What MACOM Technology Solutions (MTSI) Said on Its Q4 Earnings Call

Key Points

• MACOM posted record results: Fiscal Q4 revenue rose 62.7% year over year to $424.8 million, while adjusted EPS reached $2.09. Full-year revenue increased 37% to more than $1.3 billion, and adjusted EPS rose 61% to $5.60.
• Data centers are the main growth engine: Q4 data center revenue climbed about 37% sequentially to a record $188.1 million, and the company ended the year with record backlog and a 1.5-to-1 full-year book-to-bill ratio. CEO Steve Daly expects roughly 80% data center revenue growth in fiscal 2027 and is working toward a $2 billion revenue target for that year.
• MACOM expects continued growth and is investing in capacity: For fiscal Q1, it forecast revenue of $450 million to $460 million and adjusted EPS of $2.21 to $2.29; it also expects operating margin to exceed 40% during fiscal 2027. Planned fiscal 2027 capital spending is $100 million to $110 million, mainly for manufacturing facilities.

MACOM Technology Solutions NASDAQ: MTSI reported fiscal fourth-quarter revenue of $424.8 million, up 62.7% from a year earlier, as demand for data center products helped drive record backlog and higher profitability.

Adjusted earnings per diluted share rose to $2.09 from $1.40 in the preceding quarter. For the fiscal year ended October 2, revenue exceeded $1.3 billion, up 37%, while adjusted earnings per share increased 61% to $5.60.

President and Chief Executive Officer Steve Daly said the company expects another strong year in data centers and is aiming for faster growth in its industrial and defense business. MACOM does not provide full-year guidance, but Daly said the company is working toward a $2 billion revenue target for fiscal 2027, while acknowledging execution and market risks.

Data Center Orders Lead Growth

Fourth-quarter revenue rose sequentially across all three end markets. Data center revenue increased approximately 37% to $188.1 million, industrial and defense revenue rose 23% to $164.6 million, and telecom revenue edged up 1% to $72.1 million. Data center and industrial and defense revenue both reached quarterly records.

MACOM’s fourth-quarter book-to-bill ratio was 1.4 to 1, and the company ended the year with record backlog. Chief Financial Officer Jack Kober said full-year book-to-bill was 1.5 to 1, reflecting the company’s highest bookings year.

Daly said MACOM’s base case calls for approximately 80% data center revenue growth in fiscal 2027, compared with 74% growth in fiscal 2026. He cited growing volumes of 1.6-terabit optical products and opportunities to supply more components per system.

The company is also developing products for near-packaged optics, an approach intended to support higher-density optical connections. Daly said MACOM is sampling and developing products for multiple hyperscalers but declined to discuss specific customer wins or contracts. He said early revenue from those products could arrive in fiscal 2027 or the following year.

Defense and Telecom Outlook

Industrial and defense revenue grew 27.8% in fiscal 2026, and Daly said MACOM is targeting growth above 30% in fiscal 2027. He cited spending on radar, drone and counter-drone systems, communications and electronic warfare, as well as development awards from established defense contractors and newer companies.

Telecom revenue rose approximately 11% in fiscal 2026, driven primarily by 5G and satellite communications. Daly expects similar growth in fiscal 2027, with the business starting more slowly before strengthening in the second half. He cited softness in passive optical networks and parts of the broadband business, alongside new 5G programs expected to ramp later in the year.

Low Earth orbit satellites remain a growth opportunity, Daly said. A customer’s recently awarded constellation contract could generate approximately $20 million of new business for MACOM beginning in early 2028, he added.

Margins, Investment and Guidance

Fourth-quarter adjusted gross margin rose to 61.3% from the prior quarter, an increase of 160 basis points. Kober attributed the improvement primarily to revenue growth, product mix and factory utilization. Adjusted operating margin was 38.2%, and Kober said he expects it to exceed 40% during fiscal 2027.

For the first fiscal quarter ending January 1, 2027, MACOM forecast revenue of $450 million to $460 million, adjusted gross margin of 62% to 63%, and adjusted earnings per share of $2.21 to $2.29. The outlook assumes approximately 15% sequential growth in data center revenue, single-digit growth in industrial and defense, and flat to slightly lower telecom revenue.

MACOM plans fiscal 2027 capital spending of $100 million to $110 million, up from $64.4 million in fiscal 2026. Daly said about 60% of the planned spending will go into fabs, primarily for modernization or additional capacity. The company is expanding manufacturing capacity at three wafer fabs and two U.S. hybrid manufacturing sites.

Daly also highlighted progress on the quality of the facets of MACOM’s indium phosphide lasers, a step toward entering the continuous-wave laser market targeted for 2028. He cautioned that further work remains and that the company is not declaring success yet.

MACOM ended fiscal 2026 with $792.4 million in cash, cash equivalents and short-term investments, and approximately $451.7 million in net cash after accounting for its convertible notes. Daly said the company has no current plans for share buybacks or a dividend, preferring to retain cash for investment and strategic flexibility.

About MACOM Technology Solutions (NASDAQ:MTSI)

MACOM Technology Solutions Holdings, Inc develops and manufactures high-performance semiconductor products for applications involving radio frequency, microwave, millimeter-wave, analog, mixed-signal and optical technologies. Its offerings include integrated circuits, discrete components, modules and semiconductor devices designed to support communications, connectivity and sensing systems.

The company serves markets including telecommunications, data centers, aerospace and defense, industrial, automotive and consumer applications.

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