Semtech Corp. reported third‑quarter fiscal 2026 results with net sales of $267.0 million, a 13% year‑over‑year increase from $236.8 million in Q3 FY2025. The growth was driven by robust demand in data‑center networking and Internet‑of‑Things (IoT) markets, with the CopperEdge and FiberEdge product lines contributing 8% of total revenue. The company’s revenue estimate of $266.4 million was slightly below consensus, but the actual figure still surpassed most analysts’ expectations.
The company’s profitability improved markedly. Adjusted gross margin expanded to 53.0%, up 1.2 percentage points from 51.8% in the prior year, thanks to a higher mix of high‑margin Signal Integrity and Analog Mixed‑Signal products. Adjusted operating income rose to $54.9 million, an 18% year‑over‑year gain, reflecting disciplined cost management and scale benefits. The operating margin of 20.6% also edged higher, underscoring the company’s pricing power in its core segments.
Adjusted diluted earnings per share reached $0.48, beating the consensus estimate of $0.44 by $0.04 or 9%. The EPS beat was largely driven by margin expansion and effective cost control. CEO Hong Hou said, "Our strong results reflect disciplined R&D investments and deep partnerships with customers, positioning us to lead in high‑bandwidth data‑center networking and IoT solutions." CFO Mark Lin added, "We achieved margin expansion through cost discipline and will allocate savings to further accelerate R&D and portfolio optimization."
For the fourth quarter of fiscal 2026, Semtech guided to an adjusted operating margin of 17.8% and adjusted diluted EPS of $0.43, slightly below the current quarter’s EPS. The guidance signals a cautious outlook amid expected demand moderation, but the company remains confident in its ability to maintain profitability through continued portfolio optimization and debt reduction.
Segment performance highlights include a 15% year‑over‑year rise in Signal Integrity and Analog Mixed‑Signal revenue, a 12% increase in IoT Systems and Connectivity, and a 5% decline in legacy analog products. CopperEdge revenue grew 9% and FiberEdge grew 7%. Management noted that IoT hardware sales increased 31% sequentially, but year‑over‑year growth was 12%, reflecting strong momentum in the IoT space.
Analysts highlighted the EPS beat and margin expansion as key positives, while noting that revenue was close to estimates and that the company faces pricing pressure in legacy segments. Overall sentiment remained supportive, with investors recognizing the company’s strong execution and strategic focus on high‑growth markets.
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