Cohu (COHU) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 revenue was $401.8 million, with Q4 revenue at $94.1 million, both within guidance despite a challenging semiconductor market downturn.

• Non-GAAP gross margin for 2024 was 45%, with Q4 at 41.8% due to a $2.1 million inventory reserve charge; adjusted EBITDA for Q4 was -2.1%.

• Recurring revenue comprised 62% of Q4 and 65% of full-year revenue, providing stability amid volatile systems sales.

• Acquired Tignis, Inc. to expand AI-driven analytics and process control, enhancing the DI-Core platform and targeting software revenue growth.

• New product investments and design wins in HBM, silicon carbide, and automotive are expected to drive $25–$30 million incremental revenue in 2025.

Financial highlights

• Q4 non-GAAP operating loss was approximately $6 million; non-GAAP EPS was a $0.15 loss, with the inventory charge impacting EPS by $0.04.

• Operating expenses for Q4 were $45.3 million, below guidance due to lower labor costs and higher vacation utilization.

• Cash and investments decreased by $7 million in Q4 to $262 million, reflecting $2 million used in operations, $2 million debt repayment, and $3 million in CapEx.

• No share repurchases in Q4; 915,000 shares repurchased for $27 million through Q3 2024, exceeding dilution offset goals.

• Adjusted EBITDA for 2024 was $7.1 million (1.8% of sales), down from $114 million in 2023.

Outlook and guidance

• Q1 2025 revenue is guided to approximately $97 million ±$7 million, impacted by customer shipment delays and continued soft demand in automotive and industrial markets.

• Q1 gross margin forecasted at 44%, with expectations to rise as revenue recovers and factory absorption improves.

• Q1 operating expenses projected at $49 million, up $4 million from Q4, mainly due to the Tignis acquisition and higher labor costs.

• Management anticipates 50%+ annual growth in software revenue over the next three years, driven by analytics expansion.