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MTSI Q4 Earnings Call Highlights Data Center Growth and Margin Gains
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Key Takeaways
MTSI expects data center growth of around 80% in fiscal 2027, exceeding the 74% achieved in fiscal 2026.
MACOM projects Q1 fiscal 2027 revenues of $450M-$460M and adjusted EPS of $2.21-$2.29, with 62-63% margins.
MTSI targets operating margins above 40% in FY27, supported by higher volumes & manufacturing efficiency.
MACOM Technology Solutions Holdings, Inc. (MTSI - Free Report) emphasized accelerating data center demand, expanding manufacturing capacity and improving profitability during its fourth-quarter fiscal 2026 earnings call.
Management outlined ambitious growth expectations for fiscal 2027, supported by record backlog, strong semiconductor demand and new product development. Executives also discussed emerging optical technologies, capital investments and opportunities across defense and telecommunications.
MTSI Expects Data Center Growth to Accelerate
President and CEO Stephen Daly said MACOM expects fiscal 2027 data center revenue growth to exceed the 74% achieved in fiscal 2026, supported by increasing 1.6T deployments and higher semiconductor content.
During questioning from Stifel, Daly identified approximately 80% year-over-year data center growth as management's current base case. He also indicated that MACOM is targeting approximately $2 billion in total fiscal 2027 revenue, without issuing formal full-year guidance.
Fourth-quarter data center revenue reached $188.1 million, increasing approximately 37% sequentially. Industrial and Defense revenue totaled $164.6 million, while telecommunications contributed $72.1 million.
MACOM Projects Higher Earnings and Revenues
Daly guided fiscal first-quarter 2027 revenue to $450 million to $460 million, with adjusted earnings of $2.21 to $2.29 per diluted share and adjusted gross margin of 62% to 63%.
MACOM reported fourth-quarter fiscal 2026 adjusted earnings of $2.09 per share, exceeding the Zacks Consensus Estimate of $2. Revenues reached $424.8 million, surpassing the Zacks Consensus Estimate of $420.2 million by 1.10%.
MACOM Technology Solutions Holdings, Inc. Price, Consensus and EPS Surprise
Revenue increased 62.7% year over year and 24.1% sequentially. Chief Financial Officer John Kober attributed the performance to growth across all three end markets, particularly data center demand.
MTSI Targets Further Margin Expansion
Kober reported adjusted gross margin of 61.3%, up 160 basis points sequentially, reflecting improved manufacturing utilization, favorable product mix and higher production volumes.
Adjusted operating margin reached 38.2%. Kober expects this measure to exceed 40% during fiscal 2027 as the business scales and operational efficiency improves.
Responding to BMO Capital Markets and Needham analysts, management attributed margin expansion to higher-margin product introductions, manufacturing efficiency and improved yields. Kober maintained expectations for quarterly gross margin improvements of approximately 25 to 50 basis points during fiscal 2027.
MACOM Expands Optical Technology and Production
Daly highlighted progress in indium phosphide laser manufacturing, particularly improvements in laser facet quality and reliability. MACOM is targeting entry into the continuous-wave laser market in 2028.
The company is also pursuing near-packaged optics opportunities with hyperscale customers. During Barclays' questioning, Daly emphasized MACOM's high-performance semiconductor capabilities while acknowledging competition from more integrated solutions.
Kober projected fiscal 2027 capital expenditures of $100 million to $110 million, primarily supporting manufacturing expansion and research capabilities. During the Jefferies discussion, Daly said approximately 60% of planned spending would support fabrication facilities.
MTSI Sees Defense and Satellite Opportunities
Daly expects Industrial and Defense revenue growth to exceed fiscal 2026's 27.8%, supported by radar, electronic warfare, missile and drone applications.
Telecommunications growth is expected to remain around low double digits, with low-Earth-orbit satellite networks providing additional opportunities. Management identified approximately $20 million in potential new satellite-related business beginning in early 2028.
Responding to Barclays, Daly acknowledged near-term softness in passive optical networks and broadband products but expects telecommunications growth to strengthen during the second half of fiscal 2027.
MACOM Maintains Its Long-Term Expansion Focus
Management emphasized record backlog and a fourth-quarter book-to-bill ratio of 1.4:1 as indicators supporting continued capacity investments and product development.
Daly also confirmed during TD Cowen's questioning that MACOM currently has no plans for dividends or share repurchases, prioritizing financial flexibility, internal investments and potential strategic acquisitions.
MTSI Zacks Rank and Style Scores Signal Potential
MTSI currently sports a Zacks Rank #1 (Strong Buy), reflecting a favorable earnings estimate revision profile and stronger near-term performance potential under the Zacks ranking methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.
Its Momentum Score of B indicates favorable momentum characteristics, while its Growth Score of C reflects a middle-range growth assessment. However, the Value Score of F and VGM Score of D indicate less attractive valuation characteristics and a weaker combined style profile. Although the Zacks Rank and Momentum Score provide favorable signals, the mixed Style Scores warrant consideration. The Zacks Rank may change as analysts revise earnings estimates following the latest quarterly results.
View the Zacks #1 Rank List
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MTSI Q4 Earnings Call Highlights Data Center Growth and Margin Gains
Key Takeaways
MACOM Technology Solutions Holdings, Inc. (MTSI - Free Report) emphasized accelerating data center demand, expanding manufacturing capacity and improving profitability during its fourth-quarter fiscal 2026 earnings call.
Management outlined ambitious growth expectations for fiscal 2027, supported by record backlog, strong semiconductor demand and new product development. Executives also discussed emerging optical technologies, capital investments and opportunities across defense and telecommunications.
MTSI Expects Data Center Growth to Accelerate
President and CEO Stephen Daly said MACOM expects fiscal 2027 data center revenue growth to exceed the 74% achieved in fiscal 2026, supported by increasing 1.6T deployments and higher semiconductor content.
During questioning from Stifel, Daly identified approximately 80% year-over-year data center growth as management's current base case. He also indicated that MACOM is targeting approximately $2 billion in total fiscal 2027 revenue, without issuing formal full-year guidance.
Fourth-quarter data center revenue reached $188.1 million, increasing approximately 37% sequentially. Industrial and Defense revenue totaled $164.6 million, while telecommunications contributed $72.1 million.
MACOM Projects Higher Earnings and Revenues
Daly guided fiscal first-quarter 2027 revenue to $450 million to $460 million, with adjusted earnings of $2.21 to $2.29 per diluted share and adjusted gross margin of 62% to 63%.
MACOM reported fourth-quarter fiscal 2026 adjusted earnings of $2.09 per share, exceeding the Zacks Consensus Estimate of $2. Revenues reached $424.8 million, surpassing the Zacks Consensus Estimate of $420.2 million by 1.10%.
MACOM Technology Solutions Holdings, Inc. Price, Consensus and EPS Surprise
MACOM Technology Solutions Holdings, Inc. price-consensus-eps-surprise-chart | MACOM Technology Solutions Holdings, Inc. Quote
Revenue increased 62.7% year over year and 24.1% sequentially. Chief Financial Officer John Kober attributed the performance to growth across all three end markets, particularly data center demand.
MTSI Targets Further Margin Expansion
Kober reported adjusted gross margin of 61.3%, up 160 basis points sequentially, reflecting improved manufacturing utilization, favorable product mix and higher production volumes.
Adjusted operating margin reached 38.2%. Kober expects this measure to exceed 40% during fiscal 2027 as the business scales and operational efficiency improves.
Responding to BMO Capital Markets and Needham analysts, management attributed margin expansion to higher-margin product introductions, manufacturing efficiency and improved yields. Kober maintained expectations for quarterly gross margin improvements of approximately 25 to 50 basis points during fiscal 2027.
MACOM Expands Optical Technology and Production
Daly highlighted progress in indium phosphide laser manufacturing, particularly improvements in laser facet quality and reliability. MACOM is targeting entry into the continuous-wave laser market in 2028.
The company is also pursuing near-packaged optics opportunities with hyperscale customers. During Barclays' questioning, Daly emphasized MACOM's high-performance semiconductor capabilities while acknowledging competition from more integrated solutions.
Kober projected fiscal 2027 capital expenditures of $100 million to $110 million, primarily supporting manufacturing expansion and research capabilities. During the Jefferies discussion, Daly said approximately 60% of planned spending would support fabrication facilities.
MTSI Sees Defense and Satellite Opportunities
Daly expects Industrial and Defense revenue growth to exceed fiscal 2026's 27.8%, supported by radar, electronic warfare, missile and drone applications.
Telecommunications growth is expected to remain around low double digits, with low-Earth-orbit satellite networks providing additional opportunities. Management identified approximately $20 million in potential new satellite-related business beginning in early 2028.
Responding to Barclays, Daly acknowledged near-term softness in passive optical networks and broadband products but expects telecommunications growth to strengthen during the second half of fiscal 2027.
MACOM Maintains Its Long-Term Expansion Focus
Management emphasized record backlog and a fourth-quarter book-to-bill ratio of 1.4:1 as indicators supporting continued capacity investments and product development.
Daly also confirmed during TD Cowen's questioning that MACOM currently has no plans for dividends or share repurchases, prioritizing financial flexibility, internal investments and potential strategic acquisitions.
MTSI Zacks Rank and Style Scores Signal Potential
MTSI currently sports a Zacks Rank #1 (Strong Buy), reflecting a favorable earnings estimate revision profile and stronger near-term performance potential under the Zacks ranking methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.
Its Momentum Score of B indicates favorable momentum characteristics, while its Growth Score of C reflects a middle-range growth assessment. However, the Value Score of F and VGM Score of D indicate less attractive valuation characteristics and a weaker combined style profile. Although the Zacks Rank and Momentum Score provide favorable signals, the mixed Style Scores warrant consideration. The Zacks Rank may change as analysts revise earnings estimates following the latest quarterly results.