Good day, and thank you for standing by. Welcome to the Coherent Corp. FY '24 Fourth Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Paul Silverstein, Senior Vice President, Investor Relations and Corporate Communications.

Good afternoon, everyone. With me today are Jim Anderson, Coherent's CEO; and Rich Martucci, Coherent's Interim CFO. During today's call, we will provide a financial and business review of the fourth quarter of fiscal 2024 and the business outlook for the first quarter of fiscal 2025. Our earnings press release can be found in the Investor Relations section of our company website at coherent.com. I would like to remind everyone that during our conference call today, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements or predictions based on information that is currently available and that actual results may differ materially. We refer you to the documents that the company files with the SEC, including our 10-Ks, 10-Qs, and 8-Ks. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. This call includes and constitutes the company's official guidance for the first quarter of fiscal 2025. If at any time after this call, we communicate any material changes to this guidance, we intend that such updates will be done using a public forum such as a press release or publicly announced conference call. We'll refer to both GAAP and non-GAAP financial measures during this call. By disclosing certain non-GAAP information, management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends. For historical periods, we provided reconciliations of these non-GAAP financial measures to GAAP financial measures that can be found on the Investor Relations section of our website at coherent.com. Now let me turn the call over to Jim Anderson, our CEO.

Thank you, Paul, and thank you, everyone, for joining us on our call today. It's been a little over two months since I joined Coherent, and I'm more excited today about the potential of this company and the opportunity for shareholder value creation than the first day I joined. I want to start by thanking my predecessor, Chuck Mattera, for his over 20 years of service to the company, including his last eight years as CEO. Chuck's tireless dedication and leadership of Coherent has had a tremendous lasting impact on the company. And on behalf of all of our employees and our Board of Directors, I want to once again thank him for his service and wish him all the best. I'd also like to take the opportunity to thank my new Coherent teammates for the incredibly warm welcome to the company. In these first weeks, I've met with employees at many of our locations across the world. I'm deeply impressed with the exceptional depth and breadth of talent as well as the determination and hard work of my teammates. I look forward to working side-by-side with them to unlock the full potential of the company. Since joining Coherent, I've received a number of questions from employees and shareholders regarding my initial impressions on the business and our long-term strategic direction. I've also been asked about my reasons for joining Coherent and what drew me to this opportunity. Let me start with what I found the most attractive about joining Coherent. Simply put, it was a combination of the innovation this company is driving and the revenue growth potential that's ahead of us. Innovation is the lifeblood of the technology industry and Coherent is a deeply innovative company. Over the course of my career in the tech industry, I've worked…

Thank you, Jim. Overall, I'm very pleased with the continued sequential financial progress we made in the fourth quarter of fiscal 2024. We delivered a strong quarter with sequential revenue growth and healthy improvement in our gross and operating margins, which drove sequential earnings per share growth. Fourth quarter revenue was $1,314,000,000, representing an increase of 8.7% sequentially and 9.1% versus the prior year. From a segment perspective, networking revenue increased 10% sequentially and by 16% year-over-year. Materials segment revenue increased 17% sequentially but decreased 3% year-over-year, and our laser segment revenue increased by 1% sequentially and by 7% year-over-year. Our fourth quarter GAAP gross margin of 32.9% improved by 255 basis points sequentially and by 437 basis points versus the prior year. Our non-GAAP fourth quarter gross margin of 37.2% improved by 135 basis points sequentially and 132 basis points versus the prior year. Sequential improvements were primarily due to our increased revenue volume and resolution of the transitory margin issues that we cited in the preceding quarter, including the recovery in our datacom AI transceiver yield and resolution of the power failure issue that depressed both of our silicon carbide revenue and gross margin. Our fourth quarter GAAP operating expenses were $339 million compared to $344 million in the prior quarter and $499 million in the year ago quarter. Fourth quarter non-GAAP operating expenses were $266 million compared to $250 million in the prior quarter and $248 million in the year ago quarter. The sequential increase in non-GAAP operating expenses includes year-end bonus and benefit adjustments and term loan refinancing fees. Looking ahead, we plan to continue to be disciplined in managing our SG&A expenses, now ensuring that we invest in our product portfolio. Our fourth quarter restructuring expenses included in GAAP operating expenses were $14 million compared…

[Operator Instructions] Our first question comes from Samik Chatterjee with JPMorgan. You may proceed.

Hi. Thanks for taking my question. And Jim, I look forward to working with you. I guess the first question that I want to do sort of throw your ways really in relation to, you said it's early days in terms of the strategic assessment you're doing. Just maybe help us think about what are the sort of early reads you have around the portfolio from there? You talked about core and noncore. Maybe what's the criteria using or the lens that you're looking at from deciding core and noncore? And how much of the sort of implication is on operating the company more efficiently relative to maybe delevering the balance sheet in terms of priority of these actions? And I have a quick follow-up if you'll allow me. Thank you.

Yes. Thank you, Samik. Thanks for the question. I appreciate it. Yes, on the portfolio assessment, happy to talk a little bit more about that. I'm really pleased with the work that the team's been doing on this over the last couple of months. And think about the portfolio assessment as really work that we're doing to really build a foundation for our strategy going forward. And the ultimate goal of it is to really make sure that the company is concentrating all of its assets, whether that's OpEx or CapEx, on the areas of greatest growth and profitability over the long term. And so that's really the ultimate goal. And the way we're approaching it is we're stepping back and looking at the entire company portfolio. We're breaking down the company and each one of its individual product line divisions. And then we're grading each one of those on a set of strategic and financial criteria. And then what we're doing is putting each one of the businesses into one of four categories. I'm happy to share a little bit more about that. The four categories are what do we think are big growth engines for the company moving forward? What are the profit engines? What are the kind of longer-term bets that the company is making? And then what are those businesses that we think are nonstrategic or underperforming? When you say growth engines, those are -- obviously, those are businesses that we believe are going to drive long-term above-market growth for us. Profit engines, our businesses that may be growing a little slower but are generating really healthy levels of profit. Long-term bets or businesses that we're investing in today that have a longer ROI than typical for us but may have a big payoff at the…

Got it, got it. And if you'll allow me for a quick follow-up, I know you talked about gross margins being sustainably above 40% is how you're thinking about the business. If you sort of look at the gross margins today, do you think the effective sort of the biggest gap between where your aspiration is and what sort of the companies delivering today? Is that pricing or is that sort of these underperforming businesses? Once that's sort of done and dusted, you sort of get back to that sustainable range? Maybe just help me in sort of what's the biggest gap you're identifying between where the company should be and where the gross margins are today.

Yes. It's a great question, Samik. And I would say it's really a combination of, some of it is underperforming businesses that are significantly -- that have gross margins that are significantly below our corporate average. But also, if you set that aside, pricing, I think there's both opportunities on pricing as well as cost structure. And I mentioned this a little bit in my prepared remarks. On pricing, I do believe that there's things that we can do to improve our pricing discipline moving forward. And some of those ideas that I'm bringing with me is somewhat what I did in prior companies, where we applied some advanced, think about it, as pricing analytics, pricing strategies that really are targeted at making sure that we're competitive on price but also that we're getting fair value for the innovation that we're bringing to market. So I think there's a pricing initiative that we've kicked off around better pricing discipline. I expect that to yield gross margin improvement. But then also cost. Look, I think there's a number of different areas across the company where we need to be focused on driving better cost structure, and I mentioned a few of those in the prepared remarks. I think product yields, we have improvement to drive there, asset utilization. And then I think the third area that I mentioned was better make versus buy decisions, making sure that we're leveraging the bigger ecosystem where it makes sense to making sure that we're applying our assets to where we're driving increased differentiation or that's providing our customers some sort of significant advantage. But that's sort of the three different areas I'm thinking about in terms of gross margin improvement.

Great. Thank you. Thanks for taking my questions.

Thanks Samik.

Thank you. Our next question comes from Jeff Koche with Raymond James. You may proceed.

Yes, thanks. This is Jeff Koche for Simon Leopold. I just wanted to hit on the gross margin a little bit deeper. Maybe you can talk about the glide path and like what kind of time frame do you see getting to that 40%-plus range? And really hitting on maybe that buy-versus-make decision, you had a competitor -- one of your competitors last night talking about the indium phosphide lasers being booked out through the end of 2025 is in the 200G per lane. Maybe just update your thoughts around that for in-house production there. Thank you.

On the first part of your question, the glide path, that's definitely a topic that we want to cover at that Investor Day that I mentioned. So we'll be scheduling that in the coming quarters. And what we'll do is, as part of that Investor Day, it's not just lay out the company's strategy but give an overall business model target for the company in a sense of what our timing is of the time frame to achieve that business model target, including the gross margins. But this will definitely be a key focus area for us moving forward. And look, gross margin improvement takes time. Whether it's pricing or cost reductions, those take work. But we're determined to drive a steady roadmap of improvement moving forward. So you'll hear more about from us around the timing of those gross margin improvements in the quarters ahead. And then on the second part of your question, make-versus-buy, look, I think the way to think about this is one of the benefits that Coherent has versus our competitors, and it's a benefit that our customers see every day, is there's a number of places where we're vertically integrated. And we build, for instance, not just the datacom transceiver but we build a number of the components that go into that transceiver. And to the extent that, that provides us differentiation or faster time to market or generates real value for our customers, that's fantastic and we will continue to do that. But what I want to make sure that we're careful about is not just building it internally for the sake of building it internally, but to the extent that there's external providers or an ecosystem that we can leverage that's competitive in terms of technology and cost with the internal option, I'd rather use those resources to focus those on areas that we can truly differentiate and add value for our customers. So I just want to make sure that we're being objective moving forward on make-versus-buy and being smart about how we leverage.

Got it. Appreciate it.

Thanks Jeff.

Our next question comes from Tom O'Malley with Barclays. You may proceed.

Hi Jim. Thanks for taking my question and great to meet you. I look forward to working with you as well. But I kind of wanted to ask on the optical opportunity and the transceiver business in general. I realize you just joined the business and there were a lot of metrics kind of floating around, and I'm sure you don't want to marry yourself to any of those right away. But in your initial days at the business, clearly, the big growth engine Coherent has been this 800G ramp and then in the future, potentially the 1.6T ramp as well. But when you look at kind of what was advertised to you when you were first looking at this job and then kind of got underneath the covers and looked at that optical opportunity, could you maybe speak qualitatively about your expectations in that business? I understand that you'll have an Analyst Day and maybe put some more numbers on it, but just broadly, your feelings on that business and what that growth engine could look like for Coherent over the next couple of years? And then I had a follow-up.

Yes. Thank you, Tom, for the question. Yes, the short answer is it's better than I thought before I joined the company. So I had a sense of always as Coherent as a leader in optical transceivers specifically for datacom. And obviously, there's tremendous build-out happening now with AI data centers. And I have my own sense of what that sort of growth trajectory would look like, before I joined the company. It's stronger than what I had thought. And we've seen, just over the last, I would say, gosh, four to six weeks as I've spent a lot of time with our top customers across the - across all of our different product lines, but especially in our datacom business, I've gotten a much better sense for the opportunity that's in front of us, and I would say it's a very strong opportunity. And we continue to see demand strengthening, forecast strengthening, billings, backlog. So yes, we knew this as a really key growth area for the company. The 800G ramp is very exciting for us. And then also, I was really pleased with the team's execution on the 1.6T. They delivered samples of 1.6T just over the past few weeks, month. I think that was a key milestone for us, and we're looking forward to ramping 1.6T next year. But yes, I think it's an exciting growth area for the company. Now I'll say that, but I also want to make sure that we recognize that there are other growth areas, within the company as well. I know I'm excited about datacom and AI data centers. But there's a number of other good areas of growth within the company. I mentioned a few of them in my prepared remarks. So one of the things I think is the strength of Coherent is, not just the innovation that I talked about. But we do have a wide portfolio of growth opportunities across our other businesses as well. And I think that makes for a really strong long-term portfolio, a diversified portfolio of growth moving forward. So - and yes, definitely, I'll share more thoughts on all of those growth engines at Investor Day.

Perfect. And then the second one, is just a little more tactical in regards to kind of what we heard last night from your competitor who is talking about an improving telecom market into the September quarter. It sounded as though you were a little more cautious. Just could you describe what you're seeing from those customers just in the short-term? This is less of kind of a long-term strategic question. But just a sense check on, are you seeing that market recovering with legacy products? Are new product introductions kind of picking up? That's what was kind of echoed last night, newer products kind of growing at customers. Just the puts and takes on what - you're seeing in the telecom market just, because visibility has been pretty bad, inventory levels have been high. Where are we at in that correction kind of off the bottom? Thank you.

Yes. Thanks Tom. I'm going to separate it out into just purely end market comments versus I'll come back and talk about some of the new products that we have ramping here. So just purely end market, yes, I guess we're taking a more cautious view on the market. I don't believe that we're completely out of the woods as an industry on the telecom market. Significant destocking has happened in that market and that's good, right? The telecom market have built up significant inventory that's I think most of that destocking is largely behind us. But I think there is - there are still pockets of inventory that are out there. And so, our whole look on the telecom market through the next, I would say, at least six months and probably into the following six months, is a bit more of a cautious outlook. Now, it could be that we're wrong and it ends up being better, or stronger than that, but we're taking a more cautious view on that. Now that's all end market comments. Now set that aside, I'll switch over to Coherent specifically. We, against that market backdrop, we do have a number products that are ramping that are pretty exciting. The number - and I mentioned in the prepared remarks, both the 100G and then the 400G ZR and ZR+ that will ramp throughout the course of this year. And obviously, since you're ramping over the course of this year. They have a bigger impact in the second half of our fiscal year. So I think that we do have some growth tailwinds behind us in terms of our own products. But I think in terms of the market, we're expecting that to be - to continue to be soft. Thanks a lot. Next question.

Thank you. Our next question comes from Meta Marshall with Morgan Stanley. You may proceed.

Great. Thanks. I'll start with a question non-AI just to focus on some other areas of the business. The material business looked to have kind of better-than-expected performance throughout the quarter. Was some of that just improvement on silicon carbide yields that had kind of encumbered last quarter? Were there any other markets worth calling out that improved there? And then maybe just as a second question. On the datacom side, I know the focus is on 400G and up, but just any recovery you guys are seeing in kind of demand for the non-AI speed transceivers? Thanks.

Thank you. And on the first part of your questions on the materials business, yes, we did see some pickup in the materials business from Q3 to Q4. And you're right, actually, a good chunk of that was the production issues that we had on silicon carbide in Q3. We were able to catch up on those issues - or catch up on that demand in Q4. And so, we had a little bit of depressed demand or depressed shipments in Q3. We were able to catch up on that in Q4. So some of that sequential gain is, yes, certainly due to that silicon carbide catch-up. And then on the second part of your question, I called that it was on datacom, but I didn't quite hear the end of the question. Would you mind repeating the end of that datacom question?

Yes, just demand for kind of the non-AI speeds or the kind of sub 400G. I know that had been an area of more depressed demand, but if you're seeing any changes there.

Got it, okay. The sub 400G. We're expecting that to be relatively stable. So, we don't expect to see any huge growth from that or a huge decline. We're modeling that moving forward as relatively stable.

Great. Thank you so much.

Thank you. Our next question comes from Karl Ackerman with BNP Paribas. You may proceed.

Yes, thank you. Jim, you spoke about the need to have less transactional revenue and the ability to improve pricing going forward. Given your innovation and leadership in high-speed optical transceivers, could you discuss the breadth of hyperscale engagements within datacom. And whether this customer demand is resulting in extended volume commitments, and order visibility provided to you so that you may enable those customers to meet their data center build-outs? Thank you.

Yes. Thanks, Karl. So definitely, we're seeing - we have a very good breadth of customers. If you look at 800G, our breadth of customers continues to grow. It's grown on a quarter-over-quarter basis in terms of those customers that are ramping 800G and are in full production. And so the breadth of customers feel really good about and continues to grow. And then on the second part of your question around extending visibility, yes our visibility or the other way to look at it is our order book has continued to improve over the last 90 days. Especially over, I would say, the line of six to eight weeks, it certainly improved. And that's given us visibility not just through the end of this calendar year, but in the first half of next calendar year, so really through the rest of our fiscal year here. And that order book continues to strengthen for the datacom business, which we view as very positive. And so, we're definitely focused on making sure we meet that increasing demand.

Thank you.

Thank you. Our next question comes from Vivek Arya with Bank of America. You may proceed.

Thanks for taking my question. Jim, you mentioned the strong order book for your optical transceivers extending several quarters. I'm curious, are you seeing any impact at all, positive or negative, because of changes in NVIDIA's product schedule or does that have no impact? And then just given the strength in the order book, how does the pricing and gross margin shape up when you look at the next several quarters? Do you think it can improve from here? Or do you think that margins in this business may still be dilutive to the overall business?

Yes. Thanks, Vivek. On the first part, on the part that was about the order book, yes, we continue - as I said, we continue to see the order book strengthen. I think you asked about a particular customer. I can't comment on that particular customer, or really any particular customer. But I can say that in aggregate, we're continuing to see, again, the order book strengthen and demand growing, which is good. On the pricing and gross margin, in general, what we would usually see in the transceiver market is the newer speed grades like 800 and then, soon to be 1.6T generally carry higher gross margins than the older speed grades, right? The older speed grades are usually become commoditized over time. And so, to the extent that we're ramping the newer speed grades, that's certainly generally a tailwind for us. But a lot of my comments earlier on gross margin are really focused at the aggregate company level, not just in datacom but at an aggregate company level. I believe that there's opportunity for us to improve our pricing discipline, to have a better optimized pricing strategy across the company, across all of our product lines. And then also, there's a number of cost structure improvements that I think the company has opportunity to improve, not just in datacom, but across some of our other product line as well.

And for my follow-up, so you're guiding the current quarter roughly, kind of flat sequentially. What are the puts and takes from the different segments? And I know you're not guiding to December, but should we assume that those same end market trends follow in December also? Or do you think that there is the prospect for some sequential improvement as we look at December just from a broad end market perspective? Thank you.

Yes, Vivek, on the September quarter, the one that we currently guided, yes, we guided roughly flat sequentially. We would expect the datacom business, as we're just talking about, we would expect the datacom business to be sequentially up. But some of our other businesses tied to the telecom, and the industrial markets to be sequentially either flat or sequentially down. And so that offsets some of the datacom growth. And if you look at the midpoint of our guide, obviously, our guide is a range, right? And that's what we're seeing for the current quarter that we're in. For the December quarter, I'll probably save those comments until the next earnings call, we'll give more insight into what we're seeing in the December quarter, and maybe into the beginning of the next calendar year as well.

Thank you.

Thank you. Our next question comes from Atif Malik with Citi. You may proceed.

Thank you. This is Papa Sylla for Atif. Thank you for taking my question. I guess my first question was around the industrials business. I guess just looking at it sequentially, we saw a little bit of a deceleration versus last quarter. So we were just wondering if you can touch a little bit on the percentage there or perhaps just touch on A, at that last quarter, kind of some difficulties such as precision manufacturing, EUV, semicap back-end and how they are doing this quarter?

Yes, thanks for the question. Yes, on kind of the broad base of industrials in aggregate, we did see a little bit of sequential improvement in aggregate in the industrials from Q3 to Q4. But moving into the current quarter, as I just mentioned on a prior question, we're assuming that both the telecom as well as the industrial space are, they're kind of flat sequentially, or there are some segments that are sequentially down. And that offsets - we're assuming that offsets some of the datacom sequential growth that we're expecting in the current quarter.

Got it. And for my quick follow-up, I wanted to touch a little bit on the AI front, on the laser front of things for 1.6T. So I guess our understanding is that from an industry-wide perspective, all three technologies, so VCSEL, EML, SIFL - have their own pockets of demand. So we were just wondering, from your end, can you touch on engagement across those three and kind of what those mix look like currently? And then what they might look like maybe two, three quarters down the line?

Yes. I think one of the great things about Coherent is, look, we have a really wide portfolio of technology. And so we're -- we develop our own VCSELs, we manufacture our own VCSELs. We do the same in EML. Indium phosphide, we develop and manufacture in-house. So we both develop and manufacture a number of those lasers in-house. But then where it makes sense, we also source some of those lasers externally as well, right? And so for 1.6T, we'll - or any technology beyond that as well, we'll always make best use whatever we think is the best technology to bring the most advanced, most innovative product to market for our customers. Whatever gives us the biggest technical advantage versus our competition and the biggest differentiation for our customers, we'll always select that technology, whether it's developed in-house, or whether we source it externally, we'll select the best technology that benefits our customers. So I think, I probably won't give any prognostication on 1.6T and how much of it will be VCSEL versus other technologies. But we'll probably share more about that as we get closer to 1.6T production ramp.

Got it. Thank you.

Thank you. Our next question comes from Ruben Roy with Stifel. You may proceed.

Thank you. And hi, Jim. I wanted to - I know you had a lot of questions on strategy and I appreciate the commentary high level, Jim. But I wanted to just maybe talk about pricing optimization one more time. And you talked about some successful turnarounds that you've had, and I've watched the last one, which was tremendous and in short order. And I'm just wondering if you could comment a little bit, given that the breadth of products, end markets, customers, et cetera, is a lot different. I think at Coherent then at the last turnaround that you were working on. So just how are you thinking about timing? And kind of is this a multiyear strategy from an optimization strategy to get some of those margins that you want to get to? Or any kind of high-level commentary on that would be helpful?

Yes. Thanks, Ruben. Look, businesses - Coherent is a different business. Every business has its own dynamics, and Coherent itself has a wide range of different businesses within its portfolio. So it's a little bit different business-by-business. But as I spend time with both our business leaders, our general managers, our sales team as well as time with our customers, I do think there's opportunity for us to be better in terms of our pricing discipline and how we price our products in the market. And again, finding and striking that right balance, between being competitive in the market, but making sure we get paid for the innovation that we drive. And I think that there are some approaches, strategies, tactics and analytics that I've used in my past across multiple different businesses. Now I think our universal and can be applied to some of the businesses within Coherent as well. And so that's certainly what we're working on. Now we've kicked off already sort of bigger pricing optimization strategy work we're driving that across the company. Now that does take time. It doesn't - it's not something that turns on like a light switch. Some of those initiatives take longer time to achieve. Some of those are near term, some can provide short-term benefit. But there's a wide range of initiatives that we're beginning to drive and those yield benefit over time. And as I mentioned earlier, when we get to the Investor Day and we give our longer-term business model targets, including gross margin, we'll give some sense about what we think the progression towards those business model targets, including gross margin, will be over time.

Very helpful. Thanks Jim. I guess just a quick follow-up. It sounds like you're saying that you started some of these actions. Are there any other strategic actions that you've implanted currently? Or is most of it on the come?

Definitely, in the category gross margin expansion, we've initiated a number of, as I mentioned, pricing optimization strategies. But we're also working on product cost. So we also kicked off a number of focused product cost activities. And that's something we're driving with sort of equal focus is how do, we drive better product cost structure within the company. And given that we're a manufacturing company, there's a lot more - there's a lot of knobs for us to turn in terms of driving better cost structure, whether it's better asset utilization, higher yields for our products, et cetera. There's a number of different places we're focused to drive better product cost structure moving forward.

All right. Thanks.

Thanks, Ruben.

Thank you. Our next question comes from Jack Egan with Charter Equity Research. You may proceed.

Hi, guys. Thanks for taking the questions. I just had one other follow-up. So last quarter, you mentioned a 30% increase in bookings for the laser segment, but it's still - revenue-wise, it's still been kind of hovering in the $350 million, $355 million range for the past three quarters. So I was just curious, is that due to those various positives and negatives in the industrial and telecom sectors or markets kind of offsetting each other? Or is there anything else at play there?

Yes. Thanks, Jack. It's actually due more to the time from when a booking is made in lasers to when it's shipped. Those are generally longer lead times, and so it has more to do with just the natural lead time of that business. And there's latency from when those bookings are placed until when the product is actually shipped. So it's more about just the natural lead times of that business.

Got it. Okay. And then with the silicon carbide CapEx kind of out of the equation now, I was wondering where, are your CapEx priorities now other than expanding 800G?

Yes. I would say the number one priority in terms of CapEx and setting aside silicon carbide is making sure that we have the capacity in place to support the growing demand that we're seeing in the datacom business. And so right now, 800G capacity, but we're also building out 1.6T capacity as well and making sure we're ready for that ramp. So yes, I would say that's our priority one right now in terms of capital expense.

Great to hear.

Thanks, Jack.

Thank you. Our next question comes from Ananda Baruah with Loop Capital. You may proceed.

Hi, yes, thanks, guys. Good afternoon. Thanks for taking the question. Yes, Jim, great to meet you and look forward to working with you. Just one for me. Do you have any thoughts, Jim, on - this is a transceiver question. Do you have any thoughts, early thoughts on potential for share gains, kind of share gain percent over the next couple of years? And have you guys - have you yet begun to see the big data center customers begin to sort of index more towards U.S.-based transceiver producers? Thanks.

Yes. Thanks, Ananda. That's a great question. As I have spent time with some of those large data center CSP customers, I think there's clearly opportunity for us to gain share at those customers, due to a number of different dynamics. And look, when you look at Coherent, not only are we a technology leader in transceivers, and I think a technology leader that you can rely on over the course of multiple generations, historically moving forward, but we have an incredibly resilient supply chain. And I would say the - from supply chain resiliency, we are the most resilient supply chain in the industry. And so, I think our big data center, datacom CSP customers are - if they haven't recognized that already, they're definitely having more appreciation for that. So I think the combination of our technology and supply chain resiliency gives us the opportunity to win significantly more share of wallet with those big customers over the coming quarters and years. So thanks for the question, Ananda.

Yes, thanks for the context.

Thank you. I would now like to turn the call back over to Jim Anderson for any closing remarks.

Thank you, operator, and thanks again for everybody joining us on our call today. So just to wrap it up, I'm super excited about the opportunity ahead of us at Coherent. And I want to once again thank all of my new Coherent teammates for all their hard work, dedication and all the innovation they drive every day. While we have many strengths, we also have areas of opportunity for improvement, to translate our incredible innovation engine and growing market opportunity, be it to outstanding shareholder value creation moving forward. Thanks again for your support and look forward to updating you on our progress moving forward. Operator that concludes our call.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.