MACOM Technology Solutions Holdings, Inc. MTSI framed its third-quarter fiscal 2026 call around accelerating Data Center demand, a record order pace and expanding manufacturing leverage. President, CEO and Chairman Stephen Daly said demand was strong across all three end markets and backlog continued to build.
MTSI’s fourth-quarter fiscal 2026 adjusted earnings of $1.40 per share beat the Zacks Consensus Estimate of $1.34, supporting management’s stronger fourth-quarter outlook. Revenues of $342.2 million also topped the Zacks Consensus Estimate of $335.11 million by 2.10%.
MTSI Sets a Higher Q4 Growth Bar
Daly guided fiscal fourth-quarter revenue to $415 million-$425 million, adjusted gross margin to 60%-61% and adjusted earnings to $1.97-$2.03 per diluted share.
He expects Data Center revenue to rise approximately 35% sequentially, Industrial and Defense to increase approximately 20% and Telecom to grow in the low-single-digit range.
CFO and Senior Vice President John Kober added that adjusted operating margin is expected to reach approximately 37% in the fourth quarter, extending the operating leverage seen through fiscal 2026.
MACOM Data Center Demand Accelerates
Data Center revenue reached $137.6 million in the fiscal third quarter, up approximately 40% sequentially. Daly attributed the expansion to high-speed connectivity demand, particularly 800G and 1.6T platforms and 200-gig PAM4 products.
MACOM posted a record 1.6:1 book-to-bill ratio, up from 1.5 in Q2 and 1.3 in Q1. Daly said Data Center was the standout area within strong bookings across all three markets.
A Barclays analyst asked about fiscal 2027. Daly said annualizing the midpoint of Q4 guidance yields 27%-28% company growth and 50% Data Center growth as a base case.
MTSI Expands Margin Leverage
Adjusted gross margin was 59.7%, up 120 basis points sequentially, while adjusted operating margin reached 31.5% from 25.2% a year earlier.
Kober tied the margin gains to higher fab utilization, improved yields and operating efficiencies. He said capacity additions will continue through the remainder of fiscal 2026 and into fiscal 2027.
In response to a Jefferies analyst, Kober said quarterly gross margin improvement could run 25-50 basis points going forward. He also expects the adjusted tax rate to rise from 3% toward the mid-single digits during fiscal 2027.
MACOM Builds Its Photonics Opportunity
Daly said 200G photodetectors are ramping in volume production and becoming a more meaningful contributor to Data Center growth. The company is also sampling 400G photodetectors with customers.
Qualification work continues on MACOM’s 75-milliwatt continuous-wave laser. Daly said reliability testing was progressing well, while planning has begun for a potential production start in late calendar 2027.
A Stifel analyst asked which indium phosphide opportunities matter most. Daly emphasized current photodetector demand and said successful CW laser production in 2028 would open a much larger growth opportunity.
MTSI Broadens Defense and Telecom Growth
Industrial and Defense revenue reached $133.4 million, up 11% sequentially. Daly said MACOM expects its Defense business to grow approximately 25% in fiscal 2026, supported by radar, missile, drone and electronic warfare applications.
Telecom revenue was $71.3 million, up 2% sequentially. Daly said several LEO programs are set to enter production around the end of calendar 2026 and beginning of 2027.
In Q&A, Daly also highlighted strength outside LEO. He said cable infrastructure revenue is tracking around 40% growth this year, while metro long-haul is growing more than 50%.
MACOM Keeps Fiscal 2027 Focus on Scale
Management’s posture centered on adding capacity without abandoning capital discipline, expanding R&D and using a broader product portfolio to capture demand across Data Center, Industrial and Defense, and Telecom.
Daly and Kober also emphasized continued margin improvement as revenue scales, while keeping investment focused on internal manufacturing capacity, photonics and high-speed connectivity.
MTSI Zacks Signals Stay Mixed
MTSI carries a Zacks Rank #3 (Hold). Its Growth Score of B is favorable, while the Value Score of F is weak; the Momentum Score and VGM Score are both C. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Style Score framework allows Zacks Rank #3 stocks to be held, with higher Style Score grades remaining preferable. MTSI’s mix therefore presents a stronger growth signal than value or combined-style signals. The Zacks Rank can change as earnings estimates are revised after the just-reported results.
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MACOM Technology Solutions Holdings, Inc. (MTSI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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