MTSI - Earnings call 1 2024 | MACOM Technology Solutions Holdings, Inc.

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Operator

Welcome to MACOM's First Fiscal Quarter 2024 Conference Call. This call is being recorded today, Thursday, February 1, 2024. [Operator Instructions]. I will now turn the call to Mr. Steve Ferranti, MACOM's Vice President of Corporate Development and Investor Relations. Mr. ahead. go please Ferranti,

Stephen Ferranti

Good financial welcome fiscal results XXXX. Olivia. to quarter our discuss MACOM's for morning, you, to and call of Thank the first

today. would forward-looking risks Act results and discussion as defined Litigation that statements, I Reform safe of are in uncertainties remind may harbor the the from contain Securities for which certain Actual will those contained differ forward-looking our to subject in to like statements XXXX. discussed today materially everyone Private

more of we could you the discussion a result in to with that For and uncertainties detailed risks filings those refer SEC. differences, MACOM's

Management's and of A include the discussion reconciliation related President was filed Form statements the SEC results of information. to will Daly, and GAAP CEO in financial non-GAAP X-K, With over adjusted which non-GAAP during turn this the that, I'll of are call with call release certain today. Steve press also to MACOM. provided adjusted company's

Stephen Daly

good and morning. you, Thank

Before [ on. vision like I November. to review the educational His the the the this organizations help MACOM world semiconductor place. Ocampo world-class institutions His a make our John passing better a past contributions to industry, make would lives Chairman acknowledge to charitable ], and to quarter's company results, I of

I will quarter some the Now for and then Kober, company will first Jack I review to of second XXXX, be fiscal will Officer, update. provide XXXX. a happy take fiscal Jack provide Chief results finished, our earnings in-depth is our general will and of Financial After we guidance questions. that, quarter provide more When revenue a for

approximately flow business approximately share, on million Adjusted our from Wolfspeed closed flat EPS But was business $XX grew in sequentially, and $XXX RF the million. was operating $X.XX was QX including which core X.X% million. per by X, for revenue acquisition, quarter-over-quarter. December $X total, essentially XXXX. MACOM's diluted was cash Revenue

sheet. balance and in the our investments We short-term $XXX on approximately quarter million with cash ended

Our cash remains to in healthy generate strong opportunities. business we and improving continue while growth flow and profitable future

In increased booked book-to-bill business, revenue. ratio a XX% within our RF orders of [indiscernible] backlog, our the was or acquired market visibility revenue of and In amount our shipped included million. QX, business telecom as industrial quarters. and Separately, expected, which few X.X:X. million at $XX.X Fiscal significant data quarter, $XX.X provides QX was the total approximately by over and center next was us defense $XX million end at at with

was sequentially, down XX% For sequentially. the center sequentially data I&D quarter, was up flat X% telecom was and

end thousands industry broad and highly customers customer a of strategy expand and a maintain base exposure. range diversified further across our of is geographic consisting We our of markets, to diversify and

continue markets. new in growth opportunities We see all to end our

our Defense robust is the industrial growth are Overall, due our QX, steadily I&D remain are remain our long-term to primarily weakness largest for weak. revenue I&D and growing orders market few orders Defense the and strategies favorable, over has We believe business Industrial years. trends industrial down markets. and past the been was working. while in in sequentially

on In been higher opportunity years optical within KV wide the applications of our a Expanding product ranges. out like over RF developments technology such and lines. and the product fiber to frequency new analog adding I&D total, market. building functions, as of diode focus and caps, categories over address market established more high-speed we filters and organic high-frequency improving our and lines GaN, levels has [indiscernible] our Our new cover last through the power addressable few and competitiveness mimic cross-selling and product range

business capture looks with rate strong. for Our customers defense robust is our opportunity pipeline major future and

exceeded connectivity QX. production. revenues strong XXXG within our for XXXG very XXXG our per short-reach expectations grew market Demand optical shipments during center and up data and ramped QX continues as customers lane, certain Customer be Our sequentially end in to QX demand solutions.

Given the in shipments in anticipating past the growth QX. reduced we are quarters, X rates shipments and fast

However, couple of current for our expectation quarters. is next over remain the the will high-speed demand products steady

product recently solution enable solutions targeted in transimpedance LPO factors. of can X addition to fiber We supplementing announced new noise provide solutions Ethernet, portfolio power low DD and a SFP the of These laser driver factors X existing and targeting TIA XXX dual and bandwidth, channel and InfiniBand optical new channel applications. or continues linear to optimized form broad high or amplifier for applications SFP linear products These MACOM's portfolio our dynamic grow. cost and form pluggable products. channel products and a range feature and

seeing also implementing support network to to connections. interface expand and cards linear the drive high-volume are XXXG in to to by NIC connectivity lane further per other optical switch opportunity or We server applications

of of Diego Finally, The optics applications, teams high-performance to capabilities lane including breadth year's enable second per our in the solutions engaged developing will linear at March. spectrum broad on further or Conference, DSP-based applications. R&D in MACOM's a photonic in and terabit full OFC, are and next-generation pluggable San XXXG solutions, at Fiber be We coherent. support this display actively X.X analog Optical per

solutions. optical team data LPO center hardware opportunities, showing interoperability. including cable XXXG and lane, Our per support live These [indiscernible] planning latest is multiple demonstrations, linear LPOs a products high-speed of examples module of per variety pluggable XXXG XXXG or will copper architectures. the lane, active including fiber solutions disaggregated

demand. XG, quarters and approximately continues compared many And be is weakness weak from networks. cable customers markets, with Overall larger XX% in most to revenues end our optical market inventory of spanning or haul, to suffer these demand broad-based, subsegments, of our continue just weak in passive X reduce to telecom ago. infrastructure Demand down including metro/long market

networks product portfolio cautious While on cable attractive over telecom. much on And course, continue based time, the We diverse It wireless, of opportunities customer speeds are and opportunities product and this Telecom to MACOM. for market and satellite we we engagements see in Telecom line performance market, we positioned quality to expect numerous capture remains we expansion And well RF remain MACOM. of believe and as be our portions larger believe certain market. to data technology a about the is of to our provides differentiate share. increase for excited market power across we within player globally, wireline, an

We on semiconductor space-based the IC opportunities provide for an also capabilities. gateways technologies believe SAM beyond. Telecom SatCom provide these MACOM see 'XX FY exciting the for customers We and and we portion continue unique, will terminals, expanding proprietary solutions based and can to ground and hardware. of module in high-performance And market

applications. portfolio Linear Communications added linearizers Group. power acquisition space of addition, SSPAs, This station In stand-alone and design and with the capabilities in our we acquisition growing ground added SatCom solid-state to already or satellite for in amplifiers

last certain semiconductor Agency We European products. expanded of frequencies with MACOM key qualification millimeter year the MESC, of our wave its our Space opening European on semiconductor capabilities processes in recently received which center, and

solutions finally, techniques for to with technology microwave other leverage compared to size for military, applications. unique And PCB create capabilities and satellite, and test and our our special competition. to and materials ICs components RF, equipment specialized continue expand we and interconnect assembly assembly and subassemblies mimic our microwave and smaller millimeter wave analog test high-performance custom We

manufacturers Washington, market upcoming to the for to various conference an for to broadband and forward product this and our believe note, level support March. We look opportunity portfolio related requirements satellite commercial up the constellations. in optical, high-speed millimeter level. direct commercial team traditional we opportunity ideal comprehensive and to with in component new targeting IC participating sell is a great industry from satellite constellations to RF, and engage requires segment, discuss subsystem technologies to satellite connectivity the in see Internet provides applications. microwave The We D.C. On a groups defense our conference which

on I closed RF investors would of business. acquisition our like Wolfspeed's to update recently

its excited target We are ownership products within our process product ongoing SAM and take and portfolio technology this our our business highly The markets. technologies support compelling are to of acquired expansion existing portfolio goal of advance activities. to and complementary and

the most $X by GaN RF wireless the We RF be market complete XXXX, is billion X increased the GaN applications. industry. and on driven carbide adoption to primarily approximately the the estimate will Our in silicon defense a of by commercial and predict GaN forecasts and portfolio portfolios grow of product advanced SAM billion in market now $X to

radar we depth and market lead experience, and years which ahead. industry-leading confident further share I'm with disrupt design GaN portfolio RF Our electronic warfare well including of ground-based various terrestrial terrestrial low-frequency systems, supports and semiconductor and team process as communication now GaN the systems to as our the including ultimately DoD will and epi, applications, systems. and a innovation, frequency industry We can believe in wide IC gains range applications satellite communication systems high very GaN has

A transaction. few other comments regarding the

meet First, profitability the our significant to on modestly And projections, in took an to we important bottom prior our to to QX. will and based improve objective contribute accretive actions acquisition and identified to our current closing, to enable to the line. we believe synergies earnings be business

work of course, product us to overall a the of great Of the deal ahead of have still we profitability improve line.

integration plan our immediately within We operational business within the business the after fully closing. operating a to Second, after established enable MACOM be our a closing, goal met efficiencies, months, teams respective in to HR, RF to days XX systems ERP progress few make acquired was And expect reporting including most improving systems. operational revenue over meaningful next RF profitability the and and within expanding business. the IT, on MACOM's financial environment, XX important, to we the

will a We strength products than business products have view and cycles Many now years been an of produce attributes range long they've business as our MACOM introduced. wider has after of life revenue for summary, these of before. In inherent model. ever these

to of the brings a leader and CEO working an turn experience products hardware our [ coherent Acacia, and team He which MACOM. expertise Directors Raj to XXXX. management in decades the of industry I in The President by to Board Cisco I forward independent to and was director acquired like of with the previously welcome and ] was Raj. Raj discussion Before would Shanmugaraj, look to telecommunications Board. components Jack, extensive over

review financial results. provide now a will detailed Jack more our of

John Kober

fiscal and X, closed based included everyone. which X.X% in good growth market. Revenue for on data the Steve, end contribution which center Revenue million, was December RF million, $X partial quarter QX on first was the approximately you, in XXXX. month sequentially up a from morning Thank $XXX.X business, to our

On fiscal results. XX.X% $XX.X revenue represented gross or decrease XX.X% MACOM's from was a in QX of margins had customers QX RF fiscal U.S. Adjusted approximately of to acquisition, average. our to revenue for corporate the XX% The gross which compared than geographic business profit lower QX. basis, million was fiscal due

up sequentially operating was first $XX.X was million, the mostly XXXX. operating consisting over from $XX.X selling, leverage $XX.X expenses to see million of expense entire the for points the QX by development discretionary of QX R&D by general fiscal to million million. focus business, from operating Adjusted in million, fiscal million, adjusted and and expense basis $X.X excellence we continue business. our our opportunities The Total for acquired offset added expense margin fiscal up down operating from $XX.X research expense were lower XXXX exercise improving of and XX administrative spending quarter in year operational was operating of $XX.X discretionary spending. QX. partially RF and income We as course across fiscal XX.X%, fiscal on Adjusted due discipline

QX and $XX.X fiscal Adjusted was XX EBITDA our $XXX,XXX investment $X.X was for higher on was million, Trailing million. yields the to months adjusted roughly fiscal net due favorable QX prior portfolio. $XXX.X million, million. expense $X.X short-term EBITDA income interest was adjusted for quarter than Depreciation

income RF following the acquisition. cash on We lower business decline slightly the based quarter interest to expect balance next

expense was an adjusted $X.X X% and QX resulted tax Our in income million. of in rate fiscal approximately

$XXX,XXX Our tax were fiscal for payments net first quarter. cash approximately the

net utilizing share of our adjusted Fiscal X% fiscal fiscal and QX fiscal per $XX.X $X.XX in in XXXX. million share income a compared million was into XXXX to $X.XX to adjusted Adjusted shares count diluted to fully QX. XXXX. share We XX.X per remain was adjusted earnings $XX.X earnings fiscal rate million compared and income for expect year year at tax QX of

acquisition. applicable will accounting million shares. count business of all $XX.X the on for including shares QX XXX,XXX million And QX, diluted to these the X/X of rules, seller our RF of the diluted connection was $XX issued in share Based include with our share forecast approximately the

items. Now moving flow and cash to sheet on balance operational

to QX incremental million, $XXX.X up QX from in the from due XXXX, million $XX.X Our receivable accounts revenue was RF business. primarily balance fiscal December acquired

X.Xx, from down will result in quarter sequential business. $XXX.X in industrial turns a result, Inventory were quarter. million. were XX business' inventory a This the and of X.Xx outstanding sequentially days acquired days The were and in compared turns sequentially decrease As customers. sales the our XX associated incremental to $XXX.X the were quarter. inventory days infrastructure communications up prior prior from end, million in Inventories increase the in at defense, RF balance strategic support QX

quarters expect starts to the turns the coming inventory the will purchases and other as improve material wafer We business. we business in now within manage for RF RF

approximately QX onetime working increases sequentially acquisition-related in Fiscal down during $XX.X flow items million, due cash operations from to and was $XX.X costs the quarter. million capital paid from

As we forward operations for our in expenditures cash totaled $X.X cash on our flow look remain QX. we expect from XXXX, Capital million to fiscal and will year we QX focused fiscal exceed generation, level.

expansion for our the budgets. expenditures of be operations, capital fiscal in During of manage expect our we million Even million to to continue $XX our year. range the fiscal XXXX, with $XX effectively full CapEx year to we our

sheet Next, base investments sequentially, the $XX the the down business, for equivalents million, quarter business. driven cash for other cash by cash offset partially short-term generated and Cash, from first of moving were on acquisition RF $XX.X of balance consideration by fiscal items. paid the $XXX.X million to MACOM million

call growth forward. to like Steve, drive see to and RF some excellence combined additional provide revenue to would operating Prior acquired I opportunities the achieve recently commentary our on back go teams handing as many to business. we for the We

the as gross will the addition, our term. near margins dilute In in noted, previously business RF

accretive business QX to we expect However, acquired do be earnings. the non-GAAP to our

call gross to refined accelerate Steve. introduction and the business execution, levels operational historical adjusted to our we products, in XX%. realize turn strategies, synergies, will I improve expect of the corporate new additional return back post-closing of margins we excess to consolidated over As now

Stephen Daly

$XXX on be approximately respectively, MACOM sequentially prior Thank the XX% of increase XXXX, be share is in the QX Jack. per to to and to In to shares. between fiscal gross margin quarter. in is to expected $X.XX million. revenues expected and expected be $XXX Data I&D to expects range million expect be Adjusted fiscal diluted you, Center revenue range $X.XX earnings ending to based down in XX%, to million March revenues adjusted compared XX%, fully of QX, we XX and and are XX%. Telecom the by XX% XX,

Two final on comments MACOM's base business.

flat believe and we telecom our we to grow even second First, and industrial half weak throughout markets we weakness in said, we of the base ongoing the can see business in with expect revenues XXXX, our modestly be FY and QX. That the 'XX. markets, base profits in

revenue operating current at MACOM's base note to gross under I'll business prior periods. Second, are levels, margins and relative pressure

in levels. prior As to revenues ask take any like would to base we business, our to to profit now questions. operator expect I recover return the

Operator

Thomas [Operator from first of O'malley Instructions] Our coming with the Barclays. question line

Thomas O'Malley

X first I guess the center. on is data

could that a So you December about bit September just there? your a think breather describe the remain growth down? in temporary being March? demand kind pause talk maybe remarks, then kind of from slowing? Is taking Is talked dynamic weak that than in little things and prepared quarter? of this -- just is in And about that March. into -- X a you the that of positions quarter for you do Or inventory very you strong longer Could and worked

Stephen Daly

talk about center few comments the can and we then Tom. Sure. a trends. make about data the market I'll overall Maybe revenue

our definitely to customer the moving we base of data as rates. seeing So a higher activity to relates are lot across it

is XXX XXX where of an and incredible at gig solutions. trend a So that work amount there's general both

our call production products drive linear quarters. has products in past providing couple products. growth is That the in we of contributing are for driving over that that those today. Included We solutions been

set these And see still we very increased architecture this this early, do interest product in while in it's for systems.

those And with we're and better use so type industry continuing understand to solutions. to customers work how to

And will so growth into that ultimately, the and next add we year into think year. move even we as further

more becoming of more for the with the -- that highlight in architectures. other demand We I XXX-gig would market. stimulate the The will is traditional across the trend [indiscernible] think sort omnipresent

want So the highest analog the drivers, teams we rates. servicing and company industry. relates have to products, our have we're believe [ switches, very linear drive X a on as XPoint it of the best data TIAs, the new NPI is We best goal solutions. integrity in ] signal on to our focus development. as And to equalizers We focused product

our higher most of like revenue rates. is Now and mentioned, I backlog, the at data

gig We very backlog have today. XXX strong at a

this as we that's We customers' dipping about past schedules. down of the into bringing have data ramp lead of And hardware million. actually, actually very a they're QX. highlight good in, center our it record $XX we're a as shipments, the that under QX, visibility beginning into $XX level modulate But just why in to they're company, just shipments I at would was million, some

surprised really down. will or dip there concerned not that we're So be a

We think the long-term trends are favorable.

in We moderation other and see online. QX come QX expect to as programs

we're levels QX that while not QX. guidance have seeing that or expectation will So build and an the we're remain QX, upon we giving for in

Thomas O'Malley

with where below is it's talking business Wolf rate And of that a right run what's looks where a right run that? that on Very acquired you closed into Obviously, here, or like you rate Could is just the just bit going Or asset below of about you as million, that guidance, you little around kind helpful. a a revenue million about the about, $XXX talk that get I'm $XXX rate. one, growing things a run that is if with is now? which when contribution. bit talked are, $XX when in more $XXX math year my little million like a that -- Wolf core it stuff. you messy million doing way follow-up, the acquisition But March, little business had talked if first you're guys about

Stephen Daly

Yes.

So run of from $XX and of in August the the million, it's the December declined. until was has It closed, rate for we point transaction over announcement down business that when come rate. $XX or $XX to run that we million about Wolfspeed little When in the business, contribution look plus we a at minus including QX million bit. are guide, our from a

in cash you're weaker say, That of down come business ago. that X months sort when let's to your business bit. generated was contribution had Telecom a is one, the look have have due acquired the money. high high of the losing highlight, So was fundamentally that at the costs. returns a lot I business, it of being the comment and than, by primarily the to we number we very portion and a things expenses, very then But correct just It material

way And business so process the through that is about. acquisition I the talked we fundamentally running changed that

months months business will X So year when in that and thinking. add first is in our quarter, into we $X.XX the be in QX is in we the that And really XX at next look cash ballpark. And the full it that generated year MACOM about X, came over the million the the actually mid-XXs And generate next it mid-XXs. this will the then see beginning. XX can the in months, that certainly then and in following easily XX $XX as

So when we price. numbers to pretty purchase we close up, get our add those

the line. corporate one, lot do a MACOM, are gross we margins We we is, capital is business significantly see certainly need below the business. come don't has We as of on that we spend do margins into this average. pointed the to What number the work have address as to to with MACOM's out, Jack the top that to need to need business grow

results, the were And that X over team XXXX, business excited. this we it quite And and also gross to almost our another margins management highlight quarters when the quarters get MACOM So XX%. that get quarter I'll below us to XX% we're business actually running X took where to to first provided in back XX%. took

of at that And growing. in this run business, $XXX and so same which million is on running on somewhere rate we plan program a today

technologists, team an just a ready Power of do business MACOM. feels team, and of incredible in merchant from #X to an bazooka arguably damage. It's we're amazing And serious were as and a we into go fit U.S. like some GaN. have point handed RF incredible the to we our And the view, a supplier market

Operator

line next the question And coming of Bolton our from Needham. with Quinn

Quinn Bolton

want just up the to business. I Wolf on follow

you to the kind core margins core below MACOM there. the we in may try conditions, past, the XX%, be XX% to right should then that of relative and XX-ish are that range, ballpark the the it's be term? coming percent of to just to size under thinking be the Is quarter. Just thinking to the to Wolf down given core MACOM. the probably you kind for just the I opportunity of business that pressure Obviously, business recent guidance settling near think, to about where industry Steve, mentioned in base takes

Stephen Daly

Right.

my our at the as $XXX right million So around of don't rate it coming business, the and looking to down when we come XX% as We XX%. -- the million now business. recent for under just . data our run revolved were it's at and well at XX% core in now go business run comments to peak below trends, the expect we're modeling the that for rate and for business, core $XXX off

the get I'll of you to to you back to XX% the margins can gross So that. then would want into and Wolfspeed on of the gross Jack, to which if low think in add you side, sort turn I you sort margins

John Kober

many that gross perspective that to to things have helped there's preserve we've the an margin that was that business I just base up, from that think number XX% I Steve referring follow a Quinn, improve good MACOM to. cost summary. was structurally guess, to done overall

we lift go with business, the And with business acquired same from that done the to those we So the to acquired on business, some and base with margins then as will well a expectation as support things the Wolfspeed we've that business is, as some be forward. revenue help we'll base us. as will apply able of perspective forward, improve that help go

Quinn Bolton

first Wolf was years. you then for will question guys guess, fab it. X I -- just the to operate And continue Got follow-up that a

And fab so fab do to to start yields. your or being that to to Wolf you fab, you there you by and into is try constrained the get you drive implement start with what anything to your that being can somewhat processes your immediately free to from I yields able can the handicaps you mean do to start is are operated run post to while those blocking you've to think tackling or got know-how close? access improve higher

Stephen Daly

Sure.

So information I'll a to background of provide lot help answer that question.

So, foundry we relationship Wolfspeed where price. effectively fixed have, with a a wafers today, at we buy

in point that's one. conveys So stay until about And number fab will years. in that place X the

to Second, Wolfspeed, $XX a the -- as part of significant was of given we made portion, million stock transaction, there Wolfspeed.

now are in equity strategic aligning goals. our they So MACOM holder an

have to it's both Operating for it is because they're staff, -- Wolfspeed in you we the it's their which to can will of something fab wafers as work yield lowers comprised them together MACOM called to Committee, see, beneficial cost Third, implement selling Wolfspeed the change their execution improve us. and within support. who Fab And and with of

So everybody's are aligned. goals

just And gate. X the been -- It's coming of out so we're months. it's

working fab We whatnot and North their around fab. both the inside the have staff an amazing Carolina, technologists and the in with relationship

structure but we're that and will be we to to able able change, I to boundary that a make there's be sure there's do affect that that. So clear to want around conditions,

of to minds and for have how transaction MACOM, And great was of part do that. meeting a on were so to we that able the important the an

test move address at material that. have costs inbound full would certainly you business, improvements the When that all the well and of and associated making look the fab over inside outside as assembly you the other with back-end we the control fab. So as

contracts. to of look is part test, can COGS a significant immediately. we So we're yield full the end, and and to that the change, enhancement at effect We which changes we and assembly of doing can make MACOM to on back the OSAT bring can force

up great with Morgan a staff, MACOM rolling the team we're has Wolfspeed going team in Hill. work. over They're in and great sleeves to out a their Malaysia,

there's So that pieces be focused on. many we'll

MACOM that practices with And that will way bring then the business-related I'll there's highlight the item will other and just change we its business. in line also runs

rely full don't on our would with we deal like to line. and direct engage product customers channels. example, For major and distribution sell we like the rather We to

And so the MACOM at that whether agreements We'll products. distribution, that we'll or foundry distribution we we in certainly place make to can of been looking purchase contracts it be the put optimizing form be use have for standards. the looking at certainly be to long-term selling agreements, these sure all want that

you'll dominate the market. improvement do And if you're our time. So to lot not going over to we going I see in hard -- highlighted, a And of our work and And to will and Jack that, as thinking do. mentioned a is begin an it meet we here, certainly is lot have work of to this incremental will gratification. be financial targets. instantaneous also, There's just we

Operator

line from with Securities. question Arya Vivek America Bank the next Our of coming of

Vivek Arya

color Thank to entity get wondering required you, combined if I to was level. think there the the can gross Steve, when your margin type way you an for the around so about [indiscernible]. something Is can to line or giving you as steps activities? drive the a all historical time should is XX% achieve described and different in think we X-quarter that faster? that quantify something Or you

Stephen Daly

for We're in year if fiscal business XXs. can to segment. get don't you have XX% or starting we this on our to XX% XX%, We'd we for a the low close answer to So that. exit like sharp

that 'XX, be fiscal would win. I into a our Going think

sort happen. the focused we're . -- head that's on down all levers So pulling make that of we to can

making comes through term, line our the we'll that in and the do on the mix, you part of near of amount the will like a necessarily target. to with with put But can can't that end So tell to do business. changes. I plan have have significant time And growth I also we on

we business. look go factors so say this, understand it of that we gross I at look difficult margins, just fundamentally lot look there's this But and at of competition the a at can you answer. we that technology. know do we a their there And and the When lot we to firm there's room that industry make to give with

Vivek Arya

core then industrial sense and March for is give the in what side? on And realize back given that the see can I industrial guiding is trough do do the industrial mentioned where the you sort something it's about you're it. the the half headwinds. quarter? MACOM MACOM But where us that Got the And you I cyclical of a see you trough tough a guiding recovery. for And defense you to what core business? think to? all you're revenue

I was model the could give in we that way. So hoping just so color some us you right business can

Stephen Daly

Sure. Jack with and I'll can add. start that then

So will X%. QX, data We about or be and base think Telecom our defense, think, or business, up be up X%, center XX%. about the going and industrial about that X% know we down the X% into will will we be

is So business. core the that for

Jack, do between add Now industrial big that that numbers when of drop. step-up to the that? the will my segments. evenly at are you aggregate data compare contribution and to and want for to commentary defense essentially million, QX X you the XX% that up telecom, going the business, $XX and XX% Obviously, due full to center, the Wolfspeed in market split XX%; the it's in be same

John Kober

item other only with industrial the think business. of I piece was regard the I&D add that to to

improvements that us side on market things the see within end But the which been . quarters. been couple side go the performance we've we down drive we to pleased with forward. of discussing the on been that opportunities to business, market, something think really I industrial That's past that continue and for defense continue the we supported we've the piece in end to as I how defense over has So of think ultimately has manage.

Operator

from question Kumar next line the Harsh Piper coming Sandler. Our of with

Harsh Kumar

Congratulations deal doing to follow-up have was about. closing asking excellent a on looking the just forward what and kind on you Steve, I job did integration. Vivek a question, guys of an on

close flattish, why is bottoming in book-to-bill climb like was the recovery And business your You take assume the X.X said to the it core The of like X. being I plus your business me December now me sounds book-to-bill that, Is signals that starts to very fair to book-to-bill or minus roughly back for the the guidance about book-to-bill you're is out to if assume a asked a if bottom. business that business your it in is your for the when right it about fair the I now It talking to and in to climb. that, industrial the historically, half for start reason quarter. quarter?

Stephen Daly

a things. of couple So

go the You're just back quarter X. if book-to-bill, a or right, we

data really strongest strength was sort 'XX 'XX, and we QX X.X [indiscernible]. book-to-bill the driven primarily then the [ And So the it weakness bookings past was quarter, of with okay? it our we center D, fiscal to [indiscernible] was in the degree, fiscal ], at -- I&D, related. was bookings the And certain a telecom by very the good was was this a and it -- that of segment ended then of looking there. So was had and some

said, we're business QX. not right? we call Jack or sure whether a weak. during I'm feel million to base we're se, as we just bottom so our $XXX tell. So and I it's per able still that but So move we've few the the bottom QX hard can at at quarters, been not, mean to a business for industrial now remains

really than that. can't I So more say anything

Harsh Kumar

Is this which you into is simply as think that and shipments generative a quarter the on? June then said seems I March. and the you've customer it correct aligning products strong And imply look, your rising, you that another which that quarters? talked is slippage, else connectivity was question slipping are you in but asked maybe there got center March data And for are something that memory earlier did about And have to you would potentially think imply I like well. quarter is that I that b, driving weak? the your guys. enough. follow-up, demand, customers June then, is talking you on AI needs, about going we we Or about see wherever strength, good compute It is would Fair really this

Stephen Daly

be, a first, will business, to the think lot parts we of fiscal or 'XX we exactly When half that at opportunities in growth. that data terms data in able today. there's there's back moving center So the we're look what 'XX. for of of the not center say

center lower higher right very, very weak That NRZ rates. we're any of the XX be into products earnest half think in data not in expecting business the growth certainly traditional back the will rates, we to now the really half. come of back being a at the back there's data sold in in the We data an gig, the Second, lot overhang that

is the steady Third, and as customers up really states. start their ramp hit and around to seeing what ordering patterns movement they you're here major

the bit of center, lot as we've many before moat, so QX, times in that's and digesting the the of do ramps pump that another in customers And of data a little I step are now where and our then the -- a in inventory lot drive prime think, they And brakes. pump seen we're a lead up. there's

these The long lead know that. other thing is have the parts I'll do highlight times, customers so and

of into So drivers back beginning say, of to which think this as year. line. data strategy, compelling will we'll of are the very supportive QX, move good the have we your quarter a the focusing We the we and I trends of have product have start And into industry. rates. is point, visibility the half TIAs But core some higher our we best and the in in on to very

let's we're that become folks major drive from We in their networks. say, to cloud have where the pull seeing they're but from only have not believers place also themselves, beginning pulled, a seeing been the customers, linear can

short make or of the everybody with optical connectivity electrical reach architectures an I'll there cables. of data And systems, last new knows, center, incredible about point the as amount these or is the

SAM area from of growing tremendous counts the been are rapidly. various folks about lots publications there's port ] there's And that growth predicting. But this [ So in talking just and whatnot. is folks

are if And good but spot. that comes to fruition, a like in so we we see feel we'll

Operator

line Harlan Sur coming of next JPMorgan. with the from question Our

Harlan Sur

newly on Congrats of the RF in had getting the more X% a sort than March, the to wired December sequential of in infrastructure the RF trends marking acquired business guys and It down business wireless telecom, expected acquisition obviously, declines. decline But weak. actually actually X we closed. you continue quarter, December that in slight be consecutive quarters was growth. you're know Telco from quarter, like to thinking X% looks Steve,

So the bounces do you guys believe that sort the the business quarter? along March has beyond Telco bottom bottomed and of maybe

Stephen Daly

So possibly.

XXX very So well, we see systems there's lot is our but telecom X ramp-ups now. spending haul a this pull early, and where us in positive gigabaud for market the has X Number metro for are that right areas market. long of of products --

SATCOM, satellite is Second communications.

in our We to are area. seeing this growth and business many opportunities expand

supporting absolutely So that our revenues. is near-term

with We from a front this a come lot for are ago. to infrastructure, an modest, $XX past some amount demand, lot and X A million. PON, optical was China and but quarter it's of 'XX down cell gone the to $XX over where say, revenue million let's in away. see improvement of your to significantly small growth growth cable that's in had But had now quarter, 'XX of we essentially point, We we've networks. passive starting it's or we over haul right, deployments you're were

a into low. very We shipping but at quite products it's X, today level, it's not muted are PON

Wolfspeed is very excited about of is XG So to and telecom, actually while and the where customers were negative the a either MACOM were power they engaged. a highlight I'll lot RF are the into we we still range last about from market quite able want they bring or reinvigorated positions where that quite a grow engaged being point to people not of important for business in are whole

together, more in market And XG believe gain together. that space we share so we the can market

strategy. our part And so that's core of

Harlan Sur

Because these modules be on And driver, would as this that. like X.XX much speeds solutions maybe later types power. because the year of linear I the so then moves right? X.XX demand DSP-based for industry the more update seems appreciate it just a there quick to consumes

lane, give gig per maybe gig solutions an production of the current shipping lane. traction the Drive on team So us today? actually in the per high-volume update XXX Linear And XXX is on upcoming

Stephen Daly

Right.

the drive. for linear There is So of going interoperability a at lot a industry few lane in per XXXG work things. for on

the really state is that the industry. of So

to starting see you're so publications. And various

I functionality system-level is fact, In you get data, compelling. of systems, where think it data think, in [indiscernible] of cloud showing showing some was, there actually the major drive and I companies the was presenting October, together linear an industry and had in data

the being or others. Silicon One Tomahawk happen, to course, whether is needs what more now X, other of support but to Cisco ] So this it's switches not platforms, just available, [

ASIC So linear needs we switches there more handle the the because drive that can the support chip needs to linear that to drive be make.

of phenomenal of team and business. edge high-performance our the we're right that connectivity there. a that on So job like the is is that state discussion We feel doing

-- When that -- we be mentioned as per you my talk we'll regard. there about gig XXX lane I in products demonstrating will some script, in

And so active. very we are, of also course,

make and lot certain There support the first-generation super per silicon think will in that has kick activity gig now EMLs together volumes I'm And come that, there's photonics the VCSEL that it XXX but ecosystem very not of sure before in, early area. I lasers and the early. that to be there's to lane in days it's using that need fiber we less switch constraints. are single-mode -- still it's right A VCSEL think things a to at gig. don't and to gig, laser. XXX over very XXX high-volume for we

positioned to something So our technologies. think We be those that again, focused it's on. we're ramp want when up customers we'll well

Operator

Our of The coming from next question Company. David line Benchmark the with Williams

David Williams

And either you've you've of guess business? on that has that first positive around on or And let my of negative there the closing acquisition, Wolfspeed been there. any question that the I touch me been done anything, into in my kind come has just maybe just across? integrating add congratulations what surprises, of terms

Stephen Daly

-- was staff, no, a fair a we there say know to and get that had due diligence spent would time well, from of I to organization, engagement Sure. no surprises. Wolfspeed the spent team. just the people, the great really with the amount the infrastructure We in

sort So no surprises. real post close, of was there

us Wolfspeed the to well our and for will a to we As well essentially. together. thank company process as closed, I team acquire to after then highlighted so integrate integration as allow set team execute had really in planning that And we up day the have the script, after I working most companies closing, a

to or products RF industry lot microwave I seems and a now MACOM receptive were focused is will drawing implement say a that that on the as next-generation we and And that of They this very customers board a change. on very processes perfect be priority. of that the fit. now for things it's together recognize can the the given

benefit team, customers the to I There's have that. lifting think as staff surprises. that certainly with of very we about. will application do, strong workers have management, no I the sales from are Jack a and heavy talked They lot amazing. need say, production their So footprint had. generally we But They that would stronger I are than a applications or speaking, the and The Europe across team.

Hill Morgan but So a that. in we're strong great about also excited essentially really in not manufacturing state-of-the-art in assembly capabilities, and Very has factory. California some Carolina, only team where North China their facility

David Williams

should what you kind color of as through how and and Great kind you expectations side. get the on the side? are maybe maybe, about expense Can talk ramped model flexibility your that just in you fully we make Jack, -- you think there. go . expense expected? the And the about the about find this the of you And then talked synergies

John Kober

assuming I'm referring Thanks, expense side. you're operating to and David, the

we an the quarter, December a only view. partial So from was quarter out operating that closed of as point expense

a full view. from we're So with in we also of business, we think worth the to that right? I have the incurring as manage expense point look of of sure the to obviously things many the of are a we to X costs want make look forward, we'll how business. terms MACOM currently quarter's leveraging acquired of But We operating

played of was we'll the already as that out. call certain this So into it, acquisition we factored the, model

was or that indoor work upfront a done of to lot prior So closing.

refine good expense we're overall operating an with we've overall terms and as a MACOM perspective, to continue forward. to expenses make today. an we through from worked go expense what in where from to want So we've sure our going operating pretty we think to things perspective, we're at we Similar got leverage handle of better

we and look can from at that that historically the progress was good put some I you I overall the guide out But some of we'll So perspective. at upon be probably we're other think look as an making operating from think that good we're see you where feeling pretty expense terms go now and to information, we've directional where that pretty in there forward. of if business build obviously

Operator

line of Srinivas And from Pajjuri our next the Raymond question coming with James.

Srinivas Pajjuri

itself My I'm term. that of do something growing speed question cyclical question. I'm just And talked speed of is is see in the you what trying center to first to speed. bottoming Obviously, per this terms the near business nicely. weakness, the understand lower the higher in is speed trying on where lumpiness the extent you lower about business But some extent at data mix your lower speed higher year? structural? to versus time, the what Steve, to versus understand the market and same

Stephen Daly

for it's I we think think SRX DRX, years of traditional I and couple call demand speeds, -- when there that XXXG that. do what will AOCs more of the we lane XXX-gig like per a our about So would XXXG things be talked lower some the

right we what to jumping legacy a be business definitely of XXX. gig, So switches to there, higher to is out, run some XXX out there want we rates, demand at starting come amount data to think still people are But as and continue XXX and the good there's will next-generation the see there. are

the the today reach. And or applications. revenue PAMX And these gig see we at vast of our so majority typically XXX is what short XXX is are

about talking less meters XXX than XXX you're less could than be meters. So

long And other trends of the thing I'll that haul also is of to similar sort the just then see a thing metro highlight related we there. some with because

starting as X, they're haul next also at XX into start up or we is long -- that And but ramp gigabaud Now gigabaud. the in XX the which we roughly XXX definitely metro see to actually is gigabaud, some do gig of people down starting bring that. are will year products telecom, the lump majority XXX

the see to data higher this speeds. rate So you migration

it's of our is I say, rates data behind gradual. the so the of high, a low since of actually so down the higher XX is gig data life. I I as think rate is lower revenue and because and us, having relates platform rates slow step think end run going worst let's think a it to growth the of,

Srinivas Pajjuri

Steve. your is the fairly understand next I of business, mean, specific. think invested I&D about we And industrial on difference I company kind question is program-based and The to more think Got community then business [indiscernible] my the how side, well. it. about

that in. it? Are can what I to as take to business a programs a is thinking out modeling So how kind your of look the you're about months, defense what talk you the are business growth? -- next your XX you about XX kicking new you way just organic that the growth rate guys this about from any mean there for standpoint, think

Stephen Daly

can would CAGR high be say Yes. rates I we basis, single-digit on achieve that if a that would great. growth

last years, it's been XX%. or about I think X X the

assemblies of all part quite is Most for more defense related defense and And build well. of been and a being level. our our package up market. to into of value aggressive our or historically we've chips, slightly strategy the capturing of making So been strategy has been chip RF multifunction lot customers has the the working at moves that capabilities microwave go chain great of our business with and cross-selling programs, some using

portion course, Wolfspeed, for of primarily radar And then, the and business significant of for defense transmitters Wolfspeed with is systems. and a

higher integration, So and more we do together. we and better customers just service of levels capture MACOM, believe we segment Wolfspeed market in share this can with can to

with different SAM So we're increases our MACOM of further. all business the the sorts of just with online, RF core types power coming platforms in

Wolfspeed's of up is expand, or view, GaN through processes. up XX high-power to ideal everybody, very just through high-voltage, gigahertz a technology let's they're say, about From remind point XX

a that buy that of knock building of you're transmitter as radar is the very an X of or out of X that a or wants today. new a relevant if products you So to want Wolfspeed drones application MACOM's example wants to would knock sky, to

require upgrade then, They this and necessity jamming of is transmitters wheelhouse high-power And systems. electronic all right in the our warfare and to course, [ ].

So we've say hope run to growth, stay high been We're rate. things well, if great on very we single-digit beating we'll then that active, CAGR conservatively but that and technology. go

Operator

And our line from Tore with of next the Stifel. Svanberg question coming

Tore Svanberg

first sincere over of me my let offer And [indiscernible]. the Chairman passing on condolences

talked really it's what Stephen, you question, related about. First just to

So business, of similar? to will going Do XX-XX about that be between of to think to also expect Wolf But if RF contribution think you segments? growth very the similar about the of sort sort be sounds contribute those we like I&D it's it both Telecom. that you of and the business, as

Stephen Daly

have of want to product business. of line that products business, and around. a think at have small. is customers. higher-value very to that They discrete and and capture devices turn it they believe I today, processes look line is mimic great a exists foundry be grow XG, telecom we which We the can way the combination commercial because product And Mimics. right the a I potential going So continue at more then great we to FET to as Wolfspeed their and is we when And share full to believe different. their mimic defense, too of we force have our throw down We take designers think weak and of business, they now they're have a portfolio strong together there market which and

portion expect, think that what ways of a, revenue to small. products b, resources improve in grow share; a a that develop after and best product terms their will too market and strategy portfolio will of is to So corporate be aggressively. for to X of see profitability, us. go be would That And grow we our is the we today line mimic the capture the of priority assigning customers is to: just

rates So still beyond a when and refine team big of the team course, And of them. And There's up, wait the our to regarding customers But their we this understand about business of and here just be with to grow. yes, the our sort that and getting roll the control we tremendous know learn to all management lot and thinking. of Wolfspeed to our of has we'll programs, programs. go run some we're see. of together able factors sort programs as potential works we'll have to

believe, the related. about at you SAM half of billion that, GaN, If look for $X we is defense

piece we so that. a big want And of

Tore Svanberg

say are the you my color asking lower sort That's as is business of that on know lot more very it's $XXX people And let's a much is maybe any that helpful. to higher And starting down But are a could data questions about rate. now, business? that million in the so seasonality how give data I versus data follow-up, of you center. a Or -- and of rate early? still in too step little way see us

Stephen Daly

Yes. say people's concern just business. data our about X about center I would thing

now, $XXX is above was that's business mean probably on this So $XXX to in our we're be is XXXX kind back to million. that trajectory million the going. million. right $XXX And of on I data going center that about the business range

every grow So we're we've year, been business. to happy the very that able

X don't and volatile to we're too definitely had X you're ramp-up signing what all where business. it. and that the much like also quarters go that part up you're And last that of down, or seeing most ramps we've is for. up little We now see a having read over just this bit our a into We ramps tremendous the we go time a say is Now, and the pause. of

adopted, we're plays at we volume data sheer LPO the gaining rates, favor, is across is industry exposure technology We know that -- short-reach the the it the have our connections increasing. to and higher of as

that than I are making related infrastructure. It's business so this I or rolling and and are I think out center we And -- the the very believe large call things are winning more deployments these important. not to clusters business think it's seasonal. these seasonal, program-related folks data the the most that much infrastructure, are would

Operator

question line the Paribas. next from with our And Ackerman coming Karl BNP of call

Karl Ackerman

Two, if may. I

seeing capacity I well, whether per XX end address to suppose, actually XXX-gig today Jack and to lane And lane of gig continuity support enough you to lane whether the First, support you begin per applications. -- gig are CXXX supply in or chain co-invest you for per Steve, could or supply? customers short-reach have

Stephen Daly

that the foundries, remind to just -- we are analog high-performance everybody, So products MACOM using we produce internal not foundries. third-party

or case, germanium. with or CMOS giants high-performance CMOS by we're silicon the that produce dealing global this in So

moving volumes these small a we in really as fabs, And our don't needle to our sort and the very typically overall material so fabs. what inside business. is are requirements not of We're view large player their of typically

capacity. So this mentioned, and about we I is volatile concerned would too that not as to What concerned planning time a business. is lead say -- about so we're have that be I

parts. So we don't stops, be to when want a the music of holding lot

have plan state carefully very parts to we up of customers, ramp across So lot programs, those steady diversifying a and ramping then down.

OSAT we say, But so generally that provide customers as some buffer that manage And time lead can risk. or back die, we of here. with of and then bare would And have flip long we cases, inventory I reduce problem do way them the capacity that speaking, we a the lot bumped a are in packaged. testing, some these chip regarding not on or products end

So no there point issues from capacity view. a of

sure our them mention and talking demand, making necessary. clear with third then road us And the can phone, the that's on we're And is see that I'll foundries. have third-party if we relationships thing the we we're to for great when they high

priority it's and So really planning.

Karl Ackerman

Yes. [indiscernible].

[indiscernible] telco do gives XG you growth telecom NR implement components product the For antenna carrier really But the LDMOS gives see both well And year? LTE for thank XG as how you that you telecom, Wolf for the where March. core fiscal and can within follow-up, as operators suite infrastructure. my of GaN acquisition of full market this you providing in

so the you that particular market, And so, also the thinking end And about year you [indiscernible] if prioritize are to how well? is, carrier restructure will as market this LDMOS? that

Stephen Daly

of part clear you're those customers we becomes when will Thank is and that through we to portfolio, it conversation visit say we is. customer. best process at LDMOS requirements, with to basically, correct and products look provide Yes, the continue the to We what technology you.

that. have we'll so offer is appropriate, definitely we And if LDMOS then certainly more those conversations. And

other. wedded not X over the to are We

And higher there. edge requests infrastructure, efficiency. the what the seeing XG you're GaN typically higher frequencies, seeing is typically, has you're And for

the trend So has past that in the this been few over years market.

on devices Now -- here, with that said, MOSFETs. in we the make silicon still produce we our and our one, MOSFETs base fab make high-power

defense And a sell we've into these systems, of products and lot been them selling decades. for so avionics we and

defense great for we they technology. So as and systems, that a some at where look LDMOS some communication technology prefer systems avionics

sell across sales to our force actually we'll all so focusing wireless. be And and moving things LDMOS

Operator

no showing will Daly closing further turn I'm the for remarks. Mr. And back any questions time. call now I to over this at

Stephen Daly

suppliers would thank making possible. like Thank these you. and to In results customers closing, for our employees, I

center into move with excited our stronger SATCOM service and we and for applications and bigger infrastructure be next-generation markets power the XXXX, data involved As to cutting-edge to market. we're service our with growing to RF excited high-speed RF microwave We're team.

work a Thank needs and customers' We much. meet team very execute strategy. to will to to our our you as continue

Operator

gentlemen, for Thank and you the for that Ladies does conclude today. your participation. conference

now disconnect. may You

MACOM Technology Solutions (MTSI) 1 Feb 242024 Q1 Earnings call transcript