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]

Core Viewpoint - Semtech Corporation (SMTC) reported strong first-quarter fiscal 2026 earnings, with non-GAAP earnings of 38 cents per share matching the Zacks Consensus Estimate and revenues of $251.1 million exceeding expectations, indicating robust growth across all end markets, particularly in data centers [1][3][10]. Financial Performance - Non-GAAP earnings of 38 cents per share showed a significant improvement from 6 cents in the year-ago quarter, exceeding management's guidance of 37 cents [1][2]. - Revenues of $251.1 million surpassed the Zacks Consensus Estimate by 0.44% and increased by 22% year over year [3][10]. - Non-GAAP gross margin expanded to 53.5%, up 370 basis points year over year, while non-GAAP operating income surged 88.9% to $47.6 million [7]. Revenue Breakdown - Infrastructure market sales reached $72.8 million, accounting for 29% of net sales, with a year-over-year growth of 30% driven by data center demand [4]. - Industrial market sales were $142.8 million, representing 56.9% of net sales, up 24% year over year [4]. - High-end consumer market sales totaled $35.4 million, a 3% increase year over year, supported by strong design-in momentum for SurgeSwitch [5]. Product Line Performance - Signal Integrity sales were $73.5 million, up 26.1% year over year, making up 29.3% of net sales [6]. - Analog Mixed Signal & Wireless sales reached $90.6 million, a 20.3% increase year over year, accounting for 36.1% of net sales [6]. - IoT System and Connectivity sales were $86.9 million, reflecting a 19.9% year-over-year growth, comprising 34.6% of net sales [6]. Future Guidance - For Q2, Semtech expects net sales of $256 million (+/- $5 million), indicating a year-over-year rise of 18.5% [10]. - The company anticipates non-GAAP earnings of 40 cents (+/- 3 cents) per share, representing a year-over-year increase of 254.6% [12]. - Non-GAAP gross margin is expected to be around 53% (+/- 50 bps) for the upcoming quarter [11].

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]