Coherent Q1 Revenue Jumps 56%, FY2027 Growth Seen Above 60%

Coherent reported record revenue for the first quarter of fiscal 2027 as demand for datacenter and communications products drove strong growth, while the company projected full-year revenue growth of more than 60% and outlined further expansion in optical connectivity products for artificial intelligence infrastructure.

Fiscal first-quarter revenue reached $2.37 billion, up 16% sequentially and 56% from a year earlier. The revenue figures and growth comparisons presented on a pro forma basis exclude the company’s former Aerospace & Defense business, sold in September 2025, and its Munich, Germany business, sold in January 2026.

Non-GAAP gross margin increased 184 basis points year over year to 40.6%. Non-GAAP operating margin expanded 368 basis points to 23.2%, while operating expenses declined to 17.4% of revenue from 19.2%. Non-GAAP earnings per share rose 80% to $2.09.

Datacenter and communications drive growth

Datacenter and Communications generated 82% of total revenue and grew 79% year over year and 21% sequentially. Within the category, datacenter revenue rose 85% from a year earlier and 17% from the preceding quarter. Communications revenue increased 84% year over year and 34% sequentially.

Scale-across and data-center interconnect products contributed more than $200 million of first-quarter revenue, roughly four times the prior-year level and equivalent to an annualized run rate approaching $1 billion. Coherent expects quarterly revenue from these products to roughly double from the first-quarter level by the end of calendar 2027.

The company also expects PhotonLink revenue to exceed $100 million in the March 2027 quarter and reach more than $250 million per quarter before the end of calendar 2027. PhotonLink is an integrated optics platform supporting co-packaged optics, near-packaged optics and emerging chip-to-chip connectivity. Revenue from Coherent’s Multi-Rail products is expected to begin ramping in the March quarter.

Manufacturing capacity is expanding alongside demand. Coherent said its internal indium phosphide output doubled year over year during the quarter, reaching that target one quarter earlier than planned. The company expects capacity to more than double again by the end of calendar 2027.

Customer orders increasingly extend into calendar 2028, while long-term agreements typically run through the end of the decade. Coherent highlighted a PhotonLink agreement valued at approximately $20 billion over five years, with revenue under that agreement expected to begin ramping in early calendar 2028.

Industrial business remains flat

Industrial revenue was approximately $400 million, unchanged both sequentially and year over year. Coherent expects the segment to return to growth in the second fiscal quarter, supported by stronger semiconductor capital-equipment bookings for lasers, precision optics and engineered materials used in front-end applications.

The company also identified several developing sources of industrial demand. It plans to ship Thermadite xPU cooling prototypes to strategic customers in the second fiscal quarter, with a revenue ramp expected in the second half of calendar 2027. Coherent said fusion-related demand is increasing and is expected to contribute to Industrial growth in coming quarters. The company is also supplying lasers and materials to quantum-technology developers and participating in next-generation programs.

Other products serving AI infrastructure include carbon-dioxide lasers and zinc selenide optics used in advanced circuit-board drilling for AI servers. Coherent has also begun sampling 300-millimeter high-thermal-conductivity silicon carbide substrates designed to improve heat spreading in AI and high-performance computing applications.

Fiscal 2027 outlook

For the second quarter of fiscal 2027, Coherent forecast revenue of $2.55 billion to $2.75 billion. It expects a non-GAAP gross margin of 40% to 42%, non-GAAP operating expenses of $430 million to $450 million, a non-GAAP tax rate of 18% to 20%, and non-GAAP earnings per share of $2.28 to $2.48.

Management expects fiscal 2027 pro forma revenue growth to exceed 60%, more than twice the fiscal 2026 growth rate. Coherent continues to expect its first $3 billion revenue quarter by the end of fiscal 2027 and its first $4 billion quarter during fiscal 2028. The company also expects to record its first quarter with a non-GAAP gross margin above 45% before the end of calendar 2028.

Coherent did not provide GAAP reconciliations for its forward-looking non-GAAP measures because it said certain items—including restructuring costs, integration and site-consolidation expenses, foreign-exchange gains or losses, and share-based compensation—cannot be forecast without unreasonable effort.

The outlook remains subject to changes in end-market demand, customer purchasing patterns, manufacturing execution, product-launch timing and market acceptance. Coherent also identified competitive product introductions, the realization of returns from research and commercialization spending, debt-service requirements, international conflicts, economic volatility and trade measures such as tariffs as potential risks to its expectations.