Coherent’s shares fell 4.9% post-earnings as investors reacted negatively to a cautious outlook on near-term capacity constraints and supply chain issues, despite strong demand and record backlog levels. Concerns around production bottlenecks and margin risks overshadowed the solid revenue growth.

• Revenue increased 9% sequentially and 27% year-over-year, showing accelerating growth momentum.
• Datacenter & Communications segment, representing 75% of revenue, grew over 40% year-over-year, with data center sales alone up 37% year-over-year and 13% sequentially.
• Gross margins expanded both sequentially and year-over-year, aided by the ramp of 6-inch indium phosphide production lines.
• Production constraints remain a key challenge; the company only recently resolved bottlenecks in optical circuit switch (OCS) capacity and expects capacity growth to lag demand in the near term.
• Management pushed back the long-term capacity ramp by at least a quarter and underscored the criticality of supply chain execution to realize backlog and revenue growth, prompting investor caution.