Earnings call analysis

Semtech (SMTC) Q3 FY2027 Earnings Call: Key Takeaways

Semtech reported record second quarter fiscal 2027 net sales of $342 million and adjusted EPS of $0.71, driven by exceptional performance in its infrastructure and LoRa portfolios. The call focused on strong data center demand for 800-gig and 1.6T products, capacity expansion initiatives, and portfolio optimization through the announced divestiture of the cellular module business.

About Semtech. Semtech Corporation is a technology firm specializing in the creation, production, and global distribution of advanced analog and mixed-signal semiconductor components, complemented by sophisticated algorithms. The company's extensive product portfolio begins with signal integrity solutions.

Call date

Aug 25, 2026

Sentiment score

+45 Positive

Management tone, -100 to +100

Sentiment change

vs Q1 FY2027 call

Sector

Information Technology, Semiconductors and Semiconductor Equipment

Next report

Nov 23, 2026

View calendar

Key takeaways

Net sales for the second quarter reached a record $342 million, up 17% sequentially and 33% year-over-year, exceeding the high end of the outlook range.
Adjusted diluted earnings per share were $0.71, growing 73% year-over-year and outpacing revenue growth.
Data center revenue achieved a record $100 million, up 39% sequentially and 91% year-over-year, supported by 800-gig and 1.6T products.
LoRa-enabled net sales reached an all-time record of $58 million, up 31% sequentially and 58% year-over-year.
Semtech announced a definitive agreement to divest its cellular module business, which will result in a structural shift with an expected adjusted gross margin of 63.9% excluding the business in Q3.
For the third quarter of fiscal year 2027, Semtech projected net sales of $410 million plus or minus $5 million and adjusted diluted earnings per share of $1.05 plus or minus $0.03.

Key financial results

Second quarter net sales reached a record $342 million, growing 33% year-over-year and above the high end of the outlook range.Revenue was $342 million, growing 33% year-over-year, and we delivered strong operating leverage with earnings per share of $0.71
Adjusted diluted earnings per share were $0.71, up 73% year-over-year, growing more than twice as fast as revenue.Adjusted diluted earnings per share of $0.71, which increased at over 2x the rate of net sales growth on both a sequential and year-over-year basis.
Adjusted gross margin was 54.5%, up 150 basis points sequentially.Adjusted gross margin was 54.5%, up 150 basis points sequentially and at the high end of our outlook.
Total semiconductor products gross margin was 62.8%, up 210 basis points sequentially.Total semiconductor products gross margin was 62.8%, up 210 basis points sequentially and above the high end of our outlook
Adjusted operating income was $84 million, with an adjusted operating margin of 24.4%.adjusted operating income of $84 million, adjusted operating margin of 24.4%
Adjusted EBITDA was $91 million, representing an adjusted EBITDA margin of 26.6%.adjusted EBITDA of $91 million and adjusted EBITDA margin of 26.6%.
Operating cash flow was $69 million, and free cash flow was $61 million.
Ending cash and cash equivalents were $204 million, principal debt was $503 million, and the net leverage ratio was 1.1.Our Q2 ending cash and cash equivalents balance was $204 million, and the principal amount of debt was $503 million, and net leverage ratio was 1.1.

Business segment results

Infrastructure: Infrastructure net sales were $124 million, up 25% sequentially and 69% year-over-year.Infrastructure net sales were $124 million, up 25% sequentially and 69% year-over-year
Data center: Data center revenue reached a record $100 million, up 39% sequentially and 91% year-over-year.Data center revenue was a record $100 million, up 39% sequentially and 91% year-over-year
High-end consumer: High-end consumer net sales were $39 million, up 2% sequentially and down 5% year-over-year.net sales for Q2 were $39 million, up 2% sequentially and down 5% year-over-year.
Industrial: Industrial net sales were $179 million, up 16% sequentially and 25% year-over-year.Q2 industrial net sales were $179 million, up 16% sequentially and up 25% year-over-year
LoRa: LoRa-enabled net sales were a record $58 million, up 31% sequentially and 58% year-over-year.LoRa-enabled net sales were $58 million, up 31% sequentially and up 58% year-over-year, another all-time record.
IoT systems and connectivity: IoT systems and connectivity net sales were $98 million, up 11% sequentially and year-over-year.Our IoT systems and connectivity business recorded Q2 net sales of $98 million, up 11% sequentially and year-over-year.

Capital allocation

CapEx was 2% of net sales, with expenditures directed toward growing fab capacity for gain chips and CW lasers.CapEx was 2% of net sales and includes expenditures to grow fab capacity supporting gain chips and CW lasers.
Management expects CapEx to remain generally below 5% of net sales going forward.We expect CapEx to grow as a percentage of sales, but to remain manageable and generally be below 5% of net sales

Industry trends and dynamics

Demand continues to strengthen across data center portfolios including copper, fiber, and photonics.demand signals that we are strengthening across every part of data center portfolio: copper, fiber and photonics.
Linear equalizer solutions are positioned as the de facto industry standard for copper applications up to 1.6T and beyond.we believe our linear equalizer solutions are the de facto industry standard.
Amazon Sidewalk is expanding internationally from North America to Canada, Mexico, Europe, Australia, and Japan.Sidewalk is now expanding internationally, starting with Canada and Mexico, with Europe, Australia and Japan expected to follow.

Competitive landscape

FiberEdge TIA driver solutions are in exceptionally strong demand, with design wins across all leading hyperscalers and module providers.Our FiberEdge TIA driver solutions remain in exceptionally strong demand, and we continue to deepen our engagement across all the leading hyperscalers.
CopperEdge products are securing the lion's share of the linear equalizer market.CopperEdge already taking the lion's share of the linear equalizer market.

Macroeconomic environment

The TVS business remains resilient despite industry-wide memory constraint pressures.Our TVS business grew sequentially and remains very resilient in light of memory constrained pressure across the industry.
The call did not discuss broader macroeconomic factors beyond industry-specific end market conditions.

Growth opportunities and strategies

Semtech is expanding its photonics portfolio to span gain chips, high-power lasers, semiconductor optical amplifiers, and photodiodes.Our photonics portfolio now spans gain chips, high-power lasers, semiconductor optical amplifiers and high-speed photodiodes
The company aims to increase content per transceiver from high single-digit dollars to high double-digit dollars as the industry transitions to 3.2T.grow our content per transceiver from high single-digit dollars to high double-digit dollars as the industry transitions from 800 gig to 3.2T
LoRa Gen 4 platform with multi-protocol flexibility is expected to drive future growth in Edge AI applications.Our LoRa Gen 4 platform with the LoRa Plus, other RF protocols continues to gain market traction, and we expect it will be a key driver for the future growth.

Financial guidance and outlook

Third quarter net sales are expected to be $410 million, plus or minus $5 million.We currently expect net sales of $410 million, plus or minus $5 million
Data center revenue in Q3 is projected to grow 45% sequentially, representing approximately 160% year-over-year growth.we project a 45% sequential revenue growth in data center, representing approximately 160% growth over the same period last year.
Adjusted gross margin for Q3 is expected to be 58.3%, plus or minus 100 basis points, with an adjusted gross margin excluding modules expected at 63.9%.
Adjusted net operating expenses are expected to be $112 million, plus or minus $3 million.Adjusted net operating expenses are expected to be $112 million, plus or minus $3 million.
Adjusted diluted earnings per share for Q3 are expected to be $1.05, plus or minus $0.03.result in adjusted diluted earnings per share of $1.05, plus or minus $0.03

Cellular module business divestiture

Semtech announced a definitive agreement to divest its cellular module business, which is recorded as held for sale on the Q2 balance sheet.We announced the signing of a definitive agreement to divest our cellular module business, which is recorded as held for sale on the Q2 balance sheet.
The transaction is expected to close in the fourth fiscal quarter and be EPS neutral on a non-GAAP basis.expected to occur in the fourth quarter of the current fiscal year. We also expect the transaction to be EPS neutral on a non-GAAP basis.

Q3 FY2027 results

Metric	Result	Change
Net Sales	$342 million	Up 33% year-over-year
Adjusted Diluted EPS	$0.71	Up 73% year-over-year
Infrastructure Net Sales	$124 million	Up 69% year-over-year
Data Center Revenue	$100 million	Up 91% year-over-year
Industrial Net Sales	$179 million	Up 25% year-over-year
LoRa-enabled Net Sales	$58 million	Up 58% year-over-year

How management sounded

Positive (+45 on our -100 to +100 scale). Management highlighted record revenue, expanding operating leverage, and strong demand across data center and LoRa, while raising guidance above prior expectations. Management sounded more upbeat than on 62% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.

Read the analyst Q&A summary and guidance and outlook for this call.

What to watch before the next call

Execution and closing of the cellular module business divestiture in the fourth quarter.
Capacity expansion progress with front-end and back-end partners to support fiscal 2028 data center demand.
Ramp and customer adoption timelines for 1.6T FiberEdge, CopperEdge, and photonics products.

Earlier calls

Q1 FY2027 (May 26, 2026), tone Positive: Semtech reported record first quarter revenue of $291 million, up 16% year-over-year, driven by strong performance across data center and LoRa end markets.

Frequently asked questions

Did Semtech beat earnings in Q2 fiscal 2027?

Yes, Semtech reported record net sales of $342 million and adjusted diluted earnings per share of $0.71, both coming in above the high end of guidance ranges.

What did Semtech guide for net sales in Q3 fiscal 2027?

Semtech guided third-quarter net sales to be $410 million, plus or minus $5 million, representing sequential growth of 20% at the midpoint.

What is happening with Semtech's cellular module business?

Semtech announced a definitive agreement to divest its cellular module business, which is recorded as held for sale and expected to close in the fourth quarter of the current fiscal year.

Sources and method

Dombey's summary of the Semtech Q3 FY2027 earnings call held Aug 25, 2026, written from the call itself. Every figure on this page was checked against what was said on the call, and quoted lines are management's own words; we do not add estimates or prices. The tone score is our read of management's wording, guidance and answers. Check figures against the company's SEC filings before acting. This is research, not investment advice.

Updated Nov 9, 2026. All earnings call analyses

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