Semtech Corp Q2 FY2026 Earnings: Record Net Sales of $257.6 Million, GAAP EPS of $0.41 Surpasses Estimates.

Semtech Corp reported record Q2 FY2026 net sales of $257.6 million, beating estimates and increasing 20% YoY. The company faced challenges with a GAAP operating margin of -6.3% due to increased expenses and a goodwill impairment charge. Despite this, Semtech achieved a GAAP gross margin of 52.1% and a non-GAAP adjusted gross margin of 53.2%. The non-GAAP adjusted operating margin improved to 18.8% from 14.2% YoY, and the non-GAAP adjusted diluted earnings per share reached $0.41, exceeding estimates.

Semtech Corp (NASDAQ: SMTC), a leading provider of analog and mixed-signal semiconductors, reported robust Q2 FY2026 financial results, showcasing significant year-over-year growth and improvements in profitability metrics. The company's net sales reached $257.6 million, representing a 20% increase from the prior year, and exceeding analyst estimates [1].

Despite this strong performance, Semtech faced challenges due to a GAAP operating margin of -6.3%, primarily attributed to increased expenses and a $42.0 million goodwill impairment charge. This impairment, which is a non-cash expense, led to a GAAP net loss of $27.1 million for the quarter [1]. However, the company's non-GAAP adjusted gross margin remained at 53.2%, while the non-GAAP adjusted operating margin improved to 18.8% from 14.2% in the same period last year [1].

Semtech's non-GAAP adjusted diluted earnings per share (EPS) reached $0.41, significantly outperforming the $0.11 reported in the prior year and exceeding analyst estimates. The company also reported a substantial improvement in free cash flow, with non-GAAP free cash flow increasing to $41.5 million from a negative $8.4 million in the prior year [1].

The company's strategic focus on expanding its Internet of Things (IoT) segment, highlighted by the acquisition of Sierra Wireless, contributed to the growth in net sales. The IoT Systems & Connectivity segment, which includes end-to-end modules, routers, and gateways for internet-connected devices, saw net sales of $88.8 million, representing a 20% increase from the prior year [1].

Looking ahead, Semtech has provided guidance for Q3 FY2026, forecasting net sales at $266.0 million and non-GAAP adjusted diluted EPS of $0.44 [1]. The company's continued focus on innovation, operational efficiency, and strategic acquisitions positions it well for future growth.

References:
[1] https://www.nasdaq.com/articles/semtech-posts-20-sales-jump-q2