Upgrades Summary - Morgan Stanley upgraded Celsius Holdings (CELH) to Overweight from Equal Weight with a price target of $70, up from $61, citing a return to growth and expected reacceleration in topline growth due to easier comparisons from December through early June [2] - UBS upgraded FIS (FIS) to Buy from Neutral with an unchanged price target of $82, believing the risk/reward profile has improved as shares are down 20% year-to-date [2] - Oppenheimer upgraded Semtech (SMTC) to Outperform from Perform with a price target of $81, following positive management meetings and a bullish outlook on growth opportunities in data center artificial intelligence [2] - BofA upgraded Freeport-McMoRan (FCX) to Buy from Neutral with an unchanged price target of $42, expressing increased confidence in the current valuation despite risks associated with the halted Grasberg copper/gold mine in Indonesia [2] - Maxim upgraded Adial Pharmaceuticals (ADIL) to Buy from Hold with a price target of $1.50, reflecting a more bullish stance on the company [2]

Core Insights - POET Technologies and Semtech Corporation have announced the immediate availability of high-performance 1.6T Receiver Optical Engines for AI and cloud networks, leveraging POET's Optical Interposer platform and Semtech's FiberEdge technology [1][2][3] Group 1: Product Development - The new optical engine products integrate Semtech's 200G-per-lane receiver technologies with POET's Optical Interposer, resulting in chip-scale receive engines that enhance performance and simplify module assembly [2][3] - The optical engines include DR8 for short-reach AI cluster links and 2×FR4 for longer-reach intra-datacenter connectivity, both available for customer sampling [2][4] Group 2: Market Impact - The collaboration is expected to significantly impact the transceiver offerings of customers, enhancing their ability to meet the demanding requirements of AI and cloud networks [3] - The integration of technologies aims to address signal integrity challenges while delivering exceptional sensitivity and power in the new receiver engines [3][7] Group 3: Company Background - POET Technologies specializes in high-speed optical modules and light source products for AI systems and hyperscale data centers, utilizing its patented Optical Interposer platform for seamless integration of electronic and photonic devices [5] - Semtech Corporation is recognized for its high-performance semiconductor solutions, focusing on IoT systems and cloud connectivity, and is committed to enabling smarter and more connected technologies [8]

COPENHAGEN, Denmark & CAMARILLO, Calif.--(BUSINESS WIRE)--Semtech Corporation (Nasdaq: SMTC), a leading provider of high-performance semiconductor, Internet of Things (IoT) systems and cloud connectivity service solutions, today announced the sampling of critical physical medium dependent (PMD) building blocks that establish new performance standards for 1.6T multimode optical infrastructure in AI data centers. The FiberEdge® GN1878 200G per channel vertical-cavity surface-emitting laser (VCSEL. ...

Core Viewpoint - Semtech Corporation reported strong second-quarter fiscal 2026 earnings, exceeding estimates and demonstrating significant year-over-year growth in revenues and earnings per share [3][5]. Financial Performance - Semtech's Q2 non-GAAP earnings were 41 cents per share, beating the Zacks Consensus Estimate by a penny and reflecting a more than threefold increase from 11 cents in the same quarter last year [3]. - Revenues for Q2 reached $257.6 million, surpassing the Zacks Consensus Estimate by 0.6% and showing a 20% year-over-year increase [5]. Revenue Breakdown - Infrastructure market sales totaled $73.4 million, accounting for 28.5% of net sales, with a year-over-year growth of 38.8% driven by demand for data centers [6]. - Industrial market sales were $143 million, representing 55.5% of net sales, up 14.1% year over year [6]. - High-end consumer market sales reached $41.2 million, making up 16% of net sales, with an 11.1% year-over-year increase [7]. Product Line Performance - Signal Integrity sales were $76.8 million, up 29.3% year over year [8]. - Analog Mixed Signal & Wireless sales amounted to $92 million, reflecting a 16% year-over-year increase [8]. - IoT System and Connectivity sales totaled $88.8 million, also up 16% year over year [8]. Margin Analysis - Non-GAAP gross margin expanded to 53.2%, a 280 basis point increase year over year [9]. - Non-GAAP operating income surged 59.3% year over year to $48.6 million, with the operating margin improving to 18.8% from 14.2% in the previous year [9]. Balance Sheet and Cash Flow - As of July 26, 2025, cash and cash equivalents were $168.6 million, up from $156.5 million in the previous quarter [11]. - Long-term debt decreased to $518.9 million from $542.6 million [11]. - Operating cash flow for Q2 was $44.4 million, with free cash flow at $41.5 million [11]. Future Guidance - For Q3, Semtech expects net sales of $266 million (+/- $5 million), with growth anticipated in the infrastructure end-market driven by data center demand [12]. - Non-GAAP gross margin is projected at 53% (+/- 50 bps), and non-GAAP earnings are expected to be 44 cents (+/- 3 cents) per share [13]. Market Sentiment - Since the earnings release, there has been an upward trend in estimates, with a consensus estimate shift of -13.45% [14]. - Semtech holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [16].

Core Insights - Semtech Corporation has announced the launch of two new LoRa Gen 4 transceivers, the LR2022 dual-band and LR2012 sub-GHz, which enhance the capabilities of the existing LR2021 model [1] Company Overview - Semtech Corporation is recognized as a leading provider of high-performance semiconductor solutions, Internet of Things (IoT) systems, and cloud connectivity services [1] Product Development - The new transceivers are designed to offer cost-optimized and application-specific solutions, allowing customers to utilize the advanced performance of fourth-generation LoRa technology [1]

Core Viewpoint - A lawsuit is pending against Semtech Corporation (NASDAQ: SMTC) for alleged violations of securities laws, primarily related to the company's CopperEdge products not meeting customer needs, which could impact sales forecasts for fiscal 2026 [2][3]. Group 1: Lawsuit Details - The lawsuit was initiated by an investor on February 20, 2025, claiming that Semtech Corporation failed to disclose critical information regarding its CopperEdge products [2]. - Allegations include that the CopperEdge products required specific rack architecture changes and would not achieve expected sales growth during fiscal 2026, leading to misleading positive statements from the company [2]. - A consolidated complaint was filed on July 14, 2025, and the defendants submitted a motion to dismiss the case on August 11, 2025 [3]. Group 2: Investor Information - Investors who purchased shares of Semtech Corporation prior to August 2024 and continue to hold them are encouraged to contact the Shareholders Foundation for options regarding the lawsuit [1][3].

Core Viewpoint - Semtech Corporation has announced a new 2.5G symmetric Fiber to the Room (FTTR) chipset aimed at enhancing global Passive Optical Network (PON) deployments, addressing cost and performance challenges in the FTTR market as it anticipates significant growth [1] Company Summary - Semtech Corporation is a leading provider of high-performance semiconductor solutions, Internet of Things (IoT) systems, and cloud connectivity services [1] Industry Summary - The FTTR market is preparing for substantial growth, and the new chipset is designed to meet critical cost and performance challenges associated with this expansion [1]

Core Insights - Semtech Corporation has introduced two new FiberEdge transimpedance amplifiers (TIAs), the GN1834D and GN1818, aimed at enhancing power efficiency in AI data centers and supporting the transition to 1.6T optical interconnects [1][2][4] Product Overview - The GN1834D is designed for the emerging 1.6T optical interconnect market, enabling 8x200G optical modules and providing advanced performance with innovative 2.5D mounting technology [4][6] - The GN1818 focuses on optimizing power efficiency for existing 800G infrastructure, achieving up to 20% power reduction compared to alternatives while maintaining high performance [5][6] Market Context - The demand for high-speed optical interconnects is driven by the exponential growth of AI workloads, with the high-speed datacom transceiver market projected to grow from approximately $9 billion in 2024 to over $17 billion by 2026 [3] - As operators transition to 1.6T optics, Semtech's comprehensive 200G TIA portfolio provides the necessary performance and design flexibility for next-generation optical modules [3][6] Strategic Advantages - Semtech's broad portfolio allows for customer standardization across diverse connectivity requirements, enhancing supply chain efficiency and enabling module manufacturers to optimize designs for specific applications [6][8] - The company's approach to power efficiency and performance positions it as a leader in the emerging 1.6T market, catering to the strict power budgets demanded by AI workloads [2][3][6]

Core Viewpoint - Semtech has launched the new LoRa Plus™ series chip LR2021 at the IOTE 2025 International IoT Exhibition, marking the entry of LoRa technology into its fourth generation, which enhances low-power long-range transmission, multi-protocol compatibility, high-speed data transmission, and AI edge applications, redefining the boundaries of IoT connectivity [2][16]. Technical Features - The LR2021 chip integrates Semtech's fourth-generation LoRa technology, achieving multi-dimensional breakthroughs and providing robust support for IoT connectivity across various scenarios, including ground and non-ground networks [3]. - It supports multiple physical layer compatibilities and can integrate third-party protocol stacks, allowing it to adapt to various low-power wireless protocols, significantly simplifying the development process for IoT devices [7]. - The chip supports high-speed communication modes up to 2.6 Mbps and various modulation methods, catering to different data transmission needs from low-speed sensor data to high-speed audio and image transmission [7][8]. Performance Advantages - The LR2021 balances power consumption and data rate, making it suitable for AI-driven edge devices that require long-term stable operation and fast data transmission [9]. - Its low power consumption allows devices to operate for years on small batteries, reducing maintenance costs, while maintaining efficiency even during high-speed data transmission [9][10]. - The chip maintains backward compatibility with previous LoRa devices, allowing for seamless integration into existing systems without incurring high replacement costs [10]. Application Scenarios - Semtech has developed scenario-based solutions around the LR2021, focusing on key areas such as industrial IoT, supply chain, satellite IoT communication, agriculture, environmental monitoring, healthcare, and smart buildings [13]. - In industrial IoT, the chip's multi-protocol support and high-speed transmission capabilities enhance data interoperability among devices using different protocols [13]. - The LR2021 supports satellite communication, enabling real-time data transmission in remote areas, ensuring data continuity even without ground network coverage [14]. Redefining Connectivity - The introduction of the LR2021 chip signifies a shift from traditional LPWAN technology to a more integrated IoT connectivity solution, breaking down barriers between different protocols and enabling cross-industry innovation [16][17]. - It achieves full spatial coverage from ground to satellite, eliminating connectivity blind spots and supporting both low-speed and high-speed data transmission [16]. - The chip's capabilities foster an integrated IoT ecosystem, reducing application costs for enterprises and promoting data sharing across different industries [17].

[Report Information](index=1&type=section&id=Report%20Information) Details the Form 10-Q filing for SEMTECH CORPORATION, including its status as a large accelerated filer and common stock outstanding [Filing Details](index=1&type=section&id=Filing%20Details) This section details the filing type (Form 10-Q), the quarterly period ended July 27, 2025, the registrant's name (SEMTECH CORPORATION), its trading symbol (SMTC), and its status as a large accelerated filer - The filing is a Quarterly Report on Form 10-Q for the period ended July 27, 2025, filed by SEMTECH CORPORATION (SMTC)[2](index=2&type=chunk)[3](index=3&type=chunk) Registrant Status | Status | Value | | :--- | :--- | | Large accelerated filer | X | | Accelerated filer | ☐ | | Non-accelerated filer | ☐ | | Smaller reporting company | ☐ | | Emerging growth company | ☐ | | Shell company | No | | Common stock outstanding (August 22, 2025) | 86,773,988 shares | [Index to Form 10-Q](index=3&type=section&id=INDEX%20TO%20FORM%2010-Q) Provides a navigational index to the various sections and exhibits contained within the Form 10-Q filing [Special Note Regarding Forward-Looking and Cautionary Statements](index=4&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20and%20Cautionary%20Statements) Highlights that the report contains forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially - Forward-looking statements involve known and unknown risks and uncertainties that could cause actual results and events to differ materially from those projected[12](index=12&type=chunk) - Potential factors causing divergence include market volatility, product pricing decreases, supply chain disruptions, failure to develop new products, intellectual property issues, and integration difficulties from acquisitions[12](index=12&type=chunk) - The preparation of consolidated financial statements requires management to draw conclusions and make interpretations, judgments, assumptions, and estimates, which if different, could materially impact reported results[13](index=13&type=chunk) [Part I - Financial Information](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) Presents Semtech Corporation's unaudited condensed consolidated financial statements and management's discussion and analysis [ITEM 1. Financial Statements](index=5&type=section&id=ITEM%201.%20Financial%20Statements) Presents Semtech Corporation's unaudited condensed consolidated financial statements, including statements of operations, comprehensive loss, balance sheets, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, estimates, and specific financial line items for the reported interim periods [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Presents the company's unaudited condensed consolidated statements of operations, detailing net sales, gross profit, operating loss, and net loss for the reported periods Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $257,589 | $215,355 | $508,649 | $421,460 | | Gross profit | $134,105 | $105,464 | $265,394 | $205,056 | | Operating (loss) income | $(16,192) | $7,768 | $19,775 | $10,911 | | Net loss | $(27,064) | $(170,295) | $(7,719) | $(193,454) | | Basic loss per share | $(0.31) | $(2.61) | $(0.09) | $(2.98) | | Diluted loss per share | $(0.31) | $(2.61) | $(0.09) | $(2.98) | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20LOSS) Details the company's net loss and other comprehensive income or loss components, leading to the total comprehensive loss for the reported periods Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(27,064) | $(170,295) | $(7,719) | $(193,454) | | Other comprehensive income (loss), net | $230 | $(7,940) | $2,906 | $263 | | Comprehensive loss | $(26,834) | $(178,235) | $(4,813) | $(193,191) | [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Provides a snapshot of the company's financial position, including assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | July 27, 2025 | January 26, 2025 | | :--- | :--- | :--- | | Total current assets | $614,869 | $585,461 | | Total assets | $1,405,885 | $1,419,264 | | Total current liabilities | $243,111 | $283,034 | | Total liabilities | $813,983 | $800,808 | | Total stockholders' equity | $552,892 | $542,426 | [Consolidated Statements of Stockholders' Equity (Deficit)](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY%20(DEFICIT)) Outlines the changes in stockholders' equity, including net loss, comprehensive income, and share-based compensation, over the reported periods - Changes in stockholders' equity for the three and six months ended July 27, 2025, and July 28, 2024, include net loss, other comprehensive income, share-based compensation, and treasury stock reissued to settle share-based awards[24](index=24&type=chunk)[26](index=26&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the reported periods Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $72,219 | $(5,084) | | Net cash used in investing activities | $(10,202) | $(2,672) | | Net cash used in financing activities | $(47,018) | $(4,550) | | Effect of foreign exchange rate changes on cash and cash equivalents | $1,818 | $(351) | | Net increase (decrease) in cash and cash equivalents | $16,817 | $(12,657) | | Cash and cash equivalents at end of period | $168,560 | $115,928 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed explanations and disclosures regarding the accounting policies, estimates, and specific financial line items presented in the consolidated financial statements [Note 1: Organization and Basis of Presentation](index=13&type=section&id=Note%201:%20Organization%20and%20Basis%20of%20Presentation) Describes Semtech Corporation's business, fiscal year basis, and recent accounting standards updates impacting financial reporting - Semtech Corporation is a leading provider of high-performance semiconductor, Internet of Things ("IoT") systems, and cloud connectivity service solutions[33](index=33&type=chunk) - The company reports results on a 52 and 53-week fiscal year basis, with quarters generally ending on the last Sunday of April, July, and October[35](index=35&type=chunk) - Recent Accounting Standards Updates (ASU 2024-04, 2024-03, 2023-09) clarify convertible debt, expand expense disclosures, and require enhanced income tax rate reconciliations, with varying effective dates[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) [Note 2: Loss per Share](index=15&type=section&id=Note%202:%20Loss%20per%20Share) Details the calculation of basic and diluted loss per share, including the impact of anti-dilutive securities due to net losses Loss per Share Data (in thousands, except per share data) | Metric | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(27,064) | $(170,295) | $(7,719) | $(193,454) | | Weighted-average shares outstanding–basic | 86,707 | 65,281 | 86,574 | 64,895 | | Weighted-average shares outstanding–diluted | 86,707 | 65,281 | 86,574 | 64,895 | | Basic loss per share | $(0.31) | $(2.61) | $(0.09) | $(2.98) | | Diluted loss per share | $(0.31) | $(2.61) | $(0.09) | $(2.98) | | Total anti-dilutive shares | 10,350 | 9,484 | 10,240 | 9,461 | - Due to the Company's net loss for the three and six months ended July 27, 2025, and July 28, 2024, all shares underlying stock options, restricted stock units, and convertible notes were considered anti-dilutive[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) [Note 3: Share-Based Compensation](index=16&type=section&id=Note%203:%20Share-Based%20Compensation) Provides an overview of share-based compensation expenses, including grants of restricted stock units and performance awards to employees and directors Share-Based Compensation Expense (in thousands) | Category | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Cost of sales | $603 | $714 | $1,308 | $1,396 | | Product development and engineering | $3,424 | $3,442 | $7,169 | $6,603 | | Selling, general and administrative | $13,270 | $12,982 | $15,655 | $24,373 | | **Total share-based compensation** | **$17,297** | **$17,138** | **$24,132** | **$32,372** | - In the six months ended July 27, 2025, the Company granted **503,657 equity-settled restricted stock units** to employees and **42,568 equity-settled restricted stock units** to non-employee directors[47](index=47&type=chunk)[48](index=48&type=chunk) - The liability for cash-settled restricted stock units for non-employee directors decreased from **$14.5 million** (Jan 26, 2025) to **$7.4 million** (Jul 27, 2025), with **$4.1 million** paid out to settle awards[49](index=49&type=chunk) - **357,441 financial metric-based restricted stock units** with a market condition (Performance Awards) were granted in the six months ended July 27, 2025, with a maximum potential of **714,882 shares**[53](index=53&type=chunk) [Note 4: Available-for-sale securities](index=18&type=section&id=Note%204:%20Available-for-sale%20securities) Details the company's available-for-sale securities, primarily convertible debt investments, and their fair value and unrealized losses Available-for-sale Securities (in thousands) | Metric | July 27, 2025 | January 26, 2025 | | :--- | :--- | :--- | | Fair Value | $12,715 | $12,715 | | Amortized Cost | $14,725 | $14,725 | | Gross Unrealized Loss | $(2,010) | $(2,010) | | Total available-for-sale securities | $12,715 | $12,715 | - The Company's available-for-sale securities consist entirely of convertible debt investments issued by privately-held companies, all of which mature within one year[55](index=55&type=chunk) [Note 5: Fair Value Measurements](index=19&type=section&id=Note%205:%20Fair%20Value%20Measurements) Explains the fair value measurements for financial assets, including convertible debt investments and interest rate swap agreements, using Level 2 and Level 3 inputs Financial Assets Measured at Fair Value on a Recurring Basis (in thousands) | Financial Asset | July 27, 2025 Total | July 27, 2025 Level 2 | July 27, 2025 Level 3 | January 26, 2025 Total | January 26, 2025 Level 2 | January 26, 2025 Level 3 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Interest rate swap agreement | $205 | $205 | $— | $745 | $745 | $— | | Convertible debt investments | $12,715 | $— | $12,715 | $12,715 | $— | $12,715 | | **Total financial assets** | **$12,920** | **$205** | **$12,715** | **$13,460** | **$745** | **$12,715** | - Convertible debt investments are valued using **Level 3 inputs** (estimated discounted cash flows and fair value of equity), while interest rate swap agreements are measured using **Level 2 inputs** (readily available interest rate curves)[60](index=60&type=chunk)[61](index=61&type=chunk) - The total credit loss reserve for held-to-maturity and available-for-sale debt securities remained flat at **$4.5 million** as of July 27, 2025, and January 26, 2025[67](index=67&type=chunk) [Note 6: Inventories](index=21&type=section&id=Note%206:%20Inventories) Presents the breakdown of inventories by category and highlights the increase in total inventories over the reported period Inventories (in thousands) | Category | July 27, 2025 | January 26, 2025 | | :--- | :--- | :--- | | Raw materials and electronic components | $40,049 | $46,333 | | Work in progress | $100,994 | $87,896 | | Finished goods | $42,252 | $29,364 | | **Total inventories** | **$183,295** | **$163,593** | - Total inventories increased by **$19.7 million (12.0%)** from $163.6 million at January 26, 2025, to **$183.3 million** at July 27, 2025[69](index=69&type=chunk) [Note 7: Goodwill and Intangible Assets](index=22&type=section&id=Note%207:%20Goodwill%20and%20Intangible%20Assets) Details goodwill by operating segment, including a significant impairment charge, and summarizes amortization expense for finite-lived intangible assets Goodwill by Operating Segment (in thousands) | Segment | July 27, 2025 Carrying Value | January 26, 2025 Carrying Value | | :--- | :--- | :--- | | Signal Integrity | $267,205 | $267,205 | | Analog Mixed Signal and Wireless | $83,101 | $83,101 | | IoT Systems and Connectivity | $141,889 | $182,785 | | **Total goodwill** | **$492,195** | **$533,091** | - A **$42.0 million pre-tax non-cash goodwill impairment charge** was recorded for the IoT Connected Services reporting unit (within IoT Systems and Connectivity) in the second quarter of fiscal year 2026 due to reduced earnings forecasts[71](index=71&type=chunk) Total Amortization Expense of Finite-Lived Intangible Assets (in thousands) | Period | July 27, 2025 | July 28, 2024 | | :--- | :--- | :--- | | Three Months Ended | $2,656 | $2,610 | | Six Months Ended | $5,145 | $5,198 | [Note 8: Long-Term Debt](index=25&type=section&id=Note%208:%20Long-Term%20Debt) Provides a comprehensive overview of the company's long-term debt, including term loans and convertible senior notes, and details interest expense components Long-Term Debt (in thousands, except percentages) | Debt Type | July 27, 2025 | January 26, 2025 | | :--- | :--- | :--- | | Revolving loans | $— | $— | | Term loans | $146,212 | $181,212 | | 1.625% convertible senior notes due 2027 | $319,500 | $319,500 | | 4.00% convertible senior notes due 2028 | $61,950 | $61,950 | | **Total debt** | **$527,662** | **$562,662** | | Weighted-average effective interest rate | 3.32% | 4.10% | - As of July 27, 2025, the Company had **$146.2 million outstanding** under Term Loans and **$451.6 million of available undrawn borrowing capacity** on its Revolving Credit Facility[82](index=82&type=chunk) - One condition allowing holders of the 2028 Notes (approximately **$62.0 million outstanding**) to convert was met, granting conversion rights from July 28, 2025, through October 24, 2025[109](index=109&type=chunk) - In July 2024, approximately **$188.1 million** in aggregate principal amount of 2028 Notes were exchanged for **10,378,431 shares** of the Company's common stock[113](index=113&type=chunk) Interest Expense Components (in thousands) | Component | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Contractual interest | $4,734 | $23,502 | $10,174 | $47,147 | | Amortization of deferred financing costs | $1,271 | $2,379 | $2,525 | $4,758 | | Write-off of deferred financing costs | $364 | $5,497 | $516 | $5,497 | | Interest swap agreement | $(87) | $(2,800) | $(195) | $(5,595) | | Interest rate swap termination | $(1,047) | $— | $(1,203) | $— | | **Total interest expense** | **$5,235** | **$28,578** | **$11,817** | **$51,807** | [Note 9: Income Taxes](index=32&type=section&id=Note%209:%20Income%20Taxes) Discusses the company's effective tax rate, the impact of recent tax legislation, and changes in unrecognized tax benefits and regional income - The Company's effective tax rate differs from the **21% statutory federal income tax rate** primarily due to the regional mix of income, changes in valuation allowance, research and development (R&D) tax credits, and the impact of global intangible low-taxed income (GILTI)[116](index=116&type=chunk) - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, permanently changes the limitation on business interest expense deduction and allows immediate deduction for domestic R&D expenses, with no material expected impact on the Company's consolidated financial statements[116](index=116&type=chunk) - The balance of gross unrecognized tax benefits increased from **$20.966 million** at January 26, 2025, to **$21.975 million** at July 27, 2025[119](index=119&type=chunk) Regional Income (Loss) Before Taxes and Equity Method Income (in thousands) | Region | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Domestic | $(21,994) | $(170,591) | $(10,143) | $(189,460) | | Foreign | $(215) | $4,511 | $14,886 | $3,127 | | **Total** | **$(22,209)** | **$(166,080)** | **$4,743** | **$(186,333)** | [Note 10: Leases](index=34&type=section&id=Note%2010:%20Leases) Details total lease costs, supplemental lease information, and the maturity schedule of lease liabilities for operating leases Total Lease Cost (in thousands) | Period | July 27, 2025 | July 28, 2024 | | :--- | :--- | :--- | | Three Months Ended | $1,699 | $1,686 | | Six Months Ended | $3,358 | $3,564 | Supplemental Lease Information (in thousands, except years/percentage) | Metric | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | | Cash paid for lease liabilities | $3,954 | $4,035 | | Right-of-use assets obtained | $4,277 | $2,428 | | Weighted-average remaining lease term–operating leases (in years) | 4.6 | N/A | | Weighted-average discount rate on remaining lease payments–operating leases | 6.9% | N/A | Maturities of Lease Liabilities as of July 27, 2025 (in thousands) | Fiscal Year Ending | Amount | | :--- | :--- | | 2026 (remaining six months) | $3,979 | | 2027 | $7,854 | | 2028 | $6,675 | | 2029 | $5,354 | | 2030 | $3,418 | | Thereafter | $4,429 | | **Total lease payments** | **$31,709** | | Less: imputed interest | $(4,696) | | **Total** | **$27,013** | [Note 11: Commitments and Contingencies](index=35&type=section&id=Note%2011:%20Commitments%20and%20Contingencies) Outlines the company's involvement in legal claims, environmental remediation estimates, and deferred compensation liabilities - The Company is involved in various legal claims, including a complaint from Harman Becker Automotive Systems GmbH and putative class action/derivative lawsuits related to its CopperEdge products[128](index=128&type=chunk)[129](index=129&type=chunk) - The estimated remaining probable loss for environmental remediation at a former Newbury Park facility is between **$0.1 million and $1.6 million** as of July 27, 2025, with **$7.8 million** already paid[132](index=132&type=chunk) Deferred Compensation Liabilities (in thousands) | Category | July 27, 2025 | January 26, 2025 | | :--- | :--- | :--- | | Accrued liabilities | $2,940 | $2,930 | | Other long-term liabilities | $40,859 | $36,381 | | **Total deferred compensation liabilities** | **$43,799** | **$39,311** | [Note 12: Restructuring](index=37&type=section&id=Note%2012:%20Restructuring) Details restructuring activities, including employee termination benefits and other charges, and their impact on the company's financial position Restructuring Activity (in thousands) | Category | One-time employee termination benefits | Other restructuring | Total | | :--- | :--- | :--- | :--- | | Balance at January 26, 2025 | $787 | $— | $787 | | Charges | $2,669 | $21 | $2,690 | | Cash payments | $(2,957) | $(21) | $(2,978) | | **Balance at July 27, 2025** | **$499** | **$—** | **$499** | - Restructuring charges decreased by **$0.1 million** in Q2 FY2026 compared to Q2 FY2025, and by **$1.1 million** in 6M FY2026 compared to 6M FY2025, primarily due to structural reorganization actions and Sierra Wireless Acquisition synergies in prior periods[140](index=140&type=chunk) [Note 13: Concentration of Risk](index=38&type=section&id=Note%2013:%20Concentration%20of%20Risk) Highlights significant customer sales and receivables concentrations and the company's reliance on a limited number of third-party suppliers and subcontractors Significant Customer Net Sales Concentration (percentage of net sales) | Customer | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Customer A | 15% | 13% | 12% | 13% | | Customer B | * | 10% | * | 10% | Significant Customer Net Receivables Concentration (percentage of net receivables) | Customer | July 27, 2025 | January 26, 2025 | | :--- | :--- | :--- | | Customer A | * | 12% | | Customer B | 12% | * | | Customer C | 11% | 12% | - The Company relies on a limited number of third-party subcontractors and suppliers for silicon wafers, chipsets, electronic components, manufacturing, packaging, and testing, primarily located in the U.S., China, Israel, Japan, Taiwan, Vietnam, and Malaysia[143](index=143&type=chunk) [Note 14: Segment Information](index=39&type=section&id=Note%2014:%20Segment%20Information) Provides financial information by reportable segment (Signal Integrity, Analog Mixed Signal and Wireless, IoT Systems and Connectivity) and geographic region - Semtech operates three reportable segments: Signal Integrity (SIP), Analog Mixed Signal and Wireless (AMW), and IoT Systems and Connectivity (ISC)[145](index=145&type=chunk) Net Sales by Reportable Segment (in thousands) | Segment | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Signal Integrity | $76,758 | $59,434 | $150,279 | $117,733 | | Analog Mixed Signal and Wireless | $92,042 | $79,311 | $182,665 | $154,655 | | IoT Systems and Connectivity | $88,789 | $76,610 | $175,705 | $149,072 | | **Total Net Sales** | **$257,589** | **$215,355** | **$508,649** | **$421,460** | Gross Profit by Reportable Segment (in thousands) | Segment | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Signal Integrity | $47,859 | $36,768 | $96,023 | $71,529 | | Analog Mixed Signal and Wireless | $54,560 | $45,399 | $111,005 | $86,103 | | IoT Systems and Connectivity | $35,054 | $27,111 | $64,977 | $54,205 | | Unallocated costs | $(3,368) | $(3,814) | $(6,611) | $(6,781) | | **Total Gross Profit** | **$134,105** | **$105,464** | **$265,394** | **$205,056** | Net Sales by Geographic Region (percentage of total net sales) | Region | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Asia-Pacific | 65% | 65% | 64% | 64% | | North America | 24% | 21% | 23% | 22% | | Europe | 11% | 14% | 13% | 14% | | China (including Hong Kong) | 45% | 45% | 44% | 44% | | United States | 19% | 20% | 18% | 20% | [Note 15: Stock Repurchase Program](index=41&type=section&id=Note%2015:%20Stock%20Repurchase%20Program) Details the remaining authorization under the stock repurchase program and confirms no activity during the reported periods - As of July 27, 2025, the Company's stock repurchase program had a remaining authorization of **$209.4 million**[151](index=151&type=chunk) - There was no activity under the stock repurchase program during the three and six months ended July 27, 2025, and July 28, 2024[151](index=151&type=chunk) [Note 16: Derivatives and Hedging Activities](index=42&type=section&id=Note%2016:%20Derivatives%20and%20Hedging%20Activities) Describes the company's interest rate swap agreement used for hedging and reports realized gains on these derivative instruments - An interest rate swap agreement, partially terminated in Q2 FY2026, hedges the variability of interest payments on **$75.0 million** of Term Loans at a fixed Term SOFR rate of **3.58%** as of July 27, 2025[152](index=152&type=chunk) Realized Gain on Interest Rate Swap Agreements (in thousands) | Period | July 27, 2025 | July 28, 2024 | | :--- | :--- | :--- | | Three Months Ended | $0.1 | $2.8 | | Six Months Ended | $0.2 | $5.6 | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Semtech's financial condition and operational results, covering business segments, macroeconomic impacts, performance drivers, and detailed analysis of net sales, gross profit, operating expenses, and liquidity [Overview](index=43&type=section&id=Overview) Describes Semtech's three operating segments: Signal Integrity, Analog Mixed Signal and Wireless, and IoT Systems and Connectivity, and their target end markets - Semtech operates three segments: Signal Integrity (optical and copper data communications), Analog Mixed Signal and Wireless (protection devices, LoRa® technology), and IoT Systems and Connectivity (IoT modules, gateways, routers, and connected services)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) - The Company's products address global Infrastructure (data centers, PON, base stations), High-End Consumer (smartphones, TVs, wearables), and Industrial (IoT applications, medical, automotive) end markets[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) [Impact of Macroeconomic Conditions](index=44&type=section&id=Impact%20of%20Macroeconomic%20Conditions) Discusses the impact of macroeconomic factors, including tariffs, market volatility, inflation, and interest rates, on customer demand and channel inventories - The U.S. government imposed additional tariffs on imported goods starting in Q1 FY2026, with the ultimate impact remaining uncertain[167](index=167&type=chunk) - Macroeconomic factors such as market volatility, inflationary pressures, elevated interest rates, and geopolitical tensions have caused uncertainty in end customer demand and resulted in elevated channel inventories[168](index=168&type=chunk) [Factors Affecting Our Performance](index=44&type=section&id=Factors%20Affecting%20Our%20Performance) Identifies key factors influencing performance, such as sales through distributors, international sales concentration, and the importance of design wins and new product releases - Net sales made through independent distributors accounted for **74% of total net sales** in both the second quarters of fiscal years 2026 and 2025[169](index=169&type=chunk) - Net sales outside the United States constituted **81% in Q2 FY2026** and **80% in Q2 FY2025**, with approximately **65% of net sales** to customers in the Asia-Pacific region in both periods[170](index=170&type=chunk) - Design wins and new product releases are key indicators of future potential sales growth, though they do not necessarily guarantee business awards or purchase commitments[171](index=171&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, including net sales, gross profit, operating expenses, interest expense, and income taxes for the reported periods [Net Sales](index=46&type=section&id=Net%20Sales) Details net sales by major end markets and reportable segments, highlighting growth drivers and year-over-year changes Net Sales by Major End Markets (in thousands, except percentages) | End Market | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Change | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Infrastructure | $73,351 | $52,942 | 39% | $146,184 | $108,919 | 34% | | High-End Consumer | $41,196 | $37,080 | 11% | $76,610 | $71,619 | 7% | | Industrial | $143,042 | $125,333 | 14% | $285,855 | $240,922 | 19% | | **Total** | **$257,589** | **$215,355** | **20%** | **$508,649** | **$421,460** | **21%** | - Total net sales increased by **19.6% year-over-year to $257.6 million** in Q2 FY2026 and by **20.7% year-over-year to $508.6 million** in 6M FY2026, driven by stronger demand in infrastructure and industrial end markets[173](index=173&type=chunk)[174](index=174&type=chunk) - Q2 FY2026 net sales growth was primarily driven by a **$20.4 million increase in Infrastructure** (led by data center sales) and a **$17.7 million increase in Industrial** (led by LoRa-enabled and IoT Hardware sales)[173](index=173&type=chunk) Net Sales by Reportable Segment (in thousands, except percentages) | Segment | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Change | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Signal Integrity | $76,758 | $59,434 | 29% | $150,279 | $117,733 | 28% | | Analog Mixed Signal and Wireless | $92,042 | $79,311 | 16% | $182,665 | $154,655 | 18% | | IoT Systems and Connectivity | $88,789 | $76,610 | 16% | $175,705 | $149,072 | 18% | | **Total** | **$257,589** | **$215,355** | **20%** | **$508,649** | **$421,460** | **21%** | - All reportable segments benefited from stronger demand in Q2 FY2026, with Signal Integrity sales up **$17.3 million** (data centers), Analog Mixed Signal and Wireless up **$12.7 million** (LoRa-enabled products, TVS), and IoT Systems and Connectivity up **$12.2 million** (IoT Hardware)[176](index=176&type=chunk) [Gross Profit](index=47&type=section&id=Gross%20Profit) Analyzes gross profit and gross margin by reportable segment, attributing changes to sales volume and product mix Gross Profit and Gross Margin by Reportable Segment (in thousands, except percentages) | Segment | Q2 FY2026 Gross Profit | Q2 FY2026 Gross Margin | Q2 FY2025 Gross Profit | Q2 FY2025 Gross Margin | 6M FY2026 Gross Profit | 6M FY2026 Gross Margin | 6M FY2025 Gross Profit | 6M FY2025 Gross Margin | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Signal Integrity | $47,859 | 62.4% | $36,768 | 61.9% | $96,023 | 63.9% | $71,529 | 60.8% | | Analog Mixed Signal and Wireless | $54,560 | 59.3% | $45,399 | 57.2% | $111,005 | 60.8% | $86,103 | 55.7% | | IoT Systems and Connectivity | $35,054 | 39.5% | $27,111 | 35.4% | $64,977 | 37.0% | $54,205 | 36.4% | | Unallocated costs | $(3,368) | N/A | $(3,814) | N/A | $(6,611) | N/A | $(6,781) | N/A | | **Total** | **$134,105** | **52.1%** | **$105,464** | **49.0%** | **$265,394** | **52.2%** | **$205,056** | **48.7%** | - Gross profit increased by **$28.6 million (27.1%) to $134.1 million** in Q2 FY2026 and by **$60.3 million (29.4%) to $265.4 million** in 6M FY2026, driven by higher sales and stronger demand across all segments[178](index=178&type=chunk)[180](index=180&type=chunk) - Gross margin improved to **52.1% in Q2 FY2026** (from 49.0%) and **52.2% in 6M FY2026** (from 48.7%), primarily due to higher volume and favorable product mix across segments[179](index=179&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) [Operating Expenses, net](index=48&type=section&id=Operating%20Expenses,%20net) Provides a detailed breakdown and analysis of operating expenses, including product development, selling, general and administrative, restructuring, and goodwill impairment Operating Expenses, Net (in thousands, except percentages) | Expense Category | Q2 FY2026 | Q2 FY2025 | Change | 6M FY2026 | 6M FY2025 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Product development and engineering | $48,198 | $40,084 | 20% | $95,727 | $81,688 | 17% | | Selling, general and administrative | $58,469 | $55,789 | 5% | $104,916 | $108,058 | (3)% | | Intangible amortization | $148 | $282 | (48)% | $295 | $589 | (50)% | | Restructuring | $1,491 | $1,541 | (3)% | $2,690 | $3,810 | (29)% | | Goodwill impairment | $41,991 | $— | 100% | $41,991 | $— | 100% | | **Total operating expenses, net** | **$150,297** | **$97,696** | **54%** | **$245,619** | **$194,145** | **27%** | - Product development and engineering expenses increased by **$8.1 million** in Q2 FY2026 and **$14.0 million** in 6M FY2026, primarily due to higher staffing-related costs and new product introduction expenses[184](index=184&type=chunk)[185](index=185&type=chunk) - Selling, general and administrative expenses increased in Q2 FY2026 due to staffing and consulting, but decreased in 6M FY2026 by **$3.1 million**, driven by lower share-based compensation and transaction/integration expenses[187](index=187&type=chunk)[188](index=188&type=chunk) - A **$42.0 million goodwill impairment charge** was recorded in Q2 and 6M FY2026 for the IoT Connected Services reporting unit, with no comparable charge in the prior fiscal year[191](index=191&type=chunk) [Interest Expense](index=49&type=section&id=Interest%20Expense) Explains the significant decrease in interest expense due to debt exchanges and repayments - Interest expense decreased significantly by **$23.3 million (81.5%) to $5.2 million** in Q2 FY2026 and by **$40.0 million (77.2%) to $11.8 million** in 6M FY2026[193](index=193&type=chunk) - The decrease was primarily due to interest savings resulting from the exchange of approximately **$188.1 million of 2028 Notes** for common stock and debt repayments totaling **$215.0 million** on the Revolving Credit Facility and **$476.4 million** on Term Loans[193](index=193&type=chunk) [Investment Impairments and Credit Loss Reserves, Net](index=49&type=section&id=Investment%20Impairments%20and%20Credit%20Loss%20Reserves,%20Net) Reports on investment impairments and credit loss reserves, noting no new charges in the current fiscal year - No investment impairments or credit loss reserves were recorded in the second quarter or first six months of fiscal year 2026[194](index=194&type=chunk) - In the first six months of fiscal year 2025, a **$1.1 million loss** was recorded primarily due to an other-than-temporary impairment on a non-marketable equity investment[194](index=194&type=chunk) [Provision for Income Taxes](index=49&type=section&id=Provision%20for%20Income%20Taxes) Discusses the income tax expense and the factors influencing the effective tax rate, including regional income mix and non-deductible items - Income tax expense increased to **$4.8 million** in Q2 FY2026 (from $4.2 million) and **$13.4 million** in 6M FY2026 (from $7.2 million)[195](index=195&type=chunk)[196](index=196&type=chunk) - The change in tax provision was primarily due to a regional mix of income, changes in valuation allowance, non-deductibility of goodwill impairment (for the six-month period), the impact of GILTI, and R&D credits[195](index=195&type=chunk)[196](index=196&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's liquidity position, including cash balances, credit facilities, and plans for funding future capital expenditures and debt repayment - As of July 27, 2025, the Company had **$168.6 million in cash and cash equivalents** and **$451.6 million of available undrawn borrowing capacity** on its Revolving Credit Facility[200](index=200&type=chunk) - Foreign subsidiaries held **$151.0 million of cash and cash equivalents** as of July 27, 2025, compared to $139.1 million at January 26, 2025[202](index=202&type=chunk) - The Revolving Credit Facility's total available borrowing capacity was increased by **$117.5 million to $455.0 million** via the Fourth Amendment on April 24, 2025[206](index=206&type=chunk) - The Company intends to fund future capital expenditures and debt repayment through cash flows from operating activities, existing cash balances, and additional draws on its Revolving Credit Facility[204](index=204&type=chunk)[218](index=218&type=chunk) [Credit Agreement](index=50&type=section&id=Credit%20Agreement) Details the Revolving Credit Facility and Term Loans, including borrowing capacity, outstanding amounts, and compliance with financial covenants - The Revolving Credit Facility's borrowing capacity is **$455.0 million**, maturing on January 12, 2028, and Term Loans mature on January 12, 2028[207](index=207&type=chunk) - As of July 27, 2025, the Company had **$146.2 million outstanding** under Term Loans and **$451.6 million available undrawn borrowing capacity** on the Revolving Credit Facility[208](index=208&type=chunk) - The Company was in compliance with all financial covenants in the Credit Agreement as of July 27, 2025[210](index=210&type=chunk) [Convertible Senior Notes Due 2027](index=51&type=section&id=Convertible%20Senior%20Notes%20Due%202027) Provides information on the outstanding 2027 Convertible Senior Notes, their conversion conditions, and related hedge transactions - The **1.625% Convertible Senior Notes due 2027** (2027 Notes) have **$319.5 million outstanding** as of July 27, 2025, and are not currently redeemable[212](index=212&type=chunk) - None of the conditions allowing holders of the 2027 Notes to convert had been met as of July 27, 2025[212](index=212&type=chunk) - Approximately **$72.6 million of net proceeds** from the 2027 Notes were used for Convertible Note Hedge Transactions, partially offset by **$42.9 million from Warrant sales**, resulting in a net cost of **$29.7 million** recorded as a reduction to additional paid-in capital[213](index=213&type=chunk) [Convertible Senior Notes Due 2028](index=51&type=section&id=Convertible%20Senior%20Notes%20Due%202028) Details the outstanding 2028 Convertible Senior Notes, their conversion rights, and prior exchanges for common stock - Approximately **$62.0 million of the 4.00% Convertible Senior Notes due 2028** (2028 Notes) remained outstanding as of July 27, 2025[214](index=214&type=chunk) - One condition allowing holders to convert the 2028 Notes was met, granting conversion rights from July 28, 2025, through October 24, 2025, with the Company intending to use its Revolving Credit Facility to settle the obligation if holders elect to convert[215](index=215&type=chunk) - In July 2024, approximately **$188.1 million** in aggregate principal amount of 2028 Notes were exchanged for **10,378,431 shares of common stock**[216](index=216&type=chunk) [Capital Expenditures and Research and Development](index=51&type=section&id=Capital%20Expenditures%20and%20Research%20and%20Development) Discusses significant expenditures for new product development and manufacturing, and their planned financing sources - The Company incurs significant expenditures for new product development, design, and manufacturing, focusing on high-growth and profitable market opportunities[218](index=218&type=chunk) - These expenditures are planned to be financed by cash generated from operating activities, existing cash balances, and additional draws on the Revolving Credit Facility[218](index=218&type=chunk) [Portfolio Rationalization](index=52&type=section&id=Portfolio%20Rationalization) Describes the ongoing portfolio rationalization review aimed at aligning non-core assets with the company's strategic vision and margin profile - The Company is conducting a portfolio rationalization review to identify and review potential strategic alternatives for non-core assets, aiming to align its portfolio with its strategic vision and preferred margin profile[219](index=219&type=chunk) [Purchases under our Stock Repurchase Program](index=52&type=section&id=Purchases%20under%20our%20Stock%20Repurchase%20Program) Reports on the remaining authorization for the stock repurchase program and confirms no activity during the reported periods - As of July 27, 2025, the stock repurchase program had a remaining authorization of **$209.4 million**[221](index=221&type=chunk) - No shares were repurchased under the program in the first six months of fiscal year 2026 or 2025[221](index=221&type=chunk) [Working Capital](index=52&type=section&id=Working%20Capital) Explains the factors influencing working capital fluctuations, including market demand, inventory management, and debt transactions - Working capital fluctuates based on end-market demand and the effective management of receivables, inventory, and payables, with potential impacts from acquisitions and debt instrument transactions[222](index=222&type=chunk) [Material Cash Requirements](index=52&type=section&id=Material%20Cash%20Requirements) States that there have been no material changes to cash requirements from the prior annual report, except as disclosed - There have been no material changes to cash requirements from those disclosed in the Annual Report on Form 10-K for the fiscal year ended January 26, 2025, except as otherwise disclosed[223](index=223&type=chunk) [Cash Flows](index=52&type=section&id=Cash%20Flows) Summarizes cash flows from operating, investing, and financing activities, highlighting key drivers of changes Summary of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended July 27, 2025 | Six Months Ended July 28, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $72,219 | $(5,084) | | Net cash used in investing activities | $(10,202) | $(2,672) | | Net cash used in financing activities | $(47,018) | $(4,550) | | Effect of foreign exchange rate changes on cash and cash equivalents | $1,818 | $(351) | | **Net increase (decrease) in cash and cash equivalents** | **$16,817** | **$(12,657)** | - Operating cash flows in 6M FY2026 were favorably impacted by a **20.7% increase in net sales**, significantly lower interest payments on debt, and reduced restructuring/income tax payments, but unfavorably by increased annual bonus payments and inventory spend[226](index=226&type=chunk) - Investing activities in 6M FY2026 included **$4.5 million in capital expenditures** and **$2.8 million in intangible purchases**[227](index=227&type=chunk)[229](index=229&type=chunk) - Financing activities in 6M FY2026 included **$35.0 million in Term Loan prepayments** and **$12.2 million for employee share-based compensation payroll taxes**[231](index=231&type=chunk)[233](index=233&type=chunk) [Critical Accounting Estimates](index=53&type=section&id=Critical%20Accounting%20Estimates) Confirms consistency of critical accounting policies with the annual report, noting revised goodwill assumptions due to reduced earnings forecasts - Critical accounting policies and estimates are consistent with the Annual Report, but certain assumptions for goodwill were revised in Q2 FY2026 due to reduced earnings forecasts for the IoT Connectivity Services reporting unit[234](index=234&type=chunk)[235](index=235&type=chunk) - A **$42.0 million goodwill impairment charge** was recorded in Q2 and 6M FY2026 for the IoT Connected Services reporting unit[235](index=235&type=chunk) [Recent Accounting Pronouncements](index=53&type=section&id=Recent%20Accounting%20Pronouncements) Refers to Note 1 for a discussion of recent accounting pronouncements and their potential impact - For a discussion of recent accounting pronouncements, refer to Note 1, Organization and Basis of Presentation, in the interim unaudited condensed consolidated financial statements[237](index=237&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines Semtech's exposure to various market risks, including commodity price fluctuations, foreign currency exchange rate volatility, and interest rate and credit risks, along with the strategies and potential impacts associated with managing these exposures [Commodity Risk](index=54&type=section&id=Commodity%20Risk) Discusses the company's exposure to fluctuating commodity raw material prices, particularly gold, and its potential impact on costs and gross margins - The Company is exposed to risk from fluctuating market prices of certain commodity raw materials, particularly gold, which can lead to higher supplier costs and potential declines in gross margins if not offset by increased selling prices or manufacturing efficiencies[240](index=240&type=chunk) [Foreign Currency Risk](index=54&type=section&id=Foreign%20Currency%20Risk) Identifies major foreign currency exposures and quantifies the potential adverse impact of exchange rate changes on income before taxes - The Company's largest foreign currency exposures are from the Australian Dollar, Canadian Dollar, Euro, Great British Pound, Swiss Franc, and Mexican Peso[241](index=241&type=chunk) - A reasonably possible adverse change of **10%** in foreign exchange rates for all currencies could result in a **$2.2 million adverse impact** on income before taxes for the quarter ended July 27, 2025[242](index=242&type=chunk) [Interest rate and credit risk](index=54&type=section&id=Interest%20rate%20and%20credit%20risk) Details the company's exposure to interest rate risk on floating-rate debt and its strategy for managing credit risk in investments - The Company is subject to interest rate risk on its **$71.2 million of unhedged floating-rate outstanding indebtedness** as of July 27, 2025[245](index=245&type=chunk) - A **one percentage point increase in Term SOFR** would have an adverse impact of **$0.7 million** on interest expense[245](index=245&type=chunk) - The Company's investment strategy limits credit risk by restricting investments to high-quality, short-term debt instruments, including U.S. Treasury, Federal agency securities, high-quality money market funds, and time deposits[247](index=247&type=chunk) [ITEM 4. Controls and Procedures](index=56&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of July 27, 2025[250](index=250&type=chunk) - No changes to internal control over financial reporting occurred during the fiscal quarter ended July 27, 2025, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[251](index=251&type=chunk) [Part II - Other Information](index=57&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) Provides additional information on legal proceedings, risk factors, equity sales, defaults, mine safety, and insider trading arrangements [ITEM 1. Legal Proceedings](index=57&type=section&id=ITEM%201.%20Legal%20Proceedings) Refers to Note 11 for details on material legal proceedings and specifies the disclosure threshold for environmental sanctions - Information about material legal proceedings is incorporated by reference from Note 11, Commitments and Contingencies[253](index=253&type=chunk) - Environmental proceedings are disclosed unless monetary sanctions are reasonably believed to be less than **$1.0 million**[254](index=254&type=chunk) [ITEM 1A. Risk Factors](index=57&type=section&id=ITEM%201A.%20Risk%20Factors) Confirms no material changes to the company's risk factors compared to those disclosed in the prior annual report - The risk factors associated with the Company's business have not materially changed compared to those disclosed in the Annual Report on Form 10-K for the fiscal year ended January 26, 2025[256](index=256&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) States that there were no unregistered sales of equity securities or issuer purchases of equity securities during the reported period - There were no recent unregistered sales of equity securities or issuer purchases of equity securities[257](index=257&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=57&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) Reports that there were no defaults upon senior securities during the period - There were no defaults upon senior securities[258](index=258&type=chunk) [ITEM 4. Mine Safety Disclosures](index=57&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) Indicates that the disclosure requirement for mine safety is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[259](index=259&type=chunk) [ITEM 5. Other Information](index=57&type=section&id=ITEM%205.%20Other%20Information) Provides details on Rule 10b5-1 trading arrangements adopted by directors and executive officers during the fiscal quarter Insider Trading Arrangements Adopted (Q2 FY2026) | Name and Title | Action | Date of Action | Rule 10b5-1 | Total Shares to be Sold | Duration | | :--- | :--- | :--- | :--- | :--- | :--- | | Gregory Fischer, Director | Adopt | 5/30/2025 | X | 1,500 | Aug 29, 2025 through May 30, 2026 | | Mark Lin, EVP and Chief Financial Officer | Adopt | 6/23/2025 | X | 302,045 | Sep 21, 2025 through Oct 16, 2026 | | Paul V. Walsh Jr., Director | Adopt | 7/9/2025 | X | 10,500 | Oct 22, 2025 through Jun 23, 2027 | - The total shares to be sold under these trading plans include shares issuable pursuant to unvested restricted stock unit awards (RSUs) and unvested performance stock units (PSUs), with the actual number dependent on performance conditions and reduced by tax withholding obligations[264](index=264&type=chunk) [ITEM 6. Exhibits](index=59&type=section&id=ITEM%206.%20Exhibits) Lists the documents filed as exhibits to the Quarterly Report, including corporate governance documents, compensation plans, and certifications from the Chief Executive Officer and Chief Financial Officer - Key exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, Amended and Restated Long-Term Equity Incentive Plan, Director Compensation Policy, and certifications from the CEO and CFO[267](index=267&type=chunk) [Signatures](index=60&type=section&id=SIGNATURES) Confirms the due authorization and signing of the Quarterly Report by the Executive Vice President and Chief Financial Officer - The report was signed by Mark Lin, Executive Vice President and Chief Financial Officer (Principal Accounting and Financial Officer), on August 26, 2025[270](index=270&type=chunk)