What Cohu (COHU) Said on Its Q3 Earnings Call

Key Points

• Cohu’s Q3 performance accelerated: Revenue rose 37% year over year to $173 million, while bookings increased 126%, driven by a 318% surge in systems bookings and stronger recurring revenue.
• High-performance computing demand is expanding: Cohu raised its 2026 HPC revenue outlook to approximately $120 million, with an opportunity pipeline of about $1 billion and multiple customer programs nearing qualification.
• The company is scaling for future growth: Cohu plans to ship roughly three times as many Eclipse thermal handlers in 2027, forecasts 2027 revenue growth of 30% to 40%, and expects Q4 revenue of about $178 million.

Cohu NASDAQ: COHU reported third-quarter 2026 revenue of $173 million, up 37% from a year earlier, as adoption of its high-performance computing thermal-test products accelerated and recurring revenue strengthened. The company said bookings rose 126% year over year, led by a 318% increase in systems bookings and 36% growth in recurring bookings.

President and CEO Luis Müller said systems accounted for 59% of third-quarter bookings, while recurring business represented 41%. Cohu’s book-to-bill ratio was above one, and recurring revenue, primarily from consumables, accounted for 48% of total quarterly revenue, according to Senior Vice President of Finance and CFO Jeff Jones.

Cohu raised its 2026 high-performance computing revenue outlook to approximately $120 million. Management also said it expects total 2026 revenue growth of about 38% over 2025 and forecast 2027 revenue growth of approximately 30% to 40%, primarily driven by conversion of its high-performance computing opportunity funnel.

High-performance computing pipeline expands

Cohu said its annual high-performance computing opportunity pipeline increased about 18% during the quarter to approximately $1 billion. The pipeline includes 13 ranked customer programs and additional early-stage engagements spanning server and data-center processors, CPUs, GPUs, networking devices, custom accelerators, silicon photonics, high-bandwidth memory inspection and related services.

Of that pipeline, Cohu said programs representing $230 million in annual revenue potential have reached qualification, while another $440 million is in active qualification. Müller said the expansion primarily reflects greater visibility into customer capacity requirements and timing for 2027 rather than a substantial addition of new customers.

Computing customers drove system demand, with bookings increasing 81% sequentially, according to the company. A major networking customer qualified an initial device on Cohu’s Eclipse thermal handler in the third quarter, and Cohu expects to ship a production-configuration thermal head for validation of a higher-power device during the fourth quarter.

Management said five additional customer programs are scheduled to reach significant qualification milestones between late November and the first quarter of 2027, while two more programs are expected to begin during that period. Those seven programs represent about $340 million in annual systems revenue based on current customer planning, Cohu said.

Müller said qualification-to-production cycles have generally taken about nine to 12 months. Once a thermal head for a next-generation production device is installed, qualification typically takes six to eight weeks, he said.

Capacity expansion and supply-chain planning

To support anticipated demand, Cohu is expanding manufacturing capacity and coordinating with suppliers with the goal of shipping approximately three times as many Eclipse handlers in 2027 as in 2026. Müller said output is expected to build through 2027, with a meaningful volume expected in the second and third quarters, while visibility into the fourth quarter remains limited.

The company is increasing Eclipse manufacturing output exiting 2026 and expects the expansion to continue through June 2027. Müller said Cohu could ship more than 2,000 handler systems next year if it used its full manufacturing capacity, though the planned threefold increase applies specifically to Eclipse systems.

Jones said rapid growth in high-performance computing demand has resulted in longer lead times and higher costs for certain semiconductors and specialty components. Cohu is working to secure critical components, identify alternative sources and expand supply-chain capacity. Müller said supply constraints were not currently limiting the business but would require close management as production scales.

Inspection, interface and software progress

Cohu continued shipping final-inspection systems for HBM3 and HBM4 to a U.S.-based customer during the quarter. The customer has designated Cohu as a strategic supplier and is discussing potentially steeper production ramps, Müller said. Neon inspection systems also shipped in volume to integrated device manufacturers, with backlog extending into the first quarter of 2027.

The company expects to complete an agreement with a large U.S.-based integrated device manufacturer for advanced-packaging inspection demonstration systems in the first quarter of 2027. The potential application would use Cohu’s Neon platform to inspect die-level packaging and identify visible and subsurface micro-cracks.

In interface solutions, Cohu secured initial processor-test orders from two hyperscale customers. The company also delivered its first interface production solution for a major high-performance computing customer and said it is pursuing follow-on opportunities for devices with higher pin counts and data rates.

Software analytics annual recurring revenue increased 85% sequentially, contributing to record bookings and revenue in that business. Cohu cited a repeat order from a high-performance computing customer, an expanded AI-based HBM inspection software deployment at a memory manufacturer, and its first volume license for prescriptive-maintenance software on earlier-generation Cohu handlers.

Quarterly results and outlook

• Third-quarter non-GAAP gross margin was 45.7%, above guidance, aided by improved manufacturing cost leverage in interface products.
• Operating expenses were $53.5 million, while non-GAAP diluted earnings per share were $0.43 and adjusted EBITDA margin was 16.6%.
• Cash and investments rose about $10 million sequentially to $508 million. Cash from operations was approximately $6 million, while total debt was $310 million.
• Estimated semiconductor test utilization reached 82% at the end of the third quarter, up two percentage points sequentially and 7.5 percentage points from a year earlier.

For the fourth quarter, Cohu projected revenue of approximately $178 million, plus or minus $7 million, representing expected year-over-year growth of 46%. The company forecast fourth-quarter gross margin of about 44%, operating expenses of approximately $57 million, net interest income of roughly $1.4 million and a tax provision of about $3.3 million.

For 2027, Cohu expects gross margin of 46% to 48% at its projected revenue range and quarterly operating expenses of $54 million to $56 million. Jones said the company expects its cost approach and revenue growth to produce operating leverage, with approximately 50% of incremental revenue falling to operating income.

About Cohu (NASDAQ:COHU)

Cohu, Inc is a global provider of semiconductor test and inspection equipment and related services. The company supplies solutions used by semiconductor manufacturers and outsourced semiconductor assembly and test providers to evaluate devices during production, helping improve manufacturing quality, reliability and efficiency.

Cohu's product portfolio includes semiconductor test handlers, contactors and other interface products, inspection and metrology systems, thermal-management equipment, and software for test-data analysis and factory automation.

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