MACOM Fiscal Q3 2026 Earnings: Revenue Growth Expanded Operating Margins

MACOM Technology Solutions (Nasdaq: MTSI) reported fiscal third-quarter 2026 revenue of $342.2 million, up 35.8% year over year, while GAAP diluted EPS increased to $1.28 from $0.48. GAAP operating margin expanded to 22.5% from 14.9%, although a $41.5 million investment fair-value gain materially boosted net income. The company’s fiscal Q4 outlook calls for another sizable sequential increase in revenue and adjusted profitability.

Core Earnings Data

The results cover the three months ended July 3, 2026. GAAP gross profit grew approximately 43.1%, faster than revenue, while total operating expenses increased about 20.3%; this combination drove substantial operating leverage.

The release did not provide segment or end-market revenue figures, so the disclosed information does not support attributing the growth to a particular business line.

Operating Leverage Expanded Margins, While an Investment Gain Amplified GAAP Profit

R&D expense increased about 17.2% to $74.3 million, while selling, general and administrative expense rose about 25.4% to $48.1 million. Both grew more slowly than revenue, reducing total GAAP operating expenses to 35.8% of revenue from 40.4% a year earlier. Together with the higher gross margin, this lifted GAAP operating margin by 7.6 percentage points.

Below operating income, MACOM recorded a $41.5 million gain from the fair-value change in an investment. This non-operating item helped push GAAP net income growth well above adjusted earnings growth and raised GAAP net margin to 29.4%. Adjusted results exclude that gain but also add back items including $24.5 million of share-based compensation, amortization, acquisition-related costs, and associated tax adjustments.

Profitability, Cash Flow, and the Balance Sheet

Quarterly cash-flow figures were not provided; the available cash-flow statement covers the first nine months of fiscal 2026. Nine-month operating cash flow increased about 21.6% to $201.6 million from $165.7 million, even as accounts receivable and inventory used $30.5 million and $43.8 million of cash, respectively. Capital expenditures increased to $46.9 million from $22.3 million.

At July 3, cash and short-term investments totaled approximately $663.0 million, down from about $786.0 million at the end of fiscal 2025. MACOM also held $102.1 million of long-term investments. Reported debt declined to $340.5 million from $500.6 million, consistent with $161.2 million of convertible-note repayments during the first nine months.

Inventory increased to $281.5 million from $237.8 million at fiscal year-end, while accounts receivable rose to $179.1 million from $148.6 million. These increases supported a larger operating base but also absorbed cash.

Fiscal Q4 2026 Guidance

For the quarter ending October 2, 2026, MACOM expects revenue of $415 million to $425 million. The midpoint represents approximately 22.7% sequential growth from fiscal Q3, while the adjusted gross-margin range would extend the margin improvement reported this quarter.

The EPS outlook assumes a 3% non-GAAP tax rate and 78.9 million diluted shares. The company did not provide a GAAP reconciliation for its forward-looking non-GAAP figures because certain adjustments cannot be reliably estimated.

Recent Insider Transactions

The supplied insider data show 182,336 shares purchased across 13 transactions and 726,935 shares sold across 17 transactions during the latest six-month period. That equates to net sales of 544,599 shares, or 7.2% of the reported 7.06 million shares held by insiders.

The ten most recent reported transactions include five sales, two stock gifts, and three stock awards. These disclosures describe the transactions but do not establish the insiders’ reasons for trading.

Risks Investors Should Watch

• Fiscal Q4 requires a steep sequential ramp. The revenue outlook implies growth of roughly 21% to 24% from fiscal Q3, increasing the importance of execution during the quarter.
• The investment gain is not a recurring operating driver. The $41.5 million fair-value gain materially increased GAAP earnings and may create volatility in future period comparisons.
• Working-capital and investment needs are rising. Inventory and receivables increased from fiscal year-end, while nine-month capital expenditures more than doubled year over year.
• Non-GAAP adjustments remain substantial. Share-based compensation alone was $24.5 million, or 7.2% of quarterly revenue, and accounted for most of the difference between GAAP and adjusted operating income.

Summary

MACOM’s fiscal Q3 2026 results combined 35.8% revenue growth with higher gross margin and slower operating-expense growth, producing significant operating-margin expansion. GAAP net income received an additional lift from an investment fair-value gain, making adjusted earnings a useful comparison for underlying operations. The main follow-up points are whether MACOM can deliver the large sequential revenue increase embedded in fiscal Q4 guidance, sustain adjusted gross margin above 60%, and convert growth into cash while managing inventory and capital spending.