Allegro MicroSystems Q2 Sales Rise 29% as Data Center Revenue Hits Record

Allegro MicroSystems reported fiscal second-quarter net sales of $276.9 million, up 29% from a year earlier and 7% sequentially, as strong data-center demand and growth in automotive applications extended the company’s run of quarterly sales gains. Revenue exceeded the high end of Allegro’s $265 million to $275 million guidance range, while bookings increased for an eighth consecutive quarter.

For the quarter ended Sept. 25, 2026, GAAP gross profit was $136.2 million, representing a gross margin of 49.2%. GAAP operating income rose to $35.4 million, or 12.8% of sales, and net income attributable to Allegro was $23.3 million, equal to diluted earnings of $0.12 per share.

On a non-GAAP basis, gross margin was 51.5%, above the midpoint of the company’s guidance and up from 51.1% in the preceding quarter. Non-GAAP operating income was $57 million, producing a 20.6% operating margin, while non-GAAP diluted EPS of $0.26 reached the high end of guidance.

Operating cash flow totaled $36.8 million. After $6.3 million of capital expenditures, non-GAAP free cash flow was $30.5 million, or 11% of sales. Allegro also made a voluntary $25 million debt payment on Sept. 30.

Data-center sales lead industrial growth

Industrial and Other sales increased 79% year over year and 11% sequentially. Data-center revenue climbed more than 150% from the prior-year period and reached a quarterly record of $46 million. Allegro said its broader Other Industrial business grew for a fourth consecutive quarter.

The company is targeting power-management and thermal-control requirements in AI infrastructure as data centers adopt 48-volt and 800-volt architectures. Its product portfolio includes current sensors, isolated gate drivers and motor drivers for cooling systems. Allegro said its components have been designed into a customer’s high-density AI server power architecture to support power efficiency and thermal performance.

The company is also expanding its robotics offering with position and angle sensors, motor drivers and a 48-volt power-management IC. According to the presentation, that power-management product can reduce system footprint and hardware costs by 50%, while integrated control technology is intended to shorten development time for robotics manufacturers.

Automotive sales rose 11% year over year and 4% sequentially. Revenue from Allegro’s focus automotive categories—advanced driver-assistance systems and hybrid and battery-electric vehicles—also grew 11% from a year earlier and 4% from the first quarter. The annual increase was above the company’s target model of more than 10% growth for automotive sales.

Allegro is focusing its automotive investment on increasing semiconductor content in electrified powertrains, ADAS and emerging 48-volt vehicle architectures. The company estimates its content opportunity per vehicle could rise from about $40 in fiscal 2021 to approximately $100 by fiscal 2031 as vehicles incorporate more current and position sensors, isolated gate drivers and motor-control products.

Third-quarter outlook

For the fiscal third quarter, Allegro expects sales of $278 million to $288 million. The $283 million midpoint represents year-over-year growth of about 23%.

The company projects a non-GAAP gross margin of 51.5% to 52.5% and non-GAAP diluted EPS of $0.25 to $0.29. The midpoint of the earnings range implies growth of 80% from the prior-year period. Allegro did not provide GAAP reconciliations for these forward-looking non-GAAP measures because it said certain reconciling items could not be estimated without unreasonable effort.

Over a three- to five-year period, management is targeting mid-teens annual sales growth, with automotive revenue growing more than 10% and industrial revenue rising at a high-teens rate. Its target model also calls for a non-GAAP gross margin above 55%, a non-GAAP operating margin above 32%, non-GAAP EPS above $2 and free cash flow equal to 20% to 25% of sales.

The company expects operating leverage, factory efficiencies, a greater mix of industrial products, new tunneling magnetoresistance sensors and isolated gate drivers, product-cost reductions, disciplined pricing and a China-for-China manufacturing strategy to support its gross-margin objective. Allegro plans to continue investing in research and development and sales coverage for its focus markets, while considering acquisitions that complement its technology and financial targets.

Those goals remain subject to semiconductor-industry cyclicality, changes in automotive and industrial demand, reliance on third-party wafer fabrication and other suppliers, manufacturing concentration in the Philippines, product-mix and pricing pressures, design-win uncertainty, trade restrictions and tariffs, currency volatility, and the company’s ability to integrate acquisitions and execute its product roadmap.