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# Coherent Targets 45% Gross Margin By 2028 And Expects Fiscal 2027 Growth Above 60%
- URL: https://www.bullished.co/coherent-targets-45-gross-margin-by-2028-and-expects-fiscal-2027-growth-above-60-dc245260/
- Published: 2026-11-04T23:25:58.000Z
- Updated: 2026-11-04T23:25:58.000Z
- Description: The photonics maker reported $2.37 billion in quarterly revenue and guided second-quarter sales to $2.55 billion to $2.75 billion.
- Author: Matteo Parrino
- Tags: Earnings, COHR, Industry: Technology

[Coherent](https://www.bullished.co/tag/cohr/), which makes lasers, optical transceivers and engineered materials, reported first-quarter revenue of [$2.37 billion](https://www.sec.gov/Archives/edgar/data/0000820318/000119312526447200/d176836d8k.htm?ref=bullished.co), up 50% from a year earlier and 56% on a pro forma basis, in results issued Wednesday. It also expects fiscal 2027 pro forma revenue growth above 60% and set a new target of adjusted gross margin above 45%.

## Datacenter drives the quarter

Datacenter & Communications revenue reached [$1,951.7 million](https://www.sec.gov/Archives/edgar/data/0000820318/000119312526447200/d176836dex991.htm?ref=bullished.co) in the quarter ended September 30, compared with $1,090.0 million a year earlier. The segment made up 82% of revenue, according to the company's investor presentation, which put its growth at 79% year over year.

Industrial revenue was $418.6 million, against $491.4 million a year earlier. The presentation describes the segment as flat from the prior quarter, and its pro forma figures exclude the aerospace and defense business sold on September 2, 2025 and the Munich, Germany business sold on January 30, 2026.

Profit grew faster than sales. Adjusted earnings were [$2.09 per share](https://www.globenewswire.com/news-release/2026/11/04/3395801/11543/en/coherent-corp-reports-first-quarter-fiscal-2027-results.html?ref=bullished.co), up $0.93 from a year earlier, and earnings under standard accounting were $1.90 per share, up $0.71\. Adjusted gross margin, the share of sales left after production costs, rose to 40.6% from 38.7%.

CFO Sherri Luther credited "pricing optimization and cost improvements" for the margin gain. CEO Jim Anderson said AI datacenters are moving from copper to optical connectivity and that Coherent's manufacturing scale positions it to meet rising demand for bandwidth and energy efficiency.

## Guidance and a $20 billion agreement

For the second quarter, Coherent guided revenue of $2.55 billion to $2.75 billion and adjusted earnings of $2.28 to $2.48 per share. Adjusted gross margin is expected between 40% and 42%.

The company expects its first $3 billion revenue quarter by the end of fiscal 2027 and its first $4 billion quarter in fiscal 2028\. It said fiscal 2027 growth above 60% would be more than double its fiscal 2026 pro forma rate.

The investor presentation cites long-term supply agreements, including a PhotonLink agreement valued at about $20 billion over five years, with revenue beginning to ramp in early calendar 2028\. Coherent also said it doubled internal indium phosphide output capacity from a year earlier, one quarter ahead of plan, and expects to more than double it again by the end of calendar 2027.

## Cash goes out as capacity goes in

Operating activities used $92.7 million of cash in the quarter, against $46.0 million provided a year earlier. Capital spending reached $775.5 million, up from $103.9 million.

Inventories rose to $3,341.4 million at September 30 from $2,581.0 million at June 30\. Long-term debt stood at $3,980.7 million, up from $3,214.3 million.

Coherent said it expects its first quarter with adjusted gross margin above 45% before the end of calendar 2028.

Learn

- [Item 2.02: results of operations →](https://www.bullished.co/learn/8-k-items-explained/#item-202-results-of-operations)  
From 8-K Items Explained: What Every Item Code From 1.01 To 9.01 Tells You, With Examples

### Sources

- [8-K Filing — COHERENT CORP. (COHR)](https://www.sec.gov/Archives/edgar/data/0000820318/000119312526447200/d176836d8k.htm?ref=bullished.co) — SEC EDGAR
- [Exhibit d176836dex991.htm — COHERENT CORP. 8-K exhibit](https://www.sec.gov/Archives/edgar/data/0000820318/000119312526447200/d176836dex991.htm?ref=bullished.co) — SEC EDGAR
- [Exhibit d176836dex992.htm — COHERENT CORP. 8-K exhibit](https://www.sec.gov/Archives/edgar/data/0000820318/000119312526447200/d176836dex992.htm?ref=bullished.co) — SEC EDGAR
- [Coherent Corp. Reports First Quarter Fiscal 2027 Results](https://www.globenewswire.com/news-release/2026/11/04/3395801/11543/en/coherent-corp-reports-first-quarter-fiscal-2027-results.html?ref=bullished.co) — globenewswire.com

### More on Coherent

- [Coherent Lands A $20 Billion Five-Year AI Supply Deal And Lifts Its Gross Margin Goal Above 45%](https://www.bullished.co/coherent-lands-a-20-billion-five-year-ai-supply-deal-and-lifts-its-gross-margin-goal-above-037adf97/)
- [Coherent Burned $93 Million In Operating Cash While Revenue Jumped 50%](https://www.bullished.co/coherent-burned-93-million-in-operating-cash-while-revenue-jumped-50-bcca9748/)
- [Coherent's Proxy Notice Lists Four Director Nominees, A Pay Vote And Ernst & Young, With No Shareholder Proposals](https://www.bullished.co/coherents-proxy-notice-lists-four-director-nominees-a-pay-vote-and-ernst-and-young-with-no-1bc2af83/)

[All Coherent (COHR) coverage →](https://www.bullished.co/tag/cohr/)