Coherent Corp. Anticipates Surge in Revenue from 800G Transceivers and AI/ML Market Growth
2023-12-30
Coherent Corp., a leading transceiver maker in the marketplace, recently held its FY '23 fourth quarter earnings call. The call featured several key speakers, including Chairman and CEO Dr. Chuck Mattera, CFO Mary Jane Raymond, Chief Strategy Officer and President of Materials Segment Dr. Giovanni Barbarossa, and Laser Segment President Dr. Mark Sobey. The purpose of the change in format for the earnings call was to provide greater insight and clarity by devoting the bulk of the call to answering questions from the financial community.
During the call, the speakers discussed various financial measures, including both GAAP and non-GAAP financial measures. While the company's revenue in the fourth quarter was not specifically mentioned, it was noted that nearly 20% of the company's FY '23 revenues were generated from just two customers, one in communications and one in electronics.
The company provided guidance and discussed their expectations for the future. They highlighted the surge in Q4 bookings, driven by AI, and expressed their anticipation of a substantial amount of revenue from shipping 800G transceivers in the second half of the year. The speakers also acknowledged the challenges in managing the scale and supply chain for the capacity ramp.
In terms of market opportunities, the company is addressing the growing demand in the AI/ML market. They emphasized three separate opportunities in AI/ML, including EMLs, DFB lasers, and VCSELs. The CEO expressed optimism for the second half of the year, expecting it to be better than the first half and anticipating signs of recovery before the end of the calendar year.
The company also discussed their focus on differentiation and their advantage in the market. They highlighted their ability to provide customized solutions for AI players and their agnostic approach to switch architecture. Additionally, the company mentioned being qualified for the new ethernet switches that cloud service providers are transitioning to.
Regarding financials, the company's gross margin range is 37% to 42%. The operating expenses tend to be slightly higher as a percentage of sales, around 22% to 23%. The CFO expects margins to improve as the volume picks up, especially in the back half of the year. The decline in earnings is primarily driven by the decline in revenue compared to the previous year.
The company also discussed their focus on different segments and markets. They highlighted the growth in the AI transceiver market and their goal to be the market leader. They mentioned their advantage in the market for 800G and 1.6T technology, as well as their ability to support well beyond 800G. Additionally, they mentioned their engagement in nontraditional optical and laser designs, particularly in the electric car market.
Overall, the Coherent Corp. FY '23 fourth quarter earnings call covered a range of important business topics, including financial measures, market opportunities, differentiation, and future expectations. The company is focused on addressing the growing demand in the AI/ML market and remains optimistic about the future.