Semtech Posts Fiscal Q2 Net Sales of $341.9 Million Against a $328.0 Million Guide, With GAAP EPS of $1.59 Running Above Non-GAAP EPS of $0.71

by Henry Nakamura · August 26, 2026

Earnings Reporter, Earnings Dispatch

Semtech reported fiscal second-quarter net sales of $341.9 million after Tuesday's close, clearing the range the company had set for itself three months earlier and beating the top of it by a comfortable margin.

In its fiscal first-quarter release dated May 26, 2026, Semtech guided second-quarter net sales to a midpoint of $328.0 million plus or minus $5.0 million, non-GAAP adjusted gross margin to 54.0 percent plus or minus 50 basis points, and non-GAAP adjusted diluted earnings per share to $0.61 plus or minus $0.02. The reported quarter came in above all three: net sales of $341.9 million, $8.9 million above the high end of the guided range; non-GAAP adjusted gross margin of 54.5 percent; and non-GAAP adjusted diluted EPS of $0.71.

The fiscal labelling here needs stating plainly, because it inverts what most readers assume. Semtech's fiscal second quarter of 2027 is the three months ended July 26, 2026. The company's fiscal 2027 is therefore mostly calendar 2026, and a Semtech quarter tagged 2027 describes business already done. Intuit, which also reported Tuesday night, called almost the same three-month window its fiscal fourth quarter of 2026.

Against the prior year, Semtech said net sales rose 33 percent, and against the immediately preceding quarter -- fiscal first quarter 2027, when the company reported net sales of $291.0 million -- they rose 17 percent.

The unusual line is the earnings comparison. Semtech reported GAAP diluted EPS of $1.59 and non-GAAP adjusted diluted EPS of $0.71. In the overwhelming majority of corporate earnings releases the adjusted figure is the higher one, because non-GAAP measures typically strip out share-based compensation, acquisition amortization and restructuring costs, all of which reduce GAAP profit. Here the relationship runs the other way, and by a wide margin.

The operating lines show where the divergence is not. Semtech reported GAAP operating income of $55.8 million, a 16.3 percent operating margin, and non-GAAP adjusted operating income of $83.6 million, a 24.4 percent adjusted operating margin. At the operating level, in other words, the conventional relationship holds -- adjusted income exceeds GAAP income by roughly $27.8 million. The inversion appears only at the bottom line.

It appears there because Semtech also reported GAAP net income of $160.1 million, against that $55.8 million of GAAP operating income. The great majority of reported GAAP net income for the quarter therefore originated below the operating line rather than from operations. The driver is on the face of the income statement in the company's release: income taxes are recorded for the quarter as a benefit of $101.4 million rather than a charge. The other non-operating lines in that release are small by comparison -- interest expense of $2.0 million, interest income of $0.9 million and non-operating expense of $0.1 million. A tax benefit of that size against $55.8 million of operating income is what lifts GAAP earnings per share above the adjusted figure. The release does not explain what gave rise to the benefit; that account, along with any assets-held-for-sale accounting, belongs to the Form 10-Q. What can be said without qualification is that the $1.59 GAAP figure is not an operating result and should not be read as one.

That context matters for how the quarter gets compared to outside estimates. GuruFocus, in a note published Aug. 25 and accessed Aug. 26, cited consensus figures of $328.64 million in revenue and $0.36 in EPS. That page does not name the data provider behind those numbers, and it does not state whether the $0.36 EPS estimate is on a GAAP or a non-GAAP basis -- yet it sets that estimate directly against Semtech's GAAP EPS of $1.59, in its headline and again in its metrics summary, to produce a beat of several hundred percent -- which, in a quarter where the two measures differ by 88 cents and run in the unexpected direction, is the difference between a large beat, a large miss and a meaningless comparison. Consensus figures differ by compiler; LSEG, FactSet, Visible Alpha, Zacks and Bloomberg each poll different analyst panels and treat adjustments differently. Note also that the cited $328.64 million revenue consensus is within a rounding distance of Semtech's own $328.0 million guidance midpoint.

Semtech does not break end markets out in the summary figures of its release, but according to a published account of the company's earnings call, management described data center revenue of $100 million, a record for the company, up 91 percent from a year earlier and 39 percent sequentially; revenue from LoRa-enabled products of $58 million, also described as a record, up 58 percent year over year; infrastructure revenue of $124 million, up 69 percent; industrial revenue of $179 million, up 25 percent; high-end consumer revenue of $39 million, down 5 percent; and IoT systems and connectivity revenue of $98 million, up 11 percent. Those are figures from a secondary account of the call rather than from the primary release, and the three reporting end markets among them -- infrastructure, industrial and high-end consumer -- sum to approximately the reported $341.9 million total, with data center, LoRa and IoT sitting inside those lines rather than alongside them.

For the fiscal third quarter of 2027 -- the three months ending in late October 2026 -- Semtech guided net sales to a midpoint of $410.0 million plus or minus $5.0 million. That is a step up of roughly 20 percent from the quarter just reported.

The margin guidance carries an important qualifier. Semtech guided fiscal third-quarter non-GAAP adjusted gross margin to 58.3 percent plus or minus 100 basis points, and separately guided non-GAAP adjusted gross margin excluding a business held for sale to 63.9 percent plus or minus 100 basis points. The company has announced a sale of its cellular module business, which according to the account of the earnings call is expected to close in the fiscal fourth quarter of 2027, with management indicating gross margin would improve by more than 500 basis points once the business is out. The two guided margin figures are therefore not alternatives -- one describes the company as currently constituted, the other the company after the divestiture completes.

Non-GAAP adjusted diluted EPS for the fiscal third quarter was guided to $1.05 plus or minus $0.03. The company did not provide GAAP EPS guidance, a common practice among semiconductor issuers and one reason the GAAP figure so often arrives as a surprise in either direction.

Chief executive Hong Hou said in the release that the team had executed exceptionally well, delivering record revenue across the company's key focus areas, earnings leverage that continued to outpace revenue growth, and significant progress on portfolio optimisation; he added, also in the release, that accelerating bookings and record backlog point to a strong inflection in growth. Chief financial officer Mark Lin said in the same release that the company enters the third quarter expecting broad-based bookings strength to translate into sustained revenue, margin and earnings growth. According to the secondary account of the earnings call, management told analysts the cellular module divestiture is expected to be neutral to non-GAAP EPS.

All figures above are as reported by the company in an unaudited press release and on its earnings call. They are the company's own account of its quarter until the Form 10-Q is filed. This article does not state a share-price reaction: the results were released after Tuesday's close, and as of Wednesday morning the U.S. market was open with no session close available.