WOLF — Wolfspeed, Inc.

Summary of Wolfspeed, Inc. Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Total Revenue: $168 million, aligning with the midpoint of guidance.
• Power Revenue: $118 million, with Mohawk Valley contributing approximately $75 million.
• Materials Revenue: $50 million, impacted by tightening demand and increased competition.
• Non-GAAP Gross Margin: Negative 34%, affected by fresh start accounting adjustments and underutilization costs.
• Adjusted EBITDA: Negative $82 million, primarily due to fresh start accounting and underutilization.
• Cash Position: $1.3 billion, with $700 million from cash tax refunds and $600 million in net debt.
• Operating Cash Flow: Negative $43 million.
• CapEx: Reduced to $31 million from $400 million in the same quarter last year.

2. Strategic Updates and Business Highlights

• Leadership Changes: New leadership team focused on operational discipline and strategic execution.
• Revenue Diversification: Emphasis on expanding into industrial, energy, aerospace, and defense sectors, alongside automotive.
• AI Data Center Growth: Achieved 50% quarter-over-quarter growth in AI data center revenue, indicating strong traction in this segment.
• Manufacturing Transition: Completed the shutdown of the 150-millimeter device production ahead of schedule, transitioning to 200-millimeter manufacturing.
• Partnerships: Announced collaboration with Toyota to power onboard charging systems for BEVs, enhancing relationships with key automotive OEMs.

3. Forward Guidance and Outlook

• Revenue Expectations: Forecasted revenue between $140 million and $160 million for the fiscal year, reflecting a decline due to prior inventory build-ups and weaker EV demand.
• Operating Expenses: Expected to remain flat to slightly down sequentially.
• Gross Margin: Anticipated to remain negative in fiscal Q3, with improvements expected in subsequent quarters as operational actions take effect.
• Long-term Growth: Focus on capitalizing on the transition from silicon to silicon carbide technology across various applications.

4. Bad News, Challenges, or Points of Concern

• Weak Automotive Market: Ongoing challenges in the EV sector due to macroeconomic factors, including high interest rates and reduced government incentives.
• Negative Gross Margins: Continued underutilization and fresh start accounting impacts are hindering profitability.
• Competitive Pressures: Increased competition in the materials segment and a tightening demand environment are concerning.
• Uncertain Demand Visibility: Difficulty in predicting short-term demand dynamics, particularly in the EV market, poses risks.

5. Notable Q&A Insights

• Market Diversification: The company is pivoting from a heavy reliance on EVs to include AI data centers and other industrial applications, requiring a shift in go-to-market strategies and sales organization.
• Interest Rate Concerns: The first lien debt is expected to see a step-up in interest rates mid-2026, prompting discussions on refinancing options to reduce costs.
• AI Data Center Opportunities: Significant potential in the AI data center space, with a focus on energy generation, storage, and solid-state transformers.
• Customer Engagement: Strong interest from customers in Wolfspeed's vertically integrated manufacturing capabilities, especially in light of geopolitical material supply concerns.

Overall, Wolfspeed is navigating a challenging market environment while strategically positioning itself for future growth through diversification and operational improvements.