Microchip (1MCHP) Q2 2027 Earnings Report

The call was predominantly positive: the company reported strong year-over-year growth, broad-based end-market expansion, strong bookings and backlog, significant design-win momentum, healthy cash flow, and declining leverage. However, near-term execution is affected by extended lead times, capacity constraints, delayed high-margin shipments, lower December gross-margin guidance, supplier cost increases, and the nonrecurrence of approximately $53 million of September revenue. Management remained optimistic about the March quarter and longer-term growth while acknowledging uncertainty around data-center demand and near-term utilization.

For the December quarter, Microchip expects net sales to be between down 3% and up 1%, with a midpoint of -1%, which at the midpoint would be up 35.4% from the year-ago quarter; December quarter is usually seasonally down 3%-5%, putting guidance about 5%-7% above normal seasonality. Hailo is expected to add about $4 million and VORAGO about $6 million to December-quarter net sales. The company expects non-GAAP gross margin to be between 64%-65% of net sales, non-GAAP operating expenses to be between 26.5% and 27% of sales, non-GAAP operating profit to be between 37% and 38.5% of sales, and non-GAAP diluted earnings per share to be between $0.87 and $0.95 per share; at the midpoint, non-GAAP earnings per share would be up 107% over the year-ago quarter. For fiscal year 2027, the company expects a tax rate of about 6.5% and capital expenditures to be about $100 million, while maintaining its long-term model of 65% gross margin, 25% operating expense, and 40% operating profit.