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]

ab 18 August 2025 Global Research US Semiconductors and Semi Equipment SemiBytes: Tariffs Update, Earnings Previews (SMTC, MRVL) Further discussions suggest more of a broad formula for Tariff exclusions In response to an ongoing flood of investor queries around the tariff topic, we went back to our industry contacts for additional clarity on what US investment commitments might be required for companies to secure tariff exclusions. To this end, we believe exclusions could apply to investment commitments mad ...

Shares of Semtech Corp SMTC were down 5.8% at last check on Wednesday, despite the company’s upbeat first-quarter results.Here are some key analyst takeaways.Stifel analyst Tore Svanberg reiterated a Buy rating, while raising the price target from $42 to $45.Piper Sandler analyst Harsh Kumar maintained an Overweight rating and price target of $55.Roth Capital Partners analyst Scott Searle reaffirmed a Buy rating and price target of $65.Cantor Fitzgerald analyst Quinn Bolton maintained a Buy rating and price ...

Financial Data and Key Metrics Changes - For Q1, net sales reached a record $251.1 million, up 22% year over year and above the midpoint of the outlook [21] - Adjusted gross margin was 53.5%, up 30 basis points sequentially and up 370 basis points year over year [21] - Adjusted operating income was $47.6 million, resulting in an adjusted operating margin of 19%, up 680 basis points year over year [22] - Adjusted EBITDA was $55.4 million, up 68% year over year, with an adjusted EBITDA margin of 22.1%, up 600 basis points year over year [22] - Adjusted diluted earnings per share were $0.38, up from $0.06 a year ago [23] Business Line Data and Key Metrics Changes - Infrastructure net sales were $72.8 million, up 5% sequentially and up 30% year over year [8] - Data center net sales were a record $51.6 million, up 3% sequentially and up 143% year over year [8] - High-end consumer net sales were $35.4 million, flat sequentially and up 3% year over year [12] - Industrial net sales were $142.8 million, down 3% sequentially but up 24% year over year [16] - LoRa enabled solutions within the industrial market had net sales of $38.9 million, up 5% sequentially and up 81% year over year [16] Market Data and Key Metrics Changes - The company expects short-term demand gaps in the CopperEdge segment but anticipates sustainable growth in the data center business due to capital expenditure growth by hyperscalers [9] - The IoT cellular portfolio is expected to benefit from growing 5G adoption rates, particularly in North America [18] - Connected services net sales remained stable, showcasing the deployment of AI tools for anomaly detection [19] Company Strategy and Development Direction - The company focuses on portfolio optimization, strategic investment in R&D, and driving margin expansion [7] - Management emphasizes the importance of solidifying a winning culture, accelerating innovation, and leveraging technology leadership to enhance shareholder value [20] - The company is optimistic about the second half of the fiscal year, expecting growth driven by fiber edge products and incremental opportunities from LPO and CopperEdge [90][94] Management's Comments on Operating Environment and Future Outlook - Management acknowledges macroeconomic uncertainties that may impact the timing of portfolio optimization initiatives but remains committed to strategic priorities [68] - The company is confident in its ability to navigate through dynamic tariff policies and maintain stable product flow across the semiconductor supply chain [7] - Management expects net sales for Q2 to be around $256 million, reflecting a 19% year-over-year increase at the midpoint [25] Other Important Information - The company recorded a net debt decrease of $14.8 million to $396.2 million, with a focus on debt reduction [24] - The company successfully amended its revolving credit facility to increase total borrowing capacity by $117.5 million [24] Q&A Session Summary Question: Insights on the cellular module business - Management noted that the cellular module business experienced a seasonal decline but expects revenue to accelerate in future quarters due to competitive dynamics [32][34] Question: Update on AI connectivity and CopperEdge - Management highlighted strong engagement with over 20 customers for CopperEdge, with expectations for revenue ramp-up by Q4 [41][44] Question: Trends in the core data center business - Management expressed optimism for growth in the core data center business, driven by fiber edge products and expected incremental revenue from LPO [55] Question: LoRa market outlook - Management indicated that while LoRa sales may moderate slightly, the business remains strong with a projected quarterly run rate of $30 million to $35 million [60] Question: Expectations for seasonality in the second half - Management noted that seasonality is expected in the high-end consumer segment, while other markets may not show obvious seasonal trends [80] Question: Insights on surge switch product - Management explained that surge switch provides additional protection and is being designed into various applications, enhancing dollar content compared to typical protection products [97][100]

Q1'26 Financial Performance - Net sales were $251.1 million[14], a slight increase from $251.0 million in Q4'25[29] - Gross margin was 52.3%[29], and adjusted gross margin was 53.5%[29] - Operating income was $36.0 million[29], resulting in an operating margin of 14.3%[29] - Adjusted operating income was $47.6 million[29], with an adjusted operating margin of 19.0%[29] - Adjusted EBITDA was $55.4 million, representing an adjusted EBITDA margin of 22.1%[29] - Net income was $19.3 million, or $0.22 per diluted share[29], while adjusted net income was $33.9 million, or $0.38 per diluted share[29] End Market Performance in Q1'26 - Infrastructure end market net sales reached $72.8 million, up 5% Q/Q and 30% Y/Y[18], with data center sales at a record $51.6 million, up 3% Q/Q and 143% Y/Y[19] - High-End Consumer end market net sales were $35.4 million, flat Q/Q and up 3% Y/Y[21], with Consumer TVS net sales of $24.5 million, up 2% Q/Q[21] - Industrial end market net sales were $142.8 million, down 3% Q/Q but up 24% Y/Y[24], with LoRa-enabled solutions net sales of $38.9 million, up 5% Q/Q and 81% Y/Y[25], and IoT Systems net sales of $63.5 million, down 8% Q/Q but up 31% Y/Y[25] Q2'26 Outlook - Net sales are expected to be $256.0 million, with a potential variance of +/- $5.0 million[32] - Adjusted gross margin is projected at 53.0%, with a potential variance of +/- 50 bps[32] - Adjusted operating income is expected to be $48.2 million, with a potential variance of +/- $3.0 million[32], resulting in an adjusted operating margin of 18.8%, with a potential variance of +/- 80 bps[32] - Adjusted diluted earnings per share are projected at $0.40, with a potential variance of +/- $0.03[32] - Adjusted EBITDA is expected to be $56.0 million, with a potential variance of +/- $3.0 million[32], resulting in an adjusted EBITDA margin of 21.9%, with a potential variance of +/- 80 bps[32]

Financial Data and Key Metrics Changes - For Q4, the company recorded net sales of $251 million, up 6% sequentially and up 33% year over year [39][41] - Adjusted gross margin was 53.2%, up 80 basis points sequentially and up 430 basis points year over year [40] - Adjusted operating income was $49.8 million, resulting in an adjusted operating margin of 19.9%, up 160 basis points sequentially and up 1070 basis points year over year [40] - Adjusted diluted earnings per share increased to 40 cents, up from 26 cents in Q3 and up from a loss of 6 cents in Q4 of the previous year [41][42] - Net debt was reduced to $411 million, a decrease of 68% from $1.3 billion at the end of FY 2024 [42][43] Business Line Data and Key Metrics Changes - Infrastructure net sales for Q4 were $69.1 million, up 5% sequentially and up 75% year over year [16] - Data center net sales reached a record $50 million, up 16% sequentially and up 183% year over year [16] - High-end consumer net sales for Q4 were $35.4 million, up 10% year over year, with FY 2025 net sales at $147 million, up 17% year over year [22][25] - Industrial net sales for Q4 were $146.6 million, up 12% sequentially and up 21% year over year, with LoRa-enabled solutions recording Q4 net sales of $37.1 million, up 28% sequentially and up 205% year over year [27][28] Market Data and Key Metrics Changes - The company expects net sales from the infrastructure end market to increase sequentially, with data center applications leading growth [44] - The high-end consumer end market is expected to see slight increases reflective of seasonality, while the industrial end market is anticipated to decline due to seasonality in the IoT portfolio [45] Company Strategy and Development Direction - The company is focused on three core priorities: portfolio optimization and simplification, strategic investment in R&D, and driving margin expansion through operational leverage and AI [11][15] - The company aims to enhance profitability through portfolio optimization and leveraging AI for efficiency [15] - The company is prioritizing divestitures of non-core assets to improve balance sheet strength and operational focus [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the trajectory of the business, citing strong fundamentals and a favorable market environment [65] - The company anticipates continued growth in the data center segment despite temporary headwinds from the Copper Edge portfolio [70] - Management highlighted the importance of customer engagement and innovation in driving future growth [102] Other Important Information - The company achieved a significant milestone with the 5G Redcap certification in collaboration with AT&T and Qualcomm, positioning it for scalable solutions across industries [36] - The company is actively engaged with over 20 potential customers for its CopperEdge portfolio, indicating a strong interest in new applications [58] Q&A Session Summary Question: Can you expand on the Copper Edge portfolio and its future? - Management indicated that revenue for Copper Edge is expected to be below $50 million in FY 2026, with ongoing engagement with over 20 customers for various applications [56][58] Question: What is the outlook for the core business and growth visibility? - Management expressed confidence in the core business's growth trajectory, with expectations for continued sequential growth across various segments [62][65] Question: Can you provide timing on the upcoming revenue step change in the data center? - Management noted that while there may be temporary bumps in the Copper Edge segment, overall data center growth is expected to continue [70] Question: How is the company approaching portfolio rationalization? - Management stated that they are patient in their approach to rationalization, focusing on strategic synergies rather than distressed sales [76] Question: What is the outlook for LoRa and its recent growth? - Management attributed the strong growth in LoRa to customer focus and new product development, with expectations for continued year-over-year growth [102][156]