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ALPHA & OMEGA SEMICONDUCTOR Ltd (AOSL)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 revenue $182.5M was flat YoY and +3.4% QoQ; non-GAAP EPS $0.13 beat consensus $0.09, while revenue was fractionally below consensus $183.2M; GAAP gross margin 23.5% and non-GAAP gross margin 24.1% were within prior guidance ranges . Consensus values marked with asterisk are from S&P Global.*
  • Mix improved: Power IC revenue rose 37.3% YoY to a record and now represents “nearly 40%” of product revenue, supporting margin resiliency despite higher operating costs .
  • Q2 FY26 guidance implies a sequential correction: revenue $160M ±$10M (midpoint -12.3% QoQ), GAAP gross margin 22.3% ±1% and non-GAAP gross margin 23.0% ±1%; opex flat-to-slightly down on a non-GAAP basis .
  • Strategic catalyst: AOS is aligning to the 800V AI data center power transition (NVIDIA ecosystem), broadening content from controllers/power stages to medium/high-voltage conversion with SiC/GaN; management sees steady growth in 2026 and a stronger upturn in 2027 as programs move to volume .

What Went Well and What Went Wrong

  • What Went Well

    • Record Power IC performance: “Power IC revenue increased 37.3% year-over-year to a record quarterly high and now represents nearly 40% of total product revenue,” supporting richer mix and margin trajectory .
    • Computing and Communications strength offset Consumer/Industrial softness; Computing grew to 53.2% of revenue, with continued PC strength into September and U.S. Tier 1 smartphone-led Communications sequential growth (+21.4%) .
    • Balance sheet strengthened: received ~$94M first installment from JV stake sale; cash ended at $223.5M (vs. $153.1M in Q4), and equipment loan was paid off .

  • What Went Wrong

    • Near-term digestion in AI/graphics: combined AI and graphics declined sequentially (still >2x YoY), with a data center program ramping smaller than planned; normalization expected as new programs ramp in March quarter .
    • Consumer and Power Supply/Industrial missed internal expectations: Consumer -25.8% YoY/-11.6% QoQ; Power Supply & Industrial -12.4% YoY/-5.6% QoQ, with quick charger demand weaker than expected .
    • Margin pressure from higher operating costs; non-GAAP gross margin dipped to 24.1% from 24.4% QoQ and 25.5% YoY .

Financial Results

MetricQ3 FY25 (Mar 2025)Q4 FY25 (Jun 2025)Q1 FY26 (Sep 2025)
Revenue ($M)$164.6 $176.5 $182.5
Revenue Consensus Mean ($M)*$157.2$170.0$183.2
GAAP Gross Margin %21.4% 23.4% 23.5%
Non-GAAP Gross Margin %22.5% 24.4% 24.1%
GAAP Diluted EPS ($)-0.37 -2.58 -0.07
Non-GAAP Diluted EPS ($)-0.10 0.02 0.13
EPS Consensus Mean ($)*-0.17-0.010.09

Notes: Q1 FY26 non-GAAP EPS beat ($0.13 vs $0.09), while revenue was marginally below consensus ($182.5M vs $183.2M). Q/Q revenue grew 3.4%; YoY was flat. Consensus figures marked with asterisk are from S&P Global.*

Segment mix and trends (current quarter):

SegmentShare of RevenueY/YQ/QCommentary
Computing53.2% +27.1% +4.6% PCs strong into September; AI/graphics digestion; expect ~20% Q/Q decline in Dec quarter .
Communications—-7.8% +21.4% U.S. Tier 1 smartphone launches offset China weakness; expect low-to-mid single-digit Q/Q decline in Dec .
Consumer12.9% -25.8% -11.6% Wearables at record high; gaming/home appliance softness; expect high-teens Q/Q decline in Dec .
Power Supply & Industrial15.3% -12.4% -5.6% Quick chargers soft; expect mid-to-high single-digit Q/Q growth in Dec, led by power tools recovery .

Product mix and operating KPIs:

KPIQ4 FY25Q1 FY26
DMOS Revenue ($M)—$108.5
Power IC Revenue ($M)—$72.7
Operating Cash Flow ($M)-$2.8 $10.2
Cash & Equivalents ($M)$153.1 $223.5
DSO (days)15 21
Inventory Days126 124
CapEx ($M)14.3 9.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Revenue ($M)Q1 FY26$183 ± $10 $182.5 Met (within range)
GAAP Gross Margin %Q1 FY2623.8% ±1% 23.5% Met (within range)
Non-GAAP Gross Margin %Q1 FY2624.4% ±1% 24.1% Met (within range)
GAAP OpEx ($M)Q1 FY26$47.5 ±$1.0 $47.4 Met (slightly lower)
Non-GAAP OpEx ($M)Q1 FY26$41.0 ±$1.0 $41.4 Met (slightly higher)
Tax Expense ($M)Q1 FY26$1.0–$1.3 $1.93 Higher than guided
Net Interest (income > expense)Q1 FY26+$0.5M Interest income $0.892M; expense $0.360M Achieved (~+$0.53M)

Current guidance for Q2 FY26:

MetricPeriodPrevious GuidanceCurrent Guidance
Revenue ($M)Q2 FY26N/A$160 ± $10
GAAP Gross Margin %Q2 FY26N/A22.3% ±1%
Non-GAAP Gross Margin %Q2 FY26N/A23.0% ±1%
GAAP OpEx ($M)Q2 FY26N/A$47.1 ±$1.0
Non-GAAP OpEx ($M)Q2 FY26N/A$40.5 ±$1.0
Net InterestQ2 FY26N/AInterest income ~$1.0M higher than expense
Tax Expense ($M)Q2 FY26N/A$1.1–$1.3

Earnings Call Themes & Trends

TopicQ3 FY25 (Q-2)Q4 FY25 (Q-1)Q1 FY26 (Current)Trend
AI/data center and graphicsFocus on computing; no AI specifics in PR .“AI and graphics revenue reached record levels” .AI/graphics declined QoQ but >2x YoY; one DC program smaller-than-planned; 800V AI power architecture initiative with SiC/GaN and controllers .Pausing after strong run; broader pipeline, architecture pivot supportive mid-term.
Supply chain/tariffs—PC pull-ins tied to tariff uncertainties .Demand normalization after earlier tariff-related customer orders; Dec guide reflects seasonality plus digestion .Pull-ins unwinding into Q2.
Product mix strategyTotal solutions narrative .Total solutions across high-performance apps .Power IC nearing 40% of product revenue; richer mix benefits GM; DMOS $108.5M, Power IC $72.7M .Mix shift ongoing, margin supportive.
Regional smartphone trends——U.S. Tier 1 launch strength; China smartphone weaker; prioritizing U.S. customers .U.S. share gains vs. China softness.
R&D/capex/investment——Ramping targeted R&D/system-level engineering; CapEx $9.8M and Dec guide $14–$16M; JV cash to accelerate investments .Investment up to capture AI/PC/phone content.

Management Commentary

  • CEO: “Power IC revenue increased 37.3% year-over-year to a record quarterly high and now represents nearly 40% of total product revenue… underscores our transformation from a component supplier to a total solutions provider.”
  • CEO on AI/800V: “On October 13th, we announced support for 800 volts DC power architecture… opens the door for AOS to participate in entirely new system designs… new opportunities for AOS to expand our footprint in high-performance computing and data center markets.”
  • CFO on mix and profitability: “DMOS revenue was $108.5 million… Power IC revenue was $72.7 million… Non-GAAP gross margin was 24.1%, compared to 24.4% last quarter… primarily due to higher professional service fees.”
  • Strategy and outlook: “We are increasing targeted R&D and system-level engineering investments… We expect steady growth through 2026, followed by a stronger upturn in 2027 as programs transition from design-in to volume production.”

Q&A Highlights

  • Near-term slowdown drivers: Seasonality plus unwinding of tariff-related PC pull-ins; management views the correction as temporary with underlying mix/BOM expansion trends intact .
  • Gross margin trajectory: September GM in line (slightly below midpoint); expect lower GM in December on lower revenue/mix; confidence in mix-led improvement beyond near-term correction .
  • Pricing dynamics: ASP erosion trending at historical single-digit declines YoY; focus remains on mix (higher-performance sockets) to lift margins over time .
  • AI pipeline timing: One data center program ramped smaller than planned; broader opportunities across same and new customers; more meaningful ramp expected in fiscal Q3 (March quarter) .
  • Investment priorities: Increasing R&D/system-level engineering to expand sockets across PCs, smartphones, graphics, and AI; JV proceeds strengthen balance sheet to fund this .
  • Industrial outlook: Power Supply & Industrial expected to grow mid-to-high single digits sequentially in December, led by power tools recovery/design wins in brushless motor control .

Estimates Context

  • Q1 FY26: non-GAAP EPS $0.13 vs consensus $0.09 (beat); revenue $182.5M vs consensus $183.2M (slight miss). Q4 FY25: revenue and EPS both above consensus; Q3 FY25: revenue above and EPS less negative than consensus . Consensus values marked with asterisk are from S&P Global.*
MetricQ3 FY25Q4 FY25Q1 FY26Q2 FY26 (Guide vs. Cons)
Revenue Actual ($M)$164.6 $176.5 $182.5 Guide: $160 ± $10
Revenue Consensus ($M)*$157.2$170.0$183.2$160.7
EPS (Non-GAAP) Actual ($)-0.10 0.02 0.13 —
EPS Consensus ($)*-0.17-0.010.09-0.08

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Mix turning favorable: Record Power IC contribution and controller attach underpin medium-term margin expansion even with normalized ASP erosion; watch continued share gains in PCs and U.S. smartphones .
  • Near-term air pocket: Q2 guide midpoint implies ~12% QoQ revenue decline with softer PCs/gaming/wearables and AI/graphics digestion; margin guided down modestly with lower volumes .
  • AI structural catalyst: 800V AI data center power architecture expands AOS’ served sockets (SiC/GaN, stacked-die MOSFETs, multiphase controllers), creating new design-in cycles into CY26–27; pipeline breadth mitigates single-program variability .
  • Balance sheet optionality: ~$223.5M cash post JV installment and debt paydown provides capacity to fund R&D, equipment, and engineering to accelerate total solutions strategy .
  • Execution check-points: Monitor Q2 trough dynamics (PCs, gaming), Power Tools-led rebound in Industrial, and signs of AI/graphics re-acceleration by March quarter as indicated by management .
  • Estimate path: EPS beat/inline revenue in Q1 suggests models should reflect mix-driven GM resilience; Q2 consensus revenue near midpoint; absent EPS guidance, Street may trim near-term margins and then re-raise into CY26 as mix improves.*

Additional references and disclosures:

  • Q1 FY26 8-K (press release and prepared remarks) .
  • Earnings call transcript (Q&A themes, timing/mix commentary) .
  • Prior quarters’ press releases for trend context (Q4 FY25, Q3 FY25) .
  • AI data center 800V architecture press release (strategic initiative) .

Footnote: Consensus estimates marked with asterisk are values retrieved from S&P Global.*