Allegro Microsystems, Inc. ((ALGM)) has held its Q2 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Allegro MicroSystems’ recent earnings call highlighted a generally positive sentiment, driven by robust performance in the automotive and data center segments. The company achieved record sales and significant design wins, although challenges remain in the broad-based industrial sector and European market, coupled with increased operating expenses.
Strong Q2 2026 Results
Allegro MicroSystems reported impressive financial results for the second quarter of 2026, with net sales reaching $214 million and a non-GAAP EPS of $0.13. The company achieved a gross margin of 49.6%, surpassing the midpoint of their guidance ranges, showcasing their strong operational performance.
Automotive Segment Growth
The automotive segment was a standout performer, with sales increasing by 8% sequentially and 12% year-over-year. Notably, e-mobility sales surged by 21% year-over-year, reflecting Allegro’s strategic focus on this growing market.
Data Center Segment Performance
Allegro’s data center segment set a new quarterly sales record, driven by upgrades in server power architecture for AI workloads and increased sales of data center fan driver ICs and high-speed current sensor ICs.
Strong Design Wins
The company secured significant design wins across automotive, data center, and robotics applications, including advanced driver-assistance systems (ADAS) and electric vehicle (xEV) systems in China and North America.
New Product Innovation
Allegro introduced the industry’s first 10 megahertz TMR current sensor, enhancing their competitive edge in high-voltage power systems and underscoring their commitment to innovation.
Geographical Sales Growth
Sales growth was observed in all regions except Europe, with particularly strong performance in the Americas and China, highlighting Allegro’s global market reach.
Broad-Based Industrial Decline
The broad-based industrial sector saw a 1% sequential decline in sales, attributed to ongoing inventory reduction efforts in these markets.
Challenges in Europe
Sales in Europe faced seasonal declines, indicating persistent challenges in this region that Allegro continues to navigate.
Higher Operating Expenses
Operating expenses rose to $76 million, exceeding expectations by $3 million, due to increased variable compensation and the weakening of the U.S. dollar.
Forward-Looking Guidance
Looking ahead, Allegro MicroSystems projects third-quarter sales to range between $215 million and $225 million, with a gross margin forecasted between 49% and 51%. This outlook is supported by continued strength in the automotive and data center markets, signaling confidence in sustained growth.
In summary, Allegro MicroSystems’ earnings call reflected a positive outlook, driven by strong performances in key segments and strategic innovations. Despite challenges in certain markets, the company’s forward-looking guidance suggests continued growth, making it an intriguing prospect for investors.