MACOM Technology Solutions Holdings, Inc.

Welcome to MACOM's second fiscal quarter 2026 conference call. This call is being recorded today, Thursday, May 7, 2026. At this time, all participants are on a listen-only mode. I will now turn the call to Mr. Steve Ferranti, MACOM's Senior Vice President of Corporate Development and Investillation. Mr. Ferranti, please go ahead.

Thank you, Olivia. Good morning, and welcome to our call to discuss MACOM's financial results for the second fiscal quarter of 2026. I would like to remind everyone that our discussion today will contain forward-looking statements, which are subject to certain risks and uncertainties, as defined in the Safe Harbor for Forward-Looking Statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. For a more detailed discussion of the risks and uncertainties that can result in those differences, we refer you to MACOM's filings with the SEC. Management statements during this call will also include a discussion of certain adjusted non-GAAP financial information. A reconciliation of GAAP to adjusted non-GAAP results are provided in the company's press release and related Form 8K, which was filed with the SEC today. With that, I'll turn over the call to Steve Daly, President and CEO of MACOM.

Thank you, and good morning. I will begin today's call with a general company update. After that, Jack Kober, our Chief Financial Officer, will review our Q2 results for fiscal year 2026. When Jack is finished, I will provide revenue and earnings guidance for the third quarter of FY26, and then we will be happy to take some questions. Revenue for the second quarter of fiscal 2026 was $289 million, and adjusted EPS was $1.09 per diluted share. Demand for our products is strong across our three end markets, and our backlog continues to build. Our sequential financial performance improved across most key metrics in Q2, including gross and operating margins. Our Q2 book-to-bill ratio was 1.5 to 1, and orders booked and shipped within the quarter was 18% of total revenue. All three end markets had exceptional bookings with notable outperformance in the data center. Our backlog remains at a record level, and we believe this strength reflects that we are in the right markets with the right products at the right time. Turning to recent market trends, Q2 revenue performance by end market was as expected, with all end markets growing sequentially. Industrial and defense was 120.7 million, Data Center was 98.2 million, and Telecom was 70.1 million. Data Center was up approximately 14.5% sequentially, Telecom was up 3% sequentially, and IND was up 2.5% sequentially. Both IND and Data Center revenues are at record levels. As we look to the second half of our fiscal year, we expect data center and IND revenues to continue to lead our growth. With the exceptional first half bookings, we are positioned for a strong second half. Additionally, we expect to see momentum from our telecom segment as we enter our fiscal 2027 due to the anticipated timing of LEO space production programs and associated revenues. We believe our growth strategy of strengthening our core technologies and expanding our product portfolio around three central themes, highest power, highest frequency, and highest data rate is working. We believe we are establishing ourselves as a differentiated strategic supplier to our customers. Next, I'll quickly summarize progress on our five goals for FY26, which we outlined on our last call. First, taking advantage of the data center opportunity. We continue to enhance our design and manufacturing capabilities to support our customers in this market. And we are pleased to raise our data center FY26 revenue growth base case from 35 to 40% to over 60%. Second, expanding our 5G market share. We have developed two new process technologies which will provide us with both performance and cost benefits. GAN4 is our next-generation process for high-power linear amplifiers for 5G base stations, and we expect our new IPD processes will enable us to insource these components while achieving better electrical performance at a lower cost. Our technology teams have done a great job making these processes a reality. Third, extending our leadership in A&D. I am pleased that we recently received a Defense Manufacturing Technology Achievement Award sponsored by the Joint Defense Manufacturing Technology Panel. The panel includes members from various armed services and the Office of the Secretary of Defense. This award reflects our progress to increase manufacturability of advanced GAN technology. Our team continues to innovate and we look forward to introducing a wide range of advanced GaN MIMIC products in the next 12 to 18 months. Fourth, continued development of advanced III-V semiconductor technologies. We continue to strengthen our semiconductor processing expertise and capabilities. As an example, our team has done amazing work on OMIC regrowth for advanced high-efficiency GaN amplifiers. In addition, we are developing advanced indium phosphide epitaxial stacks for our next generation optical products for the data center. And last, management of our capital and investments. As we discussed last quarter, we have numerous strategic investment activities that we believe will support our fiscal 2027 and 2028 revenue growth objectives. We take a disciplined approach to managing capital investments for near and long-term success next i'll take a moment to review each of our three core markets in more depth data center based on customer engagements and general market trends we expect 1.6 t deployments inside the data center to continue to be strong throughout calendar 2026. today our revenue growth is primarily being driven by increased pluggable optical modules and optical cable production volumes using our 800 and 1.6T PAM4 products. As a reminder, our portfolio is highly diversified, supporting NRZ, PAM4, and coherent modulations across EML, silicon photonics, and VIXL-based architectures. We are also seeing modest growth from our lower data rate 100G single-mode and multimode products. Demand for our 200 gig per lane photo detectors continues to grow, supporting 800G and 1.6T optical connectivity. Part of our near-term and long-term growth strategy is to expand our photonics portfolio with both higher speed photo detectors and CW lasers. We are seeing growing interest in coherent light solutions, as coherent modulation can enable higher bandwidth performance with significantly improved power efficiency, especially in shorter reach applications. We believe coherent light solutions will expand and we are well positioned to support this trend. We continue to promote linear equalizer products to help extend the reach of copper interconnects at 800G and 1.6T. We are working closely with customers to address their specific program requirements and various use cases. In many cases, our newest products are designed for co-packaged and highly integrated architectures like CPO and NPO. We can differentiate in this market based on our strong customer relationships, IC and system design expertise, as well as our unique photonic materials. In summary, as we look ahead, we see many new large opportunities in the data center. We believe our SAM is increasing due to the combination of AI-driven market growth combined with our product portfolio expansion. Our strategy is to collaborate with the leaders in the industry and support their connectivity needs, whether it's scale up, scale out, or scale across. Turning to our IND business, we are seeing many growth opportunities across the industrial and defense markets, primarily in the defense segment. Comparing our first half results of FY26 With the first half of FY25, our IND business grew by 22%. Overall demand remains healthy, and notably, we expect revenues from our top 25 defense customers to significantly increase from FY25 to FY26. Our defense customer base is large and very broad, and we typically support radar systems, missile and missile defense systems, drone and drone defense systems, communication systems, and wideband electronic warfare systems. Today, we support a wide range of production programs across a diverse range of applications. We are also involved with redesigns and upgrades of existing platforms to improve performance against new threats and to improve overall system performance with more capable and modern electronics. Finally, the DoD is pushing our customers for rapid design and deployment of new systems and capabilities, spanning from modern radars to better electronic warfare systems, new space-based sensors, and even more secure communications. These systems are typically using higher frequencies, higher RF or microwave power levels, and higher levels of integration. In some cases, high performance optical systems are deployed, such as RF over fiber, for remote antenna systems. The pace of innovation in the defense market is accelerating by both the traditional defense primes and the newer, more nimble defense companies. These demanding requirements play directly to Macom's strengths, and we offer our customers turnkey support from custom chip design to subsystem solutions. All of this is driving incremental semiconductor content growth opportunities and opening up new design win opportunities. MACOM has numerous competitive advantages within the IND market. At the heart of these is MACOM's deep expertise in high-performance IC design capabilities spanning RF, microwave, millimeter wave, and optical domains. We have a growing team of system designers with architectural knowledge, which enable us to engage much earlier in our customers' project design cycles and we present the full scope of MACOM's capabilities to help solve the customer's technical challenges. MACOM also offers European and U.S.-based wafer fab and U.S.-based hybrid manufacturing capabilities at scale with proven technology, reliability, and long-term supply assurance, factors that are increasingly important as defense customers prioritize domestic sourcing and supply chain security. Within the telecom end market, satellite-based broadband access and direct-to-device, or D2D, opportunities remain robust with numerous LEO networks in the planning and production stages. The number of LEO satellites planned to be launched continues to grow as more companies compete to provide commercial broadband data, voice, and video communications by satellite. These networks typically use microwave or millimeter wave frequencies and free space optics, or FSO, communications for satellite-to-satellite or satellite-to-ground communications. Today we are supporting LEO broadband constellations and D2D programs that are either in development, low-rate initial production, or LRIP, or full production. LEO and MEO constellations have many key areas where MACOM can contribute, including large phase array antennas with active beam steering, D-to-D links operating at UHF or S-band, data center-like electronics with high-speed optical links transferring data within or across the satellite, free space optics for satellite-to-satellite communications, and ground terminal and gateway linearization for high-power transmitters. I'll note the backhaul networks for these constellations continues to move higher in frequencies. The 40-nanometer GAN technology, which Macon recently licensed, from Hughes Research Lab, HRL, is being transferred to MACOM's FAB. This technology will enable high-capacity satellite links using E-band, W-band, and D-band. Ground stations and gateways are also a key part of the LEO networks. MACOM specializes in designing products and solutions that overcome nonlinearity of RF, microwave, and millimeter wave signal transmission for satellite communication systems. In many cases, ground-to-satellite links prefer linearization of SSPAs or TWTAs to boost the linear power efficiency of the link. Turning towards the 5G segment of telecom, our global team continues to secure new business and macro base stations, driven by the need for high-performance amplifiers and multiband radios. Our RF power team is now sampling our new GAN4 products to customers, which we believe will further improve our competitiveness. We expect the global RAN market will be flat in 2026, with some regional variations. However, for MACOM, we expect our future 5G growth will be driven by content and market share gains as we have, one, recently added new resources, two, roll out new products and technologies like GAN4, SOI control products, and power amplifier modules, or PAMs, And three, gain market share in high and low power macro and MIMO amplifiers. We are making good progress improving the overall performance and competitiveness of our base station portfolio, especially in the 2.7 to 3.5 gigahertz bands. And last, we believe the cable TV infrastructure market segment is also improving. We have been releasing new products and working with customers on design wins to support the upgrades from DOCSIS 3.1 to DOCSIS 4.0. Before turning it over to Jack, I would like to quickly highlight how teamwork across the organization directly impacts our financial results, with operations and engineering being a great example. Our North Carolina FAB has been increasing wafer production while simultaneously improving yields and lowering cycle times. This performance is driving improved customer satisfaction and contributing to new business and enabling us to win new customers. Our Massachusetts fab has been installing complex processing equipment to support production ramps in some areas while maintaining production continuity in other areas. Seamlessly adding this capacity is enabling us to gain market share from our competitors. Our global planning team continues to partner with key suppliers and partners to ensure the customers are getting the deliveries they need on time. This results in brand loyalty and enables us to fully leverage our entire technology portfolio into the market and capture market share. These examples illustrate how dedication, commitment to excellence, teamwork, and coordination of our manufacturing, engineering, and planning community is directly leading to market share gains and revenue growth. In summary, Our strategy is to continue to build a best-in-class, diversified semiconductor portfolio that will enable MACOM to capture a larger share of the three markets we focus on. Our agility and strong teamwork across our organization helps us address opportunities and ultimately beat the competition that are often larger and have more resources. Jack will now provide a more detailed review of our financial results. Thanks, Steve, and good morning to everyone.