Allegro MicroSystems, Inc. Q1 FY2026 earnings call

• Strong first quarter results with sales at $203 million and gross margin at 48.2%, above guidance ranges.
• E-Mobility led automotive sales growth, with strength in current sensors for xEV applications.
• Released innovative new ASIL-C current sensor and U-core current sensor ICs, and a new 48-volt motor driver IC.
• Over 75% of first quarter design wins were in strategic focus areas, including e-Mobility, Data Center, etc.
• Continued execution on strategic priorities like relentless innovation and cost innovation.

Sales for the first quarter were $203 million. Automotive sales saw e-Mobility leading growth with a 31% year-over-year increase. Industrial and Other sales, led by Data Center, Robotics and Automation, and Clean Energy, had a 50% year-over-year increase. Magnetic sensor sales increased 12% year-over-year, and power products sales rose 43% year-over-year. Geographically, sales were 28% in China, 24% in the rest of Asia, 17% in Japan, 16% in the Americas, and 15% in Europe.

• Second quarter sales expected to be in the range of $205 million to $215 million.
• Gross margin expected to be between 48% and 50%.
• OpEx expected to be approximately $73 million.
• Interest expense projected to be $5 million.
• Tax rate expected to be 10%.
• Non-GAAP EPS expected to be between $0.10 and $0.14 per share.

• Uncertainties from tariffs and potential component shortages.
• Competition and geopolitical concerns in the China market.
• Impact of regulatory changes on downstream customers.

Q: Could you talk about forward demand and potential tariff pull-ins?

A: We see strong bookings and backlog, but tariffs create uncertainties; however, discussions with customers about manufacturing line tightness indicate picking demand.

Q: How did gross margin exceed expectations?

A: Benefit from cost rolling forward on a FIFO basis, mix tailwinds from direct sales vs. distribution, and some foreign exchange noise.

Q: What's the outlook for automotive demand recovery?

A: S&P revised automotive production forecast up, and we see increased expedites from customers indicating a recovery.

Q: When will the channel start to be restocked?

A: We take it one quarter at a time, but we're starting to restock select parts, with distribution sales expected to be flat in the September quarter.

Q: What's the future drivers for e-Mobility?

A: Increasing dollar content in ADAS and EV, isolated gate drivers for silicon carbide-based power systems in e-Mobility, Clean Energy, and Data Center applications.