Core Viewpoint - Growth investors are focused on stocks with above-average financial growth, but identifying stocks that can fulfill their growth potential is challenging due to associated risks and volatility [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system helps identify promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - M/A-Com (MTSI) is currently recommended due to its favorable Growth Score and top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is crucial for attracting investor attention, with double-digit growth preferred by growth investors [3] - M/A-Com has a historical EPS growth rate of 12.5%, but projected EPS growth for this year is 19.9%, surpassing the industry average of 19.2% [4] Group 3: Cash Flow Growth - Higher-than-average cash flow growth is vital for growth-oriented companies, enabling expansion without relying on external funding [5] - M/A-Com's year-over-year cash flow growth is 18.9%, significantly higher than the industry average of -23.3% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 14.5%, compared to the industry average of 14% [6] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements [7] - M/A-Com has seen upward revisions in current-year earnings estimates, with the Zacks Consensus Estimate increasing by 4.9% over the past month [8] Group 5: Overall Positioning - M/A-Com holds a Zacks Rank of 2 and a Growth Score of B, positioning it well for potential outperformance in the market [10]

Core Insights - Artisan Partners' "Artisan Small Cap Fund" reported strong performance in Q3 2025, with major US indices reaching record highs and the fund's Investor Class returning 8.69% [1] - MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) was highlighted as a key stock, showing a one-month return of 12.47% and a 52-week gain of 30.17% [2] - Despite operational challenges due to an accelerated transition of a fabrication facility, MACOM's quarterly results exceeded expectations, prompting the fund to increase its position in the stock [3] Fund Performance - The Artisan Small Cap Fund's Investor Class returned 8.69%, Advisor Class 8.75%, and Institutional Class 8.73%, while the Russell 2000 Growth Index returned 12.19% [1] - The fund's top holdings for 2025 can be reviewed for potential investment insights [1] Company Performance - MACOM Technology Solutions reported record revenue of $261.2 million in Q4 2025, reflecting a 3.6% sequential increase and a 30.1% year-over-year growth [4] - The company faced temporary margin pressures due to operational control of a facility acquired from Wolfspeed, but the impact is expected to be short-lived [3] Market Position - As of the end of Q2 2025, MACOM was held by 34 hedge fund portfolios, a slight decrease from 36 in the previous quarter [4] - While MACOM is recognized for its potential, other AI stocks are considered to offer greater upside with less downside risk [4]

Company Overview - The company designs, develops, and manufactures semiconductor products for the Industrial and Defense, Data Center, and Telecommunications industries, serving over 6,000 end customers[17]. - The company operates semiconductor fabrication facilities in Lowell, Massachusetts, and other locations, achieving certifications such as IATF16949 and AS9100D[19]. - The company employed approximately 2,000 individuals worldwide, with 800 in research and development, and 75% of the workforce located in North America[67]. - The company operates multiple wafer fabrication facilities, including locations in Lowell, Massachusetts, and RTP, North Carolina, which are considered competitive advantages[55]. - The company has achieved ISO 9001:2015 certifications across various locations, ensuring quality assurance in operations[61]. - The company has over 70 years of application expertise in semiconductor manufacturing, serving over 6,000 end customers[195]. Growth Strategy - The company’s growth strategy focuses on expanding addressable markets and product portfolios, strengthening customer relationships, and capturing more design wins[18]. - The company continues to invest in proprietary processes and technologies to develop high-value solutions for its primary markets[28]. - MACOM's acquisition strategy aims to accelerate growth, expand its technology portfolio, and create stockholder value[80]. - The company reported revenue growth driven by expanding product portfolios in the I&D, Data Center, and Telecom markets[199]. Market Performance - The company expects revenue growth in the Data Center market driven by the adoption of higher speed processing technologies and upgrades to data center architectures utilizing 100G to 3.2T interconnects[29]. - The Telecom market growth is supported by increasing demand for bandwidth due to applications like video conferencing and IoT, requiring advanced semiconductor solutions[37]. - Revenue in the I&D market is expected to grow due to applications in test and measurement, space-related electronics, and military radar[200]. - The Data Center market revenue is anticipated to increase with the adoption of higher speed processing technologies and upgrades to 100G, 200G, and 400G architectures[201]. - Telecom market revenue growth is projected from 5G deployments and upgrades in communications equipment[202]. Customer Base - Sales to distributors accounted for 32.3%, 29.3%, and 24.0% of revenue in fiscal years 2025, 2024, and 2023, respectively[44]. - The company’s customer base includes OEMs, contract manufacturers, and resellers, with top 25 direct customers accounting for 45.6%, 47.0%, and 51.5% of revenue in fiscal years 2025, 2024, and 2023[46]. - In the fiscal year ended October 3, 2025, sales to the top 10 customers accounted for 56.7% of MACOM's revenue, indicating a reliance on a limited customer base[94]. - Sales to customers located outside the U.S. accounted for 56.3% of total revenue for the fiscal year ended October 3, 2025, with China and the Asia Pacific region contributing 28.4% and 11.5% respectively[109]. Financial Performance - Revenue for fiscal year 2025 reached $967,258 thousand, a 32.6% increase from $729,578 thousand in 2024[214]. - Gross profit for fiscal year 2025 was $529,002 thousand, representing a gross margin of 54.7%, up from 54.0% in 2024[216]. - Research and development expenses increased to $244,466 thousand in 2025, accounting for 25.3% of revenue, compared to 25.0% in 2024[216]. - Total operating expenses for 2025 were $399,350 thousand, which is 41.3% of revenue, down from 43.9% in 2024[216]. - The company reported a net loss of $54,210 thousand in 2025, compared to a net income of $76,859 thousand in 2024[214]. - Interest income for 2025 was $29,853 thousand, while interest expense was $5,516 thousand, resulting in a net interest income of $24,337 thousand[214]. - The loss on extinguishment of debt in 2025 amounted to $193,098 thousand, significantly impacting overall financial performance[214]. Risks and Challenges - The semiconductor industry is cyclical, and MACOM's revenue growth is dependent on successful product development and market demand, particularly in Data Center and Telecom sectors[85][90]. - MACOM faces risks related to supply chain uncertainties, which could impact profitability and revenue if customer demand is mismanaged[88][89]. - Sustained inflation has led to increased costs for labor, materials, and transportation, potentially affecting MACOM's financial condition and profitability[97]. - The company faces significant risks from cybersecurity incidents, which could lead to unauthorized access to sensitive data and result in material adverse effects on business operations and financial results[99]. - The company is subject to various environmental regulations, which may require material future expenditures[63]. - The company may incur substantial costs to comply with environmental laws, and failure to comply could result in fines and operational changes[154]. - The company may face significant risks related to acquisitions, including integration difficulties and potential loss of key personnel[123]. - The company faces risks associated with government contracting, including compliance with federal regulations and potential audits[138]. Compliance and Governance - The company maintains an export compliance program to manage transactions and ensure adherence to export regulations[66]. - The company has invested in data privacy compliance efforts, but risks remain regarding potential fines and reputational harm due to data breaches[159]. - Compliance with evolving cybersecurity and data protection regulations could result in significant expenses and increased compliance burdens[101]. - The company is actively monitoring policy developments that could materially affect its business and financial condition[122]. Workforce and Diversity - The voluntary attrition rate during fiscal year 2025 was approximately 6%[70]. - The company emphasizes diversity, equity, inclusion, and belonging, with approximately 30% of the workforce being female[68]. Acquisitions - In March 2023, MACOM completed the acquisition of Linearizer Technology, Inc., enhancing its component and subsystem design expertise in target markets[76]. - In May 2023, MACOM acquired key manufacturing facilities and assets from OMMIC SAS to expand its European footprint and offer higher frequency GaAs and GaN MMICs[77]. - In December 2023, MACOM acquired certain assets of the RF business of Wolfspeed, Inc., including a portfolio of GaN on Silicon Carbide products for high-performance RF applications[78]. - In November 2024, MACOM completed the acquisition of ENGIN-IC, Inc., a fabless semiconductor company specializing in advanced GaAs and GaN MMICs[79]. Stock and Financial Instruments - The company does not currently use derivative financial instruments to manage investment portfolio risks, exposing it to potential market volatility[106]. - The company does not intend to pay cash dividends for the foreseeable future, as it plans to retain earnings for business development[167]. - The largest stockholder, Susan Ocampo, beneficially owns 12.5% of the common stock, allowing significant influence over management decisions[165]. - Anti-takeover provisions in the company's charter may delay or prevent beneficial changes in control, potentially affecting stock price[166].

Core Viewpoint - The content emphasizes the importance of conducting personal due diligence and consulting competent advisors before making any financial decisions, particularly in the context of investments and trading [1]. Group 1 - The website provides general news, personal analysis, and third-party content intended for educational and research purposes [1]. - It explicitly states that the information does not constitute any recommendation or advice for investment actions [1]. - Users are advised to perform their own research and consider their financial situation before making decisions [1]. Group 2 - The website includes information about complex financial instruments such as cryptocurrencies and contracts for difference (CFDs), which carry a high risk of losing money [1]. - It encourages users to understand how these instruments work and the associated risks before investing [1].

Core Insights - MACOM Technology Solutions reported strong financial results for Q3, with revenue of $261.2 million, a 30.1% year-on-year increase, and adjusted earnings per share of $0.94, surpassing analyst expectations [2] - The company provided an optimistic forecast for Q4, projecting revenue around $269 million, exceeding consensus estimates, which indicates continued growth [2] - Following the positive results and outlook, MACOM's shares rose by 6.6% in the morning session [1] Financial Performance - Revenue for Q3 was $261.2 million, reflecting a 30.1% increase year-on-year [2] - Adjusted earnings per share were $0.94, exceeding Wall Street estimates [2] - The Q4 revenue forecast is approximately $269 million, which is above analyst consensus [2] Market Reaction - MACOM's shares are known for volatility, with 21 moves greater than 5% in the past year, indicating that the market views the recent news as significant but not fundamentally altering its perception of the company [4] - The stock has increased by 26.9% since the beginning of the year, reaching a new 52-week high of $164.22 per share [6] - Investors who purchased $1,000 worth of MACOM shares five years ago would see their investment grow to $3,796 [6]

Core Insights - MACOM Technology Solutions Holdings, Inc. (MTSI) reported fourth-quarter fiscal 2025 earnings of 94 cents per share, beating the Zacks Consensus Estimate by a penny, with a year-over-year growth of 28.8% [1][8] - The company posted revenues of $261.2 million in the fourth quarter, surpassing the Zacks Consensus Estimate by 0.81% and reflecting a year-over-year growth of 32.3% [2][8] Financial Performance - Adjusted gross margin for the fourth quarter was 57.1%, down from 58.1% in the prior-year quarter [3] - Adjusted operating income increased to $67.0 million from $50.7 million year-over-year, with an adjusted operating income margin of 25.6%, up 40 basis points from the previous year [3] - Non-GAAP operating expenses were $82.1 million, a 24.6% increase year-over-year, representing 31.5% of revenues, which is a contraction of 140 basis points from the prior-year period [4] Balance Sheet and Cash Flow - As of October 3, 2025, cash equivalents and short-term investments totaled $785.9 million, an increase from $735.2 million in the prior quarter [5] - Long-term debt was reported at $339.6 million, slightly up from $339.4 million in the previous quarter [5] - Net cash flows from operating activities amounted to $235.4 million [5] Guidance - For the first quarter of fiscal 2026, MTSI expects revenues between $265 million and $273 million, indicating a year-over-year growth of 29.6% [6] - The company anticipates adjusted earnings per share between 98 cents and $1.02, with the Zacks Consensus Estimate for earnings at 93 cents, suggesting a growth of 27% year-over-year [6] Market Position - MTSI currently holds a Zacks Rank 3 (Hold) [7] - Other stocks in the sector with better rankings include Reddit Inc. (RDDT), Credo Technology Group (CRDO), and Amphenol (APH), all carrying a Zacks Rank 1 (Strong Buy) [7]

Core Viewpoint - M/A-Com (MTSI) reported quarterly earnings of $0.94 per share, exceeding the Zacks Consensus Estimate of $0.93 per share, and showing an increase from $0.73 per share a year ago, indicating a positive earnings surprise of +1.08% [1][2] Financial Performance - The company achieved revenues of $261.17 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.40% and up from $200.71 million year-over-year [2] - Over the last four quarters, M/A-Com has consistently exceeded consensus EPS estimates and revenue estimates [2] Stock Performance - M/A-Com shares have increased approximately 15.2% since the beginning of the year, slightly underperforming the S&P 500's gain of 15.6% [3] Future Outlook - The company's earnings outlook will be crucial for assessing future stock performance, with current consensus EPS estimates at $0.95 for the upcoming quarter and $4.03 for the current fiscal year [7] - The Zacks Rank for M/A-Com is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Semiconductor - Analog and Mixed industry, to which M/A-Com belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Financial Data and Key Metrics Changes - Revenue for Q4 FY2025 was $261.2 million, with adjusted EPS at $0.94 per diluted share. For the full year, FY2025 revenue reached $967 million, representing a more than 32% increase year over year, and EPS was $3.47, up more than 35% year over year [5][23][24] - Free cash flow generated was $193 million, with cash and short-term investments totaling approximately $786 million at year-end [5][31] - The adjusted operating margin for FY2025 grew by 140 basis points to 25.4%, and cash flow from operations increased by 45% to $235.4 million [23][24] Business Line Data and Key Metrics Changes - Q4 revenue performance by end market included industrial and defense at $115.6 million, telecom at $66 million, and data center at $79.6 million. Industrial and defense revenues were up approximately 7% sequentially, while data center revenues increased by about 5% sequentially [6][24] - The company launched over 200 new products in FY2025, which contributed to revenue growth and improved gross margins [7][8] Market Data and Key Metrics Changes - U.S. domestic customers represented approximately 43% of Q4 FY2025 revenue, with full fiscal year 2025 U.S.-based revenue at around 44% [24] - The defense market saw over 50% year-over-year revenue growth, driven by high-power GaN components [11][12] Company Strategy and Development Direction - The company aims to achieve $1 billion in annual revenues, with a focus on technology and product differentiation, particularly in high-frequency and high-power IC products [7][8] - Plans to open two additional IC design centers in Southern California and Central Europe to enhance R&D capabilities and support growth opportunities [8][9] - The strategic agreement with HRL to license the 40-nanometer GaN on silicon carbide process is expected to enhance the company's capabilities in high-frequency applications [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth in FY2026, with expectations of sequential growth across all end markets, particularly in data centers [34][35] - The company anticipates continued strength in the defense business and a rebound in telecom, with a strong backlog and positive booking trends [52][64] Other Important Information - The company expects adjusted gross margin improvements of 25 to 50 basis points as production volumes increase and operational efficiencies are realized [25][72] - Capital expenditures for FY2026 are estimated to be between $50 million and $55 million, aimed at upgrading production equipment and expanding capacity [31] Q&A Session Summary Question: Insights on telecom business outlook - Management highlighted 5G growth and satellite communications as key drivers for the telecom business in FY2026, with expectations of continued growth in metro long-haul segments [38] Question: Demand trends between 100G and 200G solutions - The company noted stable growth in the 100G business, with significant growth expected in the 200G segment, particularly for 1.6T applications [42][43] Question: Update on HRL IP license agreement - The HRL technology is expected to enhance capabilities in high-frequency SATCOM bands, transitioning from PHEMT GaAs technology to GaN technology, which offers higher power density and efficiency [46][47] Question: Drivers of growth in FY2026 - Growth is primarily driven by the rollout of 1.6T and 800G platforms, along with a rebound in telecom and strength in the defense sector [52] Question: Size of the LEO satellite market - The LEO business is expected to grow significantly over the next 12-18 months, potentially reaching hundreds of millions of dollars, with the company supporting various levels of the supply chain [54] Question: Competitive landscape post-merger of competitors - Management does not anticipate a direct impact from the merger, as the companies involved are not customers or suppliers, but sees potential opportunities arising from restructuring [81]

Financial Data and Key Metrics Changes - Revenue for Q4 FY2025 was $261.2 million, with adjusted EPS at $0.94 per diluted share. For the full year, FY2025 revenue reached $967 million, representing over a 32% increase year over year, and EPS was $3.47, up more than 35% year over year [5][23] - Free cash flow generated was $193 million, with cash and short-term investments totaling approximately $786 million at year-end [5][31] - Q4 adjusted operating income was $67 million, a 5.5% sequential increase and a 32.1% year-over-year increase [27] Business Line Data and Key Metrics Changes - Q4 revenue by end market included industrial and defense at $115.6 million, telecom at $66 million, and data center at $79.6 million. Industrial and defense revenue was up approximately 7% sequentially, while data center revenue increased by about 5% sequentially [6][24] - The company launched over 200 new products in FY2025, which contributed to revenue growth and improved gross margins [7][8] Market Data and Key Metrics Changes - U.S. domestic customers represented approximately 43% of Q4 FY2025 revenue, with full-year U.S.-based revenue at around 44% [24] - The defense market saw over 50% year-over-year revenue growth, driven by high-power GaN components [11] Company Strategy and Development Direction - The company aims to achieve $1 billion in annual revenues, with a focus on technology and product differentiation, particularly in high-frequency and high-power IC products [7][8] - Plans to open two additional IC design centers in Southern California and Central Europe to enhance R&D capabilities [8] - The strategic agreement with HRL to license the 40-nanometer GaN on silicon carbide process is expected to enhance MACOM's capabilities in high-frequency applications [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth in FY2026, driven by strong demand in data centers, telecom, and defense markets [34][35] - The company anticipates sequential revenue growth across all end markets, with data center leading at approximately 5% growth [34] - Management highlighted a strong backlog and positive booking trends as indicators of future performance [52][66] Other Important Information - The company expects adjusted gross margin improvements of 25-50 basis points as production volumes increase [25] - Capital expenditures for FY2026 are estimated to be between $50 million and $55 million, aimed at upgrading production equipment and expanding capacity [31] Q&A Session Summary Question: Insights on telecom business outlook - Management identified 5G growth and satellite communications as key drivers for the telecom business in FY2026 [38] Question: Demand trends between 100G and 200G solutions - The company expects continued growth in the 100G segment, with significant growth anticipated in the 200G segment, particularly for 1.6T applications [43] Question: Update on HRL IP license agreement - The HRL technology is expected to enhance capabilities in high-frequency SATCOM bands, transitioning from PHEMT GaAs technology to GaN technology [47] Question: Drivers of growth in guidance - Growth is primarily driven by the rollout of 1.6T and 800G platforms, along with a rebound in telecom and strength in defense [52] Question: Size of the LEO satellite market - The LEO business is expected to grow significantly over the next 12-18 months, potentially reaching hundreds of millions in size [54] Question: Backlog and order visibility - The backlog is healthy, particularly in the data center segment, but specific breakdowns by product line are not provided [58] Question: RF business yield enhancements - Management expects gross margin improvements from yield enhancements and operational performance across all fabs [60]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $261.2 million, with adjusted EPS at $0.94 per diluted share. For the full year, FY25 revenue reached $967 million, representing a more than 32% increase year over year, and EPS was $3.47, up more than 35% year over year [4][24][29] - Free cash flow generated was $193 million, with cash and short-term investments totaling approximately $786 million at year-end [4][32] - The adjusted operating margin for FY25 grew by 140 basis points to 25.4%, and cash flow from operations increased by 45% to $235.4 million [24][32] Business Line Data and Key Metrics Changes - Q4 revenue performance by end market included industrial and defense at $115.6 million, telecom at $66 million, and data center at $79.6 million. Industrial and defense revenues were up approximately 7% sequentially, and data center revenues were up approximately 5% sequentially [5][25] - The company launched over 200 new products in FY25, which contributed to revenue growth and improved gross margins [6][7] Market Data and Key Metrics Changes - U.S. domestic customers represented approximately 43% of Q4 revenue, with full fiscal year 2025 U.S.-based revenue at approximately 44% [25] - The defense market saw over 50% year-over-year revenue growth, driven by high-power GaN components [11][12] Company Strategy and Development Direction - The company aims to achieve $1 billion in annual revenues, with a focus on technology and product differentiation, particularly in high-frequency and high-power IC products [6][7] - Plans to open two additional IC design centers to enhance R&D capabilities and expand market share [8] - The strategic agreement with HRL to license the T3L process is expected to enhance MACOM's capabilities in high-frequency applications and capture significant market share [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth in FY2026, driven by data center demand and improvements in telecom and defense sectors [34][41] - The company anticipates continued growth in the LEO satellite market, with potential revenues in the hundreds of millions of dollars [42][43] - Management highlighted strong October bookings as a positive indicator for the start of FY2026 [41] Other Important Information - The company expects Q1 FY2026 revenue to be in the range of $265-$273 million, with adjusted gross margin anticipated between $56.5-$58.5 million [33][34] - Capital expenditures for FY2026 are estimated to be $50-$55 million, focusing on upgrading production equipment and expanding capacity [32] Q&A Session Summary Question: Insights on telecom business outlook - Management identified 5G growth and satellite communications as key drivers for the telecom business in FY2026 [36] Question: Demand trends between 100G and 200G solutions - The 100G business is stable, while significant growth is expected in the 200G segment, particularly for 1.6T applications [37] Question: Update on HRL IP license agreement - The HRL technology complements existing processes and is expected to enhance capabilities in high-frequency SATCOM applications [39] Question: Factors driving growth in FY2026 - Growth is primarily driven by the rollout of 1.6T and 800G platforms, along with a recovery in telecom and strength in defense [41] Question: Size of the LEO satellite market - The LEO business is expected to grow significantly over the next 12-18 months, potentially reaching hundreds of millions in revenue [42][43] Question: Competitive landscape post-merger of competitors - Management does not anticipate significant changes in the competitive landscape due to the merger, as it does not directly impact MACOM [57]