MACOM Revenue Growth Accelerates to 35.8% as Margins Climb
MACOM Technology Solutions Holdings posted fiscal third-quarter revenue of $342.2 million, up 35.8% from a year earlier and a third straight quarter of accelerating growth.
MACOM Technology Solutions Holdings (MTSI) reported fiscal third-quarter revenue of $342.2 million, up 35.8% from a year earlier and up 18.4% from the prior quarter.
Both growth rates accelerated from the second quarter's already-improving pace of 22.5% year-over-year and 6.4% sequential growth. The trend now spans three consecutive quarters: year-over-year growth moved from 24.5% in the first fiscal quarter to 22.5% in the second and 35.8% in the third, while sequential growth climbed from 4.0% to 6.4% to 18.4% over the same stretch.
Profitability expanded alongside the top line. GAAP gross margin reached 58.3% in the third quarter, up from 56.9% in the second quarter and 55.3% a year earlier, marking a third straight quarter of margin expansion. GAAP operating margin rose to 22.5% of revenue from 17.6% in the prior quarter and 14.9% a year ago, while adjusted operating margin climbed to 31.5% from 27.8%.
Net income more than doubled from a year earlier to $100.7 million, or $1.28 a share, from $36.5 million, or $0.48 a share, and rose from $46.3 million, or $0.60 a share, in the second quarter. The result included a $41.5 million non-operating gain on the fair value of the company's investment in IQE plc, a discrete line item not present in either the prior quarter or the year-ago period. Adjusted earnings, which strip out such items, rose to $1.40 a share from $1.09 in the second quarter and $0.90 a year earlier.
For the nine months ended July 3, 2024, net income totaled $195.8 million, compared with a $99.3 million loss in the same period a year earlier, when results were weighed down by a $193.1 million loss on debt extinguishment that had no counterpart in the current period.
MACOM guided fourth-quarter revenue to $415 million to $425 million, implying sequential growth of roughly 21% to 24% off the $342.2 million base just reported, a further step-up from the 18.4% sequential growth delivered in the third quarter. Adjusted gross margin guidance of 60.0% to 61.0% builds on the 59.7% just reported, continuing an uptrend that began with the third quarter's own guide of 59.0% to 60.0%. Adjusted diluted earnings guidance of $1.97 to $2.03 a share marks a large increase from the $1.40 reported for the third quarter and from the $1.31 to $1.37 range the company had guided to ahead of that quarter.
The balance sheet showed the effects of debt management alongside the growth. Short-term debt jumped to $340.5 million at July 3, 2024, from $160.9 million at fiscal year-end, while long-term debt fell to zero from $339.6 million, reflecting the reclassification of convertible notes to current liabilities. Cash and cash equivalents declined to $89.6 million from $112.1 million at fiscal year-end, as financing activities used $207.5 million during the nine-month period, including $161.2 million to repay convertible notes.