It has been about a month since the last earnings report for Semtech (SMTC). Shares have added about 0.8% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Semtech due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Semtech Corporation before we dive into how investors and analysts have reacted as of late.
Semtech's Q1 Earnings Surpass Estimates, Revenues Increase Y/Y
Semtech Corporation reported better-than-expected first-quarter fiscal 2027 results. Semtech posted non-GAAP earnings of 51 cents per share, which beat the Zacks Consensus Estimate by 13.3%. The bottom line exceeded the management’s guidance of 45 cents (+/- 3 cents) and reflected a robust year-over-year improvement of approximately 34.2%.
Semtech beat on earnings in each of the trailing four quarters, the average surprise being 6.8%.
SMTC’s first-quarter fiscal 2027 revenues of $291 million topped the Zacks Consensus Estimate by 2.7% and came above management’s guidance of $283 million (+/- $5 million). The top line jumped 16% year over year, with solid growth across all of its end markets, particularly in data centers.
Semtech’s Q1 Revenues in Terms of End Markets
The company’s top-line performance can be attributed to the impressive year-over-year rise in its end markets.
Sales from the infrastructure market totaled $98.8 million (33.9% of net sales), exhibiting year-over-year growth of 36%, supported by the expanding data center business. A key highlight was record data center net sales of $71.6 million, rising 39% year over year, reflecting continued strength in high-speed interconnect solutions.
Sales from the industrial market amounted to $153.9 million (52.9% of net sales), up 8% year over year.
Sales from the high-end consumer market totaled $38.4 million (13.2% of net sales), up 8% year over year, as the company cited resilience and continued design win momentum.
SMTC's LoRa Growth Adds Another Engine
LoRa-enabled net sales were $44.5 million, up 12% sequentially and 14% year over year, reflecting broader adoption across smart utilities, smart buildings, smart cities and asset management.
The company is positioning its fourth-generation LoRa platform to expand use cases by combining dual-band capability with higher data throughput, while maintaining the low-power attributes that underpin long-battery-life deployments.
SMTC’s Q1 Revenues in Terms of Product Lines
Signal Integrity (35.1% of net sales) sales totaled $102 million, up 38.8% year over year. Analog Mixed Signal & Wireless (34.6% of net sales) sales amounted to $100.8 million, which rose 11.3% year over year.
IoT System and Connectivity (30.3% of net sales) sales totaled $88.3 million, up 1.6% on a year-over-year basis.
Semtech’s Margins in Details
The non-GAAP gross margin of 53% contracted 50 basis points (bps) on a year-over-year basis and expanded 140 bps sequentially.
Non-GAAP operating income increased 24.6% year over year to $59.3 million. The non-GAAP operating margin expanded to 20.4% from 19% reported in the year-ago quarter. On a quarter-over-quarter basis, non-GAAP operating income increased 18.6%, while margin expanded 220 basis points.
Semtech’s Balance Sheet & Cash Flow
As of April 26, 2026, cash and cash equivalents totaled $163.3 million, down from $195.2 million as of Jan. 25, 2026.
The long-term debt amounted to $492 million, up from the previous quarter’s reported figure of $491.2 million.
During the first quarter, Semtech generated operating cash flow and free cash flow of $36.2 million and $28 million, respectively.
Semtech Initiates Q2 FY27 Guidance
For the second quarter of fiscal 2027, Semtech expects net sales to be $328 million (+/- $5 million).
The non-GAAP gross margin is expected to be 54% (+/- 50 bps). The non-GAAP operating margin is anticipated to be 21.9% (+/- 40 bps).
Non-GAAP earnings are expected to be 61 cents (+/- 2 cents) per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted 12.27% due to these changes.
VGM Scores
Currently, Semtech has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock has a score of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Semtech has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
