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CI

COHU INC (COHU)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $96.8M (63% recurring) with GAAP gross margin 43.7% and non-GAAP gross margin 44.2%; non-GAAP EPS was -$0.02, in line to slightly better than internal guidance and above Wall Street consensus for EPS while revenue was roughly in line . Consensus EPS was -$0.166* and revenue $96.6M*, implying a small EPS beat and revenue in line. Values retrieved from S&P Global.
  • Management guided Q2 2025 revenue to $106M ± $7M and non-GAAP gross margin ~45%; the sequential uptick is driven roughly half by systems and half by recurring, with strengthening HBM inspection shipments and recurring consumables demand .
  • Recurring orders rose 28% QoQ, and the company received a repeat multi‑unit HBM inspection order; test cell utilization ended at ~72% (IDMs ~70%, OSATs ~73%), suggesting potential early-cycle improvement led by OSATs and mobile .
  • Strategic AI/software integration progressed: three new demos signed for Tignis AI process monitoring; balance sheet remains strong ($200.8M cash/investments), though buybacks are paused for Q2 after repurchasing ~432K shares in Q1 .

What Went Well and What Went Wrong

What Went Well

  • Recurring revenue strength and order momentum: “Recurring orders increased 28% quarter‑over‑quarter,” with recurring comprising ~63% of Q1 revenue . CEO: “We are optimistic by the business prospects of our design‑wins, pick‑up in recurring orders, and expansion into new market segments.”
  • HBM inspection traction: repeat multi‑unit order and ~$8M 2025 HBM revenue expectation, expanding memory/data center exposure .
  • AI/software progress: “We have signed 3 new demonstration opportunities… for our AI process monitoring platform,” reflecting interest across front‑end equipment, materials suppliers, and U.S. defense research .

What Went Wrong

  • YoY revenue decline and GAAP loss: Q1 revenue fell to $96.8M vs $107.6M YoY; GAAP net loss widened to -$30.8M (EPS -$0.66) amid restructuring and amortization charges .
  • System demand mixed; utilization still subdued: Systems strength in automotive/consumer offset by declines in computing, industrial, mobile; utilization ended ~72%, below the ~80% threshold often associated with capex inflection .
  • Buyback pause and elevated effective tax at breakeven: management paused buybacks for Q2 and noted an unusually high effective tax rate (~90%) at breakeven levels, tempering near‑term EPS leverage .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$95.3 $94.1 $96.8
GAAP EPS ($)-$0.39 -$0.46 -$0.66
Non-GAAP EPS ($)-$0.08 -$0.15 -$0.02
GAAP Gross Margin %46.8% 41.9% 43.7%
Non-GAAP Gross Margin %47.1% 41.8% 44.2%
Adjusted EBITDA Margin %2.3% -2.1% -2.0%
Non-GAAP Operating Expenses ($USD Millions)$45.239 $45.304 $48.583
Actual vs ConsensusQ3 2024Q4 2024Q1 2025
Revenue Actual ($USD Millions)$95.3 $94.1 $96.8
Revenue Consensus ($USD Millions)*$95.75$95.11$96.61
Revenue Beat/(Miss) ($USD Millions)-$0.41-$0.99+$0.19
EPS Actual ($)-$0.08 -$0.15 -$0.02
EPS Consensus ($)*-$0.0725-$0.0933-$0.166
EPS Beat/(Miss) ($)-$0.0075-$0.0567+$0.146
# of Estimates (Revenue/EPS)*7 / 66 / 65 / 5

Values retrieved from S&P Global.

Revenue Mix (Recurring %)Q3 2024Q4 2024Q1 2025
Recurring (% of total)~67% ~62% ~63%
KPIsQ4 2024Q1 2025
Test Cell Utilization (Overall, %)73% 72%
Utilization – IDMs (%)70% ~70%
Utilization – OSATs (%)76% ~73%
Cash & Investments ($USD Millions)$262.1 $200.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q2 2025N/A$106 ± $7 New
Gross Margin (non-GAAP, %)Q2 2025~44% for Q1 2025 ~45% Raised
Operating Expenses (non-GAAP, $USD Millions)Q2 2025~$48/quarter at $100M run-rate (2025) ~ $48 Maintained
Interest Income (net) ($USD Millions)Q2 2025N/A~$0.9 New
Non-GAAP Tax Provision ($USD Millions)Q2 2025N/A~$1.6 New
Basic Share Count (Millions)Q2 2025~46.6 (Q1) ~46.7 Maintained
Share RepurchasesQ2 2025Goal to offset dilution (432K shares repurchased in Q1) Pause in Q2 Paused

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2024)Current Period (Q1 2025)Trend
AI/software initiatives (DI‑Core, Tignis)Announced Tignis acquisition; plan to grow software at 50% CAGR; DI‑Core qualified; initial PO for visual inspection yield optimization 3 new demos for AI process monitoring (front-end equipment, materials supplier, U.S. defense); integration progressing; broader back‑end PdM ambition Positive momentum; pipeline building
HBM inspection/data centerEntered HBM market; first tool shipment; ~$7M 2025 target Repeat multi‑unit order; 2025 HBM revenue now ~ $8M; discussions with second customer Expanding opportunity; customer base potentially broadening
Recurring demand/utilizationQ3 recurring improved 8% QoQ; Q4 recurring 62% of mix; utilization 73% (OSATs 76%, IDMs 70%) Recurring orders +28% QoQ; utilization 72% (IDMs ~70%, OSATs ~73%) Early-cycle signals; strength concentrated in mobile
Tariffs/macroLimited direct impact expected; Asia-based supply chain mitigates “Not seen any meaningful change in customer buying patterns due to tariffs”; customer is importer of record Neutral risk; monitored
Automotive/industrialDigesting inventories; trough cited around Q3’24–Q1’25 by key customers Auto likely to trail mobile; recovery pace “slow” near term Gradual improvement expected
Capital allocationRepurchases exceeded dilution by Q3’24; no buybacks in Q4 Q1 buyback of 432K shares; pause in Q2; M&A funnel under review Balanced; opportunistic pause

Management Commentary

  • CEO: “We are optimistic by the business prospects of our design‑wins, pick‑up in recurring orders, and expansion into new market segments.”
  • CEO on HBM: “We’re projecting about $8 million of revenue in HBM this year… started discussions with a second customer… expect that revenue to grow going out to 2026.”
  • CFO on guidance mix: “Half of that quarter‑over‑quarter increase [for Q2]… half systems, half recurring.”
  • CEO on tariffs: “We have not seen any meaningful change in customer buying patterns due to tariffs.”
  • CEO on utilization: “Utilization closed the quarter at about 72%. IDMs were about 70% and OSATs about 73%.”
  • CFO on operating expenses scaling: “At $100M revenue… OpEx ~ $47M [post full restructuring]; at $130M… OpEx ~ $49M.”
  • CFO on taxes: “Effective tax rate… in the 90% range at breakeven… carry that 90% into the second half.”

Q&A Highlights

  • Q2 sequential growth drivers: revenue increase at the midpoint (~$9M) split ~50/50 between systems and recurring .
  • HBM outlook: 2025 revenue raised to ~$8M; second customer discussions underway; broader 2026 opportunity expected .
  • Demand signals: recurring orders strength concentrated in mobile; viewed as a leading indicator for utilization and eventual systems demand .
  • Utilization methodology: overall 72%; refining market segmentation granularity; OSATs typically lead recoveries .
  • Operating model: OpEx scaling to ~$47M/quarter at $100M revenue post full restructuring; tax rate unusually high (~90%) at breakeven .
  • Capital allocation: Q1 buybacks (~432K shares, ~$8.6M) executed; Q2 buybacks paused; M&A funnel active .

Estimates Context

  • Q1 2025: EPS -$0.02 vs consensus -$0.166*; Revenue $96.8M vs consensus $96.61M* — EPS beat, revenue in line . Values retrieved from S&P Global.
  • Q4 2024: EPS -$0.15 vs -$0.0933*; Revenue $94.1M vs $95.11M* — both slight misses . Values retrieved from S&P Global.
  • Q3 2024: EPS -$0.08 vs -$0.0725*; Revenue $95.3M vs $95.75M* — small misses . Values retrieved from S&P Global.
  • Implication: With Q2 guide up and recurring strength, estimate revisions may trend higher on revenue and margin for Q2–Q3, but high effective tax rates and buyback pause dampen near-term EPS leverage .

Key Takeaways for Investors

  • Recurring demand and HBM traction provide near-term visibility; Q2 guide up to $106M ± $7M and ~45% gross margin is a potential stock catalyst if execution holds .
  • Non-GAAP profitability is stabilizing despite GAAP losses driven by amortization/restructuring; non-GAAP EPS beat vs consensus in Q1 suggests model resilience at ~$100M revenue run-rate . Values retrieved from S&P Global.
  • Early-cycle signals: utilization steady to slightly improving, OSATs leading; recurring strength in mobile likely precedes systems demand into 2H .
  • Strategic expansion in data center (HBM inspection, high-performance networking contactors) and AI/software (Tignis + DI‑Core) broadens TAM and could lift margin toward high‑40s over time .
  • Operating discipline: OpEx targeted to ~$48M near term (Q2) and ~$47M after full restructuring at $100M revenue, enabling operating leverage in recovery .
  • Tariff risk appears limited under Cohu’s shipping terms and Asia-centric operations; monitor policy changes but near-term cost impact expected to be minimal .
  • Trading implications: Near-term set-up favors positive revisions if Q2 demand materializes and recurring momentum persists; watch for confirmation of utilization improvement and additional HBM/customer wins to sustain multiple expansion .
Notes:
* Consensus values are from S&P Global (Capital IQ). Values retrieved from S&P Global.