Executive Summary

Q1 FY26 revenue of $85.9M, up 57.6% YoY and above S&P Global consensus; non-GAAP EPS of $0.07 beat Street, while GAAP EPS was a loss of $0.58 . Actuals vs estimates: revenue $85.9M vs $84.0M consensus; EPS $0.07 vs $0.038 consensus (12 estimates)*. The beat was driven by continued strength in edge AI and favorable product mix .
Non-GAAP gross margin was 62.0% (slightly down YoY) and Q2 FY26 guidance: revenue $86–$94M, non-GAAP GM 60.5–62.0%, OpEx $52.5–$55.5M .
Management increased FY26 revenue growth guidance to 19–25% in Q1 (approx. $348M midpoint) and subsequently to 31–35% in Q2 (approx. $379M midpoint), citing strong edge AI breadth across IoT, drones, and emerging edge infrastructure .
Edge AI revenue represented >75% of Q1 revenue (record fourth consecutive quarter), with IoT up mid-single digits sequentially and automotive down low-single digits; ASPs are rising as higher-value 5nm products ramp .

What Went Well and What Went Wrong

What Went Well

Record edge AI momentum: “fourth consecutive quarter of record AI revenue” and results in the upper half of guidance; FY26 growth guide raised to 19–25% in Q1 and later to 31–35% in Q2 .
Mix/ASPs: Non-GAAP GM 62% slightly above midpoint on favorable product mix; ASP increases from CV5/CV7 families contributed to growth .
Cash and liquidity: Cash and marketable securities rose to $259.4M in Q1; operating cash inflow was $14.8M; free cash flow $10.2M .

What Went Wrong

GAAP profitability: GAAP net loss of $24.3M (–$0.58 diluted EPS); non-GAAP GM and margins still mixed as higher OpEx for new product development continues .
GM pressure: Non-GAAP gross margin declined YoY (62.0% vs 63.4% prior-year), reflecting product/customer mix normalization as advanced products scale .
Macro/tariff uncertainty and auto softness: Auto declined low-single digits sequentially; management maintained conservatism for H2 amid geopolitical/tariff uncertainties and potential indirect impacts on customer supply chains .

Financial Results

Metric	Q3 2025	Q4 2025	Q1 2026
Revenue ($USD Millions)	$82.7	$84.0	$85.9
GAAP Gross Margin (%)	60.6%	60.0%	60.0%
Non-GAAP Gross Margin (%)	62.6%	62.0%	62.0%
GAAP Operating Income ($USD Millions)	$(25.5)	$(25.4)	$(25.9)
GAAP Net Income ($USD Millions)	$(24.1)	$(20.2)	$(24.3)
GAAP Diluted EPS ($USD)	$(0.58)	$(0.48)	$(0.58)
Non-GAAP Diluted EPS ($USD)	$0.11	$0.11	$0.07

Estimates comparison (S&P Global):

Metric	Q4 2025 Actual	Q4 2025 Consensus*	Q1 2026 Actual	Q1 2026 Consensus*
Revenue ($USD Millions)	$84.0	$78.0 (11 ests)*	$85.9	$84.0 (11 ests)*
Primary EPS ($USD)	$0.11	$(0.0199) (10 ests)*	$0.07	$0.038 (12 ests)*

Segment/End-market mix (qualitative):

Segment	Q3 2025	Q4 2025	Q1 2026
IoT	Led growth; edge AI record ~70% of rev	IoT mid-single-digit sequential increase	IoT mid-single-digit sequential increase; ~75% of rev
Automotive	Sequential decline	Sequential decline low-single-digit	Down low-single digits sequentially; up >20% YoY

KPIs:

KPI	Q3 2025	Q4 2025	Q1 2026
Cash & Marketable Securities ($USD Millions)	$226.5	$250.3	$259.4
Operating Cash Flow ($USD Millions)	N/A	$25.4	$14.8
Free Cash Flow ($USD Millions)	N/A	$21.2	$10.2
DSO (Days)	N/A	33	31
Inventory Days	N/A	97	98
Customer concentration (WT Microelectronics)	N/A	60.9%	63.1%
Share Repurchases	N/A	N/A	24,152 shares; ~$1.0M; program extended to June 30, 2026; $48M remaining

Note: Items marked with an asterisk (*) are values retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue Growth (FY26)	FY26	Mid–high teens; ~$327–$339M (Feb call)	19–25%; ~$348M midpoint (May Q1 PR)	Raised
Revenue Growth (FY26)	FY26	19–25% (May)	31–35%; ~$379M midpoint (Aug Q2 PR)	Raised
Revenue	Q2 FY26	N/A	$86–$94M	Initiated
Non-GAAP Gross Margin	Q2 FY26	N/A	60.5–62.0%	Initiated
Non-GAAP OpEx	Q2 FY26	N/A	$52.5–$55.5M	Initiated
Revenue	Q3 FY26	N/A	$100–$108M	Initiated
Non-GAAP Gross Margin	Q3 FY26	N/A	60.0–61.5%	Initiated
Non-GAAP OpEx	Q3 FY26	N/A	$54.0–$57.0M	Initiated

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q3 FY25)	Previous Mentions (Q-1: Q4 FY25)	Current Period (Q1 FY26)	Trend
Edge AI penetration/ASP	Edge AI ~70% of rev; momentum; positive FCF	CV5/CV7 ramp; ASP rising; 16th year FCF	Record AI revenue; >75% of rev; ASP increases	Improving
Supply chain/tariff/macro	Conservatism due to tariffs; geography sensitivity	Conservatism for H2; customers evaluating supply chains	Customers not building inventory; uncertainty persists	Cautious
Product performance (CV5/CV7/N1)	CV5/7 momentum; edge demos	DeepSeek/VLM on CV7/N1; 2nm roadmap	GenAI demos across 0.5–34B params; edge infrastructure roadmap	Expanding
Automotive ADAS	Positive but cost-sensitive (L2+)	Auto down sequentially; ADAS price sensitivity	Auto down seq; >20% YoY growth; bidding continues	Mixed
Edge infrastructure	N1 family initial; SAM discussion	Emphasis on near-edge; efficiency vs GPUs/FPGAs	New SoC development; first design win emerging	Emerging
R&D execution/OpEx	Controlled OpEx; timing across quarters	New chip development costs to rise	Q1 OpEx slightly above midpoint; new AI SoC spend	Investment up

Management Commentary

“As the established edge AI market leader, we achieved our fourth consecutive quarter of record AI revenue... We are increasing our fiscal 2026 revenue growth guidance to 19% to 25%... approximately $348 million at the mid-point” .
“Our SAM is comprised of more than 20 different automotive and IoT HAI applications… reaching almost $13 billion in fiscal 2031… we are developing a new AI SoC… extending our reach into the edge AI infrastructure market” .
“Non-GAAP gross margin for fiscal Q1 was 62%, slightly above the midpoint… due to a favorable product mix… We reported a non-GAAP net profit of $3 million or $0.07” .

Q&A Highlights

H2 growth profile and seasonality: Management sees normal seasonality at upper half of guidance but retains conservatism due to geopolitics; October likely up seasonally; Q4 typically down sequentially .
Edge infrastructure clarification: Near-edge use cases aggregating endpoints; advantages vs GPUs/FPGAs in performance per watt and TCO; first design win on N1 family .
IoT vs Auto focus: IoT outpacing Auto near term due to shorter cycles; Auto expected to outperform post major OEM domain controller wins (CV3) around 2027–2028 .
2nm roadmap: Test chips evaluated; tape-out late 2025, silicon early 2026, with customer production targeted end of 2026 .
Inventory/tariff checks: Regular reviews with customers and distributor show no abnormal builds; ongoing monitoring mechanisms in place .

Estimates Context

Q1 FY26: Revenue beat (actual $85.9M vs $84.0M consensus; 11 estimates); EPS beat (actual $0.07 vs $0.038 consensus; 12 estimates). Drivers: favorable mix, strong edge AI demand, rising ASP from 5nm CV5/CV7 .
Q4 FY25: Revenue beat ($84.0M vs $78.0M consensus; 11 estimates); EPS beat ($0.11 vs $(0.0199) consensus; 10 estimates).
Implications: Street likely to revise FY26 revenue higher given Q2 raise to 31–35% growth and Q3 guide to $100–$108M; margins remain a watch-point as product/customer mix drives variability .
Note: Values retrieved from S&P Global.

Key Takeaways for Investors

Edge AI leadership and breadth are driving both unit growth and ASP expansion; the narrative has shifted beyond security cameras to portable video, drones, and edge infrastructure—supportive of multi-quarter revenue momentum .
Guidance progression is a tangible catalyst: FY26 revenue growth raised twice (19–25% in May; 31–35% in August). Monitor Q3 results vs $100–$108M target and continued breadth in IoT and auto ramp .
Profitability inflection remains non-GAAP-led; GAAP losses persist due to investment pace. Watch non-GAAP gross margin ranges (60.5–62.0% Q2; 60.0–61.5% Q3) for signs of mix stabilization .
Macro/tariff risks are the primary overhang; management sees no abnormal inventory builds, but H2 conservatism remains prudent. Portfolio exposure is diversified geographically and across verticals .
Customer concentration risk: WT Microelectronics at 63.1% revenue in Q1; beneficial for fulfillment but introduces concentration sensitivity—consider in risk budgeting .
R&D/product roadmap (CV5/CV7/N1; 2nm) is a strategic asset supporting new verticals and edge infrastructure; near-edge wins could boost ASPs and margin leverage over time .
Tactical: Near-term trades can lean into Q3 guide execution and breadth of IoT demand; medium-term thesis hinges on automotive domain controller wins driving step-up in Auto growth around 2027–2028 .

Sources:

Q1 FY26 8-K and press release: revenue, margins, EPS, guidance, cash balance, repurchases .
Q1 FY26 call: mix, ASPs, segment performance, cash flow metrics, customer concentration; macro/tariffs commentary .
Q4 FY25 8-K/call/press release: prior trends, guides, margin and cash metrics .
Q3 FY25 8-K press release: revenue, margins, non-GAAP EPS .
ISC West GenAI press release: edge GenAI demos, model support breadth .
Q2 FY26 8-K/call: FY26 growth raised to 31–35%, Q3 guide $100–$108M; margin/OpEx guidance .

Note: S&P Global consensus values marked with an asterisk (*) and the statement “Values retrieved from S&P Global.”

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