MACOM Technology Solutions Holdings, Inc. (MTSI) - 10-Q Summary
Business Context and Reporting Period
This filing is a Quarterly Report on Form 10-Q for the period ended April 3, 2026 (Fiscal Q2 2026). MACOM designs, develops, and manufactures high-performance semiconductor products for Industrial & Defense (I&D), Data Center, and Telecom markets. The company operates as a single reportable segment.
Key Financial Metrics
| Metric (in thousands) | Three Months Ended April 3, 2026 |
Six Months Ended April 3, 2026 |
Six Months Ended April 4, 2025 |
|---|---|---|---|
| Revenue | $288,955 | $560,567 | $454,009 |
| Gross Profit | $164,433 | $316,212 | $247,265 |
| Gross Margin | 56.9% | 56.4% | 54.5% |
| Operating Income | $50,831 | $94,128 | $52,397 |
| Net Income | $46,331 | $95,098 | $(135,864) |
| Diluted EPS | $0.60 | $1.23 | $(1.85) |
| Cash & Equivalents | $98,521 | $98,521 | $110,926 |
| Short-term Investments | $566,337 | $566,337 | $673,833 |
| Total Debt (Long-term) | $340,186 | $340,186 | $339,630 |
Liquidity: As of April 3, 2026, the company held $98.5 million in cash and cash equivalents and $566.3 million in short-term investments. Net cash provided by operating activities for the six months ended April 3, 2026, was $121.6 million.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 22.5% year-over-year (YoY) for the quarter and 23.5% for the six-month period. Growth was driven by all three primary markets:
- Data Center: +36.0% (QoQ) and +33.8% (6-month), driven by high-speed optical and photonic components (100G to 1.6T).
- Industrial & Defense: +22.4% (QoQ) and +21.7% (6-month), driven by defense programs.
- Telecom: +7.6% (QoQ) and +14.6% (6-month), driven by PON, metro long-haul, and SATCOM applications.
- Profitability: The company returned to profitability, reporting Net Income of $95.1 million for the six months ended April 3, 2026, compared to a Net Loss of $135.9 million in the prior year period. The prior year loss was significantly impacted by a $193.1 million loss on extinguishment of debt.
- Debt Restructuring: The company settled the remaining $160.7 million principal of its 2026 Convertible Notes in March 2026 via cash and stock issuance. Consequently, short-term debt decreased from $160.9 million to $0.
- Expenses: Operating expenses increased due to higher employee-related costs (headcount increases at the RTP Fab), R&D material costs, and share-based compensation.
Guidance, Outlook, and Risks
- Outlook: Management expects continued growth driven by demand for high-performance analog, digital, and optical semiconductors. The estimated annual effective tax rate for fiscal year 2026 is approximately 17.3%.
- Subsequent Event: On April 27, 2026, MACOM entered into an agreement to invest approximately £45 million (£30 million in equity and £15 million in convertible notes) in IQE plc, a supplier of compound semiconductor materials. The transaction is expected to close in Q3 2026.
- Risks: Key risks include geopolitical conflicts and trade restrictions (tariffs, sanctions), supply chain disruptions, and the integration risks associated with the new investment in IQE plc. The company also faces potential dilution from convertible notes and equity-based compensation.
- CHIPS Act: The company is in discussions regarding a potential direct funding arrangement of up to $70 million under the CHIPS Act.
Investor Verification Checklist
- Debt Settlement: Verify the terms and dilution impact of the March 2026 settlement of the 2026 Convertible Notes (cash + stock issuance).
- IQE Investment: Review the details of the subsequent investment in IQE plc, including the strategic supply agreements and potential financial exposure.
- Working Capital: Monitor the increase in inventories ($14.4 million increase in working capital usage) and accounts receivable ($11.0 million increase) to ensure collection and inventory turnover remain healthy.
- Tax Rate: Confirm the sustainability of the 10.7% effective tax rate for the six-month period, which was driven by discrete items and R&D credits.
- Customer Concentration: Note that the top ten customers represented 57% of revenue for the six months ended April 3, 2026.