MACOM shares drop 18.5% despite fiscal Q4 profit beat

MACOM (MTSI) shares fell 18.5% at 3:59 p.m. ET, from a $233.13 close.

MACOM (MTSI) reported adjusted earnings of $2.09 per diluted share for its fiscal fourth quarter, topping the $2.04 consensus estimate. Revenue was $424.82 million, in line with the $428.64 million consensus estimate.

Here's how the company did:

• Adjusted EPS: $2.09 per diluted share vs. $0.94 a year earlier, against the $2.04 consensus estimate
• GAAP EPS: $1.78 per diluted share vs. $0.59 a year earlier
• Revenue: $424.82 million vs. $261.17 million a year earlier, against the $428.64 million consensus estimate
• Adjusted gross margin: 61.3% vs. 57.1% a year earlier
• Adjusted income from operations: $162.25 million, or 38.2% of revenue, vs. $66.99 million a year earlier

Revenue rose 62.7% from a year earlier and 24.1% from the prior fiscal quarter, when it was $342.24 million.

Revenue has risen in each of the last three quarters, from $261.2 million to $342.2 million.

GAAP gross margin was 59.9%, compared with 54.5% a year earlier.

Outlook for the first quarter

For the fiscal first quarter ending Jan. 1, 2027, the company expects revenue of $450 million to $460 million.

It also expects adjusted gross margin of 62.0% to 63.0% and adjusted earnings of $2.21 to $2.29 per diluted share.

That outlook assumes an anticipated non-GAAP income tax rate of 6% and 79.0 million fully diluted shares outstanding.

On Aug. 6, the company had forecast fourth-quarter revenue of $415 million to $425 million and adjusted EPS of $1.97 to $2.03.

Fourth-quarter revenue of $424.82 million fell within that range, and adjusted EPS of $2.09 came in above it. Adjusted gross margin of 61.3% was above the 60.0% to 61.0% it had forecast.

Fiscal 2026 full year

For the full fiscal year, revenue was $1.33 billion, up 37.3% from $967.3 million in fiscal 2025.

GAAP net income was $335.25 million, or $4.31 per diluted share, compared with a net loss of $54.21 million, or 73 cents per diluted share, a year earlier.

The prior year included a $193.1 million loss on extinguishment of debt tied to the refinancing of part of the company's convertible senior notes due 2026.

Adjusted net income was $435.67 million, or $5.60 per diluted share, against $263.37 million, or $3.47 per diluted share, in fiscal 2025.

Stephen G. Daly, President and Chief Executive Officer of MACOM, expects "continued growth in fiscal 2027."

Costs and cash

Research and development expense was $76.08 million in the quarter, up from $62.88 million a year earlier.

Adjusted EBITDA, or adjusted earnings before interest, taxes, depreciation and amortization, was $171.49 million, or 40.4% of revenue, up from $75.71 million a year earlier.

Net cash provided by operating activities for the fiscal year was $357.09 million, against $235.37 million a year earlier.

Repayment of convertible notes used $161.15 million during fiscal 2026.