Core Viewpoint - Semtech Corporation (SMTC.US) experienced a significant increase of over 16%, reaching a six-month high of $59.40, driven by record net sales and substantial debt reduction in Q2 [1] Financial Performance - The company reported record net sales for the second quarter, indicating strong performance in the high-performance computing solutions sector [1] - Semtech has set a target of $266 million in net sales for the third quarter, primarily fueled by robust demand in data centers and LoRa technology [1] Market Position - Analysts suggest that the company's performance positions it favorably for continued growth in the high-performance computing solutions market [1]

Core Insights - Semtech Corporation (NASDAQ: SMTC) released its 2Q26 earnings report, with the stock showing little change initially but experiencing a brief decline before reversing gains shortly after the earnings call [1] Company Performance - The stock of Semtech Corporation remained relatively unchanged until the morning following the earnings release, indicating a stable market reaction to the results [1] - There was a notable moment where the stock slid in the initial minutes leading into the earnings call but managed to completely reverse this decline within 15 minutes [1] Market Context - The commentary reflects a broader perspective on market dynamics, particularly in the technology sector, emphasizing the importance of momentum in investment strategies [1]

Core Viewpoint - The company, Semtech Corporation (SMTC.US), experienced a significant stock increase of over 16%, reaching a six-month high of $59.40, driven by record net sales and substantial debt reduction in the second quarter [1] Financial Performance - The company reported record net sales in the second quarter, indicating strong performance in the high-performance computing solutions sector [1] - Analysts believe the company's performance positions it favorably for continued growth in this sector [1] Future Outlook - Semtech has set a target of $266 million in net sales for the third quarter, primarily driven by strong demand in data centers and LoRa technology [1]

Core Insights - Semtech Corporation (SMTC) reported better-than-expected results for Q2 fiscal 2026, with non-GAAP earnings of 41 cents per share, exceeding the Zacks Consensus Estimate by a penny and reflecting a significant increase from 11 cents in the same quarter last year [1][9] - The company's revenue for Q2 fiscal 2026 was $257.6 million, surpassing the Zacks Consensus Estimate by 0.6% and showing a 20% year-over-year growth, driven by strong performance in data centers and other end markets [3][9] Revenue Performance - Q2 revenues were supported by substantial growth across various end markets, with infrastructure market sales reaching $73.4 million (28.5% of net sales), up 38.8% year-over-year, primarily due to demand for data centers [4] - Industrial market sales amounted to $143 million (55.5% of net sales), reflecting a 14.1% increase year-over-year, while high-end consumer market sales totaled $41.2 million (16% of net sales), up 11.1% year-over-year [4][5] Product Line Performance - Sales from Signal Integrity, which accounted for 29.8% of net sales, totaled $76.8 million, marking a 29.3% year-over-year increase [6] - Analog Mixed Signal & Wireless sales reached $92 million (35.7% of net sales), up 16% year-over-year, while IoT System and Connectivity sales totaled $88.8 million (34.5% of net sales), also up 16% year-over-year [6] Margin and Operating Performance - Non-GAAP gross margin improved to 53.2%, expanding 280 basis points year-over-year, while adjusted operating expenses were $88.4 million, reflecting a 13.5% increase year-over-year [7] - Non-GAAP operating income surged 59.3% year-over-year to $48.6 million, with the non-GAAP operating margin improving to 18.8% from 14.2% in the prior year [7][9] Balance Sheet and Cash Flow - As of July 26, 2025, Semtech's cash and cash equivalents totaled $168.6 million, an increase from $156.5 million as of April 27, 2025, while long-term debt decreased to $518.9 million from $542.6 million [10] - The company generated operating cash flow of $44.4 million and free cash flow of $41.5 million during Q2, with first-half fiscal 2026 operating and free cash flows of $72.2 million and $67.7 million, respectively [10] Future Guidance - For Q3, Semtech expects net sales to be around $266 million (+/- $5 million), indicating an 11.8% year-over-year rise, with anticipated growth in infrastructure end-market sales driven by data center demand [11] - The company projects a non-GAAP gross margin of 53% (+/- 50 bps) and non-GAAP earnings of 44 cents (+/- 3 cents) per share, reflecting a 69.2% year-over-year increase [12]

Group 1 - Semtech reported revenue of $257.6 million for the quarter ended July 2025, reflecting a year-over-year increase of 19.6% [1] - The earnings per share (EPS) for the quarter was $0.41, significantly up from $0.11 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $256.04 million by 0.61%, while the EPS also surpassed the consensus estimate of $0.40 by 2.5% [1] Group 2 - Key metrics indicate that Semtech's stock has returned -3.7% over the past month, contrasting with the Zacks S&P 500 composite's increase of 2.7% [3] - Semtech currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3] Group 3 - Net Sales for the IoT Systems and Connectivity segment were reported at $88.8 million, slightly below the average estimate of $90.42 million [4] - The Signal Integrity segment achieved net sales of $76.8 million, which is a 29.2% increase compared to the year-ago quarter, but also fell short of the average estimate of $77.92 million [4] - The Analog Mixed Signal and Wireless segment reported net sales of $92 million, exceeding the two-analyst average estimate of $87.68 million [4]

Group 1 - Semtech reported quarterly earnings of $0.41 per share, exceeding the Zacks Consensus Estimate of $0.40 per share, and showing a significant increase from $0.11 per share a year ago, representing an earnings surprise of +2.50% [1] - The company achieved revenues of $257.6 million for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 0.61% and increasing from $215.35 million year-over-year [2] - Semtech has outperformed consensus EPS estimates three times over the last four quarters and has topped consensus revenue estimates four times during the same period [2] Group 2 - The stock has underperformed the market, losing about 17.4% since the beginning of the year, while the S&P 500 has gained 10% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $0.44 on revenues of $264.8 million, and for the current fiscal year, it is $1.66 on revenues of $1.04 billion [7] Group 3 - The Zacks Industry Rank places the Semiconductor - Analog and Mixed sector in the top 11% of over 250 Zacks industries, indicating strong potential for outperformance compared to lower-ranked industries [8] - The estimate revisions trend for Semtech was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6]

Financial Data and Key Metrics Changes - For Q2, the company reported record net sales of $257.6 million, up 20% year over year and marking the sixth consecutive quarter of growth [25][27] - Adjusted gross margin was 53.2%, down 30 basis points sequentially but up 280 basis points year over year [25][26] - Adjusted operating income was $48.6 million, resulting in an adjusted operating margin of 18.8%, up 460 basis points year over year [27] - Adjusted diluted earnings per share increased to $0.41, up from $0.11 a year ago [28] Business Line Data and Key Metrics Changes - Infrastructure net sales reached $73.4 million, up 1% sequentially and up 39% year over year, driven by record revenues in the data center business [9][10] - Data center net sales were $52.2 million, up 1% sequentially and up 92% year over year [10] - High-end consumer net sales were $41.2 million, up 16% sequentially and up 11% year over year [17] - Industrial net sales were $143 million, slightly up sequentially and up 14% year over year [19] Market Data and Key Metrics Changes - The company noted strong demand in the data center market, with expectations for continued growth driven by increased CapEx spending from cloud service providers [41][42] - The industrial end market showed growth in applications including home security systems and smart appliances, with LoRa-enabled solutions net sales at $36.9 million, down 5% sequentially but up 29% year over year [19][20] Company Strategy and Development Direction - The company is focused on strengthening its balance sheet, having reduced debt significantly, resulting in an adjusted debt leverage ratio of 1.6, down from 8.8 a year ago [7][30] - The strategy includes rationalizing the portfolio and increasing investment in core assets such as data center, LoRa, and Persei, which have contributed to net sales momentum [7][9] - The company aims to transform into a higher growth and more profitable entity, with a focus on portfolio optimization and strategic investments in R&D [8][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the data center market, citing strong forecasts for 2026 and beyond, despite some caution in the Chinese market due to GPU availability [41][42] - The company anticipates continued strong demand for its fiber edge products and is preparing for significant volume ramps in 2026 [11][12] - Management highlighted the importance of low power and low latency solutions in meeting the increasing bandwidth requirements [12][16] Other Important Information - The company recorded a non-cash goodwill impairment charge of $41.9 million from its Connected Services business, reflecting a reassessment of this business's goodwill balance [28][29] - Operating cash flow for Q2 was $44.4 million, up 60% from the previous quarter and up from negative $5 million a year ago [29] Q&A Session Summary Question: What is the outlook for LPO opportunities and timing? - Management indicated that LPO deployment is expected to start in Q4, with various customers at different stages of testing and qualification [36][38] Question: How is the general state of data center spending? - Management noted strong conviction among cloud service providers to increase CapEx spending for data center capacity and AI capabilities, with optimistic forecasts for 2026 [40][41] Question: What is the outlook for CopperEdge and broader adoption? - Management reported strong traction with over 20 customers engaged, with expectations for high volume ramps in Q4 or 2026 [46][48] Question: What is the expected performance of LoRa in the coming quarters? - Management expressed confidence in LoRa's demand, expecting quarterly revenue between $30 million to $40 million, driven by new product capabilities [56][58] Question: What are the expectations for the ACC revenue ramp? - Management clarified that the volume ramp for ACC is expected to start in Q4, with specific applications driving demand [94] Question: How does the company view the general business environment and bookings? - Management reported strong booking activities across various segments, indicating positive momentum for future quarters [101][102]

Financial Data and Key Metrics Changes - For Q2, the company reported record net sales of $257.6 million, up 20% year over year and marking the sixth consecutive quarter of growth [25][24] - Adjusted gross margin was 53.2%, down 30 basis points sequentially but up 280 basis points year over year [25] - Adjusted operating income was $48.6 million, resulting in an adjusted operating margin of 18.8%, up 460 basis points year over year [26] - Adjusted diluted earnings per share increased to $0.41, up from $0.11 a year ago [28] - The adjusted debt leverage ratio improved to 1.6, down from 8.8 a year ago [27] Business Line Data and Key Metrics Changes - Infrastructure net sales reached $73.4 million, up 1% sequentially and up 39% year over year, driven by record revenues in the data center business [9] - Data center net sales were $52.2 million, up 1% sequentially and up 92% year over year [10] - High-end consumer net sales were $41.2 million, up 16% sequentially and up 11% year over year [17] - Industrial net sales were $143 million, up slightly sequentially and up 14% year over year [19] - IoT systems hardware business recorded net sales of $64.8 million, up 2% sequentially and up 24% year over year [21] Market Data and Key Metrics Changes - The company noted strong demand in the data center market, with expectations for continued growth driven by increased CapEx spending from cloud service providers [39] - In China, CSPs showed cautious booking activity due to GPU availability but have recently seen improved bookings [40] - The company is experiencing strong momentum in the 5G market, particularly with IoT transitions from 4G to 5G [22] Company Strategy and Development Direction - The company is focused on strengthening its balance sheet, having reduced debt significantly and improved its net leverage ratio [6] - There is an emphasis on portfolio optimization and increased investment in core assets such as data center, LoRa, and Persei [6][8] - The company aims to transform into a higher growth and more profitable entity, with a strong focus on R&D to support long-term growth [5][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the data center market's growth cycle, driven by higher data rates and increased demand for fiber edge products [11] - The company anticipates continued strong opportunities in the data center market, despite some caution from CSPs in China [40] - Management highlighted the importance of low power and low latency solutions in meeting the evolving demands of data centers [12] Other Important Information - The company recorded a non-cash goodwill impairment charge of $41.9 million from its Connected Services business [28] - The company expects net sales for Q3 to be approximately $266 million, reflecting a 12% year-over-year increase [30] Q&A Session Summary Question: What is the timing for LPO opportunities? - Management indicated that LPO deployments are expected to start in Q4, with some customers at different stages of testing and qualification [36][37] Question: What is the outlook for data center spending? - Management expressed strong confidence in continued data center spending, with CSPs forecasting increased CapEx for 2026 and beyond [38][39] Question: What is the outlook for CopperEdge adoption? - Management reported strong traction with CopperEdge, with several key customers engaged in testing and qualification [46] Question: What is the expected performance of LoRa? - Management expects LoRa revenue to be between $30 million to $40 million quarterly, driven by new applications and enhanced capabilities [56] Question: What are the expectations for ACC revenue? - Management expects ACC revenue to ramp up in Q4, with 100 gig per lane cables leading the initial demand [95] Question: What are the expectations for the Tri Edge business? - Management plans to continue developing the Tri Edge product line, focusing on low power consumption and signal integrity [86][88]

Non-GAAP Financial Measures QUARTERLY EARNINGS PRESENTATION Q2'26 NASDAQ: SMTC 1 | QUARTERLY EARNINGS PRESENTATION | Q2'26 Safe Harbor Statement This presentation contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, as amended, based on the Company's current expectations, estimates and projections about its operations, industry, financial condition, performance, results of operations, and liquidity. Forward-looking ...

Executive Summary & Highlights This section outlines Semtech Corporation's Q2 FY26 financial performance and management insights [Company Overview](index=1&type=section&id=Item%201.1.%20Company%20Overview) Semtech Corporation is a leading provider of high-performance semiconductor, Internet of Things (IoT) systems, and cloud connectivity service solutions, focused on delivering technology for a smarter, more connected, and sustainable planet - Semtech is a leading provider of high-performance semiconductor, IoT systems, and cloud connectivity service solutions[2](index=2&type=chunk)[22](index=22&type=chunk) [Q2 FY26 Financial Highlights](index=1&type=section&id=Item%201.2.%20Q2%20FY26%20Financial%20Highlights) Semtech reported record net sales of $257.6 million, representing 20% year-over-year growth, with improved non-GAAP adjusted gross and operating margins, and significantly increased non-GAAP adjusted diluted EPS Q2 FY26 Key Financial Highlights | Metric | Q2'26 | Q2'25 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Net sales (million USD) | $257.6 | $215.4 | +20% | | GAAP gross margin (%) | 52.1% | 49.0% | +3.1 pp | | Non-GAAP adjusted gross margin (%) | 53.2% | 50.4% | +2.8 pp | | GAAP operating margin (%) | (6.3)% | 3.6% | -9.9 pp | | Non-GAAP adjusted operating margin (%) | 18.8% | 14.2% | +4.6 pp | | GAAP diluted loss per share (USD) | $(0.31) | $(2.61) | +$2.30 | | Non-GAAP adjusted diluted EPS (USD) | $0.41 | $0.11 | +$0.30 | [Management Commentary](index=1&type=section&id=Item%201.3.%20Management%20Commentary) CEO Hong Hou highlighted strong year-over-year financial performance driven by deep customer engagement, operational discipline, and targeted investments, while CFO Mark Lin noted improved cash flows enabling accelerated debt reduction - CEO Hong Hou attributed strong YoY financial performance to deep customer engagement, operational discipline, and a culture of excellence, positioning the company for high-growth opportunities[3](index=3&type=chunk) - CFO Mark Lin emphasized that strong net sales growth and improving profitability resulted in meaningful sequential and year-over-year increases in operating and free cash flows, leading to accelerated debt reduction and a reduced net leverage ratio[3](index=3&type=chunk) Financial Results This section details Semtech's Q2 FY26 financial performance, including GAAP and non-GAAP results, and provides the Q3 FY26 outlook [Second Quarter Fiscal Year 2026 Results](index=2&type=section&id=Item%202.1.%20Second%20Quarter%20Fiscal%20Year%202026%20Results) Semtech reported Q2 FY26 net sales of $257.6 million, a GAAP net loss of $(27.1) million due to a goodwill impairment, and a non-GAAP adjusted net income of $36.7 million GAAP Financial Results (Q2'26 vs Q1'26 vs Q2'25) | Metric | Q2'26 | Q1'26 | Q2'25 | | :-------------------------- | :------ | :------ | :------ | | Net sales (million USD) | $257.6 | $251.1 | $215.4 | | Gross margin (%) | 52.1% | 52.3% | 49.0% | | Operating expenses, net (million USD) | $150.3 | $95.3 | $97.7 | | Operating (loss) income (million USD) | $(16.2) | $36.0 | $7.8 | | Operating margin (%) | (6.3)% | 14.3% | 3.6% | | Interest expense, net (million USD) | $4.7 | $6.2 | $28.1 | | Goodwill impairment (million USD) | $42.0 | — | — | | Net (loss) income (million USD) | $(27.1) | $19.3 | $(170.3) | | Diluted (loss) earnings per share (USD) | $(0.31) | $0.22 | $(2.61) | Non-GAAP Financial Results (Q2'26 vs Q1'26 vs Q2'25) | Metric | Q2'26 | Q1'26 | Q2'25 | | :-------------------------- | :------ | :------ | :------ | | Net sales (million USD) | $257.6 | $251.1 | $215.4 | | Adjusted gross margin* (%) | 53.2% | 53.5% | 50.4% | | Adjusted operating expenses, net* (million USD) | $88.4 | $86.6 | $77.9 | | Adjusted operating income* (million USD) | $48.6 | $47.6 | $30.5 | | Adjusted operating margin* (%) | 18.8% | 19.0% | 14.2% | | Adjusted interest expense, net* (million USD) | $4.1 | $5.0 | $20.5 | | Adjusted net income* (million USD) | $36.7 | $33.9 | $8.1 | | Adjusted diluted earnings per share* (USD) | $0.41 | $0.38 | $0.11 | | Adjusted EBITDA* (million USD) | $56.5 | $55.4 | $40.5 | | Adjusted EBITDA margin* (%) | 21.9% | 22.1% | 18.8% | [Third Quarter Fiscal Year 2026 Outlook](index=2&type=section&id=Item%202.2.%20Third%20Quarter%20Fiscal%20Year%202026%20Outlook) For Q3 FY26, Semtech projects net sales of $266.0 million (±$5.0 million), with non-GAAP adjusted diluted EPS of $0.44 (±$0.03) and strong adjusted operating and EBITDA margins Q3 FY26 Non-GAAP Financial Outlook | Metric | Q3'26 Outlook | | :-------------------------- | :-------------- | | Net sales (million USD) | $266.0M (±$5.0M) | | Adjusted gross margin* (%) | 53.0% (±50 bps) | | Adjusted operating expenses, net* (million USD) | $88.8M (±$1.0M) | | Adjusted operating income* (million USD) | $52.2M (±$3.0M) | | Adjusted operating margin* (%) | 19.6% (±80 bps) | | Adjusted interest and other expense, net* (million USD) | $(5.0)M | | Adjusted normalized tax rate* (%) | 15% | | Adjusted diluted earnings per share* (USD) | $0.44 (±$0.03) | | Adjusted EBITDA* (million USD) | $60.0M (±$3.0M) | | Adjusted EBITDA margin* (%) | 22.5% (±80 bps) | | Non-GAAP diluted share count* (million) | 91.6M | Non-GAAP Financial Measures This section defines Semtech's non-GAAP financial measures and provides detailed reconciliations to their GAAP equivalents [Definition and Rationale](index=3&type=section&id=Item%203.1.%20Definition%20and%20Rationale) Semtech uses various non-GAAP measures to supplement GAAP results, excluding items like share-based compensation and goodwill impairment, to provide a clearer view of core operational performance and enhance comparability - Non-GAAP measures exclude share-based compensation, intangible amortization, transaction/integration costs, restructuring, litigation costs, and goodwill impairment[10](index=10&type=chunk)[12](index=12&type=chunk) - Management believes these exclusions provide useful information by reflecting core results and enhancing comparability between periods, despite some excluded items potentially being recurring[11](index=11&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk) - A full-year normalized non-GAAP tax rate of **15%** is projected for fiscal year 2026 to reduce quarterly variability and improve comparability[15](index=15&type=chunk) [Reconciliation of GAAP to Non-GAAP Results](index=11&type=section&id=Item%203.2.%20Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Results) This section provides detailed reconciliations from GAAP to Non-GAAP figures for gross margin, operating expenses, operating income, net income, diluted EPS, and EBITDA across Q2'26, Q1'26, and Q2'25, illustrating the specific adjustments made for each metric [Gross Margin Reconciliation](index=11&type=section&id=Item%203.2.1.%20Gross%20Margin%20Reconciliation) This subsection reconciles GAAP gross margin to non-GAAP adjusted gross margin, detailing adjustments for compensation and amortization | Metric | Q2'26 | Q1'26 | Q2'25 | | :-------------------------- | :------ | :------ | :------ | | Gross margin (GAAP) (%) | 52.1% | 52.3% | 49.0% | | Share-based compensation (%) | 0.2% | 0.3% | 0.3% | | Amortization of acquired technology (%) | 0.9% | 0.9% | 1.1% | | Adjusted gross margin (Non-GAAP) (%) | 53.2% | 53.5% | 50.4% | [Operating Expenses and Income Reconciliation](index=12&type=section&id=Item%203.2.2.%20Operating%20Expenses%20and%20Income%20Reconciliation) This subsection reconciles GAAP operating expenses and income to their non-GAAP adjusted counterparts, outlining various excluded items Operating Expenses, Net Reconciliation | Metric | Q2'26 | Q1'26 | Q2'25 | | :------------------------------------ | :------ | :------ | :------ | | Operating expenses, net (GAAP) (million USD) | $150.3 | $95.3 | $97.7 | | Share-based compensation (million USD) | $(16.7) | $(6.1) | $(16.4) | | Intangible amortization (million USD) | $(0.1) | $(0.1) | $(0.3) | | Transaction and integration related costs, net (million USD) | $(1.2) | $(1.1) | $(1.5) | | Restructuring and other reserves, net (million USD) | $(1.5) | $(1.2) | $(1.5) | | Litigation costs, net (million USD) | $(0.4) | $(0.2) | $(0.1) | | Goodwill impairment (million USD) | $(42.0) | — | — | | Adjusted operating expenses, net (Non-GAAP) (million USD) | $88.4 | $86.6 | $77.9 | Operating Income Reconciliation | Metric | Q2'26 | Q1'26 | Q2'25 | | :-------------------------- | :------ | :------ | :------ | | Operating (loss) income (GAAP) (million USD) | $(16.2) | $36.0 | $7.8 | | Share-based compensation (million USD) | $17.3 | $6.8 | $17.1 | | Intangible amortization (million USD) | $2.4 | $2.4 | $2.6 | | Transaction and integration related costs, net (million USD) | $1.2 | $1.1 | $1.5 | | Restructuring and other reserves, net (million USD) | $1.5 | $1.2 | $1.5 | | Litigation costs, net (million USD) | $0.4 | $0.2 | $0.1 | | Goodwill impairment (million USD) | $42.0 | — | — | | Adjusted operating income (Non-GAAP) (million USD) | $48.6 | $47.6 | $30.5 | [Net Income and EPS Reconciliation](index=13&type=section&id=Item%203.2.3.%20Net%20Income%20and%20EPS%20Reconciliation) This subsection reconciles GAAP net income and diluted EPS to their non-GAAP adjusted equivalents, including tax effects and other adjustments Net Income Reconciliation | Metric | Q2'26 | Q1'26 | Q2'25 | | :------------------------------------ | :------ | :------ | :------ | | Net (loss) income (GAAP) (million USD) | $(27.1) | $19.3 | $(170.3) | | Total Non-GAAP adjustments before taxes (million USD) | $65.3 | $12.9 | $175.6 | | Associated tax effect (million USD) | $(1.7) | $2.7 | $2.8 | | Equity method loss (income) (million USD) | $0.1 | $(1.0) | — | | Adjusted net income (Non-GAAP) (million USD) | $36.7 | $33.9 | $8.1 | Diluted EPS Reconciliation | Metric | Q2'26 | Q1'26 | Q2'25 | | :------------------------------------ | :------ | :------ | :------ | | Diluted (loss) earnings per share (GAAP) (USD) | $(0.31) | $0.22 | $(2.61) | | Adjustments per above (USD) | $0.72 | $0.16 | $2.72 | | Adjusted diluted earnings per share (Non-GAAP) (USD) | $0.41 | $0.38 | $0.11 | [Adjusted EBITDA Reconciliation](index=14&type=section&id=Item%203.2.4.%20Adjusted%20EBITDA%20Reconciliation) This subsection provides a reconciliation from GAAP net income to non-GAAP adjusted EBITDA, detailing various adjustments | Metric | Q2'26 | Q1'26 | Q2'25 | | :-------------------------- | :------ | :------ | :------ | | Net (loss) income (GAAP) (million USD) | $(27.1) | $19.3 | $(170.3) | | Interest expense (million USD) | $5.2 | $6.6 | $28.6 | | Interest income (million USD) | $(0.5) | $(0.4) | $(0.4) | | Provision for income taxes (million USD) | $4.8 | $8.7 | $4.2 | | Equity method loss (income) (million USD) | $0.1 | $(1.0) | — | | Share-based compensation (million USD) | $17.3 | $6.8 | $17.1 | | Depreciation and amortization (million USD) | $10.3 | $10.2 | $12.6 | | Goodwill impairment (million USD) | $42.0 | — | — | | Adjusted EBITDA (Non-GAAP) (million USD) | $56.5 | $55.4 | $40.5 | Supplemental Information This section provides additional context, including webcast details, forward-looking statements, notes on results, and a company overview [Webcast and Conference Call Details](index=3&type=section&id=Item%204.1.%20Webcast%20and%20Conference%20Call%20Details) Semtech hosted a conference call on August 25, 2025, to discuss Q2 FY26 results, with webcast and replay information available on its Investor Relations website - A conference call was held on August 25, 2025, at 1:30 p.m. Pacific time to discuss Q2 FY26 results[9](index=9&type=chunk) - Webcast and supplemental materials are available on Semtech's Investor Relations website, with a replay accessible until September 22, 2025[9](index=9&type=chunk) [Forward-Looking and Cautionary Statements](index=5&type=section&id=Item%204.2.%20Forward-Looking%20and%20Cautionary%20Statements) This section contains standard forward-looking statements regarding future financial and operational performance, subject to known and unknown risks and uncertainties, cautioning investors against undue reliance - The press release contains forward-looking statements about future financial performance, operational performance, growth trends, and company plans[17](index=17&type=chunk)[18](index=18&type=chunk) - Potential risks include industry volatility, rapid decrease in average selling prices, supply chain disruptions, failure to develop new products, intellectual property issues, R&D investment needs, competition, and difficulties integrating acquisitions like Sierra Wireless[19](index=19&type=chunk) - Investors are cautioned against undue reliance on forward-looking information, which is subject to significant risks and uncertainties detailed in SEC filings[20](index=20&type=chunk) [Notes on Reported Results](index=7&type=section&id=Item%204.3.%20Notes%20on%20Reported%20Results) The reported amounts are preliminary and subject to finalization for the Form 10-Q filing, with specific quarter-end dates defined for Q2'26, Q1'26, and Q2'25 - Reported results are preliminary and subject to finalization for the Form 10-Q filing for the quarter ended July 27, 2025[21](index=21&type=chunk) - Q2'26 refers to the quarter ended July 27, 2025; Q1'26 to April 27, 2025; and Q2'25 to July 28, 2024[21](index=21&type=chunk) [About Semtech](index=7&type=section&id=Item%204.4.%20About%20Semtech) Semtech Corporation (Nasdaq: SMTC) is a leading provider of high-performance semiconductor, IoT systems, and cloud connectivity service solutions, dedicated to delivering technology for a smarter, more connected, and sustainable planet - Semtech Corporation is a leading provider of high-performance semiconductor, IoT systems, and cloud connectivity service solutions[22](index=22&type=chunk) - The company is dedicated to delivering technology solutions for a smarter, more connected, and sustainable planet, serving infrastructure, industrial, and consumer markets[22](index=22&type=chunk) Condensed Consolidated Financial Statements (Unaudited) This section presents Semtech's unaudited consolidated statements of operations, balance sheets, and cash flow information [Statements of Operations](index=8&type=section&id=Item%205.1.%20Statements%20of%20Operations) The unaudited condensed consolidated statements of operations show Q2'26 net sales of $257.6 million and a GAAP net loss of $(27.1) million, significantly impacted by a $42.0 million goodwill impairment charge Condensed Consolidated Statements of Operations (GAAP) | Metric | Q2'26 | Q1'26 | Q2'25 | | :------------------------------------ | :------ | :------ | :------ | | Net sales (million USD) | $257.6 | $251.1 | $215.4 | | Total cost of sales (million USD) | $123.5 | $119.8 | $109.9 | | Gross profit (million USD) | $134.1 | $131.3 | $105.5 | | Total operating expenses, net (million USD) | $150.3 | $95.3 | $97.7 | | Operating (loss) income (million USD) | $(16.2) | $36.0 | $7.8 | | Goodwill impairment (million USD) | $42.0 | — | — | | Net (loss) income (million USD) | $(27.1) | $19.3 | $(170.3) | | Diluted (loss) earnings per share (USD) | $(0.31) | $0.22 | $(2.61) | [Balance Sheets](index=9&type=section&id=Item%205.2.%20Balance%20Sheets) As of July 27, 2025, total assets were $1,405.9 million, with increased current assets and decreased total liabilities, notably a reduction in goodwill due to an impairment charge Condensed Consolidated Balance Sheets | Metric | July 27, 2025 | January 26, 2025 | | :-------------------------- | :-------------- | :--------------- | | Total current assets (million USD) | $614.9 | $585.5 | | Total non-current assets (million USD) | $791.0 | $833.8 | | Total assets (million USD) | $1,405.9 | $1,419.3 | | Total current liabilities (million USD) | $243.1 | $283.0 | | Total non-current liabilities (million USD) | $609.8 | $593.8 | | Stockholders' equity (million USD) | $552.9 | $542.4 | | Total liabilities & equity (million USD) | $1,405.9 | $1,419.3 | - Goodwill decreased from **$533.1 million** to **$492.2 million**, reflecting the impairment charge in Q2'26[27](index=27&type=chunk)[5](index=5&type=chunk) - Current portion of long-term debt reduced from **$45.6 million** to zero, contributing to the decrease in total current liabilities[27](index=27&type=chunk) [Supplemental Cash Flow Information](index=10&type=section&id=Item%205.3.%20Supplemental%20Cash%20Flow%20Information) Net cash provided by operating activities significantly improved to $44.4 million in Q2'26, and free cash flow turned positive, reaching $41.5 million, demonstrating strong sequential and year-over-year growth Supplemental Cash Flow Information | Metric | Q2'26 | Q1'26 | Q2'25 | | :------------------------------------ | :------ | :------ | :------ | | Net cash provided by (used in) operating activities (million USD) | $44.4 | $27.8 | $(5.0) | | Net capital expenditures (million USD) | $(2.9) | $(1.7) | $(3.4) | | Free cash flow (million USD) | $41.5 | $26.2 | $(8.4) |