Key Highlights

  • Net sales rose 37% to USD 173.0 million, and non-GAAP diluted EPS reached USD 0.43, up from a loss.
  • Bookings climbed 126% year over year, led by a 318% jump in systems orders and 36% growth in recurring.
  • Non-GAAP gross margin reached 45.7% while adjusted EBITDA margin widened to 16.6% from 9.2% in the year-ago quarter.
  • The computing opportunity pipeline grew 18% sequentially to roughly USD 1.0 billion, with 2026 revenue there near USD 120 million.

Cohu, Inc. (NASDAQ:COHU) reported fiscal third-quarter 2026 net sales of USD 173.0 million, up 37% from USD 126.2 million a year earlier and above a consensus estimate of USD 170.25 million. Non-GAAP net income was USD 23.3 million, or USD 0.43 per diluted share, above a consensus estimate of USD 0.35. GAAP net income was USD 12.1 million, or USD 0.22 per diluted share, compared with a GAAP loss of USD 4.1 million, or USD 0.09 per share, in the prior-year period.

President and CEO Luis Müller linked the quarter to broader customer adoption of the Eclipse thermal handler for high-performance computing, alongside steady demand for services, consumables and software. Systems made up 59% of bookings and recurring business 41%, while recurring revenue represented 48% of third-quarter sales. One compute customer accounted for more than 10% of total sales.

Margins, Cash and Operating Leverage

GAAP gross margin was 45.5% and non-GAAP gross margin was 45.7%, up from 43.8% and 44.1% a year earlier, a gain management tied to better cost absorption in interface products. GAAP operating income was USD 12.8 million, or 7.4% of sales, against an operating loss of USD 9.7 million a year ago. Non-GAAP operating income reached USD 25.5 million, or 14.7% of sales, and adjusted EBITDA was USD 28.8 million.

Estimated test cell utilization rose to 82%, up 200 basis points from the second quarter. Cash and investments ended the period at USD 507.9 million, with total debt of about USD 310 million, including roughly USD 288 million of convertible notes. Cash from operations was about USD 6 million, capital spending was about USD 3 million, and the company made no share repurchases.

Guidance and Supply Considerations

For the fourth quarter, Cohu guided to net sales of USD 178 million, plus or minus USD 7 million, equal to 46% growth from a year earlier. It targets a fourth-quarter gross margin near 44%, operating expenses near USD 57 million and about 55 million diluted shares. Full-year 2026 revenue growth is projected at roughly 38%, with gross margin near 45% and capital expenditures near 2% of revenue.

The company shared a preliminary view of 2027 revenue growth of 30% to 40%, with gross margin of 46% to 48% and quarterly operating expenses of USD 54 million to USD 56 million. Management said about 50% of incremental revenue would flow to operating income. It also flagged longer lead times and higher costs for certain semiconductors and specialty components, and is working with suppliers to add capacity so Eclipse output in 2027 is about triple the 2026 level.

Factors to Watch

Four items frame the coming disclosures. The first is the fourth-quarter revenue range of USD 171 million to USD 185 million against the 44% gross margin target. The second is qualification progress: five customer programs are scheduled to reach major milestones between late November and the first quarter, and together with two programs targeted to start, they represent about USD 340 million of annual systems revenue. The third is the December release of new high-current and high-voltage Diamondx capabilities ahead of first-half 2027 ramps. The fourth is utilization, which stood at 82% overall, with compute at 84%, industrial at 83% and automotive near 80%.