Semtech Corporation reported a decline in net sales for the second quarter and first half of fiscal year 2025, with net sales of $215.4 million for the three months ended July 28, 2024, down from $238.4 million in the same period of the previous year. For the six months, net sales totaled $421.5 million, a decrease from $474.9 million year-over-year. The decline was attributed to softer demand in the IoT Systems and Connectivity segment, which saw a significant drop in sales volume and pricing pressures.

Despite the decrease in sales, the company achieved a gross profit of $105.5 million for the second quarter, an increase from $100.7 million in the prior year, resulting in a gross margin improvement from 42.3% to 49.0%. This was driven by a reduction in the cost of sales, which fell to 50.0% from 53.3% in the same quarter of the previous year. Operating expenses also saw a significant reduction, totaling $97.7 million for the three months ended July 28, 2024, compared to $400.8 million in the same period of 2023, leading to an operating income of $7.8 million, a stark contrast to the operating loss of $300.1 million reported a year earlier.

The net loss for the second quarter was $170.3 million, an improvement from a net loss of $382.0 million in the same quarter of the previous year. The basic loss per share also improved to $(2.61) from $(5.97). For the first half of fiscal year 2025, the net loss was $193.5 million, compared to $411.4 million in the same period of the previous year.

Strategically, Semtech completed the exchange of approximately $188.1 million of its 2028 Convertible Senior Notes for 10.4 million shares of common stock on July 24, 2024, resulting in a loss of $144.7 million on extinguishment of debt. The company also underwent organizational restructuring, combining its IoT Systems and IoT Connected Services segments, effective Q1 FY 2025. Leadership changes included the appointment of Hong Q. Hou as President and CEO, effective June 6, 2024, succeeding Paul Pickle.

As of July 28, 2024, Semtech had $115.9 million in cash and cash equivalents and $282.2 million of available undrawn borrowing capacity under its Revolving Credit Facility, indicating a stable liquidity position despite the operational challenges faced. The company remains focused on enhancing its internal controls following the acquisition of Sierra Wireless, which has contributed to material weaknesses in financial reporting.