Semtech (SMTC) Reports Loss in Q4, Witnesses Y/Y Sales Growth

Semtech Corporation’s SMTC fourth-quarter fiscal 2024 non-GAAP loss of 6 cents per share was wider than the Zacks Consensus Estimate for a loss of 5 cents. The bottom line compares unfavorably with the year-ago quarter’s earnings of 49 cents per share.

Net sales of $192.9 million surpassed the Zacks Consensus Estimate by 0.9%. The figure increased 15.2% from the prior-year quarter.

Top-line growth was driven by the company’s strength in the IoT System and IoT Connected Services segments. Solid momentum across the industrial end-market contributed well.

Shares of Semtech have gained 25.4% on a year-to-date basis, outperforming the industry’s growth of 1.2%.

However, softness in the Signal Integrity, and Analog Mixed Signal & Wireless product lines was a major concern. Weak momentum across the infrastructure market was another headwind.

Semtech Corporation Price, Consensus and EPS Surprise

 

Semtech Corporation Price, Consensus and EPS Surprise

Semtech Corporation price-consensus-eps-surprise-chart | Semtech Corporation Quote

Revenues by End Market

Sales from the infrastructure market were $39.4 million (20.4% of net sales), exhibiting a year-over-year decline of 29.8%.

Sales from the industrial market were $121.5 million (63% of net sales), up 58.8% from the prior-year period.

Sales from the high-end consumer market were $32.1 million (16.6% of net sales), declining 8% year over year.

Revenues by Product Lines

Signal Integrity (22.2% of net sales) sales were $42.8 million in the reported quarter, down 27.7% year over year. The figure lagged the consensus mark of $47.3 million.

Analog Mixed Signal & Wireless (31.3% of net sales) sales were $60.4 million, down 35.2% from the prior-year quarter.

IoT System (34% of net sales) sales were $65.5 million, increasing significantly from $9.8 million in the year-ago quarter. The figure lagged the Zacks Consensus Estimate of $82 million.

IoT Connected Services (12.5% of net sales) sales were $24.2 million in the reported quarter, which jumped from the prior-year quarter’s $5.2 million. The figure surpassed the Zacks Consensus Estimate of $18.3 million.

Operating Results

The non-GAAP gross margin of 48.9% contracted from 62.3% in the year-ago quarter.

Adjusted selling, general and administrative expenses for the fiscal fourth quarter increased 32.9% to $38.3 million from the prior-year quarter.

Adjusted product development and engineering expenses rose 0.9% from the year-ago quarter to $38.2 million.

The non-GAAP operating margin of 9.2% contracted significantly from 22.5% in the prior-year quarter.

Balance Sheet and Cash Flow

As of Jan 28, 2024, cash and cash equivalents were $128.6 million, up from $123.8 million as of Oct 29, 2023.

Account receivables for fourth-quarter fiscal 2024 were $134.3 million, down from $156.6 million in third-quarter fiscal 2024.

Long-term debt was $1.371 billion compared with $1.374 billion in the previous quarter.

In the reported quarter, the company generated $13.9 million in cash from operations against $5.8 million of cash used in operations in the previous quarter. The free cash flow in the fiscal fourth quarter was $12.2 million.

Guidance

For first-quarter fiscal 2025, management expects net sales of $200 million (+/- $5 million). The Zacks Consensus Estimate for the same is pegged at $194.73 million.

The non-GAAP gross margin is expected to be 49.5% (+/- 100 bps). The non-GAAP operating margin is anticipated to be 10.3% (+/- 120 bps).

The non-GAAP-based bottom line is expected to be breakeven (+/- 4 cents per share). The consensus mark for the bottom line is pinned at a loss of 2 cents.

Zacks Rank & Stocks to Consider

Currently, Semtech carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Airbnb ABNB, BlackLine BL and AMETEK AME, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Airbnb have gained 21.2% in the year-to-date period. The long-term earnings growth rate for ABNB is 16.85%.

Shares of BlackLine have risen 3.4% in the year-to-date period. The long-term earnings growth rate for BL is currently projected at 5.50%.

Shares of AMETEK have gained 10.9% in the year-to-date period. The long-term earnings growth rate for AME is 9.19%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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