# COHR Quarter forecast · Q1 FY27

> Coherent reported Q1 FY27. These are the numbers we published before the release, with a cutoff of 4 November 2026, 14:14 ET.

Canonical: https://pricedin.markets/cohr/fq1-2027/preview/

Wednesday 4 November, after the close · reported

Coherent reported Q1 FY27. These are the numbers we published before the release, with a cutoff of 4 November 2026, 14:14 ET.

COHR · earnings preview · our forecast as of 2026-11-04 14:14:52 ET · 7 AI analysts · 80% ranges, 1 in 10 to 9 in 10

## COHR reports Q1 FY27 on 4 November 2026

release after the close · call 16:30 ET

Next report · Q1 FY27

Sales $2.36B +49% on Q1 FY26

Adjusted EPS $2.06 +77% on Q1 FY26

Quarter after · Q2 FY27

Sales $2.56B +52% on Q2 FY26

Adjusted EPS $2.33 +81% on Q2 FY26

### Q1 FY27 · the quarter COHR reports

##### Sales

PricedIn **$2.36B** $2.20B – $2.48B

$2.20B $2.28B $2.36B $2.42B $2.48B

##### adjusted EPS

PricedIn **$2.06** $1.80 – $2.28

$1.80 $1.95 $2.06 $2.16 $2.28

**Middle** the forecast **50% range** 1 in 4 chance the result comes in below this bar, 1 in 4 above it. Half the time it lands inside. **80% range** 1 in 10 chance below this line, 1 in 10 above it. These are the low and high printed by each number. **The room** The lowest 1-in-10 low and the highest 1-in-10 high among the seven analysts, as each handed them in before the round, with who holds each.

All seven analysts put revenue in the upper half of the company's range, and earnings per share between Analyst E's $1.97 and Analyst C's earnings per share of $2.20. They agree supply, not demand, sets the quarter. They differ on costs and on how close to the top of the guide revenue lands.

The analysts expect first-quarter fiscal 2027 revenue of about $2.4B, near the top of the company's own range, as doubled laser capacity ships.

Sales **$2.36B** +49% on Q1 FY26 ($1.58B)

*50% range* $2.28B – $2.42B *80% range* $2.20B – $2.48B *The room* $2.16B – $2.58B D low · C high

Adjusted EPS **$2.06** +77% on Q1 FY26 ($1.16)

*50% range* $1.95 – $2.16 *80% range* $1.80 – $2.28 *The room* $1.72 – $2.52 E low · C high

#### Investment and cash generation

Base case

Capital spending **$650M**

Free cash flow **−$530M**

Free cash flow: operating cash flow less capital spending.

- **Capital spending buys advanced tooling and manufacturing equipment, mainly six-inch indium phosphide laser lines and transceiver assembly, which the company says pays back in about 18 months; little of it lifts this quarter's sales. The middle case has capital spending of $650M against cash from operations of $120M, so free cash flow, defined as cash from operations less capital spending, is −$530M while inventory builds for the ramp. *2 of 7***
  - **Analyst F** June-quarter capital spending was $556 million. I model about $650 million a quarter in fiscal 2027 (about $2.6 billion for the year), which keeps free cash flow negative this year.
  - **Analyst C** Capex was $556M in Q4-FY2026 and the CFO said it will increase sequentially again in Q1, with datacenter investments carrying an 18-month payback.

Coherent's revenue has risen every quarter for two years, reaching $2.0B in the June 2026 quarter, with non-GAAP earnings per share of $1.74. In August the company guided September-quarter revenue of between $2.2 billion and $2.4 billion and non-GAAP earnings per share of between $1.85 and $2.05.

The quarter ended on 30 September, and the company reports on 4 November 2026 after the close. The middle forecast is revenue of $2.4B, a sales rise of +49% on a year earlier, and non-GAAP earnings per share of $2.06, with earnings per share up +77%.

Most analysts set the middle in the upper part of the range because recent quarters landed at or near the top of guidance. Internal indium phosphide laser output doubled a quarter ahead of plan, and management said it had the lasers for very strong data center growth this quarter. Industrial revenue is roughly flat, so data center carries the step-up.

The middle case has gross margin on a GAAP basis of +39% and operating margin of +17%; the company guided non-GAAP gross margin of between 39.5% and 41.5%. Capital spending keeps rising, so cash lags earnings.

The spread between analysts is narrow. Analyst E stays closest to the guide's midpoint on revenue, while Analyst C sits highest on earnings per share because it assumes lower research spending.

Earnings per share build from revenue near the top of the guide, GAAP gross margin of +39%, operating costs falling as a share of sales, a non-GAAP tax rate inside the guided range and a share count close to June's.

#### The company's outlooks

Q3 FY25 guided “between $1.39 billion and $1.48 billion”

Q4 FY25 guided “between $1.425 billion and $1.575 billion”

Q1 FY26 guided “between $1.46 billion and $1.60 billion”

Q2 FY26 guided “between $1.56 billion and $1.70 billion”

Q3 FY26 guided “between $1.70 billion and $1.84 billion”

Q4 FY26 guided “between $1.91 billion and $2.05 billion”

Q1 FY27 guided “between $2.2 billion and $2.4 billion”

Each outlook is the one the company gave before the quarter, in its own words. It is on another measure than the reported sales line, so it is not set against the result.

#### The quarter forecast, line by line

| Line | Q4 FY26 reported | Q1 FY26 reported | Q1 FY27 forecast | Q2 FY26 reported | Q2 FY27 forecast |
| --- | --- | --- | --- | --- | --- |
| Revenues | $2.05B | $1.58B | $2.36B | $1.69B | $2.56B |
| Sales growth, year on year | +34% | +17% | +49% | +17% | +52% |
| Datacenter & Communications | $1.62B | $1.09B | $1.92B | $1.21B | $2.10B |
| Industrial | $431M | $491M | $440M | $478M | $455M |
| Cost of goods sold | $1.26B | $1.00B | $1.44B | $1.06B | $1.54B |
| Research and development | $216M | $155M | $244M | $166M | $258M |
| Selling, general and administrative | $266M | $252M | $278M | $258M | $283M |
| Restructuring charges (recoveries) | $6.1M | $19.3M | $8.0M | $3.6M | $8.0M |
| Impairment of assets held-for-sale | $44.3M | $9.1M | $0 | $11.0M | $0 |
| Gain on sale of business | $0 | $115M | $0 | $0 | $0 |
| Interest expense | $41.1M | $58.7M | $41.0M | $45.9M | $41.0M |
| Other expense (income), net | $65.6M | $16.5M | $11.0M | $29.9M | $9.0M |
| Total Costs, Expenses, & Other Expense | $1.77B | $1.36B | $2.00B | $1.52B | $2.12B |
| Earnings (Loss) Before Income Taxes | $279M | $217M | $363M | $168M | $436M |
| Income Tax Expense | $42.3M | −$8.3M | $58.0M | $24.2M | $70.0M |
| Tax rate | 15.2% | −3.8% | 16.0% | 14.4% | 16.1% |
| Net Earnings (Loss) | $236M | $225M | $305M | $144M | $366M |
| Net Loss Attributable to Noncontrolling Interests | −$4.33M | −$1.15M | −$4.00M | −$2.90M | −$4.00M |
| Net Earnings (Loss) Attributable to Coherent Corp. | $241M | $226M | $309M | $147M | $370M |
| Basic earnings (loss) available to common shareholders | $241M | $193M | $309M | $145M | $370M |
| Average Shares Outstanding - Diluted | 0.20B | 0.19B | 0.20B | 0.19B | 0.21B |
| GAAP EPS | $1.19 | $1.19 | $1.51 | $0.76 | $1.80 |
| Tax impact of non-GAAP measures(8) | — | — | −$39.9M | — | −$41.8M |
| Share-based compensation | — | — | $60.0M | — | $61.0M |
| Amortization of acquired intangibles | — | — | $69.5M | — | $69.2M |
| Restructuring charges(4) | — | — | $8.00M | — | $8.00M |
| Integration, site consolidation and other(2) | — | — | $15.0M | — | $14.0M |
| Adjusted net income | — | — | $421M | — | $480M |
| Adjusted EPS | $1.74 | $1.16 | $2.06 | $1.29 | $2.33 |

The lines as the company's statement shows them. The forecast columns are the tab's PricedIn forecast, one analyst's whole plan, the analyst nearest the middle of the seven on both sales and earnings per share, so the lines add up to the numbers above. Sales growth is the change on the same quarter a year earlier. Earnings per share is the headline's: the company's own for the reported quarter, and for a forecast quarter that analyst's own, worked from its lines with the company's adjustments. GAAP EPS is net income over diluted shares; under it, each adjustment is its effect on net income after tax, to adjusted net income and the adjusted figure: for a forecast as that analyst states it, for a reported period from the company's own table where we hold it, and — where we do not.

#### Quarterly capital spending

June 2025 quarter $131M

March 2026 quarter $290M

June 2026 quarter $556M

**Where each number comes from**

**June 2025 quarter**

“Our capital expenditures increased $556 million up from $290 million last quarter and $131 million in the year-ago period.”

**March 2026 quarter**

“Our capital expenditures increased $556 million up from $290 million last quarter and $131 million in the year-ago period.”

**June 2026 quarter**

“Our capital expenditures increased $556 million up from $290 million last quarter and $131 million in the year-ago period.”

Spending more than quadrupled in a year, and the company expects it to rise again in the September quarter.

#### What it rests on

**Revenue outlook**

September-quarter revenue between $2.2 billion and $2.4 billion “Revenue for the first quarter of fiscal 2027 is expected to be between $2.2 billion and $2.4 billion.” August 2026 earnings release

**Earnings outlook**

Non-GAAP earnings per share between $1.85 and $2.05 “EPS for the first quarter of fiscal 2027 is expected to be between $1.85 and $2.05 on a non-GAAP basis.” August 2026 earnings release

**Gross margin outlook**

Non-GAAP gross margin between 39.5% and 41.5% “Gross margin percentage for the first quarter of fiscal 2027 is expected to be between 39.5% and 41.5% on a non-GAAP basis.” August 2026 earnings release

**Laser capacity**

Internal indium phosphide output doubling one quarter ahead of plan “We remain on track to double our internal indium phosphide output capacity year-over-year by the end of the current quarter, one quarter ahead of our original plan.” August 2026 earnings call

**Capital spending**

Expected to rise again in the September quarter “Given the exceptional demand profile and clear ROI visibility, we expect capital expenditures to increase sequentially again in Q1.” August 2026 earnings call

#### Scenarios Explained: Base, Low, and High

Base the middle forecast

Q1-FY2027

Sales **$2.36B**

Adjusted EPS **$2.06**

Capital spending **$650M**

Free cash flow **−$530M**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| net earnings | $305M |
| --- | --- |
| depreciation and amortization | $145M |
| share-based compensation | $60.0M |
| deferred income taxes | −$40.0M |
| inventories, receivables and payables | −$350M |
| Operating cash flow | $120M |
| Less capital spending | −$650M |
| Free cash flow | −$530M |

**net earnings**

Reported net earnings from the quarter plan.

**depreciation and amortization**

Rising with the new equipment.

**share-based compensation**

Per the quarter plan.

**deferred income taxes**

In line with recent quarters.

**inventories, receivables and payables**

Inventory and receivables grow with revenue, partly offset by payables.

##### Capital spending

Spending steps up from $556 million in June as guided; the remaining 20% (buildings and other spending) is unallocated because no split is disclosed.

| advanced tooling and state-of-the-art manufacturing equipment | $520M |
| --- | --- |
| Unallocated capital spending | $130M |
| Total capital spending | $650M |

**advanced tooling and state-of-the-art manufacturing equipment** My estimate of about 80% of spending; the split is mine.

“This capex is primarily directed towards advanced tooling and state-of-the-art manufacturing equipment that accelerates our volume manufacturing capabilities and optimizes production yields.” “Given the exceptional demand profile and clear ROI visibility, we expect capital expenditures to increase sequentially again in Q1.”

#### Three ways the base case happens

These levers explain the outcome together.

1. **Revenue lands in the upper half of the guide.** Recent quarters landed at or near the top of the company's guided ranges. Sets sales near the middle forecast; because operating costs are largely fixed within a quarter, each step toward the top of the range adds disproportionately to earnings per share.
  Watch Reported September-quarter revenue against the guided range on 4 November 2026.
  **Analyst reasoning**
  - **Analyst F** I set the middle in the upper part of it
  - **Analyst D** The September quarter lands in the upper half of the company's range
2. **Doubled laser capacity feeds shipments.** Internal indium phosphide output doubled one quarter ahead of the original plan. Supplies lasers for the data center transceivers that carry nearly all the growth; industrial revenue stays roughly flat, so the step-up from June must come from data center shipments.
  Watch Management's comments on laser output and data center growth on the 4 November call.
  **Analyst reasoning**
  - **Analyst E** Earlier capacity relief and a further doubling support accelerating fiscal 2027 sales
  - **Analyst F** Industrial is flat for now, so nearly all growth must come from Datacenter and Communications.
3. **Operating costs grow slower than revenue.** Guided operating expenses already sit below the company's own target share of revenue. Operating margin near +17% lets earnings per share grow faster than revenue; rising capital spending and inventory keep free cash flow negative even as earnings climb.
  Watch Non-GAAP operating expenses and gross margin in the 4 November release.
  **Analyst reasoning**
  - **Analyst F** Adjusted operating expenses are already below 18% of revenue at the guide's midpoint.
  - **Analyst C** I held non-GAAP opex roughly flat in dollars near-term and let it fall as a percent of sales

Revenue near $2.4B, in the top half of the guided range, with GAAP gross margin of +39% and operating margin of +17%. Lasers from the doubled indium phosphide lines must reach finished transceivers on schedule, and operating costs must grow more slowly than revenue. Non-GAAP earnings per share then reach about $2.06, while capital spending of $650M keeps free cash flow negative.

High about 1 chance in 10 of better

Q1-FY2027

Sales **$2.48B** +5% vs base

Adjusted EPS **$2.28** +11% vs base

Capital spending **$620M**

Free cash flow **−$430M**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net earnings attributable to Coherent Corp. on a GAAP basis | $350M |
| --- | --- |
| Depreciation and amortization | $145M |
| Share-based compensation | $57.0M |
| Deferred income taxes | −$18.0M |
| Trade and other working capital | −$344M |
| Operating cash flow | $190M |
| Less capital spending | −$620M |
| Free cash flow | −$430M |

**Net earnings attributable to Coherent Corp. on a GAAP basis**

Revenue at the top of the guide with a richer mix.

**Depreciation and amortization**

Held at about 6.2 percent of revenue.

**Share-based compensation**

Largely fixed per headcount.

**Deferred income taxes**

Cash tax exceeds book expense by more on the larger pretax base as deferred tax liabilities on acquired intangibles unwind, so the use of cash is slightly bigger.

**Trade and other working capital**

Faster collections and better inventory turns on the higher revenue.

##### Capital spending

The whole quarter's capital spending is allocated between the two disclosed categories; nothing is left unallocated.

| expanding data center and communications capacity | $330M |
| --- | --- |
| Advanced tooling and state-of-the-art manufacturing equipment | $290M |
| Unallocated capital spending | $0 |
| Total capital spending | $620M |

**expanding data center and communications capacity** Same committed capacity budget as the base case.

“These investments were primarily focused on expanding data center and communications capacity and advancing our product development roadmaps.”

**Advanced tooling and state-of-the-art manufacturing equipment** Same equipment budget as the base case.

“This capex is primarily directed towards advanced tooling and state-of-the-art manufacturing equipment that accelerates our volume manufacturing capabilities and optimizes production yields.” “These strategic investments are expected to yield excellent financial returns. For example, the investments we are making in the data center business have a roughly 18-month payback period.”

#### Three ways the high case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Revenue beats the top of the guide again.** The June quarter landed at the top of its revenue range and above its earnings range. Extra revenue at a high incremental margin lifts earnings per share faster than sales within the quarter.
  Watch Revenue above the guided top in the 4 November release.
  **Analyst reasoning**
  - **Analyst F** That record is why my September quarter middle sits near the top of the range, not at its midpoint.
  - **Analyst C** in each of the last four quarters actual revenue and non-GAAP EPS landed at or above the top of guidance
2. **Data center growth runs ahead.** Management said it already had the lasers for very strong data center growth. Data center carries nearly all the step-up, so stronger shipments raise revenue directly and release inventory into cash.
  Watch Data center and communications segment revenue well above the June quarter's level.
  **Analyst reasoning**
  - **Analyst B** And so we would expect our data center growth, for instance, this quarter on a year-over-year basis to exceed 80%, right?
  - **Analyst G** September datacenter and communications sales above $2 billion, followed by a strong December ramp and sustained margin improvement.
3. **Gross margin reaches the guide's top.** Six-inch wafers make more chips at lower cost, and pricing work continues. A richer margin on higher volume lifts earnings per share more than revenue.
  Watch Non-GAAP gross margin at or above the top of its guided range.
  **Analyst reasoning**
  - **Analyst C** Q1-FY2027 revenue above about $2.48B with non-GAAP gross margin at or above 41.5%, the top of the guided range.
  - **Analyst E** with gross margin above 41.5%

Revenue near $2.5B, above the top of the guide, and non-GAAP earnings per share near $2.28, a change in earnings per share of +11% from the middle. Lasers convert faster, data center demand absorbs everything shipped and gross margin reaches the top of its guided range. Faster shipments turn inventory into cash, so free cash flow improves to about −$430M. Analyst C's high is furthest, at earnings per share of $2.52, because it pairs revenue above the guide with the lowest research spending.

Recent quarters landed at or above the top of guidance; the June quarter's non-GAAP earnings per share beat the top of its range.

The seven highs run from $2.44B (Analyst B) to $2.58B (Analyst C).

First sign Revenue above the guided top with gross margin at its range's top, 4 November 2026.

Low about 1 chance in 10 of worse

Q1-FY2027

Sales **$2.20B** −7% vs base

Adjusted EPS **$1.80** −12% vs base

Capital spending **$620M**

Free cash flow **−$600M**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net earnings attributable to Coherent Corp. on a GAAP basis | $270M |
| --- | --- |
| Depreciation and amortization | $145M |
| Share-based compensation | $57.0M |
| Deferred income taxes | −$12.0M |
| Trade and other working capital | −$440M |
| Operating cash flow | $20.0M |
| Less capital spending | −$620M |
| Free cash flow | −$600M |

**Net earnings attributable to Coherent Corp. on a GAAP basis**

Lower revenue at the bottom of the guide with a thinner gross margin.

**Depreciation and amortization**

Held at about 6.2 percent of revenue.

**Share-based compensation**

Largely fixed per headcount.

**Deferred income taxes**

Cash tax still exceeds book expense on the smaller pretax base because deferred tax liabilities on acquired intangibles keep unwinding, so the line remains a modest use of cash.

**Trade and other working capital**

The same inventory and receivable build against lower sales, so the drag is heavier.

##### Capital spending

The whole quarter's capital spending is allocated between the two disclosed categories; nothing is left unallocated.

| expanding data center and communications capacity | $330M |
| --- | --- |
| Advanced tooling and state-of-the-art manufacturing equipment | $290M |
| Unallocated capital spending | $0 |
| Total capital spending | $620M |

**expanding data center and communications capacity** Capital spending is held at the guided step-up even if revenue disappoints, because the capacity programme is committed.

“These investments were primarily focused on expanding data center and communications capacity and advancing our product development roadmaps.”

**Advanced tooling and state-of-the-art manufacturing equipment** Same allocation as the base case; capital commitments do not flex with one quarter of revenue.

“This capex is primarily directed towards advanced tooling and state-of-the-art manufacturing equipment that accelerates our volume manufacturing capabilities and optimizes production yields.” “Furthermore, as a vertically integrated manufacturer, this capacity offers significant fungibility as our infrastructure can be dynamically repurposed to support multiple product lines.”

#### Three ways the low case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Six-inch laser lines slip.** New lines depend on tools, clean rooms, trained staff and acceptable yields. Fewer lasers leave the fab, so fewer transceivers ship; revenue drops toward the bottom of the range while new equipment still depreciates, squeezing earnings per share.
  Watch Management describing laser output short of plan on the 4 November call.
  **Analyst reasoning**
  - **Analyst F** laser supply and yield on new six-inch lines
  - **Analyst D** Six-inch indium phosphide yields or tool deliveries slip
2. **Wafers convert to shipments more slowly.** Lasers reach shipped transceivers two to three months after leaving the fab. A short delay leaves more stock unshipped, holding revenue down and tying cash up in inventory; the low cases put free cash flow near −$600M.
  Watch Inventory rising faster than revenue on the September-quarter balance sheet.
  **Analyst reasoning**
  - **Analyst G** Slower conversion of wafer output into accepted transceivers
  - **Analyst G** I phase revenue and operating cash recovery through fiscal 2027 rather than assuming an immediate full conversion of new capacity.
3. **Gross margin slips to the guide's bottom.** Start-up costs on new lines and products can offset pricing gains. A thinner margin on lower revenue cuts earnings per share more than sales within the quarter.
  Watch Non-GAAP gross margin near the bottom of its guided range in the release.
  **Analyst reasoning**
  - **Analyst B** gross margin falling toward or below the 39.5 percent bottom end of first-quarter guidance due to ramp inefficiencies
  - **Analyst A** Start-up cost on co-packaged optics and multi-rail offsets pricing gains in gross margin

Revenue near $2.2B, the bottom of the guided range, and non-GAAP earnings per share near $1.80, a change in earnings per share of −12% from the middle. New six-inch laser lines or the conversion of wafers into transceivers slip, and start-up costs hold gross margin near the bottom of its range. Inventory keeps building, so free cash flow falls to about −$600M. Analyst E's low is furthest, at earnings per share of $1.72, because it adds delayed data center orders to the supply slip.

Data center growth was capped by laser supply in the first quarter of fiscal 2026, and new lasers reach shipped transceivers only two to three months after leaving the fab.

The seven lows run from $2.16B (Analyst D) to $2.25B (Analyst F).

First sign Revenue at or below the bottom of the guided range in the 4 November 2026 release.

#### The odds the analysts give

Two questions each analyst answers with a probability.

Sales: the company's own range for Q1 FY27, from its release of 12 August 2026.

A print above the top of the company's range, $2.40B

20% the seven: 20% to 40%

The company's record: above the top of its own range in **1 of its last 6** quarters, 3 of 9 since 2024.

A print below the bottom of the range, $2.20B

4% the seven: 4% to 16%

The company's record: below the bottom of its range in **0 of 9** quarters since 2024.

Together: 24% odds of a print outside the company's range.

Adjusted EPS: the company's own normal, its year-over-year growth over the last eight quarters, +35.8% to +251.9%.

Growth above +251.9% on Q1 FY26, the company's highest in eight quarters (Q2 FY25)

0% the seven: 0% to 0.5%

On Q1 FY26's $1.16 that is first-quarter adjusted EPS above $4.08.

Growth below +35.8%, the company's lowest in eight quarters (Q2 FY26)

1% the seven: 1% to 3%

On Q1 FY26's $1.16 that is first-quarter adjusted EPS below $1.58.

Together: 1% odds of a quarter outside the company's normal.

#### Surfaced outlier views

For Q1-FY2027 the seven analysts sit within 1.7% of the PricedIn number on sales and within 7.1% on adjusted EPS. The furthest, and why:

- **Analyst E** · Q1-FY2027: sales **$2.32B**, the lowest of the seven (PricedIn $2.36B)
  Why Analyst E keeps revenue just above the midpoint of the guide rather than near its top. It plans operating margin of +16% against an operating margin of +17% in the middle forecast, with selling and administrative costs of $288M against costs of $278M. That leaves net earnings of $289M against net earnings of $309M.
  “The first-quarter forecast sits just above the guidance midpoint, the fiscal 2027 plan reaches slightly over $3 billion in the fourth quarter, and capital spending rises again in the first quarter.”
- **Analyst C** · Q1-FY2027: adjusted EPS **$2.20**, the highest of the seven (PricedIn $2.06)
  Why Analyst C puts revenue at the top of the guide and holds research spending at $221M against research spending of $244M in the middle forecast. That gives it the highest operating margin, +18%, and pre-tax earnings of $401M against pre-tax earnings of $363M.
  “I placed my sales middle at $2.38B and adjusted EPS middle at $2.20, at or above the top of the ranges, because in each of the last four quarters actual revenue and non-GAAP EPS landed at or above the top of guidance.”

#### The cases

The analyst with the highest 1-in-10 high argues the bull case; the one with the lowest 1-in-10 low argues the bear case. Each claim stands on a line the harness replays. The other analysts adopt a line or deny in a sentence, before their finals.

- The bull case · Analyst C · Q1-FY2027: sales $2.58B, adjusted EPS $2.52, as the 1-in-10 high
  The case Sales can clear the top of the company's $2.2-2.4B guide and approach $2.6B because demand is not the constraint — fiscal 2027 is "basically completely booked out" through the end of calendar 2027 — and supply arrived early: internal indium phosphide output capacity doubled a full quarter ahead of plan, giving management the lasers to push datacenter growth beyond 80% year over year, and results landed at or above the top of the guided range in every recent quarter of this cycle. Adjusted EPS can reach about $2.52 (above the $1.85-2.05 guide) because the same volume that beats revenue also carries gross margin to the 41.5% top of the guided non-GAAP range while operating expenses are already below the company's 18%-of-revenue target model, so incremental revenue flows through at roughly 40 cents of earnings per share per $100M of sales.
  “Revenue for the first quarter of fiscal 2027 is expected to be between $2.2 billion and $2.4 billion.” “fiscal 27 is basically completely booked out. We're booked really through the end of calendar 27.” “We remain on track to double our internal indium phosphide output capacity year-over-year by the end of the current quarter, one quarter ahead of our original plan.” “we would expect our data center growth, for instance, this quarter on a year-over-year basis to exceed 80%, right? We've certainly got the lasers this quarter to make that happen.” “Gross margin percentage for the first quarter of fiscal 2027 is expected to be between 39.5% and 41.5% on a non-GAAP basis.” “if you look at our operating expenses in the Q1 guide that we provided at the midpoint of that guide, we're already below our target model.”
  Verdicts: adopted by 0, denied by 6
- The bear case · Analyst D · Q1-FY2027: sales $2.16B, adjusted EPS $1.78, as the 1-in-10 low
  The case The September floor of $2.2 billion is only a small step above the June quarter, and it is not protected. One customer was 20 percent of last year's sales and a second was 12 percent, and large customers have already delayed and cut orders with little notice. June lasers are supposed to become this quarter's transceivers, but packaging and acceptable yields are a separate gate, so a short pushout or an assembly slip can land sales near $2.16 billion, under the floor. At that volume, weaker absorption takes non-GAAP earnings per share to about $1.78, under the $1.85 floor.
  “One major customer accounted for 20%, 10%, and 10% of consolidated revenue during fiscal 2026, 2025 and 2024, respectively. A second major customer accounted for 12% of consolidated revenue during fiscal 2026.” “We have in the past experienced delays and reductions in orders from some of our large customers.” “But I do not want to understress how important the packaging challenges are.” “Revenue for the first quarter of fiscal 2027 is expected to be between $2.2 billion and $2.4 billion.” “EPS for the first quarter of fiscal 2027 is expected to be between $1.85 and $2.05 on a non-GAAP basis.” “the pace of bringing equipment and processes online with the capability to manufacture high-quality products at acceptable yields.”
  Verdicts: adopted by 0, denied by 6

#### Watch

The 4 November 2026 release after the close: revenue against the guided range, non-GAAP gross margin against its range, inventory growth and the December-quarter outlook. Revenue above the top with margin rising points higher; a print near the bottom, or talk of laser yield problems, points lower.

### Q2 FY27 · the quarter after

##### Sales

PricedIn **$2.56B** $2.30B – $2.78B

$2.30B $2.45B $2.56B $2.68B $2.78B

##### adjusted EPS

PricedIn **$2.33** $1.98 – $2.71

$1.98 $2.18 $2.33 $2.52 $2.71

**Middle** the forecast **50% range** 1 in 4 chance the result comes in below this bar, 1 in 4 above it. Half the time it lands inside. **80% range** 1 in 10 chance below this line, 1 in 10 above it. These are the low and high printed by each number. **The room** The lowest 1-in-10 low and the highest 1-in-10 high among the seven analysts, as each handed them in before the round, with who holds each.

All seven analysts see revenue rising again from September, from Analyst A's $2.5B to Analyst G's sales of $2.6B, and earnings per share from $2.32 for Analysts D and E to Analyst C's earnings per share of $2.44. They agree co-packaged optics is small at first. They differ on how fast lasers turn into shipments.

The analysts expect second-quarter fiscal 2027 revenue of about $2.6B, as co-packaged optics starts shipping on top of transceivers.

Sales **$2.56B** +52% on Q2 FY26 ($1.69B)

*50% range* $2.45B – $2.68B *80% range* $2.30B – $2.78B *The room* $2.28B – $2.95B D low · G high

Adjusted EPS **$2.33** +81% on Q2 FY26 ($1.29)

*50% range* $2.18 – $2.52 *80% range* $1.98 – $2.71 *The room* $1.90 – $2.95 E low · G high

#### Investment and cash generation

Base case

Capital spending **$660M**

Free cash flow **−$373M**

Free cash flow: operating cash flow less capital spending.

- **December-quarter cash capital spending, $660M in the middle forecast, keeps buying six-inch indium phosphide tools, transceiver assembly and co-packaged optics lines aimed at the second laser doubling and at fiscal 2028 sales. Cash from operations of $287M still trails it as inventory builds, so free cash flow, cash from operations less capital spending, is −$373M; it ranges from Analyst C's free cash flow of −$502M to Analyst B's free cash flow of −$210M. *2 of 7***
  - **Analyst C** I forecast Q1-FY2027 capex of $620M rising through the year to about $2.7B for FY2027, keeping free cash flow deeply negative in FY2027 and roughly breakeven in FY2028.
  - **Analyst B** free cash flow remains negative during peak capital spending in fiscal 2027

The December quarter is the one whose outlook the company gives on 4 November 2026. The middle forecast is revenue of $2.6B, a sales rise of +52% on a year earlier, and non-GAAP earnings per share of $2.33, with earnings per share up +81%.

Two things lift the quarter. Lasers made in the doubled indium phosphide lines reach finished transceivers two to three months later, and the company said co-packaged optics would begin contributing to revenue growth in this quarter, with production wafers already started.

The company's stated aim is a first quarter with over $3 billion of revenue by the end of fiscal 27. Sequential sales growth into December runs from Analyst C's +7.6% to Analyst G's sales growth of +12%.

Margins keep rising toward the company's non-GAAP gross margin target of greater than 42%, as six-inch wafers lower laser cost and operating costs grow more slowly than sales.

Cash still lags: inventory keeps building and capital spending stays high, so free cash flow remains negative in every analyst's middle case.

Earnings per share build on higher revenue, gross margin edging up as six-inch lasers lower cost, operating costs growing more slowly than sales, and a non-GAAP tax rate and share count close to September's.

#### What it rests on

**Co-packaged optics timing**

Expected to begin contributing to revenue growth in the December quarter “We also expect CPO to begin contributing to revenue growth in fiscal Q2, consistent with our planned production ramp.” August 2026 earnings call

**Laser-to-shipment lag**

Transceivers ship two to three months after lasers leave the fab “So when the indium phosphide devices, whether that's an EML or CW laser come out of the production facility, it's really probably the next quarter, 2 to 3 months later before we see the transceivers then shipped based on those devices, right?” May 2026 earnings call

**Wafers started**

Production wafers for December-quarter shipments already started “And, yeah, we've already started production wafers for those shipments in our December quarter.” August 2026 earnings call

**Quarterly revenue target**

First quarter with over $3 billion of revenue by the end of fiscal 27 “Having achieved our first $2 billion revenue quarter, we now expect to achieve our first quarter with over $3 billion of revenue by the end of fiscal 27.” August 2026 earnings call

#### Scenarios Explained: Base, Low, and High

Base the middle forecast

Q2-FY2027

Sales **$2.56B**

Adjusted EPS **$2.33**

Capital spending **$660M**

Free cash flow **−$373M**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| net earnings | $366M |
| --- | --- |
| depreciation and amortization | $150M |
| share-based compensation | $61.0M |
| deferred income taxes | −$40.0M |
| inventories, receivables and payables | −$250M |
| Operating cash flow | $287M |
| Less capital spending | −$660M |
| Free cash flow | −$373M |

**net earnings**

Reported net earnings from the quarter plan.

**depreciation and amortization**

Rising with equipment.

**share-based compensation**

Per plan.

**deferred income taxes**

Recent pattern.

**inventories, receivables and payables**

Working capital still grows with revenue but more slowly than in fiscal 2026.

##### Capital spending

Spending held near the September level; 20% unallocated.

| advanced tooling and state-of-the-art manufacturing equipment | $528M |
| --- | --- |
| Unallocated capital spending | $132M |
| Total capital spending | $660M |

**advanced tooling and state-of-the-art manufacturing equipment** About 80%, my estimate.

“This capex is primarily directed towards advanced tooling and state-of-the-art manufacturing equipment that accelerates our volume manufacturing capabilities and optimizes production yields.” “Given the exceptional demand profile and clear ROI visibility, we expect capital expenditures to increase sequentially again in Q1.”

#### Three ways the base case happens

These levers explain the outcome together.

1. **September lasers ship as December transceivers.** The company describes a two-to-three-month lag from laser output to transceiver shipment. The doubling finished in September shows up mainly in December revenue, giving the step-up from September; inventory built in September turns into sales and starts to release cash.
  Watch Management's December-quarter revenue outlook on 4 November 2026.
  **Analyst reasoning**
  - **Analyst B** will drive a strong sequential step-up in second-quarter fiscal 2027 revenue
  - **Analyst G** I phase revenue and operating cash recovery through fiscal 2027 rather than assuming an immediate full conversion of new capacity.
2. **Co-packaged optics begins contributing.** Production wafers for December shipments had started, with the customer asking for more. Adds a new revenue line on top of transceivers, small at first, lifting December sales above a transceivers-only path.
  Watch Confirmation on the 4 November call that co-packaged optics shipments are on schedule.
  **Analyst reasoning**
  - **Analyst A** That is why the December quarter is the first one where I add a new revenue line on top of transceivers rather than merely more transceivers
  - **Analyst F** Co-packaged optics revenue starts in the December quarter; it is small at first.
3. **Gross margin keeps climbing.** Six-inch wafers yield more chips at lower cost than three-inch wafers. Higher margin on higher revenue makes earnings per share grow faster than sales from September to December.
  Watch The December-quarter non-GAAP gross margin outlook against September's range.
  **Analyst reasoning**
  - **Analyst C** I ramped non-GAAP gross margin from about 41% in Q1-FY2027 to roughly 42-43% by FY2029
  - **Analyst A** Gross margin gains of roughly 60 basis points a quarter from six-inch indium phosphide cost, yields and pricing

Revenue near $2.6B and non-GAAP earnings per share near $2.33. September lasers become December transceivers on the usual lag, first co-packaged optics revenue arrives on schedule, and gross margin moves up from September as six-inch output grows. Inventory still builds and cash capital spending of $660M continues, keeping free cash flow near −$373M.

High about 1 chance in 10 of better

Q2-FY2027

Sales **$2.78B** +9% vs base

Adjusted EPS **$2.71** +16% vs base

Capital spending **$720M**

Free cash flow **−$329M**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| net earnings | $420M |
| --- | --- |
| depreciation and amortization | $150M |
| share-based compensation | $61.0M |
| deferred income taxes | −$40.0M |
| inventories, receivables and payables | −$200M |
| Operating cash flow | $391M |
| Less capital spending | −$720M |
| Free cash flow | −$329M |

**net earnings**

High case near $2.58 adjusted earnings per share.

**depreciation and amortization**

As base.

**share-based compensation**

As base.

**deferred income taxes**

As base.

**inventories, receivables and payables**

Faster conversion of inventory.

##### Capital spending

More capacity in the high case; 20% unallocated.

| advanced tooling and state-of-the-art manufacturing equipment | $576M |
| --- | --- |
| Unallocated capital spending | $144M |
| Total capital spending | $720M |

**advanced tooling and state-of-the-art manufacturing equipment** About 80%, my estimate.

“This capex is primarily directed towards advanced tooling and state-of-the-art manufacturing equipment that accelerates our volume manufacturing capabilities and optimizes production yields.” “Given the exceptional demand profile and clear ROI visibility, we expect capital expenditures to increase sequentially again in Q1.”

#### Three ways the high case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **The December outlook comes in high.** Orders cover fiscal 2027, so supply decides how much ships. If six-inch lines run ahead, more transceivers ship in December, lifting revenue and earnings at a high incremental margin.
  Watch A December-quarter revenue outlook well above the September guide on 4 November.
  **Analyst reasoning**
  - **Analyst A** A December-quarter revenue guide above $2.7 billion
  - **Analyst F** Orders cover fiscal 2027, so the main risk to the year is supply, not demand.
2. **Co-packaged optics ramps faster.** The customer told the company to ship as fast as possible. A faster new-product ramp adds revenue on top of transceivers within the quarter, with more capital spending to support it.
  Watch Management describing co-packaged optics shipments ahead of plan.
  **Analyst reasoning**
  - **Analyst E** December-quarter co-packaged-optics shipments ramp faster than planned
  - **Analyst C** Co-packaged optics ramps ahead of the NVIDIA schedule and optical circuit switch production accelerates across two sites
3. **Prices hold under long-term agreements.** Most long-term agreements fix price as well as volume, many through the decade. Firm prices let lower six-inch costs fall to margin, lifting earnings per share more than revenue.
  Watch A December gross margin outlook at or above September's guided top.
  **Analyst reasoning**
  - **Analyst F** pricing locked in long-term agreements
  - **Analyst D** Pricing stays firm under long-term agreements

Revenue near $2.8B and non-GAAP earnings per share near $2.71, a change in earnings per share of +16% from the middle. Capacity converts fast, co-packaged optics ramps ahead of plan and prices hold under long-term agreements. Higher earnings lift free cash flow to about −$329M even with more capital spending. Analyst G's high is furthest, with revenue of $3.0B and earnings per share of $2.95, from faster six-inch output that customers absorb at once.

The company reported a data center book-to-bill above four times in fiscal 2026 and orders extending into calendar 2028.

The seven highs run from $2.73B (Analyst A) to $2.95B (Analyst G).

First sign A December-quarter outlook above the September guide's top on 4 November 2026.

Low about 1 chance in 10 of worse

Q2-FY2027

Sales **$2.30B** −10% vs base

Adjusted EPS **$1.98** −15% vs base

Capital spending **$600M**

Free cash flow **−$469M**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| net earnings | $310M |
| --- | --- |
| depreciation and amortization | $150M |
| share-based compensation | $61.0M |
| deferred income taxes | −$40.0M |
| inventories, receivables and payables | −$350M |
| Operating cash flow | $131M |
| Less capital spending | −$600M |
| Free cash flow | −$469M |

**net earnings**

Low case earnings near $2.05 adjusted earnings per share.

**depreciation and amortization**

Rising with equipment.

**share-based compensation**

Per plan.

**deferred income taxes**

Recent pattern.

**inventories, receivables and payables**

Inventory piles up if shipments stall.

##### Capital spending

Spending slows slightly in the low case; 20% unallocated.

| advanced tooling and state-of-the-art manufacturing equipment | $480M |
| --- | --- |
| Unallocated capital spending | $120M |
| Total capital spending | $600M |

**advanced tooling and state-of-the-art manufacturing equipment** About 80%, my estimate.

“This capex is primarily directed towards advanced tooling and state-of-the-art manufacturing equipment that accelerates our volume manufacturing capabilities and optimizes production yields.” “Given the exceptional demand profile and clear ROI visibility, we expect capital expenditures to increase sequentially again in Q1.”

#### Three ways the low case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **A September slip stalls December.** December transceivers use lasers made two to three months earlier. A short delay in September removes the step-up rather than merely delaying it, holding December revenue close to September's while costs keep rising.
  Watch A December revenue outlook barely above September's results on 4 November.
  **Analyst reasoning**
  - **Analyst A** so a short slip in the September conversion stalls the step-up rather than merely delaying it
  - **Analyst F** That is the main low-case path for the September and December quarters.
2. **Co-packaged optics qualifies later.** Integrated optics needs packaging, reliability and customer qualification before volume. The new revenue line slips out of the quarter, removing part of the planned growth while start-up costs stay in the cost base.
  Watch Management moving co-packaged optics timing beyond December on the 4 November call.
  **Analyst reasoning**
  - **Analyst G** Integrated optics qualification delays
  - **Analyst E** Packaging and qualification difficulty is a reason to temper the pace of the 400-gig-per-lane and integrated-optics ramp in the low case
3. **A large customer pushes orders out.** One customer was a fifth of fiscal 2026 revenue. A push-out leaves inventory unsold, cutting revenue and earnings and absorbing cash in working capital.
  Watch Comments on customer order timing or price concessions on the 4 November call.
  **Analyst reasoning**
  - **Analyst B** Digestion or capital spending pauses by major hyperscale customers—where two customers represent 32 percent of revenue—leading to order push-outs or price concessions
  - **Analyst E** AI optical orders are delayed or cancelled just as new capacity arrives.

Revenue near $2.3B and non-GAAP earnings per share near $1.98, a change in earnings per share of −15% from the middle. A short September slip stalls the December step-up, co-packaged optics qualifies later, and a large customer pushes orders out, so inventory piles up and free cash flow is about −$469M. Analyst E's low is furthest on earnings per share, at $1.90, because it adds delayed or cancelled orders and weaker yields to the supply slip.

Data center growth was capped by laser supply in the first quarter of fiscal 2026, and new optical architectures need packaging and customer qualification before volume shipments.

The seven lows run from $2.28B (Analyst D) to $2.38B (Analyst G).

First sign A December-quarter revenue outlook near September's level on 4 November 2026.

#### The odds the analysts give

Two questions each analyst answers with a probability.

Sales: the company's own normal, its year-over-year growth over the last eight quarters, +16.4% to +33.7%.

Growth above +33.7% on Q2 FY26, the company's highest in eight quarters (Q4 FY26)

96% the seven: 90% to 97%

On Q2 FY26's $1.69B that is second-quarter sales above $2.25B.

Growth below +16.4%, the company's lowest in eight quarters (Q4 FY25)

1% the seven: 0.1% to 3%

On Q2 FY26's $1.69B that is second-quarter sales below $1.96B.

Together: 97% odds of a quarter outside the company's normal.

Adjusted EPS: the company's own normal, its year-over-year growth over the last eight quarters, +35.8% to +251.9%.

Growth above +251.9% on Q2 FY26, the company's highest in eight quarters (Q2 FY25)

0% the seven: 0% to 1%

On Q2 FY26's $1.29 that is second-quarter adjusted EPS above $4.54.

Growth below +35.8%, the company's lowest in eight quarters (Q2 FY26)

2% the seven: 1% to 4%

On Q2 FY26's $1.29 that is second-quarter adjusted EPS below $1.75.

Together: 2% odds of a quarter outside the company's normal.

#### Surfaced outlier views

For Q2-FY2027 the seven analysts sit within 3.1% of the PricedIn number on sales and within 4.6% on adjusted EPS. The furthest, and why:

- **Analyst G** · Q2-FY2027: sales **$2.64B**, the highest of the seven (PricedIn $2.56B)
  Why Analyst G plans the steepest climb, sequential sales growth of +12% from September, aiming at a June quarter well above the company's target. It also spends more on research, $270M against research spending of $258M in the middle forecast, so earnings rise less than its extra sales suggest.
  “My base September sales are near the upper end of guidance and my June exit estimate is $3.2 billion.”
- **Analyst C** · Q2-FY2027: adjusted EPS **$2.44**, the highest of the seven (PricedIn $2.33)
  Why Analyst C has the smallest sequential sales step, +7.6%, yet the highest earnings. It keeps research spending at $231M against research spending of $258M in the middle forecast and tax at $63.0M against tax of $70.0M, so pre-tax earnings reach $467M.
  “I held non-GAAP opex roughly flat in dollars near-term and let it fall as a percent of sales (to roughly 15% by FY2029), which is the main reason EPS grows faster than revenue in my forecast.”

#### The cases

The analyst with the highest 1-in-10 high argues the bull case; the one with the lowest 1-in-10 low argues the bear case. Each claim stands on a line the harness replays. The other analysts adopt a line or deny in a sentence, before their finals.

- The bull case · Analyst G · Q2-FY2027: sales $2.95B, adjusted EPS $2.95, as the 1-in-10 high
  The case My December-quarter high case of $2.95 billion sales and $2.95 adjusted earnings per share rests on faster conversion of booked demand: management described fiscal 2027 as basically completely booked out. Capacity doubling by September, combined with the disclosed two-to-three-month laser-to-transceiver lag, could concentrate incremental shipments in December. Initial PhotonLink revenue adds to that transceiver ramp, and management said in August that production wafers for December shipments had already started. My earnings tail assumes six-inch manufacturing cost benefits and pricing improvements reach earnings while overhead grows more slowly than sales; it requires unusually strong execution, not immediate revenue from the later scale-up optics ramp.
  “And so our backlog now extends out, you know, fiscal 27 is basically completely booked out.” “We remain on track to double our internal indium phosphide output capacity year-over-year by the end of the current quarter, one quarter ahead of our original plan.” “James Anderson: Yes. Remember that there is a latency from the indium phosphide devices to when we actually ship transceivers, right? So when the indium phosphide devices, whether that's an EML or CW laser come out of the production facility, it's really probably the next quarter, 2 to 3 months later before we see the transceivers then shipped based on those devices, right? And as an example, those transceivers that shipped in our March quarter, that was indium phosphide devices that were produced in either our September or the early part of our December quarter.” “We expect initial revenue from PhotonLink related products to begin in our December quarter.” “And, yeah, we've already started production wafers for those shipments in our December quarter.” “We expect gross margin to continue to improve over the coming quarters as pricing optimization and cost structure improvements, such as increasing capacity from our 6-inch indium-phosphide platform, continue to take effect.” “And then, yeah, there are pricing improvements that we're driving, either kind of normal pricing improvements or pricing improvements that are part of our LPAs, long-term agreements with our customers that are kicking in as well.” “Speaker not named: scale-out applications, and then about a year later in the second half of 27, we'll start ramping”
  Verdicts: adopted by 0, denied by 6
- The bear case · Analyst D · Q2-FY2027: sales $2.28B, adjusted EPS $1.95, as the 1-in-10 low
  The case December is supposed to add the first co-packaged optics revenue on top of another sequential step, but the transceivers in that quarter are lasers that leave the fab two to three months earlier. If the September conversion misses, or that December start slips, sequential growth stalls and sales can land near $2.28 billion, only a little above a weak September. Earnings per share stay near $1.95 because the start-up cost arrives without the volume, and a large customer can still delay orders with little notice.
  “We also expect CPO to begin contributing to revenue growth in fiscal Q2, consistent with our planned production ramp.” “James Anderson: Yes. Remember that there is a latency from the indium phosphide devices to when we actually ship transceivers, right? So when the indium phosphide devices, whether that's an EML or CW laser come out of the production facility, it's really probably the next quarter, 2 to 3 months later before we see the transceivers then shipped based on those devices, right?” “Because many customers may alter purchasing behavior with little or no notice, including by delaying, reducing, or cancelling purchase orders” “offset by continued weakness across broader industrial markets.”
  Verdicts: adopted by 1, denied by 5

#### Watch

The December-quarter outlook in the 4 November 2026 release: its revenue range, non-GAAP gross margin and whether co-packaged optics shipments have started. An outlook above the September guide's top points higher; a flat outlook or delayed co-packaged optics points lower.