Skip to content
    MTSI
    Earnings call· Apr 2026(Q2 FY26)

    MACOM Technology Solutions Holdings Q2 FY26 earnings call MTSI

    May 7, 2026 Source

    Executive summary

    MACOM Q2 FY26 — Record Bookings and Strong Data Center Growth Drive Outperformance

    MACOM delivered a strong second fiscal quarter, marked by record bookings and robust sequential growth across all end markets, particularly in Data Center. The company is benefiting from its diversified product portfolio and strategic investments in high-growth areas like 1.6T optical modules and advanced GaN technologies. Management expects continued momentum into the second half of FY26, driven by Data Center and Industrial & Defense, with Telecom growth anticipated to accelerate in FY27.

    Highlights

    5

    • Q2 FY26 revenue reached $289 million, up 6.4% sequentially and over 22% year-on-year, exceeding expectations.

    • Record quarterly bookings resulted in a book-to-bill ratio of 1.5:1, indicating strong future demand.

    • Data Center revenue grew approximately 14.5% sequentially to $98.2 million, with its FY26 growth forecast raised from 35-40% to over 60%.

    • Adjusted gross margin improved by 90 basis points sequentially to 58.5%, with expectations for continued sequential improvements.

    • Adjusted operating income reached a record $80.5 million, up 8.8% sequentially, and adjusted EPS was $1.09, up from $1.02 in Q1 FY26.

    Concerns

    3

    • CW Laser Reliability and Qualification Timeline

    • Geopolitical and Supply Chain Issues

    • Global RAN Market Flatness

    Guidance & targets

    17
    CategoryTargetConfidence
    Q3 FY26 Revenue
    $331 million to $339 million
    high materiality
    High
    Q3 FY26 Adjusted Gross Margin
    59% to 60%
    high materiality
    High
    Q3 FY26 Adjusted EPS
    $1.31 and $1.37
    high materiality
    High
    FY26 Data Center Revenue Growth
    over 60%
    high materiality
    High
    Q3 FY26 Data Center Sequential Growth
    approximately 35%
    medium materiality
    High
    Q3 FY26 Industrial and Defense Sequential Growth
    approaching 10%
    medium materiality
    High
    Q3 FY26 Telecom Sequential Growth
    low single-digit
    medium materiality
    High
    FY26 CapEx
    $55 million to $65 million
    medium materiality
    High
    Q3 FY26 Cash Flow from Operations
    in excess of $80 million
    medium materiality
    High
    FY26 Cash Flow from Operations
    exceed $300 million
    medium materiality
    High
    Adjusted Income Tax Rate
    3%
    low materiality
    High
    Adjusted Income Tax Rate (Long-term)
    low to mid-single-digit
    low materiality
    Medium
    FY26 I&D Revenue Growth
    above 20%
    medium materiality
    Medium
    FY26 Telecom Revenue Growth
    low double digit
    medium materiality
    Medium
    FY26 Gross Margin Exit Rate
    closer to 60%
    high materiality
    Medium
    CW Laser Revenue Contribution
    fiscal '27 or '28 time frame
    low materiality
    Low
    5G RAN Market Growth
    flat
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Industrial and Defense
    Revenue at record levels. First half FY26 growth of 22% vs first half FY25. Expecting full-year FY26 growth above 20%.
    		$120.7 million—2.5%—
    Data Center
    Revenue at record levels. FY26 revenue growth base case raised to over 60%.
    		$98.2 million—14.5%—
    Telecom
    Expect full-year FY26 growth to be low double-digit. Expect momentum to build in FY27 due to LEO space production programs.
    		$70.1 million—3%—

    Operational metrics

    22
    Adjusted Gross Profit
    $169 million
    Q2 FY26

    Represents a 90 basis point increase over the prior quarter.

    Adjusted Operating Expense
    $88.6 million
    Q2 FY26

    Anticipated sequential increase primarily due to R&D investments and employee-related costs.

    Research and Development Expense
    $59.1 million
    Q2 FY26

    Component of total adjusted operating expense.

    Selling, General and Administrative Expenses
    $29.5 million
    Q2 FY26

    Component of total adjusted operating expense.

    Depreciation Expense
    $9 millionstable sequentially
    Q2 FY26

    Slightly above prior quarter.

    Adjusted Operating Income
    $80.5 millionup 8.8% sequentially, up 34.5% YoY
    Q2 FY26

    Another record, with adjusted operating margin of 27.8%.

    Adjusted Operating Margin
    27.8%increased over last 3 fiscal quarters
    Q2 FY26

    Expected to be approximately 30% next quarter.

    Adjusted Net Interest Income
    $6.5 milliondecrease of $200,000 sequentially
    Q2 FY26

    Primarily due to planned repayment of $161 million of 2026 convertible notes.

    Adjusted Income Tax Expense
    $2.6 million
    Q2 FY26

    Expected to remain at 3% for the remainder of FY26.

    Deferred Tax Asset Balances
    $202 million
    Q2 FY26

    Anticipate further utilization through remainder of FY26 and beyond.

    Adjusted Net Income
    $84.3 millionincreased 7.8% sequentially
    Q2 FY26

    Contributed to sequential increases in adjusted operating income and EPS over the past 11 quarters.

    Adjusted EPS
    $1.09
    Q2 FY26

    Increased sequentially over the past 11 quarters.

    Accounts Receivable
    $160 millionconsistent sequentially
    Q2 FY26

    Consistent with prior quarter balance.

    Days Sales Outstanding (DSO)
    50 daysdown from 54 days
    Q2 FY26

    Improved from the previous quarter.

    Inventories
    $252.2 millionup sequentially
    Q2 FY26

    Largely driven by additional work-in-process inventory at fabs and higher balances to support increasing demand.

    Inventory Turns
    1.9xsteady sequentially
    Q2 FY26

    Same level as the preceding quarter.

    Capital Expenditures
    $13.2 million
    Q2 FY26

    Part of full-year CapEx guidance of $55M-$65M.

    Cash, Cash Equivalents and Short-Term Investments
    $664.9 million
    Q2 FY26

    As of April 3, 2026.

    Net Cash Position
    $325 million
    Q2 FY26

    Calculated by comparing cash and short-term investments to the book value of remaining convertible notes.

    Convertible Notes
    $340 million
    Q2 FY26

    Remaining balance after $161 million repayment in Q2 FY26.

    Orders Booked and Shipped within Quarter
    18%
    Q2 FY26

    Of total revenue.

    Defense Business Growth
    over 20%
    FY26

    Full year growth expectation.

    Industry KPIs

    11
    MetricValueDetails
    Backlog order bookRecord level
    Book to bill ratio1.5:1
    Ai data center revenue$98.2 millionUSD
    Market share commentary—
    Fab capacity utilization—%
    Bookings net order intakeLargest quarterly bookings in company's history
    Design wins socket pipeline—
    Inventory channel inventory$252.2 millionUSD
    Node platform ramp schedule—
    End market segment revenue mix—
    Strategic supply agreements customer prepaymentsGBP 45 millionGBP

    Orderbook & backlog

    3
    BookingsLargest quarterly bookings in company's historyQ2 FY26

    Orders booked and shipped within the quarter was 18% of total revenue. All 3 end markets had exceptional bookings with notable outperformance in the Data Center. Orders recognized are typically within a 12-month delivery period.

    Book-to-bill ratio1.5:1Q2 FY26

    Reflects orders that would be delivered within 12 months.

    BacklogRecord levelQ2 FY26

    Strength reflects being in the right markets with the right products at the right time.

    Product announcements

    6
    ProductTypeDetails
    GaN 4 Process Technologylaunch
    IPD Processeslaunch
    Advanced GaN MMIC Productsroadmap
    Advanced Indium Phosphide Epitaxial Stacksroadmap
    OMMIC Regrowth for Advanced High-Efficiency GaN Amplifiersmilestone
    DOCSIS 4.0 Productslaunch

    Deals & partnerships

    1
    IQEStrategic Investment and Long-Term Supply AgreementGBP 45 millionlong-term

    Investment includes GBP 30 million in equity for approximately 11% ownership and a GBP 15 million convertible note. Aims to ensure adequate supply of indium phosphide and silicon carbide technologies, shoring up supply chain security and resiliency.

    Capital programs

    3
    North Carolina Fab Capacity Expansionunderwayless than $20 million
    Period spend: $15 million to $16 million

    Benefit: 30% increase in wafer production capacity

    Opportunity to buy heavily discounted fab equipment from the market.

    Massachusetts Fab Equipment Investmentunderway

    Benefit: Advanced GaN, indium phosphide capacity and production, general modernization

    Installing complex processing equipment to support production ramps and maintain production continuity.

    French Fab Product Line Migrationunderway

    Benefit: Moving entire product line from 3-inch to 6-inch wafers, new MOCVD reactor

    Equipment for 3-inch to 6-inch migration already in place with little money spent. New MOCVD reactor to support anticipated volumes.

    Risks & headwinds

    3
    CW Laser Reliability and Qualification TimelineFY27-FY28

    Fiscal '27 or '28 time frame for revenue contribution

    Mitigation: Ongoing internal work to dial in process of record and optimize reliability; extensive qualification process with module customers and hyperscalers.

    Geopolitical and Supply Chain Issues

    Unquantified

    Mitigation: Proactive strategic investments, such as the IQE partnership, to ensure strong supply chain security and resiliency.

    Global RAN Market Flatness2026

    Flat in 2026

    Mitigation: MACOM expects future 5G growth to be driven by content and market share gains through new resources, new products (GaN 4, SOI control, PAMS), and market share gains in macro and MIMO amplifiers.

    Q&A highlights

    8

    What are the key drivers behind the gross margin improvement, specifically volume versus mix, and how should we think about it for the rest of the year?

    Volume increases from both Lowell and North Carolina fabs are contributing to gross margin improvements. Data Center's increasing revenue share also helps, though gross margins vary across all segments. The team is focused on yield enhancement, efficiencies, and cost reductions. Management expects continued improvements, raising the year-end target from 59% to closer to 60%.

    “Generally speaking, the team has been very focused on yield enhancement, efficiencies, cost reductions as we're scaling across a whole wide range of technologies, some of which I talked about in the prepared remarks.”

    asked by Blayne Curtis · answered by Stephen Daly

    2 min read5 chapters

    Detailed Narrative

    01

    Data Center Momentum and Portfolio Expansion

    MACOM's Data Center segment continues to be a primary growth driver, with Q2 revenue up 14.5% sequentially to $98.2 million, reaching record levels. The company raised its FY26 Data Center revenue growth forecast to over 60%, driven by strong demand for 1.6T deployments and PAM4 products. MACOM's diversified portfolio supports various modulation schemes and architectures, including NRZ, PAM4, and coherent, across EML, silicon photonics, and VCSEL-based designs. The company is expanding its photonics portfolio with higher-speed photodetectors and CW lasers, and sees growing interest in coherent light solutions for power efficiency in shorter-reach applications.

    02

    Industrial & Defense Strength and Innovation

    The Industrial & Defense (I&D) segment also achieved record revenue of $120.7 million, growing 2.5% sequentially. The I&D business grew 22% in the first half of FY26 compared to the first half of FY25, with expectations for over 20% full-year growth. MACOM received a Defense Manufacturing Technology Achievement Award for its progress in GaN technology manufacturability. The company is introducing advanced GaN MMIC products in the next 12-18 months and is engaged in rapid design and deployment of new systems for the DoD, leveraging its expertise in high-performance IC design across RF, microwave, millimeter wave, and optical domains.

    03

    Telecom Opportunities in LEO and 5G

    Telecom revenue grew 3% sequentially to $70.1 million. Satellite-based broadband access and direct-to-device (D2D) opportunities remain robust, with numerous LEO networks in planning and production stages. MACOM supports LEO networks with components for phased array antennas, D2D links, high-speed optical links, free space optics, and ground terminal linearization. The company's 40nm GaN technology, licensed from HRL, is being transferred to MACOM's fab for high-capacity satellite links. In 5G, MACOM is sampling new GaN 4 products and expects future growth from content and market share gains, despite a flat global RAN market in 2026.

    04

    Operational Excellence and Capacity Expansion

    MACOM's operational teams are driving financial improvements, with the North Carolina fab increasing wafer production, improving yields, and lowering cycle times. The Massachusetts fab is installing complex processing equipment to support production ramps and maintain continuity. The company's global planning team ensures timely deliveries, contributing to market share gains. These efforts are enabling MACOM to meet increasing demand and improve gross margins, with the company targeting incremental capacity expansion within existing facilities rather than greenfield builds.

    05

    Strategic Investments and Supply Chain Security

    MACOM is making strategic investments to support future growth objectives, including a recent GBP 45 million investment in IQE, a U.K.-based epitaxial services provider. This investment, comprising GBP 30 million in equity (for 11% ownership) and a GBP 15 million convertible note, is tied to a long-term supply agreement. This move aims to ensure adequate supply of critical technologies like indium phosphide and silicon carbide, enhancing supply chain security and resiliency for MACOM's expected growth.

    AI-generated summary of the company’s earnings call. Not investment advice.