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Semtech Q2 EPS hit 41 cents, topping estimates and increasing threefold from the prior-year level.
Revenues rose 20% year over year to $257.6M, led by data centers, industrial and consumer demand.
Signal Integrity sales climbed 29.3% while gross margin expanded 280 basis points year over year.
Semtech Corporation (SMTC - Free Report) reported better-than-expected results for second-quarter fiscal 2026. It posted non-GAAP earnings of 41 cents per share, which beat the Zacks Consensus Estimate by a penny. The bottom line exceeded management’s guidance of 40 cents and reflected a robust improvement, rising more than threefold from the year-ago quarter’s earnings of 11 cents.
The company's impressive bottom-line performance demonstrated the benefits of increased revenues, operational efficiency and effective expense management. Semtech beat on earnings in three of the trailing four quarters and met once, the average surprise being 8.9%.
SMTC’s second-quarter fiscal 2026 revenues of $ 257.6 million beat the Zacks Consensus Estimate by 0.6% and came above the midpoint of management’s guidance of $256 million. The top line jumped 20% year over year, with solid growth across all of its end markets, particularly in data centers.
The company’s latest quarterly results are likely to boost its share price. Year to date, shares of Semtech have plunged 17.5%, underperforming the Zacks Semiconductor - Analog and Mixed industry’s decline of 14.7%.
Semtech Corporation Price, Consensus and EPS Surprise
The company’s top-line outperformance can be attributed to the impressive year-over-year rise in its end markets.
Sales from the infrastructure market totaled $73.4 million (28.5% of net sales), exhibiting year-over-year growth of 38.8%. This was driven by solid demand for data centres and continued investment in CopperEdge.
Sales from the industrial market amounted to $143 million (55.5% of net sales), up 14.1% year over year.
Sales from the high-end consumer market totaled $41.2 million (16% of net sales), up 11.1% year over year. Strong 5G momentum as IoT transitions from 4G accelerates, driven by growth in bookings and design wins, along with expanding router and gateway partnerships, supports top-line growth.
SMTC’s Q2 Revenues in Terms of Product Lines
Signal Integrity (29.8% of net sales) sales totaled $76.8 million, up 29.3% year over year. Analog Mixed Signal & Wireless (35.7% of net sales) sales amounted to $92 million, up 16% year over year.
IoT System and Connectivity (34.5% of net sales) sales totaled $88.8 million, up 16% on a year-over-year basis.
Semtech’s Margins Expand Year Over Year
The non-GAAP gross margin of 53.2% expanded 280 basis points (bps) on a year-over-year basis but contracted 30 bps sequentially.
Adjusted operating expenses of $88.4 million were within Semtech’s guided range. On a year-over-year basis, adjusted operating expenses increased 13.5%.
Non-GAAP operating income surged 59.3% year over year to $48.6 million. The non-GAAP operating margin improved to 18.8% from 14.2% reported in the year-ago quarter.
Semtech’s Balance Sheet & Cash Flow
As of July 26, 2025, cash and cash equivalents totaled $168.6 million, up from $156.5 million as of April 27, 2025.
The long-term debt amounted to $518.9 million, down from the previous quarter’s reported figure of $542.6 million.
During the second quarter, Semtech generated operating cash flow and free cash flow of $44.4 million and $41.5 million, respectively. In the first half of fiscal 2026, it generated operating and free cash flows of $72.2 million and $67.7 million, respectively.
Semtech Initiates Impressive Q3 Guidance
For the third quarter, Semtech expects net sales to be $266 million (+/- $5 million). The Zacks Consensus Estimate is pegged at $264.8 million, indicating a year-over-year rise of 11.8%.
Semtech expects infrastructure end-market net sales to increase sequentially, driven by data center growth, high-end consumer sales to rise slightly due to typical seasonality and industrial sales to remain slightly up, as moderation in the LoRa business offsets IoT cellular growth.
The non-GAAP gross margin is expected to be 53% (+/- 50 bps). The non-GAAP operating margin is anticipated to be 19.6% (+/- 80 bps).
Non-GAAP earnings are expected to be 44 cents (+/- 3 cents) per share. The consensus mark for earnings is pegged at 44 cents per share, indicating a year-over-year rise of 69.2%. The figure has remained unchanged over the past 60 days.
Zacks Rank & Stocks to Consider
Currently, Semtech carries a Zacks Rank #3 (Hold).
Amphenol shares have lost 58% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings is pegged at $3.02 per share, indicating an increase of 59.8% from the year-ago quarter’s reported figure. The estimate has risen 7.5% over the past 30 days.
F5’s shares have surged 25.5% year to date. The Zacks Consensus Estimate for F5’s fiscal 2025 earnings is pegged at $15.38 per share, indicating a gain of 15% from the year-ago quarter’s reported figure. The estimate has risen 5.4% over the past 30 days.
Analog Devices’ shares have gained 19.8% year to date. The Zacks Consensus Estimate for Analog Devices’ full-year 2025 earnings per share is pegged at $7.69 per share, indicating a gain of 20.5% from the year-ago quarter’s reported figure. The estimate has risen 3.9% over the past seven days.
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Semtech's Q2 Earnings Beat Estimates, Revenues Increase Y/Y
Key Takeaways
Semtech Corporation (SMTC - Free Report) reported better-than-expected results for second-quarter fiscal 2026. It posted non-GAAP earnings of 41 cents per share, which beat the Zacks Consensus Estimate by a penny. The bottom line exceeded management’s guidance of 40 cents and reflected a robust improvement, rising more than threefold from the year-ago quarter’s earnings of 11 cents.
The company's impressive bottom-line performance demonstrated the benefits of increased revenues, operational efficiency and effective expense management. Semtech beat on earnings in three of the trailing four quarters and met once, the average surprise being 8.9%.
SMTC’s second-quarter fiscal 2026 revenues of $ 257.6 million beat the Zacks Consensus Estimate by 0.6% and came above the midpoint of management’s guidance of $256 million. The top line jumped 20% year over year, with solid growth across all of its end markets, particularly in data centers.
The company’s latest quarterly results are likely to boost its share price. Year to date, shares of Semtech have plunged 17.5%, underperforming the Zacks Semiconductor - Analog and Mixed industry’s decline of 14.7%.
Semtech Corporation Price, Consensus and EPS Surprise
Semtech Corporation price-consensus-eps-surprise-chart | Semtech Corporation Quote
Semtech’s Q2 Revenues in Terms of End Markets
The company’s top-line outperformance can be attributed to the impressive year-over-year rise in its end markets.
Sales from the infrastructure market totaled $73.4 million (28.5% of net sales), exhibiting year-over-year growth of 38.8%. This was driven by solid demand for data centres and continued investment in CopperEdge.
Sales from the industrial market amounted to $143 million (55.5% of net sales), up 14.1% year over year.
Sales from the high-end consumer market totaled $41.2 million (16% of net sales), up 11.1% year over year. Strong 5G momentum as IoT transitions from 4G accelerates, driven by growth in bookings and design wins, along with expanding router and gateway partnerships, supports top-line growth.
SMTC’s Q2 Revenues in Terms of Product Lines
Signal Integrity (29.8% of net sales) sales totaled $76.8 million, up 29.3% year over year. Analog Mixed Signal & Wireless (35.7% of net sales) sales amounted to $92 million, up 16% year over year.
IoT System and Connectivity (34.5% of net sales) sales totaled $88.8 million, up 16% on a year-over-year basis.
Semtech’s Margins Expand Year Over Year
The non-GAAP gross margin of 53.2% expanded 280 basis points (bps) on a year-over-year basis but contracted 30 bps sequentially.
Adjusted operating expenses of $88.4 million were within Semtech’s guided range. On a year-over-year basis, adjusted operating expenses increased 13.5%.
Non-GAAP operating income surged 59.3% year over year to $48.6 million. The non-GAAP operating margin improved to 18.8% from 14.2% reported in the year-ago quarter.
Semtech’s Balance Sheet & Cash Flow
As of July 26, 2025, cash and cash equivalents totaled $168.6 million, up from $156.5 million as of April 27, 2025.
The long-term debt amounted to $518.9 million, down from the previous quarter’s reported figure of $542.6 million.
During the second quarter, Semtech generated operating cash flow and free cash flow of $44.4 million and $41.5 million, respectively. In the first half of fiscal 2026, it generated operating and free cash flows of $72.2 million and $67.7 million, respectively.
Semtech Initiates Impressive Q3 Guidance
For the third quarter, Semtech expects net sales to be $266 million (+/- $5 million). The Zacks Consensus Estimate is pegged at $264.8 million, indicating a year-over-year rise of 11.8%.
Semtech expects infrastructure end-market net sales to increase sequentially, driven by data center growth, high-end consumer sales to rise slightly due to typical seasonality and industrial sales to remain slightly up, as moderation in the LoRa business offsets IoT cellular growth.
The non-GAAP gross margin is expected to be 53% (+/- 50 bps). The non-GAAP operating margin is anticipated to be 19.6% (+/- 80 bps).
Non-GAAP earnings are expected to be 44 cents (+/- 3 cents) per share. The consensus mark for earnings is pegged at 44 cents per share, indicating a year-over-year rise of 69.2%. The figure has remained unchanged over the past 60 days.
Zacks Rank & Stocks to Consider
Currently, Semtech carries a Zacks Rank #3 (Hold).
Amphenol (APH - Free Report) , F5 (FFIV - Free Report) and Analog Devices (ADI - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. Amphenol, F5 and Analog Devices sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Amphenol shares have lost 58% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings is pegged at $3.02 per share, indicating an increase of 59.8% from the year-ago quarter’s reported figure. The estimate has risen 7.5% over the past 30 days.
F5’s shares have surged 25.5% year to date. The Zacks Consensus Estimate for F5’s fiscal 2025 earnings is pegged at $15.38 per share, indicating a gain of 15% from the year-ago quarter’s reported figure. The estimate has risen 5.4% over the past 30 days.
Analog Devices’ shares have gained 19.8% year to date. The Zacks Consensus Estimate for Analog Devices’ full-year 2025 earnings per share is pegged at $7.69 per share, indicating a gain of 20.5% from the year-ago quarter’s reported figure. The estimate has risen 3.9% over the past seven days.