Ganesh Moorthy
President & Chief Executive Officer at Microchip Technology
Thank you, Eric, and good afternoon everyone. Our March quarter results were very strong across the board and set several records in the process. Revenue grew 4.9% sequentially and 25.7% on a year-over-year basis to achieve an all-time record of $1.84 billion. Despite a number of operational challenges, including the rapid spread of the COVID Omicron virus, which affected several of our factories, the shutdowns in several cities in China and the suspension of shipments to Russia, we finished just shy of the high end of our revenue guidance. This was our fifth consecutive quarter of new revenue records.
Non-GAAP gross margin was another record at 66.6%, up 50 basis points from the December quarter and at the high end of our guidance, as we continue to ramp our internal factories and benefit from improved operational efficiencies, as well as product mix changes. Non-GAAP operating margin was also a record at 44.7%, very close to the high end of our guidance. At 21.9% operating expenses, we are 60 basis point below the low end of our long-term model of 22.5% to 23.5%. Our long-term operating expense model will continue to guide our actions to invest for the long-term growth and profitability of our business. Our consolidated non-GAAP diluted EPS was a record $1.35 per share, well over the high end of our guidance and up 45.2% from the year ago quarter. Even after excluding the tax benefit, we received our March quarter non-GAAP diluted EPS at $1.28 was at the high end of our guidance.
Adjusted EBITDA at 48.9% of revenue and free cash flow at 34.3% of revenue were both very strong in the March quarter, continuing to demonstrate the robust cash generation capabilities of our business. Net debt declined by $209.8 million driving our net leverage ratio down to 2.32 in the March quarter, as we continue to relentlessly drive down our net leverage. During the March quarter, we returned $400.4 million to shareholders, representing 52.5% of the prior quarter's free cash flow. Reflecting on our fiscal year '22 results, it was one for the record books and one of our best years ever. We made dramatic progress on all fronts, revenue growth, gross and operating margins, earnings per share, free cash flow generation, debt and leverage reduction and last but not least, we significantly increased the capital return to shareholders through dividend increases and the initiation of a programmatic share buyback program.
At our Investor Day in November 2021, we outlined our plan to increase the capital return to shareholders every quarter, as our net leverage continues to drop. We are making consistent and meaningful progress towards our net leverage growth every quarter. I would like to take this opportunity to profusely thank all our stakeholders, who enabled us to achieve these outstanding results and especially thank the worldwide Microchip team for their never give up attitude and concerted effort to consistently deliver results to support our customers in the face of a historic and persistent imbalance between supply and demand. Taking a look at our revenue from a product line perspective, our microcontroller revenue was sequentially up a strong 7.6% as compared to the December quarter and was another all-time record.
On an annualized basis, our March quarter microcontroller revenue broke through the $4 billion mark for the first time. On a year-over-year basis, our March quarter microcontroller revenue was up 28.3%, all microcontroller product lines, 8-bit, 16-bit and 32-bit experienced strong growth and achieve record revenue milestones. 32-bit microcontrollers had the highest growth and is now the largest microcontroller product line for us at 46.5% of our microcontroller revenue. Microcontrollers represented 56.7% of our revenue in the March quarter.
Our analog revenue sequentially increased 3% in the March quarter, setting another record in the process. On a year-over-year basis, our March quarter analog revenue was up a strong 24.2%. Analog represented 27.9% of our revenue in the March quarter. Taking a look at our revenue from a geographic and end-market perspective, Americas was up 21.4% over the prior year quarter, Europe was up 25% over the prior year quarter, Asia was up 27.9% over the prior year quarter, all end markets remained strong and were supply constrained. Business conditions continue to be exceptionally strong through the quarter.
Our preferred supply program or PSP backlog continue to grow and remained well over 50% of our aggregate backlog and a 100% of our backlog in the most constrained capacity product areas. Demand continued to be insatiable despite the significant capacity increases we have implemented so far. As a result, our unsupported backlog, which represents customer backlog and backlog that customers wanted shipped to them in the March quarter, but which we could not deliver in the March quarter substantially again, as we exited the March quarter with our highest unsupported backlog ever. We continue to experience constraints in all our internal and external factories and their related manufacturing supply chains.
We are ramping our internal factories as fast as reasonably possible and we are working closely with our supply chain partners to secure additional capacity wherever possible. Our supply chain partners as well as some of our customers were adversely impacted by the lockdowns in China during March, which continued into April and May. Our operations team worked to redirect our manufacturing activities and sourcing wherever possible to other locations that are not lockdown. Looking at the magnitude of the demand supply imbalance, a size of our non-cancelable backlog, the rate at which new backlog continues to come in and the rate at which we're able to bring on new capacity, we expect that we will remain supply constrained throughout 2022 and into 2023. Our growth is predominantly limited by how quickly we can bring on additional capacity to support demand.
To reiterate what we first shared with you in March this year, we expect our five-year compounded annual growth rate using fiscal year 2021 as a baseline to be 10% to 15%. We expect our capital spending in fiscal year '23 to be at the high end of the range we have shared with you, as we respond to growth opportunities in our business as well as fill gaps in the level of capacity investments being made by our outsourced manufacturing partners in specialized technologies they consider to be trailing edge, but which we believe will be workhorse technologies for us for many years to come. We believe our calibrated increase in capital spending will enable us to capitalize on growth opportunities, serve our customers better, increase our market share, improve our gross margins and give us more control over our destiny, especially for specialized trailing edge technologies. We will of course continue to utilize the capacity available from our outsourced partners, but our goal is to be less constrained by their investment priorities in areas, where they don't align with our business needs.
Now, let's get into the guidance for the June quarter. Our backlog for the June quarter is very strong and we have more capacity improvements coming into effect, taking all the factors we have discussed on the call today into consideration. We expect our net sales for the June quarter to be up between 4% and 8% sequentially. Our guidance range assumes capacity additions as well as continued materials and capacity challenges, some of which will work -- expect to work through during the quarter, others that will carry over to be worked in future quarters. We have also included the anticipated effects of the lockdowns in China on our supply chain partners as well as our customers.
At the midpoint of our revenue guidance, our year-over-year growth for the June quarter would be a strong 24.6%. For the June quarter, we expect our non-GAAP gross margin to be between 66.8% and 67.2% of sales. We expect our non-GAAP operating expenses to be between 21.6% and 22% of sales. We expect our non-GAAP operating profit to be between 44.8% and 45.6% of sales. We expect our non-GAAP diluted earnings per share to be between $1.32 per share and $1.36 per share after comprehending the higher tax rate that Eric shared with you.
Finally, as you can see from our March quarter results and the June quarter guidance, every element of our Microchip 3.0 strategy is firing on all cylinders, as we continue to build and improve what we believe is one of the most diversified defensible high growth, high-margin, high-cash generating businesses in the semiconductor industry. To summarize the essential elements of Microchip 3.0, they are organic growth rate of 10% to 15% in the fiscal year '22 to '26 timeframe by focusing on total system solutions and our six key market mega trends. Long-term non-GAAP operating margin target of 44% to 46% and free cash flow target of 38%, consistently increasing capital return to shareholders, as net leverage drops such that 100% of free cash flow is returned to shareholders by the time net leverage drops to 1.5x. capex investment of 3.6% of revenue and an inventory investment of 130 to 150 days over the business cycles. And last but not least, a strong company foundation built on culture and sustainability.
Let me now pass the baton to Steve to talk more about our cash return to shareholders. Steve.