Semtech Sales Reach Record $341.9 Million
The semiconductor maker guided third-quarter net sales of $410.0 million plus or minus $5.0 million.
Semtech Corporation (SMTC) posted record net sales of $341.9 million in the second quarter of fiscal 2027, ending July 26, 2026, as sequential growth accelerated to 17% from 6% in the prior quarter and year-over-year growth widened to 33% from 16%.
The Camarillo, California, provider of high-performance semiconductors for AI data center networking and connected IoT devices said the faster pace followed a first quarter that already set a sales record at $291.0 million. President and Chief Executive Officer Hong Hou said accelerating bookings and record backlog pointed to a strong inflection in growth, with new revenue drivers and visibility expected to extend well into next fiscal year.
GAAP gross margin expanded to 53.8% from 52.0% sequentially and 52.1% a year earlier. Non-GAAP adjusted gross margin rose to 54.5% from 53.0% and 53.2%. GAAP operating margin widened to 16.3% from 8.9% sequentially and from a 6.3% loss a year earlier, with operating income of $55.8 million versus $25.8 million and a $16.2 million loss. Non-GAAP adjusted operating margin expanded to 24.4% from 20.4% and 18.8%; adjusted operating income was $83.6 million versus $59.3 million and $48.6 million.
GAAP diluted earnings were $1.59 a share versus $0.27 sequentially and a $0.31 loss a year earlier; net income was $160.1 million versus $26.6 million and a $27.1 million loss. Non-GAAP adjusted diluted earnings were $0.71 a share versus $0.51 and $0.41. Adjusted EBITDA rose to $91.1 million with a 26.6% margin, from $66.4 million and 22.8% sequentially and $56.5 million and 21.9% a year earlier.
Signal Integrity net sales were $126.2 million with a 65.3% segment gross margin, versus $102.0 million and 62.7% sequentially and $76.8 million and 62.4% a year earlier. Analog Mixed Signal and Wireless net sales were $117.4 million with a 60.1% segment gross margin, versus $100.8 million and 58.7% sequentially and $92.0 million and 59.3% a year earlier. Combined semiconductor products sales were $243.5 million with a 62.8% segment gross margin, versus $202.8 million and 60.7% sequentially and $168.8 million and 60.7% a year earlier. IoT Systems and Connectivity net sales were $98.3 million with a 34.0% segment gross margin, versus $88.3 million and 35.8% sequentially and $88.8 million and 39.5% a year earlier.
The company classified its cellular module business as held for sale as of period end, with $132.2 million of assets and $70.7 million of liabilities on the July 26, 2026, balance sheet. Adjusted gross margin excluding that business was 59.7%, after a 5.2% adjustment for $48.1 million of held-for-sale net sales and $10.9 million of adjusted gross profit.
Free cash flow was $61.4 million, versus $28.0 million sequentially and $41.5 million a year earlier; operating cash flow was $68.9 million versus $36.2 million and $44.4 million. Cash and cash equivalents were $204.1 million.
Chief Financial Officer Mark Lin said the company entered the third quarter expecting broad-based bookings strength to translate into sustained revenue, margin and earnings growth. Semtech guided third-quarter net sales of $410.0 million plus or minus $5.0 million, adjusted operating margin of 31.0% plus or minus 60 bps, and adjusted diluted earnings of $1.05 plus or minus $0.03 a share. The outlook included adjusted gross margin of 58.3% plus or minus 100 bps, or 63.9% plus or minus 100 bps excluding the business held for sale, and adjusted EBITDA of $134.3 million plus or minus $4.0 million with a 32.8% margin.