Allegro 2026 Q1 Earnings Narrowed Losses with 25.3% Improvement in Net Income

Allegro (ALGM) reported its fiscal 2026 Q1 earnings on Jul 31st, 2025. The company's revenue surpassed analyst expectations, demonstrating robust financial health. Allegro's optimistic guidance for Q2 2026 forecasts a 12% year-over-year sales increase, aligning with market expectations. Investors reacted to the earnings miss on profitability, despite the positive revenue growth and guidance. The company's stock experienced a notable drop following the announcement.

Revenue
The total revenue of Allegro increased by 21.9% to $203.41 million in 2026 Q1, up from $166.92 million in 2025 Q1.

Earnings/Net Income
Allegro narrowed losses to $0.07 per share in 2026 Q1 from a loss of $0.09 per share in 2025 Q1 (22.2% improvement). Meanwhile, the company successfully narrowed its net loss to $-13.16 million in 2026 Q1, reducing losses by 25.3% compared to the $-17.61 million net loss reported in 2025 Q1. EPS performance showed improvement, indicating a positive trend.

Post-Earnings Price Action Review
The strategy of buying ALGM when revenues miss and holding for 30 days resulted in a 4.00% return, significantly underperforming the benchmark return of 38.80%. Despite the strategy's low-risk nature, its CAGR was a modest 1.05%, with a maximum drawdown of 0.00%. The Sharpe ratio stood at 0.02, underscoring the low-reward approach. This suggests that while the strategy minimizes risk, it fails to capture substantial gains, especially when compared to broader market benchmarks.

CEO Commentary
Michael C. Doogue, President and CEO, expressed optimism about Allegro MicroSystems' performance, highlighting "continued strong bookings, increasing backlog and strong design win activity." He noted automotive sales growth was driven by e-Mobility, particularly in current sensors for xEV applications, stating, "We expect this positive e-Mobility trend to continue." Doogue emphasized relentless innovation as a strategic priority, mentioning the release of new products designed for safety and efficiency. He acknowledged the competitive landscape while affirming the company's leadership position, stating, "Our teams have already demonstrated an ability to gain market share," underlining a positive outlook on future growth.

Guidance
For Q2 2026, Allegro expects sales to range between $205 million and $215 million, projecting a 12% year-over-year increase. Non-GAAP EPS is anticipated to be between $0.10 and $0.14 per share, reflecting a 50% year-over-year increase at the midpoint. The company also expects gross margin to be between 48% and 50%, operating expenses to be approximately $73 million, and an effective tax rate of 10%.

Additional News
Recently, Allegro MicroSystems announced a voluntary debt payment of $25 million, showcasing its commitment to strengthening financial stability. The company also repurchased common stock worth $853.9 million, reflecting confidence in its growth prospects. In leadership news, Michael C. Doogue continues as President and CEO, driving strategic initiatives. Allegro’s proactive financial maneuvers, including the debt payment and stock buyback, signal a focus on shareholder value and operational fortitude, emphasizing a disciplined approach to capital management amidst the evolving semiconductor landscape.