Microchip Technology Incorporated Q2 2027 Earnings Recap

Microchip shares fell 10.0% after earnings, with the outlook likely disappointing investors: December-quarter sales are expected to decline sequentially, and September revenue included $53 million of items not expected to recur. That makes the reported growth and above-guidance EPS less indicative of the underlying near-term trend.

Key Takeaways

• September-quarter net sales were $1.622 billion, up 9.2% sequentially and 42.2% year over year; non-GAAP EPS was $0.97, $0.04 above the midpoint of guidance.
• About $53 million of September sales came from infrequent items: a $21 million channel-pricing impact, $22 million of patent-licensing revenue above the expected December-quarter level, and a $10 million long-term-contract benefit.
• Non-GAAP gross margin was 66.5%, including $26.6 million of capacity-underutilization charges; the company said licensing revenue and the pricing change lifted the margin.
• Growth was broad across reported end markets, led by data center, up 55.7% year over year, and industrial, up 50.3%. Data center sales exceeded $250 million in the quarter.
• Inventory rose to $1.117 billion, or 184 days, up nine days sequentially. The company cited incoming wafers and finished-goods builds.