ALGM Delivers Double-Digit Growth in Q2, Signals Strong Outlook for Year-End
Growth Momentum in Both Automotive and Industrial Segments Fuels Results
Allegro MicroSystems (NASDAQ: ALGM) has announced impressive financial results for the second quarter ended September 26, 2025, with total net sales reaching $214.29 million, representing a 14% year-over-year increase. This robust growth was primarily driven by the company’s performance in the Automotive and Industrial segments. Automotive sales climbed 12% year-over-year to $155.85 million, while the Industrial and Other category surged 23% to $58.45 million.
CEO Mike Doogue highlighted that design wins so far in 2026 are well ahead of last year’s pace, notably in e-Mobility and data centers. These trends underline the company’s commitment to power and sensing solutions for motion control and energy efficiency, especially within the fast-evolving automotive and industrial automation sectors.
Non-GAAP Profitability Accelerates; Margins Expand on Both GAAP and Non-GAAP Basis
Non-GAAP diluted earnings per share (EPS) jumped over 60% year-over-year, landing at $0.13, and Non-GAAP operating margin expanded to 13.9% compared to 11.7% a year ago. Notably, GAAP operating margin also returned to positive territory at 2.9% after being slightly negative in the previous quarter.
The table below highlights the key non-GAAP and GAAP metrics for the recent period compared to a year earlier:
| Metric | Q2 2026 | Q2 2025 | Y/Y Change |
|---|---|---|---|
| Net Sales ($M) | 214.29 | 187.39 | +14% |
| Automotive Net Sales ($M) | 155.85 | 139.68 | +12% |
| Industrial & Other Net Sales ($M) | 58.45 | 47.71 | +23% |
| Non-GAAP Gross Margin (%) | 49.6 | 48.8 | +0.8 pt |
| Non-GAAP Operating Margin (%) | 13.9 | 11.7 | +2.2 pt |
| Non-GAAP Diluted EPS ($) | 0.13 | 0.08 | +62.5% |
Cash Flow Strengthens; R&D and Strategic Investments Remain a Focus
Non-GAAP free cash flow for the quarter stood at $13.92 million, up more than 2x year-over-year, underscoring Allegro’s ability to balance growth investments and operational efficiency. Operating cash flow as a percentage of sales reached 9.5% this quarter, with the company keeping a steady pace of R&D investment—key to ongoing design wins in automotive and data centers.
Management Sets Bullish Guidance for Q3, Projects 24% Revenue Growth at Midpoint
Looking ahead, Allegro projects total net sales for the third fiscal quarter to range between $215 million and $225 million. At the midpoint, this implies 24% year-over-year growth, maintaining momentum as the company enters year-end. Non-GAAP gross margin is expected in the 49-51% range, with diluted EPS guided between $0.12 and $0.16. These targets suggest Allegro expects sustained demand in its core markets and continued profitability improvements.
| Q3 2026 Outlook (Non-GAAP) | Range |
|---|---|
| Net Sales ($M) | 215–225 |
| Gross Margin (%) | 49–51 |
| Diluted EPS ($) | 0.12–0.16 |
Key Takeaway: Healthy End Markets, Lean Operations, and Forward-Looking Investments
Allegro MicroSystems is riding a strong upcycle in its automotive and industrial markets, outpacing prior year metrics in revenue, margins, and EPS. The guidance for next quarter reinforces management’s confidence in demand for Allegro’s power and sensing semiconductor solutions. For investors, the most striking message is the company’s combination of top-line growth and disciplined cost management—a profile that could drive continued momentum if end-market demand holds steady. Those watching the semiconductor sector may find Allegro’s trajectory in e-Mobility and automation a bellwether for further industry recovery.
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