Coherent Q4 FY25 slides reveal datacenter-driven growth, strong FY26 outlook

Introduction & Market Context

Coherent Inc (NASDAQ:COHR) presented its fourth quarter and full fiscal year 2025 results on August 13, 2025, showcasing strong performance driven primarily by its datacenter and communications segments. The company’s stock rose 3.17% in aftermarket trading to $120.25, reflecting positive investor sentiment following the presentation.

The optical components manufacturer has capitalized on the continued expansion of AI infrastructure and datacenter buildouts, with its networking segment representing 62% of Q4 revenue. This strategic focus has helped Coherent deliver substantial year-over-year growth despite relatively flat performance in its industrial and materials segments.

Quarterly Performance Highlights

Coherent reported Q4 FY25 non-GAAP earnings per share of $1.00, showing sequential improvement from the $0.91 reported in Q3. The company’s quarterly revenue breakdown reveals the growing dominance of its networking business, which accounted for nearly two-thirds of total revenue.

As shown in the following quarterly revenue by segment breakdown:

The networking segment reached $945 million in Q4 FY25, continuing its upward trajectory throughout the fiscal year. Meanwhile, the lasers segment contributed $348 million and materials added $236 million, both remaining relatively stable compared to previous quarters.

When viewed by market rather than segment, the datacenter and communications market similarly dominated Coherent’s revenue mix:

The datacenter and communications market generated $942 million in Q4 FY25 revenue, representing 62% of the total, while industrial markets contributed $587 million or 38%. This market distribution underscores Coherent’s strategic positioning in high-growth technology infrastructure segments.

Full-Year Financial Results

Coherent delivered exceptional full-year results for fiscal 2025, with substantial improvements across all key financial metrics. The company’s performance highlights include:

For the full fiscal year 2025, Coherent achieved:

• Revenue of $5.81 billion, up 23% from $4.7 billion in FY24
• Gross margin of 37.9%, an increase of 358 basis points from 34.3% in FY24
• Earnings per share of $3.53, up 191% from $1.21 in FY24

The datacenter and communications sector was the primary growth driver, increasing 51% year-over-year, while industrial and other sectors grew by a modest 2%. This performance aligns with the broader market trend of accelerated investment in AI and cloud infrastructure.

Segment and Market Analysis

Coherent’s revenue by market for FY25 shows the company’s strategic focus areas:

• Datacenter & Communications: 59%
• Industrial: 29%
• Electronics: 5%
• Instrumentation: 7%

The company highlighted several innovative product developments that contributed to its growth, including:

1. First revenue from its differentiated liquid-crystal optical circuit switch

2. New diamond silicon carbide composite for advanced cooling in AI datacenters

3. Industry-first 600W excimer laser for emerging energy applications

These innovations demonstrate Coherent’s commitment to addressing high-value opportunities in its target markets, particularly in AI datacenter infrastructure where thermal management and optical switching are critical challenges.

Forward Guidance and Outlook

Looking ahead to the first quarter of fiscal 2026, Coherent provided the following guidance:

The company expects:

• Revenue of $1.46-$1.60 billion, which excludes approximately $20 million in Aerospace and Defense revenue due to the expected sale of that business
• Non-GAAP gross margin of 37.5%-39.5%
• Non-GAAP operating expenses of $290-$310 million
• Non-GAAP earnings per share of $0.93-$1.13

This outlook suggests continued strong performance despite the planned divestiture of the Aerospace and Defense business, indicating confidence in the company’s core growth drivers. The projected Q1 FY26 EPS range represents potential year-over-year growth, building on the momentum established throughout fiscal 2025.

CEO Jim Anderson’s comments from the presentation emphasized that fiscal 2025 was "a strong fiscal year" with significant "future growth opportunities," particularly in the datacenter and communications markets where Coherent has established a strong competitive position.

With the stock trading at $120.25 in after-hours trading following the presentation, Coherent remains well-positioned to capitalize on the ongoing expansion of AI infrastructure and next-generation optical networking deployments in the coming fiscal year.

Full presentation:

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