Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $584.9 million | Up 154% year-over-year |
| Non-GAAP EPS | $1.32 | Up $0.52 sequentially |
| Non-GAAP Gross Margin | 72.4% | Above guidance of 72% |
| Non-GAAP Operating Margin | 44.7% | Up 560 basis points sequentially |
| Cash and Equivalents | $1.38 billion | Increase of $125.3 million from Q2 |
Guidance and outlook
- Q4 revenue is expected to be in the range of $730 million to $750 million.
- Q4 non-GAAP gross margin is expected to be approximately 72%.
- Q4 non-GAAP operating expenses are expected to be between $194 million and $200 million.
- Q4 non-GAAP fully diluted earnings per share are expected to be between $1.62 and $1.66.
How management sounded
Positive (+7 on our -10 to +10 scale). Management reported record revenue with 154% year-over-year growth, raised guidance, and highlighted significant expansion into new addressable markets like optical and custom silicon. Management sounded more upbeat than on 48% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Orion Rackscale Architecture
Asked: Harlan Sur of JPMorgan asked about the interest level in the Orion platform and the potential dollar content capture.
Answer: Management stated Orion is seeing strong interest as a GPU-agnostic rack solution, with an estimated $100,000 in Astera content per rack for the 1.0 version.
Scorpio X Series Growth
Asked: Joe Morgan of Morgan Stanley asked if the Scorpio X Series growth might plateau before the transition to UALink.
Answer: Management noted that while initial platforms are at scale, they expect continued growth in 2027 from new platforms and additional customers layering into the model.
Optical Connectivity Strategy
Asked: Blayne Curtis of Jefferies asked about the timeline for NPO (Near Package Optics) revenue contribution.
Answer: Management expects revenue contribution from NPO deployments to begin in the second half of 2027, with hundreds of dollars in content per accelerator.
OpEx Trends
Asked: Tore Svanberg of Stifel asked if the increased OpEx is for future growth opportunities or if the heavy lifting is done.
Answer: Management explained that OpEx is growing slower than revenue, reflecting operating leverage, and is driven by headcount growth, variable R&D expenses, and variable compensation.
What to watch before the next call
- The ramp of NPO (Near Package Optics) products in the second half of 2027.
- The market entry of the Orion rack-scale reference architecture through ODM and OEM partners in 2027.
- The transition of customers from current PCIe-based platforms to UALink and other next-generation protocols.
