Semtech Corporation Reports 5% Revenue Growth to $909.3 Million for Fiscal Year 2025

Semtech Corporation reported net sales of $909.3 million for the fiscal year ended January 26, 2025, a 5% increase compared to $868.8 million in fiscal year 2024. This increase was primarily driven by higher sales in the infrastructure and high-end consumer markets, partially offset by lower volume in the industrial market. Specifically, infrastructure sales increased by $79.8 million, high-end consumer sales increased by $21.8 million, while industrial sales decreased by $61.1 million. The company attributed these changes to stronger demand in certain sectors and softer demand in others.

Gross profit for fiscal year 2025 was $456.5 million, up from $296.3 million in fiscal year 2024. This increase resulted from higher sales in Signal Integrity and Analog Mixed Signal and Wireless segments, partially offset by a decrease in IoT Systems and Connectivity sales. The gross margin improved to 50.2% in fiscal year 2025 from 34.1% in fiscal year 2024, primarily due to higher sales volume in Signal Integrity and reduced overhead. The company's operating expenses, net, decreased significantly to $406.6 million in fiscal year 2025 from $1,240.6 million in fiscal year 2024, largely due to lower goodwill and intangible impairments, and restructuring expenses.

Semtech completed the acquisition of Sierra Wireless, Inc. in January 2023 for approximately $1.3 billion. The company also divested its high reliability discrete diodes and assemblies business in May 2022 for $26.2 million. The acquisition of Sierra Wireless significantly impacted the company's financial performance in fiscal year 2024, contributing $431.5 million in net sales, primarily within the industrial end market. The company also completed a secondary public offering of common stock in December 2024, raising $661 million in gross proceeds. The company's headcount decreased year-over-year from 1,917 to 1,838 full-time employees as of January 26, 2025.

Semtech's sales were concentrated among a small number of customers, with some customers accounting for over 10% of net sales in fiscal year 2025. The company's sales to customers in China (including Hong Kong) comprised 43% of net sales in fiscal year 2025. The company outsources most of its manufacturing, relying on a limited number of suppliers and subcontractors located in the U.S., China, Taiwan, and Vietnam. The company identified material weaknesses in its internal control over financial reporting as of January 28, 2024, which it claims to have remediated as of January 26, 2025.

The company's outlook is subject to various risks, including macroeconomic conditions, industry cycles, competition, and governmental regulations. Semtech's financial performance is subject to seasonality, and the company anticipates that it will continue to retain earnings to finance business growth. The company's liquidity and capital resources are expected to be sufficient to meet its requirements for at least the next 12 months. The company's financial statements include various critical accounting estimates, including those related to inventories, revenue recognition, and income taxes.