July 15, 2024
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Semtech shares rise in after-hours trading following earnings beat


Camarillo-based Semtech saw its shares rise nearly 15% in after-hours trading on June 7, hours following the company’s first-quarter earnings announcement in which it beat analyst expectations in both revenue and net income. 

Semtech, which specializes in the Internet of Things applications, generated revenue worth $236.5 million, an increase of 41.2% sequentially, which means from the fourth quarter of 2022, and 17.0% year-over-year.

The company did suffer a net loss of $29.4 million, but when adjusted for one-time losses, Semtech actually delivered positive net income worth $1.5 million or two cents per share.

This mark beat analysts’ expectations, according to Zacks Consensus Estimate, which had projected the company losing seven cents per share.

Moreover, the company’s generated revenue beat analysts’ expectations by about $16 million, or 10%.

Investors were pleased with the news, as Semtech’s stock shot up 14.5% in after-hours trading with shares nearly reaching $26 after closing at $22.43.

Year-to-date, Semtech shares are still down more than 22%, as investors saw some shaky news after the company’s fourth-quarter earnings report, but those nerves could be subsiding.

The first quarter of 2023 also marks the last for President and CEO Mohan Maheswaran, who announced in March that he would be stepping down from the position. He will stay on as a consultant for at least the next 16 months.

“In summary, Q1 performance was better than expected despite being impacted by macroeconomic headwinds,” Emeka Chukwu, Semtech’s CFO, said during the company’s earnings call on June 7.

“Looking ahead, we are continuing to make progress on the integration of Sierra Wireless. Our synergy is ahead of planning and, as a result, we still expect the Sierra acquisition to be attractive to fiscal year 24.”

Maheswaran was appointed Semtech’s chief executive officer in 2006 and has grown the company from approximately $200 million to over $1 billion in annual net revenues while also delivering record gross margin, record operating margin and record earnings through many semiconductor industry cycles.

During his tenure as president and chief executive officer, Semtech completed numerous acquisitions, including the most recent acquisition of Sierra Wireless just last year for a company record $1.2 billion, paid for in an all-cash transaction.

On May 30, Semtech announced it would be hiring Paul H. Pickle as its new president and CEO.

“I will ensure a smooth transition and support him and the board as needed for the next 16 months. Thank you all for your support and interest in Semtech over my tenure as CEO over the last 17 years. I’ve enjoyed working with you all and I’m counting on you to continue to support Semtech through the next phase of growth,” Maheswaran said during the earnings call.

Pickle, who will be resigning as the president and CEO of Irvine-based Lantronix to accept this position, will be joining the company between June 9 and June 30, pending the transition from that current role in Orange County, Semtech said in a press release.

He was not on the company’s earnings call on June 7 as he is still transitioning from his previous post. Semtech did not deliver an updated timeline for his start date.

Maheswaran noted in the earnings call that Semtech is doing well in navigating headwinds as there was more “business stabilization” than expected during the first quarter.

“As we continue to navigate this challenging macro-economic environment, we are taking steps to improve our operational efficiency and financial performance while focusing on executing our plans. With an expanded highly differentiated IoT portfolio, combined with our best-in-class High-Performance Analog portfolio, we are well positioned to emerge stronger from this current cycle,” he said.

He also noted the company expects an increase in its advanced protection and sensing businesses as well as the continued adoption of LoRa.

The LoRa platform is a very low-power and long-range way of sending small amounts of data. Semtech ended the quarter with $164.1 million in cash and cash equivalents. 

email: jmercado@pacbiztimes.com