Allegro MicroSystems reported a strong second quarter of fiscal 2027, with sales rising 29% year over year to $276.9 million. Growth came from both automotive and industrial markets, with industrial and other sales—led by data centers—providing the larger increase. The company also reported higher margins and earnings, and forecast further year-over-year growth in the current quarter.
Management said bookings rose for an eighth consecutive quarter and design wins reached their highest level since Allegro’s 2020 IPO, up nearly 40% from a year earlier. After the quarter ended, the company made a voluntary $25 million debt repayment.
Key details
- Sales accelerated across both major markets. Automotive revenue was $172.5 million, up 11% year over year. Industrial and other revenue was $104.4 million, up 79%, which Allegro said included record data-center sales. Total sales were up about 7% from the first quarter.
- Profitability improved. GAAP gross margin rose to 49.2%, from 46.3% a year earlier, while operating margin increased to 12.8%, from 2.9%. On a non-GAAP basis, gross margin was 51.5%, versus 49.6%, and operating margin was 20.6%, versus 13.9%.
- Per-share earnings increased. GAAP diluted EPS was $0.12, compared with $0.03 a year earlier. Non-GAAP diluted EPS doubled to $0.26 from $0.13.
- First-half results also strengthened. For the six months ended September 25, sales totaled $536.1 million, up from $417.7 million in the same period last year. GAAP diluted EPS was $0.21, versus a loss of $0.04; non-GAAP diluted EPS rose to $0.48 from $0.21.
- Allegro forecast another year-over-year sales increase. For fiscal Q3, ending December 25, the company expects sales of $278 million to $288 million. The midpoint implies 23% growth from the year-earlier quarter.
- Q3 earnings and margin outlook: Allegro expects non-GAAP gross margin of 51.5% to 52.5%, operating expenses of $87 million, plus or minus $1 million, and non-GAAP diluted EPS of $0.25 to $0.29. The EPS midpoint implies an 80% year-over-year increase. The company did not provide comparable GAAP forecasts for these non-GAAP measures.
- Debt repayment followed quarter-end. On September 30, Allegro made a voluntary $25 million repayment. The company described the payment as reflecting its balance-sheet strength and confidence in anticipated free cash flow; it did not provide a new debt balance in the results announcement.
- Management pointed to stronger forward indicators. Allegro said design wins were up nearly 40% year over year and at their highest quarterly level since its IPO. Bookings increased for the eighth consecutive quarter, and management cited a robust backlog and expanding customer content in automotive and industrial markets. It said these indicators support confidence in exceeding its target model of mid-teens annual sales growth.
Plain-English implications
The results show broad-based revenue growth, with industrial and data-center demand growing especially quickly, alongside improved margins and earnings. The $25 million repayment reduces debt, while the company’s Q3 forecast calls for continued sales growth and higher non-GAAP EPS.