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COHU INC (COHU)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $94.1M, within prior guidance, but down 1% sequentially and 31% year over year; GAAP EPS was -$0.46 and non-GAAP EPS was -$0.15 .
  • Gross margin was pressured by a $2.1M inventory reserve charge, reducing Q4 GM to 41.9% GAAP (41.8% non-GAAP) and costing ~4 cents of EPS; absent the charge, GM was in line with guidance .
  • Management guided Q1 2025 revenue to $97M ± $7M, lower than earlier commentary calling for ~10% sequential growth, due to ~$7M of shipment pushouts; Q1 GM ~44%, OpEx ~$49M, tax ~$3M, net interest income ~$1.3M .
  • Strategic initiatives advanced: first HBM inspection shipment with repeat order, entry into SiC die-level burn-in, and the Tignis AI/process-control acquisition to drive software growth, positioning medium-term margin expansion toward ~50% as software scales .

What Went Well and What Went Wrong

What Went Well

  • Systems revenue increased sequentially in Computing, Industrial and Consumer during a seasonally slow period, while recurring revenue remained 62% of total, supporting cash flow resilience .
  • HBM and SiC vectors progressing: first HBM inspection system shipped with repeat order; management targets ~$7M HBM and ~$5M SiC in 2025, plus $10–$15M from a Diamondx automotive win, implying $25–$30M incremental revenue drivers .
  • Operating expenses came in below expectations for Q4 (non-GAAP OpEx ~$45.3M) due to lower labor costs and higher vacation utilization; cash and investments remained strong at $262.1M .
    • “We are expanding our analytics offering with Tignis, creating the opportunity to potentially grow software revenue at an annual rate of 50% or more over the next three years…” — CEO Luis Müller .

What Went Wrong

  • Gross margin miss: Q4 non-GAAP GM 41.8% was ~220 bps below guidance due to a $2.1M inventory reserve for slow-moving customer-specific inventory; non-GAAP EPS was a -$0.15 loss .
  • Revenue headwinds: declines in Automotive and Mobile as customers work through inventory corrections; overall revenue -31% YoY vs Q4 2023 ($94.1M vs $137.2M) .
  • 2025 Q1 outlook reduced from earlier commentary (≈10% sequential growth) to $97M ± $7M on shipment pushouts (~$7M deferred across 2025), tempering near-term recovery expectations .

Financial Results

Quarterly trend (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$104.7 $95.3 $94.1
GAAP EPS ($USD)-$0.34 -$0.39 -$0.46
Non-GAAP EPS ($USD)-$0.01 -$0.08 -$0.15
GAAP Gross Margin %44.8% 46.8% 41.9%
Non-GAAP Gross Margin %45.1% 47.1% 41.8%
Adjusted EBITDA ($USD Millions)$4.0 $2.1 -$2.0
Adjusted EBITDA Margin %3.8% 2.3% -2.1%
Non-GAAP Operating Expenses ($USD Millions)$46.9 $45.2 $45.3
Recurring Revenue Share (%)66% 67% 62%
Cash & Investments ($USD Millions)$262.4 $269.2 $262.1

Year-over-year comparison (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$137.2 $94.1
GAAP EPS ($USD)-$0.04 -$0.46
Non-GAAP EPS ($USD)$0.23 -$0.15
GAAP Gross Margin %47.7% 41.9%
Non-GAAP Gross Margin %48.5% 41.8%
Adjusted EBITDA ($USD Millions)$17.8 -$2.0
Non-GAAP Operating Expenses ($USD Millions)$49.8 $45.3

KPIs and operational context

KPIQ2 2024Q4 2024
Estimated Test Cell Utilization (%)74% 73%
OSAT Utilization (%)—76%
IDM Utilization (%)—70%
CapEx ($USD Millions, quarter)~$2.0 ~$3.0

Systems revenue mix context (FY 2024)

MarketFY 2024 Systems Revenue (%)
Automotive9%
Industrial6%
Mobile11%
Consumer4%
Compute3%
IoT2%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025≈10% above Q4 (~$105M) based on Q3 commentary $97M ± $7M Lowered due to ~$7M shipment pushouts across 2025
Gross Margin %Q1 2025N/A~44% New detail provided
Operating Expenses ($USD Millions)Q1 2025N/A~$49M New detail provided
Net Interest Income ($USD Millions)Q1 2025N/A~$1.3M New detail provided
Tax Provision ($USD Millions)Q1 2025N/A~$3.0 New detail provided
Basic Shares (Millions)Q1 2025N/A~46.6 New detail provided
Sales ($USD Millions)Q4 2024$95M ± $7M (guided on 10/31/24) Actual $94.1M In-range outcome

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
AI/software and analyticsBuilding recurring software; new product launches; utilization improving DI‑Core subscriptions; data analytics opportunity; initial wins Tignis acquisition closed; plan to grow software ≥50% CAGR; DI‑Core qualified and first PO Expanding capability and pipeline
HBM (High Bandwidth Memory)N/AAnnounced HBM inspection order; large market opportunity First HBM system shipped; repeat order; ~$7M 2025 revenue potential Moving from initial order to revenue
SiC die-level burn-inN/AAnnounced entry; displacement of wafer-level burn-in ~$5M 2025 potential; further ramp in 2H25 Commercialization progressing
Inventory correction & end-marketMild utilization improvement (74%) Mobile strengthening; orders up; cautious cycle outlook Auto/Industrial still digesting inventory; recovery likely after ~2–3 quarters Gradual normalization expected
Margin outlookGM mid-40s at ~$100M revenue Strong Q3 GM 47.1% Q4 GM hit by inventory reserve; Q1 GM ~44%; incremental business GM high-40s, path to ~50% with software Near-term pressure; medium-term upside

Management Commentary

  • “Estimated test cell utilization at the end of December increased 1 point quarter-over-quarter to 73%, driven by OSATs that improved 2 points to 76% and while IDMs closed the quarter at 70%.” — CEO Luis Müller .
  • “We shipped our first HBM inspection system and received a repeat order early in first quarter that we expect to ship in the middle of this year… potential to deliver $7 million of revenue this year.” — CEO Luis Müller .
  • “Q4 gross margin was 41.8%, about 220 basis points lower than guidance due to a $2.1 million charge to our inventory reserve… Excluding the impact… gross margin was in line with the guidance.” — CFO Jeffrey Jones .
  • “We believe there is an opportunity to grow Cohu's software revenue at an annual rate of 50% or more over the next 3 years…” — CEO Luis Müller .

Q&A Highlights

  • Tignis impact: ~$2M Q1 OpEx addition; revenue sub-$1M in 2024 and likely ~$1M in 2025; breakeven expected in a few years .
  • 2025 incremental drivers: HBM ~$7M, SiC ~$5M, Diamondx automotive ~$10–$15M; aggregate ~$25–$30M; incremental GM guided high-40s, approaching ~50% as software scales .
  • Shipment timing: ~$7M of Q1 tools pushed to later 2025; book remains intact; sequential revenue uplift deferred .
  • Segment recovery cadence: Auto/Industrial have most inventory to digest; recovery expected to begin in 2H25, with Mobile lagging but with customer-share dynamics potentially benefiting Cohu mid‑year .
  • Recurring revenue stability: ~$60M run-rate in services/spares seen as relatively stable with ~1/3 the volatility of systems .

Estimates Context

  • Wall Street consensus (S&P Global) for EPS and revenue was unavailable due to a data access limit on retrieval. As a result, we cannot quantify beats/misses versus consensus for Q4 or Q1 guidance at this time (S&P Global consensus data unavailable).
  • Management indicated Q4 revenue was within guidance, and absent the inventory reserve GM would have aligned with guidance; pending consensus restoration, sell-side models are likely to reflect lower near-term GM and modestly lower Q1 revenue timing due to pushouts .

Key Takeaways for Investors

  • Near-term margin headwinds were driven by a discrete $2.1M inventory reserve; non-GAAP EPS (-$0.15) and GM (41.8%) should improve as mix normalizes and as Q1 GM (~44%) benefits from recurring business and product differentiation .
  • The medium-term narrative is improving: HBM and SiC initiatives, plus Diamondx wins, support ~$25–$30M incremental 2025 revenue, with incremental GM in the high-40s and a path toward ~50% as software scales (Tignis/DI‑Core) .
  • Recovery cadence remains back-end weighted: Auto/Industrial digestion likely requires 2–3 more quarters; investors should expect steadier recurring revenue and systems growth tied to data center and network infrastructure demand before broad-based recovery .
  • Q1 2025 guide reset ($97M ± $7M) reflects ~$7M shipment deferrals, not order cancellations; monitor backlog conversion and HBM tool revenue recognition (one tool in Q1, repeat shipment mid‑year) for catalysts .
  • Cash/investments of $262.1M and low net debt provide flexibility to invest through the cycle while supporting buybacks as conditions permit .
  • Watch for software traction and margin mix: management’s ≥50% software growth target over the next three years is a key driver for sustained gross margin expansion .
  • Tactical implication: limited near-term estimate upside until shipment timing normalizes; medium-term thesis rests on AI/data‑center aligned products and software monetization that can drive re‑rating as cycle turns .
Non-GAAP adjustments and reconciliations are provided in company schedules; key Q4 items included amortization of purchased intangibles, share-based compensation, restructuring, and the $2.1M inventory reserve impacting GM and EPS **[21535_0cf835fabf9144adaae334f4be4f9e30_6]** **[21535_0001437749-25-003753_ex_777843.htm:5]** **[21535_0001437749-25-003753_ex_777843.htm:7]**.