Materials and photonics company Coherent (NYSE: COHR) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 17.5% year on year to $1.69 billion. On top of that, next quarter’s revenue guidance ($1.77 billion at the midpoint) was surprisingly good and 3.4% above what analysts were expecting. Its non-GAAP profit of $1.29 per share was 7% above analysts’ consensus estimates.
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Coherent (COHR) Q4 CY2025 Highlights:
- Revenue: $1.69 billion vs analyst estimates of $1.64 billion (17.5% year-on-year growth, 2.9% beat)
- Adjusted EPS: $1.29 vs analyst estimates of $1.21 (7% beat)
- Adjusted Operating Income: $336 million vs analyst estimates of $328.1 million (19.9% margin, 2.4% beat)
- Revenue Guidance for Q1 CY2026 is $1.77 billion at the midpoint, above analyst estimates of $1.71 billion
- Adjusted EPS guidance for Q1 CY2026 is $1.38 at the midpoint, above analyst estimates of $1.32
- Operating Margin: 10%, in line with the same quarter last year
- Free Cash Flow Margin: 3.4%, down from 5.7% in the same quarter last year
- Market Capitalization: $39.12 billion
Jim Anderson, CEO, said, “We delivered strong year-over-year revenue growth in the December quarter, driven by another quarter of strong demand in our datacenter and communications segment. We expect continued strong growth in the second-half of fiscal 2026 and throughout fiscal 2027 based on strong datacenter and communications demand and our continued production capacity expansion along with improving demand in our Industrial segment.”
Company Overview
Created through the 2022 rebranding of II-VI Incorporated, a company with roots dating back to 1971, Coherent (NYSE: COHR) develops and manufactures advanced materials, lasers, and optical components for applications ranging from telecommunications to industrial manufacturing.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $6.29 billion in revenue over the past 12 months, Coherent is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions.
As you can see below, Coherent’s 16.9% annualized revenue growth over the last five years was incredible. This is an encouraging starting point for our analysis because it shows Coherent’s demand was higher than many business services companies.
We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Coherent’s annualized revenue growth of 16.6% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong. 
We can dig further into the company’s revenue dynamics by analyzing its most important segment, Networking. Over the last two years, Coherent’s Networking revenue (communications components and subsystems) averaged 38.3% year-on-year growth. This segment has outperformed its total sales during the same period, lifting the company’s performance. 
This quarter, Coherent reported year-on-year revenue growth of 17.5%, and its $1.69 billion of revenue exceeded Wall Street’s estimates by 2.9%. Company management is currently guiding for a 18.2% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 16.8% over the next 12 months, similar to its two-year rate. This projection is eye-popping and indicates the market is baking in success for its products and services.
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Adjusted Operating Margin
Adjusted operating margin is a key measure of profitability. Think of it as net income (the bottom line) excluding the impact of non-recurring expenses, taxes, and interest on debt - metrics less connected to business fundamentals.
Coherent’s adjusted operating margin has been trending up over the last 12 months and averaged 17.8% over the last five years. On top of that, its profitability was top-notch for a business services business, showing it’s an well-run company that manages its expenses efficiently and benefits from immense operating leverage as it scales.
Analyzing the trend in its profitability, Coherent’s adjusted operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
This quarter, Coherent generated an adjusted operating margin profit margin of 19.9%, up 1.5 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Coherent’s EPS grew at an unimpressive 4.1% compounded annual growth rate over the last five years, lower than its 16.9% annualized revenue growth. However, its adjusted operating margin didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Coherent, its two-year annual EPS growth of 69.9% was higher than its five-year trend. This acceleration made it one of the faster-growing business services companies in recent history.
In Q4, Coherent reported adjusted EPS of $1.29, up from $0.95 in the same quarter last year. This print beat analysts’ estimates by 7%. Over the next 12 months, Wall Street expects Coherent’s full-year EPS of $4.36 to grow 34.7%.
Key Takeaways from Coherent’s Q4 Results
We were impressed by Coherent’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also glad its EPS guidance for next quarter outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 5.8% to $223.40 immediately following the results.
Coherent put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
