Executive Summary
Allegro MicroSystems Inc (ALGM) reported solid Q1 2026 results, demonstrating resilience in a volatile semiconductor market. Revenue reached $203 million, marking a 22% increase year-over-year and a 5% increase from the previous quarter. Despite overall industry challenges, Allegro's e-Mobility segment drove automotive sales growth, particularly in current sensors for electric vehicle applications. Gross margin expanded to 48.2%, bolstered by improved manufacturing efficiencies and effective cost management strategies. While net income was reported at a loss of $13.2 million, reflecting ongoing investments in R&D, management expressed optimism about future performance, citing strong order demand and a positive trend in design wins across strategic focus areas. The company's proactive approach to managing inventory and enhancing product offerings positions it well to withstand market fluctuations and capitalize on emerging opportunities in both automotive and industrial segments.
Key Performance Indicators
Key Insights
1. Revenue: $203.4 million, up 22% YoY, 5% QoQ.
2. Gross Profit: $91.3 million, with a gross margin of 48.2%, a 260 basis point increase sequentially.
3. Operating Income: -$2.7 million, reflecting ongoing investments in innovation.
4. Net Income: -$13.2 million, with an EPS loss of $0.07.
5. Free Cash Flow: $51 million, representing 25% of sales.
6. Cash at End of Period: $139 million.
7. Inventory Days: Reduced to 141 from 148 in the previous quarter.
These metrics underscore Allegro's a...
Financial Highlights
1. Revenue: $203.4 million, up 22% YoY, 5% QoQ.
2. Gross Profit: $91.3 million, with a gross margin of 48.2%, a 260 basis point increase sequentially.
3. Operating Income: -$2.7 million, reflecting ongoing investments in innovation.
4. Net Income: -$13.2 million, with an EPS loss of $0.07.
5. Free Cash Flow: $51 million, representing 25% of sales.
6. Cash at End of Period: $139 million.
7. Inventory Days: Reduced to 141 from 148 in the previous quarter.
These metrics underscore Allegro's ability to maintain substantial year-over-year growth despite a challenging economic landscape, influenced by supply chain dynamics and operational adjustments.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
203.41M |
21.86% |
5.49% |
| Gross Profit |
91.30M |
22.11% |
14.30% |
| Operating Income |
-2.74M |
74.22% |
79.24% |
| Net Income |
-13.23M |
25.17% |
10.63% |
| EPS |
-0.07 |
23.41% |
12.50% |
Management Commentary
Growth Strategy and Market Demand:
Management stressed the positive momentum across various sectors, particularly in e-Mobility and Data Center. CEO Mike Doogue highlighted, "We are encouraged by the positive momentum we are seeing across the business, including continued strong bookings, increasing backlog and strong design win activity in our strategic focus areas."
Cost Optimization:
Derek P. D'Antilio noted the importance of cost innovation: "We optimized our manufacturing flow and increased test yield for certain high-volume TMR devices, resulting in a tangible COGS reduction." This points towards efficient management practices that aid in margin improvement despite external pressures.
Future Outlook:
Management expects Q2 2026 sales to range between $205 million to $215 million, illustrating continued growth trajectories in their operating segments.
"We expect this positive e-Mobility trend to continue as a result of tailwinds from ADAS-related safety feature adoption and the continued electrification of vehicle powertrains."
â Mike Doogue
"We remain committed to demonstrating relentless innovation that drives performance leadership in new and existing markets and applications."
â Mike Doogue
Forward Guidance
Looking ahead, Allegro is targeting a revenue range of $205M to $215M for Q2 2026, projecting a 12% year-over-year increase at the midpoint. Management anticipates gross margins will stabilize between 48% and 50% with operational expenses estimated at approximately $73 million. This guidance reflects optimism driven by recovering demand in the automotive sector, particularly from e-Mobility and significant design wins in industrial applications that are expected to bolster future revenue performance. Investors are encouraged to monitor gross margin improvements and operational scalability as key indicators of continued financial health.