Coherent expects fiscal first-quarter 2027 revenue of $2.2 billion to $2.4 billion, putting the midpoint at $2.3 billion, as accelerating artificial intelligence data center demand drives the photonics company to expand manufacturing capacity.
The outlook follows record Q4 revenue of approximately $2.05 billion, up 33.8% year-over-year and 13.3% sequentially. Coherent said revenue increased approximately 42% year-over-year on a pro forma basis.
Coherent believes the growing computational requirements of AI are accelerating a transition in data center architecture from copper connections toward optical connectivity. The company is expanding production capacity as multiple new growth platforms begin to ramp and customer demand increases.
The investment required to support that growth increased substantially during fiscal 2026. Additions to property, plant and equipment reached approximately $1.10 billion compared with $440.8 million a year earlier. Property, plant and equipment on the balance sheet increased to nearly $3 billion from $1.88 billion.
Inventories also increased to approximately $2.58 billion from $1.44 billion, while accounts receivable increased to $1.34 billion from $964.1 million as the company prepared for a higher level of business activity.
Q4 profitability expanded significantly alongside revenue. GAAP gross margin increased 277 basis points year-over-year to 38.5%, while non-GAAP gross margin increased 215 basis points to 40.2%.
GAAP operating income increased to $254 million from just $6 million a year earlier, lifting GAAP operating margin to 12.4% from 0.4%. On a non-GAAP basis, operating income increased 62.1% to $446 million and operating margin expanded 381 basis points to 21.8%.
Net earnings attributable to Coherent reached $240.5 million compared with a loss of $95.6 million in the prior-year quarter. Diluted GAAP EPS improved to $1.19 from a loss of $0.83, while non-GAAP diluted EPS increased to $1.74 from $1.00.
For the full fiscal year, revenue increased 22.5% to approximately $7.12 billion. Non-GAAP operating income increased 40.5% to $1.46 billion, while non-GAAP operating margin expanded to 20.5% from 17.8%. Non-GAAP net earnings increased 58.3% to approximately $1.10 billion.
Coherent ended June with $1.16 billion of cash and cash equivalents and $825 million of short-term investments. Long-term debt stood at approximately $3.21 billion, down from $3.50 billion a year earlier.
For Q1 fiscal 2027, Coherent expects non-GAAP gross margin of 39.5% to 41.5%, non-GAAP operating expenses of $400 million to $420 million and non-GAAP diluted EPS of $1.85 to $2.05.
KEY QUOTES:
“Fiscal 2026 was an outstanding year for Coherent, with record revenue, significant margin expansion, and non-GAAP EPS growth that was more than twice the rate of revenue growth.”
“We enter fiscal 2027 with exceptional customer demand, expanding production capacity, and multiple new growth platforms beginning to ramp. As AI datacenter architectures increasingly transition from copper to optical connectivity, we believe Coherent’s broad photonic technology portfolio and manufacturing scale uniquely position us to deliver accelerating growth and capitalize on this multi-year opportunity.”
Jim Anderson, CEO Of Coherent
“Strong operational execution across our business drove meaningful gross margin expansion and converted our top-line revenue growth into robust GAAP and non-GAAP EPS growth.”
“As we enter fiscal 2027, we remain disciplined in our capital allocation, prioritizing investments to expand manufacturing capacity so we can efficiently fulfill the ongoing acceleration in customer demand.”
Sherri Luther, Chief Financial Officer Of Coherent
