MTSI - Earnings call transcript Q1 2025 | MACOM Technology Solutions Holdings, Inc.

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Operator

Welcome to MACOM's First Fiscal Quarter 2025 Conference Call. This call is being recorded today, Thursday, February 6, 2025. [Operator Instructions] and I will now turn the call to Mr. Stephen Ferranti, MACOM's Vice President of Corporate Development and Investor Relations. Mr. ahead. go please Ferranti,

Stephen Ferranti

discussion Good as financial welcome Act Private fiscal XXXX. results like for certain contained that XXXX. Olivia. which statements forward-looking to subject forward-looking in are quarter our Litigation the discuss Securities of I'd to our everyone remind MACOM's for and to the will morning, you, Reform contain to statements, uncertainties and risks call of today defined Thank in the harbor first safe

from discussed today. materially differ may results Actual those

For in adjusted discussion those and of information. you release risks SEC. result to was the filings a call of related uncertainties and the non-GAAP the this Form more reconciliation detailed differences, X-K, provided discussion with A will company's that could financial today. of the also Management's SEC with which press adjusted certain to GAAP in statements during filed refer include are non-GAAP we results MACOM's

President to I'll that, with And Daly, turn of the call MACOM. Steve and over CEO

Stephen Daly

million for second adjusted Thank Chief . Revenue finished, you, share. update. Kober, When fiscal is guidance begin $XXX XXXX. to Jack take fiscal EPS today's of for provide of After will review diluted that, and good general our will fiscal some was per the with 'XX year and we earnings and a call the was XXXX questions. Officer, will QX quarter $X.XX then be results company will Jack our happy for morning. revenue I first quarter Financial and I

quarter we balance investments and flow $XX and in million execute cash are held increased Free continue approximately for sheet. pleased short-term cash end, our At $XXX to with flow we approximately our and was million. QX on QX We earnings. strategy, cash our

Center Revenues were Telecom market $XX.X IND was $XX.X and Data by Overall, start X% data note QX as at levels. fiscal sequentially. sequentially, and Industrial was was was IND a record I'll Telecom to up revenues sequentially Data were million, $XX.X was end defense that million was follows: XX% Center both quarterly up million. great XXXX. our and way up was and our X% center

QX new of order in and business. areas strong certain our Our was ratio activity book-to-bill X.X:X, was

at While strength pockets across record see of customer is we both base. backlog our and levels, do weaknesses our

Our large XX% shipped turns and booked total business or and strong the some within have was orders markets, of end serves MACOM growth quarter, which drivers. X diverse secular approximately revenue. of

market represent collectively $X SAM. markets billion approximately addressable serviceable billion end targeted Our or to $X

a we to our have of Today, with market be compelling product design we and technologies where products performance continue of new advanced IC portfolio variety in share. intend will and deploy We strategies lines, leveraging market, to all a in gain share a the market capture small fraction by by while our by semiconductor expanding launching our focusing new areas our investments product differentiator. to

due our quarter, changes Defense Now end to to threats million advancements. battlefield in rapidly to in seen is The by IND markets. business. revenue $XXX defense is recent X response new in our driven evolving technology in turning market largely the growth approaching per

and content. design microwave and We an have increased novel the are uptick innovative which RF EW in seeing of many semiconductor and systems, of radar

strengths. levels, frequencies, higher long customers trend power towards a and list to primes, technology wider innovative solutions service we small industry. higher in the that and systems suppliers defense new well-funded role market, which levels enabling opportunities of plays and designed Tier subsystem are MACOM to these and all higher defense business bandwidths Tier X with of cases, integration, some being models. In an X by Most start-ups, the of address medium and plays defense MACOM's technology providing

radar manufacturing can aggressive growing with and legacy threats. a scale, has for and deliver platforms on cases, upgrades The that increased ground-based and domestic looking and airborne drones to for and focused are identify, system partners created entirely while high-volume need where along cost use UAVs to In of new eliminate meeting they're detect, platforms, customers urgent applications track targets. solutions low-cost some electronic complete warfare

need anytime, satellite connectivity links high-speed And digital greater DoD's EW data the platforms anywhere avionics, are addition, for increasingly analog newer requirements. adopting finally, optical In to investments new transport to adapt ubiquitous to in driving access and is DoD and broadband programs. radar

a few to strategy is Our defense customers key service upon built differentiators.

gallium power MMIC nitride gallium capabilities, arsenide our both product and and spanning First, industry-leading RF MACOM's portfolios.

which us an and unique GaN example wide allow products a range address dozen As of of complexity, utilize nearly to semiconductor applications requirements. a MACOM's processes, technical

design have for and narrowband that Communications in radar, signal EW, now wideband we specialize cases Secure intelligence. and both And teams use

product over Second, over optical for MACOM a for digital RF broad hardened and photonics expertise solutions, conversion. comprehensive without need signal directly fiber utilizes has RF over subsystems. to fiber fiber portfolio radio including the linear transmit

lower coax RF fiber to loss traditional better signal versus applications. cables. remote The in immunity These over bandwidth, used distances, typically array higher solutions cable. replace transmission cable copper and coax digital phased and interferences high-speed result decode to is are can radar, longer antenna or

leading diode for which tunable technologies, has are and RF generators receiver filter applications. ideal comb switching, MACOM protection, Third, high-power

Many the in quality. In MACOM performance the have the markets is our for is the within standard decades. areas, experts and industry-leading core diodes And A&D some technology our MACOM's with and system engineering in for gold of and as applications of engineering last engineering spent area platforms these microwave customers MACOM system using We've expertise. few final across the their veterans been regarded team building differentiator growing years capabilities. industry

This customers' challenges. the to earlier the solve scope of present team help project in full much customers' to MACOM's to enabled our technical cycles capabilities engage design us has

higher of combination With defense increasingly ability a of system technology for growing the many our with of portfolio, our and viewed our space we design, as are partner along choice to level customers. support

lines to shows in our technologies XXXX. and time. at our plan new portfolio reach we June plan in calendar product extend trade to and in months' few To add We market share, upcoming new March just a X to gain to announce

for Additionally, we products have defense pipeline this space market our year and of to customers. an amazing high-performance coming

telecom market, the carbide a stations high-power silicon where MACOM's MACOM comprehensive and and for multiple provides on XG us also areas require portfolio technology medium has this XG Within great base opportunity. amplifiers are solutions of applications. shines. GaN growth a there

unique use architectures products and device proprietary packaging circuit Our structures, solutions. high-performance

improve multi-band complacent, we XG, are are offer MIMO for MACOM's by segment We gaining competition. we especially believe unique where developing higher driven performance, products not we to that products' advantages competitiveness and epitaxial new radios station That massive over share macro and need base the market in the power are for our of our applications. said, solutions

provides Second, low portfolio our HPC, and direct or power, LEO Linearizer for Earth established satellite-based diode, product satellite-to-satellite well of MMIC, as broad we have RF a Lightwave and as and applications. products MACOM broadband technology to-sell module solutions semiconductor links satellite-to-ground for lines. leaks, from orbit utilizing

linear microwave an example, for solutions millimeter communication and and As and of wave that designing nonlinearity team, signal subsystems or our transmission modules RF, LMS, overcome in specializes products space-based systems.

SATCOM center the processes or connection. of SSPAs cases, linearizers, links the linearization quality from European can efficiency when agency improve our converters. team frequency and European our the space-qualified power some In semiconductor This MACOM to very space leverage designing boost high-frequency required

system for We and optics in free components and use a ground networks. that team space distribution specializes also state-of-the-art photonic in linear and have systems optical modules

haul, the to is our focus and portfolio telecom Other deployments, cable segments leveraged IC from infrastructure. systems and within we the Lightwave coherent in on market address our products of front our PON photonic long-haul high-speed metro and XXX-gigabaud We strength markets. these portfolio

There year. service data next-generation strong Our market trends favorable, providers, center by growth expenditure on pace is revenue growth driven are capital to have deploy to secular accelerating center architectures. another data cloud

the with in our existing us to integrity support expertise broad-based products. industry signal Our allows high-speed

More in expertise. road maps to importantly, our product well deliver at and We the market system this expertise our can on IC we right photonic have technology product and customers' based aligned with design differentiate as our needs as the time. unique materials right our

servicing T support with that we to from products customers X.X XXXG Today, are applications.

support product systems. per lane per XXXG XXXG XXX our XXXG T X.X and and systems Our XXXG lane and product support

connectivity. we look are designing products, we eventually ahead, will As per support on XXXG lane X.XT focused which

multiple wide key factor. a differentiating on Our while ability supporting products to of stay the base a across is generations customer edge leading

And technology or optical the support. as both cables linear and no we solutions and using architectures by application lean non-DSP as copper of retimed or active or in we selected pluggable customers with products support active engineering well a as Regardless We cables, assist customers, using DSPs support our best-in-class linear, architectures they're and PAMX modules LPO. reminder, designing our DSPs. pluggable whether and them our optics

optics. photonics that co-packaged and optics We customers also support silicon or near packaged utilize

growth. a to diversified X. X future we applications X and ZR+ and disaggregated positioned XXXG share PCI as build capture look to the Our will computing, markets that unique, is In well coherent And best-in-class we support our market PCI on. with are and products ZR see within larger also finally, for the we ahead, semiconductor and MACOM emerging new summary, such as a to enable XXXG of portfolio focus strategy

ultimately competitors and us resources. have Our helps agility more are beat address opportunities our and that larger often

recent I plan press CHIPS funding. Jack, our and we long-term state the release and X January press fab associated capital to issued would a conversation the detailed pass investment review releases. I Before wafer On like to summarizing Act XX,

the will long make which MACOM Our term. investment plan over a has more tenets, X company believe competitive major we

have state faster tax expand grants North And advantage will we the on plans carbide. at and of capacity to expand with by To federal programs. technology our silicon of execution its we modernize our advanced offered plan First, second, and the enable manufacturing fab to strategy, Massachusetts node Lowell we capabilities and our benefits and seek fab. GaN take Carolina base to

has with MACOM program nonbinding the only CHIPS As PMT, preliminary of a or of today, terms office. signed memorandum

coming press funded a or term, P&L. will In expect release X, was framework no European MES, agreement. by project terms MACOM's development the government definitive or XXXX weeks the impact MMIC within our announcing we the a to finalize we second, and French program. issued the on semiconductor awarded Over minimal France of near February that of Center, the be to And the the months, there

We and French sector opens results. a a to MESC look provide collaborating capital more of supplier larger investment collaborate to review European execute and base for as partners team programs. forward to will partner our Union the it potentially facility public symbolizes on program. private recognition now to and our of Jack French and and industrial our detailed development technology exciting the with This award MESC financial door this

John Kober

Thanks, good everyone. to morning Steve, and

our Our QX well us positions growth to balance financial revenue, This results income building sheet, priorities. and strengthen performance, to our cash has allowed execute cash in and strong generation. our steady us upon accumulating show operating while corporate

we XXXX, $XXX December the would recent I of to convertible are our in that getting Before of numbers, In approximately notes into XX% due highlight refinanced or like a announcement. March XXXX. million

in issued the which As part their refinancing, $XXX who notes the have convertible to X.X and of we X% XXXX. with notes. due refinancing, of of shares certain Also stock a million, new in the approximately million are coupon December connection issued rate we common refinanced approximately of noteholders

debt Based our accounting of diluted a leverage, the the on and our on GAAP performance. were strengthen of we has future shares as we these refinancing. perspective, and in majority refinancing financial the our net forma included to the rules, of a on noncash loss reporting of already onetime sheet shares primarily From of date impact the helps $XXX.X recorded a neutral the The extinguishment believe balance million. pro had

quarterly XX% our our high end markets. $XXX.X based lower preceding And to now sequentially a our the of with from million, all customers approximately growth was X.X% basis domestic Fiscal On revenue fiscal quarter. across gross points fiscal new XX profit consistent XXXX. QX QX record million on a of results. $XXX.X revenue, results, X revenue or U.S. fiscal was for up of represented quarterly levels basis, Adjusted of QX geographic QX on XX.X% than

some we'd targets, this. recognize information that to our additional provide on We and gross below our is first like margin trend quarter the for

had telecom fab end resulting within As costs contribution be XXXX fiscal revenue to of our periods. we softness based low compared our the gross in estimated have Power XX%. our increased we ongoing and lower business, markets, remainder to XX% on Further, for through our the wafer expect future a mix the of underabsorbed of volumes RF to going of prior certain product industrial including result range in year shipments, of margins from

seen yield would efficiencies good note adjusted margin and and where our that on to over can we progress in X income, and to refine past quarters. I the our the operational incremental team numerous our EPS initiatives improvements like are execute on be enhancements. in These and continues cost making increases optimize structure sequential operating operating

was consisting higher for compensation-related expense R&D administrative in of million and of first operating our operating research and by $X and expense merit general $XX.X annual $XX.X selling, quarter expense sequential adjusted increase $XX.X million. expense development our expenses of Total costs. The was with driven and increases associated adjusted employee million, higher million primarily of

$X.X Adjusted was income QX $XX.X in operating QX million X% expense million compared from $XX.X fiscal $X.X QX Depreciation fiscal fiscal million QX XXXX. was million, for XXXX. in up sequentially in to

of we net million $X.X interest QX. QX, approximately fiscal net million to For had income $X.X compared interest income adjusted in of

similar quarterly income rate fiscal the we As net at a XXXX, as through expect increase. we increase continue QX interest to

rates which yields. than interest and will expect balances potentially We future increase to associated generation, operational cash lower more offset investment through

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

approximately tax cash the quarter. were $X.X net first million for payments Our

We expect for rate remain our year to XXXX. income fiscal adjusted tax X% at

As tax of including our asset of increased balances, tax our XXXX. $XX.X to hoping anticipate credits fiscal into tax of compared asset QX through million January these QX R&D our balances QX. deferred to cash the keep utilizing We $XXX to million XXXX, fiscal at compared X, $XXX XXXX over fiscal net million to fiscal end million deferred to in low tax XXXX, as increased payments the $XX.X remainder adjusted and periods. income relatively Fiscal

adjusted compared share count fully fiscal earnings in $X.XX utilizing earnings share XXXX. shares QX share million Adjusted per $X.XX, XX.X of per to diluted was a of

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

was during million in to activity balance due million, receivable accounts QX fiscal shipment the linearity QX from $XX.X Our strong down $XXX.X XXXX improved collection quarter. and

outstanding sequentially sales million. days days up end, at quarter. result, $XXX.X XX $XXX.X XX million days Inventories a prior compared in As were were to quarter from the

fiscal sequentially our cash than flat at QX operations QX is plans X.Xx. sequentially and over up was strategic million balance from flow million, million were more our support inventory XXXX. in our growing growth increase order turns for and Inventory customer The fiscal to backlog $XX.X approximately XXXX. Fiscal $X.X $XX

quarter. $X.X slightly the totaled million above QX, fiscal for expenditures Capital preceding

the As the of mentioned agreement the office nonbinding, we earlier, program near term. pleased the are with memorandum forward details Steve with CHIPS had and announcement finalizing preliminary the in of to terms look definitive of a

program be to excluding XXXX, We full million expect our spending. $XX year for capital the expenditures approximately fiscal any CHIPS

equivalents Next, $XXX.X QX. other and up sheet balance the fourth on quarter to Cash, investments short-term cash moving fiscal items. for million, were from $XX.X million

our to and ongoing continue generation our of and in cash spending short-term to pressure. target are convertible than we over a January our Comparing position book and investments leverage balance of cash we and million operations remains XXXX. as notes, X, margins discretionary the net sheet cash $XXX more support our to MACOM's through value exercise of sound, cyclical

to business, sequentially thank to flexibility remainder look operational cash a and XXXX, and our and team I more performance prior growth structure the low EPS, to fiscal revenue we or increased to the our their cost. from at build an improved in the manage the run is and are that to and rate billion would to generate on of company like fiscal accomplishments and execute spending with goals during capital that operations operating to flow financial pleased achieve continue capital of MACOM $X optimized areas year annualized year year support margins carefully quarterly of a expenditures levels entire the discretionary quarterly allocate XXXX. will provide and for company's We QX, ensure forward exceed can

to Steve. you, now back over And

Stephen Daly

to in is expects $XXX share $X.XX gross XX the $XXX range adjusted be of Thank XX%, $X.XX in shares. diluted and between Jack. to XX% fully ending April Adjusted million be be MACOM million. fiscal to to per QX and X, to margin range expected million revenue based expected is XXXX, in you, of earnings the on

markets. end all in growth revenue sequential expect We our

We approximately to followed mid-single-digit expect and and industrial defense, both telecom that with XX% data lead center with growth low sequential growth. by will

our goal by to continue operator we in make our now to ask any billion questions. revenues. the to evidenced $X of I to take As would progress annual achieve like QX steady outlook,

Operator

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

Thomas O'Malley

I of X-part business data on it's there. side to really growth kind right want start the question the as engine center now, of the

your have see of of year? you always middle Do happening talked So just point expectations could inflection ACC progress ACC call, you with the point calendar you this in in more guys a on but ACC last potentially the middle year sounded about 'XX, bit on still the modest inflection kind the 'XX? kind us there of update of you for

what then on more more the been you a moving that's kind LPO, which talk you talk the LPO ACC around really you for there. a optics been it to about the in about and lot about lot I kick call. talk the to co-packaged the bit you're the is side, center, of little There's an out second solutions spoke being opportunity everything of Could apologies offering laid that exceed And potentially wanted that potentially opportunity a off but could optics. if There's back an with rock. data

Stephen Daly

year I exceed might And is be Thank center good year. conclude to for we having fiscal end a XX% looks providing that even a growth. correct guidance it And level into that you're the second quarter, market on very the last you, had It in Tom, based year data very growth think good the 'XX. with able to question. our like

the that side driven our being by is growth lot of A portfolio. of optical

what in strength our our fiscal the actually I of has transition clear. gig see slowdown driven XXX of in XXX is very gig A to as bit that our a make 'XX customers lead some lot a growth to of of during And probably by happening, portfolio. over want we been So course that X.XT.

that. I to want just So highlight

of line, data and when various see a a we that customers our the of the overlay We Number to company one, facts. notable change highest for data market to the that changes data support have as dynamics the few We've the Now for you in rates, we challenge variety that the customer within ACC rates, built seen product of trajectory think ACCs. offer around the the will centers guidance. I major in don't absolutely this for just lots into center. demand the have are there which not we architecture some given data

But that product. moved from, as one I would solution to solution a that say, just highlight seeing overall they've particular X-rack X-rack are demand that for we a customer reduce will the ultimately let's

Now to copper little the XXX have is cables of can and environment. I that highlight gig electrified provide we with a for bit that that game that X.XT entire a we said, have fact proven at the changer

very a we this to so tremendous And across interest seeing customer base broad are evaluate from technology.

so game is And our the changer. really that, mind, in

on So then a which is a positive some DSP. the to early term, solution LPO, very are adopters everybody, making And question but changes, your trend. remind it's really on we was architecture, think second clearly, long without the

We sort ACC. LPO are an of there's -- equivalence and here between also

XXX see a lot of also X.XT. a the data rates, so primarily also at lot gig We activity, higher of and interest,

revenue. solutions a calendar 'XX contribution very, late that this is line would and data I a to say, strong from area. 'XX And for 'XX, our late have of our center in view, We overall calendar point this very for product

Operator

the question coming of with next Benchmark Company. the line from Williams David our And

David Williams

strong satellite-comm's that I execution Congratulations the here. DoD some been the and satellite on kind enthusiastic for an about you thinking area earlier. maybe of time. first, you've mean, mentioned I been just programs about results the that guess, really

space? that in the over strength wonder little what about com on of in how seeing couple years, revenue the think if a overall you do give could you're kind and seeing that color more you space? And that Just of that satellite next just given we're opportunity

Stephen Daly

LEOs. that years, for satellite manufacturers, class from satellite building are we are seeing established Well, let's manufacturers X say, the say, low-cost and to next X strength of continue let's more, a not but tremendous I think demand, that will also, only new

a it's industry. environment active So the across space very

a also providers global provided overlay. DoD there's services a broadband clearly, commercial by So being but there's

And including Ku-band. what high-frequency we see is of of V-band opportunity, there's even E-band, or bands multiple and opportunity bands

just those these a So There's or of bands. from microwave very frequency are RF solutions levels. very, of an be And limited semiconductor for very point leading generally can MACOM view. high provider solutions

mixed-signal communications. have we're we satellite-to-satellite generally the be sell devices, or of moving platforms. that optics that products as on well, on but side really Not high-speed satellite-to-ground effectively platform, data can systems, also selling the The optical we speaking, into components are it analog involved lots only whether different for the space are selling free in

content to when doing. also overlay or of happening lot LMS the that subsystems top Now prepared where And ground-based platforms shine. those And my that's about doing other that, work there's you on we is connectivity remarks, that's on ends. terminals, in the we either is or airborne of module talked group a linear our

And their this for has and really been XX butter bread years.

access to MACOM opportunities to TWTs. with scale and great photonics SSPAs breadth these platforms. and so customers, onto pushing and linearized We're produce really seeing more just some we're And

lines the We in have very even back exciting more introduce to this new will we're that year of some half going growth. support product

a environment wave We're unique technology. it's the great environment MACOM, we it's with great think millimeter vertically have I because for semiconductors. a So obviously, integrated,

processes lasers tremendous lot to one optical the So can the we advantage to have we where we're proprietary is on DoD fact they of a want. to can provide them and And side, provide they course, customers. go photodetectors a the solution of making customers our our that that company that

on depending It So good these be high a -- business. of and it periods be slow -- growth is flow. there contracts how there will are growth will

it's won't remember, executing our development 'XX back may we revenue highlight just X the a I'll and fiscal are and contract, of happen probably of that fiscal we phase months associated did about until ago. really a million half that X to $XX revenues contributor. the 'XX in announce that contract you on contract, with the And As

It's So It's not also very commercial, dynamic. we it's the defense. only market. like

David Williams

then center of can talked heard the this now any over color about great there. of secondly, on terms the spending you've about you just really expectations maybe bit next the of the We've seen Lots couple And of in talk years. that side, a you maybe data changes earlier, just but that you're all DeepSeek. anything kind kind potentially heard of early in changes this just from early. state the industry and what thoughts But given the spending that of customers or if of could hearing curious happen we on plans from terms their just

Stephen Daly

So expansion a on the bullish we capital spending have generally posture center. the data and within the

for so more PAMX And be providing that data rate existing continues area on the And not the it very the believe but products to add side, focus be high side supporting we're well. we future, in on a MACOM. only optical with also I'll solutions, as we'll customers electrical our

and silicon think a per photonic and revenue And have can XXX strong product solutions. this our support of the we and 'XX, We very we that XX-milliwatt PD very product, laser product, XXX-milliwatt will to portfolio. lane during 'XX gig strong overall into additional have a CW add course

is with And companies X interfaces. those we to connectivity few PCIe and PAMX one to understands that around and of solutions opportunities compute, I'll electronics around other The the thing, for PCIe are regards we're see the with X. really starting the highlight,

to for way of full PCIe the bringing on plan systems. we the portion those into these interconnect markets so MACOM And

support PCI stage, link. per a new second now PAMX be not right electrical And out ironing also but we'll offering but So only it's working a lot still partnerships. they're X is which customers, protocols. in major chipsets, solutions, the still we're standards, forming the some those We're forming and essentially of gigabit optical XXX with

see continuing So we opportunities. are to

dragged high-speed data automotive but connectivity about that. of other the also Obviously, to being just markets are I'll And would add talked sort that area. as defense, well. just There's I into I add

are for the as to to the cabin cabin. inside starting automobile opportunities the the things and well as connectivity more connectivity see high-speed connecting harnesses associated with and more outside We within

Operator

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

Tore Svanberg

calendar could a you the talk for on Steve, data take of just and about results. back center this Yes. Congratulations sort business the step year.

the like be transition So growth optical. it sounds to X.X mainly the to driven by going is

this growth in see Is then may it? late should think about that You comes some LPO year. copper. how obviously, we And

Stephen Daly

Yes.

I our to quarters that strong X.XT. customers migrating There's think instances, optical past in going growth There's XXX-gig some very the been to with away be from over going that's right. and few products. some

say, so MACOM, up. to already, that production, let's is that's rate And ramp and low we're for going

And increasing. that ACC just so let's half remember expect from is particular SAM course, think in continue. go would solutions the size and contribution continued . And within in solutions there's module that will into application, DSPs a XXXX, we X and actually with the pluggable overall, back standard, we as of LPO been, say, because SAM reduction the we

Tore Svanberg

That's gross or And either for great color. then you Jack, on the margin.

lower utilization So it sounds lower in like driving fab. there's a mix that's element here the

or there? Is get and try that again? for center? are back team the margin it Just products what what's telecom to specifics up data primarily the And some curious, doing of gross

Stephen Daly

really everybody Thanks, also has was just ago. we business is it weak, to we hitting Tore. words had I stride right a now over just business were about has turn base had our and as when in would really and very in low Jack. then gross margins relatively few Maybe quarters MACOM And script I'll say core a strong. And Jack. piece -- few XXs say telecom seen, that, my as And the of our talked I that our MACOM

be will necessary over to will -- get that returns we so strength what's XX. when be -- time be really back that in to for us And the there'll

RF low It dynamics So related really It's with of has acquisition business fab to to I overall not want the to base business. utilization, make our Jack maybe related sure which upon. topic. the that within a people expand it's understand really necessarily the Wolfspeed can or that other do MACOM,

John Kober

making had discussed that the a mix sure low just we've fab. running and more it product got it's as And prepared we're is we in most Thanks, Yes. high Steven. that bit a when remarks, efficient through fab

through going think growth been line are we've there -- the that, fab. don't at gross to lower It's as as at have corporate products cost the than had past. some some additional continuing build just in for we're MACOM. through the many average mix of the that slightly of there And we are are pleased margins I that driving just are So to improvements some absorbing areas well improvements seen upon just we utilize with issues. this stage We've top as that that coming seen line that as just bottom

element our But about remarks. mix So there's organization. of lines that to the little been growth prepared overall, a talked that seeing we're pleased these in a bit bringing the we're product with . have that we

Operator

next question with Paribas. line have coming the And I of X I if questions, BNP from Karl may. our Ackerman

you silicon transceivers, that the to you or optical last First, your capabilities quarters? customers I you laser your address you've discuss couple portfolio particularly CW have of could scale please. want whether about asking a have to photonics been follow-up, in-house discussing

Stephen Daly

Sure.

just and -- phosphide it's We be silicon internal generally have fabs. and we GaN to than indium that, of clear, other we processes within So on our other no processes. have have any gas running do silicon photonic carbide-type

from is foundry of are others. merchant a wafers. not we and market materials services producer There silicon a and available photonic So

investment. or years, was let's X significant MACOM, X a say, of spending and resources effort amount and back going

photonics day, silicon that trying of end to program. at silicon platform, silicon say. the photonic partnered out. canceled had attach let's were large At to our not with Looking did up a photonics, the work laser we we a We the and fab,

retain capability today, photonic service down our small team reduced to we basically defense-related a primarily applications. to We silicon design that

the the we've space. silicon -- effectively commercial silicon So exited photonics

is module foundries since companies and silicon utilizing other many and our seen solutions. larger then, many been we've photonic what Now of customers, own have developing their way, the manufacturers by

And to complement so that effort. we want

supplier merchant a finite CW number lasers. that companies a There's that. are can of do We of

is So find what doing need that we ourselves that module today partnering designing devices laser. CW own silicon a are photonic their with manufacturers

up And for so this an of opportunity us. bit actually opens a

some drivers I'll laser also The and other solutions cases. is, transimpedance thing, will in add need those amplifiers

that they a can't unique nice able with view, point unique competing elsewhere. or customers, necessarily it's where provide them we're a not so of very get performance from our technology our And to we're and setup

Karl Ackerman

Thanks, Yes. Very clear. Steve.

on. funding there's I within of well. my satellite. For you area And I business your pivot and toward follow-up, expect BEAD seeing initiatives. to any funding separately, guess government this a are pickup shift in clearly going PON -- we that, as wanted to Should are ahead lot to

Stephen Daly

ask. question anything funding days an question interesting the about these to Well, is government

So as we'll and is there, out, need engaged companies that have ultimately the to the satellites wait and are satellites. traditional we're see shake or new I well and as with manufacturing you designing can actively how the tell things that launching but

different programs. pretty in we're on And of lot a deep

prepared needed So some a it's I which variety we that stated of on remarks. reasons, believe the of for

space is necessary. so that And it sort posture of is in position DoD's expectation government improve the to the the our of funding

funding so And will that continue.

I Have expectation. our se, that's correlation. market can't PON that say we per a So we could the seen impact that to direct draw

PON ago. ticking Our it's slowly but has at it quarters, few level a to years business only over small a few been was up compared what past the

speaking. generally that say they're disassociated would I So

Operator

from Jefferies. coming question with next our the line Curtis of And Blayne

Blayne Curtis

X. to on had kind I start I want gross the of the comment. margin just

of at obviously the range. You're that middle

business, kind we business that a some the to I the gave pieces. had Is the you within kind overall see of I margin and -- range you offsetting RF that? kind want the improvement look think Or at of internal just you from that margin moving improvement margin is improvement RF? understand growing with of when you there. should

like the RF. telecom I'm just understand trying pieces. to from growth It has the moving of bulk from sound does been

maybe you. against going of within address kind the the is can mix business. improvement margin of that you kind that So But

Stephen Daly

Sure.

a to Jack answer, at a me take and help then out Let here. an can take try crack

of we've The that So reasons. RF has of sort which Wolfspeed out multiple piece year can we it acquired for into -- in pieces. from quite break our of -- variety significantly been the terms you a over business, the growing past

business. actually ability terms more We trend is improve that improving, be exceeding have and the our lower in cost, on efficient the our line margin that expectations running to -- it's of yields,

improvements sort forma with business. the of tremendous that see P&L the pro we So of

we're great So that. about a And happy has the very job. done team

with support Wolfspeed, team. the team, sales operations Our the

more working that that I'll within our to that to way, launch is part as by expected. And So strategy the portfolio. MMIC is of products add that,

sort portfolio over, Wolfspeed at look you it enough we came as When the standard of just the products. there weren't felt actually

of launch generally base benefit gross And the also our that accelerating base have to margins products and P&L.. business. MACOM, of been look at we've MACOM the business, the standard growing. portfolio, So a within that which When that will you been has speaking,

I we industrial has pockets demand been other primarily have wireless some infrastructure weak, would cable However, related of say, platforms a platforms as effect in X that over low some and gaps as as of in demand, within some and you've well underutilization direct seen quarters. result past And creep level. margins the gross up, fab having that's the direct corporate the on our the that, at a

great industrial that? Jack, issue want our that, for and data revolves add filling business, defense, profitability profile. the around Outside profile, fab. do That The is of And great low business. a the profitability priority to really to you center

John Kober

I good Steve. think that with job one, you a did

Blayne Curtis

Should at the And assume commentary your Steve, the between X.XT we a if maybe overall going on your Or saying I'm slowdown? content I there just trying XXX? just X volumes indicating down? the want you're to comment difference versus on in optical. understand you comment to is to are understand just can --

Stephen Daly

few a around with dips of say quarters, the expected concentrated So the at we down business, demand or expand we've ramp revenues the into XXX-gig had will so, enter over it over that to that we're our half would be -- quarter as back where is past I go and the that next X.XT. of year as concentrated filled

growing starting grew So net-net, data for QX. we're this last our to be and build They're quarter. center to we growing. backlog QX expect and quarter revenues They the

one transition a here. noting. more the customers is expanding point bit base of gig, of at breadth we're customer there which our a that's of importantly, So the we're lead our and But little at XXX key

Operator

question the Quinn with of Bolton Company. from Needham line & coming next Our

Quinn Bolton

to record there. defense guess I business I through also levels. just revenue and at fab went Lowell. back thought The the guess And want to the I under-loadings I defense Lowell is come a lot the of

that industrial that some guess, on that. of infrastructure is So cable thought certainly much pretty offset loadings from have understand would I we've I But have industry. side the in defense the everyone given and weak would I heard

and could defense just the that fab? us helping much So goes you how give why that sense of Lowell fill through wouldn't a be business

Stephen Daly

program I that volumes that Yes. reload is, on fab supports we you're that as come is would correct business. here that the RADAR do that only would a that thing I we one would a long-term program another say down large have I significant say, wait a defense amount of the The have particular of highlight contract. for

is that having a so which effect we temporary And a headwind think is effect.

A the add a within lot correct. technologies There's that defense just the different you're And support expect in our industrial at some products like medical, and of recently we on devices, those demand and speaking, market. that. of then for products the the broader of high-power high-power come has time. point to generally fab been to back But some I'll lot switches, that down,

John Kober

seen a acquisitions. through Tore ], perspective Jack. that defense would we've the [ of that come And also some I growth some has newer add from is this of the

necessarily So top once through that's driving again the Lowell line, fab. all flowing not the

not the that we're the on defense So helping Lowell it's that underutilization. side, revenues support increase with the seeing to fab in that

Quinn Bolton

just cables active signal opportunity? integrity to a also overall, talked see PCIe . How on you upbeat customer transition. kind growth Got mean, issues. opportunity do and cable in spend back equalizer in more now by cable of customers may from the sort you've about lower-speed of the playing. their it. the But the. about much because having is the follow-up just like go I'll linear just minute that industry there, just if highlighted opportunity I issues applications use seem wondering copper that of you kind needing guess that you've those cables would And signal ACC reports helpful. a linear equalizer linear how that equalizers. certainly more larger coming been smaller large is given then integrity in think I planes There's of to very I back of or TAM be maybe And to help excited that call linear driven that could equalizers. it I'm where be you

Stephen Daly

on Yes. I the growth on the cables that opposed plan. would just say as to will the primary be back

we and think is signal I in And So that correct put integrity. places to where think to believe help volume gain or equalizers equalization be be. various on there'll will the you're that boost

which we on So be the that to will will cables or focus themselves. believe that be ancillary the main volumes, main the

Operator

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

Srinivas Pajjuri

as XXX sort as you well you A there then to, data guess about LPO. solution from a speak we -- top an DSP-based go And on for on could go questions guess, to is I ASP couple there lot you is one X.X. transition go Steve, on as center do as to hear benefit I see? you? X.XT of what of a X.XT, But benefit LPO, benefit of from first. the to the to we we ASP

Stephen Daly

Yes.

the competitive difficult products, nature to of it's the given comment ASPs So the very on of for us the business.

that. So there can't on I comment really specifically

to really able is them. it's . cost customer solution the DSP, is which eliminate of savings the highlight the that is major to the benefit important I think LPO a for

certainly there's power significant savings. Additionally,

the solution ] of on-time is the the latency better. So sort less power. And benefit [ last with is

argue those a for -- that should could reasons one alone, somebody LPO So an solution. premium pay

If make you can in put and work it environment. your it into service

from we make so sure also value. to enabling we're point good always our of And our technology, and customers view, provide providing we an want

die wire then flip how a bare bump you about that the all X.XT, sort those talk arguments you use chip matters. the all stacking, interface And things you of think difficult, assemble similar, when get a unit of whether more bonds, supply, die, die, I is harder, same

And lot with those details. dealing at so we're a good very of

And rates of The photodiodes. data I as the I that other only which one the move are amplifiers may things photodiodes. expertise think, we company up industry is would transimpedance be higher and the we thing I add, in relevant with is, to, -- MACOM's makes think

eliminate to that on for so the by And our we're able other. connection mounting one customer

And us. buy that can and customers how our chips from teach they so -- then do the so to it

in MACOM's the I to around depth a good expertise rates think solutions lot very position higher and and go of data So speeds. these as a

Srinivas Pajjuri

kind you the terms about market of And level high going My LEO also Are you a opportunity of big qualitatively, competitive how satellite whatever this what in in contribution is terms be do other give how the is? is to question with on us and you how your think the else or at share to here the business. SAM see least you're to of able willing us position?

Stephen Daly

satellite, really assembly CHIP whether on for or or customer want and engagement whether subsystem. multi-chip products module different level the it it's build So depends or is to the full-up the a us buying portfolio the they our ultimately a what across at from

range you these imagine sort dollars prices from the of dollars for or on them. the what of for depending to products that exactly contribution can of of or So we're could thousands hundreds thousands tens building

. that more are would of Some on products building, go is and a X- team linear that our exotic these products systems the X-figure satellite module board type

Operator

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

Harsh Kumar

have shipping results you the of a had it as And And come? functionality multipart think other lot, for long-term I is thinking ACC, do then, get contributor? now? ACC X, When a rack. question great Or let on of out. rack path, all, that Is outside trend you a of and it usual. with you. to we viable first in doesn't a years solution? this guidance will Steve, are then are right Congratulations, X, just and one, me some you've a start uses technology that been probably of What is this X it the question,

Stephen Daly

have been to part we shipping So your question we'll first is, we continue ship. and and of the shipping are

today, then of the long-term I can can you are second you opportunity there. that. into that even we the over and we is, And And capabilities So that And see yes there's tell X. PCIe a do question. some seeing to believe piece X spill

power then use equivalent make the switches is an or the within attractive to compute in within to ASIC ways equalizers customers. the of these finding very of that chip think I connections or So using linear ACC and

I is that mean believe XXXX, demand these will a case fad. specific. applications. are believe very -- It's we the use not this We So continue. it's XXXX much typically short-reach

is use out -- will that will if as clearly, cost mode there's more I advantage and is and have doing what single a reach, be the gets industry it's very there's a a long different you're simplicity sort to long so you're to reach, guess, going be But that exact DSP, case. associated a architecture, And that trying it we'll solution. question. the with it the experienced, very to ACC the And industry answer need

and customers meantime, we the continue to engage try in So them to will make successful.

Harsh Kumar

of sort enough. down is an and orders to your orders is also And part? XX% much turns accurate Jack. you Defense your if strong. my assessment how Fair then Steve. the then I would to Everything surprised pretty be good. be time, defense That's very this number, on Industrial I'm Jack, clear, clarify of that could Is is up. and for The one high. -- book-to-bill At turns it up, And expect are maybe this segment. turns also seems are but like your

John Kober

problem. No Sure.

book-to-bill quarter. been we've So this with our That X.X, came at ratio. pleased in again,

nature just building the consistent been of from in the That's a turns been bit but a So past XX% And we've we've been, backlog. of perspective, there's where yes, that number relatively for bump quarters. of up. a been range it's

of think don't the out anything turns there's really from I a ordinary So to highlight. perspective

continued X And through period. been growth could area evidenced break been see we the But vary yes, other but from as and going bookings with piece where out of in period different the it by that's focused where the and of some the defense end will to of evidenced it's each quarters. areas, number over past you markets, pleased our defense by as have been the We revenues build backlog are we've to that's by backlog. We that building growing generally an the don't backlog.

Operator

Your next Mani with line Bank question Securities. coming of up America Michael from the

Unknown Analyst

for Vivek on This Mani is Arya. Michael

quarter. coming do telecom weakness parts these be $XXX anything double click what of there where there. back get you or like was And incremental is well? the on any it point. your sound quarter versus it weakness as the any prospects there areas your run of if impact the or but Are industrial to on the front, strength you might backlog to how are It change last sounds backlog there rate. -- all seen you've million kind that Just from but thinking per like moving that to for does, how just that doesn't get side changes It the

Stephen Daly

Sure. Michael, question. you, Thank for the

center growth quarters higher, the has a that at of you're be talking everybody, to year. slowdowns we think if about where even And XX% is to growth record telecom seems trajectory, and strong a at you our data of our it strong end fourth or the we've Just is today sort been last as and look stand in of as going the had book-to-bill been Even close backlog and modest growth year-over-year market half, a last growth X.X. quarter the for row of where that had today, X at industrial. have then quite book-to-bill I you a said, double-digit to we in X growth we've This the there assume looking year-over-year remind back XX% level.

number, that first we say out booking it's be the things business is pleased the se parts the the per booking actually is number hyper book-to-bill of our is just on is contracts, to We're one would normal with particular large the do turns we're it I with contracts. execution of important the every read quarter moving our bookings. quite multiyear It's I the into business. anything So we put any What this because wouldn't and quarter. on has why most focused setup.

work team we've to has and keep this sales up And development very diversified the deliver very team able that operations the business of growth. to been so has done, proud that we're team, the our able been so

read wouldn't So the business. anything I turns into

course cash the overall quarter up flow the the of the is X over evenly shows our during in balanced the financial That and the business. of quarter. revenue Our of months performance

healthy us. in strong, very front business very some of So and great growth

Unknown Analyst

expansion Got fab North well. Lowell at the it. And Carolina my and fab in the just the then capacity on as for follow-up, initiatives these

are do sense will kind us initiatives, efforts line? you to could And modernization help you give initiatives should how these both opportunities conclude. what mean I And margin Lowell, a you these any then a impact? for we impacts for think When of as of headwinds both eventually? pursue? you do gross time So the expect ramping of capacity of kind of you're does think about Or especially in become or Like up the it fairly Carolina is to from a especially negligible? gross there that margin, tailwind North P&L,

Stephen Daly

And Thank just of plan to through CHIPS Sure. for primarily you to CHIPS GaN our significant try under remind for funding advanced the question, I'll and the and R&D projects. key program, have everybody, briefly run the we today elements overall some investment regarding commentary.

to the programs different and projects was that development. them million department in address The of category million resiliency, of are January national -- XX, by and announcement high generally of have in capacity $XX probably this to advanced came most to modernization, commerce do supported And about sort active through of are supply made These security, through DoD. development. on we really the expansion we've January, $XX and some elements, technology some general the of chain

Commerce overall Department. our highly was And by application regarded the very

our who MACOM is this poster So of minds. the funding should in get child

that that's number out program. So program a long-term want just -- I two, to Number is point that one. the

at new this antiquated to fab, you And the within not building low replacing site, would some modernizing at and infrastructure So We're X years. least buildings. of some expect for of we plan some the on the of equipment. see the program not any benefits improving

low, give failure equipment upgrade. We're say, point or to to we certain just going low-end areas that single have want let's

benefit that and will immediate end increased. improve will will have be gross And our our and our our yields throughput margins quality so improve an because will to

as up So there benefit capacity we'll actually well. be picking

In technology. application GaN addition Lowell, GaN on in that, a silicon install X-inch to our part line small advanced to of was to a X-inch, carbide support

do down So our on line. we X-inch plan shutting not

as will going to our profitable line. business. of a We of not running to moving it very our just that on plan run modernize We off X-inch continue line. part that and our keep We're do products

that as do North And here want a then issues, to advanced to expand focused bit In or we GaN bump capacity with capability. the a That little small, very in X, that and Lowell going calculus, different. we're see up year next augment fab, we Carolina, it's the in we capacity. against we'll

a installing building. the next X-inch to application the that And was X-inch line so line existing primarily in right

X-inch And line over with high-volume the programs. we time, would fill

to And an we can advanced reactor so GaN. on to in for buy MOCVD addition epi so going that, we that were work

It's And a that all in nutshell program. lot So there's we the a of subject as Washington. is highlighted, dynamics to in approval.

the the of that the So whole long-term near thing P&L. MACOM And in does, we there's But to to be investment factor highlight no I that canceled. supplier will it these It's accordingly. a be technologies always will adjust impact do gets -- stronger a our term, a program. if benefits risk the The in will market. strategy want

Operator

from [Operator the Our question line next Instructions] Peng JPMorgan with of Peter coming Chase.

Peter Peng

in and throughout any record sequentially QX grow your commentary business that on Is some X.XT Just there and about in expectations think of the to we data the some your year? reason your in can't based quarters. sizable backlog ramp pretty QX center

Stephen Daly

typically volatile, end every risk. lead certainly quarter, is talked market of our for are center That's And always one between data as products times X anywhere months. most the our a and X we about and our

let's X our in very away, say. generally fade is so next that, the And after quarters good. it But does visibility

programs within strength confident about to can the on segment. so And all different this continue involved we today we have based we're had that discussions getting we're in, the

We're We're and I expanding like about. and our customer products lasers the that PDs adding base. talked the broadening new

segment. that within the this for be MACOM confident we're year year So will a record

Peter Peng

speed on for maybe your then and of the in so what levered applications the out set higher is Got you is expect and for to XXX then 'XX, the it. And [indiscernible], those you lower play to gig expectations on year? percentage speed level kind how a and at to least can if me X.XT fiscal that

Stephen Daly

question. interesting an That's

has improving. base actually Our business been

-- have lot are we've XXXG LRX seeing have which So been of our platforms there. been a for NRZ all platforms CWDMX strength some

AOCs up we actually XXX-gig even well. bump platforms also And DSP. some in manufacturing our we quite SR of Our a for a are where doing have

So business actually next our stop And base the of sort be center XXX-gig. improving. then data would is

strength We both also there, see and DRX. FRX

speaking, business that generally improving. would I say, So is

lower the will other now of layer a be we of elements all is considered business top about confidence that you that that on base that talked year 'XX year good So data the all rate gives fiscal and us

Operator

turn the call will in for any I now the over back Mr. Steve to further no are there see questions closing queue. I Daly remarks.

Stephen Daly

like results nice In our day. you. Thank thank their these for to . closing, I work Have all employees dedication, a possible. would and made which hard

Operator

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

now may disconnect. You

MACOM Technology Solutions (MTSI) 6 Feb 252025 Q1 Earnings call transcript