Coherent, Inc.

Coherent sells components and modules to hyperscalers and telecom equipment makers without multi-year take-or-pay contracts. Revenue fell from $5.16B in FY2023 to $4.71B in FY2024 as datacenter capex cycled down, then recovered to $5.81B in FY2025, illustrating the absence of contractual revenue floors.

The Networking segment generated approximately 62% of FY2025 revenue, making Coherent highly dependent on the AI datacenter transceiver cycle. The Materials (approximately 15%) and Lasers (approximately 23%) segments serve distinct end markets but are not large enough to materially buffer a Networking downturn.

Coherent operates manufacturing facilities in the U.S., Germany, China, and across the Asia-Pacific region, serving hyperscaler and telecom customers globally. No country-level revenue breakdown was disclosed in FY2025, but the combination of U.S. hyperscaler customers, European telecom, and Asia-Pacific manufacturing suggests a multi-region revenue mix without extreme single-country concentration.

The transition to 6-inch InP wafers in the Sherman, Texas facility reduces per-unit laser chip costs and creates meaningful operating leverage in the Networking segment as volumes scale. Capex intensity of approximately 8% of revenue and the labor-intensive Materials and Lasers segments constrain overall operating leverage relative to asset-light businesses.

Coherent's revenue is transactional (component and module sales) rather than subscription or contractual, but hyperscaler qualification cycles of 12-18 months create de facto stickiness once designed in. The Networking segment is mission-critical for AI datacenter connectivity, supporting recurring purchasing, but the overall revenue profile remains discretionary on a capex-cycle basis.