Microchip Technology announced robust financial results for its third fiscal quarter of 2026, exceeding expectations with significant year-over-year growth in net sales and improved profitability. The company highlighted a broad-based recovery across its end markets and the successful execution of its strategic initiatives, positioning it for continued expansion in the upcoming quarters.
Key Takeaways
- Strong Revenue Growth: Net sales reached $1.186 billion, a 15.6% increase from the prior year’s quarter.
- Margin Expansion: Non-GAAP gross margin improved to 60.5%, nearing the company’s long-term target.
- Profitability Boost: Non-GAAP EPS rose to $0.44, significantly up from the previous year.
- Positive Outlook: Guidance for the next quarter indicates continued sequential and year-over-year growth.
Financial Performance Highlights
Microchip Technology reported net sales of $1.186 billion for the third quarter ended December 31, 2025. This figure represents a 4.0% increase sequentially and a substantial 15.6% rise compared to the same quarter in the previous fiscal year. On a GAAP basis, the company posted a gross profit of 59.6%, operating income of $151.7 million, and diluted EPS of $0.06.
More significantly, on a Non-GAAP basis, Microchip achieved a gross profit of 60.5%, operating income of $337.8 million, and diluted EPS of $0.44. This non-GAAP performance exceeded the company’s updated guidance provided earlier in the quarter.
Management Commentary and Strategy
Steve Sanghi, Microchip’s CEO, expressed satisfaction with the results, stating, "Our fiscal third quarter results exceeded our expectations." He attributed the success to a broad-based recovery across end markets and significant margin expansion, demonstrating the effectiveness of their nine-point recovery plan. Sanghi also highlighted progress in inventory reduction, which is expected to enhance operational efficiency as manufacturing capacity ramps up in the March quarter. The company’s focus on debt reduction remains a priority, with improving operational performance expected to strengthen the balance sheet.
Rich Simoncic, Chief Operating Officer, noted strong momentum in the connectivity business, driven by modernization cycles in automotive and industrial markets. Microchip’s "Total System Solution" approach, combining various connectivity solutions, aims to reduce complexity and time-to-market for customers.
Outlook for the Fourth Quarter
Looking ahead to the fourth quarter of fiscal year 2026, Microchip provided guidance with a midpoint net sales forecast of $1.260 billion. This projection suggests an approximate 6.2% sequential growth and a significant 29.8% year-over-year increase. The company anticipates continued gross margin improvements and robust customer engagement across its diverse end markets. Capital expenditures for the upcoming quarter are expected to be between $20 million and $23 million, with full-year fiscal 2026 capital expenditures projected to be at or below $100 million.
Shareholder Returns
Microchip continued its commitment to returning capital to shareholders. In the December quarter, approximately $246.1 million was returned through dividends. The Board of Directors declared a quarterly cash dividend on common stock of 45.5 cents per share, payable on March 10, 2026.
Sources
Founder Dinis Guarda
IntelligentHQ Your New Business Network.
IntelligentHQ is a Business network and an expert source for finance, capital markets and intelligence for thousands of global business professionals, startups, and companies.
We exist at the point of intersection between technology, social media, finance and innovation.
IntelligentHQ leverages innovation and scale of social digital technology, analytics, news, and distribution to create an unparalleled, full digital medium and social business networks spectrum.
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Microchip Technology Surpasses Expectations in Q3 FY2026, Signals Strong Recovery
Microchip Technology announced robust financial results for its third fiscal quarter of 2026, exceeding expectations with significant year-over-year growth in net sales and improved profitability. The company highlighted a broad-based recovery across its end markets and the successful execution of its strategic initiatives, positioning it for continued expansion in the upcoming quarters.
Key Takeaways
Financial Performance Highlights
Microchip Technology reported net sales of $1.186 billion for the third quarter ended December 31, 2025. This figure represents a 4.0% increase sequentially and a substantial 15.6% rise compared to the same quarter in the previous fiscal year. On a GAAP basis, the company posted a gross profit of 59.6%, operating income of $151.7 million, and diluted EPS of $0.06.
More significantly, on a Non-GAAP basis, Microchip achieved a gross profit of 60.5%, operating income of $337.8 million, and diluted EPS of $0.44. This non-GAAP performance exceeded the company’s updated guidance provided earlier in the quarter.
Management Commentary and Strategy
Steve Sanghi, Microchip’s CEO, expressed satisfaction with the results, stating, "Our fiscal third quarter results exceeded our expectations." He attributed the success to a broad-based recovery across end markets and significant margin expansion, demonstrating the effectiveness of their nine-point recovery plan. Sanghi also highlighted progress in inventory reduction, which is expected to enhance operational efficiency as manufacturing capacity ramps up in the March quarter. The company’s focus on debt reduction remains a priority, with improving operational performance expected to strengthen the balance sheet.
Rich Simoncic, Chief Operating Officer, noted strong momentum in the connectivity business, driven by modernization cycles in automotive and industrial markets. Microchip’s "Total System Solution" approach, combining various connectivity solutions, aims to reduce complexity and time-to-market for customers.
Outlook for the Fourth Quarter
Looking ahead to the fourth quarter of fiscal year 2026, Microchip provided guidance with a midpoint net sales forecast of $1.260 billion. This projection suggests an approximate 6.2% sequential growth and a significant 29.8% year-over-year increase. The company anticipates continued gross margin improvements and robust customer engagement across its diverse end markets. Capital expenditures for the upcoming quarter are expected to be between $20 million and $23 million, with full-year fiscal 2026 capital expenditures projected to be at or below $100 million.
Shareholder Returns
Microchip continued its commitment to returning capital to shareholders. In the December quarter, approximately $246.1 million was returned through dividends. The Board of Directors declared a quarterly cash dividend on common stock of 45.5 cents per share, payable on March 10, 2026.
Sources
Technology Incorporated (MCHP), Microchip Technology.
Founder Dinis Guarda
IntelligentHQ Your New Business Network.
IntelligentHQ is a Business network and an expert source for finance, capital markets and intelligence for thousands of global business professionals, startups, and companies.
We exist at the point of intersection between technology, social media, finance and innovation.
IntelligentHQ leverages innovation and scale of social digital technology, analytics, news, and distribution to create an unparalleled, full digital medium and social business networks spectrum.
IntelligentHQ is working hard, to become a trusted, and indispensable source of business news and analytics, within financial services and its associated supply chains and ecosystems
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