Semtech Posts Record Q2 Sales, Up 20% YoY, and Sets New EPS Record with $0.41

Semtech reported Q2 FY2026 net sales of $257.6 million, up 20% YoY and beating expectations. Non-GAAP adjusted diluted EPS rose to $0.41, nearly quadrupling from $0.11 in the previous year. The company's adjusted gross margin increased to 53.2%, and adjusted operating margin reached 18.8%. However, a one-time $42 million goodwill impairment charge resulted in a GAAP net loss.

Semtech Corporation (NASDAQ: SMTC) announced its second-quarter (Q2) fiscal 2026 results on August 25, 2025, showcasing robust revenue growth and significant improvements in its financial position. The semiconductor company reported net sales of $257.6 million, up 20% year-over-year (YoY) and exceeding analyst expectations [1]. This strong performance was driven by balanced growth across all segments, with the data center business emerging as a standout performer.

Key highlights from the Q2 results include:

- Revenue Growth: Semtech's net sales increased by 20% YoY, reaching $257.6 million, with strong contributions from the Infrastructure, Industrial, and High-End Consumer segments.
- Adjusted EPS: Non-GAAP adjusted diluted earnings per share (EPS) rose to $0.41, nearly quadrupling from $0.11 in the previous year, reflecting the company's operational efficiency and financial discipline.
- Adjusted Gross Margin: The adjusted gross margin improved to 53.2%, up from 52.1% in the previous quarter, indicating enhanced profitability.
- Adjusted Operating Margin: The adjusted operating margin reached 18.8%, demonstrating Semtech's ability to manage costs effectively while maintaining growth.
- Debt Reduction: Semtech reduced its debt by $879 million since June 2024, significantly strengthening its balance sheet [1].
- Data Center Sales: The Infrastructure segment, particularly data center sales, surged by 92% YoY, reaching a record $52.2 million, driven by increasing bandwidth requirements in data centers [1].

However, the company reported a GAAP net loss of $27.1 million due to a one-time $42 million goodwill impairment charge, which impacted its GAAP operating margin. Despite this, the non-GAAP figures provide a clearer picture of Semtech's operational performance.

Looking ahead, Semtech expects net sales of $266.0 million in Q3 2026, representing a sequential increase of approximately 3.3%. The company forecasts an adjusted gross margin of 53.0% and adjusted operating income of $52.2 million for the quarter [1].

Semtech's strategic initiatives, including portfolio rationalization, increased investments in core assets, and revitalizing its corporate culture, are expected to drive continued growth in the coming quarters [1].

References:
[1] https://www.investing.com/news/company-news/semtech-q2-2026-slides-data-center-sales-surge-92-yoy-debt-reduced-by-879m-93CH-4209633
[2] https://www.ainvest.com/news/semtech-q2-2026-earnings-preview-eps-estimate-0-40-263-6-revenue-estimate-256-06m-18-9-2508/