MACOM(US:MTSI)2024-02-01 22:04Financial Data and Key Metrics Changes - Revenue for Q1 was $157.1 million, up 4.5% sequentially, including approximately $6 million from the RF business acquisition [18][31] - Adjusted gross profit for fiscal Q1 was $93.1 million or 59.2% of revenue, compared to 60.1% in fiscal Q4, due to the RF business acquisition [41] - Adjusted operating income in fiscal Q1 was $38.6 million, up from $37.2 million in fiscal Q4, with an adjusted operating margin of 24.5% [42] - Adjusted earnings per fully diluted share was $0.58, compared to $0.56 in fiscal Q4 [43] Business Line Data and Key Metrics Changes - Industrial and Defense (I&D) revenue was $77 million, down 3% sequentially, while Data Center revenue was $49.5 million, up 22% sequentially, and Telecom revenue was $30.6 million, flat sequentially [10] - The Data Center end-market continues to see strong demand for 100G, 400G, and 800G optical connectivity solutions, with expectations of reduced shipments in Q2 [11][12] - Telecom revenues were down approximately 50% compared to the same quarter last year, with broad-based demand weakness across major sub-segments [34] Market Data and Key Metrics Changes - Revenue from US customers represented approximately 44% of fiscal Q1 results [41] - The RF GaN market is estimated to be a $2 billion serviceable available market (SAM), expected to grow to approximately $3 billion by 2027 [38] Company Strategy and Development Direction - The company is focused on expanding its product lines, including new technologies like KV caps BAW filters and high-frequency GaN, to enhance competitiveness [5] - The acquisition of Wolfspeed's RF business is seen as a strategic move to expand the product portfolio and improve profitability [15][16] - The company aims to improve operational efficiencies and profitability within the RF business over the next 12 to 18 months [39] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding ongoing weakness in the telecom and industrial markets throughout 2024, but believes modest growth in base revenues and profits is achievable in the second half of FY 2024 [24][32] - The company anticipates I&D and Telecom revenues to increase sequentially by approximately 20% and 50%, respectively, in Q2, while Data Center revenues are expected to decline by 15% [24] Other Important Information - The company ended the quarter with approximately $463 million in cash and short-term investments [31] - Capital expenditures totaled $4.7 million for fiscal Q1, with expectations of $30 million to $35 million for the full fiscal year [22] Q&A Session Summary Question: What are the expectations for the RF business acquisition? - Management indicated that the RF business is expected to contribute modestly to earnings in Q2, with significant synergies identified post-acquisition [16][54] Question: How does the company view the telecom market? - Management noted that while the telecom market remains weak, there are positive trends in metro long-haul and SATCOM, and they are optimistic about gaining market share in the 5G space [110] Question: What is the outlook for the Data Center business? - Management acknowledged a dip in Data Center revenues but emphasized strong long-term trends and demand for higher data rates, expecting a recovery in the back half of FY 2024 [72][106]