Microchip Technology Reports Strong Third Quarter Fiscal Year 2026 Financial Results
Chandler, Ariz., February 5, 2026 — Microchip Technology Incorporated (NASDAQ: MCHP), a global leader in smart, connected, and secure embedded control solutions, today announced its financial results for the third quarter ended December 31, 2025, highlighting robust revenue growth, margin expansion, and operational progress.
Quarterly Financial Highlights
Net sales reached $1.186 billion, marking a 4.0% sequential increase and a substantial 15.6% rise compared to the same quarter last year. This performance slightly exceeded the company’s updated sales guidance of $1.185 billion released on January 5, 2026. – On a GAAP basis, the company reported:
- Gross profit margin of 59.6%
- Operating income of $151.7 million, representing 12.8% of net sales
- Net income attributable to common stockholders of $34.9 million
- Diluted earnings per share (EPS) of $0.06, surpassing the earlier GAAP EPS guidance of $0.02 per diluted share
On a non-GAAP basis, Microchip posted:
- Gross profit margin of 60.5%
- Operating income of $337.8 million, or 28.5% of net sales
- Net income of $252.8 million
- Diluted EPS of $0.44, ahead of the prior non-GAAP guidance of $0.40 per diluted share
During the quarter, Microchip returned approximately $246.1 million to shareholders through dividends, with the board declaring a quarterly dividend of 45.5 cents per common share for the March quarter.
Executive Commentary
Steve Sanghi, Microchip’s CEO and President, remarked, “Our fiscal third quarter results exceeded our expectations, with net sales of $1.186 billion growing 4% sequentially and 15.6% year-over-year, well above our original guidance. The broad-based recovery across our end markets and significant margin expansion clearly demonstrate the tangible impact of our nine-point recovery plan execution. Notably, our non-GAAP operating profit grew sequentially even more than our net sales did during the December quarter, highlighting the strong operational momentum in our business.”
Sanghi further emphasized improvements in operational efficiency, saying, “We have made substantial progress on inventory reduction, positioning us to boost manufacturing capacity in the March quarter. Our non-GAAP gross margins expanded markedly from 52% in the March 2025 quarter to 60.5% this quarter, reflecting the cumulative impact of operational improvements. We expect further margin expansion toward our long-term target of 65% as inventory normalizes and factory utilization improves.”
Eric Bjornholt, Chief Financial Officer, added, “Our third quarter results demonstrate the strength of our operational model, which has driven meaningful cash flow improvements. We reduced net debt by $26 million this quarter, with operating cash flow covering our debt obligations and dividend payments. Debt reduction remains a top priority, and we believe our improving operational performance puts us in a strong position to continue bolstering our balance sheet in coming quarters.”
Rich Simoncic, Chief Operating Officer, highlighted the company’s market traction stating, “We see strong momentum in our connectivity business, fueled by concurrent modernization cycles in automotive and industrial sectors. Our Ethernet connectivity solutions, spanning 10BASE-T1S to higher-speed single-pair industrial Ethernet standards, combined with our broad product portfolio, form a comprehensive Total System Solution approach. This reduces complexity, cost, and time to market, enabling us to capture significant design opportunities with leading OEMs and industrial manufacturers.”
Outlook for Fourth Quarter Fiscal Year 2026
Microchip’s backlog entering the March quarter is significantly stronger than the prior quarter, and booking momentum remains positive. The company projects net sales in the range of $1.240 billion to $1.280 billion for the fourth quarter, with a midpoint of $1.260 billion. This guidance implies approximately 6.2% sequential growth and nearly 30% year-over-year increase.
The company anticipates continuing improvements in gross margins and sustained customer activity across diversified end markets as manufacturing capacity ramps up. Sanghi concluded, “With stronger quarters ahead, we are well-positioned to deliver consistent sequential growth and enhance shareholder value while maintaining a disciplined approach amid an evolving macroeconomic landscape.”
Summary of Selected Financial Data (Q3 FY 2026)
| Metric | Amount (in millions) | % of Net Sales (GAAP) | % of Net Sales (Non-GAAP) |
|---|---|---|---|
| Net Sales | $1,186.0 | 100% | 100% |
| Gross Profit | $706.9 | 59.6% | $717.4 (60.5%) |
| Operating Income | $151.7 | 12.8% | $337.8 (28.5%) |
| Net Income | $62.7 | N/A | $252.8 |
| Net Income Attributable to Common Stockholders | $34.9 | 2.9% | $252.8 (21.3%) |
| Diluted EPS (per share) | $0.06 | N/A | $0.44 |
Dividend Declaration
- A common stock quarterly dividend of 45.5 cents per share payable March 10, 2026, to shareholders of record as of February 23, 2026.
- A quarterly dividend of $18.75 per share ($0.9375 per depositary share) on the 7.50% Series A Mandatory Convertible Preferred Stock payable March 16, 2026, to record holders as of March 1, 2026. —
For more details and access to the full earnings webcast, investor presentations, and supplemental financial information, please visit Microchip Technology’s Investor Relations website.
About Microchip Technology Incorporated
Microchip Technology Incorporated is a leading provider of microcontroller, mixed-signal, analog, and Flash-IP solutions, delivering comprehensive embedded control applications worldwide. The company focuses on enabling smarter, safer, and more connected devices across automotive, industrial, aerospace, communications, and consumer markets.
Forward-Looking Statements
This press release includes forward-looking statements, including projections regarding future financial results and operational progress, which are subject to risks and uncertainties. Actual results may differ materially from those expressed or implied herein.
For Media and Investor Inquiries:
Microchip Technology Incorporated
Investor Relations Contact:
Email: IR@microchip.com
Phone: (480) 792-7200
