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    SMTC
    Earnings call· Apr 2026(Q1 FY27)

    SEMTECH Q1 FY27 earnings call SMTC

    May 26, 2026 Source

    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

    15
    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

    6
    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%—

    Operational metrics

    19
    Non-GAAP EPS
    $0.5134% YoY
    Q1 FY27

    Adjusted diluted earnings per share.

    Non-GAAP gross margin
    53%20 bps above midpoint of outlook
    Q1 FY27

    Reflective of favorable mix from data center and LoRa portfolio.

    Total Semiconductor Products Gross Margin
    60.7%30 bps above midpoint of outlook
    Q1 FY27

    Reflective of favorable mix from data center and LoRa portfolio.

    Signal Integrity Products Gross Margin
    62.7%down from 67.4% in Q4
    Q1 FY27

    Q1 is the first quarter of operating the recently acquired indium phosphide facility, which is in ramp mode.

    IoT Systems and Connectivity Gross Margin
    35.8%up from 31.6% in Q4
    Q1 FY27

    Sequential increase.

    Adjusted Net Operating Expenses
    $95.1 millionslightly favorable to low end of guidance range
    Q1 FY27

    Reflective of timing on project-related expenses.

    Adjusted Operating Income
    $59.3 million
    Q1 FY27

    Favorable to the high end of guidance range.

    Adjusted Operating Margin
    20.4%
    Q1 FY27

    Favorable to the high end of guidance range.

    Adjusted EBITDA
    $66.4 million
    Q1 FY27

    Favorable to the high end of guidance range.

    Adjusted EBITDA Margin
    22.8%
    Q1 FY27

    Favorable to the high end of guidance range.

    Cash and investments balance
    $163.3 million
    Q1 FY27 end

    Net acquisition consideration of $29.2 million reflected in balance.

    Principal amount of debt
    $503 millionunchanged from last quarter
    Q1 FY27 end

    Unchanged from last quarter.

    R&D as % of net sales
    17.6%20 bps higher than a year ago
    Q1 FY27

    Up 17% year-over-year in dollar terms. Majority of incremental spend goes towards high conviction R&D programs in data center and LoRa.

    SG&A as % of net sales
    15.1%decrease of 200 bps year-over-year
    Q1 FY27

    Has been in a steady decline and projected to continue in Q2.

    Gain chip demand vs supply
    3x
    Q1 FY27

    Demand outpaces supply by approximately 3x.

    Gain chip capacity expansion
    3-4x
    CY26

    Expected capacity increase by end of CY26, with another 3-4x increase by end of CY27.

    LoRa end nodes
    150 million
    current

    Current number of LoRa end nodes.

    LoRa Plus data throughput
    2.6 megabit per second
    current

    Step change increase that unlocks new AI application classes.

    LPO/LRO share of total transceiver mix
    25%
    1-2 years

    Expected share of linearized solutions (LPO/LRO) in the total transceiver mix.

    Industry KPIs

    8
    MetricValueDetails
    Lead timeswell within the lead time
    Backlog order bookstrength and depth
    Ai data center revenue$71.6 millionUSD
    Fab capacity utilizationdemand outpaces supply by about 3xratio
    Bookings net order intakevery strong
    Design wins socket pipelinemultiple design wins
    Node platform ramp schedule1.6T shipments launching in Q2
    End market segment revenue mixData Center: $71.6M; High-End Consumer: $38.4M; Industrial: $153.9M; LoRa-enabled: $44.5M; IoT Systems and Connectivity: $88.3MUSD

    Orderbook & backlog

    3
    Bookings and Backlogvery strongQ1 FY27

    General statement for the quarter.

    1.6T Optical Bookings and Backlogexceptionally strongQ1 FY27

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

    Backlogstrength and depthQ1 FY27

    Contributes to accelerating demand throughout FY27 and beyond.

    Product announcements

    3
    ProductTypeDetails
    AirLink RX400 and EX400 routerslaunch
    SurgeSwitch solutionlaunch
    LoRa Pluslaunch

    Deals & partnerships

    2
    HieFoAcquisition 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 businessDivestiture 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

    2
    Gain chip demand exceeding supplyQ1 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 environmentcurrent

    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

    5

    Data Center Revenue Growth

    Q2 FY27
    Current$71.6M (Q1 FY27), +39% YoY
    Target35% 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.

    Q&A highlights

    6

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.