Allegro MicroSystems (NASDAQ:ALGM) reported first-quarter fiscal 2027 sales of $259 million, exceeding the high end of its guidance range and rising 7% sequentially and 27% from a year earlier. Non-GAAP earnings per share reached $0.23, up 35% sequentially and 156% year over year, as the company cited operating leverage, product mix and early contributions from pricing actions.
President and Chief Executive Officer Mike Doogue said the quarter marked Allegro’s sixth consecutive period of sequential sales growth. Bookings increased for a seventh consecutive quarter, while backlog also expanded, according to management.
Data Center Business Reaches Record Level
Industrial and other sales increased 18% sequentially to $94 million and rose 59% from the prior-year quarter, led by data center demand. Data center sales accounted for 17% of total first-quarter revenue, compared with 14% in the prior quarter and 10% in the third quarter of fiscal 2026.
Doogue said data center revenue rose 32% sequentially to a quarterly record. Current sensors represented 22% of data center sales in the quarter, growing 66% sequentially, as customers adopted the products to improve power efficiency and system power density.
Allegro expects fiscal 2027 data center sales to more than double from fiscal 2026. The company said its current sensors and fan driver integrated circuits are supporting near-term demand, while isolated gate drivers could add further content opportunities in future AI-focused server architectures.
Chief Financial Officer Derek D’Antilio said data center product gross margins have reached the mid-50% range, supported by the growing contribution from current sensors. He said current sensors carry gross margins above the company average, while motor drivers are slightly below that level. The company also expects isolated gate drivers to generate above-average margins as they enter the market.
D’Antilio said Allegro expects a material contribution from its isolated gate-driver products in data centers in roughly 18 to 24 months. The company plans to begin sampling a second-generation product designed for data center applications in the fall.
Automotive Growth Supported by Content Gains
Automotive sales totaled $165 million, increasing 1% sequentially and 15% year over year. Focus Auto sales, which include electric vehicle and advanced driver-assistance system applications, increased 3% from the prior quarter and 11% from a year earlier.
Management said automotive customer demand remains strong, although some within-lead-time orders could not be shipped during the first quarter. Automotive bookings rose 30% year over year and increased by high single digits sequentially, while automotive design wins also increased 30% from the prior-year period.
Doogue said the company sees a path for Allegro content to rise from about $40 in legacy internal-combustion-engine vehicles to more than $100 in next-generation battery-electric vehicles. The company highlighted first-quarter design wins across Korea, Japan and China, including electronic power steering, hybrid traction inverters, onboard chargers and 12-volt and 48-volt electromechanical braking systems.
Allegro also secured its first major tunneling magnetoresistance, or TMR, angle-sensor programs for ADAS steering motors with Chinese automakers. Doogue said the company is using TMR technology to pursue share gains in automotive and data center applications, where higher switching speeds in silicon carbide and gallium nitride power systems require faster current sensing.
Management expects both automotive and industrial end markets to deliver mid-single-digit sequential sales growth in the fiscal second quarter.
Robotics Adds to Growth Pipeline
Allegro said robotics and automation are becoming an additional source of demand for its sensor and power products. During the quarter, the company secured current-sensor wins with large Chinese humanoid robot original equipment manufacturers and a design win with a North American humanoid robotics company using Allegro inductive position sensors in robotic joints.
The company expects robotics and automation to account for 3% to 4% of fiscal 2027 sales. Doogue said Allegro estimates its addressable content could exceed $150 per humanoid robot by 2030, based on the number of joints, actuators and safety-relevant motor-control systems in those devices.
Management said the opportunity also extends beyond humanoid robots to industrial robotic arms, autonomous mobile robots and other factory automation systems.
Margins Improve; Second-Quarter Outlook Calls for Continued Growth
First-quarter non-GAAP gross margin was 51.1%, up from 50% in the prior quarter and 48.2% a year earlier. Non-GAAP operating margin was 19.4%, compared with 15.6% in the fourth quarter and 11.1% in the prior-year period. Adjusted EBITDA margin was 23.9%.
D’Antilio attributed gross-margin improvement to operating leverage, product mix, factory efficiencies, bill-of-material transitions and selective pricing actions. The company is working on transitions including gold-to-copper wire bonding and continues to target gross margin of 55% and higher over the next several years.
While pricing actions began late in the first quarter, D’Antilio said their impact should become more meaningful in the second half of fiscal 2027. He noted that auto pricing was down low single digits under annual customer contracts that began at the start of the calendar year, while selective actions have focused largely on distribution channels.
- Cash at quarter-end: $170 million
- Cash flow from operations: $22 million
- Capital expenditures: $8 million
- Free cash flow: $14 million
- Term debt: $285 million
- Net debt: $115 million
For the fiscal second quarter, Allegro forecast sales of $265 million to $275 million. At the midpoint, the outlook represents 26% year-over-year growth. The company projected non-GAAP gross margin of 50.75% to 51.75%, operating expenses of approximately $84.5 million, and non-GAAP earnings per share of $0.23 to $0.26. The midpoint of the EPS outlook would represent an 88% increase from the year-earlier period.
About Allegro MicroSystems (NASDAQ:ALGM)
Allegro MicroSystems, Inc (NASDAQ: ALGM) is a leading designer and manufacturer of high-performance power and sensing integrated circuits. The company focuses on semiconductor solutions that enable precise motion control, energy-efficient power management and robust sensing in a wide range of applications. Allegro’s product portfolio includes Hall-effect magnetic sensors, current and position sensing ICs, motor driver and controller devices, and power management components.
Allegro MicroSystems serves major automotive, industrial and consumer markets worldwide.
-sa-logo-1200x675.png){kind=logo}