To The Moon

$Semtech(SMTC)$ has announced its plans to release the financial results for its first quarter of fiscal year 2026 after the market closes on Tuesday, May 27, 2025.

Revenue Consensus: the consensus estimate is expected at $250.10 million.

EPS Consensus: the earnings per share (EPS) consensus estimate is expected at $0.37 (some sources indicate $0.21 or $0.38).

Semtech (SMTC) Last Positive Earnings Call Saw Significant 22.71% Share Price Gain

Semtech had a positive earnings call on 13 March 2025 which saw its share price gained a significant 22.71% since.

The earnings call presented several positive developments, including strong revenue growth particularly in the data center and LoRa segments, significant improvements in margins, and a substantial reduction in debt. However, challenges such as the CopperEdge deployment delays and expected seasonal declines in the industrial market were noted. Overall, the positive aspects significantly outweigh the lowlights, indicating a strong performance and optimistic outlook.

Semtech (SMTC) Guidance

In the Semtech Corporation's fourth-quarter and fiscal year 2025 earnings call, the company provided guidance indicating positive momentum across various financial metrics. For FY 2025, Semtech reported sequential growth in net sales, gross margin, operating margin, and earnings per share each quarter. The adjusted gross margin improved by 200 basis points, adjusted operating margin by 570 basis points, adjusted EBITDA margin by 610 basis points, and adjusted diluted earnings per share increased by 529%.

In Q4, net sales reached $251 million, up 6% sequentially, with data center net sales hitting a record $50 million, up 16% sequentially and 183% year-over-year. The adjusted operating margin for Q4 was 19.9%, and adjusted EBITDA margin was 23%. For the first quarter of FY 2026, Semtech expects net sales of $250 million, adjusted gross margin of 53%, and adjusted diluted earnings per share of 37 cents. The company aims to focus on strategic investments, portfolio optimization, and driving margin expansion moving forward.

Net Sales: Approximately $250.0 million (+/- $5.0 million).

Adjusted Gross Margin: Approximately 53.0% (+/- 50 basis points).

Adjusted Operating Expenses: Approximately $87.0 million (+/- $1.0 million).

Adjusted Operating Income: Approximately $45.5 million (+/- $3.0 million).

Adjusted Operating Margin: Approximately 18.2% (+/- 80 basis points).

Adjusted Interest Expense, Net: Approximately $6.3 million.

Normalized Tax Rate: Approximately 15%.

Adjusted Diluted Earnings per Share (EPS): Approximately $0.37 (+/- $0.03).

Adjusted EBITDA: Approximately $53.3 million (+/- $3.0 million).

Adjusted EBITDA Margin: Approximately 21.3% (+/- 80 basis points).

Non-GAAP Diluted Share Count: Approximately 90.1 million.

Key Focus Areas for Semtech

Based on their Q4 FY25 earnings call and statements, Semtech is focusing on:

Portfolio Optimization and Simplification: Streamlining their offerings.

Strategic Investment in R&D: Focusing on key growth areas.

Driving Margin Expansion: Improving profitability.

Debt Reduction: They significantly reduced net debt in FY25, which is expected to lead to annual cash savings.

Growth in Key Markets: Strong growth was noted in the data center and LoRa segments in Q4 FY25.

What To Watch in the Q1 2026 Earnings Report

Net sales for Q4 were $251 million, up 6% sequentially and up 21% year over year. Data center net sales were a record $50 million, up 16% sequentially and up 183% year over year.

Segment Performance: Insights into the performance of different business segments, particularly data center and LoRa, will be important.

Within the industrial end market, LoRa-enabled solutions recorded Q4 net sales of $37.1 million, up 28% sequentially and up 205% year over year.

CopperEdge Deployment: Any updates on the deployment timelines for their CopperEdge solutions will be closely watched, as there were previous mentions of delays.

Expected volume ramp for CopperEdge products will not materialize for FY 2026 due to rack architecture changes. CopperEdge demand at anchor customers to be lower than prior expectations for three to four quarters.

Industrial Market Trends: Given previous expectations of seasonal declines in the industrial market, the actual performance will be of interest.

AirVantage Smart Sensing was recognized with the M2M Innovation of the Year Award by IoT breakthrough. Semtech also achieved the 5G Redcap certification in collaboration with AT&T and Qualcomm.

The industrial end market is expected to be down in Q1 FY 2026 reflective of seasonality in the IoT portfolio.

Margin Trends: Investors will look for continued progress in gross and operating margin expansion. Adjusted gross margin improved 200 basis points year over year to 53.2% in Q4. Adjusted operating margin improved 570 basis points to 19.9%, and adjusted EBITDA margin improved 610 basis points to 23% for FY 2025.

Net debt was reduced by $868 million or 68% from the end of FY 2024, enabling annual cash savings of approximately $40 million based on interest rates.

Semtech Corp (SMTC) Price Target

Based on 12 analysts from Tiger Brokers offering 12 month price targets for Semtech in the last 3 months. The average price target is $53.58 with a high forecast of $68.00 and a low forecast of $30.00. The average price target represents a 33.49% change from the last price of $40.14.

Technical Analysis - Exponential Moving Average (EMA)

Based on the technicals, we are seeing Semtech holding up well, but only for short term, as the concern of CopperEdge deployment delays does have some impact on its share price. We can see that SMTC bulls is trying to gain the control for a daily uptrend, but does not seem to be too successful.

SMTC have been trading sideways and we need to see whether there is any updates on the demand for the industrial market as it is going to be a seasonal decline in the industrial market.

We are not seeing any potential profit taking or selling off from the short interest, investors might be waiting to see if SMTC could provide a better margin improvement, considering that there is an expected seasonal decline in the industrial market, but the demand could increased due to stockpiling ahead of the tariffs turmoil for IoT.

I think we need to watch closely on how the demand for Semtech IoT portfolio will shaped out.

Summary

Semtech's guidance for the next quarter and any commentary on the rest of fiscal year 2026 will be crucial in understanding the company's near-term prospects. I think investors would also be interested to see if Semtech could provide continued progress in gross and operating margin expansion.

Appreciate if you could share your thoughts in the comment section whether you think Semtech could provide an earnings surprise with stronger margin and better cost management.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.