What happened

Shares of Semtech (SMTC 2.71%) climbed as much as 10.2% early Thursday, then settled to trade up 7.5% as of 2:30 p.m. ET after the Internet of Things (IoT) systems and cloud connectivity services company announced strong quarterly results. 

For its fiscal third quarter ended July 30, revenue grew 13.9% year over year, to $238.4 million, translating to non-GAAP (adjusted) net income of $0.11 per share. Analysts, on average, were expecting adjusted earnings of only $0.02 per share on revenue closer to $237 million.

So what

Within Semtech's top line, cloud data center sales climbed 114% sequentially from last quarter, while high-end consumer net sales grew 58%.

Semtech CEO Paul Pickle -- who took the helm on June 30 -- credited the company's big earnings beat "largely to focused cost-savings initiatives."

"While we remain cautious given the current challenges of broader economic uncertainties and high channel inventory, I am confident that our ongoing operational refinements and strong presence in key markets keep us poised to recover as economic conditions evolve," Pickle added.

Now what

For the current fiscal third quarter, Semtech expects net sales of $190 million to $210 million, and an adjusted net loss of $0.22 to $0.09. By comparison, most analysts were modeling adjusted earnings of $0.11 per share on significantly higher revenue of $244 million.

With shares down more than 20% year to date leading into this report, however, it seems the market today is willing to overlook that conservative guidance in light of Semtech's strong earnings improvement.