Semtech Corporation reported fiscal second-quarter 2027 net sales of $341.9 million, up 33% year-over-year and 17% sequentially, exceeding analyst expectations of $328.64 million. The company’s adjusted diluted earnings per share rose 73% to $0.71, surpassing consensus estimates of $0.61 by 16.39%. Shares rose 5.47% during regular trading to $127.52 and added another 3.65% in after-hours trading to $132.17, a combined gain of approximately 9.3%.
Revenue growth was driven by a record $100 million in data center sales, marking a 39% quarter-over-quarter increase and 91% year-over-year expansion. The infrastructure segment, which includes data center products, generated $124 million in net sales, up 25% sequentially and 69% year-over-year. The industrial segment reported $179 million in net sales, with LoRa-enabled sales reaching a record $58 million, growing 31% quarter-over-quarter and 58% year-over-year.
Adjusted gross margin expanded to 54.5%, up 150 basis points from the prior quarter, while adjusted operating margin rose to 24.4%, compared with 20.4% in Q1’27 and 18.8% in Q2’26. Adjusted EBITDA totaled $91.1 million, representing a 26.6% margin, up from $66.4 million and 22.8% in the previous quarter. Operating cash flow increased 90% sequentially to $68.9 million, while free cash flow surged 119% to $61.4 million.
CEO Hong Hou highlighted the breadth of the quarter’s performance, noting record revenue across key focus areas and accelerating bookings and backlog. Semtech also provided guidance for Q3’27, projecting net sales of $410 million at the midpoint, representing 54% year-over-year growth and 20% sequential growth. Adjusted diluted EPS is forecast at $1.05, up 119% year-over-year and 48% sequentially. Adjusted gross margin is expected to reach 58.3%, with adjusted operating margin projected at 31.0% and adjusted EBITDA margin at 32.8%.
The company’s net debt declined to $299 million, down from $339.7 million in Q1’27, while total debt stood at $503 million with cash and cash equivalents of $204.1 million. Semtech also noted that its cellular module divestiture, expected to close in Q4’27, is projected to be non-GAAP EPS neutral and improve post-divestiture gross margins by over 500 basis points to approximately 64%.
