Microchip Technology Announces Financial Results for Fourth Quarter and Fiscal Year 2026
Rhea-AI Summary
Microchip Technology (NASDAQ: MCHP) reported fiscal Q4 net sales of $1.311 billion, up 35.1% year‑over‑year and 10.6% sequentially, with GAAP EPS of $0.21 and non‑GAAP EPS of $0.57. Fiscal 2026 net sales were $4.713 billion; non‑GAAP EPS was $1.64. The Board declared a $0.455 quarterly cash dividend payable June 5, 2026. Company guidance for Q1 FY2027 targets midpoint net sales of $1.456 billion and non‑GAAP EPS of $0.69 (range $0.67–$0.71).
Positive
- Q4 net sales of $1.311 billion (+35.1% YoY)
- Q4 non‑GAAP EPS of $0.57 per diluted share
- Fiscal 2026 non‑GAAP EPS of $1.64 (up 25.2% YoY)
- Returned $984.0 million to shareholders through dividends
- Inventory reduction of $22.3 million in the quarter and $320.9 million since peak
- Q1 FY2027 guidance midpoint net sales $1.456 billion and non‑GAAP EPS ~$0.69
Negative
- GAAP net income attributable to common modest at $116.4 million in Q4 and $118.8 million for FY2026
- GAAP results adversely impacted by purchase accounting, restructuring charges and Series A preferred dividends
- Paused most factory expansion and reduced planned capital investments through fiscal 2027
- Dependency on non‑GAAP metrics due to multiple adjustments including intangible amortization and restructuring
Key Figures
Market Reality Check
Peers on Argus
MCHP is up 4.51% while key peers show mixed but generally positive moves: NXPI up 4.11%, MPWR up 4.51%, STM up 1.7%, CRDO up 0.19%, and ALAB down 6.85%. Momentum scanner also flags multiple semi peers (e.g., NXPI, STM) moving up, but MCHP’s stronger gain suggests company-specific earnings impact.
Previous Earnings Reports
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Feb 05 | Q3 FY2026 earnings | Positive | -2.6% | Q3 sales and EPS beat prior quarter with strong March guidance. |
| Nov 06 | Q2 FY2026 earnings | Negative | -5.2% | Q2 sales slightly down year-over-year despite sequential growth and bookings lift. |
| Aug 07 | Q1 FY2026 earnings | Negative | -6.6% | Q1 GAAP net loss and year-over-year sales decline despite strong inventory progress. |
| May 29 | Q1 FY2026 guidance raise | Positive | -0.1% | Raised Q1 revenue and EPS guidance as bookings exceeded expectations. |
| May 08 | Q4 FY2025 earnings | Negative | +12.6% | Weak FY2025 results but improving book-to-bill and expectations of cycle bottom. |
Earnings releases often saw muted or negative next-day moves, even when guidance or recovery signals were positive.
Over the last five earnings-related announcements, Microchip moved from a deep downcycle in FY2025 to a recovery trajectory in FY2026. Q4 FY2025 results with net sales of $970.5M and a GAAP loss marked the trough, followed by Q1–Q3 FY2026 where net sales climbed from $1.0755B to $1.186B. Management repeatedly highlighted inventory reduction, improving bookings, and raised guidance. Despite this, average 24-hour price moves around earnings were slightly negative at -0.37%.
Historical Comparison
In the past five earnings-related releases, MCHP’s average 24-hour move was -0.37%. Today’s +4.51% post-earnings reaction is notably stronger and more positive than recent history.
Earnings updates show a progression from FY2025’s downturn and GAAP losses toward FY2026 recovery, with rising quarterly net sales and improving non-GAAP EPS supporting the latest stronger results and guidance.
Market Pulse Summary
The stock is up +5.1% following this news. A strong positive reaction aligns with earnings that exceeded prior guidance and showed accelerating growth. With quarterly net sales at $1.311B and non-GAAP EPS of $0.57, the move compared against an average earnings-day change of -0.37% would represent a break from past muted responses. Investors would still need to weigh how quickly growth, guidance, and recent insider selling trends might normalize performance.
Key Terms
gaap financial
non-gaap financial
series a mandatory convertible preferred stock financial
tax cuts and jobs act regulatory
available-for-sale investments financial
restructuring charges financial
revenue recognition standard regulatory
AI-generated analysis. Not financial advice.
For the quarter ended March 31, 2026
- Net sales of
$1.311 billion , increased35.1% from the year ago quarter and up10.6% sequentially. The midpoint of our guidance provided on February 5, 2026 was net sales of$1.260 billion . - On a GAAP basis: gross profit of
61.0% ; operating income of$217.4 million and16.6% of net sales; net income attributable to common stockholders of$116.4 million ; and EPS of$0.21 per diluted share. Our guidance provided on February 5, 2026 was GAAP EPS per diluted share of $0.08 to $0.12. - On a Non-GAAP basis: gross profit of
61.6% ; operating income of$400.9 million and30.6% of net sales; net income of$327.3 million ; and EPS of$0.57 per diluted share. Our guidance provided on February 5, 2026 was Non-GAAP EPS per diluted share of $0.48 to $0.52. - Midpoint of net sales guidance for the June 2026 quarter of
$1.456 billion , which would be up35.3% from a year ago quarter and11.0% sequentially.
For fiscal year 2026
- Net sales of
$4.713 billion up7.1% over the prior year. - On a GAAP basis: gross profit of
57.7% ; operating income of$490.1 million ; net income attributable to common stockholders of$118.8 million , adversely impacted by purchase accounting adjustments associated with our previous acquisitions, restructuring charges and the preferred stock dividend related to our Series A Preferred Stock and EPS of$0.22 per diluted share. - On a Non-GAAP basis: gross profit of
58.5% ; operating income of$1.238 billion and26.3% of net sales; net income of$933.9 million and EPS of$1.64 per diluted share. - Returned
$984.0 million to shareholders through dividends.
CHANDLER, Ariz., May 07, 2026 (GLOBE NEWSWIRE) -- (NASDAQ: MCHP) - Microchip Technology Incorporated, a leading provider of smart, connected, and secure embedded control solutions, today reported results for the three months and fiscal year ended March 31, 2026.
"Our March quarter results significantly exceeded our expectations, with revenue of
“A key lesson from the last cycle was the importance of disciplined inventory, capacity, and working capital management, and that continues to guide how we are operating the business,” Sanghi added. “As conditions have improved, we are encouraged by the progress we made during the last five quarters in reducing inventory levels across the company and the channel. We now expect lower inventory and improving demand to support higher internal factory utilization, which will further drive operating leverage and progress toward our long‑term gross and operating margin objectives.” “Our March quarter results reflect improved operating leverage and continued progress in strengthening our balance sheet and working capital profile,” said Eric Bjornholt, Microchip's Senior Vice President and Chief Financial Officer. "During the quarter, we reduced inventory by
“We are seeing strong customer engagement and expanding design activity in data center and AI applications, driven by the breadth and performance of our high‑speed connectivity and compute portfolio,” said Rich Simoncic, Microchip's Chief Operating Officer. "The addition of our Gen6 PCIe retimer solutions further strengthens our data center offerings and supports increasingly complex system architectures, and we are encouraged by the growing number of design wins as customers adopt Microchip platforms, with engagement remaining broad-based across multiple end-markets."
“As we move into our seasonally stronger June and September quarters, we are seeing continued strengthening in booking activity and improved visibility across our business,” Sanghi said. “Based on current demand trends, backlog, and bookings activity, we expect net sales for the June quarter to be in the range of approximately
The following table summarizes Microchip's reported results for the three months and fiscal year ended March 31, 2026.
| Three Months Ended March 31, 2026(1) | Twelve Months Ended March 31, 2026(1) | |||||||
| Net sales | ||||||||
| GAAP | % | Non- GAAP(2) | % | 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 fourth quarter of fiscal 2026 were
GAAP net income attributable to common stockholders for the fourth quarter of fiscal 2026 was
Non-GAAP net income for the fourth quarter of fiscal 2026 was
Net sales for the fiscal year ended March 31, 2026 were
GAAP net income attributable to common stockholders for the fiscal year ended March 31, 2026 was
Non-GAAP net income for the fiscal year ended March 31, 2026 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 June 5, 2026 to stockholders of record on May 22, 2026. The Microchip Board also declared a quarterly cash dividend on Microchip's
First 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 549.7 to 550.4 million shares | 22.7 to 23.0 million shares | Approximately 572.4 to 573.4 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 June 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 June 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.
Capital expenditures for the quarter ending June 30, 2026 are expected to be approximately
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, cybersecurity incident expenses, 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, loss on settlement of debt, (gain) loss on available-for-sale investments, and dividends on our Series A Mandatory Convertible Preferred Stock. For the fourth quarters of fiscal 2026 and fiscal 2025, 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 June 2026 quarter between
| MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES | |||||||||||||||
| CONSOLIDATEDSTATEMENTS OF OPERATIONS | |||||||||||||||
| (in millions, except per share amounts, unaudited) | |||||||||||||||
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Net sales | $ | 1,311.2 | $ | 970.5 | $ | 4,713.1 | $ | 4,401.6 | |||||||
| Cost of sales | 511.6 | 469.4 | 1,992.0 | 1,933.7 | |||||||||||
| Gross profit | 799.6 | 501.1 | 2,721.1 | 2,467.9 | |||||||||||
| Research and development | 293.8 | 255.2 | 1,085.9 | 983.8 | |||||||||||
| Selling, general and administrative | 174.2 | 152.0 | 674.3 | 617.7 | |||||||||||
| Amortization of acquired intangible assets | 107.8 | 122.6 | 431.1 | 490.9 | |||||||||||
| Special charges and other, net | 6.4 | 71.6 | 39.7 | 79.2 | |||||||||||
| Operating expenses | 582.2 | 601.4 | 2,231.0 | 2,171.6 | |||||||||||
| Operating income (loss) | 217.4 | (100.3 | ) | 490.1 | 296.3 | ||||||||||
| Other expense, net | (53.5 | ) | (68.0 | ) | (216.6 | ) | (257.4 | ) | |||||||
| Income (loss) before income taxes | 163.9 | (168.3 | ) | 273.5 | 38.9 | ||||||||||
| Income tax provision (benefit) | 19.7 | (13.7 | ) | 43.5 | 39.4 | ||||||||||
| Net income (loss) | 144.2 | (154.6 | ) | 230.0 | (0.5 | ) | |||||||||
| Dividends on Series A Preferred Stock | (27.8 | ) | (2.2 | ) | (111.2 | ) | (2.2 | ) | |||||||
| Net income (loss) attributable to common stockholders | $ | 116.4 | $ | (156.8 | ) | $ | 118.8 | $ | (2.7 | ) | |||||
| Basic net income (loss) per common share | $ | 0.21 | $ | (0.29 | ) | $ | 0.22 | $ | (0.01 | ) | |||||
| Diluted net income (loss) per common share | $ | 0.21 | $ | (0.29 | ) | $ | 0.22 | $ | (0.01 | ) | |||||
| Basic common shares outstanding | 541.5 | 538.2 | 540.4 | 537.3 | |||||||||||
| Diluted common shares outstanding | 547.9 | 538.2 | 545.2 | 537.3 | |||||||||||
| MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES | |||||
| CONSOLIDATED BALANCE SHEETS | |||||
| (in millions, unaudited) | |||||
| ASSETS | |||||
| March 31, | March 31, | ||||
| 2026 | 2025 | ||||
| Cash and short-term investments | $ | 240.3 | $ | 771.7 | |
| Accounts receivable, net | 894.7 | 689.7 | |||
| Inventories | 1,035.4 | 1,293.5 | |||
| Other current assets | 207.2 | 236.4 | |||
| Total current assets | 2,377.6 | 2,991.3 | |||
| Property, plant and equipment, net | 1,106.7 | 1,183.7 | |||
| Other assets | 10,885.8 | 11,199.6 | |||
| Total assets | $ | 14,370.1 | $ | 15,374.6 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Accounts payable and accrued liabilities | $ | 1,136.3 | $ | 1,155.1 | |
| Total current liabilities | 1,136.3 | 1,155.1 | |||
| Long-term debt | 5,496.4 | 5,630.4 | |||
| Long-term income tax payable | 570.9 | 633.4 | |||
| Long-term deferred tax liability | 25.1 | 33.8 | |||
| Other long-term liabilities | 709.0 | 843.6 | |||
| Stockholders' equity | 6,432.4 | 7,078.3 | |||
| Total liabilities and stockholders' equity | $ | 14,370.1 | $ | 15,374.6 | |
| 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 March 31, | Twelve Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Gross profit, as reported | $ | 799.6 | $ | 501.1 | $ | 2,721.1 | $ | 2,467.9 | |||||||
| Share-based compensation expense | 8.4 | 3.5 | 34.9 | 21.8 | |||||||||||
| Cybersecurity incident expenses | — | — | — | 20.1 | |||||||||||
| Non-GAAP gross profit | $ | 808.0 | $ | 504.6 | $ | 2,756.0 | $ | 2,509.8 | |||||||
| GAAP gross profit percentage | 61.0 | % | 51.6 | % | 57.7 | % | 56.1 | % | |||||||
| Non-GAAP gross profit percentage | 61.6 | % | 52.0 | % | 58.5 | % | 57.0 | % | |||||||
RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES TO NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Research and development expenses, as reported | $ | 293.8 | $ | 255.2 | $ | 1,085.9 | $ | 983.8 | |||||||
| Share-based compensation expense | (38.4 | ) | (25.6 | ) | (140.0 | ) | (104.6 | ) | |||||||
| Non-GAAP research and development expenses | $ | 255.4 | $ | 229.6 | $ | 945.9 | $ | 879.2 | |||||||
| GAAP research and development expenses as a percentage of net sales | 22.4 | % | 26.3 | % | 23.0 | % | 22.4 | % | |||||||
| Non-GAAP research and development expenses as a percentage of net sales | 19.5 | % | 23.7 | % | 20.1 | % | 20.0 | % | |||||||
RECONCILIATION OF GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES TO NON-GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Selling, general and administrative expenses, as reported | $ | 174.2 | $ | 152.0 | $ | 674.3 | $ | 617.7 | |||||||
| Share-based compensation expense | (21.5 | ) | (11.6 | ) | (80.5 | ) | (54.0 | ) | |||||||
| Cybersecurity incident expenses | — | — | — | (1.3 | ) | ||||||||||
| Other adjustments | — | — | — | (7.3 | ) | ||||||||||
| Professional services associated with certain legal matters | (1.0 | ) | (1.4 | ) | (21.9 | ) | (2.5 | ) | |||||||
| Non-GAAP selling, general and administrative expenses | $ | 151.7 | $ | 139.0 | $ | 571.9 | $ | 552.6 | |||||||
| GAAP selling, general and administrative expenses as a percentage of net sales | 13.3 | % | 15.7 | % | 14.3 | % | 14.0 | % | |||||||
| Non-GAAP selling, general and administrative expenses as a percentage of net sales | 11.6 | % | 14.3 | % | 12.1 | % | 12.6 | % | |||||||
RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Operating expenses, as reported | $ | 582.2 | $ | 601.4 | $ | 2,231.0 | $ | 2,171.6 | |||||||
| Share-based compensation expense | (59.9 | ) | (37.2 | ) | (220.5 | ) | (158.6 | ) | |||||||
| Cybersecurity incident expenses | — | — | — | (1.3 | ) | ||||||||||
| Other adjustments | — | — | — | (7.3 | ) | ||||||||||
| Professional services associated with certain legal matters | (1.0 | ) | (1.4 | ) | (21.9 | ) | (2.5 | ) | |||||||
| Amortization of acquired intangible assets(1) | (107.8 | ) | (122.6 | ) | (431.1 | ) | (490.9 | ) | |||||||
| Special charges and other, net | (6.4 | ) | (71.6 | ) | (39.7 | ) | (79.2 | ) | |||||||
| Non-GAAP operating expenses | $ | 407.1 | $ | 368.6 | $ | 1,517.8 | $ | 1,431.8 | |||||||
| GAAP operating expenses as a percentage of net sales | 44.4 | % | 62.0 | % | 47.3 | % | 49.3 | % | |||||||
| Non-GAAP operating expenses as a percentage of net sales | 31.0 | % | 38.0 | % | 32.2 | % | 32.5 | % | |||||||
(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 (LOSS) TO NON-GAAP OPERATING INCOME
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Operating income (loss), as reported | $ | 217.4 | $ | (100.3 | ) | $ | 490.1 | $ | 296.3 | ||||||
| Share-based compensation expense | 68.3 | 40.7 | 255.4 | 180.4 | |||||||||||
| Cybersecurity incident expenses | — | — | — | 21.4 | |||||||||||
| Other adjustments | — | — | — | 7.3 | |||||||||||
| Professional services associated with certain legal matters | 1.0 | 1.4 | 21.9 | 2.5 | |||||||||||
| Amortization of acquired intangible assets(1) | 107.8 | 122.6 | 431.1 | 490.9 | |||||||||||
| Special charges and other, net | 6.4 | 71.6 | 39.7 | 79.2 | |||||||||||
| Non-GAAP operating income | $ | 400.9 | $ | 136.0 | $ | 1,238.2 | $ | 1,078.0 | |||||||
| GAAP operating income (loss) as a percentage of net sales | 16.6 | % | (10.3 | )% | 10.4 | % | 6.7 | % | |||||||
| Non-GAAP operating income as a percentage of net sales | 30.6 | % | 14.0 | % | 26.3 | % | 24.5 | % | |||||||
(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 OTHER EXPENSE, NET TO NON-GAAP OTHER EXPENSE, NET
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Other expense, net, as reported | $ | (53.5 | ) | $ | (68.0 | ) | $ | (216.6 | ) | $ | (257.4 | ) | |||
| Loss on settlement of debt | — | 1.4 | — | 1.7 | |||||||||||
| (Gain) loss on available-for-sale investments | — | 1.7 | (0.1 | ) | 3.5 | ||||||||||
| Non-GAAP other expense, net | $ | (53.5 | ) | $ | (64.9 | ) | $ | (216.7 | ) | $ | (252.2 | ) | |||
| GAAP other expense, net, as a percentage of net sales | (4.1 | )% | (7.0 | )% | (4.6 | )% | (5.8 | )% | |||||||
| Non-GAAP other expense, net, as a percentage of net sales | (4.1 | )% | (6.7 | )% | (4.6 | )% | (5.7 | )% | |||||||
RECONCILIATION OF GAAP INCOME TAX PROVISION (BENEFIT) TO NON-GAAP INCOME TAX PROVISION
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Income tax provision (benefit) as reported | $ | 19.7 | $ | (13.7 | ) | $ | 43.5 | $ | 39.4 | ||||||
| Income tax rate, as reported | 12.0 | % | 8.1 | % | 15.9 | % | 101.3 | % | |||||||
| Other non-GAAP tax adjustment | 0.4 | 23.4 | 44.1 | 77.6 | |||||||||||
| Non-GAAP income tax provision | $ | 20.1 | $ | 9.7 | $ | 87.6 | $ | 117.0 | |||||||
| Non-GAAP income tax rate | 5.8 | % | 13.6 | % | 8.6 | % | 14.2 | % | |||||||
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 March 31, | Twelve Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Net income (loss) attributable to common stockholders, as reported | $ | 116.4 | $ | (156.8 | ) | $ | 118.8 | $ | (2.7 | ) | |||||
| Dividends on Series A Preferred Stock | 27.8 | 2.2 | 111.2 | 2.2 | |||||||||||
| Share-based compensation expense | 68.3 | 40.7 | 255.4 | 180.4 | |||||||||||
| Cybersecurity incident expenses | — | — | — | 21.4 | |||||||||||
| Other adjustments | — | — | — | 7.3 | |||||||||||
| Professional services associated with certain legal matters | 1.0 | 1.4 | 21.9 | 2.5 | |||||||||||
| Amortization of acquired intangible assets | 107.8 | 122.6 | 431.1 | 490.9 | |||||||||||
| Special charges and other, net | 6.4 | 71.6 | 39.7 | 79.2 | |||||||||||
| Loss on settlement of debt | — | 1.4 | — | 1.7 | |||||||||||
| (Gain) loss on available-for-sale investments | — | 1.7 | (0.1 | ) | 3.5 | ||||||||||
| Other non-GAAP tax adjustment | (0.4 | ) | (23.4 | ) | (44.1 | ) | (77.6 | ) | |||||||
| Non-GAAP net income | $ | 327.3 | $ | 61.4 | $ | 933.9 | $ | 708.8 | |||||||
| GAAP net income (loss) attributable to common stockholders as a percentage of net sales | 8.9 | % | (16.2 | )% | 2.5 | % | (0.1 | )% | |||||||
| Non-GAAP net income as a percentage of net sales | 25.0 | % | 6.3 | % | 19.8 | % | 16.1 | % | |||||||
| Diluted net income (loss) per common share, as reported | $ | 0.21 | $ | (0.29 | ) | $ | 0.22 | $ | (0.01 | ) | |||||
| Non-GAAP diluted net income per common share | $ | 0.57 | $ | 0.11 | $ | 1.64 | $ | 1.31 | |||||||
| Diluted common shares outstanding, as reported | 547.9 | 538.2 | 545.2 | 537.3 | |||||||||||
| Diluted common shares outstanding non-GAAP | 571.7 | 543.5 | 569.9 | 542.5 | |||||||||||
RECONCILIATION OF GAAP DILUTED COMMON SHARES OUTSTANDING TO NON-GAAP DILUTED COMMON SHARES OUTSTANDING
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||
| 2026 | 2025 | 2026 | 2025 | ||||
| Diluted common shares outstanding, as reported | 547.9 | 538.2 | 545.2 | 537.3 | |||
| Dilutive effect of RSUs(1) | — | 2.7 | — | 4.0 | |||
| Dilutive effect of 2015 Senior Convertible Debt(1) | — | — | — | 0.1 | |||
| Dilutive effect of 2017 Senior Convertible Debt(1) | — | 0.3 | — | 0.5 | |||
| Dilutive effect of Series A Preferred Stock(1) | 23.8 | 2.3 | 24.7 | 0.6 | |||
| Diluted common shares outstanding non-GAAP | 571.7 | 543.5 | 569.9 | 542.5 | |||
(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 March 31, | Twelve Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| GAAP cash flow from operations, as reported | $ | 257.0 | $ | 205.9 | $ | 962.1 | $ | 898.1 | |||||||
| Capital expenditures | (14.2 | ) | (14.2 | ) | (91.1 | ) | (126.0 | ) | |||||||
| Free cash flow | $ | 242.8 | $ | 191.7 | $ | 871.0 | $ | 772.1 | |||||||
| GAAP cash flow from operations as a percentage of net sales | 19.6 | % | 21.2 | % | 20.4 | % | 20.4 | % | |||||||
| Free cash flow as a percentage of net sales | 18.5 | % | 19.8 | % | 18.5 | % | 17.5 | % | |||||||
Microchip will host a conference call today, May 7, 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 June 5, 2026.
A telephonic replay of the conference call will be available at approximately 8:00 p.m. (Eastern Time) on May 7, 2026 and will remain available until 5:00 p.m. (Eastern Time) on June 5, 2026. Interested parties may listen to the replay by dialing 201-612-7415/877-660-6853 and entering access code 13756975.
Cautionary Statement:
The statements in this release relating to broad‑based improvement across Microchip’s business, meaningful progress from the challenging conditions we were navigating, increasing momentum across our product lines, improving booking and sell‑through trends, strong expedite activity, and meaningful operating leverage, disciplined execution against our nine‑point recovery plan, the importance of disciplined inventory, capacity, and working capital management, and that continues to guide how we are operating the business, that we are encouraged by the progress we made during the last five quarters in reducing inventory levels across the company and the channel, that we now expect lower inventory and improving demand to support higher internal factory utilization, which will further drive operating leverage and progress toward our long‑term gross and operating margin objectives, that our March quarter results reflect improved operating leverage and continued progress in strengthening our balance sheet and working capital profile, that we are seeing strong customer engagement and expanding design activity in data center and AI applications, driven by the breadth and performance of our high‑speed connectivity and compute portfolio, that the addition of our Gen6 PCIe retimer solutions further strengthens our data center offerings and supports increasingly complex system architectures, and we are encouraged by the growing number of design wins as customers adopt Microchip platforms, with engagement remaining broad-based across multiple end-markets, that as we move into our seasonally stronger June and September quarters, we are seeing continued strengthening in booking activity and improved visibility across our business, that based on current demand trends, backlog, and bookings activity, we expect net sales for the June quarter to be in the range of approximately
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 May 7, 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.
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.
INVESTOR RELATIONS CONTACT:
Sajid Daudi -- Head of Investor Relations..... (480) 792-7385
