Semtech (SMTC) Q1 2027 earnings summary

Executive summary

• Achieved record Q1 net sales of $291.0 million, up 16% year-over-year, driven by strong performance in data center, LoRa, infrastructure, and industrial markets.

• Adjusted diluted EPS rose 34% year-over-year to $0.51, with GAAP diluted EPS at $0.27; robust bookings and backlog support future growth.

• Advanced R&D and strategic initiatives, including HieFo acquisition integration, portfolio optimization, and force sensing acquisition.

• All operating segments reported sales growth, with strong design wins and momentum in key focus areas.

• Final stages of divestiture for the cellular module business, with transition and integration discussions progressing.

Financial highlights

• Adjusted gross margin was 53% (non-GAAP), with GAAP gross margin at 52%; total semiconductor products gross margin reached 62.1%.

• Adjusted operating income was $59.3 million, with an adjusted operating margin of 20.4%; GAAP operating margin was 8.9%.

• Adjusted EBITDA was $66.4 million, with a margin of 22.8%.

• Operating cash flow for Q1 was $36.2 million, up year-over-year; free cash flow was $28 million.

• Q1 ending cash and cash equivalents were $163.3 million; principal debt ranged from $492 million to $503 million.

Outlook and guidance

• Q2 net sales expected at $328 million ±$5 million, up 27% year-over-year at midpoint.

• Data center segment projected to grow 35% sequentially and 85% year-over-year in Q2; LoRa net sales anticipated to grow over 15% sequentially.

• Adjusted gross margin expected at 54% ±50 bps; semiconductor products gross margin at 62.1% ±50 bps.

• Adjusted operating margin at 21.9% and adjusted EBITDA margin at 24.2% for Q2.

• Adjusted diluted EPS for Q2 expected at $0.61 ±$0.02, up 49% year-over-year.