Wolfspeed Fiscal Q1 2027 Earnings: Margins Improve but Cash Burn Persists

Wolfspeed (NYSE: WOLF) reported fiscal Q1 2027 revenue of $155.0 million, compared with $196.8 million in the predecessor period, while diluted GAAP loss per share was $2.61 versus $4.12. GAAP gross margin improved to negative 22% from negative 39%, but the company still posted a $143.8 million net loss and used $84.2 million of operating cash. Because Wolfspeed adopted fresh-start accounting after emerging from Chapter 11 on September 29, 2025, the successor quarter ended September 27, 2026 is not directly comparable with the prior-year predecessor period.

Core Financial Results

Reported revenue decreased by $41.8 million as both product lines generated less revenue. At the same time, cost of revenue fell by $84.9 million, allowing the gross loss to narrow by $43.1 million despite the lower sales base.

The sharp reduction in net loss largely reflects the absence of the prior-year period’s $503.8 million of net reorganization expenses. Current-quarter interest expense also increased to $40.0 million from $0.7 million, limiting the benefit from the smaller operating loss.

The prior-year figures represent the predecessor company, while the current quarter represents the successor company under fresh-start accounting. Wolfspeed’s historical non-GAAP measures are presented for continuing operations.

Product-Line Performance

Materials Products accounted for most of the reported revenue decline. Its revenue fell by $26.8 million, representing about 64% of the consolidated decrease, while Power Products declined by $15.0 million.

Power Products consequently represented a larger share of quarterly revenue, but neither product line delivered reported growth against the predecessor period.

Margin Recovery Has Not Yet Eliminated Cash Burn

Wolfspeed’s margin performance moved in the right direction, including a 710-basis-point sequential improvement in adjusted non-GAAP gross margin. However, non-GAAP gross margin remained negative at 13%, adjusted EBITDA was negative $55 million, and GAAP operating expenses of $78.8 million continued to exceed the company’s gross-profit contribution.

Operating cash outflow was $84.2 million. Cash, cash equivalents and short-term investments declined by $93.5 million during the quarter to $995.1 million, while inventory fell by $30.7 million to $203.5 million. Capital expenditures were $10.6 million, compared with $104.0 million in the predecessor period.

The balance sheet included approximately $1.68 billion of long-term debt and convertible notes. Wolfspeed announced a conditional 30-year, $1.5 billion loan commitment from the U.S. Department of War, which management expects to produce annual interest savings if completed. The financing remains subject to due diligence, definitive agreements, government approvals and other closing conditions.

Fiscal Q2 2027 Guidance

Wolfspeed expects fiscal Q2 revenue of $155 million to $175 million. The $165 million midpoint would represent approximately 6% sequential growth from fiscal Q1, while the company is also targeting further non-GAAP gross-margin improvement toward breakeven.

The company did not provide a quantitative GAAP reconciliation for projected non-GAAP operating expenses because several items, including stock-based compensation, restructuring charges and transformation costs, cannot be forecast with reasonable certainty.

Management Perspective

CEO Robert Feurle emphasized the conditional loan commitment and new long-term supply agreements as important components of Wolfspeed’s strategy to return to sustainable growth. The company expanded its existing 150mm silicon carbide wafer supply agreement with Infineon to include 200mm wafers and signed a multiyear device supply agreement supporting BorgWarner’s next-generation 800V inverter platform.

CFO Gregor van Issum focused on the sequential non-GAAP margin improvement and the potential interest savings from the conditional financing. These agreements and financing initiatives may support future operations, but the company did not quantify their current-quarter revenue contribution.

Risks Investors Should Monitor

• Margins remain negative: GAAP gross margin was negative 22% and non-GAAP gross margin was negative 13%. The Q2 outlook depends on substantial additional progress toward breakeven.
• Cash consumption and interest costs remain material: Wolfspeed used $84.2 million of operating cash and incurred $40.0 million of quarterly interest expense while carrying approximately $1.68 billion of long-term debt and convertible notes.
• The conditional loan has not closed: Expected interest savings depend on Wolfspeed completing due diligence, definitive documentation, approvals and other funding conditions.
• Both product lines reported lower revenue: Materials Products showed the larger decline, while Power Products also remained below the predecessor period.
• Fresh-start accounting limits historical comparisons: Changes in asset and liability values mean reported successor results are not directly comparable with predecessor financial statements.

Summary

Wolfspeed’s fiscal Q1 2027 results showed meaningful margin improvement and a smaller operating loss, but revenue declined across both product lines and operating cash flow remained negative. Fiscal Q2 will test whether the company can move non-GAAP gross margin close to breakeven while stabilizing revenue and preserving liquidity, with completion of the conditional $1.5 billion financing representing another important variable.