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Sep 30, 2025
Microchip Q2 2026 Earnings Report
Microchip reported modest growth in sequential revenue and returned to profitability on a GAAP basis in Q2 2026.
Key Takeaways
Microchip Technology posted net sales of $1.14 billion, beating the midpoint of its prior guidance. While GAAP net income remained low at $13.9 million, the company achieved $199.1 million in non-GAAP net income, driven by a recovery in operational efficiency. A new 3nm PCIe Gen 6 switch was introduced, highlighting innovation amid industry headwinds.
Net sales reached $1.14 billion, above the midpoint of prior guidance.
GAAP net income came in at $13.9 million, with EPS of $0.03.
Non-GAAP EPS was $0.35, with non-GAAP net income at $199.1 million.
Launched industry's first 3nm PCIe Gen 6 switch targeting AI and data centers.
Forward Guidance
Microchip guided Q3 FY2026 net sales to range from $1.109 to $1.149 billion, with expectations of continued operational discipline and improved free cash flow.
Positive Outlook
- Q3 net sales guidance of $1.129 billion midpoint indicates stability.
- Non-GAAP EPS projected between $0.34 and $0.40.
- Improved bookings and a 1.06 book-to-bill ratio signal demand recovery.
- Inventory normalization progressing with higher expedited shipment requests.
- Expected free cash flow and operational efficiencies to aid debt reduction.
Challenges Ahead
- December quarter is historically seasonally weakest.
- Gross margins expected to compress slightly.
- GAAP EPS may range from -$0.02 to $0.02, indicating ongoing cost pressures.
- Operating expenses remain elevated as a percentage of sales on GAAP basis.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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