Corning (GLW) Q2 FY26 earnings call: guidance and Q&A

Why is Q4 growth limited given Q3 guide implies hitting FY26 run rate early? And thoughts on optical margins ramping in H2.

Management clarified that the Q3 guide implies hitting the $20B run rate a quarter early, and they expect growth to accelerate to a 19% CAGR from Q4 '26 to Q4 '30. No implied message of limited Q4 growth. Optical margins are expected to continue expanding due to new innovations.

“our guide implies that we might actually get to that $20 billion that we put out for the end of this year, a quarter or so early, and then we expect to continue to grow from there.”

asked by Asiya Merchant · answered by Edward Schlesinger

Has anything changed regarding Photonics and Scale-Up since the May Investor Day, given industry chatter about supply chain readiness and potential delays? Is the $1B+ Photonics business for next year still visible?

Wendell reiterated that their fundamental beliefs haven't changed. He acknowledged industry speculation on timing but stated that the internal ecosystem sees less drama. He clarified they haven't guided a specific number for Photonics next year, only the long-term $10 billion target.

“what you're hearing from us is we see no changes to our fundamental belief that we just shared with you in May. Yes, there has been much industry speculation on the exact timing of when everything begins and that's fair enough.”

asked by Joshua Spector · answered by Wendell Weeks

What is the current and future mix of optical business covered by LTAs? Are they being more aggressive on pricing for non-LTA customers?

Wendell stated that LTAs will become the "lion's share" of their optical business as major capacity expansions are underpinned by these agreements. He explained that profitability improvement is driven by delivering innovations that reduce customer costs, allowing Corning to capture a portion of that value, rather than just increasing bare fiber prices.

“Will be the lion share of our optical business because when I say that you're going to underpin any major capacity expansion will be underpinned by these agreements that appropriately share the sort of risk and rewards given our rate of growth, just the math that, that is just going to be the overwhelming part of our overall optical business.”

asked by George Notter · answered by Wendell Weeks

Why does Q3 guidance imply a slight deceleration in growth? And why didn't net margin see more operating leverage despite strong enterprise sales growth from Q1 to Q2?

Ed clarified that the Q3 guide is not intended to imply deceleration but similar YoY growth to Q2, with acceleration expected later. He noted that handheld market weakness and muted automotive market are factors. For margins, he reiterated that optical margins are compelling and expected to continue increasing due to new innovations.

“So our guide for Q3 is not intended to imply any deceleration in growth. I think it's similar -- it's intended to imply similar year-over-year growth as we had in Q2. And then as we've shared longer term, we expect that growth rate to actually accelerate.”

asked by Wamsi Mohan · answered by Edward Schlesinger

Is the implied uptick in gross and operating margins for Q3 fair directionally, and what are the drivers and sustainability of this improvement?

Ed confirmed the assessment is directionally correct, primarily driven by improved profit and profitability in the solar business as manufacturing performance improves. He noted that they expect to be at or above 20% operating margin and will provide a new target later this year after more experience with solar ramp-up and photonics business build-out.

“one thing I would call out is we expect our solar business to improve profit and profitability from Q2 to Q3 as we've gotten past this cycle of improving our manufacturing performance there. So that is definitely a driver.”

asked by Joseph Cardoso · answered by Edward Schlesinger

Why not allocate more polysilicon to higher-profit electronic grade, especially with US semiconductor manufacturing efforts? And how much of the scale-up and fiber array unit opportunity is already baked into the Springboard plan?

Wendell agreed on increasing participation in highest grade semi poly. For Photonics, he clarified that the $10 billion Photonics map includes the "inside the face plate" content like FAU harnesses and other components shown in the diagram. He noted that the biggest driver for upside depends on the percentage of optical ports and the success of optical Scale-Up in AI factories.

“So I can totally understand where some of the confusion can come from. Because we have -- the every of the fiber to the sort of face plate in enterprise, and that is a huge increase potentially with Scale-Up and then what we do is what we call photonics is what's inside the face plate, which among many other things, is also what you referred to as an FAU harness or fiber ray unit harness. So that is what we're putting in that photonics number -- at Photonics map which you see at $10 billion.”

asked by Mehdi Hosseini · answered by Wendell Weeks