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Semtech Q3 Earnings Beat: Can Strong Guidance Lift the Stock?
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Semtech Corporation (SMTC - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings of 26 cents per share, which surpassed the Zacks Consensus Estimate by 8.33%. The bottom line also exceeded management’s guidance of 23 cents and showed a robust improvement from the year-ago quarter’s earnings of 2 cents.
The company's impressive bottom-line performance demonstrated its operational excellence and effective expense management.
Semtech’s earnings beat the Zacks Consensus Estimate twice over the trailing four quarters, matched once and missed once, with an average negative surprise of 0.6%.
Semtech’s third-quarter fiscal 2025 revenues of $236.8 million beat the Zacks Consensus Estimate by 1.81% and exceeded management’s guidance of $233 million.
The top line increased 18% year over year, with solid growth across all of its end markets, particularly in data centers, where SMTC anticipates that AI-driven product demand will serve as a long-term and transformative growth engine.
Buoyed by strong quarterly performance, Semtech provided optimistic guidance for the fourth quarter. Better-than-expected third-quarter results, along with an optimistic outlook, are expected to pull up its shares. On a year-to-date basis, shares of SMTC have risen a whopping 143.9%, outperforming the Zacks Semiconductor - Analog and Mixed industry’s decline of 0.1%.
Semtech Corporation Price, Consensus and EPS Surprise
SMTC’s better-than-expected top-line performance can be attributed to the impressive year-over-year rise in its end markets.
Sales from the infrastructure market were $65.8 million (27.8% of net sales), exhibiting year-over-year growth of 52.3%. This was driven by solid demand for Semtech’s FiberEdge TIAs, laser drivers and Tri-Edge 50G PAM4 products that led to strong growth in hyperscale data center sales in the reported quarter.
Sales from the industrial market were $131 million (55.3% of net sales), up 9% from the prior-year period’s tally.
Sales from the high-end consumer market were $40 million (16.9% of net sales), up 6.4% year over year. Strong market demand, along with solid momentum in consumer circuit protection and smart sensing products, drove top-line growth.
SMTC’s Q3 Revenues in Product Lines
Signal Integrity (30.2% of net sales) sales were $71.5 million in the reported quarter, up 51.5% year over year. Analog Mixed Signal & Wireless (35% of net sales) sales were $82.8 million, up 17.9% from the prior-year quarter’s figures.
IoT System and Connectivity (34.8% of net sales) sales were $82.5 million, down 1.2% on a year-over-year basis.
The non-GAAP gross margin of 52.4% expanded 110 basis points (bps) from the year-ago quarter’s tally. The non-GAAP operating margin of 18.3% expanded 810 bps from the prior-year quarter’s tally.
Semtech’s Balance Sheet & Cash Flow
As of Oct. 27, 2024, cash and cash equivalents were $136.5 million, up from $115.9 million as of July 28, 2024.
Account receivables for the third quarter of fiscal 2025 were $142.5 million, down from $152.9 million in the second quarter of fiscal 2025.
The long-term debt was $1.19 billion, which remained unchanged from the previous quarter’s reported figure.
Operating and free cash flow for the reported quarter was $29.6 million and $29.1 million, respectively.
Semtech Offers Strong Q4 Guidance
For fourth-quarter fiscal 2025, management expects net sales of $250 million (+/- $5 million). The Zacks Consensus Estimate for the same is pegged at $240.1 million, indicating a year-over-year rise of 24.4%.
The non-GAAP gross margin is expected to be 52.8% (+/- 50 bps). The non-GAAP operating margin is anticipated to be 19.7%, suggesting an improvement of 140 bps sequentially.
Non-GAAP earnings per share are expected to be 32 cents (+/- 3 cents) based on a weighted average share count of 80 million shares. The consensus mark for earnings is pegged at 25 cents per share, suggesting a robust improvement from the year-ago quarter’s loss of 6 cents. The figure remained unchanged for the past 60 days.
Zacks Rank & Stocks to Consider
Currently, SMTC carries a Zacks Rank #3 (Hold).
Blackberry (BB - Free Report) , Advantest (ATEYY - Free Report) and Amphenol (APH - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector.
BB shares have plunged 27.4% year to date. The Zacks Consensus Estimate for BB’s full-year fiscal 2025 loss is pegged at 2 cents per share, up by a couple of pennies over the past 60 days, indicating a loss of 140% from the year-ago quarter’s reported figure.
ATEYY shares have surged 76.5% year to date. The Zacks Consensus Estimate for ATEYY’s full-year 2024 earnings is pegged at $1.16 per share, up by 41.5% over the past 60 days, indicating a gain of 100% from the year-ago quarter’s reported figure.
APH shares have gained 47.9% year to date. The Zacks Consensus Estimate for APH’s full-year 2024 earnings is pegged at $1.84 per share, up by a couple of pennies over the past 60 days, indicating a gain of 21.9% from the year-ago quarter’s reported figure.
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Semtech Q3 Earnings Beat: Can Strong Guidance Lift the Stock?
Semtech Corporation (SMTC - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings of 26 cents per share, which surpassed the Zacks Consensus Estimate by 8.33%. The bottom line also exceeded management’s guidance of 23 cents and showed a robust improvement from the year-ago quarter’s earnings of 2 cents.
The company's impressive bottom-line performance demonstrated its operational excellence and effective expense management.
Semtech’s earnings beat the Zacks Consensus Estimate twice over the trailing four quarters, matched once and missed once, with an average negative surprise of 0.6%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Semtech’s third-quarter fiscal 2025 revenues of $236.8 million beat the Zacks Consensus Estimate by 1.81% and exceeded management’s guidance of $233 million.
The top line increased 18% year over year, with solid growth across all of its end markets, particularly in data centers, where SMTC anticipates that AI-driven product demand will serve as a long-term and transformative growth engine.
Buoyed by strong quarterly performance, Semtech provided optimistic guidance for the fourth quarter. Better-than-expected third-quarter results, along with an optimistic outlook, are expected to pull up its shares. On a year-to-date basis, shares of SMTC have risen a whopping 143.9%, outperforming the Zacks Semiconductor - Analog and Mixed industry’s decline of 0.1%.
Semtech Corporation Price, Consensus and EPS Surprise
Semtech Corporation price-consensus-eps-surprise-chart | Semtech Corporation Quote
Semtech’s Q3 Revenues in End Markets
SMTC’s better-than-expected top-line performance can be attributed to the impressive year-over-year rise in its end markets.
Sales from the infrastructure market were $65.8 million (27.8% of net sales), exhibiting year-over-year growth of 52.3%. This was driven by solid demand for Semtech’s FiberEdge TIAs, laser drivers and Tri-Edge 50G PAM4 products that led to strong growth in hyperscale data center sales in the reported quarter.
Sales from the industrial market were $131 million (55.3% of net sales), up 9% from the prior-year period’s tally.
Sales from the high-end consumer market were $40 million (16.9% of net sales), up 6.4% year over year. Strong market demand, along with solid momentum in consumer circuit protection and smart sensing products, drove top-line growth.
SMTC’s Q3 Revenues in Product Lines
Signal Integrity (30.2% of net sales) sales were $71.5 million in the reported quarter, up 51.5% year over year. Analog Mixed Signal & Wireless (35% of net sales) sales were $82.8 million, up 17.9% from the prior-year quarter’s figures.
IoT System and Connectivity (34.8% of net sales) sales were $82.5 million, down 1.2% on a year-over-year basis.
The non-GAAP gross margin of 52.4% expanded 110 basis points (bps) from the year-ago quarter’s tally. The non-GAAP operating margin of 18.3% expanded 810 bps from the prior-year quarter’s tally.
Semtech’s Balance Sheet & Cash Flow
As of Oct. 27, 2024, cash and cash equivalents were $136.5 million, up from $115.9 million as of July 28, 2024.
Account receivables for the third quarter of fiscal 2025 were $142.5 million, down from $152.9 million in the second quarter of fiscal 2025.
The long-term debt was $1.19 billion, which remained unchanged from the previous quarter’s reported figure.
Operating and free cash flow for the reported quarter was $29.6 million and $29.1 million, respectively.
Semtech Offers Strong Q4 Guidance
For fourth-quarter fiscal 2025, management expects net sales of $250 million (+/- $5 million). The Zacks Consensus Estimate for the same is pegged at $240.1 million, indicating a year-over-year rise of 24.4%.
The non-GAAP gross margin is expected to be 52.8% (+/- 50 bps). The non-GAAP operating margin is anticipated to be 19.7%, suggesting an improvement of 140 bps sequentially.
Non-GAAP earnings per share are expected to be 32 cents (+/- 3 cents) based on a weighted average share count of 80 million shares. The consensus mark for earnings is pegged at 25 cents per share, suggesting a robust improvement from the year-ago quarter’s loss of 6 cents. The figure remained unchanged for the past 60 days.
Zacks Rank & Stocks to Consider
Currently, SMTC carries a Zacks Rank #3 (Hold).
Blackberry (BB - Free Report) , Advantest (ATEYY - Free Report) and Amphenol (APH - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector.
BB, ATEYY and APH sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
BB shares have plunged 27.4% year to date. The Zacks Consensus Estimate for BB’s full-year fiscal 2025 loss is pegged at 2 cents per share, up by a couple of pennies over the past 60 days, indicating a loss of 140% from the year-ago quarter’s reported figure.
ATEYY shares have surged 76.5% year to date. The Zacks Consensus Estimate for ATEYY’s full-year 2024 earnings is pegged at $1.16 per share, up by 41.5% over the past 60 days, indicating a gain of 100% from the year-ago quarter’s reported figure.
APH shares have gained 47.9% year to date. The Zacks Consensus Estimate for APH’s full-year 2024 earnings is pegged at $1.84 per share, up by a couple of pennies over the past 60 days, indicating a gain of 21.9% from the year-ago quarter’s reported figure.