Microchip tops Q2 profit estimates, but shares fall 5.7% in early trading
Microchip earned 97 cents per diluted share on a non-GAAP basis, topping the 95-cent consensus estimate, while net sales of $1.62 billion came in below the $1.64 billion estimate.
Key takeaways
- Microchip Technology (MCHP) reported fiscal second-quarter net sales of $1.62 billion, up 42.2% from a year earlier, and non-GAAP earnings of 97 cents per diluted share. Non-GAAP EPS topped the 95-cent consensus estimate and net sales were below the $1.64 billion estimate. The company guided third-quarter net sales to $1.573 billion to $1.638 billion.
Microchip Technology (MCHP) reported fiscal second-quarter net sales of $1.62 billion, up 42.2% from a year earlier and 9.2% from the prior quarter.
Shares fell 5.7% at 9:46 a.m. ET, from a $64.85 close.
Here's how the company did:
- Net sales: $1.62 billion vs. $1.64 billion expected and $1.14 billion a year earlier
- Non-GAAP EPS: 97 cents vs. 95 cents expected
- GAAP EPS: 68 cents vs. 3 cents a year earlier
- Non-GAAP operating income: $639.9 million vs. $277.2 million a year earlier
GAAP net income attributable to common stockholders was $373.6 million, up from $13.9 million a year earlier.
Revenue has risen in each of the last three quarters, reaching $1.48 billion in the first quarter of fiscal 2027.
Third-quarter outlook
For the December quarter, net sales are expected between down 3% and up 1% sequentially, with a midpoint of down 1%, or $1.573 billion to $1.638 billion.
Non-GAAP gross margin is expected at 64% to 65%, and GAAP gross margin at 62.9% to 63.9%.
About $53 million of infrequent revenue items in the September quarter will not repeat in the December quarter.
Eric Bjornholt, corporate senior vice president and chief financial officer, said the company remains "focused on strengthening our balance sheet while making targeted investments that accelerate our product roadmap."
Costs and capital returns
Non-GAAP operating expenses were $437.9 million, or 27.0% of net sales, down from 32.4% a year earlier.
The company returned about $247.6 million to common stockholders through dividends in the September quarter.
The board declared a quarterly dividend of 45.5 cents per share, payable Dec. 8 to holders of record Nov. 23. It also declared a quarterly dividend of $18.750 per share on its 7.50% Series A Mandatory Convertible Preferred Stock, or $0.9375 per depositary share, payable Dec. 15 to holders of record Dec. 1.
Acquisitions and board change
The company completed its acquisition of Hailo, a provider of accelerated edge AI processors, on Sept. 17.
It completed its acquisition of Vorago Technologies, a provider of radiation-hardened microcontrollers and microprocessors, on Oct. 8.
Victor Peng told the board on Nov. 3 that he will step down, citing time commitments including his role as Chief Executive Officer of PsiQuantum.