MACOM's Q4 Revenue Jumps 62.7% to $424.8M on Data Center Demand

By Grace Kim

MACOM Technology Solutions (NASDAQ:MTSI) posted fiscal fourth-quarter revenue of $424.8 million, up 62.7% from a year earlier, as data center demand drove record backlog and stronger profitability. For the full fiscal year ended October 2, revenue exceeded $1.3 billion, up 37%, with adjusted earnings per share climbing 61% to $5.60.

Adjusted EPS for the quarter came in at $2.09, up from $1.40 in the preceding quarter. The analog and optical semiconductor maker doesn't give full-year guidance, but CEO Steve Daly said the company is working toward a $2 billion revenue target for fiscal 2027 — while acknowledging execution and market risks. Daly said he expects another strong year in data centers and faster growth in industrial and defense.

What drove the quarter?

All three end markets grew sequentially, but the spread was wide:

• Data center revenue rose approximately 37% quarter-over-quarter to $188.1 million — a quarterly record.
• Industrial and defense revenue grew 23% to $164.6 million, also a record.
• Telecom revenue edged up 1% to $72.1 million.

MACOM's fourth-quarter book-to-bill ratio (orders received divided by revenue billed) hit 1.4 to 1, and the company ended the year with record backlog. CFO Jack Kober said full-year book-to-bill reached 1.5 to 1, reflecting MACOM's highest bookings year.

Daly said the company's base case calls for roughly 80% data center revenue growth in fiscal 2027, versus 74% growth in fiscal 2026. He cited rising volumes of 1.6-terabit optical products and opportunities to supply more components per system. MACOM is also developing near-packaged optics products — an approach that supports higher-density optical connections — and is sampling with multiple hyperscalers, though Daly declined to name specific customer wins. Early revenue from those products could arrive in fiscal 2027 or the year after.

How solid is the defense and telecom outlook?

Industrial and defense revenue grew 27.8% in fiscal 2026, and Daly is targeting growth above 30% in fiscal 2027. He pointed to spending on radar, drone and counter-drone systems, communications and electronic warfare, plus development awards from established defense contractors and newer entrants.

Telecom revenue rose about 11% in fiscal 2026, driven primarily by 5G and satellite communications. Daly expects similar growth in fiscal 2027, though the business will start slowly before strengthening in the second half. He flagged softness in passive optical networks and parts of broadband, offset by new 5G programs set to ramp later in the year.

Low Earth orbit satellites remain a growth lever: a customer's recently awarded constellation contract could generate roughly $20 million of new business for MACOM beginning in early 2028, Daly said.

What about margins and guidance?

Fourth-quarter adjusted gross margin rose 160 basis points from the prior quarter to 61.3%. Kober attributed the improvement primarily to revenue growth, product mix and factory utilization. Adjusted operating margin reached 38.2%, and Kober said he expects it to exceed 40% during fiscal 2027.

For the fiscal first quarter ending January 1, 2027, MACOM guided to:

• Revenue of $450 million to $460 million.
• Adjusted gross margin of 62% to 63%.
• Adjusted EPS of $2.21 to $2.29.

The outlook assumes about 15% sequential data center growth, single-digit growth in industrial and defense, and flat to slightly lower telecom revenue.

Capital spending is scaling up fast. MACOM plans fiscal 2027 capex of $100 million to $110 million, up from $64.4 million in fiscal 2026, with roughly 60% going into fabs — primarily for modernization or added capacity. The company is expanding three wafer fabs and two U.S. hybrid manufacturing sites.

Daly also highlighted progress on the facet quality of MACOM's indium phosphide lasers, a step toward entering the continuous-wave laser market targeted for 2028. He cautioned that further work remains and the company isn't declaring success yet.

What's the cash picture?

MACOM ended fiscal 2026 with $792.4 million in cash, cash equivalents and short-term investments — roughly $451.7 million in net cash after accounting for its convertible notes. Daly said the company has no current plans for share buybacks or a dividend, preferring to retain cash for investment and strategic flexibility.

The takeaway in plain words: record bookings, rising margins and a capex step-up show a company leaning into its data center momentum while it funds the next growth cycle.