MACOM Technology Solutions Holdings, Inc. Q2 FY26 Earnings Analysis

- Fiscal ’26 revenue growth expected to be strong, driven primarily by Data Center (40% to over 60% growth) and Defense markets. - Fiscal ’27 anticipated to be a strong year with continued solid growth across Data Center, Defense, and Telecom segments. - Data Center growth fueled by expanding product portfolio, increased deployment of 1.6T and 800G PAM4 products, and growing interest in coherent light solutions. - Defense market showing over 20% growth in FY ’26, supported by expanding customer base in North America and Europe. - Telecom expected to achieve low double-digit growth in FY ’26 and a strong year in FY ’27, especially in SATCOM. - Incremental capacity expansions in existing fabs to support demand; no major new fabs planned. - Competitor exit from RF power market to contribute revenue growth starting in FY ’27. - Continued innovation in advanced GaN, indium phosphide, and photonic technologies expected to drive long-term growth.

- Fiscal 2026 earnings expected to show strong growth, with adjusted EPS guidance between $1.31 and $1.37 for Q3. - Adjusted operating margin forecasted to reach approximately 30% in Q3, up from 27.8% in Q2, indicating improving profitability. - Earnings growth anticipated to be driven by Data Center, Defense (I&D), and Telecom markets, with second half of fiscal 2026 seeing notably improved earnings. - Long-term fiscal 2027 expected to be a strong year with solid growth continuing across key markets. - Growth drivers include expanding product portfolio, increasing fab utilization, and new design wins especially from competitors exiting the RF power market. - Gross margin improvements expected to continue through 2026 and into 2027, supported by yield enhancements and volume scale. - EBIT and net income expected to benefit from disciplined capital spending (4-5% of revenue) without major investments in new fabs.

- Fiscal ’26 capital expenditures (CapEx) are guided between $55 million to $65 million, about 4%-5% of revenue, focusing on incremental expansion within existing facilities without building new fabs. - Investments include: - Increasing wafer production capacity by 30% at North Carolina fab (completed by end of calendar 2026) with less than $20 million spent. - Equipment upgrades at Massachusetts fab for advanced GaN, expanded indium phosphide capacity, and general modernization. - Transitioning French fab product line from 3-inch to 6-inch wafers with new MOCVD reactor installation to support future volumes. - No plans for greenfield fab construction. - Strategic investment includes a GBP 45 million stake in IQE (epitaxial services provider), securing long-term supply agreements to ensure supply chain security for indium phosphide and silicon carbide. - Management takes a disciplined, opportunistic approach balancing capacity needs and capital efficiency to support growth through fiscal ’27 and beyond.

- As of April 3, 2026, MACOM held $664.9 million in cash, cash equivalents, and short-term investments. - The company is in a net cash position of approximately $325 million after comparing cash to $340 million of remaining convertible notes maturing in December 2029. - MACOM retired $161 million of its 2026 convertible notes during the quarter, reducing debt and deleveraging the balance sheet. - No mention of current or planned new fundraising through debt or equity was stated in the provided excerpts. - The company views its cash as a strategic asset to fund ongoing investments. - Capital expenditures for fiscal 2026 are planned between $55 million to $65 million, funded internally. - MACOM emphasizes disciplined capital management without plans for large fab investments or new factories. - Overall, no announced or imminent new debt or equity fundraising activities are evident.

- The company reported a strong book-to-bill ratio of 1.5x, indicating orders significantly exceed shipments. - New orders mainly came from the Data Center segment, but all three markets (Data Center, Industrial & Defense, Telecom) experienced strong bookings. - Orders are typically spread over multiple quarters and recognized within a 12-month delivery period. - The strong book-to-bill reflects orders expected to be delivered within the next 12 months. - The backlog benefits from customer transitions following competitor exits, expected to contribute revenue mainly in fiscal 2027. - The company anticipates continued order momentum across key markets, supporting strong growth in fiscal 2027.