Wolfspeed Q4 FY2026 Earnings: Revenue Falls as Gross Margin Deteriorates

Wolfspeed (NYSE: WOLF) reported fiscal Q4 2026 revenue of $149.6 million, down about 24% from $197.0 million a year earlier, while GAAP diluted loss per share was $2.81 versus $4.30. Although reported operating and net losses narrowed, GAAP gross margin deteriorated to negative 25%, operating cash flow remained negative, and both product lines recorded lower revenue.

Core Earnings Data

For the quarter ended June 28, 2026, revenue was near the midpoint of Wolfspeed’s guidance range. Cost of revenue exceeded sales, producing a $36.8 million gross loss, while adjusted EBITDA and operating cash flow were also negative.

Year-over-year comparisons require caution. Wolfspeed adopted fresh-start accounting after emerging from Chapter 11 on September 29, 2025, so the current successor financial statements are not comparable with the predecessor statements for Q4 fiscal 2025.

Non-GAAP gross margin was negative 20%, five percentage points above the GAAP result but still indicating that Wolfspeed did not cover its production costs on either basis.

Business and Product-Line Performance

Revenue declined in both reported product lines, but Materials Products accounted for most of the contraction. Materials revenue fell by $35.1 million, representing approximately 74% of the company’s total $47.4 million revenue decline, while Power Products recorded a more moderate decrease.

AI data center applications provided a contrasting growth signal. Revenue from this end market more than doubled for fiscal 2026 and increased approximately 20% sequentially in Q4. However, Wolfspeed described it as a moderate but growing opportunity and did not disclose its absolute revenue, making it difficult to measure how much it offset weakness elsewhere.

The company also launched its fifth-generation silicon carbide MOSFET and created a dedicated data center solutions team. These initiatives expand Wolfspeed’s product and customer-development efforts, but their financial contribution was not quantified in the results.

Lower Special Charges Narrowed Reported Losses, but Gross Economics Worsened

Wolfspeed’s much smaller reported operating and net losses mainly reflect an easier comparison below the gross-profit line rather than improved gross profitability. The prior-year quarter included a $359.2 million goodwill impairment, $122.8 million of restructuring and other expenses, and $19.2 million of factory start-up costs. In Q4 fiscal 2026, there was no goodwill impairment or factory start-up expense, while restructuring and other expenses declined to $15.9 million.

Interest expense also fell to $39.8 million from $84.8 million. These changes helped reduce the reported net loss, but the underlying gross-margin direction moved the other way: cost of revenue was $186.4 million against only $149.6 million of sales, and GAAP gross margin fell by 12 percentage points. The EPS comparison is further complicated by fresh-start accounting and the change in weighted-average diluted shares from 155.6 million to 51.8 million.

Cash Flow and Capital Structure

Wolfspeed ended the quarter with $1.09 billion in cash, cash equivalents, and short-term investments, consisting of $576.3 million in cash and cash equivalents and $512.3 million in short-term investments. That liquidity provides a buffer, but the company still used $54 million of operating cash during the quarter.

The post-restructuring balance sheet included $931.0 million of long-term debt and $756.5 million of convertible notes, or approximately $1.69 billion combined. During Q4, holders voluntarily converted $46 million of convertible notes into equity. CFO Gregor van Issum said the company continues to pursue initiatives intended to reduce debt and its cost of capital, but no additional quantified debt-reduction target was provided.

Fiscal Q1 2027 Guidance

Wolfspeed’s new outlook places the fiscal Q1 2027 revenue midpoint at $150 million, nearly unchanged from the Q4 result. The expectation that non-GAAP gross margin will remain negative indicates that a return to positive gross profitability is not yet incorporated into the near-term outlook.

The revenue range represents an approximate sequential change of negative 6% to positive 7% from Q4 fiscal 2026, leaving cost reduction and manufacturing economics as central factors for the next quarter.

Risks Investors Need to Watch

• Persistently negative gross margin: GAAP gross margin deteriorated to negative 25%, and management expects the non-GAAP measure to remain negative in fiscal Q1 2027. Continued production costs above revenue would prolong operating losses and cash use.
• Broad product-line contraction: Power Products revenue declined about 10%, while Materials Products fell about 45%. Stabilizing Materials Products is particularly important because it generated most of the quarter’s revenue decline.
• Cash consumption and leverage: Quarterly operating cash flow was negative $54 million, while long-term debt and convertible notes totaled approximately $1.69 billion. Continued cash use could complicate efforts to reduce debt and financing costs.
• Converting new opportunities into meaningful revenue: AI data center revenue is growing rapidly, but Wolfspeed characterized the opportunity as moderate and did not disclose its size. New products and partnerships must translate into enough volume to offset declines in established product lines.

Summary

Wolfspeed’s fiscal Q4 2026 results showed lower revenue and weaker gross margins, even as reported operating and net losses narrowed because prior-year impairment, restructuring, and start-up charges did not recur at the same scale. The company retains $1.09 billion of liquidity and is reducing elements of its capital burden, but operating cash flow remains negative. The next key measures are whether Materials Products stabilize, AI data center growth becomes financially significant, and cost reductions begin moving gross margin toward positive territory.