Microchip Technology Inc (NASDAQ:MCHP) stock fell 3.91% (As on February 6, 11:43:05 AM UTC-4, Source: Google Finance) after the company reported third-quarter net income of $34.9 million or $0.06 per share, compared to a net loss of $53.6 million or $0.10 per share in the prior year’s third fiscal quarter. Adjusted income for the third quarter was $252.8 million compared to adjusted net income of $107.3 million in the prior year’s third fiscal quarter. As of Dec. 31, 2025, cash and cash equivalents totaled $250.7 million compared with $236.8 million as of Sept. 30. As of Dec. 31, 2025, total debt (long-term plus current portion) was $5.37 billion compared with $5.38 billion as of Sept. 30. Inventory at the end of Dec. 2025 was 201 days, down from 251 days at the end of March 2025. The distribution inventory days were 28 days, which is in the normal range. For the fiscal third quarter, cash flow from operating activities was $341.4 million compared with $271.5 million in the previous quarter. The free cash flow was $318.9 million compared with $253.4 million in the previous quarter.

MCHP in the third quarter of FY26 has reported the adjusted earnings per share of $0.44, beating the analysts’ estimates for the adjusted earnings per share by 3.38%. The company had reported the adjusted revenue growth of 15.6 percent to $1.19 billion in the third quarter of FY26, missing the analysts’ estimates for revenue by 0.08%. Sequentially, revenues increased 4%. The non-GAAP gross margin expanded 510 basis points (bps) on a year-over-year basis to 60.5%, but expanded 379 bps sequentially. The product gross margin was above 65%, driven by a rich product mix of data center products. Underutilization in MCHP’s factories in the reported quarter was $50 million. The non-GAAP operating margin increased to 28.5% from 20.5% in the year-ago quarter.

Additionally, Microchip declared a quarterly cash dividend on its common stock of 45.5 cents per share, which is payable on March 10, 2026, to stockholders of record on February 23, 2026.

Microchip expects net sales of $1.26 billion (+/-$20 million) at the mid-point for the fourth quarter of fiscal 2026, which indicates 6.2% sequential growth and a 29.8% rise from the year-ago quarter’s actual. Non-GAAP earnings are anticipated between 48 cents and 52 cents per share. The non-GAAP gross margin is anticipated between 60.5% and 61.5%. Non-GAAP operating expenses are projected to be 31.3-31.7%. The non-GAAP operating margin is anticipated to be 28.8-30.2%.