Microchip Technology Reports Strong Financial Results for Q3 Fiscal Year 2026
Chandler, Ariz., February 5, 2026 – Microchip Technology Incorporated (NASDAQ: MCHP), a leading provider of smart, connected, and secure embedded control solutions, announced its financial results for the third quarter ended December 31, 2025. The company reported robust revenues, significant margin expansion, and improved cash flow, with a positive outlook for the upcoming quarter.
Key Financial Highlights for Q3 FY2026:
- Net Sales: $1.186 billion, an increase of 4.0% sequentially and 15.6% year-over-year. This exceeded the company’s updated guidance of $1.185 billion provided in early January 2026.
- GAAP Gross Profit: 59.6% of net sales.
- GAAP Operating Income: $151.7 million, representing 12.8% of net sales.
- GAAP Net Income: $34.9 million attributable to common stockholders, or $0.06 per diluted share. This was well above earlier guidance of $0.02 per diluted share.
- Non-GAAP Gross Profit: 60.5%.
- Non-GAAP Operating Income: $337.8 million, 28.5% of net sales.
- Non-GAAP Net Income: $252.8 million, or $0.44 per diluted share, surpassing the previously forecasted $0.40.
- Dividends: Approximately $246.1 million returned to common stockholders during the quarter. The Board declared a quarterly dividend of $0.455 per share on common stock, payable March 10, 2026. ### Operational and Strategic Insights
Steve Sanghi, Microchip’s CEO and President, commented:
“Our fiscal third quarter results exceeded expectations with net sales growing across the board by 4% sequentially and 15.6% year-over-year, significantly outperforming initial guidance. The recovery across our end markets, coupled with meaningful margin expansion, validates the execution of our nine-point recovery plan. Notably, our non-GAAP operating profit increased at a higher rate than net sales, signaling strong operational momentum.”
Mr. Sanghi highlighted the company’s inventory management success: “We have made substantial progress reducing inventory, setting the stage for improved operational efficiencies as we increase manufacturing capacity in the March quarter. Our non-GAAP gross margins expanded from 52% in March 2025 to 60.5% this quarter, reflecting the cumulative benefits of operational improvements. We anticipate further margin expansion toward our long-term goal of 65% as inventory normalizes and factory utilization improves.”
Eric Bjornholt, Chief Financial Officer, added:
“This quarter’s results underscore the strength of our operational model, generating positive cash flow improvements. We reduced net debt by $26 million as operating cash flow comfortably covered debt obligations and dividends. Debt reduction remains a top priority, and our improved operational performance positions us well to strengthen our balance sheet in coming quarters.”
Rich Simoncic, Chief Operating Officer, noted strong demand growth:
“Momentum in our connectivity business is robust, propelled by modernization cycles in automotive and industrial sectors. Our Ethernet connectivity solutions—from 10BASE-T1S to advanced single-pair industrial Ethernet—combined with our comprehensive product portfolio, enable our Total System Solution approach. This strategy helps OEMs and industrial manufacturers reduce complexity, cost, and time to market, creating significant design opportunities.”
Outlook for Q4 Fiscal Year 2026
The company issued guidance for the March 2026 quarter with net sales expected to range between $1.240 billion and $1.280 billion. The midpoint represents approximately 6.2% sequential growth and 29.8% year-over-year growth. Gross margin is forecasted to be between 59.5% and 60.5% on a GAAP basis and 60.5% to 61.5% on a non-GAAP basis. Operating expenses are projected to represent approximately 45.5% to 46.1% of net sales (GAAP) and 31.3% to 31.7% (non-GAAP).
Net income guidance ranges from $72.4 million to $95.5 million on a GAAP basis, and $271.0 million to $298.4 million on a non-GAAP basis, with an expected diluted net income per common share of $0.48 to $0.52 (non-GAAP).
Mr. Sanghi concluded:
“Our starting backlog for March quarter is substantially stronger than December’s, with continued strong booking momentum. As we ramp manufacturing capacity, we expect improved gross margins and sustained customer engagement across diversified markets. Entering typically stronger quarters ahead, we are well positioned to deliver consistent sequential growth and enhance shareholder value while continuing to navigate the evolving macroeconomic environment with discipline.”
Summary of Q3 FY2026 Financial Results
| Metric | GAAP | % of Net Sales | Non-GAAP | % of Net Sales |
|---|---|---|---|---|
| Net Sales | $1.186 billion | — | $1.186 billion | — |
| Gross Profit | $706.9 million | 59.6% | $717.4 million | 60.5% |
| Operating Income | $151.7 million | 12.8% | $337.8 million | 28.5% |
| Net Income attributable to common stockholders | $34.9 million | 2.9% | $252.8 million | 21.3% |
| Diluted EPS | $0.06 | — | $0.44 | — |
Dividend Information:
The Board declared a quarterly dividend on common stock of 45.5 cents per share, payable March 10, 2026, to shareholders of record as of February 23, 2026. Additionally, a dividend on the 7.50% Series A Mandatory Convertible Preferred Stock of $18.75 per share (or $0.9375 per depositary share) is payable March 16, 2026. —
For more detailed information, including the earnings webcast, investor presentation, and SEC filings, visit Microchip Technology’s Investor Relations website at microchip.com.
About Microchip Technology
Microchip Technology Inc. offers a broad portfolio of microcontroller, mixed-signal, analog, and Flash-IP solutions. Their products serve a wide variety of embedded control applications worldwide, empowering intelligent systems and helping shape the future of technology.
This press release contains forward-looking statements that reflect management’s current expectations. Actual results may differ materially due to various risks and uncertainties.
