MACOM Aims for 2026 Double-Digit Growth with $1B Revenue and Expanded GaN Lineup

Financial Performance and Strategic Growth

MACOM Technology Solutions Holdings, Inc. (MTSI) delivered a strong performance in the fourth quarter of fiscal 2025, with revenue reaching $261.2 million and adjusted earnings per share (EPS) of $0.94 per diluted share. The company's annual revenue for fiscal 2025 totaled over $967 million, reflecting a 32% year-over-year increase. Adjusted EPS for the year was $3.47, showcasing consistent growth.

The company also generated $193 million in free cash flow and ended the year with approximately $786 million in cash and short-term investments on its balance sheet. This financial strength positions MACOM to invest in future growth opportunities while maintaining flexibility in its operations.

During Q4, the book-to-bill ratio was just over 1.0:1, and for the full fiscal year, it stood at 1.1:1, indicating strong demand and a record backlog. Revenue across key segments included $115.6 million from Industrial & Defense, $79.6 million from Data Center, and $66 million from Telecom.

Product Innovation and Expansion

MACOM launched over 200 new products in fiscal 2025, with new product introductions contributing significantly to revenue growth and improving gross margins. The company is investing in innovation, with a focus on GaN-based technologies that are driving growth in defense, radar, and electronic warfare markets, where revenue grew by over 50% year-over-year.

In addition, MACOM announced plans to open two additional IC design centers in Southern California and Central Europe, aiming to expand its engineering talent base. The company also entered into an agreement with HRL or Hughes Research Laboratories to transfer their 40-nanometer GaN on Silicon Carbide process known as T3L, further enhancing its technological capabilities.

Outlook for Fiscal 2026

MACOM expects revenue in fiscal Q1 ending January 2, 2026, to range between $265 million and $273 million. Adjusted gross margin is projected to be between 56.5% and 58.5%, with adjusted EPS expected to fall between $0.98 and $1.02 based on 76.6 million fully diluted shares.

Sequential revenue growth is anticipated across all end markets, with Data Center leading at approximately 5% growth, followed by Telecom and Industrial & Defense with low single-digit growth. For fiscal 2026, MACOM projects double-digit growth, with no less than mid-teens on the top line, driven primarily by the Data Center segment.

Financial Highlights

Fiscal Q4 revenue reached a new quarterly record of $261.2 million, up 3.6% sequentially and 30.1% year-over-year. Adjusted gross profit for Q4 was $149.1 million, or 57.1% of revenue. Adjusted operating expenses were $82.1 million, with R&D at $55.6 million and SG&A at $26.6 million.

Adjusted operating income in Q4 was $67 million, representing a 5.5% sequential increase. Adjusted net income for Q4 was $71.4 million, with adjusted EPS of $0.94. Cash, cash equivalents, and short-term investments totaled $786 million, while cash flow from operations was approximately $69.6 million.

Kober highlighted a $10.1 million gain on acquired assets related to the RTP Fab transfer, which was excluded from adjusted results.

Analyst Questions and Market Focus

Analysts raised several questions during the earnings call, focusing on the outlook for the Telecom business, demand trends between 100G and 200G solutions, and the drivers behind growth in satellite products. Daly emphasized that the continued rollout of 1.6T and 800-gig platforms is driving growth, with the LEO satellite market showing significant potential.

The data center backlog is growing nicely, though management does not break down backlog by product line or market. Analysts also inquired about the direction of growth for the three segments in 2026, with Daly confirming expectations of double-digit growth.

Sentiment and Risk Considerations

Analysts expressed generally positive sentiment, congratulating MACOM on its performance and expressing interest in the pace of LPO adoption and the ramp-up of new technology platforms. Management maintained a confident and optimistic tone, highlighting the company’s talented team, core technologies, and secular growth trends in the market.

However, management acknowledged the need to manage capacity and supply chain stress points amid rapid growth. Kober noted that increases in accounts receivable and inventory support anticipated demand, but could pose working capital risks if demand fluctuates. Analysts questioned the sustainability of growth rates and the impact of competitive industry mergers, with Daly indicating potential talent acquisition opportunities from restructuring competitors.

Final Takeaway

MACOM closed fiscal 2025 with record revenue, robust growth in Data Center and Industrial & Defense, and a strong outlook for fiscal 2026. The company is targeting double-digit growth and the achievement of a $1 billion annual run rate. Strategic expansion into advanced GaN technologies, new product launches, and increased R&D investments, combined with disciplined operational management and a record backlog, position MACOM to capitalize on secular growth trends in core markets while mitigating operational risks and pursuing further market share gains.