Qnity Electronics, Inc. (Q) Earnings & Analysis

Latest quarter

Qnity reported Q2 FY2026 revenue of $1.4 billion, up 22.1% from Q2 FY2025. The company said revenue exceeded the consensus by 5.22%; the consensus was $1.4 billion and reported revenue, as the consensus counts it, was $1.4 billion. Qnity reported adjusted EPS of $1.19, compared with the consensus of $1.07 and 11.2% above the consensus.

The filing said the revenue increase primarily reflected a 23% increase in volume, with volume up in both operating segments. Semiconductor Technologies sales rose as customer utilization improved and demand grew for AI-driven applications, while Interconnect Solutions sales increased on demand from AI-driven technology ramps and new content and share gains. Qnity reported gross margin of 46.6%, versus 46.2% a year earlier, while operating margin was 19.3%, versus 21.0%. Diluted EPS was $0.59, down −34.4% year over year, and free cash flow was $157.0 million, down −29.9%.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

John Kemp said Qnity’s Semiconductor Technologies business grew through AI-driven solutions, with advanced-node portfolio growth of more than 20% in the second quarter. He said utilization had improved across logic and memory, and that greater processing complexity, additional layers and packaging steps increase material volume and content. Kemp also said Interconnect Solutions recorded 28% organic growth, led by advanced packaging and interconnects, AI PCBs and thermal management.

Mike Goss said Qnity’s adjusted operating EBITDA was $431 million in Q2 2026 and that its adjusted operating EBITDA margin was 30.2%. Goss said Semiconductor Technologies’ margin profile reflected product mix and investments supporting advanced-node growth, while Interconnect Solutions benefited from higher volume and favorable mix. He said the company expected approximately $20 million of logistics and energy costs, with half incurred in the first half, and said targeted pricing actions were in place where input or logistics costs had risen.

On investment, Kemp said Qnity had deployed approximately $600 million in growth investments since 2022, focused on capacity and next-generation technologies. Goss said capital expenditures totaled $90 million in the quarter and that Qnity anticipated elevated full-year capital expenditures; he said the long-term expectation was for capital expenditure to return to the 6% of net sales range.

Analysts asked about the pace of advanced-node growth and Interconnect Solutions demand. Kemp said Qnity would not provide quarterly advanced-node growth-rate guidance, but said advanced nodes were about 40% of the portfolio exiting the first half and that the company could reach its 45% to 50% portfolio objective early. In response to questions on the second half, Goss said order books remained healthy and cited Middle East developments, customer-ramp timing and utilization trends as variables Qnity was monitoring. For Q3, he said Qnity expected low-single-digit sequential sales growth, with Semiconductor Technologies in the low-single-digit range and Interconnect Solutions in the mid-single-digit range.

Guidance

Qnity said it raised its FY2026 outlook. Mike Goss said the company now expects net sales of $5.6 billion to $5.7 billion, adjusted operating EBITDA of $1.7 billion to $1.7 billion, adjusted EPS of $4.40 to $4.60, and adjusted free cash flow of $600.0 million to $700.0 million.