Semtech 2026 Q1 Earnings Strong Performance as Net Income Swings 183.5%
Daily EarningsFriday, May 30, 2025 1:11 am ET
3min readSemtech (SMTC) reported its fiscal 2026 Q1 earnings on May 29th, 2025. The results exceeded expectations, with revenue at $251.1 million against estimates of $250.09 million. The company also outperformed in adjusted EPS, recording $0.38 compared to forecasted $0.37. Looking ahead, has raised its guidance for Q2, projecting revenue of $256 million, plus or minus $5 million, and adjusted earnings per share of $0.40, plus or minus $0.03, surpassing analyst predictions. These results demonstrate Semtech's robust operational capabilities and strategic growth focus in a challenging market.
Revenue
Semtech's total revenue for Q1 2026 saw a significant increase of 21.8%, reaching $251.06 million from $206.10 million in the same quarter the previous year. The Signal Integrity segment contributed $73.52 million, while the Mixed Signal and Wireless segment generated $90.62 million. The IoT Systems and Connectivity segment added $86.92 million to the total revenue. Unallocated costs, including share-based compensation and amortization of acquired technology, were recorded at zero, leading to an overall revenue of $251.06 million.
Earnings/Net Income
Semtech experienced a notable recovery in profitability during Q1 2026, achieving an EPS of $0.22, which marked a reversal from a loss of $0.36 per share in Q1 2025, reflecting a positive change of 161.1%. Net income for the quarter was $19.34 million, which represents an impressive 183.5% swing from the net loss of $23.16 million in the prior year’s quarter. This EPS turnaround underscores a favorable financial performance.
Post Earnings Price Action Review
The strategy of purchasing Semtech shares when revenues fall short and holding them for 30 days has shown promising outcomes. Historical performance analysis suggests that this approach benefits from the reversion to mean principle, which indicates that stock prices and returns typically gravitate toward historical averages over time. By holding shares for 30 days, the strategy potentially capitalizes on short-term fluctuations that often revert, particularly in volatile stocks like Semtech. Effective risk management is crucial, as the 30-day period allows recovery from initial price drops. Market conditions, including Semtech’s record Q1 sales, reflect strong business fundamentals that may support the stock price, even amid revenue misses. Analysts maintain positive ratings, with forecasts indicating potential upside, attracting investors who are confident in Semtech’s long-term growth prospects. Despite uncertainties, this strategy may be viable, though continuous monitoring of performance and market conditions is essential.
CEO Commentary
Hong Hou, President and CEO of Semtech, expressed optimism regarding the company's performance, stating, "We reported Q1 results with net sales... each above the midpoint of our guidance." He highlighted the resilience of the business amidst market challenges, particularly in navigating dynamic tariff policies. The CEO emphasized strategic priorities such as "portfolio optimization, strategic investment in R&D, and driving margin expansion," affirming a strong conviction in the company's ability to grow revenue, expand margins, and enhance shareholder value. He conveyed confidence in the growth drivers, especially in data centers and AI connectivity, and acknowledged ongoing efforts to improve overall financial metrics.
Guidance
For the second quarter, Semtech expects net sales of $256 million, plus or minus $5 million, representing a 19% year-over-year increase at the midpoint. The adjusted gross margin is anticipated to be 53.0%, plus or minus 50 basis points, with adjusted net operating expenses projected at $87.5 million. The company guides for adjusted diluted earnings per share of $0.40, plus or minus $0.03, based on a weighted average share count of 90 million shares.
Additional News
In recent corporate developments, Semtech has announced the appointment of Mitch Haws as Senior Vice President of Investor Relations, a strategic move to enhance communication with investors and stakeholders. Additionally, the company has increased its revolving credit facility, providing greater financial flexibility to support growth initiatives. This expansion aligns with Semtech’s commitment to strengthening its financial position and supporting long-term strategic objectives. Moreover, Semtech's LoRaWAN® technology is being utilized by Yorkshire Water to achieve significant smart meter savings, demonstrating the company's innovative solutions in the IoT market. These advancements reflect Semtech’s ongoing efforts to expand its market presence and drive sustainable growth.
Revenue
Semtech's total revenue for Q1 2026 saw a significant increase of 21.8%, reaching $251.06 million from $206.10 million in the same quarter the previous year. The Signal Integrity segment contributed $73.52 million, while the Mixed Signal and Wireless segment generated $90.62 million. The IoT Systems and Connectivity segment added $86.92 million to the total revenue. Unallocated costs, including share-based compensation and amortization of acquired technology, were recorded at zero, leading to an overall revenue of $251.06 million.
Earnings/Net Income
Semtech experienced a notable recovery in profitability during Q1 2026, achieving an EPS of $0.22, which marked a reversal from a loss of $0.36 per share in Q1 2025, reflecting a positive change of 161.1%. Net income for the quarter was $19.34 million, which represents an impressive 183.5% swing from the net loss of $23.16 million in the prior year’s quarter. This EPS turnaround underscores a favorable financial performance.
Post Earnings Price Action Review
The strategy of purchasing Semtech shares when revenues fall short and holding them for 30 days has shown promising outcomes. Historical performance analysis suggests that this approach benefits from the reversion to mean principle, which indicates that stock prices and returns typically gravitate toward historical averages over time. By holding shares for 30 days, the strategy potentially capitalizes on short-term fluctuations that often revert, particularly in volatile stocks like Semtech. Effective risk management is crucial, as the 30-day period allows recovery from initial price drops. Market conditions, including Semtech’s record Q1 sales, reflect strong business fundamentals that may support the stock price, even amid revenue misses. Analysts maintain positive ratings, with forecasts indicating potential upside, attracting investors who are confident in Semtech’s long-term growth prospects. Despite uncertainties, this strategy may be viable, though continuous monitoring of performance and market conditions is essential.
CEO Commentary
Hong Hou, President and CEO of Semtech, expressed optimism regarding the company's performance, stating, "We reported Q1 results with net sales... each above the midpoint of our guidance." He highlighted the resilience of the business amidst market challenges, particularly in navigating dynamic tariff policies. The CEO emphasized strategic priorities such as "portfolio optimization, strategic investment in R&D, and driving margin expansion," affirming a strong conviction in the company's ability to grow revenue, expand margins, and enhance shareholder value. He conveyed confidence in the growth drivers, especially in data centers and AI connectivity, and acknowledged ongoing efforts to improve overall financial metrics.
Guidance
For the second quarter, Semtech expects net sales of $256 million, plus or minus $5 million, representing a 19% year-over-year increase at the midpoint. The adjusted gross margin is anticipated to be 53.0%, plus or minus 50 basis points, with adjusted net operating expenses projected at $87.5 million. The company guides for adjusted diluted earnings per share of $0.40, plus or minus $0.03, based on a weighted average share count of 90 million shares.
Additional News
In recent corporate developments, Semtech has announced the appointment of Mitch Haws as Senior Vice President of Investor Relations, a strategic move to enhance communication with investors and stakeholders. Additionally, the company has increased its revolving credit facility, providing greater financial flexibility to support growth initiatives. This expansion aligns with Semtech’s commitment to strengthening its financial position and supporting long-term strategic objectives. Moreover, Semtech's LoRaWAN® technology is being utilized by Yorkshire Water to achieve significant smart meter savings, demonstrating the company's innovative solutions in the IoT market. These advancements reflect Semtech’s ongoing efforts to expand its market presence and drive sustainable growth.
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