Optics solutions supplier Coherent saw record revenues in its latest earnings report as demand for its networking solutions soared.

The Pennsylvania-based firm reported revenues of $1.53 billion for the fourth quarter of fiscal 2025, while revenue for the full fiscal year soared by 23% to a record $5.81 billion.

Driving growth was strong demand from Coherent’s data center and communications business, with the firm citing AI data centers as leading the demand for its 1.6T Datacom transceivers, which started shipping this quarter.

Full-year revenue for its data center segment rose by 61%, while revenue for Q4 jumped by 38% year-over-year. The networking segment, which includes Coherent's data center business, saw revenues jump 39% year-over-year to $945.2 million in the fourth quarter, while full-year networking revenues surged 49% to $3.42 billion

“We continue to see strong bookings and demand forecasts across our data center customers as they continue to invest in AI data center capacity expansion,” CEO Jim Anderson said.

The CEO told investors that Coherent expects to “ramp up” shipments of its new 1.6T transceivers, which will provide “more meaningful revenue contribution[s]” in the next financial year.

“We believe both AI data centers as well as communications will be strong long-term growth drivers for the company, given the exceptional breadth and depth of our photonic technology,” Anderson added.

The company also achieved its first revenue from its new Optical Circuit Switch (OCS) platform during the quarter, marking another milestone in its data center portfolio expansion.

Coherent estimates that its differentiated liquid-crystal OCS technology will expand the firm's addressable data center market opportunity by more than $2 billion by 2030, as hyperscale operators look to optimize network switching within their facilities.

Beyond optics, the company is also working to expand its data center solutions through the introduction of diamond silicon carbide composite materials. Designed to enhance thermal conductivity for cooling xPUs (processing units) in an AI data center, the technology aims to address thermal management challenges as AI workloads become more intensive and generate higher heat loads.

While Coherent doubles down on networking and data centers, it’s set to carve off other parts of the business. Earlier this week, Coherent announced plans to sell its aerospace and defense business to private equity firm Advent International in a deal worth $400 million.

Coherent CFO Sherri Luther told investors that proceeds from the sale will be used to reduce the firm’s interest expense by paying down additional debt. The sale will also see Coherent reduce its employee headcount by around 550 staff. The company expects it to exclude around $20 million in expected revenue for the first quarter of its 2026 fiscal year.

“We view this sale as a very positive outcome for shareholders as exiting this business will meaningfully streamline our portfolio, allow us to accelerate the paydown of our debt, increase our profitability, and focus our investments in the areas that enhance shareholder value,” Luther said.