MACOM Technology Solutions Q2 Earnings Call Highlights

Key Points

• Q2 results: MACOM reported revenue of $289 million and adjusted EPS of $1.09, backed by a record backlog and a 1.5-to-1 book-to-bill as management said the quarter included the company's largest-ever bookings.
• Margins and cash strength: Adjusted gross margin improved to 58.5% (adjusted operating margin 27.8% with ~30% expected next quarter), operating cash flow was about $78.7 million with the company on track for >$300 million for fiscal 2026 and a net cash position of roughly $325 million after convertible note repayments.
• Positive outlook and guidance: MACOM raised its fiscal 2026 data-center growth "base case" to over 60% driven by 800G/1.6T demand and expects strong 1.6T deployments, while guiding Q3 revenue of $331–339 million and adjusted EPS of $1.31–1.37.

MACOM Technology Solutions NASDAQ: MTSI reported fiscal second-quarter 2026 revenue of $289 million and adjusted earnings per diluted share of $1.09, supported by what management described as strong demand across its three end markets and a record backlog.

President and CEO Steve Daly said sequential performance improved “across most key metrics” including gross and operating margins, while CFO Jack Kober said the company delivered “multiple new quarterly records” and its “largest quarterly bookings in the company’s history.”

Q2 results and end-market trends

Daly said all three end markets grew sequentially in the quarter, with revenue of $120.7 million in Industrial and Defense (I&D), $98.2 million in data center, and $70.1 million in telecom. Data center revenue rose about 14.5% sequentially, while telecom increased 3% and I&D increased 2.5%. Daly said both I&D and data center revenues reached record levels.

MACOM’s book-to-bill ratio was 1.5-to-1 in the quarter, which Daly and Kober both highlighted as a record level of bookings. Daly added that 18% of total revenue came from orders “booked and shipped within the quarter.” In response to a question about the duration of orders, Daly said the strongest portion of new orders was in the data center, but “all three markets had a very strong booking event,” and that the 1.5 book-to-bill reflects orders deliverable “within 12 months,” consistent with the company’s practice of recognizing bookings inside a 12-month window.

Margins, operating leverage, and cash flow

Kober said adjusted gross profit was $169 million, or 58.5% of revenue, up 90 basis points sequentially. He attributed the improvement to progress in capacity expansion and yields, plus improved utilization as demand rose. Kober said MACOM expects “ongoing sequential gross margin improvements through the remainder of fiscal 2026.”

Adjusted operating income was $80.5 million, an 8.8% sequential increase and a 34.5% year-over-year increase, according to Kober. Adjusted operating margin was 27.8%, and Kober said MACOM expects adjusted operating margin to be “approximately 30% next quarter,” citing leverage in the company’s operating model.

On the balance sheet and cash generation, Kober said Q2 cash flow from operations was about $78.7 million, up $35.8 million sequentially, driven largely by working capital timing. He said MACOM expects Q3 cash flow from operations to exceed $80 million and stated the company believes it is “on track” for cash flow from operations to exceed $300 million in fiscal 2026.

MACOM ended the quarter with $664.9 million in cash, cash equivalents, and short-term investments. Kober noted the company repaid $161 million of its 2026 convertible notes during the quarter and said MACOM was in a net cash position of approximately $325 million as of April 3, 2026, when comparing cash and investments to the book value of remaining convertible notes maturing in December 2029.

Data center outlook: raised FY2026 growth baseline and 1.6T focus

Daly said MACOM raised its fiscal 2026 data center revenue growth “base case” to over 60%, up from a prior expectation of 35% to 40%. He said the company expects 1.6T deployments inside the data center to remain strong through calendar 2026 and that growth is being driven primarily by higher production volumes of pluggable optical modules and optical cables using MACOM’s 800G and 1.6T PAM4 products.

Daly described demand growth for the company’s 200G-per-lane photodetectors supporting 800G and 1.6T connectivity, and said MACOM is working to expand its photonics portfolio with higher-speed photodetectors and CW lasers. He also discussed “growing interest” in Coherent LITE solutions for shorter-reach applications, citing the potential for improved power efficiency. In response to a question, Daly categorized coherent light as part of the data center segment, while noting that metro long haul/DCI has historically been reported in telecom.

On CW lasers, Daly said customers have validated optical performance of MACOM’s “75mW class lasers,” but emphasized that the company is still dialing in a process of record and reliability work before engaging module customer qualifications and subsequent hyperscaler qualification. He cautioned investors not to model CW laser contributions for fiscal 2026 and said “not for fiscal 2027” either, describing a potential fiscal 2027 or 2028 contribution timeframe “assuming everything goes well.”

Daly also addressed emerging architectures such as co-packaged optics (CPO), characterizing it as “TBD,” while noting MACOM is seeing “real demand” and “real hardware” ramps in optical today and is actively pursuing equalizer opportunities across multiple use cases, including PCIe-related applications.

I&D and telecom: defense strength, LEO timing, and 5G technology roadmap

In I&D, Daly said the business grew 22% in the first half of fiscal 2026 compared to the first half of fiscal 2025, with growth opportunities “primarily in the defense segment.” He said MACOM expects revenues from its top 25 defense customers to “significantly increase” from fiscal 2025 to fiscal 2026 and discussed demand drivers including radar, missile defense, drones and counter-drone systems, communications systems, and electronic warfare.

Daly also said MACOM received a Defense Manufacturing Technology Achievement Award sponsored by the Joint Defense Manufacturing Technology Panel, which he said reflects progress in increasing manufacturability of advanced GaN technology. He said MACOM expects to introduce a “wide range” of advanced GaN MMIC products in the next 12 to 18 months.

Within telecom, Daly said satellite-based broadband access and direct-to-device opportunities remain robust, with MACOM supporting LEO broadband constellations and D2D programs that range from development to low-rate initial production and full production. However, on timing, Daly told analysts not to expect a sharp near-term step-up, saying activity should be viewed as a ramp and that a larger program involving “Electronic Modules” is expected to enter full-rate production later this year or early next year. He said, “You’re going to see a ramp-up, and that will happen during the course of calendar 2027.”

Daly also discussed the transfer of 40nm GaN technology licensed from Hughes Research Laboratories to MACOM’s fab, intended to support higher-capacity satellite links at E-band, W-band, and D-band. In terrestrial 5G, Daly said the company is sampling new Gen4 GaN products and expects the global RAN market to be flat in 2026, with MACOM aiming for growth via content and share gains through new resources, new products (including Gen4 GaN, SOI control products, and power amplifier modules), and share gains in macro and MIMO amplifiers.

Q3 guidance and capital investment approach

For fiscal Q3 ending July 3, 2026, Daly guided revenue of $331 million to $339 million, adjusted gross margin of 59% to 60%, and adjusted EPS of $1.31 to $1.37, based on 78.5 million fully diluted shares. He said MACOM expects sequential revenue growth in each of its three end markets, including approximately 35% sequential growth in data center, growth “approaching 10%” in I&D, and low single-digit growth in telecom.

On capital needs, Daly said MACOM is investing to expand capacity within existing facilities rather than building a new fab, stating the company does not expect to greenfield new manufacturing as it targets higher revenue levels. Kober reiterated fiscal 2026 capital expenditures are expected to be $55 million to $65 million, and both executives framed CapEx as remaining disciplined and generally in a 4% to 5% of revenue range.

Daly also discussed a strategic investment and supply agreement with IQE, a U.K.-based epitaxial services provider. Daly said MACOM participated in IQE’s fundraising with a GBP 45 million investment—GBP 30 million in equity for about 11% ownership plus a GBP 15 million convertible note—along with a long-term supply agreement. He said the transaction is intended to support supply chain security and resiliency for technologies including indium phosphide and silicon carbide, and that it was expected to close in 30 to 60 days pending regulatory approval and a shareholder vote.

About MACOM Technology Solutions NASDAQ: MTSI

MACOM Technology Solutions is a semiconductor company specializing in high-performance analog, microwave, millimeter-wave and photonic semiconductor solutions. Its product portfolio includes amplifiers, switches, modulators, detectors and integrated circuits designed to optimize signal integrity, power management and data transmission. MACOM's offerings address both digital and optical domains, providing critical building blocks for next-generation communications infrastructure.

The company's solutions serve a diverse set of end markets, including wireless and wireline telecom, data centers, satellite communications, aerospace and defense, industrial and automotive applications.

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