Allegro MicroSystems delivered a quarter that was well received by the market, driven by robust demand in both its automotive and industrial segments, particularly in data center applications. Management cited content gains in electric vehicles (XEV) and advanced driver-assistance systems (ADAS) as key contributors, while the data center business set a new record, making up 10% of total sales. CEO Michael Doogue highlighted, “The rapid expansion of higher power AI servers continues to drive increased demand for our fan driver ICs,” and pointed to multiple design wins in both automotive and industrial markets as a reflection of Allegro’s strong execution and rising market presence.
Is now the time to buy ALGM? Find out in our full research report (it’s free for active Edge members).
Allegro MicroSystems (ALGM) Q4 CY2025 Highlights:
- Revenue: $229.2 million vs analyst estimates of $221.3 million (28.9% year-on-year growth, 3.6% beat)
- EPS (GAAP): $0.04 vs analyst estimates of $0.05 (in line)
- Adjusted EBITDA: $46.18 million vs analyst estimates of $38.86 million (20.1% margin, 18.8% beat)
- Revenue Guidance for Q1 CY2026 is $235 million at the midpoint, above analyst estimates of $228.7 million
- EPS (GAAP) guidance for Q1 CY2026 is $0.16 at the midpoint, beating analyst estimates by 156%
- Operating Margin: 4.2%, up from 0% in the same quarter last year
- Inventory Days Outstanding: 133, down from 135 in the previous quarter
- Market Capitalization: $7.08 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Allegro MicroSystems’s Q4 Earnings Call
- Timothy Arcuri (UBS) questioned gross margin dynamics given higher sales in China, and CFO Derek D'Antilio explained that geographic and product mix led to slight margin compression, but a more favorable mix is expected next quarter.
- Joseph Moore (Wells Fargo) asked about the growth outlook for automotive versus industrial and data center. D'Antilio responded that industrial, particularly data center, will lead growth next quarter, while automotive remains stable with robust design win activity.
- Blayne Curtis (Jefferies) sought clarity on the data center product pipeline and timing for new gate driver IC revenue. CEO Michael Doogue stated that gate driver revenue is expected to ramp in 18-24 months as design-ins progress.
- Thomas O'Malley (Barclays) explored the health of the automotive market and inventory levels. Doogue emphasized no signs of share loss and highlighted lean inventory at automotive customers.
- Gary Mobley (Loop Capital) probed operating expense growth and its alignment with sales. D'Antilio indicated recent increases were mostly variable compensation and expects future OpEx to rise only at the rate of inflation after seasonal resets.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be watching (1) the adoption rate of Allegro’s new current sensors and isolated gate driver ICs in both data center and automotive applications, (2) the pace of design win conversion in robotics and advanced industrial markets, and (3) the company’s ability to expand gross margin through product mix improvements and factory efficiencies. Execution on these fronts, along with maintaining pricing discipline, will be key markers of ongoing performance.
Allegro MicroSystems currently trades at $38.28, up from $34.55 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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