Core Insights - M/A-Com reported revenue of $218.12 million for the quarter ended December 2024, reflecting a year-over-year increase of 38.8% [1] - The company's EPS for the quarter was $0.79, up from $0.58 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $215.07 million, resulting in a surprise of +1.42% [1] - M/A-Com's EPS also surpassed the consensus estimate of $0.78, with a surprise of +1.28% [1] Revenue by Primary Markets - Telecommunications revenue was reported at $55.44 million, slightly below the estimated $56.06 million, but showed an impressive year-over-year increase of +81% [4] - Industrial & Defense revenue reached $97.40 million, close to the average estimate of $97.61 million, marking a +26.5% change year over year [4] - Data Center revenue was reported at $65.28 million, exceeding the average estimate of $61.40 million, with a year-over-year increase of +31.9% [4] Stock Performance - M/A-Com shares returned +0.1% over the past month, while the Zacks S&P 500 composite increased by +2.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Revenue Growth - Revenue increased by $61.0 million, or 38.8%, to $218.1 million for the three months ended January 3, 2025, compared to $157.1 million for the same period in 2023[125] - Industrial & Defense market revenue rose by $20.4 million, or 26.5%, driven by incremental revenue from the RF Business Acquisition[126] - Data Center market revenue increased by $15.8 million, or 31.9%, primarily due to the adoption of higher speed processing technologies[127] - Telecom market revenue surged by $24.8 million, or 80.9%, reflecting strong demand for 5G deployments and communication equipment upgrades[126] - Telecom market revenue increased by $24.8 million, or 80.9%, driven by 5G applications and recent acquisitions[129] Profitability and Expenses - Gross profit margin decreased to 53.7% for the three months ended January 3, 2025, down from 55.6% in the prior year[124] - Operating expenses increased to $99.6 million, representing 45.7% of revenue, compared to 48.6% in the previous year[124] - Net loss for the three months ended January 3, 2025, was $167.5 million, compared to a net income of $12.5 million for the same period in 2023[123] - Research and development expenses rose by $21.0 million, or 53.2%, to $60.4 million, representing 27.7% of revenue[132] - Selling, general and administrative expenses increased by $2.3 million, or 6.3%, to $39.2 million, accounting for 18.0% of revenue[133] Interest and Cash Flow - Interest income increased to $7.0 million, while interest expense was $1.4 million for the three months ended January 3, 2025[123] - Interest income increased to $7.0 million from $5.6 million, attributed to higher short-term investments[134] - Cash and cash equivalents at the end of the period were $232.7 million, up from $146.8 million at the beginning[138] - Cash flow from operating activities was $66.7 million, compared to $33.1 million in the previous period[139] Future Outlook - The company expects continued growth driven by the demand for high-performance analog, digital, and optical semiconductors across its primary markets[116] - Future revenue growth is anticipated from the introduction of new products and increased content of semiconductor solutions in customer systems[116] - The company plans to use remaining cash and short-term investments for general corporate purposes and potential acquisitions[149] - A preliminary agreement with the CHIPS Program Office could provide up to $70 million in funding under the CHIPS Act[148] Other Financial Events - The company recognized a $193.1 million loss on extinguishment of debt during the quarter[135]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $218 million, representing an 8.7% sequential increase [7][40] - Adjusted EPS for Q1 was $0.79, up from $0.73 in Q4 2024 [47] - Free cash flow for Q1 was approximately $63 million, with cash and short-term investments totaling approximately $657 million at quarter end [8][51] - Adjusted gross profit was $125.3 million, or 57.5% of revenue, which is 60 basis points lower than the preceding quarter [41] - Adjusted operating income increased to $55.4 million, up 9% sequentially [44] Business Line Data and Key Metrics Changes - Industrial and Defense (I&D) revenue was $97.4 million, Data Center revenue was $65.3 million, and Telecom revenue was $55.4 million [9] - Data Center revenue increased by 16% sequentially, Telecom by 7%, and I&D by 5% [9] - The Q1 book-to-bill ratio was 1.1:1, indicating strong new order activity [10] Market Data and Key Metrics Changes - Revenue from U.S. domestic customers represented approximately 45% of Q1 results, consistent with Q4 2024 [40] - The targeted end markets collectively represent a serviceable addressable market (SAM) of approximately $7 billion to $8 billion [11] Company Strategy and Development Direction - The company aims to capture market share by leveraging advanced IC design and expanding its product portfolio [12] - Plans to modernize the Lowell Massachusetts fab and expand manufacturing capacity in North Carolina were announced [33] - The company is focused on developing new technologies and product lines, with two new product lines expected to be announced in upcoming trade shows [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the defense market, highlighting growth driven by new threats and technology advancements [13] - The company anticipates continued strong demand in the satellite communications space, particularly from both established and new satellite manufacturers [70] - Revenue guidance for Q2 2025 is expected to be in the range of $227 million to $233 million, with sequential growth anticipated across all end markets [55] Other Important Information - The company refinanced approximately 65% of its convertible notes, which is expected to strengthen its balance sheet [38] - The adjusted income tax rate for Q1 was 3%, with net cash tax payments of approximately $1.1 million [46] Q&A Session Summary Question: Update on Data Center Growth and ACC Inflection Point - Management noted strong growth in the data center market, driven by the optical side of the portfolio, and indicated that the ACC product line is expected to contribute positively in late 2025 and 2026 [61][62] Question: Insights on DoD Satellite Programs - Management highlighted strong demand in the satellite communications space, particularly from new low-cost LEO manufacturers, and expects continued growth in this area [69][70] Question: Changes in Spending Expectations in Data Centers - Management maintains a bullish outlook on capital spending in data centers, with expectations for increased revenue from both electrical and optical solutions [79] Question: Clarification on Gross Margin Issues - Management explained that current gross margin challenges are primarily due to underutilization in the low fab, particularly related to the telecom business [90][91] Question: In-house Capabilities for Silicon Photonics - Management clarified that the company does not have internal silicon photonic processes but is partnering with module manufacturers to provide CW lasers and other components [98][102] Question: Government Funding for Satellite Initiatives - Management expects continued government funding for satellite initiatives, particularly to enhance the DoD's capabilities in space [106]

M/A-Com (MTSI) came out with quarterly earnings of $0.79 per share, beating the Zacks Consensus Estimate of $0.78 per share. This compares to earnings of $0.58 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 1.28%. A quarter ago, it was expected that this chipmaker would post earnings of $0.73 per share when it actually produced earnings of $0.73, delivering no surprise.Over the last four quarters, the company has surpassed co ...

Financial Performance - Revenue for Q1 FY2025 was $218.1 million, a 38.8% increase from $157.1 million in Q1 FY2024 and an 8.7% increase from $200.7 million in the prior quarter[5] - Net loss for Q1 FY2025 was $167.5 million, or $2.30 loss per diluted share, compared to net income of $12.5 million, or $0.17 per diluted share, in Q1 FY2024[5] - Adjusted net income for Q1 FY2025 was $59.5 million, or $0.79 per diluted share, compared to $41.8 million, or $0.58 per diluted share, in Q1 FY2024[5] - Income from operations for Q1 FY2025 was $17.5 million, or 8.0% of revenue, compared to $11.0 million, or 7.0% of revenue, in Q1 FY2024[5] - Adjusted EBITDA (Non-GAAP) for the quarter was $62,162 thousand, representing 28.5% of revenue, compared to $44,806 thousand or 28.5% in the same quarter last year[31] Margin and Expenses - Adjusted gross margin for Q1 FY2025 was 57.5%, down from 59.2% in Q1 FY2024 and 58.1% in the prior quarter[5] - Operating expenses (GAAP) rose to $99,582 thousand, which is 45.7% of revenue, compared to $76,300 thousand or 48.6% in the prior year[31] Future Outlook - For Q2 FY2025, MACOM expects revenue to be between $227 million and $233 million, with adjusted gross margin between 57% and 58%[4] - MACOM anticipates a non-GAAP income tax rate of 3% for FY2025, reflecting its strategic financial planning[4] Strategic Initiatives - The company is focused on expanding its product portfolio and enhancing competitiveness in the semiconductor market[4] - MACOM has made strategic acquisitions, including ENGIN-IC, Inc. and Linearizer Communications Group, to strengthen its market position[8] Assets and Liabilities - Total assets increased to $1,843,630 thousand, up from $1,755,640 thousand, representing a growth of 5.0%[27] - Total current liabilities increased to $272,407 thousand from $108,184 thousand, indicating a significant rise in short-term obligations[27] Cash Flow and Debt - Cash and cash equivalents at the end of the period increased to $232,699 thousand from $163,586 thousand, marking a significant increase[29] - The company reported a loss on extinguishment of debt amounting to $193,098 thousand during the latest quarter[29] - The company made an acquisition of business, netting $(12,474) thousand during the latest quarter, compared to $(75,000) thousand in the same period last year[29]

Group 1 - Analysts project M/A-Com (MTSI) will announce quarterly earnings of $0.78 per share, a 34.5% increase year over year [1] - Revenues are expected to reach $215.07 million, reflecting a 36.9% increase from the same quarter last year [1] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating analysts' reassessment of their initial estimates [1][2] Group 2 - Revenue from the Telecommunications market is forecasted to reach $56.06 million, an increase of 83% from the prior-year quarter [4] - Revenue from the Industrial & Defense market is expected to be $97.61 million, indicating a 26.8% increase year over year [4] - Revenue from the Data Center market is projected at $61.40 million, reflecting a 24% year-over-year change [4] Group 3 - M/A-Com shares have shown a return of -2.1% over the past month, compared to the Zacks S&P 500 composite's +1.7% change [5] - M/A-Com holds a Zacks Rank 3 (Hold), suggesting it is expected to mirror overall market performance in the near future [5]

Industry Overview - Semiconductor chips are essential for telecommunication equipment, electronic goods, and IoT devices, with increasing demand driven by advancements in AI technologies [1] - The 2022 Chips Act allocates $39 billion in direct grants and $75 billion in loans to revitalize domestic semiconductor production, aiming to foster innovation and expansion in the industry [2][3] - The steady rollout of 5G and investments in rural fiber infrastructure are creating healthy demand trends for semiconductor chips, with 5G being a primary catalyst for next-generation IoT services [5][6] Technological Advancements - Continuous network tuning and optimization are necessary to maintain performance standards, leading to increased demand for advanced wireless products and services [7] - The shift towards converged network structures is enabling operators to combine voice, video, and data communications, driving the development of solutions that support this convergence [8] - The proliferation of cloud networking solutions is increasing the demand for quality networking equipment, further boosting chip demand [9] Focus on Novel Technologies - Adoption of cutting-edge technologies such as AI, machine learning, and advanced networking platforms is driving higher demand for semiconductor chips [10] - The need for faster data transfer rates due to changing data consumption patterns, particularly for video content, is expected to drive the adoption of higher-speed optical and photonic components [14] Company Highlights - **MACOM Technology Solutions Holdings, Inc. (MTSI)**: Offers power analog semiconductor solutions and has a Zacks Industry Rank of 82, with a stock gain of 40.9% over the past year and long-term earnings growth expectations of 21% [13][15] - **NVIDIA Corporation (NVDA)**: A leader in visual computing technologies, NVIDIA's GPUs are benefiting from the AI boom, with a stock gain of 161.4% over the past year and long-term earnings growth expectations of 20% [16][18] - **Semtech Corporation (SMTC)**: Manufactures analog and mixed-signal semiconductors, with a Zacks Rank of 2 and a stock gain of 190% over the past year, alongside long-term earnings growth expectations of 20% [19][21]

Group 1 - M/A-Com (MTSI) is currently outperforming the Computer and Technology sector, with a year-to-date performance of 42.5% compared to the sector's average return of 31.3% [4] - The Zacks Rank system indicates M/A-Com has a strong buy rating (1), with a consensus estimate for full-year earnings increasing by 7.2% over the past quarter, reflecting positive analyst sentiment [3] - M/A-Com belongs to the Semiconductor - Analog and Mixed industry, which has seen a decline of 8.3% year-to-date, further highlighting M/A-Com's superior performance within its industry [5] Group 2 - The Computer and Technology sector includes 618 companies and is currently ranked 2 in the Zacks Sector Rank, which evaluates 16 different sector groups [2] - Meta Platforms (META) is another strong performer in the Computer and Technology sector, with a year-to-date increase of 68.7% and a Zacks Rank of 2 (Buy) [4][5] - The Internet - Software industry, where Meta Platforms operates, has 145 stocks and has returned 32.4% since the beginning of the year, indicating a competitive environment within the sector [6]

Core Insights - MACOM Technology Solutions Holdings, Inc. reported fourth-quarter fiscal 2024 earnings of 73 cents per share, aligning with the Zacks Consensus Estimate and reflecting a year-over-year increase of 30.4% [1] - The company's revenues rose 33.5% year over year to $200.71 million, slightly missing the Zacks Consensus Estimate by 0.23% [2] - Following the earnings report, MACOM shares increased by over 14%, although they have declined 49.7% year to date, underperforming the Zacks Computer & Technology sector's return of 28.5% [2] Revenue Breakdown - Telecom Market: Generated revenues of $51.7 million, accounting for 25.8% of total revenues, marking a 69% year-over-year increase due to high demand for products supporting the 5G market [3] - Data Center Market: Revenues reached $56.2 million, representing 28% of total revenues, up 38.8% from the previous year, driven by strong demand from Internet service providers [4] - Industrial & Defense Market: Generated revenues of $92.8 million, making up 17.2% of total revenues, with an 8.8% year-over-year increase, reflecting high demand for products in electronic warfare and secure communications [5] Operating Performance - Non-GAAP gross margin for the fourth quarter was 58.1%, a contraction of 200 basis points from the previous year [6] - Non-GAAP operating expenses were $65.9 million, up 24.1% year over year, but as a percentage of revenues, this figure decreased by 240 basis points to 32.9% [6] - Non-GAAP operating margin improved to 25.2%, an expansion of 50 basis points from the prior year [6] Balance Sheet Highlights - As of September 27, 2024, cash equivalents and short-term investments totaled $581.9 million, an increase from $521.5 million as of June 28, 2024 [7] - Inventories rose to $194.5 million from $190.7 million in the previous quarter [7] - Long-term debt obligations were $448.3 million, slightly up from $447.9 million in the prior quarter [7] Future Guidance - For the first quarter of fiscal 2025, MACOM expects revenues between $212 million and $218 million, exceeding the Zacks Consensus Estimate of $203.3 million [9] - The anticipated non-GAAP gross margin is projected to be between 57% and 59% [9] - Adjusted earnings per share are expected to range from 75 to 81 cents, compared to the Zacks Consensus Estimate of 72 cents [9]

Call Start: 08:30 January 1, 0000 9:35 AM ET MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Q4 2024 Earnings Conference Call November 07, 2024 08:30 AM ET Company Participants Steve Ferranti - Vice President, Corporate Development & Investor Relations Steve Daly - President & Chief Executive Officer Jack Kober - Chief Financial Officer Conference Call Participants David Williams - The benchmark company Harsh Kumar - Piper Sandler Tore Svanberg - Stifel Srini Pajjuri - Raymond James Karl Ackerman - ...