Cohu, Inc. (COHU) Income Statement

The sequential revenue progression from $94.1M in Q4 2024 to $149.0M in Q2 2026 indicates a robust cyclical upswing, likely driven by OSAT capacity expansion and improving test cell utilization. The 38.4% YoY growth in Q2 2026, up from 2.8% in Q2 2025, suggests the recovery is broadening, though the sustainability depends on continued capital spending by customers. Investors should monitor whether this growth is volume-led or price-led, as pricing power in the back-end equipment market remains limited.

The gross margin recovery is a direct result of higher revenue volumes spreading fixed manufacturing overhead over a larger base. However, the 45.4% gross margin still trails peers like Onto Innovation (49.7%) and Axcelis (44.9%), indicating room for improvement. The mix shift toward higher-margin Interface consumables and thermal subsystems could further enhance margins, but the current level suggests the company is still operating below optimal utilization.

The transition to near-breakeven operating income demonstrates that operating leverage is starting to work as revenue scales. SG&A and R&D expenses have remained relatively flat around $59M, while gross profit has grown from $37.0M to $67.6M, indicating that the cost structure is not expanding proportionally with revenue. This suggests that if revenue continues to grow, operating margins could expand rapidly, but the company must sustain this trajectory to cover its fixed costs fully.

Management appears to be maintaining tight control over operating expenses, with R&D and SG&A not increasing proportionally with revenue. This discipline is crucial for achieving operating leverage, but it also raises questions about whether R&D investment is sufficient to sustain long-term competitiveness in thermal management and interface technology. The flat cost structure suggests that the company is prioritizing near-term profitability over aggressive growth investments, which may be prudent given the cyclical recovery.