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Jun 30
Microchip Q1 2026 Earnings Report
Microchip posted a net loss in Q1 FY26, but beat guidance with strong sequential revenue growth and margin improvement.
Key Takeaways
Microchip Technology began fiscal 2026 with a sequential revenue increase of 10.8% and beat its own EPS and revenue guidance. Despite a GAAP net loss due to non-cash charges and preferred dividends, the company demonstrated operational improvements and strong free cash flow.
Revenue came in at $1.0755 billion, up 10.8% sequentially.
GAAP EPS was -$0.09, while non-GAAP EPS reached $0.27.
Net loss attributable to common stockholders was $46.4 million.
Free cash flow for the quarter totaled $257.7 million.
Microchip
Microchip
Forward Guidance
For Q2 FY26, Microchip expects modest revenue growth and improved margins, supported by strong backlog and bookings.
Positive Outlook
- Revenue guidance midpoint of $1.13 billion, up ~5.1% QoQ.
- Non-GAAP gross margin guided between 55.0% to 57.0%.
- Non-GAAP EPS expected between $0.30 to $0.36.
- September backlog running ahead of June levels.
- Capital expenditures projected to remain under $100 million for FY26.
Challenges Ahead
- GAAP EPS expected to remain in negative territory (-$0.04 to -$0.01).
- Ongoing impact from amortization of acquired intangibles.
- Inventory destocking still ongoing at customer and channel levels.
- Total assets declined slightly QoQ from $15.374B to $14.979B.
- GAAP operating income expected to remain low (6.3% to 8.8%).