Microchip Technology Announces Financial Results for First Quarter of Fiscal Year 2027
Rhea-AI Summary
Microchip Technology (NASDAQ:MCHP) reported fiscal Q1 2027 net sales of $1.485 billion, up 38.0% year over year and 13.2% sequentially, exceeding prior guidance midpoint of $1.456 billion. GAAP EPS was $0.37 versus a prior-year GAAP loss of $0.09; non-GAAP EPS was $0.76, above the guided $0.67–$0.71 range.
According to Microchip, GAAP gross margin was 63.2% and GAAP operating margin 22.7%, while non-GAAP gross and operating margins reached 63.8% and 35.1%. The company reduced net debt by about $170 million and returned $246.9 million via dividends. A quarterly common dividend of $0.455 per share was declared, payable September 9, 2026. For Q2 FY27, Microchip guides net sales to $1.589–$1.618 billion and non-GAAP EPS of $0.91–$0.95, with non-GAAP operating margin projected at 38.5%–39.5%.
Positive
- Net sales $1.485B, up 38.0% YoY and 13.2% QoQ, above guidance midpoint
- Non-GAAP EPS $0.76, up from $0.27 a year ago and above $0.67–$0.71 guidance
- GAAP results swing from $46.4M loss to $202.0M net income attributable to common stockholders YoY
- Non-GAAP operating income $521.1M, 35.1% of net sales in Q1 FY27
- Net debt reduced by ~$170M during the June 2026 quarter
- Q2 FY27 guidance: net sales $1.589–$1.618B and non-GAAP EPS $0.91–$0.95
Negative
- Other expense $46.9M and $27.8M preferred dividends reduce GAAP net income to common
- $90.0M amortization of acquired intangibles and $18.9M special charges weigh on GAAP profitability
- GAAP operating expenses $602.1M, up from $544.6M year over year
News Explained
Microchip has committed a $27.8 million preferred-stock dividend, payable September 15, while its per-share outlook uses different GAAP and non-GAAP share counts.
Microchip has reported its first-quarter fiscal 2027 results and declared a
The release's non-GAAP results exclude share-based compensation, restructuring and acquisition-related expenses, among other items, and exclude the preferred-stock dividend; the company says these measures are not substitutes for GAAP results.
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- Net sales of
$1.485 billion , increased38.0% from the year-ago quarter and up13.2% sequentially. The midpoint of our guidance provided on May 7, 2026 was net sales of$1.456 billion . - On a GAAP basis: gross profit of
63.2% ; operating income of$336.8 million and22.7% of net sales; net income attributable to common stockholders of$202.0 million ; and EPS of$0.37 per diluted share. Our guidance provided on May 7, 2026 was GAAP EPS per diluted share of $0.28 to $0.29. - On a Non-GAAP basis: gross profit of
63.8% ; operating income of$521.1 million and35.1% of net sales; net income of$438.6 million ; and EPS of$0.76 per diluted share. Our guidance provided on May 7, 2026 was Non-GAAP EPS per diluted share of $0.67 to $0.71. - Returned approximately
$246.9 million to common stockholders in the June quarter through dividends. - Quarterly dividend on common stock declared for the September quarter of 45.5 cents per share.
- Continued balance sheet deleveraging with approximately
$170 million reduction in net debt during the June quarter.
CHANDLER, Ariz., Aug. 06, 2026 (GLOBE NEWSWIRE) -- Microchip Technology Incorporated, a leading provider of smart, connected, and secure embedded control solutions, today reported results for the three months ended June 30, 2026.
"We kicked off fiscal 2027 on a strong note, with net sales increasing
Mr. Sanghi added, “Our operational metrics strengthened during the quarter, with inventory days declining from 185 days on March 31 to 175 days on June 30 and non-GAAP gross margin expanding sequentially to
Eric Bjornholt, Microchip's Corporate Senior Vice President and Chief Financial Officer, said, "Our June quarter financial performance demonstrates the strength of our operating model and the significant leverage embedded in the business as revenue recovers. Higher factory utilization, lower underutilization charges, and disciplined expense management drove meaningful sequential improvements in profitability and cash generation during the quarter. We also continued to strengthen our balance sheet and improve financial flexibility by reducing net debt by approximately
Mr. Sanghi concluded, “As we enter the September quarter, improving demand trends, healthy bookings activity, stronger customer engagement, and increasing traction in growth-oriented applications continue to reinforce our confidence in the direction of the business. We expect net sales for the September quarter to be up sequentially between
The following table summarizes Microchip's reported results for the three months ended June 30, 2026.
| Three Months Ended June 30, 2026(1) | |||||
| Net sales | |||||
| GAAP | % | Non-GAAP(2) | % | ||
| Gross profit | |||||
| Operating income | |||||
| Other expense | |||||
| Income tax provision | |||||
| Net income | |||||
| Dividends on Series A Preferred Stock | — | ||||
| Net income attributable to common stockholders | |||||
| Diluted net income per common share | |||||
(1) In millions, except per share amounts and percentages of net sales.
(2) See the "Use of Non-GAAP Financial Measures" section of this release.
Net sales for the first quarter of fiscal 2027 were
GAAP net income attributable to common stockholders for the first quarter of fiscal 2027 was
Non-GAAP net income for the first quarter of fiscal 2027 was
Microchip announced today that its Board of Directors declared a quarterly cash dividend on its common stock of 45.5 cents per share, which is payable on September 9, 2026 to stockholders of record on August 24, 2026. The Microchip Board also declared a quarterly cash dividend on Microchip's
Second Quarter Fiscal Year 2027 Outlook:
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.
| Microchip Consolidated Guidance | |||
| Net Sales | |||
| GAAP(5) | Non-GAAP Adjustments(1) | Non-GAAP(1) | |
| Gross Profit | |||
| Operating Expenses(2) | |||
| Operating Income | |||
| Other Expense, net | |||
| Income Tax Provision | |||
| Net income | |||
| Dividends on Series A Preferred Stock | — | ||
| Net income attributable to common stockholders | |||
| Diluted Common Shares Outstanding | Approximately 550.7 to 551.7 million shares | 23.8 million shares | Approximately 574.5 to 575.5 million shares |
| Diluted net income per common share | |||
(1) See the "Use of Non-GAAP Financial Measures" section of this release for information regarding our non-GAAP guidance.
(2) We are not able to estimate the amount of certain Special Charges and Other, net that may be incurred during the quarter ending September 30, 2026. Therefore, our estimate of GAAP operating expenses excludes certain amounts that may be recognized as Special Charges and Other, net in the quarter ending September 30, 2026.
(3) The forecast for GAAP tax expense excludes any unexpected tax events that may occur during the quarter, as these amounts cannot be forecasted.
(4) Represents the expected cash tax rate for fiscal 2027, excluding any transition tax payments associated with the Tax Cuts and Jobs Act.
(5) Our GAAP guidance excludes the impact of any potential gains or charges related to our ongoing evaluation of restructuring activities including the sale of our Fab 2 wafer fabrication facility in Tempe, Arizona.
Capital expenditures for the quarter ending September 30, 2026 are expected to be between
Under the GAAP revenue recognition standard, we are required to recognize revenue when control of the product changes from us to a customer or distributor. We focus our sales and marketing efforts on creating demand for our products in the end markets we serve and not on moving inventory into our distribution network. We also manage our manufacturing and supply chain operations, including our distributor relationships, towards the goal of having our products available at the time and location the end customer desires.
Use of Non-GAAP Financial Measures: Our non-GAAP adjustments, where applicable, include the effect of share-based compensation, restructuring charges, expenses related to our acquisition activities (including intangible asset amortization, severance, other restructuring costs, and legal and other general and administrative expenses including legal fees and expenses for litigation related to our Microsemi acquisition), professional services associated with certain legal matters, and dividends on our Series A Mandatory Convertible Preferred Stock. For the first quarters of fiscal 2027 and fiscal 2026, our non-GAAP income tax expense is presented based on projected cash taxes for the fiscal year, excluding transition tax payments under the Tax Cuts and Jobs Act.
We are required to estimate the cost of certain forms of share-based compensation, including restricted stock units and our employee stock purchase plan, and to record a commensurate expense in our income statement. Share-based compensation expense is a non-cash expense that varies in amount from period to period and is affected by the price of our stock at the date of grant. The price of our stock is affected by market forces that are difficult to predict and are not within the control of management. Our other non-GAAP adjustments are either non-cash expenses, unusual or infrequent items, or other expenses related to transactions. Management excludes all of these items from its internal operating forecasts and models.
We are using non-GAAP operating expenses in dollars, including non-GAAP research and development expenses and non-GAAP selling, general and administrative expenses, non-GAAP other expense, net, and non-GAAP income tax rate, which exclude the items noted above, as applicable, to permit additional analysis of our performance.
Management believes these non-GAAP measures are useful to investors because they enhance the understanding of our historical financial performance and comparability between periods. Many of our investors have requested that we disclose this non-GAAP information because they believe it is useful in understanding our performance as it excludes non-cash and other charges that many investors feel may obscure our underlying operating results. Management uses non-GAAP measures to manage and assess the profitability of our business and for compensation purposes. We also use our non-GAAP results when developing and monitoring our budgets and spending. Our determination of these non-GAAP measures might not be the same as similarly titled measures used by other companies, and it should not be construed as a substitute for amounts determined in accordance with GAAP. There are limitations associated with using these non-GAAP measures, including that they exclude financial information that some may consider important in evaluating our performance. Management compensates for this by presenting information on both a GAAP and non-GAAP basis for investors and providing reconciliations of the GAAP and non-GAAP results.
Generally, gross profit fluctuates over time, driven primarily by the mix of products sold and licensing revenue; variances in manufacturing yields; fixed cost absorption; wafer fab loading levels; costs of wafers from foundries; inventory reserves; pricing pressures in our non-proprietary product lines; and competitive and economic conditions. Operating expenses fluctuate over time, primarily due to net sales and profit levels.
Diluted Common Shares Outstanding can vary for, among other things, the trading price of our common stock, the vesting of restricted stock units, the potential for incremental dilutive shares from our convertible debentures and our mandatory convertible preferred stock (additional information regarding our share count is available in the investor relations section of our website under the heading "Supplemental Information"), and repurchases or issuances of shares of our common stock. The diluted common shares outstanding presented in the guidance table above assumes an average Microchip stock price in the September 2026 quarter between
| MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| (in millions, except per share amounts, unaudited) | |||||||
| Three Months Ended June 30, | |||||||
| 2026 | 2025 | ||||||
| Net sales | $ | 1,484.7 | $ | 1,075.5 | |||
| Cost of sales | 545.8 | 498.8 | |||||
| Gross profit | 938.9 | 576.7 | |||||
| Research and development | 308.9 | 255.5 | |||||
| Selling, general and administrative | 184.3 | 159.3 | |||||
| Amortization of acquired intangible assets | 90.0 | 107.6 | |||||
| Special charges and other, net | 18.9 | 22.2 | |||||
| Operating expenses | 602.1 | 544.6 | |||||
| Operating income | 336.8 | 32.1 | |||||
| Other expense, net | (46.9 | ) | (47.9 | ) | |||
| Income (loss) before income taxes | 289.9 | (15.8 | ) | ||||
| Income tax provision | 60.1 | 2.8 | |||||
| Net income (loss) | 229.8 | (18.6 | ) | ||||
| Dividends on Series A Preferred Stock | (27.8 | ) | (27.8 | ) | |||
| Net income (loss) attributable to common stockholders | $ | 202.0 | $ | (46.4 | ) | ||
| Basic net income (loss) per common share | $ | 0.37 | $ | (0.09 | ) | ||
| Diluted net income (loss) per common share | $ | 0.37 | $ | (0.09 | ) | ||
| Basic common shares outstanding | 542.5 | 539.2 | |||||
| Diluted common shares outstanding | 550.5 | 539.2 | |||||
| MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES | |||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
| (in millions, unaudited) | |||||
| ASSETS | |||||
| June 30, | March 31, | ||||
| 2026 | 2026 | ||||
| Cash and short-term investments | $ | 272.3 | $ | 240.3 | |
| Accounts receivable, net | 967.7 | 894.7 | |||
| Inventories | 1,047.3 | 1,035.4 | |||
| Other current assets | 198.9 | 207.2 | |||
| Total current assets | 2,486.2 | 2,377.6 | |||
| Property, plant and equipment, net | 1,084.4 | 1,106.7 | |||
| Other assets | 10,836.8 | 10,885.8 | |||
| Total assets | $ | 14,407.4 | $ | 14,370.1 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Accounts payable and accrued liabilities | $ | 1,294.4 | $ | 1,136.3 | |
| Total current liabilities | 1,294.4 | 1,136.3 | |||
| Long-term debt | 5,361.3 | 5,496.4 | |||
| Long-term income tax payable | 580.2 | 570.9 | |||
| Long-term deferred tax liability | 25.4 | 25.1 | |||
| Other long-term liabilities | 695.1 | 709.0 | |||
| Stockholders' equity | 6,451.0 | 6,432.4 | |||
| Total liabilities and stockholders' equity | $ | 14,407.4 | $ | 14,370.1 | |
| MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES | |||||||
| RECONCILIATION OF GAAP TO NON-GAAP MEASURES | |||||||
| (in millions, except per share amounts and percentages; unaudited) | |||||||
| RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT | |||||||
| Three Months Ended June 30, | |||||||
| 2026 | 2025 | ||||||
| Gross profit, as reported | $ | 938.9 | $ | 576.7 | |||
| Share-based compensation expense | 8.7 | 7.7 | |||||
| Non-GAAP gross profit | $ | 947.6 | $ | 584.4 | |||
| GAAP gross profit percentage | 63.2 | % | 53.6 | % | |||
| Non-GAAP gross profit percentage | 63.8 | % | 54.3 | % | |||
| RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES TO NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES | |||||||
| Three Months Ended June 30, | |||||||
| 2026 | 2025 | ||||||
| Research and development expenses, as reported | $ | 308.9 | $ | 255.5 | |||
| Share-based compensation expense | (41.1 | ) | (29.1 | ) | |||
| Non-GAAP research and development expenses | $ | 267.8 | $ | 226.4 | |||
| GAAP research and development expenses as a percentage of net sales | 20.8 | % | 23.8 | % | |||
| Non-GAAP research and development expenses as a percentage of net sales | 18.0 | % | 21.1 | % | |||
| RECONCILIATION OF GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES TO NON-GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | |||||||
| Three Months Ended June 30, | |||||||
| 2026 | 2025 | ||||||
| Selling, general and administrative expenses, as reported | $ | 184.3 | $ | 159.3 | |||
| Share-based compensation expense | (25.2 | ) | (16.1 | ) | |||
| Professional services associated with certain legal matters | (0.4 | ) | (7.5 | ) | |||
| Non-GAAP selling, general and administrative expenses | $ | 158.7 | $ | 135.7 | |||
| GAAP selling, general and administrative expenses as a percentage of net sales | 12.4 | % | 14.8 | % | |||
| Non-GAAP selling, general and administrative expenses as a percentage of net sales | 10.7 | % | 12.6 | % | |||
| RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES | |||||||
| Three Months Ended June 30, | |||||||
| 2026 | 2025 | ||||||
| Operating expenses, as reported | $ | 602.1 | $ | 544.6 | |||
| Share-based compensation expense | (66.3 | ) | (45.2 | ) | |||
| Professional services associated with certain legal matters | (0.4 | ) | (7.5 | ) | |||
| Amortization of acquired intangible assets (1) | (90.0 | ) | (107.6 | ) | |||
| Special charges and other, net | (18.9 | ) | (22.2 | ) | |||
| Non-GAAP operating expenses | $ | 426.5 | $ | 362.1 | |||
| GAAP operating expenses as a percentage of net sales | 40.6 | % | 50.6 | % | |||
| Non-GAAP operating expenses as a percentage of net sales | 28.7 | % | 33.7 | % | |||
(1) Amortization of acquired intangible assets consists of core and developed technology and customer-related acquired intangible assets in connection with business combinations. Such charges are excluded for purposes of calculating certain non-GAAP measures.
| RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME | |||||||
| Three Months Ended June 30, | |||||||
| 2026 | 2025 | ||||||
| Operating income, as reported | $ | 336.8 | $ | 32.1 | |||
| Share-based compensation expense | 75.0 | 52.9 | |||||
| Professional services associated with certain legal matters | 0.4 | 7.5 | |||||
| Amortization of acquired intangible assets (1) | 90.0 | 107.6 | |||||
| Special charges and other, net | 18.9 | 22.2 | |||||
| Non-GAAP operating income | $ | 521.1 | $ | 222.3 | |||
| GAAP operating income as a percentage of net sales | 22.7 | % | 3.0 | % | |||
| Non-GAAP operating income as a percentage of net sales | 35.1 | % | 20.7 | % | |||
(1) Amortization of acquired intangible assets consists of core and developed technology and customer-related acquired intangible assets in connection with business combinations. Such charges are excluded for purposes of calculating certain non-GAAP measures. The use of acquired intangible assets contributed to our revenues earned during the periods presented.
RECONCILIATION OF GAAP INCOME TAX PROVISION TO NON-GAAP INCOME TAX PROVISION
| Three Months Ended June 30, | |||||||
| 2026 | 2025 | ||||||
| Income tax provision as reported | $ | 60.1 | $ | 2.8 | |||
| Income tax rate, as reported | 20.7 | % | (17.7 | )% | |||
| Other non-GAAP tax adjustment | (24.5 | ) | 16.9 | ||||
| Non-GAAP income tax provision | $ | 35.6 | $ | 19.7 | |||
| Non-GAAP income tax rate | 7.5 | % | 11.3 | % | |||
| RECONCILIATION OF GAAP NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS AND GAAP DILUTED NET INCOME (LOSS) PER COMMON SHARE TO NON-GAAP NET INCOME AND NON-GAAP DILUTED NET INCOME PER COMMON SHARE | |||||||
| Three Months Ended June 30, | |||||||
| 2026 | 2025 | ||||||
| Net income (loss) attributable to common stockholders, as reported | $ | 202.0 | $ | (46.4 | ) | ||
| Dividends on Series A Preferred Stock | 27.8 | 27.8 | |||||
| Share-based compensation expense | 75.0 | 52.9 | |||||
| Professional services associated with certain legal matters | 0.4 | 7.5 | |||||
| Amortization of acquired intangible assets | 90.0 | 107.6 | |||||
| Special charges and other, net | 18.9 | 22.2 | |||||
| Other non-GAAP tax adjustment | 24.5 | (16.9 | ) | ||||
| Non-GAAP net income | $ | 438.6 | $ | 154.7 | |||
| GAAP net income (loss) attributable to common stockholders as a percentage of net sales | 13.6 | % | (4.3 | )% | |||
| Non-GAAP net income as a percentage of net sales | 29.5 | % | 14.4 | % | |||
| Diluted net income (loss) per common share, as reported | $ | 0.37 | $ | (0.09 | ) | ||
| Non-GAAP diluted net income per common share | $ | 0.76 | $ | 0.27 | |||
| Diluted common shares outstanding, as reported | 550.5 | 539.2 | |||||
| Diluted common shares outstanding non-GAAP | 574.3 | 569.5 | |||||
| RECONCILIATION OF GAAP DILUTED COMMON SHARES OUTSTANDING TO NON-GAAP DILUTED COMMON SHARES OUTSTANDING | |||
| Three Months Ended June 30, | |||
| 2026 | 2025 | ||
| Diluted common shares outstanding, as reported | 550.5 | 539.2 | |
| Dilutive effect of RSUs(1) | — | 3.0 | |
| Dilutive effect of 2017 Senior Convertible Debt(1) | — | 0.3 | |
| Dilutive effect of Series A Preferred Stock(1) | 23.8 | 27.0 | |
| Diluted common shares outstanding non-GAAP | 574.3 | 569.5 | |
(1)The non-GAAP adjustment includes the impact that is anti-dilutive on a GAAP basis for the periods shown in the table above.
| RECONCILIATION OF GAAP CASH FLOW FROM OPERATIONS TO FREE CASH FLOW | |||||||
| Three Months Ended June 30, | |||||||
| 2026 | 2025 | ||||||
| GAAP cash flow from operations, as reported | $ | 511.5 | $ | 275.6 | |||
| Capital expenditures | (13.9 | ) | (17.9 | ) | |||
| Free cash flow | $ | 497.6 | $ | 257.7 | |||
| GAAP cash flow from operations as a percentage of net sales | 34.5 | % | 25.6 | % | |||
| Free cash flow as a percentage of net sales | 33.5 | % | 24.0 | % | |||
Microchip will host a conference call today, August 6, 2026 at 5:00 p.m. (Eastern Time) to discuss this release. This call will be simulcast over the Internet at www.microchip.com. The webcast will be available for replay until September 3, 2026.
A telephonic replay of the conference call will be available at approximately 8:00 p.m. (Eastern Time) on August 6, 2026 and will remain available until 5:00 p.m. (Eastern Time) on September 3, 2026. Interested parties may listen to the replay by dialing 201-612-7415/877-660-6853 and entering access code 13761643.
Cautionary Statement:
The statements in this release relating to improving demand, continued inventory normalization, and stronger factory utilization, better operational leverage, our continued progress towards our long-term business model, growing momentum in data center and connectivity applications, that these trends reinforce our confidence in both the recovery underway and our long-term growth opportunities, the strength of our operating model and the significant leverage embedded in the business as revenue recovers, that higher factory utilization, lower underutilization charges, and disciplined expense management drove meaningful sequential improvements in profitability and cash generation, that we continue to strengthen our balance sheet and improve financial flexibility by reducing net debt, improving demand trends, healthy bookings activity, stronger customer engagement, and increasing traction in growth-oriented applications continue to reinforce our confidence in the direction of the business, that we expect net sales for the September quarter to be up sequentially between
For a detailed discussion of these and other risk factors, please refer to Microchip's filings on Forms 10-K and 10-Q. You can obtain copies of Forms 10-K and 10-Q and other relevant documents for free at Microchip's website (www.microchip.com) or the SEC's website (www.sec.gov) or from commercial document retrieval services.
Stockholders of Microchip are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Microchip does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after this August 6, 2026 press release, or to reflect the occurrence of unanticipated events.
About Microchip:
Microchip Technology Inc. is a broadline supplier of semiconductors committed to making innovative design easier through total system solutions that address critical challenges at the intersection of emerging technologies and durable end markets. Its easy-to-use development tools and comprehensive product portfolio support customers throughout the design process, from concept to completion. Headquartered in Chandler, Arizona, Microchip offers outstanding technical support and delivers solutions across the industrial, automotive, consumer, aerospace and defense, communications and computing markets. For more information, visit the Microchip website at www.microchip.com.
INVESTOR RELATIONS CONTACT:
Sajid Daudi -- Head of Investor Relations..... (480) 792-7385
Note: The Microchip name and logo are registered trademarks of Microchip Technology Incorporated in the U.S.A. and other countries. All other trademarks mentioned herein are the property of their respective companies.
