Semtech Corporation Reports 19.6% Revenue Growth to $257.6 Million in Q2 FY 2026

Semtech Corporation reported a significant increase in financial performance for the second quarter of fiscal year 2026, with total net sales reaching $257.6 million, a 19.6% increase from $215.4 million in the same period last year. The company's product sales were a major contributor, amounting to $229.7 million, up from $186.0 million, while service revenues slightly declined to $27.9 million from $29.4 million. Despite the revenue growth, Semtech recorded a net loss of $27.1 million, compared to a loss of $170.3 million in the prior year, reflecting a substantial improvement in profitability.

The company experienced notable changes in its operational metrics, including a 20% increase in gross profit to $134.1 million, resulting in a gross margin of 52.1%, up from 49.0% a year earlier. This improvement was driven by higher sales volumes across all reportable segments, particularly in infrastructure and industrial markets. The Signal Integrity segment saw a 29% increase in sales, while the IoT Systems and Connectivity segment grew by 16%. However, the company also recorded a goodwill impairment charge of $42.0 million related to its IoT Connected Services reporting unit, which impacted overall profitability.

In terms of strategic developments, Semtech has been focusing on enhancing its product offerings and expanding its market presence. The company has made significant investments in product development, with expenses rising to $48.2 million for the quarter, reflecting a 20% increase year-over-year. Additionally, Semtech's workforce has grown, with a headcount increase contributing to higher staffing-related costs. The company continues to explore opportunities for geographic expansion, particularly in the Asia-Pacific region, which accounted for 65% of net sales during the quarter.

Operationally, Semtech reported a cash position of $168.6 million as of July 27, 2025, with an additional $451.6 million available under its revolving credit facility. The company generated $72.2 million in cash from operating activities during the first half of the fiscal year, a significant turnaround from the negative cash flow of $5.1 million in the same period last year. This positive cash flow was attributed to increased sales, lower interest payments, and reduced restructuring costs.

Looking ahead, Semtech remains cautiously optimistic about its growth trajectory, despite ongoing macroeconomic challenges such as inflation and geopolitical tensions. The company plans to continue investing in product innovation and market expansion while managing its operational costs effectively. Semtech's management emphasized the importance of aligning inventory levels with customer demand and maintaining financial flexibility to navigate potential market fluctuations.