MTSI Q3 Earnings Surpass Expectations, Revenues Rise Y/Y

MACOM Technology Solutions Holdings, Inc. MTSI reported third-quarter fiscal 2026 earnings of $1.40 per share, which beat the Zacks Consensus Estimate by 4.5%. The bottom line grew 55.6% year over year.

MACOM Technology’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 2.6%.

MTSI posted revenues of $342.2 million in the third quarter of fiscal 2026, surpassing the Zacks Consensus Estimate by 2.1%. The top line increased 35.8% year over year.

Growth was broad-based across all three end markets, led by data center. MACOM also posted a record book-to-bill ratio of 1.6, reflecting its highest quarterly bookings to date and strengthening visibility entering the final quarter of fiscal 2026.

MTSI's Data Center Business Leads Growth

Data center revenues were $137.60 million, rising roughly 40% sequentially to a record level. Management said fiscal 2026 data center growth is trending toward about 74%, with 200G PAM4 products for pluggable optical modules serving as the primary year-over-year growth driver.

Bookings strength in data center was mainly tied to 1.6T and 800G platforms. The company is also seeing growth in ZR light, 100G-per-lane products and legacy 25G-per-lane offerings, while 200G photodetectors are ramping up in volume production.

MACOM's I&D and Telecom Sales Advance

Industrial and Defense revenues reached a record $133.40 million, up 11% sequentially. MACOM expects its defense business to grow about 25% this year, supported by demand across radar, missile and missile-defense, drone and anti-drone, communications and electronic-warfare systems.

Telecom revenues were $71.30 million, up 2% sequentially. Management highlighted opportunities in low-Earth-orbit satellite networks, while noting that 5G remains the largest part of telecom. Cable infrastructure revenues are expected to grow about 40% this year, while metro long-haul is tracking above 50% growth.

MTSI Operating Details

For the third quarter of fiscal 2026, MACOM’s adjusted gross margin was 59.7% compared with 57.6% in the prior-year quarter. Adjusted operating income came in at $107.7 million, up from $63.5 million reported in the year-ago period. As a percentage of revenues, the adjusted operating income came in at 31.5%, up 630 basis points from the year-ago quarter.

Non-GAAP operating expenses were $96.5 million, up 18.2% year over year. As a percentage of revenues, non-GAAP operating expenses came in at 28.2%, contracting 420 basis points from the prior-year period.

MTSI’s Balance Sheet and Cash Flow

As of July 3, 2026, cash equivalents and short-term investments totaled $663.03 million, down from $664.9 million in the prior quarter.

For the third quarter of fiscal 2026, MTSI’s net cash flows from operating activities came in at $80 million.

Capital expenditures totaled $20.80 million, with fiscal 2026 CapEx expected between $60 million and $65 million as MACOM expands manufacturing capacity and R&D capabilities. The company also invested $61 million in IQE during the third quarter to strengthen supply-chain resilience.

MTSI’s Guidance for Q4 FY26

For the fourth quarter of fiscal 2026, MACOM Technology expects revenues between $415 million and $425 million. The Zacks Consensus Estimate for fourth-quarter fiscal 2026 revenues is pegged at $356.8 million, indicating year-over-year growth of 36.6%.

The company anticipates adjusted earnings per share between $1.97 and $2.03. The Zacks Consensus Estimate for earnings is pinned at $1.46 per share, indicating growth of 55.3% year over year.

Zacks Rank & Stocks to Consider

Currently, MTSI carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Lumentum LITE, Applied Materials AMAT and Analog Devices ADI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Lumentum have surged 127.4% year to date. The Zacks Consensus Estimate for LITE’s fiscal 2026 earnings is pegged at $8.19 per share, up by 5 cents over the past 30 days, indicating an increase of 297.6% year over year.

Shares of Applied Materials have jumped 105.2% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.17 per share, up by 3 cents over the past seven days, indicating a rise of 29.2% year over year.

Analog Devices shares have surged 39.1% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $12.42 per share, up by 10 cents over the past 30 days, indicating an increase of 59.4% year over year.

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