COHU — Cohu, Inc.

Cohu Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: $149 million, up 38% year-over-year, exceeding guidance.
• Recurring Revenue: Approximately 53% of total revenue, primarily driven by consumables.
• Gross Margin: 45.5%, above guidance due to favorable product mix.
• Operating Expenses: $52.7 million, in line with guidance.
• Net Interest Income: Approximately $1.7 million after interest expense and a foreign currency loss of $600,000.
• Non-GAAP EPS: $0.26; adjusted EBITDA at 12%.
• Cash and Investments: Increased by $9 million to $498 million; cash from operations was $10 million.
• Total Debt: $304 million, primarily from a convertible debt offering.
• Capital Expenditures: Approximately $2 million, targeting 2% of revenue for 2026.

2. Strategic Updates and Business Highlights:

• Cohu is focusing on high-performance computing (HPC), with a robust customer pipeline estimated at $850 million annually.
• Significant traction in advanced thermal test handlers for AI processors and HBM inspection systems.
• Expansion in Southeast Asia to support fabless and hyperscaler programs.
• Software analytics business saw a 140% year-over-year increase in orders, with the first $1 million revenue quarter achieved.
• Continued investment in infrastructure and capacity expansion in Malaysia, expected to double output by mid-2027.

3. Forward Guidance and Outlook:

• Q3 revenue expected to increase by 14% sequentially and 35% year-over-year, targeting approximately $170 million.
• Full-year 2026 revenue outlook raised to approximately 35% growth over the previous year.
• Q3 gross margin projected at around 45%, with operating expenses expected to remain in the low-$50 million range.
• Continued focus on R&D investments to secure design wins in HPC and AI applications.

4. Bad News, Challenges, or Points of Concern:

• Automotive segment orders declined by 24% year-over-year, indicating ongoing struggles in that market.
• Rising input costs and longer lead times for certain semiconductors and components, particularly memory, could impact profitability and lead times.
• There are concerns about the sustainability of the current growth trajectory in the core business, particularly in light of potential seasonal fluctuations.

5. Notable Q&A Insights:

• Cohu's pipeline of $850 million includes three HPC and one HBM customer in the qualified segment, with expectations for revenue conversion within the next few months.
• The company is experiencing increased demand for its Eclipse handlers, with a notable $26 million order received for Q4.
• Discussions are ongoing regarding passing on higher input costs to customers, but no definitive plans have been established yet.
• There is a strong focus on maintaining operational efficiency and capacity expansion to meet growing demand, particularly in the HPC segment.
• Competitive pressures remain, primarily from a single competitor, Han Precision, which has historically dominated the market.

Overall, Cohu's Q2 2026 results reflect strong growth driven by HPC and strategic investments, though challenges in the automotive sector and rising input costs present potential headwinds.