Financial Data and Key Metrics Changes - For Q3 FY2026, net sales were $267 million, representing a 4% sequential increase and a 13% year-over-year increase, driven by data center and LoRa portfolio momentum [5][22] - Adjusted operating margins grew by 180 basis points sequentially and 230 basis points year-over-year [5][23] - Adjusted diluted earnings per share were $0.48, up 17% sequentially and 85% year-over-year [5][26] - Adjusted EBITDA was $62.7 million, up 11% sequentially and 23% year-over-year, with an adjusted EBITDA margin of 23.5% [23][26] Business Line Data and Key Metrics Changes - Infrastructure net sales were $77.9 million, up 6% sequentially and 18% year-over-year, supported by data center business [7] - Data center net sales reached a record $56.2 million, up 8% sequentially and 30% year-over-year [8] - High-end consumer net sales for Q3 were $41.9 million, up 2% sequentially and 5% year-over-year [13] - Industrial net sales were $147.2 million, up 3% sequentially and 12% year-over-year, driven by strong LoRa performance [14] Market Data and Key Metrics Changes - The data center business is expected to see continued growth, with projections for a 10% sequential increase in Q4 [27] - The high-end consumer market is anticipated to decrease by about 3% sequentially in Q4, partially offset by market share gains [27] - The industrial end market is expected to remain flat, with growth in IoT systems and connectivity offsetting declines [27] Company Strategy and Development Direction - The company is focused on capturing growth opportunities in core assets and optimizing its portfolio, including the recent acquisition of the Force Sensing business [6][20] - The strategy includes leveraging R&D resources to expand the portfolio, particularly in LoRa and data center technologies [6][19] - The company aims to strengthen its market position in next-generation data center solutions and LoRa-based IoT applications [18][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of the data center business, supported by strong demand and customer engagement [8][62] - The company anticipates a meaningful contribution from LPO in Q4, with expectations for continued design wins [46][60] - Management highlighted the importance of power efficiency in their solutions, positioning the company to lead in ultra-power-efficient technologies [18][19] Other Important Information - The company completed a $402.5 million convertible note offering, significantly reducing interest expenses and improving cash flow [24][25] - The adjusted net leverage ratio improved to 1.5, down from 7.2 year-over-year, reflecting strong business performance and debt reduction [27][26] Q&A Session Summary Question: Insights on CopperEdge ramping with lead CSP - Management indicated that CopperEdge is designed into three programs with a significant ramp expected starting mid-2026, which is seen as a catalyst for broader adoption [34][36] Question: Size of the ACC opportunity - Management noted that ACC is positioned between DAC and AEC, with a substantial total addressable market (TAM) and expected to capture a significant portion as deployment ramps up [38][39] Question: Growth expectations for LPO - Management expects LPO to contribute meaningfully in Q4, with a strong growth opportunity anticipated [44][46] Question: Gross margin outlook for Q4 - Management clarified that semiconductor gross margins are expected to remain healthy, driven by data center and LoRa growth, despite lower margins in IoT systems [50][51] Question: Force-sensing acquisition details - The force-sensing technology is expected to enhance the company's sensing portfolio, with integration already underway and first products shipped [65][68] Question: Divestiture of non-core assets - Management confirmed that interest from potential acquirers has increased, and the divestiture remains a top priority [82][84]

Financial Data and Key Metrics Changes - For Q3 FY2026, net sales were $267 million, representing a 4% sequential increase and a 13% year-over-year increase, driven by data center and LoRa portfolio momentum [5][22] - Adjusted operating margins grew by 180 basis points sequentially and 230 basis points year-over-year [5][23] - Adjusted diluted earnings per share were $0.48, up 17% sequentially and 85% year-over-year [5][26] - Adjusted EBITDA was $62.7 million, up 11% sequentially and 23% year-over-year, with an adjusted EBITDA margin of 23.5% [23][26] Business Line Data and Key Metrics Changes - Infrastructure net sales were $77.9 million, up 6% sequentially and 18% year-over-year, supported by data center business [7] - Data center net sales reached a record $56.2 million, up 8% sequentially and 30% year-over-year [8] - High-end consumer net sales for Q3 were $41.9 million, up 2% sequentially and 5% year-over-year [13] - Industrial net sales were $147.2 million, up 3% sequentially and 12% year-over-year, driven by strong LoRa performance [14] Market Data and Key Metrics Changes - The data center market is expected to see continued growth, with projections of approximately 10% sequential growth in Q4 [27] - The high-end consumer market is anticipated to decrease by about 3% sequentially, partially offset by market share gains [27] - The industrial end market is expected to remain flat, with growth in IoT systems and connectivity [27] Company Strategy and Development Direction - The company is focused on capturing growth opportunities in core assets and optimizing its portfolio, including the recent acquisition of the Force Sensing business [6][20] - The strategy includes leveraging R&D resources to expand the portfolio, particularly in LoRa and data center technologies [6][19] - The company aims to strengthen its culture and operational excellence while addressing margin disparities through divestitures of non-core assets [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand pipeline for data center solutions, particularly in AI CapEx and low-power solutions [8][9] - The company anticipates a meaningful contribution from LPO in Q4, with expectations of continued growth in the data center business [46] - Management highlighted the importance of power efficiency in their solutions, positioning the company to lead in ultra-power-efficient technologies [18] Other Important Information - The company completed a $402.5 million convertible note offering, significantly reducing interest expenses and improving cash flow [24][25] - The acquisition of the Force Sensing business is expected to enhance the company's sensing portfolio and create cross-selling opportunities [14][70] Q&A Session Summary Question: Insights on CopperEdge ramping with lead CSP - Management indicated that CopperEdge is designed into three programs with a ramp expected to start in mid-2026, which will serve as a catalyst for broader adoption among other CSPs [34][36] Question: Size of the ACC opportunity - Management noted that ACC is positioned between DAC and AEC, with significant potential to capture market share due to its power-saving advantages [38][39] Question: Growth expectations for LPO - Management expects LPO to contribute meaningfully in Q4, with a strong ramp anticipated throughout 2026 [46][62] Question: Force Sensing acquisition details - The force sensing technology enhances capabilities for smart wearables and computing, with integration already underway and first products shipped [66][70] Question: Gross margin outlook for ISC business - Management acknowledged that ISC gross margins are expected to be lower due to the mix of cellular modules, but semiconductor gross margins remain healthy [102][103]

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Core Insights - Alger Weatherbie Specialized Growth Fund's third-quarter 2025 investor letter indicates that equity markets continued to rise, with the S&P 500 Index increasing by 8.12% during the quarter [1] - The fund's Class A shares underperformed compared to the Russell 2500 Growth Index in the same period [1] Company Overview - Semtech Corporation (NASDAQ:SMTC) specializes in semiconductors, Internet of Things systems, and cloud connectivity solutions [2][3] - As of October 28, 2025, Semtech's stock closed at $70.44 per share, with a market capitalization of $6.112 billion [2] Performance Metrics - Semtech's one-month return was -1.41%, while its shares appreciated by 47.49% over the past 52 weeks [2] - The company reported fiscal second-quarter earnings that exceeded analyst expectations, contributing positively to its stock performance [3] Product and Market Position - Semtech's product portfolio includes high-speed data transfer solutions for data centers, protection products, signal integrity solutions, and wireless sensing technologies [3] - The company is focusing on expanding its optical portfolio to support future 800G and 1.6T AI data centers [4] Hedge Fund Interest - At the end of the second quarter, 37 hedge fund portfolios held Semtech Corporation, a decrease from 40 in the previous quarter [4]

Core Viewpoint - Kuehn Law, PLLC is investigating potential breaches of fiduciary duties by certain officers and directors of Semtech Corporation, related to misrepresentations regarding the company's CopperEdge products [1] Group 1: Allegations Against Semtech - Semtech insiders allegedly caused the company to misrepresent or fail to disclose that its CopperEdge products did not meet the needs of its server rack customers or end users [1] - The CopperEdge products required specific rack architecture changes, which were not disclosed [1] - Due to the aforementioned issues, sales of CopperEdge products are expected to be lower than anticipated, and the sales ramp-up during fiscal 2026 will not occur as previously stated [1] - Positive statements regarding the company's business, operations, and prospects were materially misleading and lacked a reasonable basis [1]

Core Viewpoint - Johnson Fistel, PLLP is investigating potential legal claims on behalf of Semtech Corporation shareholders regarding alleged misconduct by certain officers and directors that may have harmed the company and its investors [1] Summary by Relevant Sections Legal Investigation - The investigation focuses on potential legal claims for Semtech Corporation shareholders who held shares continuously since before October 10, 2024 [1] - A shareholder class action complaint has been filed against Semtech, alleging that the company made materially false and misleading statements and failed to disclose adverse facts about its business and operations [1] Allegations Against Semtech - The complaint specifically alleges that: 1. Semtech's CopperEdge products did not meet the needs of server rack customers or end users [1] 2. Changes in rack architecture were required for the CopperEdge products [1] 3. Sales of CopperEdge products would not ramp up during fiscal 2026 [1] 4. Sales of CopperEdge products would be lower than expected [1] 5. Positive statements made by the defendants regarding the company's business and prospects were materially misleading and lacked a reasonable basis [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].

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]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against Semtech Corporation due to a class action complaint alleging breaches of fiduciary duties by the board of directors [1][2] Group 1: Class Action Complaint Details - The class action complaint was filed on February 20, 2025, covering a Class Period from August 27, 2024, to February 7, 2025 [1] - Allegations include that Semtech's management made materially false and misleading statements and failed to disclose adverse facts about the company's business and operations [2] - Specific failures include the inadequacy of CopperEdge products for server rack customers, necessary architectural changes, and lower-than-expected sales projections for fiscal 2026 [2] Group 2: Company Information and Contact - Bragar Eagel & Squire, P.C. is a nationally recognized law firm representing investors in complex litigation [4] - Long-term stockholders of Semtech are encouraged to contact the firm for more information regarding their rights and the ongoing investigation [3][6]