Executive Summary

Record quarter: Revenue $252.1M (+32.3% Y/Y, +6.9% Q/Q), GAAP gross margin 55.3%, adjusted EPS $0.90; all at or above guidance ranges and reflecting broad-based strength across Industrial & Defense and Data Center end markets .
Slight beats vs S&P Global consensus: Revenue $252.1M vs $249.9M*; adjusted EPS $0.90 vs $0.897*; beats driven by record IND and Data Center revenues and healthy book-to-bill (>1.1x) with record backlog. Book-to-bill >1.1x; turns ~17% of revenue . Values retrieved from S&P Global.
Q4 FY25 guide points to new records despite a ~60 bps gross margin headwind from early RTP fab transfer: Revenue $256–$264M, adj. GM 56–58%, adj. EPS $0.91–$0.95 (3% tax; ~76.5M fully diluted shares); expecting +5% Q/Q growth in Data Center and IND, Telecom slightly down .
Strategic drivers: 200G-per-lane photodetectors in high-volume production; first 100G LPO chipset production order; GaN4 sampling to major customers; accelerated control of RTP GaN-on-SiC fab with capacity expansion plan (+30% in 12–15 months) .
Balance sheet remains a strength: Cash and short-term investments $735.2M; net cash >$235M vs converts; Q3 CFO ~$60.4M; Capex $8.8M with FY25 capex now $40–$45M .

What Went Well and What Went Wrong

What Went Well

Record revenues and mix: New quarterly record revenue ($252.1M) with record IND and Data Center; end-market mix IND $108.2M, Data Center $75.8M, Telecom $68.1M; book-to-bill >1.1x and record backlog. CEO: “Our results demonstrate the growing competitiveness of MACOM’s diverse product portfolio” .
Product ramps and wins: 200G-per-lane photodetectors moved to high-volume production; first 100G-per-lane LPO chipset production order; expecting record 200G-per-lane product revenue in Q4 .
Strategic fab control accelerated: Assumed full operational control of RTP GaN-on-SiC fab ~6 months early; plan to expand capacity by up to 30% within 12–15 months to support future program wins .

What Went Wrong

Gross margin headwind: Early RTP conveyance created a near-term ~~60 bps gross margin dilution (~~$1.5M in Q4), delaying trajectory toward 60%+ gross margin; Lowell fab underutilization (industrial softness) also a drag .
Operating expense drift: Adjusted OpEx stepped up to $81.7M in Q3 (R&D hiring, foundry and variable comp) though management emphasized discipline as scale increases .
Telecom near-term: Guide calls Telecom “slightly down” sequentially in Q4 (after strong run-rate); management attributes to backlog timing rather than fundamentals; full-year Telecom +~40% Y/Y expected .

Financial Results

Summary P&L (GAAP and Non-GAAP)

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	190.5	218.1	235.9	252.1
GAAP Gross Margin %	53.2%	53.7%	55.2%	55.3%
Adjusted Gross Margin %	57.5%	57.5%	57.5%	57.6%
GAAP Operating Margin %	10.4%	8.0%	14.8%	14.9%
Adjusted Operating Margin %	24.0%	25.4%	25.4%	25.2%
GAAP Diluted EPS ($)	0.27	(2.30)	0.42	0.48
Adjusted Diluted EPS ($)	0.66	0.79	0.85	0.90
Adjusted EBITDA Margin %	27.8%	28.5%	28.2%	27.9%

Notes: Q1 FY25 GAAP EPS includes $193.1M loss on extinguishment of debt from convertible note refinancing .

Q3 FY25 vs S&P Global Consensus

Metric	Consensus	Actual	Delta
Revenue ($M)	249.9*	252.1	+0.9%
Primary EPS ($)	0.897*	0.90	+0.3%

Values retrieved from S&P Global.

End-Market Revenue Breakdown ($M)

End Market	Q1 2025	Q2 2025	Q3 2025
Industrial & Defense	97.4	98.5	108.2
Data Center	65.3	72.2	75.8
Telecom	55.4	65.2	68.1

KPIs and Operating Metrics

KPI	Q1 2025	Q2 2025	Q3 2025
Book-to-Bill	~1.1x	~1.1x	>1.1x
Turns (% rev)	~23%	~20%	~17%
DSO (days)	41	51	47
Cash & ST Investments ($M)	656.5	681.5	735.2
Inventory ($M)	198.4	209.3	215.4
Cash From Ops ($M)	~66.7	~38.7	~60.4
Capex ($M)	~5.3	~8.2	~8.8

Non-GAAP adjustments (policy)

Non-GAAP results exclude amortization of intangibles, share-based comp, non-cash interest, acquisition/integration costs, loss on debt extinguishment, and related tax effects. Management uses a 3% non-GAAP tax rate in FY24 and first three quarters of FY25 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q4 FY25	n/a	256–264	New
Adjusted Gross Margin %	Q4 FY25	n/a	56–58	New
Adjusted EPS ($)	Q4 FY25	n/a	0.91–0.95 (3% tax; ~76.5M FD shares)	New
Gross Margin headwind	Q4 FY25	—	~~60 bps RTP conveyance dilution (~~$1.5M)	New
Segment outlook	Q4 FY25	—	DC +5% Q/Q, IND +5% Q/Q; Telecom slightly down	New
FY25 Capex ($M)	FY25	~30 (prior commentary)	40–45 (incl. RTP surplus tools)	Raised
FY25 Cash From Ops ($M)	FY25	>$210	>$220	Raised

Reference (for context, achieved vs prior quarter’s Q3 guide): Q3 FY25 was guided to Revenue $246–$254M, adj. GM 56.5–58.5%, adj. EPS $0.87–$0.91; actuals came in within those ranges (Revenue $252.1M; adj. GM 57.6%; adj. EPS $0.90) .

Earnings Call Themes & Trends

Topic	Q1 FY25 (prior)	Q2 FY25 (prior)	Q3 FY25 (current)	Trend
Data Center: LPO/ACC, 800G→1.6T, 200G PDs	DC up 16% Q/Q; LPO momentum late CY25/CY26; ACC viable use-cases; 200G PDs ramping; expanding to lasers and PCIe 6/7	DC up 11% Q/Q; LPO ecosystem matured (MSA spec); 200G PDs die-stacked with TIAs; broad platform support; DC growth mid-40% Y/Y expected	Record DC revenue; 200G PDs now in high volume; first 100G LPO chipset in production; expecting record 200G-per-lane revenue in Q4	Positive; diversifying DC revenue base; near-term strong
Telecom: 5G, Metro/Long-Haul, Cable, SATCOM	Building positions in 5G GaN; strong SATCOM pipeline; metro/LH focus; PON/cable slowly ticking up	Telco up 18% Q/Q; metro/LH 128+ Gbaud coherent programs; cable inventory burn helps; SATCOM design wins; $55M SATCOM program on track for late CY25/early CY26 production	Q3 Telco strong; Q4 slight sequential down; secular growth intact; full-year Telecom ~+40% Y/Y; metro/LH and SATCOM continue	Healthy; minor Q4 timing
Industrial & Defense	IND ~record; radar/EW upgrades, RF-over-fiber; strong US/EU pipeline; Lowell underutilization partly offset by defense	IND flat to up modest; robust radar/EW, European growth via MESC; pilot orders and BAE award	Record IND; defense-led; book-to-bill >1 for 5–6 quarters	Strong uptrend
Manufacturing footprint	CHIPS PMT to modernize Lowell and add advanced GaN; plan 6" GaN in NC; long-term benefits	RTP transition likely before Dec-25; plan +30% capacity with used tools; leased real estate step	RTP fab conveyed early (Jul 25); +30% capacity plan in 12–15 months; GM ~60 bps Q4 headwind, then improving 25–50 bps/quarter thereafter	Accelerated execution; near-term GM hit then tailwind
Gross margin outlook	57–58% for FY25 due to mix/Lowell underabsorption	Mid-57% through Q3; Lowell underabsorption persists	Path to ~59% exit FY26; 60% more likely FY27	Improving in FY26–27
Tariffs/macro	—	No notable impact; 95% direct sales, sticky designs	No new updates	Stable impact

Management Commentary

CEO on Q3 performance and positioning: “Our results demonstrate the growing competitiveness of MACOM’s diverse product portfolio and our increasing momentum in the market.”
CEO on Data Center ramps: “We recently transitioned our 200 Gs per lane photodiodes…into high volume production…[and] secured high volume production orders for 100 Gs per lane LPO chipsets.”
CFO on near-term gross margin: “The acceleration of [RTP] transfer will result in some minor near term gross margin dilution of approximately 60 basis points…in Q4,” while enabling faster yield and capacity improvements .
CEO on margin trajectory: Exit FY26 “closer to 59%…60% gross margin…more likely a fiscal 2027 event” .

Q&A Highlights

RTP fab conveyance: Margin headwind (~60 bps) in Q4; then modeled 25–50 bps improvement per quarter post-Q4 as yield/cycle time/capacity enhancements flow through; capacity expansion underway (+30% in 12–15 months) .
LPO adoption pipeline: One customer in production; second close; broader adoption expected into 2026; benefits are lower power, lower latency, lower cost sans DSP, but BER/interoperability challenges limit universal applicability .
Telecom outlook: Slight Q/Q decline guided for Q4; secular drivers remain (Satcom, metro/long-haul coherent, 5G GaN share gains); full-year Telecom ~+40% Y/Y .
DC 2026 setup: Do not model another ~48% DC growth; company targets double-digit top-line overall with diversified drivers (LPO, ACC, PDs, lasers), and bottom-line growing faster than top-line .
Gross margin target cadence: 60% now expected FY27 (was earlier), with Lowell underutilization and RTP timing cited as factors .

Estimates Context

Q3 FY25: MACOM modestly beat S&P Global consensus on revenue and adjusted EPS (see table above). Values retrieved from S&P Global.
Q4 FY25 (context at guide): Consensus Revenue ~$260.2M*, EPS ~$0.93* sat near MACOM’s guidance midpoints (Revenue midpoint $260M; EPS midpoint $0.93), implying expectations aligned with management outlook despite the GM headwind . Values retrieved from S&P Global.

Key Takeaways for Investors

Execution remains strong: Three straight quarters of sequential revenue and adjusted EPS growth with record backlog and >1.1x book-to-bill underpinning H2 momentum .
Near-term margin dip, medium-term uptrend: Expect ~60 bps GM headwind in Q4 from early RTP conveyance, with GM progression improving into FY26 as yields/capacity rise; 60% GM more likely FY27 vs earlier expectations .
Data Center mix broadening: 200G PDs at scale and first LPO production order diversify DC revenue; watch for continued ramp, though management tempers FY26 DC growth vs FY25’s ~48% pace .
Telecom normalization with strong seculars: Minor Q4 sequential dip, but metro/long-haul coherent and SATCOM remain growth vectors; full-year Telecom growth ~+40% Y/Y highlights durability .
IND/Defense leadership: Record IND driven by radar/EW and European demand via MESC; multiyear program content (GaN-on-SiC, RF-over-fiber) supports sustained growth .
Capacity-driven upside optionality: RTP control and +30% planned capacity expansion create room for incremental share/program wins from FY26 onward .
Cash optionality: $735M cash & ST investments; net cash >$235M vs converts; FY25 CFO outlook >$220M; FY25 capex raised to $40–$45M to accelerate RTP improvements .

Appendix: Additional context and disclosures

Non-GAAP policy and adjustments include amortization, SBC, non-cash interest, acquisition/integration costs, loss on debt extinguishment, and related tax effects; non-GAAP tax rate 3% for FY24 and first three quarters of FY25 .
RTP fab conveyance finalized Jul 25, 2025, six months ahead of schedule; facility is a U.S. DoD Trusted Foundry producing GaN-on-SiC RF processes for telecom and defense .
Board change: Director Susan Ocampo retiring effective Aug 31, 2025 .

S&P Global disclaimer: Values marked with an asterisk (*) are retrieved from S&P Global and may reflect consensus at or around the time of reporting.

MACOM Technology Solutions Holdings, Inc. (MTSI)·Q3 2025 Earnings Summary