Semtech Corporation (SMTC) Q1 2027 Financial Results Summary

2026-05-27 · Stocks · QuoteReporter

Semtech Corporation (SMTC) Q1 2027: Record Sales and Earnings Growth — Strong Start to Fiscal Year

Semtech Corporation (Nasdaq: SMTC) reported impressive results for the first quarter of fiscal year 2027, showcasing a significant year-over-year performance improvement. The company achieved record net sales of $291.0 million, reflecting an increase of $39.9 million or 16% compared to the same quarter last year, where sales were $251.1 million. This sequential growth was also notable, with sales rising $16.6 million or 6% from the previous quarter's $274.4 million.

This quarter's results are undoubtedly positive for shareholders, as the company not only exceeded prior year figures but also demonstrated operational improvements. The GAAP diluted earnings per share (EPS) reached $0.27, up 23% from $0.22 in Q1 2026, while the Non-GAAP adjusted diluted EPS increased by 34% to $0.51 from $0.38 in the same period last year. Such growth in earnings reflects effective cost management and operational leverage, which are critical for sustaining shareholder value.

Key Financial Metrics:

Net Sales: $291.0 million (up $39.9 million or 16% YoY)
GAAP Gross Margin: 52.0%
Non-GAAP Adjusted Gross Margin: 53.0%
GAAP Operating Margin: 8.9%
Non-GAAP Adjusted Operating Margin: 20.4%
GAAP Diluted EPS: $0.27 (up 23% YoY)
Non-GAAP Adjusted Diluted EPS: $0.51 (up 34% YoY)

The company also reported a GAAP operating income of $25.8 million, a significant turnaround from a loss of $18.3 million in the previous quarter, and an increase from $36.0 million in Q1 2026. This operational improvement is indicative of Semtech's ability to manage costs effectively while driving revenue growth.

Operational Highlights:

Gross Margin: The GAAP gross margin stood at 52.0%, slightly down from 52.3% in Q1 2026, while the Non-GAAP adjusted gross margin was 53.0%, a decrease from 53.5% year-over-year.
Operating Expenses: Total operating expenses were $125.7 million, up from $95.3 million in Q1 2026, reflecting increased investment in product development and engineering, which totaled $57.6 million.
Free Cash Flow: The company generated $28.0 million in free cash flow, compared to $26.2 million in Q1 2026, indicating strong cash generation capabilities.

Shareholder Returns and Guidance:

While there were no announcements regarding dividends or share buybacks in this quarter, the management expressed confidence in increasing shareholder returns moving forward. The outlook for the second quarter of fiscal year 2027 is optimistic, with projected net sales of $328.0 million, indicating a potential increase of $37.0 million or 13% from Q1 2027.

Forward-Looking Catalysts:

Investors should keep an eye on Semtech's second quarter results, particularly the anticipated growth in data center revenues driven by new product lines such as FiberEdge and CopperEdge 1.6T. The management's focus on expanding design wins in the data center and IoT connectivity markets is expected to further enhance growth prospects.

In conclusion, Semtech's Q1 2027 results reflect a robust start to the fiscal year, with significant revenue and earnings growth. The company's operational improvements and positive outlook for the next quarter position it favorably for continued shareholder value creation.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

Note: All amounts are in thousands.

	Q1'27	Q4'26	Q1'26
Net sales	$ 291.0	$ 274.4	$ 251.1
Cost of sales	$ 137.8	$ 133.5	$ 117.6
Amortization of acquired technology	$ 1.8	$ 2.6	$ 2.2
Total cost of sales	$ 139.6	$ 136.1	$ 119.8
Gross profit	$ 151.5	$ 138.3	$ 131.3
Operating expenses, net:
Product development and engineering	$ 57.6	$ 51.2	$ 47.5
Selling, general and administrative	$ 66.6	$ 59.8	$ 46.4
Intangible amortization	$ 0.3	$ 0.2	$ 0.1
Restructuring	$ 1.2	$ 0.7	$ 1.2
Intangible impairments	$ —	$ 1.8	$ —
Goodwill impairment	$ —	$ 42.8	$ —
Total operating expenses, net	$ 125.7	$ 156.5	$ 95.3
Operating income (loss)	$ 25.8	$ -18.3	$ 36.0
Interest expense	$ -1.9	$ -1.8	$ -6.6
Interest income	$ 0.9	$ 0.8	$ 0.4
Non-operating income (expense)	$ 0.2	$ -0.7	$ -2.8
Investment impairments and credit loss reserves, net	$ —	$ -10.4	$ —
Income (loss) before taxes and equity method income (loss)	$ 25.1	$ -30.4	$ 27.0
Provision (benefit) for income taxes	$ 0.1	$ -0.9	$ 8.7
Net income (loss) before equity method income (loss)	$ 24.9	$ -29.4	$ 18.3
Equity method income (loss)	$ 1.6	$ -0.4	$ 1.0
Net income (loss)	$ 26.6	$ -29.8	$ 19.3
Earnings (loss) per share:
Basic	$ 0.29	$ -0.32	$ 0.22
Diluted	$ 0.27	$ -0.32	$ 0.22
Weighted average number of shares used in computing earnings (loss) per share:
Basic	92.9	92.6	86.4
Diluted	98.0	92.6	89.6

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)