Allegro MicroSystems’ second quarter results were mixed, with revenue surpassing analyst expectations but profitability falling short. Management attributed the strong sales growth to ongoing momentum in automotive e-Mobility, particularly for electric vehicle (EV) and advanced driver-assistance system (ADAS) applications, as well as robust performance in data center and industrial segments. CEO Mike Doogue highlighted that "current sensors for xEV applications like high-voltage traction inverters and onboard chargers" were major contributors to automotive growth, while data center and robotics demand drove industrial expansion. The market’s negative reaction reflected concerns about the company’s lower-than-expected earnings and continued operating margin challenges.
Is now the time to buy ALGM? Find out in our full research report (it’s free).
Allegro MicroSystems (ALGM) Q2 CY2025 Highlights:
- Revenue: $203.4 million vs analyst estimates of $197.9 million (21.9% year-on-year growth, 2.8% beat)
- EPS (GAAP): -$0.07 vs analyst estimates of $0 (significant miss)
- Adjusted EBITDA: $33.37 million vs analyst estimates of $32.1 million (16.4% margin, 4% beat)
- Revenue Guidance for Q3 CY2025 is $210 million at the midpoint, above analyst estimates of $207.1 million
- EPS (GAAP) guidance for Q3 CY2025 is $0.12 at the midpoint, beating analyst estimates by 293%
- Operating Margin: -1.3%, up from -6.4% in the same quarter last year
- Inventory Days Outstanding: 141, down from 150 in the previous quarter
- Market Capitalization: $5.90 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 Q2 Earnings Call
- Joseph Michael Quatrochi (Wells Fargo) pressed on whether inventory shortages were driving demand or if tariffs could prompt pull-ins. CEO Mike Doogue explained that demand is primarily real, with tariffs having limited current impact but being closely monitored for future effects.
- Vivek Arya (Bank of America Securities) asked about drivers of gross margin upside. CFO Derek D’Antilio detailed that improved manufacturing yields and timing dynamics in pricing and cost benefits led to sequential margin gains.
- Gary Wade Mobley (Loop Capital) questioned if revenue guidance reflected true end demand or ongoing channel inventory corrections. D’Antilio responded that shipments are not yet at end-demand levels, but distribution channel inventories are approaching normalized levels.
- Thomas James O'Malley (Barclays) sought clarification on the sources of strength in the industrial segment. D’Antilio cited broad-based growth, led by data center, robotics, and a resurgence in clean energy across multiple geographies.
- Blayne Peter Curtis (Jefferies) inquired about future growth drivers in e-Mobility and the timing of new product adoption. Doogue noted rising semiconductor content in automotive systems and the potential of isolated gate drivers in EV and data center markets.
Catalysts in Upcoming Quarters
In the coming quarters, key areas to watch will be (1) sustained momentum in automotive e-Mobility design wins and content expansion, (2) continued recovery and inventory normalization in distribution channels, and (3) the impact of new product adoption in data center and industrial markets. Additionally, margin trends and the effectiveness of cost optimization efforts will be important indicators for improved profitability.
Allegro MicroSystems currently trades at $32.01, down from $33.87 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
