Microchip (MCHP) Q4 2026 earnings summary

Executive summary

• Achieved strong sequential and year-over-year revenue growth, with Q4 FY26 net sales up 10.6% sequentially and 35.1% year-over-year, and FY26 net sales up 7.1% from FY25, driven by improved demand, normalized inventory, and execution of a recovery plan.

• Focused on high-performance mixed-signal microcontrollers, analog, connectivity, and security solutions, with diversified end markets and enhanced profitability through operational efficiency.

• Non-GAAP gross margin improved to 61.6% in Q4 FY26, with operating income at 30.6% of sales; non-GAAP EPS exceeded guidance midpoint.

• Distribution inventory correction completed, with restocking underway and customer engagement rising across all end markets.

• Nine-point recovery plan largely executed, focusing on inventory reduction, business unit realignment, and improved customer relationships.

Financial highlights

• Q4 FY26 net sales: $1.311B (up 10.6% sequentially, 35.1% YoY); FY26 net sales: $4.713B (up 7.1% YoY).

• Q4 FY26 non-GAAP net income: $327.3M; non-GAAP EPS: $0.57; GAAP net income: $116.4M; GAAP EPS: $0.21.

• FY26 non-GAAP net income: $933.9M; non-GAAP EPS: $1.64; FY26 GAAP net income: $118.8M; GAAP EPS: $0.22.

• Q4 FY26 non-GAAP gross margin: 61.6%; operating expenses: 31% of sales; operating income: 30.6% of sales.

• Adjusted EBITDA in Q4: $466.8M (35.6% of net sales), up 132.9% YoY; adjusted TTM EBITDA for FY26: $1,496.4M, up 11.9% YoY.

• Free cash flow for FY26 was $871.0M (18.5% of net sales); adjusted free cash flow for FY26 was $816.3M (17.3% of revenue).

Outlook and guidance

• Q1 FY27 net sales guidance: $1.442–$1.469B, up 35.3% YoY and 11% sequentially at midpoint; non-GAAP gross margin expected at 62.25%–63.25%; non-GAAP EPS: $0.67–$0.71.

• Q1 FY27 operating margin guidance at 33.8%; long-term model targets 65% gross margin and 40% operating margin.

• Expect strong growth in data center, aerospace & defense, industrial, and automotive end markets.

• September quarter backlog higher than June quarter at the same point in time.

• FY27 capex expected at $100M.