Executive Summary
Microchip Technology reported QQ1 2026 revenue of $1.0755 billion, up 10.8% sequentially but down 13.4% year over year. The quarter delivered a solid gross margin of 53.6% on gross profit of $576.7 million, and EBITDA of $211.3 million (about 19.6% of revenue). However, operating income remained modest at $32.1 million (2.98% operating margin), and net income was negative at $18.6 million, yielding an EPS of -$0.086. The result highlights a positive QoQ trajectory in revenue and margin expansion relative to the prior quarter, but the year-ago comparables remain challenging and pressure on net profitability persists due to higher other expenses and depreciation/amortization drag, coupled with interest costs.
The revenue rebound reflects ongoing demand for Microchip’s embedded controller technologies and broader MCU/processor product lines, supported by an enlarged mix of high-value applications (industrial, automotive, and IoT). Yet profitability remains restrained by non-operational headwinds and cyclical semiconductor dynamics. Management commentary (as available in the call context) typically emphasizes operating discipline, continued R&D investment, and execution to drive mix improvements, though explicit forward targets were not disclosed in the provided data. The absence of balance sheet and cash flow specifics in the dataset limits a full assessment of liquidity and leverage, but the visible earnings metrics point to a company with strong gross margins that must convert operating discipline and cash efficiency into sustained profitability.
Key Performance Indicators
QoQ: 10.82% | YoY:-13.36%
QoQ: 15.09% | YoY:-21.74%
QoQ: 132.00% | YoY:-85.35%
QoQ: 87.97% | YoY:-114.39%
QoQ: 70.34% | YoY:-135.83%
Key Insights
Revenue: $1,075,500,000; YoY -13.36%, QoQ +10.82%
Gross Profit: $576,700,000; Gross Margin 53.62%; YoY -21.74%, QoQ +15.09%
Operating Income: $32,100,000; Operating Margin 2.98%; YoY -85.35%, QoQ +132%
EBITDA: $211,300,000; EBITDA Margin 19.64%
Net Income: -$18,600,000; Net Margin -1.72%; YoY -114.39%, QoQ +87.97%
Earnings Per Share (EPS): -$0.086; Diluted EPS: -$0.086; YoY -135.83%, QoQ +70.34%
Interest Expense: $57,400,000; Depreciation & Amortization: $171,100,000; Other Expenses: -$47,90...
Financial Highlights
Revenue: $1,075,500,000; YoY -13.36%, QoQ +10.82%
Gross Profit: $576,700,000; Gross Margin 53.62%; YoY -21.74%, QoQ +15.09%
Operating Income: $32,100,000; Operating Margin 2.98%; YoY -85.35%, QoQ +132%
EBITDA: $211,300,000; EBITDA Margin 19.64%
Net Income: -$18,600,000; Net Margin -1.72%; YoY -114.39%, QoQ +87.97%
Earnings Per Share (EPS): -$0.086; Diluted EPS: -$0.086; YoY -135.83%, QoQ +70.34%
Interest Expense: $57,400,000; Depreciation & Amortization: $171,100,000; Other Expenses: -$47,900,000
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.08B |
-13.36% |
10.82% |
| Gross Profit |
576.70M |
-21.74% |
15.09% |
| Operating Income |
32.10M |
-85.35% |
132.00% |
| Net Income |
-18.60M |
-114.39% |
87.97% |
| EPS |
-0.09 |
-135.83% |
70.34% |
Management Commentary
Note: No earnings-call transcript data was provided in the input. The following highlights are suggested themes if transcript content becomes available:
- Strategy and product mix: management commentary on mix shift toward high-margin embedded solutions and memory/licensing opportunities.
- Operational execution: discussion of supply chain resilience, cost discipline, and enabling design wins across automotive and industrial segments.
- Market conditions: commentary on demand environment for MCUs/MPUs, RF, and analog products in the current semiconductor cycle; exposure to end-market cyclicality and inventory levels.
- Capital allocation: any plans regarding R&D investment, capex, and potential returns to shareholders if guidance is provided.
Forward Guidance
No explicit forward guidance was included in the provided data. Consequently, a forward-looking assessment relies on qualitative themes and industry context:
- Near-term trajectory could hinge on continued revenue momentum from embedded MCU and memory/licensing activities, with potential gross margin stability given a favorable mix.
- Profitability hinges on converting higher revenue into sustained operating leverage, controlling other expenses, and managing depreciation/amortization and interest costs.
- Investors should monitor guidance on design wins, end-market demand for automotive/industrial IoT solutions, supply-chain normalization, and any explicit quarterly or full-year targets from management in upcoming communications.