Cohu's Full Year 2024 Earnings: EPS Misses Expectations, but Long-Term Growth Remains Promising

Cohu, Inc. (NASDAQ: COHU), a global supplier of equipment and services optimizing semiconductor manufacturing yield and productivity, reported fiscal 2024 fourth quarter net sales of $94.1 million and a GAAP loss of $21.4 million or $0.46 per share. Net sales for full year 2024 were $401.8 million with a GAAP loss of $69.8 million or $1.49 per share. The company also reported non-GAAP results, with a fourth quarter 2024 loss of $7.1 million or $0.15 per share and a full year 2024 loss of $10.9 million or $0.23 per share.

Cohu's earnings miss in the full year 2024 can be attributed to several primary factors:

1. Market Downturn: The semiconductor industry experienced a downturn, which negatively impacted Cohu's revenue and earnings. This is evident in the company's full-year 2024 revenue of $401.8 million, which is lower than the previous year's $636.3 million.
2. Inventory Corrections: Ongoing inventory corrections in the Automotive and Mobile segments led to a decline in revenue from these segments. This is highlighted by Luis Müller, Cohu's President and CEO, who mentioned that the Automotive and Mobile segments are still undergoing inventory correction.
3. Acquisition-related Costs: The acquisition of Tignis, Inc., a provider of artificial intelligence process control and analytics software, resulted in additional costs. While this acquisition is expected to drive long-term growth, it has temporarily impacted Cohu's earnings.
4. Inventory Reserve Charge: A $2.1 million inventory reserve charge in the fourth quarter of 2024 impacted Cohu's gross margin, contributing to the earnings miss. This charge is reflected in the company's non-GAAP gross margin of 41.8% for the quarter.



Despite the earnings miss, Cohu's long-term growth prospects remain promising. The company has expanded into new markets such as high-bandwidth memory (HBM) and silicon carbide power semiconductors, which are expected to drive incremental revenue in 2025. Cohu anticipates approximately $25 million to $30 million in incremental revenue from these new business drivers this year.

Additionally, Cohu's acquisition of Tignis is expected to contribute to the company's software revenue growth, with an anticipated annual growth rate of 50% or more over the next three years. This integration is expected to help the industry optimize yield and productivity.

In conclusion, while Cohu's earnings miss in the full year 2024 was primarily due to market downturn, inventory corrections, acquisition-related costs, and an inventory reserve charge, the company's long-term growth prospects remain positive, driven by its expansion into new markets and software revenue growth. As Cohu continues to execute on its strategic initiatives, investors should keep a close eye on the company's progress in these new markets and the integration of Tignis' technology into its existing product portfolio.