COHU Q1 2026 Earnings Call Summary

Revenue: Q1 2026 revenue was $125.1 million, exceeding guidance.
Recurring Revenue: Represented 60% of total revenue, primarily from consumables.
Gross Margin: 46.5%, above guidance due to a favorable revenue mix.
Operating Expenses: Increased to $55 million, reflecting investments to support high-performance computing (HPC) opportunities.
Net Interest Income: Approximately $2.1 million.
Cash and Investments: Increased by $5 million to $489 million; cash from operations was $10 million.
Debt: Total debt stood at $305 million, including $288 million from a convertible debt offering.

Order Growth: Orders surged 57% year-over-year, with notable increases in semiconductor testing and inspection.
AI and HPC Focus: Cohu is capitalizing on the rising demand for AI workloads and high-performance computing, with a pipeline opportunity of approximately $750 million.
Customer Engagement: Significant wins included major orders for Eclipse test handlers and Neon inspection systems, with a focus on AI data centers and automotive applications.
Software Solutions: Cohu is expanding its software offerings, which are expected to provide high-margin recurring revenue and improve customer engagement.

Q2 Revenue Guidance: Expected to increase by 15% sequentially to approximately $144 million.
Full Year 2026 Revenue Outlook: Increased to a growth rate of 20% to 25% year-over-year.
Gross Margin Projections: Q2 gross margin expected around 44%, with full-year margins projected in the mid-40% range.
Operating Expenses: Anticipated to stabilize around $53 million for Q2 and the remainder of the year.

Operating Expenses: Higher than expected due to scaling resources, which may pressure margins.
Supply Chain Issues: Initial costs related to ramping up the Eclipse supply chain may impact gross margins in the near term.
Market Competition: Increased competition in the semiconductor testing space, particularly as demand grows.
Revenue Recognition: Uncertainty around the timing of revenue recognition for new customer engagements could impact financial performance.

HPC Revenue Breakdown: Approximately $30 million of the revised $100 million HPC revenue forecast is attributed to Eclipse handlers, with the remainder from other testers and handlers.
Customer Demand: There is a shift in demand from a singular focus on GPUs to a broader range of processors, including CPUs and ASICs.
Software Opportunities: The attachment rate for software subscriptions remains low, indicating significant growth potential.
M&A Strategy: Cohu is actively looking for acquisition opportunities in recurring revenue streams but remains disciplined due to high valuations in the market.
Future Growth: The company expects continued growth in 2027, driven by the qualification of new customers and increased test utilization rates.

This summary encapsulates the key points from Cohu's Q1 2026 earnings call, highlighting both the strong performance and the challenges ahead.

COHU — Cohu, Inc.