$COHR Coherent guided the December quarter to $2.65B in revenue and $2.38 in non-GAAP EPS at the midpoints, above the $2.54B and $2.21 consensus. It also set a new margin goal: a first quarter above 45% non-GAAP gross margin before the end of calendar 2028. The bill for that growth sits in the cash flow statement: $775.5M of capex in one quarter against negative operating cash flow. 1. FQ1 vs guidance and consensus Revenue was $2.37B, +50% y/y (+56% pro forma), near the top of the $2.20-2.40B guide and above the $2.30B consensus. Non-GAAP EPS was $2.09, above both the $1.85-2.05 guide and the $1.97 consensus. GAAP EPS was $1.90. Non-GAAP gross margin was 40.6%, up from 40.2% last quarter and inside the 39.5-41.5% guide. Non-GAAP operating margin reached 23.2%. Datacenter & Communications did the work: $1,951.7M, up from $1,615.0M last quarter (+21% q/q) and $1,090.0M a year ago (+79%). Industrial slipped to $418.6M from $430.5M. 2. FQ2 guidance and our read Guided to $2.55-2.75B in revenue, 40-42% non-GAAP gross margin, $430-450M non-GAAP opex and $2.28-2.48 non-GAAP EPS. Management also expects FY27 pro forma growth above 60%, a first $3B quarter by the end of FY27 and a first $4B quarter in FY28. Our read: the beat and raise is clean on the income statement, and the CFO credits the margin to pricing and cost improvements. That means Coherent has pricing power in AI optics right now. The open issue is cash. Operating cash flow was -$92.7M this quarter, compared with +$46.0M a year ago, while capex rose to $775.5M from $103.9M. Coherent is building capacity ahead of revenue. What would change our view: another quarter of negative operating cash flow with no clear payback path, or gross margin stalling near 40% while capex stays this high. 3. Answering the preview Q1 Did FQ1 land toward the top of guidance? Answered: revenue near the top, EPS above it. Q2 Does FQ2 guidance clear $2.54B / $2.21? Answered: yes on both midpoints ($2.65B / $2.38). Q3 Is PhotonLink (CPO/NPO) moving into production on the FQ2 timeline? Not in the release. Left for the call. Q4 Are margins improving? Answered: 40.6% vs 40.2%, FQ2 guided to 40-42%, plus the new >45% target. Q5 Is cash conversion improving? Answered, negatively: operating cash flow -$92.7M with $775.5M capex. 1.6T shipments and six-inch InP output are not in the release. 4. What the call needs to answer C1 PhotonLink: does first revenue still land in FQ2, and how much is in the $2.55-2.75B guide? C2 Capex: FY27 total, and when operating cash flow turns back positive. C3 Pricing: how much of the 45% path is price vs mix vs cost, and how durable it is. C4 The NVIDIA agreement: shipment and capacity schedule under the purchase commitment. Source: Coherent Corp. press release (Form 8-K, Exhibit 99.1), November 4, 2026