Semtech Corporation reported fiscal second-quarter results that topped Wall Street expectations, sending shares up nearly 10% in extended trading. The chipmaker posted adjusted earnings per share of $0.71, a 39% sequential increase and a 73% jump from the prior-year period, surpassing analyst forecasts of $0.61 by 16.4%.
Revenue rose to a record $341.9 million, up 17% sequentially and 33% year-over-year, exceeding the $328.64 million consensus by $13.3 million. This marked the 10th consecutive quarter of revenue growth, with adjusted gross margin expanding to 54.5%, a 150-basis-point improvement from the prior quarter. Excluding its held-for-sale cellular module business, gross margin reached 59.7%, while semiconductor products gross margin rose to 62.8%, up 210 basis points sequentially.
Adjusted operating income totaled $84 million, with operating margin at 24.4%, while adjusted EBITDA reached $91 million, representing a 26.6% margin. Operating cash flow surged 90% sequentially and 55% year-over-year to $69 million, with free cash flow up 119% and 48% to $61 million. The company held $204 million in cash and equivalents against $503 million in principal debt.
Segment performance showed broad-based strength. Infrastructure net sales rose 25% sequentially to $124 million, while data center revenue hit a record $100 million, up 39% sequentially and 91% year-over-year, driven by demand for 800G and early 1.6T solutions. Industrial net sales increased 16% sequentially to $179 million, and LoRa-enabled revenue reached a record $58 million, up 31% sequentially and 58% year-over-year. High-end consumer net sales edged up 2% sequentially to $39 million, though they declined 5% from the prior year.
CEO Hong Hou highlighted the company’s performance, stating it delivered "exceptionally well" this quarter, with record revenue and earnings leverage. He noted Semtech’s role in "one of the most significant infrastructure build-outs in history." CFO Mark Lin emphasized the company’s outlook post-divestiture, projecting a gross margin starting point of about 64%, with product mix as a key driver.
Shares of Semtech climbed 5.47% during regular trading to close at $127.52, before adding another 3.65% in after-hours trading to $132.17, a gain of roughly 9.3% from the prior session’s close. The stock has traded between $53.62 and $177.35 over the past 52 weeks.
For the current quarter, Semtech guided revenue to $410 million, plus or minus $5 million, implying 20% sequential growth and 54% year-over-year expansion. Adjusted EPS is projected at $1.05, plus or minus $0.03, with adjusted gross margin expected at 58.3%, plus or minus 100 basis points. Data center revenue is forecast to rise 45% sequentially, while LoRa revenue is projected to grow about 15% sequentially and 65% year-over-year.
