Optical communications business grew 59%, Coherent’s full-year revenue hit record high

As the demand for optical interconnection in global artificial intelligence data centers continues to heat up, Coherent is accelerating the transformation to the next generation of optical communication infrastructure through manufacturing capacity expansion, technology platform iteration and in-depth cooperation with leading companies in the industry chain.

On August 12, global optical communications and compound semiconductor giant Coherent released its fourth quarter and full-year financial results for fiscal year 2026 as of June 30, 2026.

Coherent's quarterly performance reached a new high and profitability significantly improved

In the fourth quarter of fiscal year 2026, Coherent achieved revenue of US$2.046 billion, an increase of 33.8% over the same period last year and an increase of 13.3% over the previous quarter.

If excluding the impact of the sold aerospace and defense business and the Munich, Germany business and calculating on a pro forma basis, Coherent's revenue increased by 42% year-on-year.

From a full-year perspective, Coherent's total revenue in fiscal year 2026 was US$7.118 billion, a year-on-year increase of 22.5%, setting a record high.

The performance on the profit side is even more outstanding. The U.S. GAAP gross profit margin in the fourth quarter was 38.5%, a year-on-year increase of 277 basis points; the non-GAAP gross profit margin reached 40.2%, a year-on-year increase of 215 basis points.

For the whole year, Coherent's GAAP net profit reached US$805 million, compared with only US$49.4 million in the previous year; non-GAAP net profit reached US$1.097 billion, a growth rate significantly higher than the revenue growth rate, reflecting that the company has made substantial progress in improving operating efficiency and optimizing cost structure.

From the perspective of business structure, the data center and communications sectors have become Coherent’s core growth engines. This segment achieved revenue of US$1.615 billion in the fourth quarter, a year-on-year increase of 59%, accounting for 79% of total revenue. In contrast, the fourth quarter revenue of the industrial segment was US$431 million, accounting for 21% of total revenue, a slight decline year-on-year.

In the full-year perspective, the data center and communications sectors contributed US$5.275 billion in revenue, and the industrial sector contributed US$1.844 billion. The difference in performance between the two sectors reflects that Coherent is deeply benefiting from the wave of AI computing infrastructure construction.

For the upcoming first quarter of fiscal year 2027, Coherent management has given optimistic performance guidance: revenue is expected to be between US$2.2 billion and US$2.4 billion, non-GAAP gross profit margin is expected to be 39.5% to 41.5%, and non-GAAP diluted earnings per share is expected to be between US$1.85 and US$2.05. The guidance continues a trend of revenue and profit expansion in tandem.

Coherent is deeply involved in the optical communications ecosystem and laying out the next generation of AI infrastructure

Against the backdrop of the accelerated migration of AI data center architecture from copper interconnection to optical interconnection, Coherent has launched a series of intensive strategic layouts in the field of optical communications this year.

The most eye-catching thing is the deepening of cooperation between the company and NVIDIA. The two parties recently held a groundbreaking ceremony for the expansion of a manufacturing plant in Sherman, Texas. The plant will increase the production capacity of 6-inch indium phosphide wafers and provide key manufacturing support for high-speed optical communication devices.

At the same time, Coherent has also received a total of US$50 million in CHIPS Act letter of intent funding. The company has previously received US$20 million in financial support through the Texas Semiconductor Innovation Fund and the Sherman Economic Development Corporation. These government cooperation are substantially promoting the improvement of its domestic manufacturing capabilities in the United States.

In terms of product technology roadmap, Coherent is promoting performance upgrades in multiple dimensions. The company has now delivered 400G per-channel link technology, which can provide higher bandwidth and faster data transmission rates while simplifying the architecture; its advanced multi-track optical transmission solution can increase the capacity of a single optical fiber to four times the original level.

Looking to the future, Coherent has disclosed a clear product schedule: optical switch products have begun to contribute revenue, co-packaged optical and near-packaged optical products are expected to be launched on the market in the second half of 2026, multi-track optical transmission systems are planned to be launched in the first half of 2027, and thermal management solutions for high-density AI environments are expected to be available in the second half of 2027.

In addition, Coherent continues to iterate on existing product lines such as 1.6T, 3.2T and even 6.4T high-speed transceivers, data center interconnect ZR and ZR+ transceivers, optical transmission equipment and core optical components. Management predicts that these new platforms will bring the company an incremental serviceable market of more than US$20 billion by 2030. Adding the existing product portfolio, the overall serviceable market size is expected to exceed US$50 billion.

Coherent management stated at the performance briefing that the company enters fiscal 2027 with strong customer demand, continuously expanding production capacity, and multiple emerging growth platforms that are about to increase in volume. As AI data centers become more dependent on photonic technology, Coherent's technology breadth and manufacturing scale will bring it growth opportunities that will last for many years.