Microchip Technology Inc
Q4 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +6.56%.
Did MCHP Beat Earnings? Q4 2025 Results
Microchip Technology posted a better-than-expected fiscal fourth quarter, with revenue of $970.50 million edging past the $951.29 million consensus by 2.02% and non-GAAP EPS of $0.11 beating the $0.10 estimate by 10%, even as both metrics reflected the ongoing severity of an industry downcycle that pushed net sales down 26.8% year over year. The clearest signal of a potential inflection came from the demand side, where the company recorded its first positive book-to-bill ratio in nearly three years, with April bookings exceeding any month in the March quarter, giving management confidence that the period marks a cyclical trough. Inventory reduction also stood out, with overall inventory dollars falling $62.80 million and balance sheet inventory days declining by 15 days sequentially. On the balance sheet, a mandatory convertible preferred offering helped reduce total net debt by roughly $1.30 billion during the quarter. Looking ahead, Microchip guided Q1 fiscal 2026 revenue of $1.02 billion to $1.07 billion, a return to sequential growth, though analysts remain divided on whether the valuation fully reflects the risks that still linger, including tariff uncertainty and a prolonged recovery timeline.
- Nine-point plan driving operational efficiency improvements in manufacturing and inventory management
- Inventory reduction strategy — overall inventory dollars down $62.8 million, distribution inventory days reduced by 4 days to 33 days
- First positive book-to-bill ratio in nearly three years
- April bookings higher than any month in the March quarter
- Net debt reduction of approximately $1.3 billion through mandatory convertible preferred offering
“Our March quarter revenue of $970.5 million exceeded the midpoint of our guidance, and we believe marks the bottom of this prolonged industry down cycle for Microchip. The decisive actions we have taken under our nine-point-plan are enhancing our operational capabilities through more efficient manufacturing, improving inventory management, and a renewed strategic focus. As we move forward from a challenging fiscal year, we believe Microchip is better positioned to capitalize on growth opportunities as market conditions evolve.”
Microchip Technology CEO, on the earnings call
Forward Guidance & Outlook
For Q1 fiscal 2026 (quarter ending June 30, 2025), Microchip guides net sales of $1.020 billion to $1.070 billion, representing a return to sequential growth. Non-GAAP gross profit margin is expected at 52.2% to 54.2%, with non-GAAP operating income margin of 17.4% to 20.8%. Non-GAAP EPS is guided at $0.18 to $0.26. GAAP diluted loss per share is expected between ($0.15) and ($0.07). Capital expenditures for Q1 FY2026 are expected between $20 million and $25 million, and at or below $100 million for all of fiscal 2026. Management noted the first positive book-to-bill ratio in nearly three years, with April bookings exceeding any month in the March quarter, though geopolitical concerns and tariff impacts remain non-quantifiable risks.
MCHP YoY Financials
Figures from SEC filings and company reports. Not investment advice.