MACOM Technology Solutions (MTSI) Q3 2024 earnings summary

Executive summary

• Q3 FY24 revenue was $190.5M, up 28.3% year-over-year and 5.1% sequentially, driven by acquisitions and strong Data Center and Telecom growth.

• Net income reached $19.9M ($0.27 per diluted share), up from $11.9M ($0.17) year-over-year; adjusted EPS was $0.66 per diluted share.

• Data center revenue grew 83.9% year-over-year and 13.6% sequentially; telecom up 31.9% year-over-year and 7.1% sequentially; I&D revenue grew 8.8% year-over-year and was flat sequentially.

• Ended the quarter with $521.5M in cash and short-term investments; book-to-bill ratio was 1.1:1.

• Recent acquisitions, including the RF Business of Wolfspeed, MESC, and Linearizer, contributed significantly to revenue growth and portfolio expansion.

Financial highlights

• Adjusted gross profit was $109.5M (57.5% of revenue), up 40 bps sequentially; GAAP gross margin was 53.2%, down from 58.0% year-over-year.

• Adjusted operating income was $45.6M (24% margin), up from $40.2M in Q2; adjusted EBITDA was $53M (27.8% of revenue).

• Adjusted net income was $48.9M, up from $43.2M in Q2; diluted EPS was $0.27, adjusted EPS $0.66.

• Cash, cash equivalents, and short-term investments were $521.5M at quarter-end; net cash provided by operating activities for nine months was $100.3M.

• R&D expenses rose 29.6% year-over-year to $47.5M in Q3, reflecting higher headcount and acquisition integration.

Outlook and guidance

• Q4 FY24 revenue expected between $197M-$203M, with adjusted gross margin of 57%-59% and adjusted EPS of $0.70-$0.76.

• Sequential revenue growth anticipated across all end markets, led by data center (low to mid-teens growth), followed by telecom and I&D (low single-digit growth).

• FY24 full-year outlook: data center up ~35%, I&D up ~10%, telecom down slightly year-over-year.

• Management expects near-term demand softness across all primary markets due to macroeconomic conditions.

• Estimated annual effective tax rate for FY24 is expected to be approximately 20%.