Allegro MicroSystems Beats Q3 Estimates, Guides In-Line for Q4
ALLEGRO MICROSYSTEMS INC (NASDAQ:ALGM) reported financial results for its fiscal third quarter of 2026, delivering a top and bottom-line beat against analyst expectations. The semiconductor company, a leader in power and sensing solutions for automotive and industrial markets, saw its shares rise approximately 3.9% in pre-market trading following the announcement, indicating a positive initial market reception to the report.
Earnings and Revenue Performance Versus Estimates
The company's third-quarter performance exceeded the consensus forecasts on both key metrics. Total net sales for the quarter ended December 26, 2025, reached $229.2 million, surpassing the high end of its own guidance range and representing a significant 29% increase compared to the same period last year.
- Reported Revenue (Q3 2026): $229.2 million
- Analyst Estimated Revenue: $225.1 million
- Result: Beat by $4.1 million
Profitability, as measured by non-GAAP earnings per share (EPS), more than doubled year-over-year. The reported figure came in slightly ahead of the Street's expectation.
- Reported Non-GAAP EPS (Q3 2026): $0.15
- Analyst Estimated Non-GAAP EPS: $0.146
- Result: Beat by $0.004
The strong quarterly growth was driven by broad-based strength across the company's core markets. Automotive sales grew 28% year-over-year, with e-Mobility sales surging 46%. Industrial and Other sales also saw robust growth, increasing 31% year-over-year, led by record performance in the Data Center segment.
Market Reaction and Forward Guidance
The pre-market share price increase suggests investors are rewarding the company for its outperformance in Q3. This positive momentum is further supported by the stock's recent performance, which has seen gains of over 12% in the last two weeks and 30% over the past month, potentially reflecting building optimism ahead of the earnings release.
Looking ahead, management provided its outlook for the fourth fiscal quarter ending March 27, 2026. The company expects total net sales in the range of $230 million to $240 million. At the midpoint of $235 million, this implies a 22% year-over-year growth rate.
- Company Q4 Sales Guidance: $230M - $240M (Midpoint: $235M)
- Analyst Estimated Q4 Sales: $232.3M
- Comparison: Company guidance is essentially in-line with, and slightly above the midpoint of, analyst expectations.
For profitability, Allegro provided non-GAAP EPS guidance for Q4 between $0.14 and $0.18. The company also noted a recent repricing of its term loan, which is expected to reduce annualized interest expense by an additional $700,000.
Key Takeaways from the Earnings Release
Beyond the headline numbers, several important points were highlighted by management:
- Strong Demand Indicators: CEO Mike Doogue noted "growing bookings and backlog, and a significant annual increase in year-to-date design wins," suggesting a healthy pipeline for future revenue.
- Margin Expansion: Non-GAAP gross margin improved to 49.9% in Q3, up from 49.1% a year ago, while non-GAAP operating margin expanded significantly to 15.4% from 10.8%.
- Analyst Day Teased: The company announced an upcoming Analyst Day where it plans to provide a deeper look into its longer-term strategy, growth drivers, and target financial model, which may serve as a future catalyst for the stock.
- Balance Sheet: The company ended the quarter with $155.2 million in cash and cash equivalents and reduced its total long-term debt compared to the end of the prior fiscal year.
Conclusion
Allegro MicroSystems delivered a solid quarter, beating revenue and earnings estimates while demonstrating strong execution in its core automotive and industrial markets. The company's guidance for the current quarter aligns with analyst expectations, providing a stable near-term outlook. The positive pre-market reaction reflects investor approval of the results and the ongoing growth narrative, particularly in high-potential areas like e-Mobility and data centers. The market will now look towards the upcoming Analyst Day for further details on the company's long-term trajectory.
For a detailed breakdown of historical earnings, future estimates, and analyst projections, you can review the earnings data for ALLEGRO MICROSYSTEMS INC (NASDAQ:ALGM).
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