Inve US ▾
SMSMTC

Semtech (SMTC) Q1 FY27 earnings call: guidance and Q&A

Earnings call· Apr 2026 (Q1 FY27)· Information Technology· May 26, 2026

Source: earnings call transcript

Executive summary

Semtech Q1 FY27 — Record Revenue Driven by Data Center and LoRa Outperformance

Semtech delivered record Q1 FY27 revenue and strong earnings growth, primarily fueled by exceptional performance in its data center and LoRa businesses. The company is actively investing in R&D for next-generation optical solutions and expanding capacity to meet accelerating demand, while also progressing with portfolio optimization through the divestiture of its cellular module business. Management anticipates continued strong growth into the second half of FY27 and beyond.

Highlights

5

  • Record quarterly revenue of $291 million, up 16% year-over-year.

  • Adjusted diluted earnings per share of $0.51, up 34% year-over-year.

  • Data center net sales reached a record $71.6 million, increasing 39% year-over-year.

  • LoRa-enabled net sales grew 14% year-over-year to $44.5 million.

  • Strong Q2 FY27 net sales guidance of $328 million (midpoint), representing 13% sequential and 27% year-over-year growth.

Concerns

3

  • Operating cash flow for Q1 was $36.2 million, down 41% sequentially from $61.5 million.

  • Free cash flow for Q1 was $28 million, down 53% sequentially from $59.1 million.

  • Gain chip demand currently exceeds supply by approximately 3x.

Guidance & targets

CategoryTargetConfidence
Net Sales
$328 million, plus or minus $5 million
high materiality
High
Data Center Net Sales Growth
35% sequential growth
high materiality
High
LoRa Revenue Growth
greater than 15% sequential quarterly revenue growth
medium materiality
High
Adjusted Gross Margin
54%, plus or minus 50 basis points
medium materiality
High
Total Semiconductor Products Gross Margin
62.1%, plus or minus 50 basis points
medium materiality
High
Adjusted Net Operating Expenses
$105.2 million, plus or minus $2 million
medium materiality
High
Adjusted Operating Margin
21.9%
medium materiality
High
Adjusted EBITDA
$79.2 million, plus or minus $2.3 million
medium materiality
High
Adjusted Interest and Other Expenses Net
approximately $0.5 million
low materiality
High
Adjusted Normalized Income Tax Rate
17%
low materiality
High
Adjusted Diluted Earnings Per Share
$0.61, plus or minus $0.02
high materiality
High
Weighted Average Share Count
97.7 million shares
low materiality
High
Data Center Demand
accelerating demand throughout fiscal year 2027 and beyond
high materiality
High
Gain Chip Capacity Expansion
increase by about 3, 4x
medium materiality
High
Linearized Transceiver Solution Mix
25% plus/minus of the total transceiver mix
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Infrastructure
Strongly supported by the growing data center business.
$98.8 million36%14%—
Data Center
Record net sales, benefiting from strong demand across the broad portfolio, increased customer engagement, portfolio alignment, and supply assurance. Anchored by 800-gig FiberEdge portfolio.
$71.6 million39%14%—
High-End Consumer
TVS business continues to demonstrate impressive resilience and momentum with revenue growth outpacing underlying handset volumes. Expanding into higher-value applications and PerSe capacitive sensor design wins.
$38.4 million8%5%—
Industrial
Driven by another strong quarter for LoRa.
$153.9 million8%2%—
LoRa-enabled
Supported by continued expansion across several application verticals such as smart utilities, smart building, smart city, and asset management. LoRa Plus is emerging as a key enabler for Edge AI.
$44.5 million14%12%—
IoT Systems and Connectivity
Newly released AirLink RX400 and EX400 routers are generating strong industry reception for mission-critical applications.
$88.3 million2%-2%—

Orderbook & backlog

Bookings and Backlog very strong Q1 FY27

General statement for the quarter.

1.6T Optical Bookings and Backlog exceptionally strong Q1 FY27

To support module ramps in the second half of the year.

Backlog strength and depth Q1 FY27

Contributes to accelerating demand throughout FY27 and beyond.

Product announcements

ProductTypeDetails
AirLink RX400 and EX400 routerslaunch
SurgeSwitch solutionlaunch
LoRa Pluslaunch

Deals & partnerships

HieFo Acquisition of indium phosphide photonic products business.

Acquisition completed in March. HieFo is reported in Signal Integrity Products segment, and its products in the data center end market.

cellular module business Divestiture of the cellular module business.

Discussions regarding transition and integration are progressing well. Expected to be a compelling opportunity for the right acquirer.

Risks & headwinds

Gain chip demand exceeding supply Q1 FY27

Demand outpaces supply by about 3x

Mitigation:Capacity expansion plan is on schedule, aiming for a 3-4x increase by end of CY26 and another 3-4x by end of CY27.

Capacity-constrained environment current

Industry-wide supply constraints

Mitigation:Semtech anticipated this and started capacity expansion 18 months ago, ensuring availability and planning further increases (double or triple current capacity) with foundry and OSAT partners.

What to watch in Q2 FY27

Data Center Revenue Growth

Q2 FY27
Current $71.6M (Q1 FY27), +39% YoY
Target 35% sequential growth (Q2 FY27)

Why it matters

Data center is a primary growth driver, and continued acceleration is key to the investment thesis.

We are targeting 35% sequential revenue growth in Q2 for data center. which would represent 85% growth over the same period last year.

Find out whether SMTC delivers this. Inve re-checks your case every morning.

Q&A highlights

Inquires about the status of ACC MSA specs, potential impact on ramp, and if ratification could accelerate adoption.

MSA is still finalizing specs, which will help accelerate ACC adoption by providing a standard for cable manufacturers. This standardization can act as a catalyst for more widespread adoption.

“MSA, they announced right around the DesignCon time. They're still working on finalizing the specification. You are right. When every industry participants, they are on the same page, that will help to accelerate the adoption of the ACC.”

asked by Richard Schafer · answered by Hong Hou

2 min read 5 chapters

Detailed narrative

Data Center Momentum

Semtech's data center business achieved record net sales of $71.6 million in Q1 FY27, marking a 39% year-over-year increase, driven by robust demand for its 800-gig FiberEdge portfolio. The company secured significant design wins for 1.6T optical modules and is actively engaged in the development and deployment of Linear Pluggable Optics (LPO), Linear Receive Optics (LRO), Near Package Optics (NPO), and XPO solutions. Shipments of CopperEdge 1.6T ICs to a U.S. hyperscaler commenced in Q1, with expectations for multiyear opportunities and accelerating growth from 1.6T inflections in the second half of FY27.

LoRa Expansion and Edge AI Enablement

LoRa-enabled net sales grew 14% year-over-year to $44.5 million, supported by continued expansion across smart utilities, smart building, smart city, and asset management verticals. The new fourth-generation LoRa Plus platform, offering dual-band capability and dramatically increased data throughput of 2.6 megabits per second, is emerging as a key enabler for new Edge AI application classes. Semtech is targeting over 15% sequential LoRa revenue growth for Q2, driven by three complementary pillars: LoRaWAN, LoRa Plus, and Amazon Sidewalk.

Portfolio Optimization and Strategic Investments

The divestiture process for Semtech's cellular module business is in its final stages, with discussions progressing well towards a successful close. The acquisition of HieFo in March, which contributes indium phosphide photonic products, is a strategic building block for 1.6T and 3.2T optical modules. Demand for Gain chips currently outpaces supply by approximately 3x, but capacity expansion plans are on schedule, aiming for a 3-4x increase by the end of calendar year 2026 and another 3-4x by the end of calendar year 2027 to meet high-end coherent market needs.

High-End Consumer Resilience and Expansion

The high-end consumer end market recorded net sales of $38.4 million, up 8% year-over-year, with the TVS business demonstrating impressive resilience and momentum through market share gains and content expansion at premium handset manufacturers. Semtech is broadening its TVS franchise into higher-value applications with its new SurgeSwitch solution for high-voltage power delivery. The PerSe capacitive sensor business continues to expand design wins in specific absorption rate and smart wearable applications, with the force sensor business enriching the portfolio and creating synergies.

Operational Leverage and R&D Prioritization

Semtech achieved an adjusted operating margin of 20.4% and an adjusted EBITDA margin of 22.8% in Q1, demonstrating operating leverage. The Q2 outlook includes increased R&D spend, primarily focused on accelerating time to market for key data center projects and supporting LoRa, while SG&A as a percentage of revenue is expected to decline. This strategic allocation of resources aims to intensify R&D investment to add new growth drivers and deepen solution differentiation in coherent light, CPO, LoRa, and sensors.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.