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WI

WOLFSPEED, INC. (WOLF)·Q1 2026 Earnings Summary

Executive Summary

  • Revenue of $196.8M modestly exceeded S&P Global consensus ($195.4M*) and non-GAAP EPS of $(0.55) beat consensus $(0.75*) as management delivered “strong revenue” while navigating post-Chapter 11 transition .
  • Gross margins deteriorated materially on underutilization costs: GAAP gross margin was (39)% and non-GAAP was (26)%, with $47M of underutilization from Mohawk Valley and Siler City; GAAP loss per share was $(4.12), including $504M of reorganization items .
  • Q2 FY26 revenue guidance of $150–$190M implies a sequential decline, driven by last-time buys ahead of the Durham 150mm fab closure and customer second-sourcing during bankruptcy, with ongoing industry softness expected through FY26; profitability guidance withheld pending fresh-start accounting .
  • Strategic narrative: focus on profitability, technology leadership (Gen4 devices; 200mm materials commercial launch), and operational excellence; closure of Durham 150mm device fab by year-end and continued consolidation around 200mm Mohawk Valley .

What Went Well and What Went Wrong

What Went Well

  • Mohawk Valley Fab revenue contribution nearly doubled YoY to $97M, validating 200mm device ramp and learning curve advantage versus peers .
  • Non-GAAP EPS improved to $(0.55) vs $(0.91) YoY; non-GAAP net loss improved to $(85.2)M vs $(115.8)M YoY, reflecting cost actions and mix shift toward Power Products .
  • Management tone: “We’ve strengthened the foundation of the company, emerging as a leaner organization with a focus on product innovation and market leadership” — CEO Robert Feurle .

What Went Wrong

  • Margins compressed sharply: GAAP gross margin (39)% and non-GAAP (26)% amid $47M underutilization costs and ~$29M inventory reserves/one-time transition charges; GAAP loss per share was $(4.12) on $504M reorganization items .
  • Guidance signaled demand fragility and order timing distortions: Q2 revenue guide $150–$190M reflects pull-forward ahead of fab closure and customer second-sourcing; management expects “ongoing softness” across the industry through FY26 .
  • Free cash flow remained negative at $(99.6)M; non-GAAP gross margin turned from positive 3% in prior-year Q1 to (26)% this quarter; adjusted EBITDA at $(57.4)M .

Financial Results

P&L Snapshot (Sequential Comparison)

MetricQ3 2025Q4 2025Q1 2026
Revenue ($USD Millions)$185.4 $197.0 $196.8
GAAP EPS ($)$(1.86) $(4.30) $(4.12)
Non-GAAP EPS ($)$(0.72) $(0.77) $(0.55)
GAAP Gross Margin %(12)% (13)% (39)%
Non-GAAP Gross Margin %2% (1)% (26)%
GAAP Operating Loss %(105)% (295)% (82)%
Non-GAAP Operating Loss %(51)% (48)% (60)%
Adjusted EBITDA ($USD Millions)$(45.2) $(40.7) $(57.4)

YoY Comparison (Q1 FY25 vs Q1 FY26)

MetricQ1 2025Q1 2026
Revenue ($USD Millions)$194.7 $196.8
GAAP EPS ($)$(2.23) $(4.12)
Non-GAAP EPS ($)$(0.91) $(0.55)
GAAP Gross Margin %(19)% (39)%
Non-GAAP Gross Margin %3% (26)%

Actuals vs S&P Global Consensus (Q1 FY26)

MetricConsensus*ActualBeat/Miss
Revenue ($USD Millions)$195.37*$196.8 Beat +$1.43M
Primary EPS ($)$(0.75)*$(0.55) Beat +$0.20

Values retrieved from S&P Global.*

Segment Revenue (Power vs Materials)

Segment ($USD Millions)Q3 2025Q4 2025Q1 2026
Power Products$107.5 $118.6 $131.8
Materials Products$77.9 $78.4 $65.0
Total$185.4 $197.0 $196.8

KPIs and Operating Drivers

KPIQ3 2025Q4 2025Q1 2026
Cash, Cash Equivalents & ST Investments ($M)$1,329.6 $955.4 $926.0
Inventories ($M)$459.1 $435.4 $385.5
PP&E Spending (Net) ($M)$24.1 $210.1 $103.9
Free Cash Flow ($M)$(167.7) $(454.0) $(99.6)
Underutilization Costs ($M)$26.3 $23.6 $47.0
Mohawk Valley Fab Revenue ($M)$78 $94.1 $97

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ2 FY26Not provided$150–$190M Lower sequential; decline expected
Profitability metrics (EPS/margins)Q2 FY26Not providedWithheld pending fresh-start accounting Deferred guidance
Manufacturing footprintQ4 CY25Durham 150mm device fab operatingClosure by year-end; consolidate to 200mm Mohawk Valley Strategic consolidation
Long-term modelLong-range planPrior model (not updated)Comprehensive update to be provided in 1H CY26 Timeline set; no interim updates

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 FY25; Q-1: Q4 FY25)Current Period (Q1 FY26)Trend
AI/data center initiativesLimited explicit references in Q3/Q4 releasesGen4 SiC devices “purpose built” for AI data centers; technology leadership emphasized Expanding focus on AI-centric power needs
Supply chain & inventoryRestructuring, impairments, ramp challenges Customers built inventory ahead of fab closure; some second-sourcing; inventory down ~$50M seq Moderation; aligning output to demand
Tariffs/macroTariff/macro risks noted in FLS “Ongoing softness… expected through fiscal 2026” Persistent demand softness
Product performance (200mm)Mohawk Valley revenue ramp: $78M → $94.1M $97M MV revenue; continued 200mm device shipments Steady progress
Regulatory/legalGoing concern and Chapter 11 process Emerged from Chapter 11; fresh-start accounting to reset financials Transition completed; accounting reset pending
R&D executionCost focus and restructuring Aligning R&D priorities to high-growth verticals; disciplined capital deployment Refocused, disciplined R&D
Materials (200mm)N/ACommercial launch of 200mm SiC materials and epitaxy Commercialization milestone
Regional/renewablesN/ACollaboration with Hopewind (China) for all-SiC wind power cabinet Expanding renewables footprint

Management Commentary

  • Strategic priorities: “Accelerate our path to profitability… technology leadership… operational excellence,” with a leaner, more efficient organization post-restructuring .
  • Technology leadership: “We remain the clear leader in silicon carbide… launched our Gen4 device platform… for AI data centers, aerospace and defense” .
  • Manufacturing actions: “On track to close our 150mm Durham device fab by the end of this calendar year… consolidating device production around 200mm Mohawk Valley” .
  • Fresh-start accounting: “Next quarter… a new basis of accounting and a reset of our financial statements… prior period comparisons can no longer be done one-to-one” .
  • CEO tone: “We’re building a stronger Wolfspeed… disciplined approach to align the business with near-term headwinds while advancing into… AI data centers, aerospace, and energy storage” .

Q&A Highlights

  • No Q&A conducted; the call consisted of prepared remarks only .
  • Clarifications via prepared remarks: Q2 revenue decline driven by last-time buys ahead of Durham closure and customer second-sourcing during bankruptcy .
  • Profitability guidance withheld due to pending fresh-start accounting; material accounting adjustments expected in Q2 .
  • Long-range plan timing: comprehensive financial update targeted for 1H CY26; timing update expected next quarter .

Estimates Context

  • Q1 FY26 actuals vs S&P Global consensus: Revenue $196.8M vs $195.4M* (beat), EPS $(0.55) vs $(0.75)* (beat). Coverage remains thin (3 revenue estimates, 2 EPS estimates*), limiting confidence in consensus precision .
  • Q2 FY26 consensus revenue at ~$170M* sits within company guidance ($150–$190M), implying potential revisions as order timing and second-sourcing normalize; EPS consensus is $(0.98)* without company profitability guidance due to fresh-start .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term revenue pressure is largely mechanical (pull-forward, second-sourcing) layered on industry softness; watch order cadence normalization post-Durham closure .
  • Margin trajectory hinges on utilization: underutilization costs rose to $47M; consolidation to 200mm and output-to-demand alignment are critical levers .
  • Liquidity remains adequate ($926M cash/short-term investments); but free cash flow is negative and capex, while reduced, still meaningful — monitor fresh-start opening balance sheet and cash burn path .
  • Technology leadership is the core thesis: Gen4 devices and 200mm materials commercial launch position WOLF for AI/data center, aerospace/defense, and renewable energy applications; execution will drive narrative re-rating .
  • Segment mix shift toward Power Products continues; Materials softness evident — track Mohawk Valley output, yields, and device ASPs for leverage .
  • Catalysts: Q2 report with fresh-start accounting and detailed reconciliations; 1H CY26 long-range plan update; operational milestones on Durham closure and Mohawk Valley utilization .
  • Risk watch items: demand softness through FY26, potential customer second-sourcing persistence, tariffs/geopolitical overhang, and execution on footprint consolidation .