Key Highlights

  • Non-GAAP EPS of USD 0.26 topped the consensus estimate of USD 0.24, while GAAP EPS was USD 0.12.
  • Sales of USD 276.9 million rose 29% and beat the consensus estimate of USD 270.86 million.
  • Data center sales hit a record USD 46 million, up more than 150%, as industrial and other sales grew 79%.
  • Third quarter sales guidance of USD 278 million to USD 288 million implies roughly 23% growth at the midpoint.

Allegro MicroSystems, Inc. (NASDAQ:ALGM) reported fiscal second quarter 2027 non-GAAP earnings per share of USD 0.26, above a consensus estimate of USD 0.24 and double the USD 0.13 posted a year earlier. GAAP diluted EPS was USD 0.12 versus USD 0.03. Net sales of USD 276.9 million were above a consensus estimate of USD 270.86 million, up 29% from USD 214.3 million and 7% from the prior quarter, marking the seventh straight sequential increase.

Segment Mix and Margin Expansion

Automotive sales rose 11% to USD 172.5 million, the sixth consecutive quarter of double digit annual growth, while industrial and other sales grew 79% to USD 104.4 million, a record that crossed USD 100 million for the first time. Data center revenue of USD 46 million was also a record. By product, magnetic sensors reached USD 158 million and power products USD 119 million, up 42% year over year. Non-GAAP gross margin improved to 51.5% from 49.6%, and non-GAAP operating margin rose to 20.6% from 13.9%. GAAP gross margin was 49.2% and GAAP operating margin was 12.8%.

Chief Executive Officer Mike Doogue said design wins were the highest since the 2020 IPO, up nearly 40% year over year, and that bookings rose for an eighth straight quarter, up 45%. The chief financial officer reported cash of USD 201 million, operating cash flow of USD 37 million, free cash flow of USD 31 million and term loan debt of USD 285 million, with net debt of USD 84 million. A further USD 25 million voluntary debt repayment was made on September 30.

Third Quarter Guidance and Margin Levers

For the quarter ending December 25, 2026, Allegro guided to sales of USD 278 million to USD 288 million, non-GAAP gross margin of 51.5% to 52.5%, operating expenses of USD 87 million plus or minus USD 1 million, and non-GAAP EPS of USD 0.25 to USD 0.29, a midpoint that implies an 80% increase. The company also cited interest expense of USD 4 million, a tax rate of 10% and 188 million diluted shares.

On margins, management pointed to a gross margin target above 55%, supported by converting parts from gold to copper wire, with copper shipments starting in fiscal Q3, and by price increases. Pricing actions so far sit mainly in industrial and catalog products, with most automotive contract renewals and increases effective January 1.

Calendar Items and Metrics to Track

Several dated and quantified items follow the report. Shipments of copper wire products and sampling of an integrated magnetic sensor and motor driver chip for humanoid hands both begin in fiscal Q3. The January 1 automotive pricing resets bear on the 55% gross margin goal. Data center sales of USD 46 million sit against management intent to more than double that line in fiscal 2027, and the 20.6% operating margin can be compared with the 12.8% GAAP figure. Allegro is scheduled to present at investor conferences on November 17, December 1 and 2, December 8 and December 9.