Coherent guides second-quarter revenue to $2.55bn to $2.75bn, expects $3bn quarter

First-quarter earnings of $2.09 a share and revenue of $2.37bn, against $2.35bn expected, came with a higher long-term gross margin target.

Coherent expects revenue of $2.55bn to $2.75bn in the second quarter of fiscal 2027, and its first $3bn quarter by the end of that fiscal year. It expects pro forma revenue growth of more than 60% for fiscal 2027 and a first $4bn quarter in fiscal 2028.

The first quarter was ahead of forecasts. Earnings were $2.09 a share, $0.08 better than expected, and revenue was $2.37bn against $2.35bn expected. For the second quarter, Coherent guides to non-GAAP earnings of $2.28 to $2.48 a share. Non-GAAP figures leave out certain items the company excludes.

Margins are where the guidance is less firm. The second-quarter non-GAAP gross margin range of 40% to 42% stops short of the company's earlier goal of more than 42%. Coherent has also set a new target of a non-GAAP gross margin above 45% in a quarter, but it has until the end of calendar 2028 to reach it.

Chief financial officer Sherri Luther said operating leverage and gross margin expansion this quarter, driven by pricing optimization and cost improvements, gave the company confidence to raise the longer-term target.

Bank of America has questioned whether higher transceiver volumes can dilute gross margin. The next few quarters will show whether pricing and cost gains outpace that effect.