0001437749-25-024281
SEC filingCohu's Q2 FY2025 revenue grew 2.8% YoY to $107.7M, but gross margin contracted 110 bps to 43.7% due to product mix and restructuring costs.
For the second quarter of fiscal 2025, Cohu reported net sales of $107.7 million, a 2.8% increase compared to $104.7 million in the same period of fiscal 2024. The year-over-year growth was driven by increased demand for mobile and AI-based computing applications, partially offset by continued weakness in automotive, industrial, and consumer end markets. The acquisition of Tignis, completed on January 7, 2025, contributed incrementally but was not material to overall revenue.
Gross margin declined to 43.7% from 44.8% in the prior-year quarter, a contraction of 110 basis points. The decrease was primarily due to an unfavorable mix of systems sold and $0.3 million in additional manufacturing employee compensation and inventory charges related to the transition of manufacturing activities from the U.S. and Europe to factories in the Philippines and Malaysia. Excess and obsolete inventory charges increased to $1.5 million from $0.3 million in the prior year.
Operating expenses increased as a percentage of net sales. Research and development expense rose to $23.2 million (21.5% of sales) from $21.3 million (20.4% of sales), driven by higher material costs for new product development and $0.9 million in incremental costs from Tignis. Selling, general and administrative expense decreased to $29.9 million (27.7% of sales) from $32.1 million (30.7% of sales), reflecting lower incentive compensation and cost controls, partially offset by $0.6 million in incremental Tignis costs. Amortization of purchased intangible assets increased to $10.0 million from $9.7 million due to the Tignis acquisition. Restructuring charges totaled $1.2 million, compared to immaterial amounts in the prior year, related to the Poway manufacturing transition and the 2025 Restructuring Program.
Net loss for the quarter was $16.9 million, compared to a net loss of $15.8 million in the prior-year period. The increase in net loss was driven by higher operating expenses and restructuring charges, partially offset by revenue growth.
Cohu operates as a single reportable segment, Semiconductor Test & Inspection. The segment's revenue growth of 2.8% YoY reflects a mixed demand environment: strength in mobile and AI-based computing applications was offset by weakness in automotive, industrial, and consumer markets. Gross margin compression was driven by product mix and manufacturing transition costs. The company's recurring products (spares, contactors, kits, and services) provide a more stable revenue stream compared to capital equipment, which is more cyclical.
Management's outlook is cautiously optimistic. The company initiated a global restructuring program in fiscal 2025 designed to improve profitability without negatively impacting product development. Once fully implemented, quarterly cost savings are expected to total approximately $2.0 million, split evenly between manufacturing overhead and operating expenses. The company continues to focus on long-term market drivers including increasing semiconductor complexity, test intensity, and automation. Management remains optimistic about long-term prospects due to the increasing ubiquity of semiconductors and recent developments in artificial intelligence. The company repurchased 432,288 shares for $8.6 million during the first six months of fiscal 2025, and $22.8 million remained available under the share repurchase program as of June 28, 2025. Management believes existing liquidity will be sufficient for at least the next 12 months.