MCU Leader Microchip Stock Drops 4% on Weak Forecast

On November 5, after U.S. markets closed, Microchip Technology, a leading MCU manufacturer, released its financial results for the second quarter of fiscal year 2025 (ending September 30, 2024). Although the overall performance exceeded expectations, lower-than-anticipated guidance for the upcoming third quarter led to a 4% decline in after-hours trading.

For the second quarter, Microchip reported revenue of $1.164 billion, a 48.4% year-over-year decrease and a 6.2% decline from the previous quarter. However, this revenue surpassed both the midpoint of the August 1 forecast ($1.15 billion) and analyst expectations of $1.15 billion. The company posted non-GAAP earnings per share of $0.46, a 71.6% year-over-year drop, but at the higher end of its forecasted range ($0.40-$0.46) and above the analyst estimate of $0.43.

Microchip's non-GAAP gross margin for the quarter was 59.5%, a decrease of 8.6 percentage points from the previous year's 68.1%, aligning with the upper end of the forecasted range (58.5%-59.5%).

In terms of revenue by region, Asia accounted for 50% of the second-quarter revenue, with the Americas and Europe contributing 32% and 18%, respectively.

For the third quarter, Microchip projects revenue between $1.025 billion and $1.095 billion, with a midpoint of $1.06 billion, below the analyst forecast of $1.18 billion. Non-GAAP earnings per share are expected to range from $0.25 to $0.35, with a midpoint of $0.30, also lower than the analyst expectation of $0.46. The anticipated gross margin for the third quarter is between 57.0% and 59.0%.

Following this guidance, Microchip's stock dropped by 4.45% in after-hours trading on November 5, closing at $71.75.