Coherent (COHR) 15 Aug 242024 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Coherent Corp. FY '24 Fourth Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Paul Silverstein, Senior Vice President, Investor Relations and Corporate Communications.

everyone. afternoon, Good are Coherent's today Coherent's and CEO; With CFO. Jim Martucci, Interim Rich me Anderson,

During will XXXX call, fiscal the outlook today's we the XXXX. fourth review and for quarter of business of quarter fiscal first and business provide the of a financial

caution underlying the financial investors and or be company's forum of with at non-GAAP call, as this conference differ results material we first during to announced includes publicly call time to our regarding remind we Our with of statements you our in everyone actual factors other that trends. permit release results events intends or or our SEC, XX-Qs, call XX-Ks, the projections refer that can you today, company's that actual make those These that based that By is XXXX. materially. future differ contained on of Relations done intend this any to call. We'll release information, coherent.com. I documents updates We public this materially projections statements. This financial refer including forward-looking at the further press wish the contain risk constitutes our both fiscal found that information If of such important such disclosing X-Ks. guidance and press additional in during after for website statements forward-looking earnings the quarter Investor we identify management may or provide a to that and official the and and measures company. would may or files the currently the documents to using future a be communicate section and from cause company guidance, any company changes available certain like to to performance could will call. to performance GAAP such conference analysis the predictions We the information non-GAAP

For GAAP Investor periods, financial can we measures to website on historical these section the at of Relations our that non-GAAP measures found financial of provided reconciliations be coherent.com.

call me Now the Anderson, turn our let to over CEO. Jim

thank and everyone, our at call employees as deeply been to talent years a about excited reasons and I'm first also to potential this of to impressions business company. the my initial work with incredibly him Chuck's wish joined. X lasting on his the I on company, Thank months Coherent joined for today. today XX and for and you, over joining and Coherent, as to has all by from of also I start my working since company. Since the full to joining of and the employees teammates. what Paul, over determination them the Mattera, for of his Coherent first my little me about the our questions employees the Directors, with of I asked Coherent his service more long-term creation the to CEO. had the you, leadership shareholders I the value tireless and want the predecessor, take company a strategic Coherent, this number than for potential opportunity. the dedication look exceptional the opportunity my been the Chuck locations Board as a impressed the new I want of drew of and like forward and regarding and of to day received direction. well It's to unlock joining world. thanking of of side-by-side our for I've I've shareholder once on all company. including of teammates for our breadth across thank X these tremendous service behalf our I've many And years again him last on us weeks, opportunity thank warm hard with depth I'm In best. I'd my and to welcome met impact

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Moving to strategy.

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return improve However, we our on capital also need to expenditures.

our our discipline, and accelerate better of focus greatest our cash pace significantly to areas With and we our on We profitability. and investments portfolio growth debt our will with of increase I operational CapEx align deleveraging. believe reduction free overall opportunity have and flow strategy

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Analyst plans upcoming As details at I to specific more Investor our targets and sharing business look forward I and earlier, metrics mentioned and an about Meeting.

the top fourth our is switch in results. priorities transceivers primarily result by line EPS sequentially increased by from Non-GAAP place, for We're making internal by my QX datacom the our sequentially that brief on year-over-year, of our considering transitory Analyst now and data-centric approximately a set X%, specific strong both by CFO Non-GAAP quarter Investor a date comments of and candidates QX. both we'll fill gears and AI margin expansion. in role. about external year-over-year growth gross and One grew the basis search. issues and CFO our near-term expanded impacted Revenue margin XX% new and XX% for some good Once due driven Meeting. I'll fiscal and points is the provide by sequentially almost deployments. progress recovery primarily to as in XXX growth to

QX experienced what Let revenue XX% XX% we're end year-over-year. sequentially in by business end QX revenue summarize QX and growth me XX% seeing communications We grew market the market, by vertical. datacom, In our strong increased in by in where primarily due AI revenue year-over-year for increasing sequential growth and and backlog our center also and strong data XX% seeing saw are in current datacom and XXXG the We future sequentially to orders quarters. demand. in transceiver

to also of we XXXX. calendar initial in delivered our samples datacom X.XT which begin We ramping expect transceivers,

well by datacom a sequential optical XXXX. customer weakness. telecom decline we enter new is expect switch XX% platform partially Growth is to was in offset progressing and engagement, revenue customer datacom end generating and Our trials calendar year-over-year due in market in to X% and significant

year-over-year. expect course expect end Although sequentially long-term Overall, company. In also the and of for revenue remain be ZR+ factor growth to ramp transceivers market we X% we term, strong over a X% industrial the XXXG market the end year. increased XXXG ZR new fiscal telecom and expect market, the near the Coherent we our to weak to communications the our in

I'm Our essentially display demand of being to OLED revenue relatively new for laptop expect driven industrial for gen adoption computers, capital and doubling our the near for saw in remaining to growth by each revenue, vertical end as opportunity X X production. In of and well for area annealing the verticals, in instrumentation, remain laser our markets of excited overall we growth, and in, dealing screen about be saw growing unlock we us. In the both even revenue [indiscernible] we XX% which our expanded opportunities for adoption summary, size sequential growth breadth smartphones significant While market stable electronics total in long-term growth of less product and lasers operational some value our latter than and XXXX our innovation, our We're over QX markets, of we softness over are the new opportunities we and for our more about address, months for for our on based a we saw related the shareholder tablet inception the equipment platform and depth account OLED a term, such into persists in over markets, long-term to services our potential the industrial end while telecom overall and with term, our the our a segment, to demand expect fabs. In the OLED for Interim datacom turn in CFO, expecting now believe execution. company. we the systems given near-term driven and strong year the Rich introductions improve demand Martucci. market be end opportunities industrial in cutting display quarters. in line solid positioned AI business coming growth to the growth call And by fiscal multiple fiber long I'll this soft other the

X.X% which improvement we the delivered margins, XX% segment year-over-year. year-over-year. the prior an a perspective, versus our quarter Fourth you, quarter financial sequentially increased Jim. a representing X% increased sequentially $X,XXX,XXX,XXX, sequential sequential and by Thank very XX% XX% fiscal and revenue revenue sequentially per X.X% and segment growth. was and increased quarter pleased sequential and healthy I'm gross made revenue in X% year-over-year, progress increase strong with revenue but and drove Materials operating with share Overall, by by segment the We sequentially XXXX. revenue our earnings decreased continued laser year. From X% networking in of fourth of growth

fourth Our year. basis by points and gross improved of by sequentially XXX margin prior basis GAAP the XXX versus XX.X% points quarter

in resolution margin transitory our cited and margin. quarter, points Our prior of quarter issues that the issue points our carbide we resolution XXX due AI including and revenue depressed by in non-GAAP basis XX.X% margin datacom and increased transceiver of improved the revenue our of improvements fourth the XXX were the preceding gross the power primarily of volume yield failure and recovery basis to silicon gross that year. Sequential both versus sequentially

benefit in and to million year million compared $XXX year prior quarter Our increase includes $XXX quarter. prior operating the and The sequential ago and $XXX in expenses and the quarter $XXX loan quarter expenses term adjustments in the million ago to fourth million non-GAAP operating $XXX operating fees. compared non-GAAP the in expenses Fourth quarter. GAAP quarter refinancing were bonus million million in year-end $XXX were

be that in managing we ensuring continue SG&A ahead, plan product disciplined to in Looking invest to portfolio. our we expenses, our now

$XXX from quarter restructuring fourth $XX operating $XX the preceding quarter expenses million ago expenses in in Our included to the GAAP year million were million quarter. and compared

in communicated both costs site line previously of expectation and savings. in consolidation synergy restructuring Our terms plans are and progressing with

compared X.X% compared loss prior fourth improvements basis expense in margin by quarter, operating the increased Our both quarter margin ago by driven GAAP in XXX and of basis by leverage. quarter points the operating an and points to gross operating X.X% XX.X% X,XXX to year in

points quarter operating quarter, gross basis fourth by compared by operating points both the XXX improvements XX% non-GAAP compared expense and year Our XX.X% in basis margin in to leverage. ago increased to XXX margin by prior and the XX.X% quarter in driven

in paid in the was 'XX to was the quarter. ago interest tax million the FY quarter quarter. Fourth negative capital The and share in generated $XX to million capital down the year cash XX.X% subsidiary increased fourth Restricted prior year cash full carbide from in the $X.XX the at year during $XX in $XXX to set of $X.XX tax year quarter. in expenditures million the $XXX $XXX preceding million compared XX% $X.XX Unrestricted 'XX debt GAAP ago aside quarter. In $XX of million ago silicon $XX in FY the loss the to compared for Total million million the in $XXX the summary, quarter. Our total $XXX billion. share of million quarter prior capital the $X.XX a in to in prudent ago was preceding quarter company negative will $XX in decreased prior and for were Fourth fourth operations net year to rate million previous million per GAAP million investing of end our all $X.XX laser forward, in improving quarter and year We paying quarter. We operating the $XXX growth, versus carbide earnings expense compared XXXX. $XXX the million million minority executing quarter $XX quarter from the quarter loss previous and in quarter the X.X% continue million. Fourth cash on and $XXX ago $XX to million quarter. Free non-GAAP compared silicon rate non-GAAP in $XXX in million 'XX the flow, investment, quarter preceding loss was full be by The organic is $X.XX leverage, $XXX was million down FY LLC compared to moving to focused in diluted LLC diluted year. per on cash XX.X% and was debt. preceding a in $X.XX debt the quarter year and compared year. fiscal from interest funded quarter in investment, earnings of the the

on expected for our operating $X.XX Now to and $XXX turn margin fiscal I billion and be will between guidance Total XX%. XXXX. XX% to expected is and million to expected be million $X.XX billion. be are is first Revenue to questions. between Non-GAAP $XXX expenses basis. be a quarter between the of rate gross is comments. Operator, the basis. concludes non-GAAP a non-GAAP on the between for call We XX% for and quarter expected open $X.XX basis. between $X.XX Tax that to now non-GAAP is can expected formal a and on to our EPS XX% be

Chatterjee Our JPMorgan. from Samik comes question first [Operator Instructions] with

said ways your you're really Jim, strategic want to the in the assessment terms in do with question relation first I forward days early working guess you. I you doing. to, for it's of to look I that

the how balance I implication And the from of of at company about portfolio you'll sort the have Maybe reads priority in a operating more what or early you You much sort that actions? deciding efficiently the core lens of around what's terms of Just maybe have me. there? the noncore. are delevering noncore? follow-up using us looking And and help sheet the core the and of is relative think about to on maybe from you're talked if allow criteria these quick

pleased we're for the to it. with strategy about portfolio to And this Yes. areas that Thank make assessment, appreciate months. about doing as the you, more question. company Samik. ultimate the last forward. goal on really that. the work and that I sure term. portfolio of happy that the little to CapEx, is is growth a OpEx really the been its going Yes, the team's over assets, the couple greatest for work I'm really think doing our the build on profitability talk a assessment Thanks concentrating bit of all foundation that's or long on really whether over of And it of the

obviously, growth And are we're those bets And are X and you of goal. And are those the We're that really for forward? we moving product ROI so are a are levels ultimate have end. the just we're with those putting financial we is a businesses I'm built, really are little going we our say profit engines, are the those the is than making? we'll think taking that. The be one that breaking each bets work foundation of long-term of to criteria. set think grading we're and may overall businesses engines? growing X through that X down way the Long-term for share And underperforming we're a engines company line more longer big the individual approaching then are on month, at healthy above-market to And either into a or then underperforming company kind the in typical growth of or do we're but one on then underperforming? the down profit. significantly or each When really divisions. but what And the our and portfolio that concluding And a believe that's looking then be -- course businesses set little one for categories a big of longer-term with doing and greatest What as businesses the of portfolio. company that really today investment our nonstrategic categories. shutting those its said, of is drive the it strategic of happy are and company concentrate are don't slower growth, what back or investing businesses engines, actions growth businesses are those targets. at What underperforming that each of financial stepping bit about what the that this nonstrategic areas assets, may nonstrategic the our generating us. Profit then businesses of or payoff and fit investment divesting to in really have businesses. us that is that entire I

certainly coming more we're So quarters. hear from over the share Analyst at Investor more that about and Day to future. happy planning us really the the about to expect in that that

gross aside help setting on delivering better well. the that accelerate certainly debt instance, but want which the portfolio execution the better us sheet divest flow, about proceeds better, is think asked improvements ours assessment, of a obviously, sheet. profit balance I to X also about margins. pay debt. But decide that that any some To used margin, at And we really the driving of you certainly those focused by big for divestitures balance could focus also really operational And key talked down well. we extent a the of to that as I things. businesses, be look opportunity do delevering as be the I driven just cash would drive, could the as focus paydown, yields That's delevering to

quick talked I how you'll for above margins is XX% got about you me being follow-up, know business. sustainably Got it, the gross allow it. you're thinking And a if about

companies between of me biggest sort what effective today? where that's is that dusted, be sort range? sort get of is where are and and back Is businesses? at Maybe identifying just Once margins look of to and do gross you done of help margins where the the gross the If delivering in gap the what's you're pricing your you the of sort or biggest think underperforming sort you of gap the should these the that sort aspiration sort company of today. that sustainable between today,

there's a that things It's on that below really our in improve of, Samik. well think that say bit there's do question, that I pricing little both a discipline Yes. forward. mentioned that you moving great I remarks. are combination of to margins as this some I On would is set significantly businesses we And also, And opportunities significantly pricing prepared our can I do as have if cost aside, believe it underperforming gross pricing, structure. are it's -- a corporate my pricing, average. But that

some getting And the are about advanced, me really did we some I analytics, that competitive applied ideas in those pricing that sure but as of companies, pricing I'm is think value we're making prior bringing price that to market. we're for also on targeted that fair bringing it, of with innovation where at we're strategies that what some

cost number think initiative pricing discipline. better mentioned where So driving those remarks. there's need focused be of few I prepared and Look, we that different I that I areas a company in the better structure, there's to off across improvement. But gross the yield on a margin we've kicked expect also then a around of cost. think I pricing to

buy the I providing gross it our we mentioned sort to yields, improvement. that ecosystem customers But bigger And applying terms drive improvement where have sense or that's assets that product X sort we're thinking I'm making in area driving to we're we're versus making areas to asset sure I the think margin third the think that the advantage. decisions, leveraging make about I then differentiation where makes some better that's was there, of utilization. our significant of greatest of different sure

Our Koche Raymond from next James. question Jeff with comes

competitor the kind hit I Koche just you frame on This hitting of range? gross in-house you booked update indium decision, end Maybe production a talking the for had margin buy-versus-make that that bit per being there. thoughts XX%-plus the out on a really like Leopold. lasers and through can your to see last the phosphide around is you Simon the just competitors glide XXXG maybe time is for about about little in of wanted one deeper. what do getting -- lane. talk to your And night path of XXXX Jeff that Maybe

first the of path, at topic the that definitely I On Investor part a glide that's question, want that your cover to mentioned. we Day that

to a be a moving a we'll what gross be take time. part our model including that an of reductions, drive area we'll Day, that quarters. improvement gross And determined us the key those pricing it's work. steady Whether for map forward. And focus in this do frame in we're as margins. But coming to that look, scheduling forward. definitely strategy for cost of the business margin achieve but the target, the So will takes not business company moving model company's is, improvement road But or give sense Investor of out lay target it's time is just overall what timing of the

from that in will competitive margin more can improvements differentiation internally, gross build, instance, customers. vertically of market see or we number of value the that a that to transceiver. real to provides sake to it timing cost those we're we the of there's transceiver just integrated. terms I and where it's external extent datacom want time the that is you'll to value in So our sure use competitors, continue then make but hear or is what think your our benefit to of that areas the and or rather to of we this of that building customers, a for versus about and our Coherent faster make-versus-buy, of and it the build those but that I that, to the careful And providers we're that's into our on for a those generates option, that there's us number extent that. But that And resources building on fantastic go not internally benefits think do for with look, the quarters places has we just is one we us an differentiate around internal about for the question, focus part day, add every components that's the about ecosystem ahead. And leverage the can I'd technology not way second customers the truly

forward I smart just leverage. objective make on about So being want and make-versus-buy to how we're moving sure being we that

comes next O'Malley Tom from Our Barclays. question with

your an maybe optical meet to next yourself of qualitatively feelings And this to future, over first But look Jim, away. kind could of joined of optical looked I job at that as ramp just when and then the the Analyst Day you but then want sure that just I floating working you what you been in with the could business? a expectations transceiver on at numbers and to X.XT Coherent realize for were engine I'm engine more you broadly, I growth underneath and that were the like look you lot in kind and business clearly, kind when business that of big look around, on got couple the right looking ask your the on well. of general. it, understand and But metrics great a you business XXXG speak well. But advertised in initial any Coherent ramp the days years? follow-up. don't those business, the and marry was to potentially has that had there covers the to and of I this to at wanted you. forward growth opportunity I in some then put as at and of have your you'll what kind maybe about opportunity, you

Tom, question. before Yes. better company. answer short you, for than the the Yes, I joined Thank it's thought I the is

AI as for transceivers the joined as I datacom. of spent look over of of but sort the company. different X Coherent front we of better all So in centers. much gosh, build-out there's than -- time to it's strengthening, business, sense product now for us, a the gotten customers It's opportunity a have last, a would billings, optical opportunity. our lot the seen, I with that's stronger And see own of sense very like our growth a say, continue strengthening, weeks tremendous datacom obviously, I've lines had with forecast as my I in had strong demand specifically sense trajectory X always I what I've to of across happening that I And data would I just before across our And would and we've a in thought. And especially backlog. top say what leader

area is So company. The for really pleased really then yes, this team's of X.XT past a us. the key was the also, I as just And on They exciting with ramp X.XT. the few growth XXXG we over the weeks, knew very delivered for execution month. samples

it's next X.XT forward we're the looking key I year. think for was milestone for think an to us, growth that exciting ramping area company. and yes, But I a

I'll a my within the sure about there other AI in that, company. we a number want few I'm but that of remarks. know centers. as the of other there's recognize them are growth within But company make areas to Now prepared data growth I excited and good areas well. I that say also mentioned datacom I of

I but across as the our portfolio wide So portfolio do a innovation that really I diversified growth is Coherent forward. moving strength things for the strong long-term we growth makes other opportunities of of businesses that the think think not a talked well. I portfolio, have just one a And is about, of of

all and yes, more at growth I'll engines those Day. Investor -- of thoughts on definitely, So share

kind a an the X more Perfect. just improving is And little September quarter. tactical you though market into as to more regards last were what in from second cautious. the heard your talking It about sounded of competitor who is then little we telecom a night

is kind from at market kind products kind a just less strategic of products? newer legacy up? long-term Are That's what Just customers of a recovering could you of night, term? customers. sense describe seeing growing you This product of are what those last was short on, picking of echoed that with in introductions check question. But new just you're seeing kind the

Where because has correction and in Just takes visibility bad, we you're market seeing kind been telecom high. at the of what inventory been that the puts the are just bottom? in on pretty off have levels

Yes. just Thanks versus and I'll back out here. the ramping new come comments of some in it separate I'm market going we to end purely talk about products that have

up market. the I destocking on and out that's as completely inventory still that don't happened purely is that's of believe inventory more of pockets have The out right? industry a think an us. that we're I on behind think I of most market good, taking that there the we're there are in is has So there. that yes, destocking cautious woods I are -- telecom But market. Significant market largely built just significant end guess the market, view telecom

a And of X telecom following so probably months at through the market say, months look next, I our a and more the into outlook. bit on least whole is the would X cautious

up and could than it view or we're cautious be more that. that, taking better but on stronger that ends a being wrong Now we're it

end that's market all Now comments.

bigger set to and XXXG I in number ramping over throughout products are market aside, Coherent year, XXXG this ramp that course year. have impact our this number and we they exciting. the switch will fiscal ZR in And I'll remarks, are and over second Against that a -- pretty have Now that you're a year. the both the The then of specifically. backdrop, that prepared course mentioned the the do ramping half of obviously, since the ZR+ of that

tailwinds to products. of to terms we some behind sought. expecting that our that I So -- be in But we're to of own continue be have think growth do the in us terms I market, think

question next Morgan Our Meta with from Stanley. comes Marshall

carbide of just to to improved focus calling that worth kind that start any out business with there silicon quarter. other that have better-than-expected the non-AI areas markets last second question a I'll yields as looked kind a encumbered just of Were throughout performance The on had quarter? other business. Was of the improvement of some question. some on there? And then material just maybe

just datacom are any demand but guys non-AI the transceivers? is I for in recovery the on the speed seeing up, you know On and of XXXG focus kind side,

see good you. were QX. chunk of materials on that the that right, from QX was the first demand carbide production catch materials or up questions issues in on Thank We up that yes, you're to And silicon issues able to And your those the we had on QX. catch in some actually, pickup on of QX. on did business we a in part the business,

had of or shipments a little QX. that demand so catch were up we depressed bit depressed to in able We QX. And in on

on I on So mind catch-up. end some silicon gain carbide called question? question. sequential that the that of part question, I to the your of And but quite end is, repeating certainly was hear the of the that then second Would due that datacom, yes, of datacom didn't you it

kind more for demand of just or sub speeds had seeing I area Yes, if kind know but depressed there. been any an you're the XXXG. non-AI changes the of that of demand,

stable. to it, relatively okay. Got The be expecting that XXX-gig. We're sub

from stable. huge modeling to expect that that huge forward relatively or as decline. We're So we growth see don't any a moving

next Ackerman Karl from with Our comes BNP question Paribas.

to have the improve to the transactional forward. pricing and Jim, less need revenue ability going spoke about you

of customers to and breadth center Given is volume order you data could and so build-outs. to in this the leadership within in whether visibility may resulting and that your enable transceivers, demand customer commitments you hyperscale optical high-speed engagements those you discuss extended their datacom, meet innovation provided

Karl. Thanks, Yes.

seeing definitely, we have breadth So good customers. very of we're a --

look are at are on breadth customers production. quarter-over-quarter continues basis customers If that grow. It's XXXG, our full in those a to in you and grown terms XXXG of ramping of

extending breadth our year of visibility, on it really part which over at especially say, or our year the your visibility first X XX the order view X this datacom And days, through improved. of book book the it visibility grow. And business, the improve continued about customers end good last really positive. way has that's strengthen so half the other look of as and I second calendar to to the feel certainly weeks, of is we to year, just our to And that continues over, here. then continues would question very the around so not the through calendar rest the us of to And of in for fiscal next given but order line

meet definitely sure so on making we're And increasing that focused demand. we

of Arya question from next Our with America. Vivek Bank comes

improve in or in several no have does that impact transceivers the of seeing because when And changes Or and next to you you the optical I'm order curious, this negative, the product think several up overall be the do the strong quarters. look Jim, order mentioned business gross schedule pricing or are book just think does can extending you at you book, from shape positive then that business? margin Do your for all, NVIDIA's any strength it impact? you how the in here? dilutive given may margins quarters? still at

Yes. Thanks, Vivek.

about continue we part as to strengthen. book continue yes, that order I the part, the order first book, we on -- was see the said, the On

I say strengthen customer. asked good. aggregate, again, you a that demand on book any continuing about can see, really can't to order we're customer. is But particular particular growing, think and I I comment in customer that particular the or which

see speed XXX speed newer usually the what the the older older over and pricing right? market margin, the like usually higher be carry soon then X.XT in commoditized gross would than and in On time. speed are to is generally become we grades, The general, gross grades transceiver grades margins

the there's level. improve ramping some believe extent in structure comments to just of number product the improvements not cost are on the that's across across not pricing discipline, company also, to but but the company across certainly other datacom opportunity company, us. But that I opportunity as at so And us pricing that tailwind a has aggregate datacom think margin lot optimized at newer there's level, a gross grades, of lines. earlier a generally focused aggregate to for our an better of speed all to a our we're for company really in our I strategy of have the And that improve, well. then product just my

segments? you different from you're from the but the to guiding end broad you're think puts takes And December, at perspective? and are some roughly flat not for And the I that should same December What for also? of assume prospect know sequentially. market sequential follow improvement we quarter market current my that look in we those December there just a do kind guiding is follow-up, as so trends the end Or

guided of Yes, flat expect would X the and Vivek, markets either But be sequentially the we on the September business, down. roughly sequentially some guided, or that datacom the businesses our be sequentially about, yes, we would business datacom as we currently sequentially. talking the expect other we're to to industrial We the telecom up. quarter, just flat tied to

of is in. of some look offsets what if we're a midpoint obviously, the guide that And the datacom you growth. range, our for that quarter we're our current so guide, at that's And right? And seeing the

year I'll For we'll the more well. as beginning quarter, of the save what comments call, give earnings December those we're seeing the next in insight and the calendar into probably the until next December into maybe quarter

Citi. next Our Atif question with from comes Malik

for the Sylla business. question bit around guess my saw little guess deceleration a it Papa a of first is versus at This industrials last was quarter. Atif. I just we looking sequentially, I

they on can are if some perhaps quarter. you last percentage little touch at how on a difficulties there and or that this bit wondering quarter, just A, such of semicap the just were EUV, kind touch precision as we So doing manufacturing, back-end

in base for the a sequential bit the we on into of as But quarter, down. well aggregate the improvement industrials moving of some current offsets there in current little question. that quarter. in QX on -- a growth kind to thanks offsets or as they're that that kind see space flat of segments we're are of that telecom we're as And of broad assuming did sequential aggregate, sequentially, expecting assuming that both mentioned we're some industrial question, the datacom in the sequentially the are just the are, the Yes, prior Yes, from QX. I industrials

the it. Got wanted little things X.XT. quick for touch I on bit on And front of front, a my follow-up, for AI laser the to

X an so our is pockets technologies, of own have that VCSEL, I all industry-wide their EML, demand. understanding from guess So perspective,

like the X across engagement mix quarters from wondering, touch currently? just like on And maybe what might were line? we X, can your you those So what look and those X they then end, look down kind of

Yes.

of wide we about one of a great things think Coherent portfolio I technology. have really look, is, the

manufacture EML. We And own we -- in-house. the do so develop manufacture we our VCSELs. own in Indium we're our same we VCSELs, develop phosphide, and

technical best bring or that customers, that technology we'll manufacture the our customers. also we'll So biggest -- we sense, source is of the we'll to most beyond biggest any and the as us gives X.XT, we or most lasers those in-house developed lasers differentiation it's the Whatever of advantage a well, source technology both advanced, it right? And we externally it the benefits whether those product our use innovative think for our develop and select to our where best customers. versus market externally, in-house. select technology, number we competition makes technology for always But for we'll some well, best then that so always whatever as whether make

X.XT technologies. So ramp. we'll to on X.XT give about production how other we versus of as I get much probably VCSEL I think that it prognostication any be more and will probably But closer share won't

Ruben with Stifel. Our from next question comes Roy

I'm at of you to watched talked Jim, know high questions wanted successful I've end in working you was on. I appreciate I you lot if just maybe a the had I which cetera, And But talk a and last at that I different, wanted then some wondering et lot more breadth X -- markets, to had, commentary that turnaround a little And products, that the I one, the of is tremendous optimization comment given order. could and turnarounds level, Coherent customers, bit, on Jim. you've think short pricing just you strategy were the time. and about last about

on kind helpful. optimization are this to? to how you you of of an any margins just commentary get some get be kind want strategy Or would So thinking those is high-level And to that that strategy a timing? multiyear of from about

its business portfolio. a its -- Yes. Coherent within range itself different has businesses is Thanks, different Every Look, businesses has business. Ruben. a and wide of Coherent own dynamics,

spend businesses. sales well a business. products discipline our our business and market and team approaches, for drive. think to terms But managers, in that my again, some our it's in we get different general leaders, the as time balance sure I there So are both with our multiple with competitive striking that we better opportunity think as that be I the that past business analytics time across I customers, market. And as paid pricing little right strategies, by there's but us in and our how price for finding between used being of do innovation in bit our different making the we tactics I've And

some Now I be our to applied the businesses and of well. as Coherent universal think can within

on. And so we're that's certainly what working

of that sort company. bigger we're optimization driving across already strategy the off kicked work we've pricing Now

Now that It that take time. doesn't on -- does like a light turns something switch. not it's

Some achieve. of those initiatives take longer time to

progression Day business over we're think gross to margin, term, the sense earlier, short-term And the mentioned when we Investor near we are targets, initiatives those some what we wide to of drive about provide over and time. benefit. I longer-term including Some can get and yield benefit those gross including beginning margin, model time. we'll But of give there's a be give towards those model targets, will some range as that business our

you've there any it follow-up. currently? Are most guess you strategic quick some like It I that implanted you're started Or helpful. other the these a actions. saying sounds come? on Very of just actions that of is

margin initiated optimization mentioned, also number we've cost. working category product the gross in a on But as pricing we're Definitely, strategies. of, I expansion,

a cost a with something structure we're driving how kicked also within drive of we a So a -- do off better the focus product company, that's there's manufacturing equal And lot is activities. that us There's focused more different of cost we're asset cost given number it's product we of we're terms company. And to focused sort turn moving cetera. utilization, product in et structure, to better knobs our there's products, driving a for better for higher places yields better forward. cost lot of of whether number drive structure

from with Jack comes Our Equity Charter next question Research. Egan

X follow-up. had just I other

a the laser hovering the still $XXX kind been for segment, increase of bookings it's past mentioned XX% you still in quarter, last quarters. -- but revenue-wise, $XXX million in it's for range million, So the X

kind I those play due there offsetting that each of was in anything curious, markets there? negatives positives other? to is and and just Or telecom is or industrial else at the various sectors So

more Those placed with Yes. times, to to Thanks, shipped. until the booking time generally it's more It's are do just a when when Jack. is the has of lasers due longer it when to in bookings made lead And actually so lead are shipped. actually natural that is those product latency there's from and from the business. when time

natural So business. that times about the it's lead of just more

Got of it, kind carbide now, your other of was wondering XXXG. equation with than now then okay. CapEx priorities expanding out silicon CapEx And the I the are where

datacom the terms in priority is #X growing Yes. I sure business. and silicon say would capacity that place seeing CapEx we're in the the making in support to we aside the of carbide setting that have demand

XXXG capacity that also capacity building now, we're right out ramp. so well And and making ready for but X.XT sure as we're

So our now say capital yes, that's expense. would right priority of terms X I in

Our with Capital. Ananda Loop next question comes Baruah from

working with great Jim, Yes, you. forward to look meet to and you

guys is you customers you this have years? gain Just gains, begin potential producers? any big yet X for on begun transceiver share kind -- you thoughts U.S.-based have percent to to have of you thoughts, transceiver Jim, have more any for share of see index me. Do towards of And the over Do a on thoughts, -- early question. the next data couple center sort

Yes. Thanks, Ananda. That's a great question.

industry. moving over the chain and the transceivers, rely of number spent resilient resilient when we opportunity leader -- chain that you to supply customers I us chain. And And most dynamics. leader there's only but those think we in you generations center the would CSP think clearly forward, look, a have multiple those to share Coherent, at say for supply resiliency, an not of a with some are incredibly we gain in supply on As due are at I a technology data time the technology look historically large can I of have course from customers, different I

center, that haven't I so definitely already, CSP And our recognized if think data more customers appreciation they are -- datacom having they're that. for big

quarters the us and So supply technology the gives opportunity share more those coming win of to of the and with significantly combination I years. think chain resiliency big wallet over our customers

question, for Ananda. the thanks So

closing would call to like any to now over I Jim Anderson remarks. back turn the for

you, everybody Thank thanks and for on today. our call operator, again joining us

dedication super Coherent once to just teammates the I up, us ahead And and Coherent. again all drive about innovation at hard it all excited So my opportunity for every wrap new day. of to work, they I'm the all want their of thank

While we our have your value engine innovation updating to we areas that translate improvement moving to opportunity, creation have many also you of look to our progress outstanding concludes incredible forward be strains, opportunity growing and shareholder Operator, call. for for our and it forward. again support Thanks on forward. market

conference. This you your participation. concludes the for Thank

may now You disconnect.