Executive Summary

Q3 FY2026 revenue was $206.0M with non-GAAP EPS of $0.32 and GAAP diluted loss/share of $(0.30); gross margin expanded (GAAP 57.8%, non-GAAP 58.0%) on favorable mix and higher distribution sell-through .
Results were below S&P Global consensus on both revenue ($241.8M*) and EPS ($0.80*) despite beating the midpoint of management’s EPS guidance by $0.02 on better-than-expected gross margin .
Q4 FY2026 guidance: revenue $200–$215M, GAAP and non-GAAP gross margin 62–64%, non-GAAP EPS $0.40–$0.70; management flagged a ~200 bps one-time gross margin credit in Q4 that lifts the midpoint to ~63% but normalizes to ~61% thereafter .
Strategic updates: expanded U.S. onshore manufacturing via GlobalFoundries (40nm ULP) and launched the “Simplicity” developer ecosystem with an AI SDK aimed at accelerating IoT development; both seen as longer-term growth/efficiency drivers .
Near-term stock catalysts: consensus reset lower for Q4 given guidance well below Street revenue/EPS, continued gross margin trajectory (including one-time benefit), and evidence of end-customer inventory normalization and rising distribution mix .
(*Values retrieved from S&P Global)

What Went Well and What Went Wrong

What Went Well
- Mix-driven margin expansion: non-GAAP GM rose to 58.0% (up 170 bps QoQ, +350 bps YoY) driven by product mix and higher distribution contribution (74% of revenue) .
- Segment growth: I&C revenue $118M (+7% QoQ, +22% YoY) and Home & Life $88M (+6% QoQ, +26% YoY), with medical customers up nearly 60% YoY and smart home sequential growth .
- Strategic positioning: announced expansion with GlobalFoundries to onshore Series 2 wireless SoC manufacturing and launched Simplicity Ecosystem & AI SDK to speed IoT development; management expects scalability and faster customer ramps over time .
What Went Wrong
- Miss vs Street: Actual revenue $206.0M and non-GAAP EPS $0.32 were below S&P Global revenue ($241.8M*) and EPS ($0.80*) consensus; CFO indicated the EPS outperformance vs company guidance came from better gross margin, not top-line .
- Q4 guide under consensus: Revenue guide $200–$215M and non-GAAP EPS $0.40–$0.70 trail S&P consensus for revenue ($241.2M*) and EPS ($0.73*), implying estimate cuts near-term .
- One-time tailwind: Q4 gross margin includes ~200 bps non-recurring credit; normalized GM expected ~61%, suggesting mid-60s are not sustainable beyond near term .
  (*Values retrieved from S&P Global)

Financial Results

Metric	Q1 FY2026	Q2 FY2026	Q3 FY2026
Revenue ($USD Millions)	$177.7	$192.8	$206.0
GAAP Diluted EPS ($)	$(0.94)	$(0.67)	$(0.30)
Non-GAAP Diluted EPS ($)	$(0.08)	$0.11	$0.32
GAAP Gross Margin (%)	55.0%	56.1%	57.8%
Non-GAAP Gross Margin (%)	55.4%	56.3%	58.0%
GAAP Operating Expenses ($M)	$129.9	$131.0	$131.4
Non-GAAP Operating Expenses ($M)	$105.3	$107.4	$109.0
GAAP Operating Income (Loss) ($M)	$(32.1)	$(22.9)	$(12.3)
Non-GAAP Operating Income ($M)	$(6.9)	$1.1	$10.5

Segment revenue

Segment Revenue ($USD Millions)	Q1 FY2026	Q2 FY2026	Q3 FY2026
Industrial & Commercial	$96	$110	$118
Home & Life	$82	$83	$88

Operating KPIs

KPI	Q1 FY2026	Q2 FY2026	Q3 FY2026
Distribution mix (% revenue)	66%	69%	74%
Channel inventory (days)	48	51	61
DSO (days)	~30	~30	~30
Inventory days on hand	94	86	85
Cash + ST investments ($M)	~$425	~$416	~$439

Vs. S&P Global consensus (Quarter reported)

Metric	Actual Q3 FY2026	S&P Global Consensus	Outcome
Revenue ($USD Millions)	$206.0	$241.8*	MISS
Primary EPS ($)	$0.32 (non-GAAP) / $(0.30) GAAP	$0.80*	MISS
*Values retrieved from S&P Global

Notes: Non-GAAP adjustments primarily exclude stock-based comp, intangible amortization, certain other items, and apply a long-term 20% non-GAAP tax rate .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q4 FY2026	N/A	$200–$215	Initiated
GAAP Gross Margin (%)	Q4 FY2026	N/A	62%–64%	Initiated
Non-GAAP Gross Margin (%)	Q4 FY2026	N/A	62%–64%	Initiated
GAAP OpEx ($M)	Q4 FY2026	N/A	~$134–$136	Initiated
Non-GAAP OpEx ($M)	Q4 FY2026	N/A	~$110–$112	Initiated
GAAP Diluted EPS ($)	Q4 FY2026	N/A	$(0.22) to $0.08	Initiated
Non-GAAP Diluted EPS ($)	Q4 FY2026	N/A	$0.40 to $0.70	Initiated

Additional guidance color: Q4 gross margin includes a ~200 bps one-time credit; normalized GM implied ~61% near term, trending back toward the long-term 56%–58% model over time .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 FY2026)	Current Period (Q3 FY2026)	Trend
Gross margin trajectory	FY model 56%–58%; rising toward high end on mix/distribution	Non-GAAP GM 58%; Q4 guide 62%–64% with ~200 bps one-time credit; normalized ~61% near term	Improving near term; normalizing later
Channel & customer inventory	Channel days 48→51; intention to rebuild to 70–75 over multiple quarters; end-customer inventory declining	Channel 61 days; aim to add ~5 days per quarter; end-customer excess largely gone	Normalizing; rebuild in progress
Tariffs/macro	Watching tariffs; modest direct impact expected; pass-through if needed	No customer inventory builds around geopolitics; uncertainty persists	Manageable
Product/segments	CGM targeted to reach ~10% of rev in 1H’26; ESL, smart meters, Wi-Fi wins (e.g., Roku cam)	CGM path to 10% still on track; industrial strength; medical +~60% YoY	Positive momentum
AI/tools & developer ecosystem	Series 3 ramp starting; tools evolving	Simplicity Ecosystem & AI SDK launched; expected to improve developer efficiency and scalability	Building
Supply chain/onshoring	Supply chain diversification emphasized	Expanded GF partnership to manufacture in NY on 40nm ULP platform	Strengthening

Management Commentary

“Non-GAAP gross margin was 58%,… up 170 bps from the prior quarter and… 350 bps [YoY]… Non-GAAP EPS… beat the midpoint of our guidance by $0.02, driven by… gross margins.” – CFO .
“We announced the expansion of our partnership with GlobalFoundries… to add needed U.S. capacity for competitive IoT wireless solutions…” – CEO .
“Simplicity AI SDK… should result in scalability and more efficiency in terms of acquiring customers' designs and scaling… not going to happen overnight…” – CEO .
“Customer side… any excess inventory effects at end customers are effectively gone now… We're now operating with the market again.” – CEO .
“Q4… gross margins expected in the range of 62%–64%… includes an expected one-time benefit… ~200 bps… normalized ~61%… likely to gradually return toward long-term range.” – CFO .

Q&A Highlights

Gross margin mechanics: ~200 bps one-time credit in Q4; normalized gross margin ~61% for the next few quarters before gradually moving back toward the long-term 56%–58% model; mix tailwinds include specific higher-margin parts and increasing distribution share .
Channel inventory strategy: Target 70–75 days; Q3 at 61 days; plan to add ~5 days per quarter on average, acknowledging lumpiness; distribution POS strong .
CGM and medical trajectory: CGM expected to reach ~10% of revenue in 1H 2026; medical customers up nearly 60% YoY in Q3 .
Capital allocation & M&A: Tight M&A filter; more likely to return increasing excess cash via buybacks as profitability improves .
AI SDK (Agentic AI): Financial impact expected over time via development efficiency and faster ramps rather than immediate revenue .

Estimates Context

Q3 FY2026: Revenue $206.0M vs S&P Global consensus $241.8M*; Primary EPS $0.32 (non-GAAP) / $(0.30) GAAP vs S&P $0.80* – both MISS despite beating midpoint of company EPS guidance .
Q4 FY2026 guidance vs S&P Global: Revenue $200–$215M vs $241.2M*; non-GAAP EPS $0.40–$0.70 vs $0.73* – guidance below Street likely drives estimate cuts .
Implications: Street models should lower near-term revenue/EPS to management ranges; incorporate ~200 bps one-time GM uplift for Q4, then normalize GM ~61% into early 2026 per management commentary .
*Values retrieved from S&P Global

Key Takeaways for Investors

Expect downward estimate revisions for Q4 given guidance ranges are below S&P Global consensus; watch for how much of the one-time GM benefit is recognized and whether analysts adjust normalized GM to ~61% .
The quality of growth is improving: mix and distribution channel strength are lifting gross margins; monitor distribution mix (now 74%) and channel inventory rebuild toward 70–75 days as a lever for margins and POS visibility .
Segment momentum remains favorable: I&C and Home & Life both growing; medical/CGM, smart metering, and smart home remain core ramps into 2026 .
Strategic catalysts are medium term: U.S. onshoring with GlobalFoundries (Series 2) and Simplicity AI SDK/Studio should enhance supply resilience and developer efficiency, supporting share gains and faster ramps over time .
Management discipline on OpEx (non-GAAP $109M in Q3; Q4 guide $110–$112M) supports EPS leverage as gross margins expand; focus remains on earnings growth outpacing revenue growth .
Near-term trading setup: The combination of a Q3 miss vs S&P consensus and below-consensus Q4 guide could weigh on sentiment; however, improving gross margins, normalizing inventories, and visible ramps (CGM, metering) provide medium-term support .

Appendix: Additional Relevant Press Releases

Expanded GlobalFoundries partnership for U.S.-based manufacturing of Series 2 wireless SoCs on 40nm ULP platform; production to ramp over next several years .
Launched Simplicity Ecosystem and AI SDK to accelerate embedded IoT development; AI-augmented developer experience to enter public access in 2026 .

Source Notes

Q3 FY2026 8-K press release and financials ; companion press release -.
Q3 FY2026 earnings call transcript -.
Prior quarters for trend: Q2 FY2026 8-K and press release - -; Q1 FY2026 press release and call - -.
S&P Global consensus used for estimate comparisons (Primary EPS Consensus Mean, Revenue Consensus Mean). Values marked with an asterisk are from S&P Global.

SILICON LABORATORIES INC. (SLAB)·Q3 2026 Earnings Summary