Microchip Technology Inc
Q1 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +2.36%.
Did MCHP Beat Earnings? Q1 2026 Results
Microchip Technology kicked off its fiscal 2026 with a recovery narrative gaining traction, posting Q1 results that beat analyst expectations on both the top and bottom lines despite a still-challenging year-over-year backdrop. The Chandler, Arizona-based chipmaker reported revenue of $1.08 billion, ahead of the $1.06 billion consensus by 1.87%, while non-GAAP EPS of $0.27 topped the $0.24 estimate by 13.16%; revenue nonetheless fell 13.4% from the year-ago quarter, reflecting the lingering weight of an industry-wide inventory correction. The key driver behind the beat was what CEO Steve Sanghi called a "trifecta effect," as distributor sell-through recovered, sell-in and sell-out gaps narrowed, and direct customer inventory normalized, combining to push sequential revenue up 10.8%. Non-GAAP incremental gross margins hit 76% in the period, underscoring improving operating leverage as utilization charges and inventory write-offs eased. Looking ahead, Microchip guided Q2 net sales to a midpoint of $1.13 billion with non-GAAP EPS of $0.30 to $0.36, bolstered by July bookings that management described as the strongest since July 2022.
- 10.8% sequential revenue growth exceeding revised guidance
- Trifecta effect: recovery in distributor sell-through, narrowing sell-in/sell-out gaps, and normalization of direct customer inventory
- Inventory reduction of $124.4 million in the quarter; distribution inventory days down 4 days to 29 days
- Incremental non-GAAP gross margins of 76% and incremental non-GAAP operating margins of 82%
- Declining inventory write-offs and reduced underutilization charges driving margin expansion
“Fiscal 2026 is off to a strong start as revenue grew 10.8% sequentially to approximately $1.0755 billion, well ahead of our revised guidance. As we execute our strategic imperatives under our nine-point recovery plan, we are seeing improvements across key financial metrics and emerging from the prolonged industry downturn with enhanced operational capabilities and a strengthened financial position. The momentum from the March quarter has accelerated into fiscal 2026, validating our strategic plan and positioning us well to capitalize on the recovery.”
Microchip Technology CEO, on the earnings call
Forward Guidance & Outlook
For the September 2025 quarter (fiscal Q2 2026), Microchip guided net sales of $1.110 billion to $1.150 billion (midpoint $1.130 billion), representing approximately 5.1% sequential growth. Non-GAAP EPS is expected to be $0.30 to $0.36 per diluted share. GAAP diluted EPS is expected to be a loss of $0.04 to $0.01. Non-GAAP gross profit margin is guided at 55.0% to 57.0%. Non-GAAP operating income margin is expected at 22.2% to 24.6%. Capital expenditures for the September quarter are expected at $35 million to $40 million, and for all of fiscal 2026 at or below $100 million. September quarter backlog is running ahead of June quarter levels, and July bookings were the highest since July 2022. The company is maintaining a disciplined approach given the evolving macro environment but believes it is well-positioned to deliver sustained growth throughout fiscal 2026.
MCHP YoY Financials
Figures from SEC filings and company reports. Not investment advice.