Cohu (COHU +5.91%), a provider of semiconductor test and inspection equipment, reported results for the second quarter of fiscal 2025 on July 31, 2025. The most notable news was that revenue and non-GAAP earnings per share both exceeded Wall Street expectations. Revenue (GAAP) was $107.7 million, ahead of the $105.9986 million analyst estimate (GAAP), while non-GAAP EPS was $0.02, outpacing the expected non-GAAP loss of $0.014 per share. Overall, but profit remains challenged, with improvement coming mostly from the mobile segment rather than broad-based recovery.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Revenue | $107.7 million | $106.0 million | $104.7 million | 2.9% |
| Gross Margin (Non-GAAP) | 44.4% | N/A | 45.1% | (0.7) pp |
| Adjusted EBITDA (Non-GAAP) | $3.8 million | N/A | $4.0 million | (5.0%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Company Background and Key Priorities
Cohu (COHU +5.91%) operates in the semiconductor equipment industry, supplying a wide range of automated test systems, handlers, interface products, inspection metrology solutions, and analytics software. Its customers include semiconductor manufacturers who rely on advanced testing and inspection to maintain product quality and performance.
The company's major priorities center on growing its product innovation, building stable recurring revenue through service contracts and consumables, and investing in strategic acquisitions to broaden its technology base. Its financial performance depends on balancing cyclical equipment sales, stable recurring revenue, and the successful integration of new technologies following acquisitions.
Quarter in Review: Revenue, Profits, and Operations
Revenue (GAAP) came in ahead of expectations. Management commented, "“Second quarter 2025 results were in line with guidance, test cell utilization is up a few points across all Cohu segments, and we secured a $28 million design-win order from a customer serving mobile and automotive end-markets”" Net sales rose from $104.7 million in Q2 2024, with management highlighting increased test cell utilization and customer wins in mobile and automotive.
Non-GAAP earnings per share shifted into positive territory, while adjusted EBITDA—a measure which strips out non-cash and one-time items—remained thin. On a GAAP basis, the company posted a net loss of $16.9 million, driven by high R&D spending and amortization of acquisition-related intangibles. Gross margin (non-GAAP) slipped slightly to 44.4%, but was higher than in the previous quarter.
Recurring revenue remained a bright spot, making up 63% of total sales. However, management noted that this increase was mainly due to the mobile segment, with other end markets such as automotive and industrial still lagging. The recurring revenue line includes consumable kits, interface products, and ongoing service contracts, providing a buffer against swings in capital equipment orders.
On the product side, the company highlighted new launches in automated handlers (Eclipse handler) and integrated interface products (ULTRA-S contactor for precision analog integrated circuit test).
Strategic moves included the acquisition and initial integration of Tignis, Inc, a supplier of artificial intelligence (AI) monitoring software for semiconductor manufacturing. While the Tignis acquisition has not yet made a significant financial impact, early interest from customers signals future potential.
The company reported realized cost savings from a restructuring program announced earlier in the year, with non-GAAP operating expenses down quarter-over-quarter. Cost controls are taking effect mainly through manufacturing consolidation and workforce realignment, aiming for a lower ongoing expense base beginning in 2026.
Looking at the balance sheet, cash and investments increased by $8.6 million to $209.4 million. However, overall liquidity remains below year-end 2024 levels, due to cash spent on the Tignis acquisition and previous share repurchases. The company did not buy back any shares during the quarter, following its previously stated pause, supporting ongoing R&D efforts and general administration.
Looking Ahead: Guidance and Industry Signals
Management provided sales guidance for Q3 FY2025, with expectations set at $125 million, plus or minus $7 million, although profit and margin targets were not disclosed. No explicit earnings per share outlook was provided for the upcoming period.
Company leaders cautioned that recovery is not yet broad-based, with demand growth still tied closely to the mobile segment. Recurring revenue is expected to remain near the recent share of approximately 63% of total revenue as system sales recover. Revenue from the HBM (High Bandwidth Memory) inspection system—equipment used by semiconductor manufacturers to test and verify memory components—was guided up to $8 million as customer demand strengthens. The full impact of cost-saving measures will begin next year, and leadership continues to monitor industry cycles and customer trends closely.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
