Aug 6, 2026 earnings call — Record bookings and Data Center growth
MACOM reported Q3 revenue of $342.2 million and set Q4 revenue guidance of $415 million to $425 million.
Revenue $0.3B (est $0.3B) · EPS $1.40 (est $1.35) · Next-quarter revenue outlook $0.4B–$0.4B
Key quotes
"Our Data Center business is growing due to increased demand for high-speed connectivity using our 800G and 1.6T PAM4 products."
"Our laser team is actively working to lock down a production process."
"We expect to add new capacity across our operations during the remainder of fiscal 2026 and into fiscal 2027."
Analyst Q&A 10
Drivers of Data Center strength
Q (Thomas O'Malley · Barclays): What specifically drove strength in Data Center this quarter and the higher book-to-bill? Are TIAs/drivers or PDs responsible, and what's behind the increased bookings?
A: Management said growth came from many data rates but the primary driver was 200-gig PAM4 products in pluggable optical modules. They also said book-to-bill is primarily driven by 1.6 and 800-gig platforms.
"If you pull back and look at our growth from, let's say, fiscal '25 to fiscal '26, the primary driver is 200-gig PAM4 products, primarily in pluggable optical modules" — Stephen Daly (CEO)
Telecom and LEO timing
Q (Blayne Curtis · Jefferies): When might the Telecom business accelerate next year, and how will LEO programs layer into that growth? Also, what are the expected incremental gross margins?
A: Management said Telecom (smallest segment) should grow double-digits and two or three major LEO programs start production end of this calendar year and early next. They also said gross margins improved and expect sequential quarterly gains of about 25 to 50 basis points going forward.
"We do have, as we've talked about in the past, two or three major LEO programs that will start production at the end of this calendar year and at the beginning of next." — Stephen Daly (CEO)
Impact of China transceiver restrictions
Q (Vivek Arya · BofA): If restrictions on Chinese module makers happen, how does that affect MACOM? Also, what's the SAM change from 2026 to 2027 and will you gain share?
A: Management said if hyperscalers shift transceiver suppliers due to rules, MACOM would likely follow that business to other manufacturers, causing a customer mix shift. They also said they raised SAMs for 2027 after updating the strategic plan and expect SAM growth of about 20% to 30% from '26 to '27.
"So from our point of view, I think we would see a customer mix shift." — Stephen Daly (CEO)
NPO product involvement
Q (Quinn Bolton · Needham & Company): What is MACOM supplying for NPO (TIAs, drivers, full engines)? Will you provide full optical engines or parts?
A: Management said they will not build full engines; they are a chip supplier of drivers and TIAs for NPO architectures. They said they have about 10 to 20 active NPO development projects and expect revenue from some programs to start in 2028.
"We have numerous over, I would say, somewhere between 10 and 20 active NPO development projects that are servicing various customers and use cases." — Stephen Daly (CEO)
Indium phosphide priorities
Q (Tore Svanberg · Stifel): Which indium phosphide projects (lasers, PDs) are most promising short term and when will EU defense revenue grow?
A: Management said PDs are ramping now with strong demand and added capacity. They said bringing a CW laser into production in 2028 would be a watershed moment and could be a very large market; EU defense revenue should become more material around 2028 after fab upgrades.
"If we're able to bring a CW laser into production in 2028, that's a watershed moment." — Stephen Daly (CEO)
OpEx/CapEx plans next year
Q (Sean O'Loughlin · TD Cowen): Any early plans for OpEx or CapEx in fiscal '27, and benchmarks for expense growth?
A: Management said they target to exceed 40% operating margin next year and will keep capital spending judicious, expecting next year's CapEx to be roughly similar to this year, in the "$60 million range." They also said they updated a CHIPS Office project plan and are renegotiating terms.
"When we look at our capital spending for next year, it won't be too dissimilar to this year, sort of in that $60 million range." — Stephen Daly (CEO)
Use of growing cash
Q (Christopher Rolland · Susquehanna): What will you do with the growing cash pile—pay debt, buy assets, or make investments?
A: Management said their philosophy is to build cash and make strategic investments, citing the recent IQE investment. They also said they will use cash to pay down debt and for internal investments and tuck-in acquisitions to round out the portfolio.
"Our philosophy is you can never have enough cash, and we want to build that." — Stephen Daly (CEO)
Input cost inflation and margins
Q (William Stein · Truist): Are input cost increases affecting COGS and can you pass these costs to customers? Is margin improvement from mix or utilization?
A: Management said input costs (labor, electricity, materials) are increasing and they try to pass costs to customers when possible, but not always. They also said utilization increases plus mix (more indium phosphide PDs) and existing fixed costs leverage are helping gross margins, and lasers should help further.
"We try to pass those costs on to customers when possible." — Stephen Daly (CEO)
Lasers for hyperscalers vs merchant market
Q (Karl Ackerman · BNP Paribas): Are hyperscalers that build in-house transceivers ordering meaningful optical components and lasers from you? Could datacom be the largest opportunity?
A: Management said they are not a high-volume laser manufacturer today and currently sell lasers into the merchant module market (100-gig classic modules). They also said Data Center and I&D SAMs are each about $6 billion and Data Center could outgrow I&D in the near term, but both are large opportunities.
"So we are not a high-volume manufacturer of lasers today." — Stephen Daly (CEO)
Optical content: lasers/detectors vs TIAs/drivers
Q (Timothy Savageaux · Northland): Is laser and detector content on modules larger than TIA/driver content, and are PDs already materially contributing to growth?
A: Management said they have not stated lasers/detectors are larger than TIAs/drivers and treat both as multibillion-dollar product areas they can serve. They said PD revenue is more meaningful and will grow significantly ahead, but they would not break out product-line revenue publicly for competitive reasons.
"At the end of the day, they're both classes of products are, in our mind, multibillion-dollar product areas that we can service, and we have unique technology, whether it's our chip design capability or our internal indium phosphide manufacturing capability." — Stephen Daly (CEO)