Cohu Inc. (<a>(COHU)</a>) has held its Q2 earnings call. Read on for the main highlights of the call.

Cohu Inc. recently held its earnings call, showcasing a robust performance characterized by new orders, increased utilization, and innovative product launches. However, the call also addressed concerns about a potential seasonal slowdown and adjustments in tax provisions, painting a mixed yet optimistic picture for the company’s future.

The earnings call revealed a noteworthy increase in test cell utilization, which rose by 3 percentage points quarter-over-quarter to reach 75%. This uptick suggests a potential recovery cycle within the industry, indicating that Cohu is effectively leveraging its resources to meet growing demand.

Cohu secured a substantial $28 million design win order for its Eclipse handler from an existing customer, targeting the mobile and automotive end markets. This order underscores the company’s strong customer relationships and its ability to deliver solutions that meet the evolving needs of these dynamic sectors.

In a strategic move, Cohu received its first system order from a customer in India for silicon carbide testing. This development opens a new geographical opportunity for the company, potentially expanding its market reach and diversifying its revenue streams.

For the second quarter, Cohu reported revenue of $107.7 million, with a non-GAAP gross margin of 44.4%. These figures reflect the company’s solid financial performance and its ability to maintain healthy margins amidst a competitive landscape.

Cohu introduced a new model of the Eclipse handler, a configurable platform designed to expand its market share among test subcontractors. This launch highlights Cohu’s commitment to innovation and its strategic focus on enhancing its product offerings.

The launch of the PD3x instrument marks a significant advancement in Cohu’s capabilities for OLED displays and emerging AR devices. This product enhancement positions the company to capitalize on the growing demand for advanced display technologies.

Cohu’s software segment booked $360,000 in Q2, with an annual recurring revenue opportunity of $530,000. The company continues to invest in AI-driven process control, signaling its dedication to expanding its software business and leveraging technology for growth.

The company anticipates a seasonal slowdown in the fourth quarter, with a potential mid-single-digit revenue decline. This expectation reflects typical industry cycles and suggests a cautious approach to managing future performance.

Cohu expects a Q3 tax provision of approximately $15 million due to changes in capitalized R&amp;D, with a high effective tax rate anticipated in Q4. These adjustments highlight the financial complexities the company faces in navigating regulatory changes.

Despite having $23 million available for future repurchases, Cohu did not complete any stock repurchases in Q2. This decision may reflect a strategic choice to allocate capital towards other growth initiatives.

Looking ahead, Cohu projects a 16% revenue increase quarter-over-quarter for Q3 2025, driven by recent system orders in the mobile and automotive test markets. The company expects a revenue mix of 47% from systems and 53% from recurring revenue, with a gross margin of around 44%. Operating expenses are projected at $50 million, and the effective tax rate for Q4 is estimated between 30% and 35%. Cohu remains optimistic about its growth prospects, focusing on capturing new customer opportunities and investing in new products.

In summary, Cohu Inc.’s earnings call painted a picture of a company on the rise, with strong performance metrics and strategic initiatives aimed at sustaining growth. While challenges such as a potential seasonal slowdown and tax provision adjustments were acknowledged, the overall sentiment was one of cautious optimism, with a clear focus on innovation and market expansion.

Cohu Inc. Earnings Call Highlights Growth and Challenges

Cohu Inc. reported strong Q2 performance with $107.7 million in revenue and a 44.4% non-GAAP gross margin, driven by increased test cell utilization, new orders, and product launches. The company secured a $28 million design win for its Eclipse handler and a system order in India, while anticipating a potential Q4 seasonal slowdown and tax provision adjustments. Strategic investments in AI-driven process control and new products like the PD3x instrument aim to sustain growth.