Semtech(US:SMTC)2025-11-24 21:06Financial Performance - Record net sales of $267.0 million, representing 13% year-over-year growth[4] - GAAP gross margin of 51.9%, up from 51.1% a year ago, and Non-GAAP adjusted gross margin of 53.0%, up from 52.4% a year ago[4] - GAAP operating margin of 11.6% compared to 7.5% a year ago, and Non-GAAP adjusted operating margin of 20.6% compared to 18.3% a year ago[4] - Non-GAAP adjusted diluted earnings per share of $0.48 compared to $0.26 a year ago[4] - Adjusted EBITDA of $62.7 million, with an adjusted EBITDA margin of 23.5%[5] - Q3'26 adjusted operating income (Non-GAAP) increased to $54.9 million, up from $48.6 million in Q2'26 and $43.4 million in Q3'25, reflecting a year-over-year growth of 26.5%[35] - Q3'26 adjusted EBITDA reached $62.7 million, compared to $56.5 million in Q2'26 and $51.1 million in Q3'25, indicating a 22.5% increase year-over-year[41] - The operating margin (GAAP) for Q3'26 improved to 11.6%, a significant recovery from a loss margin of (6.3)% in Q2'26 and an increase from 7.5% in Q3'25[41] - Q3'26 net loss (GAAP) narrowed to $(2.9) million, a substantial improvement from $(27.1) million in Q2'26 and $(7.6) million in Q3'25[38] - Adjusted diluted earnings per share (Non-GAAP) for Q3'26 was $0.48, up from $0.41 in Q2'26 and $0.26 in Q3'25, representing an 84.6% increase year-over-year[38] - Q3'26 total operating expenses (GAAP) decreased to $107.4 million from $150.3 million in Q2'26, showing a reduction of 28.5%[35] - The company reported an adjusted net income (Non-GAAP) of $44.1 million in Q3'26, compared to $36.7 million in Q2'26 and $20.3 million in Q3'25, marking a 117.8% increase year-over-year[38] Future Outlook - Fourth quarter outlook projects net sales of $273.0 million, with a variance of +/- $5.0 million[6] - Expected adjusted diluted earnings per share for the fourth quarter is $0.43, with a variance of +/- $0.03[6] Cash Flow and Assets - Free cash flow for Q3'26 was $44.6 million, up from $41.5 million in Q2'26 and $29.1 million in Q3'25[30] - Total current assets increased to $620.9 million as of October 26, 2025, compared to $585.5 million on January 26, 2025[28] - Long-term debt decreased to $490.5 million from $505.9 million since January 26, 2025[28] - Cash and cash equivalents rose to $164.7 million from $151.7 million since January 26, 2025[28] Market Position and Strategy - The company is focused on ultra-power-efficient solutions for high-bandwidth data center networking and IoT applications[3] - The company anticipates ongoing growth trends and market position improvements in the IoT and cloud connectivity sectors[19] - The company is focused on empowering solution architects and application developers to create innovative products for various markets[23] Segment Performance - The company reported a segment gross margin of 61.3% for total semiconductor products in Q3'26[32] - Gross profit for Q3'26 was $138.5 million, resulting in a gross margin of 51.9%, compared to 52.1% in Q2'26 and 51.1% in Q3'25[26][32] Interest and Debt - Interest expense (GAAP) for Q3'26 was $26.2 million, significantly higher than $4.7 million in Q2'26 but lower than $20.3 million in Q3'25[38]