Semtech reported a strong start to fiscal year 2026 (quarter ended April 27, 2025) with a record net sales of $251.1 million, up 22% year-over-year. Adjusted gross margin rose to 53.5%, and adjusted operating margin reached 19% as the company continued to optimize its portfolio and invest in R&D to expand margins. The quarter showcased meaningful progress across multiple end markets, with data center activity posting robust year-over-year growth (+143%) and infrastructure delivering $72.8 million in net sales, while the IoT ecosystem and LoRa-enabled solutions continued to strengthen. Industrial net sales grew 24% year-over-year to $142.8 million, underscoring Semtech’s exposure to the expanding industrial IoT and 5G-adjacent opportunities. In parallel, the company reduced net debt to $396.2 million and expanded its revolving credit facility to $455 million, signaling improved liquidity and financial flexibility amid a volatile macro environment.
Management highlighted several catalysts that underpin the medium-term growth trajectory: (1) data center copper/copper-edge solutions (CopperEdge and ACC) addressing AI compute and power/thermal challenges, with design wins and multiple customer engagements expected to ramp in the second half of fiscal 2026; (2) LPO deployments and 1.6T optical transceivers driving opportunities in the data center optics stack; (3) LoRa-enabled solutions expanding into new verticals such as hearing aids, robotics, and smart building applications; and (4) increasing 5G module adoption within the IoT portfolio. The company reaffirmed its commitment to debt reduction and maintaining a lean operating structure while investing in strategic initiatives to drive profitable growth.
Guidance for the second quarter (non-GAAP metrics) shows continued revenue growth and margin expansion: net sales of $256 million +/- $5 million (up ~19% YoY at the midpoint), adjusted gross margin of 53.0% +/- 50 basis points, adjusted operating margin around 18.8%, and adjusted EBITDA near $56 million with a 21.9% margin. The company also guided for a normalized tax rate of 15% and a diluted EPS of $0.40 +/- $0.03, based on ~90 million shares. Taken together, Semtech’s QQ1 results reflect disciplined execution amid macro uncertainty and position the company for meaningful 2H26 contribution from AI-connectivity products, optical LPO ramp, and LoRa-enabled growth.