Allegro MicroSystems, Inc. Q3 FY2026 earnings call

• Positive momentum across the business with growth in bookings and backlog, and significant design wins in ADAS, XEV, and data center. - Achieved third quarter sales of $229 million (above high end of guidance) and EPS of $0.15 (above midpoint of guidance). - Automotive sales growth driven by eMobility, with ADAS and XEV securing key design wins. - Industrial and other sales led by data center, with data center sales at 10% of total, up 31% sequentially. - Introduced an innovative current sensor and expanded isolated gate driver portfolio. - Conducted a Robotics Roadshow in the US, Japan, and China, confirming new wins in robots.

Automotive: Sales increased by 6% sequentially and 28% year over year, with eMobility sales up 46% year over year. Industrial and other: Sales increased by 11% sequentially and 31% year over year, led by data center which reached 10% of sales, up 31% sequentially. Magnetic sensors: Increased by 5% sequentially and 21% year over year. Power products: Increased by 9% sequentially and 43% year over year. Geography: 30% of sales in China, 27% in rest of Asia, 17% in Japan, 15% in The Americas, 11% in Europe.

• Q4 2026 sales expected to be in the range of $230 to $240 million, midpoint equating to 22% year over year growth. - Gross margin expected to be between 49-51%. - Operating expenses expected to increase by approximately 3% sequentially. - Interest expense projected at $5 million in Q4. - Non-GAAP EPS expected to be between $0.14 and $0.18 per share.

• Risks and uncertainties related to forward-looking statements, where actual results could differ materially from projections. - Market risks, supply chain issues, and other operational uncertainties that could impact financial performance.

Q: Derek, on gross margin, revenue above high end but gross margin barely at midpoint. Can you talk about that?

A: Gross margin was affected by geographic and product mix; China was 30% of sales, driving it down a bit, but expecting improvement in future with better mix.

Q: Joseph Moore on automotive growth vs industrial. How to think about automotive growth into Q4 relative to industrial?

A: Industrial will lead Q4 growth at midpoint of ~2.5% increase, auto expected to be flat to marginally down due to Chinese New Year.

Q: Blayne Curtis on data center pipeline. Can you talk about that pipeline a little bit more, when that revenue kinda layers in and how big that opportunity is?

A: Fan drivers are driving current growth, current sensors are ramping, and isolated gate drivers are in design-in phase, with revenue expected to ramp in 18-24 months.