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MT

MACOM Technology Solutions Holdings, Inc. (MTSI)·Q4 2025 Earnings Summary

Executive Summary

  • Revenue of $261.2M rose 3.6% sequentially and 30.1% year over year; adjusted EPS was $0.94, with GAAP gross margin at 54.5% and adjusted gross margin at 57.1% .
  • Results modestly beat consensus: revenue $261.17M vs $260.16M* and adjusted EPS $0.94 vs $0.9287*; Q1 FY26 guidance implies continued growth with revenue $265–$273M and adjusted EPS $0.98–$1.02 .
  • Data Center and Industrial & Defense achieved record quarterly revenues; book-to-bill ≈1.0 and record backlog position, supported by strong bookings in October .
  • Strategic catalysts: exclusive license to manufacture HRL’s 40nm GaN-on-SiC T3L process and ongoing ramp of 200G photodetectors and LPO solutions, underpinning share gains in high-frequency GaN and next-gen optical interconnects .

What Went Well and What Went Wrong

What Went Well

  • Record performance in Data Center ($79.6M) and Industrial & Defense ($115.6M) revenue; sequential growth +5% and +7% respectively .
  • Product pipeline and execution: “we launched over 200 new products” in FY25; PD ramp transferred to larger fab for volume; LPO customers in production increased from one to three .
  • Strategic GaN leadership: exclusive HRL T3L 40nm GaN-on-SiC license to address Q/V/E/W bands; defense radar/EW GaN components >50% YoY growth .
    • Quote: “T3L… engineered to achieve exceptional high-power performance at very high frequencies… we believe the T3L process will help us capture significant market share over time.”

What Went Wrong

  • Gross margin compression: GAAP GM declined to 54.5% (from 55.3% in Q3); adjusted GM fell to 57.1% (from 57.6%), reflecting mix and near-term fab transition effects .
  • Working capital headwinds: DSO rose to 52 days (from 47), inventory increased to $237.8M with turns down to 1.9x, as RTP WIP built for anticipated demand .
  • Telecom softness sequentially; management flagged timing effects with strong full-year growth (>40%) and expected rebound in FY26 .
    • Clarification: CFO guided sequential GM improvements of 25–50 bps through FY26 as utilization improves across fabs .

Financial Results

MetricQ4 2024Q3 2025Q4 2025
Revenue ($USD Millions)$200.7 $252.1 $261.2
Gross Margin % (GAAP)54.7% 55.3% 54.5%
Operating Income ($M, GAAP)$27.5 $37.7 $39.6
Operating Margin % (GAAP)13.7% 14.9% 15.2%
Net Income ($M, GAAP)$29.4 $36.5 $45.1
Diluted EPS (GAAP)$0.39 $0.48 $0.59
Adjusted Gross Margin %58.1% 57.6% 57.1%
Adjusted Operating Income ($M)$50.7 $63.5 $67.0
Adjusted Operating Margin %25.2% 25.2% 25.6%
Adjusted Net Income ($M)$54.2 $68.2 $71.4
Adjusted Diluted EPS$0.73 $0.90 $0.94

Notes: Q4 2025 GAAP net includes $10.1M gain on acquired assets tied to RTP fab transfer .

Segment / End-Market Breakdown (Q4 2025)

End-MarketRevenue ($M)Seq Change
Industrial & Defense$115.6 +~7%
Telecom$66.0 Slightly down
Data Center$79.6 +~5%

KPIs and Balance Sheet Highlights

KPIQ3 2025Q4 2025
Book-to-Bill>1.0 ~1.0
Turns Revenue (% of revenue booked & shipped in-quarter)~17% 14.5%
DSO (days)47 52
Inventory Turns (x)2.0 1.9
Cash + Short-term Investments ($M)$735.2 $786.0
Net Cash ($M, vs convertible notes)>$235 >$285
Cash from Operations ($M)—$69.6 (Q4); $235.4 (FY25)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Revenue ($M)Q4 2025$256–$264 $261.2 Met (mid-upper range)
Adjusted Gross Margin %Q4 202556–58 57.1 Within, slight upside
Adjusted EPSQ4 2025$0.91–$0.95 $0.94 Within range
Revenue ($M)Q1 2026—$265–$273 New
Adjusted Gross Margin %Q1 2026—56.5–58.5 New
Adjusted EPSQ1 2026—$0.98–$1.02 New
Tax rate (non-GAAP)FY26—~3% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 FY25)Current Period (Q4 FY25)Trend
Data Center 800G/1.6T optical momentumRecord 200G PDs, LPO first customer; linear equalizers for 1.6T; broad engagement across module/cloud; FY25 DC growth ~48% YoY Continued records; PD ramp to Massachusetts fab; customers recognize indium phosphide PD leadership; share gains at 800G/1.6T Strengthening
LPO adoptionLPO first production customer in Q3; ecosystem showcased at OFC; benefits: lower power/latency/cost LPO customers tripled to three in production; broader adoption expected in FY26 Accelerating
ACC/Equalizers & PCIe over fiberEqualizers for ACC/AOC; PCIe solutions in development; demonstrated at OFC/ECOC PCIe/CXL over optical fiber chipset released; 100m reach, PCIe 6.0 64 Gbps PAM4, consolidates sideband Productization
GaN strategy & RTP fabRTP transfer 6 months early; temporary ~60 bps GM headwind; plan +30% capacity, yield improvements Exclusive HRL T3L license; ALD passivation upgrade for airborne radar; >50% YoY GaN revenue in defense/EW Expanding TAM and capability
Bookings/backlogQ3 book-to-bill >1.0; record backlog; turns ~17% Q4 book-to-bill ~1.0; October bookings one of best in years; record backlog maintained Healthy
Regional mixUS ~43% of Q4 revenue; FY25 US ~44% Similar commentary maintained Stable
R&D execution & footprintNext-gen GaN4 for 5G; European Semiconductor Center (MESC); IMS demos; workforce +17% YoY Two new IC design centers planned (SoCal, Central Europe); modern MOCVD reactor for MESC Scaling
Macro/regulatoryRisk factors include tariffs/trade tensions; July 4, 2025 Bill Similar caution; forward-looking risks reiterated Ongoing vigilance

Management Commentary

  • “We built upon our strong foundation in fiscal year 2025, and we look forward to starting fiscal 2026.” — Stephen G. Daly, CEO
  • “We expect sequential quarterly gross margin improvements of between 25 to 50 basis points as we move through fiscal 2026.” — Jack Kober, CFO
  • “T3L… will help us capture significant market share over time.” — Steve Daly on HRL 40nm GaN-on-SiC license
  • “Our 200 gig PD has industry-leading sensitivity and dark current… we have PD design wins at all major module manufacturers supporting 800G and/or 1.6T applications.” — Steve Daly
  • “MACOM expects revenue in fiscal Q1… $265–$273M… adjusted EPS $0.98–$1.02.” — Steve Daly

Q&A Highlights

  • Telecom outlook: Growth drivers in 5G and SATCOM/LEO; metro long-haul solid; telecom sequential dip viewed as timing; full-year ~40% growth .
  • LPO adoption: Customers in production increased from one to three; broader adoption expected in FY26; benefits from removing DSP (power, latency, cost) .
  • Gross margin trajectory: 25–50 bps sequential improvement through FY26 via utilization/yield; near-term margin headwind from RTP transfer acknowledged .
  • RTP fab plan: +30% capacity over 12–18 months via equipment additions; focus on yield, cycle times, quality; potential market share opportunities from competitor restructuring .
  • Data Center growth durability: Base case double-digit top-line in FY26 with operating leverage; potential upside if 1.6T ramps outpace plan .

Estimates Context

MetricQ4 2025 ConsensusQ4 2025 ActualSurpriseQ1 2026 ConsensusCompany Guidance
Revenue ($M)260.16*261.17 +$1.01M (+0.4%)*269.02*$265–$273
Adjusted EPS$0.9287*$0.94 +$0.0113 (+1.2%)*$0.9976*$0.98–$1.02
# of Estimates (Rev/EPS)14 / 15*——14 / 15*—

Values retrieved from S&P Global*.
Interpretation: Modest beat on both revenue and EPS; Q1 guidance brackets consensus, suggesting alignment with Street trajectory .

Key Takeaways for Investors

  • Revenue/EPS beat with record Data Center and I&D revenues; margin trajectory improving as fab utilization rises — supportive of estimate revisions on profitability .
  • Strategic GaN assets (HRL T3L, ALD passivation) enhance high-frequency positioning in SATCOM/airborne radar, expanding medium-term TAM and potential share gains .
  • Optics portfolio deepening: industry-leading 200G PDs, growing LPO adoption, and PCIe/CXL over fiber chipset position MACOM against bottlenecks in 1.6T/800G ramps .
  • Working capital elevated (DSO, inventory), but October bookings strong and backlog at record levels — near-term cash conversion improving with sequential CFO growth .
  • Guidance frames FY26 as a year of operating leverage: 25–50 bps sequential GM improvements and double-digit top-line baseline — watch for upside if 1.6T ramps accelerate .
  • RTP fab transition: temporary margin headwind offset by yield/capacity programs; +30% capacity in 12–18 months is a 2026 catalyst for defense/telecom programs .
  • Trading lens: Near-term strength tied to AI optical cycles and LPO momentum; medium-term thesis centers on GaN leadership and expanding photonics/equalizer franchises .

Appendices

Non-GAAP Adjustments Context

  • Adjusted metrics exclude intangible amortization, share-based comp, non-cash interest, acquisition/integration costs, loss on debt extinguishment, gain on acquired assets, and tax effects; reconciliations provided in the press release .
  • Q4 GAAP net includes $10.1M gain on acquired assets from RTP fab transfer; excluded from adjusted results .

Additional Relevant Press Releases (Q4 FY25 period)

  • HRL 40nm GaN-on-SiC T3L license and exclusive manufacturing rights .
  • PCIe/CXL over optical fiber chipset announced; supports PCIe 6.0 across 100m multimode fiber .
  • Completion of RTP wafer fab transfer (July 25, 2025), 6 months ahead of schedule .