruben. the little One, sub-XXXG a 'XX for numbers down bit. report. much happened. from Thanks, CY a down then term, did than long we take what Yes, was over Two Yes. our bigger things had it taken

fluid. we and So XXXG same earlier customers. we're made clip, customers -- for over still We data growing keep comment the XX% We years kind projecting that anticipated. then the previously market from our and and still the and young points getting of at I keep is beyond. about X is That

So we view of the are constantly the market. revising Hopefully, answered question. our that

as question Yes, it And follow-up, for did. then gross margin I a had well. a

as Can Given I move you detail a part some that on the corrective to are a And margins actions of guess. some more fiscal kind us or the applicable transceivers the ramp? transceiver the give way around gross of into the of meaningful 'XX X.XT do Datacom corrective actions, out around, little you the think you those of look yields?

Ruben, yes, sure. Lee?

the is Datacom for one our key This for question. operations, transceivers. of the target Ruben, thanks our

of FY First issue in we a been has see our yield XXXG are slightly problem of QX. And and resolved, all, is we'll and significant margin Datacom and a data we improvement, did in impacting XXXG forward going just transparent transceiver rate, in we that ramp-up because higher margins. more terms that move improve we and Datacom unexpected -- think on had our to further -- we 'XX going to more we product will

because forward, quite kind high-end of leader margin. of of our our a confident we integration the going on because are of gross So part the our margin also and NIM of verticals market, being

does So that question? your answer

you. Thank Yes.

of And our O'Malley Thomas next Barclays. line question comes from from the

ask to timing the wanted on X.XT. I of

saying are QX. guys You fiscal

XXXG calendar sampling lane the fiscal that There's -- maybe Your talking just When customers really competitor end of do September or year. customers in of expect are volume across per calendar major quarter, X doing Can QX? last the about is multiple night is you was X.XT. concentrated X of at the kind only that or year, next beginning you X? which production? is talk the among about And who

Lee, Thanks, Okay. Tom. please.

Thanks have volume transceivers line-based per shipments published. QX calendar starting we to year. fiscal in fiscal being clear our or and ready of we do what to the X.XT Yes. start we sample are of at XXXG or expect 'XX Yes, beginning for our QX so

and so this opportunity. about expected, And everything's excited going we're far, as new

question And Helpful. second around the carbide. then was silicon

because the bit quarter. business. the an more kind silicon us color during You customer to that's in just Could issue maybe guys little solve a it made carbide in went quarter you've described had you some expecting the you're give for couple? Electronics has a next in just revenue of where a just the Historically, a little easier about details that revenue And from Where the Any small? perspective? on you strong in that out-quarter? that so customer the gotten carbide has where gone over talked additional silicon growth and then

our for Yes. I data carbide. have in for Tom, And Electronics you're understand the as like to it, silicon you'd market to versus view clear carbide. trying plumb a sensing silicon

that you that I Sohail color need, give will you think.

Tom, some issues in impacted power carbide had power that failure failure -- -- this about our ability about -- limited -- we our to the is factory, Sohail The the operational we mentioned to QX, deliver the and silicon Khan. impacted which power able will QX, XX a very grow plan. XX% And to All those everything actions back We we looking within that have I get place. been more expect am put were we at to from days. than strong QX. and in good, QX

Stanley. come And the from our from line next Morgan of question will Marshall Meta

margin resolved but to in the the the and most And -- in overhang on for just with what for of in Maybe the both gross kind you've yield today, of QX, that on growth are Datacom. noted fiscal for Congrats couple industry questions quarter. slower answers resolved, carbide to seemingly kind you've -- issues on forecasting anything heart kind the XXX-gig just But piece, in reason XXX-gig A industry and had the kind what pickup the the kind rate. declined, of seeing you first that change But growth what that terms of at understanding any of or commentary of the quarter? silicon led sub Q-on-Q question, me. been on that your and a demand? was given second is last you just of than expectations given the of sub you then

Just repeat of part the the last question.

Yes.

QX, what quarter, jump And seemingly of QX kind to QX but fiscal between down to understand kind between implied overhang XXX QX of difference margins? about the of of fiscal QX kind XX about basis point gross and up fiscal have in you So is the fiscal a points. and and last basis smaller fiscal XXX, that kind would increase come implied

if I you think, please. Rich, just give picture, a big would,

Yes.

So our XXXG QX, product mentioned, the in mentioned, our middle done. in we We're and that resolution have as forward. pretty much margin of we as are plans going still ramping the yield we

is mentioned quarter-over-quarter XXXG margin just carbide we is as piece in silicon our the other of the and this past, that majority average. from of as is the at the product XXXG increase gross the So coming well

part So as quarter-over-quarter. a of mix it's issue well really

Yes.

me add, Let Meta, clear. be to

resolving, have a cut. to where back we up or problems flash a in a be. there's to the ramp terms been While tail not resolved It's of need just

about within confident this corrective we we're that will lines the the So actions come like, and but -- target definitely still establish eagles product to will need on quarter. different come

the bit that tailwind little a clear? quarter. of to Is a there's So

No, Yes. clear. gig then sub-XXX perfectly that's just demand? any And on commentary

great topic. That's a

can. if Let's we go first, to market

Okay. Thanks, is Meta. This Sanjai.

projection. is as growing flat. XX% above, X the is a grow latest our to earlier, XXXG sub-XXXG That's at the CAGR. essentially over -- at So needed and said The I a years,

-- sub-XXX So the that's I is market. view the of mean, our

Just one second.

please important further is I step one It with think topic. Lee. can do Can clarify we you very this? a

From view, our from but Sanjai see for sub-XXXG quarters the do next was just of some is quarters point flat now. saying, forecast we pickup the own kind of few indeed, we as roughly internal see, X

So that healthy. -- overall I is think the

opportunistic be out trying And real can the in good turn make share told it expand capacity wallet of XXXG the we'll comes, largest to definitely and a players. with of when it if business the into about it, our We'll we We're story past. about it. the there. be We've

the from Karl line from PNB Paribas. comes question next The of Ackerman

But as the year of to pockets and well to even of some be XXXX. a growth that, portion seems was recovery I out what the year June telecom of to your beginning there this this as telecom peers softness. moment. perhaps business end within of you wanted Clearly, from pushed the have the in the for and roughly of focus on ecosystem and

week, I'm recovery bit was curious commentaries metro telecom. the have seen haul in peers a similar your For if example, a of about one soft. long you had while spoken cable within last

you that you if in market? just telecom? toward on that double That working, helpful. within as could What's opportunities recovery what's the see working So click very you progress not be would

please. Beck, Karl. Okay,

Sure. for question. Thank you the

So of market. telecom networks. by strength we with major mixed strength going the we do in have build-outs carriers new is a sort and there, see of areas the most see in of area weakness a market. on we And C+L One China seen of the

continue in us through we We WSS our that differentiated and year. our to expect products pump give some that laser the have that strength in and market,

other the the is in pluggable really a on differentiated XXX-gig products of Coherent we space. thing ZR tremendous we where us 'XX. has to think demand think really FY have I that's number sort customer digital FY optical base, coming market coming for to opportunity QSFPXX our see we help growth 'XX, including that us And market, and will up from of lift that our our where

So our happen in what's decoupled to and with maybe market view growth of a competitors what seeing. bit of our the from going are some little our

Our from the from next Dorsheimer Blair. question of comes William line Jed

a I first, carbide, and provide? then know power maybe update your had the progress And you development on one that outage, metrics follow-up. if So on just a an but I silicon XXX-millimeter as follow-up. give could you I additional guess on wondering and can clarity. have any the you activities

Jed. Okay. Thank you,

please. Sohail,

XXX-millimeter going Thanks for quite the question. is well.

very both feedback to from from And quantities their quality preproduction multiple up. lines supplying ability are the bring as to We their good customers as well the customers. is

their on is the up. fabs know, dependent ramp to As when be you going are

to and standpoint, see much next will ramp, we year. more our from coming capacity adding we in ready. And a contribution are are more fiscal So we

the playing And and then side business, into a guys in a you that That's are follow-up, lot demand the fantastic Datacom that. of it's of well great. there's clearly, as

to And about bit components respect that in how seem a growth? structural out selling limiting is a think be some with transformers specifically, challenges to little something thinking I'm and As those your center like lead power things bit, of how just developing out curious I'm thinking the a you're market curious, that's around of times control, we that's data company AI? into about challenges

like would Giovanni, to that? you you, take Jed. Thank

transformers, well-known Yes, for worried We challenge. of know mean even we it, that's about the read transformers. about a I very the course, about it. [indiscernible]

for of ultimately GPUs. demand. that is is beyond, GPU. GPU are the of driving but But the That's The only time It's bandwidth -- quite not that driving the is output. strong some focusing demand X.XT and our bandwidth number we the GPU you've for what's as in what's will GPUs, and need We in by by the required require actually seen continue bandwidth input cost us number their very of increase important for optical keep terms on and more Recently, is growing. optical for required more growing.

the will what's which us unchanged. really course, solve. we really of to our growth, fundamental for the challenges there there that's the And drivers infrastructure -- dependent standpoint, I them. the don't to may fundamental So are be But in could going will -- our on drivers think from -- are we those But change. to but obviously, for remain it's growth be not up infrastructure

energy particularly that is hope focused Jed. required the on system. by was Jed helpful, total the I

It is.

from the Miller question next our come will The from Company. Benchmark line of And Mark

your progress. opportunities you some market? And can along wondering just was positioned us for there where are that VCSELs coming new on you in on Congratulations and are any if color give also, ROADMs? I

We'll take thanks parts. in Mark, X your it for Okay. question.

Beck? VCSEL question. the ROADM take First Beck Giovanni question. will the address will

for Thanks, of years is are in Mark. the really new deployments, most one deployed. many drive CPON and because actually of been and the question on I'm being the ask cell really important now drawing trends really excited towards have coming finally board which you network kind ROADMs that

really C+L And else has in one ROADM. that true one thing that no a we is the industry have

C-band the there's the in both to X L-band. is fiber. one in long-haul the expanding that So in And communication, the use we by one C+L, we bands DFB-M communications the and doubled is space optical -- is that capacity

upside bands forward. being simultaneously networks driving a and today and a company And for opportunity of has go that part, C a deployed covers both as we include the we're new only single the of in that's lot L. us both all ROADM actually solution So that

see really to that's are build-out. some China, The emerging in we hyperscalers important the into capacity but know we of the very North America first and higher place

about excited future in are the ROADMs. We what's in going happen to

network evolving, the ROADMs [ dependent of is in that really is use but other applications evolving ] is to on network. and nature the that in terminals still one and Now strongly the of boxes

driver that's us. positive long-term a think we for So

systems, the Giovanni? VCSELs. Datacom laser, the telecom For

So on progress VCSEL well for XXXG at as industry on reported we've the be we go XXXG. VCSELs think ruled a customers the changer the many C, the that out of which game kind VCSELs, as development the even of possibility the -- in to as would we making been generally even above beyond competitors the

also exciting that's need progress lease good suppliers are to cite. have only VCSELs we we then So we for the the also the it, the to will the on growth. didn't industry that for working probably industry had It's a because the XXXG competitor the something support And they're future. that competitor, news positive which very main is on we is on space, also our reporting

keep map we'll road going. so And the

increase also And wanted the mention if progress some I VCSEL is which of power cases. that you some ask the display coming in for user about cases required applications, to behind in through -- display general the -- VCSELs, multifunction

ramp, and the today product is quarters. something several over been line, have that we working with the incredible part already VCSEL will XXXG that's the growth provide growth experiencing of past that So on for an also which

So quarters, in the next few too.

Loop Baruah from Ananda question line next of Our Capital. from the comes

little transceivers. bigger on a picture Just

X.X, And to of from wondering going understanding to to new that progress that manifest to interested them and guys hurdles a what market the challenges I successful quick guys dynamics -- any context will then opportunity have net successful necessary follow-up. like? technical And could gain that call guess could occur that XXX you and there? be that take a in you any look As -- there share X.X, be as and sort I'm dynamic going and it are have whole I increasingly in business-related to if that progresses

Lee?

question. Lee Thanks is for the Xu. This

asking is very question. for that. this Thanks key a So

advantages that shipment able higher only our is are of higher the and XXXG indeed is the getting of and high competition landscape Also, use For and that on the X.XT. this is lasers the a that getting far got small and are it there data right, components. expect found to to also we rates, things more fewer development, portion we challenge -- higher to similar us, kind number that several so support technical a but complex volume, X.XT becomes for current companies would and -- people, we there of be internal

do we can share we that gain over few So market years. think next the

mentioned our far no. if able has be on is going be hurdles time. able so that We overcome, we to You also the key won't any to technical confident we'll track, development -- are there been that we release on product and

laser the and to us. may one disruptive transceiver to going right imagination have both the to This use new of circuits, will across that innovation worth is the example, begin power dollars market kind markets is evolution of and innovate of company of in a The is which billions deliver to just the the of circuit not of the into and opportunity play strengths customer. Coherent, for capabilities we optical and invest, to the our a continue to of optical the catalyze just laser-based switch another but company example the ability to

So thank you question, for your Ananda.

will B. Riley. question next Dave Kang come line the Our of from from

any Regarding you get main just if new how right do the update, competitors? OCS, could who now wondering your I wins? are And in it was customer I use

that? to Dave. want take Julie, you, do Thank you

for Dave, Yes, the Sure. question. thanks

demo a that crystal liquid I which, at you just optical of was technology. is saying Chuck sure of I'm our release think, OFC, and the as yes, where circuits great power innovation we're example So of saw company. using our

a that history of. have we where We into undersea example market. great a it's we So have long inside company a ship the technology the

the for reliable. we technology opportunity switch. in need it's market a different could optical And very, same circuit we So very a use that saw where market

than great MEMS. I So is our for delivered crystal It a our of incremental for operates us. new really at who team demo think was proud a voltage a solution. great We liquid It lower revenue is OFC.

very that so power, also leads which very, data reliability, And center. but in is lower to the important higher

with we just called customers see few think have I product engaged next samples 'XX. we really all our many a shipping fiscal within we by that we shareholder year and We're yes, letter feel in And there. revenue could our see that position out And like the strong multiple we months. on

about So excited I'm it.

is follow-up XXX on my gig. And

sequentially mentioned strong You from XQ. fiscal were down that orders very

to during quarter? wondering Just what expect this

you that? Magnus, to want do take

Sure. question, Thanks that. the for I can take Dave.

come in shareholder So have down. letters, times lead we the noted as

And of so time, quarters ordered couple customer out. quarters a many ordering to be lead patterns have ago, more whereas within they normalized

So a I normal to pattern. think we're back order more

question of Needham line from Company. from & comes next Jim Our Ricchiuti the

What XX% increase assuming Can laser display? performed, display the bookings? how it a business as driver. what ELA bookings, you was excluding drove the the say big I'm in

Magnus it. take will Yes.

Yes.

So current in quarter, of math, order in and the yes, similar display expect do orders right. I you're in uptick. quarter saw in think but the we The capacity China actually to orders that the have performance display we the drove share orders QX. a uptick the saw market in increase and I'll in lion's the good from We

display. So most of that uptick was

right behind manufacturing it. Precision

the in I a and one, QX. that number Yes. an vertical, And see will in think SEMI further mostly increase, precision also flat. then Display increase manufacturing saw

precision actually of manufacturing. case this of ties guys part are question seeing a Is the turn comparisons? in business? that? on with you into the driving next the It What's Or it easy

China, depth we're the I engagements. an of we what applications, where the in welding we're of space. terms business seen to what bit in seen we're yet is of a engagements, in EV doing little think uptick customer broad rest for target in have we in market broader broader in about -- that increasing seeing haven't and the turn space the customer towards I we've but the market excited China

pretty we it's know, way. you that As a really haven't macro-dependent. change in seen And broad

So there in some manufacturing. of precision a than are upside broad pockets rather comeback

Our Markets. line the next question Savageaux from Tim will from come Capital Northland of

expect the in book-to-bill I I under the you below in order quarters normalized, come It see in row QX we driven to a of orders what expect to come by And into back company guess discussion. surge direction normalize. big that here? and lead more you've was but backlog as a of networking quarter. again down, But like and for and for now, X times the want sounds commentary don't think, heading the backlog I see did the QX. should I last orders think about to X overall fiscal you orders year And seen the was

Richard, just general words. in

Okay.

in did So much backlog terms QX. we a Really, we pretty in but expecting of increase QX total in a of see book-to-bill majority flat book-to-bill. that We're year-over-year, in long we the general, expect term X that backlog. still on below year book-to-bill our we the remained the really the will markets strength believe quarter-over-quarter, in X were --

success a it, factor forward. focused critical We're is Tim, going on

totally say from 'XX focused So have more we're to now, about as in on it's it we'll priority team. XX the And a top days a but in company.

quick it. appreciate follow-up. And just a I

And but if And in along I of maybe what was kind the driving in overall quarter? this about Datacom in there address Datacom, any the point? you of in you lines, those customers XXX Datacom had believe, at generally. customers gig, major a wonder comment segment sort think broadening are I XX% concentration the can whether base specifically I customer out.

the year, as on from market. once broadening Tim. But don't additional to customers flavor industry a tremendous of know, which just a of saw end have of XX% just the can you in any the evidence report we base OFC of amount give fanning the with the at year, a for general fiscal out at We that. you comments interest layers the We Lee

as -- we shipment who they know are. of the We all of reported we X right. major that XXXG, customers the That's have that we of beginning

amount, we over our that's Now are we customers XXXG ordered significant X short from And range with various dollars XXXG long wins from key us. also quarter, multimillion product past quarters have past range design to have in the of multiple the in -- customers. X

forward 'XX, have a So we think going going much FY customer into base. to XXXG the broader is

of line Susquehanna. Christopher the from from come Rolland will question next our And

more? results. this demand the that of just coming the here, people gig, talk Congrats or on lead XXXG market, the if like XXX beginning it about you X.X the this was answered. and and have understand of like kind just And down, people it -- did more an well, X like kind rush the to of could like is been it ton a issue market trying may bit times like bought there Is unpauses, of be But I'm pause you as as of that a ahead Is issue? a a looks particularly for this this for this quarters? here is initial is going AI of. this And mentioned And quarters. little little on pause supply digestion quarters? a of exacerbating itself guys X will more inventory got there bit couple when pause, products, a just a that

demand put inventory So to those trying all issue, together, cetera. pieces et supply digestion, issues, just

you said Chris. Okay, XXXG? clarify? something Can about You

say XXX. I meant XXX, XXX? I I if said Did

address top that Okay. But the our and management the for right. to up as said All priority is for I to will bookings Well, building that. Tim, a sure, we try backlog team.

the indicated, grow in building and our transceivers. going expand XXXG as to up quarter to we're output this we However, to continue fourth are in we capability again

Lee, little a don't more give you So color? why

Thanks your question, Chris. for

neither of First the do lead year. place at quarters the for because capacity That's all, time material people that close a few the a to ready. are orders nor time, ago, fully XXXG,

are the secure material. to place longer-term people So and secure orders capacity, the willing

still is in we're -- we're XXXG Now as quarters. up companies there, shipment, ramping next although a expanding capacity of of the the couple largely couple the so

also time then And lead material came down. the

for -- you growth does us Officer and very forecast that Chief that So industry. orders see said, customers within shorter normal question the our in one Revenue asked. as that's And our that's I lead not think And related time. future why XXXG the we Magnus, of products. customers a change That's that's the give our placing

of The squeezing for the XXXG But addition few XXXG in people using some we But other for more There's below AI on see switch are expansion. we kind is to to CapEx their overall, for start some that quarters on money AI. back that in XXXG. as to be effect normal is there networking you is a to that is see indeed, normal that, networking out out. What pause putting up. of that for said seem squeezed people there go a is might products do

that's view overall, our current the So of that's marketplace. --

a great was clarification. That

to going particularly this X.XT laser the and there's address out technologies, company to technology, the has different are think going cycle, industry SiFo I AI EMLs its in probably opportunity. and As X.X be weaknesses. to this every opportunity, that kind VCSELs, And of strengths X

a or clear which Like technologies? I you're What X What your just EMLs are around are your strengths your are wanted capabilities? like when X.X more where you get of intercept if picture. can SiFo, to Maybe for SiFo, move for technologies, And kind talk with times? about SiFo technologies example, little not a I what these addressing ramp these X.X hard initially are kind to cost-effective? over you can of X guys? you think

do Okay. you it? want Julie, to take

in-house. can DFB-MZ, for we domain we Yes. and question. the accurately in-house introduced our actually, and for have, also EMLs. the We We've use VCSELs indium can design we use Thanks you phosphide you we use photonics. said, Sure. know, and in Yes, phosphide, can as we manufacture indium And VCSELs. as silicon the

an the fab. For silicon common as have is so internal photonics, fabless, silicon design outsourced of team we industry we where use in and

the because technologies, we we to for the we have the access based best so the product is the on the one we the that makes And And do what choose technology choose most can performance. cost and sense. all

transitioning laser to you but go XXXG, similar. from XXXG is similar. Once basic actually to As XXXG, fundamental very very it's as it's still technology the far hard,

we set, higher make lasers the data up. The the So rate using rates. similar test this go very data to has equipment can at equipment

be XXXG. general, as challenge we that handle we to something that's So need ramp have at we in same able the should to do but

the then as on in applications, XXXX. capabilities. may transitioning feel be been things for in some products always We've choice. But strong silicon in cheaper. we silicon the to photonics And very silicon some we best photonics it as And -- isn't our cases, our working see photonics,

photonics have in shipping in product. We silicon production

very photonics the for team products publicly we in per XXXG right and photonics Our Datacom. -- lane silicon and actual one important design [indiscernible] silicon with demonstrated now have

is thing laser. high-power important very photonics-based one to forget that an never actually indium And phosphide transceiver silicon requires

even photonics, silicon photonics So think in should indium silicon phosphide. you and

can So in transceivers, phosphide silicon we differentiate also indium with ourselves lasers. photonics-based

a -- lane. that for technologies address really we at to So feel all the we're good at X.XT at position XXXG per

clarification. a maybe just And

And X shift? then, first the do second mix ramp, Let's of say, let's in what expect say, you might that within the year, those to the be? technologies how

time we running for have think I We're only out time. Chris, Chris? of X.

and person call, the left. be we've on we X minutes another to To queue, have the respectful still everybody in got

take we'll So that offline.

Thank you, Chris.

for our Shannon question will from come Richard from today And last Craig-Hallum.

EBIT half to a the at talk I your of where is really look to done the about kind 'XX. above structure in little which XX% here that, margin wanted fiscal you growth first I get bit the past as want time XX% and margin. to you've

And revenue up if X whether that? enable of to that great. networking in that with margin kind margin would to Or of high? expect be what maybe kind you your specifically, structure back can EBIT by of get can also Looking I'm do at that to the required you not get segments. levels as it you able range being suggest be structure, to And curious the to XX-plus kind that percent

it, Richard. Take

you're Yes, I think XXX% right.

revenue have of over $X.X We was achieved billion. range that XX% a over the margin and

cross even as mix. need and $X.X improve. billion the our as So on line, you we comes down industrial believe margin, really that the markets the top we mark still Instrumentation networking increase to to this I we still we can mentioned to we though need, earlier, And

Richard, do have you follow-up? a

you. for No, Thank that's all me, Chuck.

for it the back further queue. turn any Paul remarks. no in there's questions closing over I'll And to

you, for thank on us to this call want Thank everybody the I Victor. joining morning.

that third Just hosting our be series will a market. up, XX, will webinars Instrumentation on in our be our on March heads we next investor market of week

for As insight into goal you to the help of the various other give aspects the our is business. X,

day. Once If like accessible to on be us. to look talking website. join, to joining you you'd thank again, We you will it all forward our throughout for the

in the today's This Thank participation you program. does for conference. conclude your

a disconnect. now day. have may Everyone, great You