Cohu's Q1 2025 Earnings Call: Key Contradictions on Recurring Revenue, Market Opportunities, and Customer Demand

Recurring revenue trends and sustainability, HBM market opportunities and growth expectations, silicon carbide market opportunities, recurring revenue outlook, and customer demand and market recovery are the key contradictions discussed in Cohu's latest 2025Q1 earnings call.



Revenue and Utilization Trends:
- Cohu reported revenue of $96.8 million for Q1 2025, in line with guidance, with recurring revenue representing 63% of total revenue.
- Test cell utilization at the end of March was 72%, down 1% quarter-over-quarter.
- The decline in utilization was offset by a 28% increase in recurring orders, indicating potential future utilization improvements.
- The company is implementing restructuring programs to reduce manufacturing and operating expenses.

System and Recurring Revenue Growth:
- Cohu guided Q2 revenue to be approximately $106 million, a 10% increase quarter-over-quarter.
- The revenue increase is expected to be evenly split between systems and recurring revenue components.
- Growth in recurring orders, particularly in the mobile segment, is a significant contributing factor.
- Expansion in customer orders for HBM inspection systems and design wins in power probe cards and handlers are anticipated to drive future growth.

Software and AI Integration:
- Cohu's acquisition of Tignis is integrating well, with three new demonstration opportunities signed in the first quarter.
- The company is optimistic about the potential for its AI process monitoring platform, targeting backend semiconductor manufacturing applications.
- Expansion into new backend semiconductor manufacturing markets is a strategic focus for future growth.

Tariffs and Cost Impact:
- Cohu does not expect recently announced tariffs to create a measurable and direct increase in cost of goods sold in the near term.
- The company's supply chain and manufacturing operations are primarily Asia-based, minimizing direct tariff impacts.
- Long-term efforts are underway to transition the supply chain to mitigate potential impacts of revised tariff schemes.