Allegro MicroSystems (NASDAQ:ALGM) reported fiscal third-quarter 2026 results that exceeded the high end of its revenue guidance range, as management pointed to “positive momentum” in bookings and backlog and highlighted design win activity in its strategic focus areas, including ADAS, xEV, and data center applications.
Third-quarter results came in above revenue guidance
Net sales for the quarter were $229 million, and non-GAAP earnings per share were $0.15. CFO Derek D’Antilio said sales increased 7% sequentially and 29% year-over-year, while EPS rose 15% sequentially and 114% year-over-year.
Automotive and industrial commentary: xEV, ADAS, and data center strength
CEO Mike Doogue said the company continues to see content gains and increased adoption of xEV and ADAS systems in cars, which supported automotive performance and design wins during the quarter. D’Antilio noted automotive sales increased 6% sequentially and 28% year-over-year, with e-mobility sales up 46% year-over-year.
On specific automotive win activity, Doogue cited:
- ADAS design wins for position sensors and motor drivers in electronic power steering systems, as well as “higher dollar content” steer-by-wire programs with OEMs in North America, China, and Europe.
- xEV wins involving current sensor ICs and onboard charging systems and high-voltage traction inverters.
In industrial and other end markets, management said growth was again led by data center, which reached a new quarterly record. Doogue said data center represented 10% of total sales and grew 31% sequentially. He attributed demand to the “rapid expansion of higher power AI servers,” which is increasing fan counts per rack and driving demand for Allegro’s fan driver ICs. He also said high-speed current sensors are ramping in data center power supply applications, and that current sensors were a growing contributor to data center sales growth.
D’Antilio reported industrial and other sales increased 11% sequentially and 31% year-over-year. He also said distribution sales rose 11% sequentially and 39% year-over-year, and that both sell-in and point-of-sale (POS) increased. In the Q&A, he noted that distributor inventories are down nearly 50% over roughly five quarters, and that in the quarter POS and sell-in were close, with sell-in slightly higher; going forward, he expects sell-in and POS to be roughly equal, though varying by region.
Product and innovation highlights: current sensors and isolated gate drivers
Doogue emphasized innovation in current sensing and power products. He said Allegro introduced a new current sensor that “cuts power-related losses by up to 90%,” can measure up to 200 amperes in a small package, and is drawing broad customer interest for xEV and data center applications.
He also discussed expanding the company’s isolated gate driver portfolio, including the release of its first isolated gate driver IC for silicon carbide transistors. Doogue said the company is broadly sampling the new silicon carbide driver to industrial customers and also sampling market leaders in xEV charger and inverter markets. In response to a question about timing, he said he expects gate driver revenue in data center to begin ramping in an “18 months to 24 months” timeframe.
On the margin profile within data center, D’Antilio said the fan driver products that make up the majority of data center shipments today are “slightly below fleet average” on gross margin, while current sensors carry “slightly better” margins. He said as the business shifts further toward current sensors and eventually isolated gate drivers, data center margins should improve.
Robotics and longer-term growth areas
Doogue said the company conducted a robotics roadshow across the U.S., Japan, and China and confirmed new wins and pilot production ramps with market leaders in quadruped and humanoid robots. He described a “high content opportunity” in advanced humanoid robots, including “up to 150” Allegro sensor ICs and “50” power ICs.
In the Q&A, Doogue said internal expectations are that revenue ramps in robotics could begin “2 or 3 years out,” depending on how the market develops, with some customers discussing production in the “tens of thousands” of robots per year in the near term, potentially ramping to “hundreds of thousands” over the next few years. He also said interest is coming from a broad range of companies with motor manufacturing and motor control expertise, including automotive players and major motor manufacturers, though he did not name specific customers.
Outlook: March quarter expected to be led by industrial
For the fiscal fourth quarter of 2026, Allegro guided net sales to a range of $230 million to $240 million. D’Antilio said the midpoint implies 22% year-over-year growth. The company expects non-GAAP gross margin between 49% and 51% and non-GAAP EPS between $0.14 and $0.18, with an expected non-GAAP tax rate of 8% and a diluted share count of 186 million.
D’Antilio said operating expenses are expected to rise about 3% sequentially in dollars due largely to annual payroll tax resets. He also said the company repriced its term loan down 25 basis points to SOFR plus 175 basis points, with Q4 interest expense projected at $5 million, including about $700,000 related to the repricing.
On segment dynamics for the March quarter, D’Antilio said growth is expected to be led by industrial, while automotive is expected to be flat to marginally down due to the impact of Chinese New Year. Doogue added that management feels good about automotive based on bookings, backlog, and design win activity across xEV and ADAS, including in China, and said the company continues to see lean inventory levels in the automotive supply chain.
About Allegro MicroSystems (NASDAQ:ALGM)
Allegro MicroSystems, Inc (NASDAQ: ALGM) is a leading designer and manufacturer of high-performance power and sensing integrated circuits. The company focuses on semiconductor solutions that enable precise motion control, energy-efficient power management and robust sensing in a wide range of applications. Allegro’s product portfolio includes Hall-effect magnetic sensors, current and position sensing ICs, motor driver and controller devices, and power management components.
Allegro MicroSystems serves major automotive, industrial and consumer markets worldwide.
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