Alpha and Omega Semiconductor Limited 2026 Q4 Earnings Call

Please go ahead. Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor's conference call to discuss fiscal 2026 fourth quarter financial results.

I am Steven Pelayo, investor relations representative for AOS. With me today are Stephen Chang, our CEO, and Yifan Liang, our CFO. This call is being recorded and broadcast live over the web. A replay will be available for seven days following the call via the link in the investor relations section of our website. Our call will proceed as follows today. Steven will begin business updates, including strategic highlights and a detailed segment report. After that, Yifan will review the financial results and provide guidance for the September quarter. Finally, we will have a Q&A session. The earnings release was distributed over the wire today, August 12, 2026, after the market closed. The release is also posted on the company's website.

Our earnings release and this presentation include non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release. We remind you that during this conference call, we will make certain forward-looking statements, including discussions of the business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligation to update the information provided in today's call. Now, I will turn the call over to our CEO, Stephen Chang.

Steven? Thank you, Steven. Welcome to Alpha and Omega's fiscal 2026 Q4 earnings call.

I will begin with a high-level overview of our results and then jump into segment details. We delivered fiscal Q4 revenue results above the midpoint of our guidance. Total June quarter revenue was $170.4 million, down 3.5% year-over-year and up 4% sequentially. Non-GAAP gross margin was 23.7%. Non-GAAP EPS was a loss of $0.13 per share. As anticipated, strength in advanced computing, particularly AI and server applications and in the communication segment, offset softness in the traditional PC market, driven by higher memory costs and in gaming within the consumer segment. Advanced computing continues to be the strongest part of our business and provides clear evidence that our long-term strategy is delivering results.

As our portfolio expands into higher performance applications, we are increasing content per platform, broadening customer adoption, and strengthening our competitive position in AI infrastructure. To support this opportunity, we continue expanding our medium-voltage manufacturing capacity while increasing targeted R&D investments. With that, let me now cover our Q2 segment results and provide more details. Starting with computing. June quarter revenue was down 8.6% year over year and up 5.6% sequentially and represented about 49.8% of total revenue. The segment results came in at the high end of our guidance for a low to mid-single digit sequential increase, driven by strength in advanced computing, which increased 35% sequentially and represented a record high 31% of the computing segment in the June quarter.

The strength in advanced computing was driven by AI, server, workstation, and cloud applications, while declines in PCs, tablets, and graphics cards offset and impacted the overall segment results. Demand for our medium-voltage MOSFET portfolio continues to expand across AI and cloud infrastructure, with growing engagement from power supply providers, module makers, leading ODMs, cloud service providers, and hyperscale customers. Customer engagement and design activity continue to expand in these areas, and we expect these products to contribute more meaningfully during the second half of 2026 and into 2027. Looking ahead to the September quarter, we expect advanced computing revenue to grow by more than 40% sequentially, driven by continued strength across AI servers, graphics cards, and other high-performance computing platforms. Our AI and server business alone is expected to increase more than 60% sequentially and represent the majority of our advanced computing business.

This growth is expected to more than offset the well-publicized weakness in traditional PC applications caused by memory chip constraints, resulting in flattish sequential growth for the overall computing segment. More importantly, advanced computing is expected to exceed 40% of computing segment revenue and approach 20% of total company revenue. Another important step in shifting our product mix towards higher value applications with richer product content and stronger profitability. Turning to the consumer segment, June quarter revenue was down 21.3% year over year and up 8% sequentially, and represented 12.3% of total revenue. The sequential results were better than our expectations for a relatively flattish quarter, with broad-based quarter-on-quarter growth across gaming, wearables, and home appliances. The year over year decline primarily reflects lower gaming revenue as the current console product cycle nears maturity.

For the September quarter, we expect consumer segment revenue to decline approximately 25% sequentially, primarily reflecting lower revenue in home appliances, wearables, and gaming. Next, let's discuss the communication segment. June quarter revenue was up 22.3% year over year and down 2.3% sequentially and represented 19.3% of total revenue. The results were in line with our expectations for a slight sequential decline as seasonally lower battery PCM shipments ahead of new smartphone model transitions were largely offset by strong growth in DC/DC modules and networking applications. For the September quarter, we are ramping new products with our Tier 1 U.S. smartphone customer, and we continue to benefit from our strong position in premium smartphone platforms, where our differentiated battery protection solutions and support for higher charging currents are increasing BOM content and driving greater value per device.

Outside of the premium tier, market conditions remain more challenging as elevated memory pricing and supply constraints are pushing some OEMs toward lower performance components in certain platforms. We remain disciplined in managing our product mix, prioritizing higher performance sockets and premium smartphone platforms where our technology and content opportunities are greatest. As a result, we expect communication segment revenue to increase approximately 10% sequentially. Now let's talk about our last segment, power supply and industrial, which accounted for 17.6% of total revenue and was up 1.4% year-over-year and up 5.2% sequentially. Overall, the results were in line with expectations for mid-single-digit sequential growth, driven by sequential and year-over-year growth in e-mobility, as well as DC fans tied to AI server demand. This was partially offset by sequential and year-over-year declines in quick chargers and AC/DC power supplies.

Looking ahead to the September quarter, we see stronger demand for power tools and continued momentum in DC fans supporting AI server rack applications. We also expect quick chargers and AC/DC power supplies to increase sequentially. While demand trends continue to vary across end markets, we remain encouraged by the expanding tangential opportunities in AI infrastructure and the improving demand environment across several industrial applications. Altogether, we expect power supply and industrial revenue to increase nearly 30% sequentially. In closing, we are encouraged by the continued progress of our strategic transformation, even as conditions remain uneven across several end markets. Advanced computing is now a clear and growing contributor to both revenue and earnings, reinforcing the long-term direction of the business.

That mix shift, combined with an improving pricing environment, is expected to support higher gross margins in the second half of calendar 2026, demonstrating the benefits of the strategic investments we have made over the past several years. Despite ongoing pressure on the broader PC and smartphone markets from elevated memory pricing and supply constraints, we believe our computing and communications businesses are outperforming their respective end markets, supported by our expanding advanced computing portfolio, total solution strategy, and disciplined focus on premium smartphone platforms with our Tier 1 U.S. customer. We are expanding manufacturing capacity in key product areas, increasing targeted R&D investments for next-generation AI infrastructure, and building a growing pipeline of new products across AI-related workloads. We believe this combination, a broader product portfolio, increasing content per platform, and continued investment in technology, positions AOS to deliver stronger, more profitable, and more sustainable long-term growth.

I also want to address a recent event that is affecting our near-term outlook. A couple days ago, Shanghai experienced Typhoon Dolphin and flooding that impacted portions of our packaging operations. We expect a slight impact to the September quarter. Our teams are moving quickly to restore affected capacity, minimize customer disruption, and position us to recover as much of the delayed business as possible in the coming quarters. With that, I will now turn the call over to Yifan for a discussion of our fiscal fourth quarter financial results and our outlook for the next quarter.