Full-Year 2024 Revenue: $401.8 million. Fourth-Quarter 2024 Revenue: $94.1 million. Full-Year 2024 Non-GAAP Gross Margin: 45%. Fourth-Quarter 2024 Gross Margin: 41.8%, impacted by a $2.1 million inventory reserve charge. Fourth-Quarter 2024 Operating Expenses: $45.3 million. Fourth-Quarter 2024 Non-GAAP Operating Loss: Approximately $6 million. Fourth-Quarter 2024 Non-GAAP EPS: $0.15 loss. Fourth-Quarter 2024 Cash and Investments: Decreased by $7 million to $262 million. Fourth-Quarter 2024 CapEx: Approximately $3 million. First-Quarter 2025 Revenue Guidance: Approximately $97 million plus or minus $7 million. First-Quarter 2025 Gross Margin Guidance: Approximately 44%. First-Quarter 2025 Operating Expenses Guidance: Approximately $49 million.

Warning! GuruFocus has detected 3 Warning Signs with COHU.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Cohu Inc (NASDAQ:COHU) reported full-year 2024 revenue of approximately $402 million, demonstrating resilience despite market downturns. The company achieved a full-year non-GAAP gross margin of 45%, highlighting the value of its differentiated products and optimized manufacturing cost structure. Cohu Inc (NASDAQ:COHU) entered the memory and silicon carbide power semiconductor markets, with promising growth prospects in high-bandwidth memory (HBM) and silicon carbide sectors. The company is focusing on expanding its software platform, with expectations to grow software revenue at an annual rate of 50% over the next three years. Cohu Inc (NASDAQ:COHU) maintains a strong balance sheet, supporting investment opportunities and a share repurchase program to return capital to shareholders.

Negative Points

Fourth-quarter gross margin was impacted by a $2.1 million inventory reserve charge, leading to a non-GAAP EPS loss of $0.15. Revenue from the Automotive and Mobile segments declined due to ongoing inventory corrections, affecting overall performance. Operating expenses for Q1 2025 are forecasted to increase, partly due to the acquisition of Tignis, which is not expected to be earnings per share breakeven for several years. Recent customer requests to delay Q1 shipments have impacted initial revenue guidance, with potential delays extending throughout 2025. The company faces challenges in the Automotive and Industrial segments, which continue to experience inventory corrections and market downturns.

Q & A Highlights

Q: Can you provide details on the revenue and breakeven expectations for Tignis, the newly acquired AI process control company? A: Tignis generated less than $1 million in revenue last year and is expected to remain around that level in 2025. We anticipate healthy growth rates over the next few years, but it will take some time to reach the breakeven point. (Jeffrey Jones, CFO)

Story Continues

Q: What is the expected revenue impact from new business drivers like high-bandwidth memory (HBM) and silicon carbide in 2025? A: We anticipate approximately $7 million from HBM and $5 million from silicon carbide, totaling around $12 million. Additionally, software, including Tignis and DI-Core, is expected to contribute about $13 million. Overall, these new drivers could add $25 million to $30 million in incremental revenue this year. (Luis Muller, CEO)

Q: How should we think about the gross margin for these new business drivers in 2025? A: The gross margin for these new business drivers is expected to be in the high-40s, potentially growing to 50% as the software segment expands. (Jeffrey Jones, CFO)

Q: What is the outlook for the Automotive and Industrial (A&I) segment utilization levels? A: The A&I segment is currently at a high plateau but still undergoing inventory correction. Some customers indicate another two to three quarters of digestion. We expect some dynamics in the Mobile segment to drive incremental business starting mid-year. (Luis Muller, CEO)

Q: How stable is the $60 million run rate for services and spares recurring revenue amid industry inventory control and fab utilization cuts? A: The recurring revenue has proven stable historically, with about a third of the volatility of systems revenue. We expect it to remain steady despite the downturn. (Jeffrey Jones, CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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