"Revenue hit $1.58 billion, up 17% year-over-year, driven by $1.09 billion in datacenter and communications revenue. Non-GAAP gross margin expanded 200 basis points to 38.7%. But recent cash flow data raises questions. Q3 operating cash flow of $45.96 million contrasted sharply with net income of $225.2 million, producing negative free cash flow of $57.9 million. The disconnect stems from $219.1 million in inventory reductions and non-operating gains rather than core operational strength."
"Operating margins expanded 690 basis points year-over-year to 9.5% in fiscal 2025, but capital expenditures consumed 69.6% of operating cash flow. That intensity limits free cash flow generation even as reported earnings climb. The February 2 completion of the Tools for Materials Processing unit sale to Bystronic removes $100 million in annual sales but should reduce debt and boost margins. Management's guidance on how proceeds affect capital allocation matters more than the revenue haircut."
Coherent Inc delivered consecutive earnings beats, reporting $1.16 EPS and $1.58 billion in revenue, a 17% year-over-year increase led by $1.09 billion in datacenter and communications sales. Non-GAAP gross margin improved 200 basis points to 38.7%, and operating margins expanded 690 basis points to 9.5% in fiscal 2025. Q3 operating cash flow was $45.96 million versus $225.2 million in net income, producing negative free cash flow of $57.9 million tied to $219.1 million in inventory reductions and non-operating gains. Capital expenditures consumed 69.6% of operating cash flow. The sale of the Tools for Materials Processing unit removes $100 million in annual sales but should reduce debt and boost margins. Director selling accelerated late in the year while Bain Capital acquired 7.75 million shares and shares traded above analyst averages.
Read at 24/7 Wall St.
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