Semtech reported a robust QQ2 2026 with record quarterly net sales of $257.6 million, up 20% year over year, driven by standout performance in data center and a diversified end-market mix. Infrastructure net sales reached $73.4 million ( +1% QoQ, +39% YoY ), underpinned by a data center record of $52.2 million (+92% YoY), aided by FiberEdge momentum and ongoing transitions to higher data rates. Management highlighted progress across core assets—data center, LoRa, and PerSe—plus disciplined portfolio optimization aimed at elevating growth and profitabilityl, supported by a materially improved balance sheet (debt down by $879 million since the CEO tenure began) and a strongly cash-generative profile.
The quarter featured meaningful margin expansion on an adjusted basis (adjusted gross margin 53.2%; IoT/Systems margin expansion to 39.5%), while GAAP results were affected by a noncash impairment charge of $41.9 million in connected services. Management reiterated a constructive longer-term outlook anchored by a data center CapEx backdrop and a multi-year transition to higher-bandwidth, lower-power interconnects (notably 800G and 1.6T designs) with LPO driving incremental TAM. The company also signaled ongoing strength in LoRa and PerSe applications within IoT, as well as a resilient industrial end-market footprint.
Looking ahead, management provided Q3 guidance (net sales of $266 million +/- $5 million; adjusted gross margin ~53%, adjusted EBITDA ~$60 million, adjusted EPS ~$0.44, tax rate ~15%) and stressed that LPO and CopperEdge opportunities should contribute to a higher-growth trajectory into 2026, with data center ramp support confirmed for late calendar 2025 and into 2026. The investment thesis rests on a diversified, high-m-margin product portfolio, a disciplined balance sheet, and a rising contribution from data-center-related interconnectivity technologies.