Earnings call transcript: ams OSRAM posts Q3 2026 revenue beat, shares fall

ams OSRAM reported a modest revenue beat for Q3 2026 and said adjusted EBITDA came in above the midpoint of guidance, but the shares fell 5.72% in pre-market trading to $15.81 from $16.77. Revenue reached EUR 829 million, above the EUR 817.73 million forecast, while the company said its core semiconductor portfolio grew 3% on a like-for-like basis. The company did not provide EPS in the data available. Management pointed to stronger Opto Semiconductors performance, a healthier balance sheet after divestments and continued progress in its Digital Photonics strategy, but investors appeared to focus on weaker year-on-year revenue, lower profitability and cautious near-term guidance.

ams OSRAM said Q3 marked another step in its transformation, with mixed end-market conditions but continued progress in its core business. Group revenue of EUR 829 million rose 3% sequentially, though it was down 3% from a year earlier on a reported basis.

The company’s semiconductor core portfolio grew about 3% year on year at constant currencies, led by Opto Semiconductors, which posted 8% comparable growth. Management said automotive, industrial and some consumer applications continued to show design-win momentum, even as smartphone demand in China remained weak.

The quarter also reflected the impact of portfolio changes. The company completed the sale of its non-optical sensor business to Infineon, which generated EUR 569 million in divestment proceeds and helped strengthen the balance sheet. Reported EBITDA was EUR 503 million, boosted by gains from the sale.

The company’s reported revenue of EUR 829 million came in above the EUR 817.73 million forecast, a beat of EUR 11.27 million, or about 1.4%. That is a small but positive surprise.

EPS was not available in the provided figures, so the comparison is limited to revenue. Still, the revenue beat was not large enough to offset investor concern about the broader trend. Revenue declined 3% year on year, and adjusted EBITDA fell 19% from a year earlier, even though it improved sequentially and beat the midpoint of guidance.

In that sense, the quarter looked more like steady execution than a clear inflection point. The result suggests the business is moving in the right direction, but not fast enough yet to change the market’s view in a major way.

The stock was indicated at $15.81, down 5.72% from the previous close of $16.77. That implies a drop of about $0.96. The move left the shares above their 52-week low of $6.85 but well below the 52-week high of $25.50. The stock has declined 48% year-to-date, reflecting broader investor concerns about the company’s path to profitability. According to InvestingPro analysis, the stock currently trades below its Fair Value, suggesting potential upside for patient investors willing to wait for the company’s transformation to bear fruit. The platform tracks this stock alongside other undervalued opportunities in the market.

The decline suggests investors were not focused only on the revenue beat. They also appeared to weigh the year-on-year decline in revenue, the lower adjusted EBITDA versus last year, and the fact that some of the quarter’s reported strength came from divestment gains rather than operating growth alone.

The stock’s pre-market move also points to a cautious read on the company’s near-term outlook. No unusual volume data was provided.

For Q4 2026, ams OSRAM guided for revenue of EUR 750 million to EUR 850 million and an adjusted EBITDA margin of 16% plus or minus 0.5 percentage points, assuming an euro-dollar exchange rate of 1.12. The guidance comes as the company remains unprofitable, with a negative return on equity of 7% over the last twelve months. InvestingPro Tips highlight that analysts do not anticipate the company will be profitable this year, underscoring the importance of management’s cost-cutting initiatives. Investors can access the full Pro Research Report on ams OSRAM, one of over 1,400 comprehensive reports that transform complex data into actionable intelligence.

Management said semiconductors should see a typical seasonal decline, while Lamps and Systems should benefit from the usual seasonal peak in the traditional automotive lamp business. The company also said it expects positive free cash flow to continue in fiscal 2027.

Beyond the quarter, management highlighted several strategic priorities:

The company said it has already secured EUR 3.8 billion in design wins over the first nine months of the year and remains on track for about EUR 5 billion for the full year.

Chief Executive Aldo said, “Q3 marks another step ahead in our transformation. The core business is growing despite mixed end market demand. The financial profile is improving, and our AI Photonics development is moving closer to commercialization.”

He also said, “Our semiconductor core portfolio grew 3% year-on-year on a like-for-like basis, led by 8% comparable growth in Opto Semiconductors.”

On the company’s broader strategy, he said, “Our ambition is to move from being a supplier of individual components to providing an increasingly integrated photonics platform for high-volume applications.”

Chief Financial Officer Rainer said the company’s cost-cutting pipeline is “really full,” pointing to a mix of Simplify savings, procurement gains, productivity improvements and production changes.

Analysts pressed management on several topics, including order intake, automotive trends, consumer demand and the timing of new photonics products.

One focus was the company’s backlog and order visibility. Management said recent semiconductor orders were “okay” and that the Q1 order book looked good, but it also noted that customers are facing PCB shortages and other supply chain issues tied to AI demand.

Analysts also asked about the timing of AI photonics revenue. Management said the first commercialization is likely to come from micro-pixel products in active optical cables or pluggables, while microLED-based solutions are more complex and likely further out, with a possible 2029-2030 timeframe for first commercialization.

In automotive, analysts questioned whether ams OSRAM was underperforming peers. Management said the company is performing well in LED lighting, especially in high-density forward lighting, where only a small number of suppliers can compete.

Questions also centered on the path to the company’s 25% adjusted EBITDA margin target. Management said the improvement should come from a combination of cost reductions, volume growth and the gradual replacement of low-margin manufacturing services with more profitable business.

Other questions covered the Kulim 2 facility, the strength of the Chinese automotive market and the company’s view on 850-nanometer versus 1060-nanometer technology for optical interconnects. Management said 850 nanometers looks like the better fit for scalability and ecosystem support, though it did not rule out other wavelengths entirely.

Moritz, Chorus Call Operator, Chorus Call: Ladies and gentlemen, welcome to the ams OSRAM conference call on third quarter 2026 results conference call and webcast. I am Moritz, your Chorus Call operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Jürgen Rebel, Head of Investor Relations. Please go ahead, sir.

Jürgen Rebel, Head of Investor Relations, ams OSRAM: Hey, good morning, everyone. This is Jürgen speaking. Welcome to our third quarter 2026 earnings call, despite the global Microsoft server issues. Some of you might not have received all the emails, but as we have a large group of participants, we believe that most of you have gotten the information. With us today is Aldo, our CEO, who will comment on the business performance and strategic progress. Rainer, our CFO, will walk you through the financials. Please refer to the Q3 earnings call presentation available on our website. That should still be accessible. We checked it. Aldo, please take us through the quarter.

Aldo, CEO, ams OSRAM: Thank you, Jürgen, and good morning, everyone. Q3 marks another step ahead in our transformation. The core business is growing despite mixed end market demand. The financial profile is improving, and our AI Photonics development is moving closer to commercialization. Let us turn to slide three and start with the quarter. Our semiconductor core portfolio grew 3% year-on-year on a like-for-like basis, led by 8% comparable growth in Opto Semiconductors. Group revenue reached EUR 829 million. Adjusted EBITDA margin came in at 16.3%, above the midpoint of our guidance. We secured approximately EUR 1.3 billion of new semiconductor design wins in the quarter. One nice example of this is the flagship Android smartphone design win, combining three of our most advanced optical sensors. In AI Photonics, our 850 nanometer thin-film microVCSEL platform achieved the key performance and reliability milestones.

The Credo-led wide-and-slow initiative in advancing ecosystem validation and industry standardization, while our micro-emitters featured in Credo’s active light cable demonstrator. In summary, the core portfolio is growing, design momentum is strong, and in AI Photonics, our innovation pipeline is translating into tangible customer and ecosystem validation. Let me now ask Rainer to walk you through some of the financials.

Rainer, CFO, ams OSRAM: Thank you, Aldo. Good morning from my side as well, and I am on slide four. Q3 was another strong quarter against the backdrop of all the portfolio changes. Group revenue reached EUR 829 million, up 3% sequentially. The increase was driven by continued gro