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Coherent targets its first $3 billion revenue quarter by fiscal 2027
Coherent said it expects Data Center and Communications to contribute 79% of total revenue, as it ramps 800G and 1.6T transceivers and expands internal Indium Phosphide capacity.
Coherent, Inc. said its Q4 performance reflected strong demand for AI data center connectivity, alongside revenue growth acceleration tied to faster expansion of internal production capacity for 6-inch Indium Phosphide manufacturing, according to a Yahoo Finance earnings call summary.
The company reported gross margin expansion of 152 basis points for the full year, attributing it to lower product input costs, improved manufacturing yields, and pricing optimization efforts. Management also pointed to its vertically integrated model and a significant US manufacturing footprint for supply chain resiliency.
Coherent said its Data Center and Communications segment now represents 79% of total revenue. It expects to reach its first $3 billion revenue quarter by the end of fiscal 2027, supported by 800G and 1.6T transceiver ramps, and it projected internal Indium Phosphide capacity to double year over year by the end of the current quarter, one quarter ahead of plan.
The company also outlined plans for additional revenue streams in fiscal 2027, including Optical Circuit Switching (OCS), co-packaged optics (CPO), and multi-rail systems. It said order visibility is exceptional, with customer orders extending into calendar 2028 and long-term agreements reaching the end of the decade, and it expects capital expenditures to rise sequentially in Q1 to support advanced volume manufacturing tooling with an 18-month payback period. Management added that it reduced its debt leverage ratio from 2.0x to 0.7x during fiscal 2026.