MACOM Technology Solutions Holdings, Inc. Q1 FY2026 earnings call

• General company update: Revenue for 2026 was $271.6 million with adjusted EPS of $1.02 per diluted share. Strong demand across end markets, backlog building, Q1 book-to-bill ratio 1.3 to one, and $768 million in cash and short-term investments. - End market details: Data center revenue could achieve 35 to 40% year-over-year growth driven by hyperscaler investments. Industrial and defense and telecom also saw sequential growth. - Product portfolio: Expanding data center portfolio with support for various modulations and transmission technologies; interest in LPO and linear equalizers; strengths in defense with GaN amplifiers, RF over fiber, etc.; telecom opportunities in satellite-based broadband and 5G; cable infrastructure improvement. - FY26 goals: Enhance data center presence, expand 5G share, extend industrial and defense leadership, develop advanced semiconductor technologies, and manage capital.

Industrial and defense generated $117.7 million, accounting for approximately 43.3% of total revenue. Data center brought in $85.8 million, representing around 31.6% of total revenue. Telecom contributed $68.1 million, making up about 25.1% of total revenue. Q1 revenue for industrial and defense was up 2% sequentially, data center up 8% sequentially, and telecom up 3% sequentially.

• Fiscal Q2 2026 revenue expected in the range of $281 to $289 million. - Adjusted gross margin expected to be between 57 to 59%. - Adjusted earnings per share forecasted to be between $1.05 and $1.09 based on 77.7 million fully diluted shares. - Anticipates sequential revenue growth in all three end markets.

• Supply chain risks that could impact production and delivery. - Competition in the semiconductor market affecting market share. - Timing of satellite system changes potentially impacting contract execution. - Regulatory and geopolitical uncertainties that may affect business operations.

Q: Quinn Bolton asked about the uptick in the data center outlook.

A: Stephen Daly mentioned that 1.6T is driving growth, there's a healthy backlog, and the second half of 2026 is expected to be stronger in terms of revenue shipped.

Q: Vivek Arya inquired about telecom growth post NXP's RF power exit.

A: Stephen Daly stated that it will take 1-2 years to see share gain, focusing on strengthening design teams and product development to maximize the opportunity.

Q: Thomas O'Malley asked about the RTP fab insourcing.

A: Stephen Daly discussed improvements at the RTP fab, goals to increase output by 30%, and that benefits from insourcing components will come incrementally over time.

Q: Harsh Kumar asked about LPO commercial revenues and LPO market size.

A: Stephen Daly said there are three hyperscalers in production phases with LPO, and LPO is still a small part of the market expected to grow over time but is currently hard to size precisely.

Q: Blayne Curtis asked about data center growth regions and components.

A: Stephen Daly talked about data rate focus (400g+ and 1.6T), supporting all hyperscalers globally, and the real action being at 200 gig per lane PAM4 and coherent systems.

Q: Tore Svanberg asked about telecom growth conservatism.

A: Stephen Daly mentioned it's a base case below 10% due to a high prior year base and long design cycles in the telecom market.

Q: Sean O'Loughlin asked about CW laser customers.

A: Stephen Daly said it's module customers first, with a process to get into production and be on approved vendor lists, early in the phase but a watershed moment.