Macom Technology Solutions (MTSI -8.43%), a key player in analog semiconductor solutions for communications and defense, released its Q3 FY2025 results on August 7, 2025. The company reported GAAP revenue of $252.1 million, up 32.3% from the prior year period (GAAP) and topping the consensus estimate of $249.9 million (GAAP). Non-GAAP earnings per share came in at $0.90, matching analyst expectations for non-GAAP EPS. The quarter showed strong year-over-year performance across most financial metrics, though profit margins (GAAP and non-GAAP) appear to have stabilized as the company works through ongoing integration and manufacturing challenges. Overall, the period highlighted steady operational progress, continued strength in innovation, and resilience in major end markets.
| Metric | Q3 FY25(ended July 4, 2025) | Q3 Estimate | Q3 FY24(ended June 28, 2024) | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.90 | $0.90 | $0.66 | 36.4 % |
| Revenue (GAAP) | $252.1 million | $249.89 million | $190.5 million | 32.3 % |
| Gross Margin (Non-GAAP) | 57.6 % | 57.5 % | 0.1 pp | |
| Income from Operations (Non-GAAP) | $63.5 million(25.2 % margin) | $45.6 million(24.0 % margin) | 39.3 % | |
| Net Income (Non-GAAP) | $68.2 million | $48.9 million | 39.4 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q2 2025 earnings report.
Company Overview and Business Focus
Macom Technology Solutions designs and manufactures high-performance analog and mixed-signal semiconductors. Its products power infrastructure for optical and wireless networks, data centers, industrial systems, and military platforms. The business is built around key strengths in circuit and materials engineering, serving over 6,000 customers with a range of solutions.
The company’s edge lies in its ability to innovate across a broad portfolio, including integrated circuits, optical modules, amplifiers, and switches. These products are developed for demanding applications—such as high-speed data transmission and advanced defense systems—where reliability and performance are critical. Focus areas include research and development in radio-frequency and photonics technologies, expanding the reach of its semiconductor processes, and driving efficiencies through a hybrid model of internal and external manufacturing partnerships.
Quarterly Performance and Key Developments
Revenue (GAAP) grew 32.3% year over year, reflecting robust demand across key segments, especially in data center and defense-related applications. Non-GAAP net income climbed to $68.2 million, This represented a 39.5% increase from the prior year period. Non-GAAP earnings per share increased 36.4% year-over-year to $0.90. The company’s gross margin on a non-GAAP basis was 57.6%, pointing to stable profitability, as non-GAAP gross margin remained nearly flat at 57.6%.
Research and development costs (GAAP) reached $63.4 million, up 32.3% from the prior year fiscal third quarter, as Macom continued to invest in next-generation technologies. Recent highlights include the launch of the “Opto-Amp Product Line” at SATELLITE 2025, offering high-output optical amplifiers for satellite and free-space networks. The company also reported solid progress on its fourth-generation gallium nitride (GaN) on silicon carbide semiconductor process, which is used in next-gen cellular infrastructure requiring higher power, improved efficiency, and better signal accuracy. Management noted that integration of the Wolfspeed radio-frequency (RF) fab is ahead of schedule, though it has not yet contributed to higher gross margins as anticipated in Q2 FY2025 due to ongoing process and utilization challenges.
End-market trends were mixed. Telecom saw renewed growth in Q2 FY2025, driven by satellite communication (“SATCOM”), increased cable infrastructure orders, and momentum in high-speed metro and long-haul network modules. Defense spending remained strong, especially for radar and sensor platforms, while parts of the industrial market faced demand and inventory headwinds. The company received notable customer recognition, including supplier awards from BAE Systems and pilot production orders for European radar projects through its recently acquired MACOM European Semiconductor Center (MESC).
Operating expenses increased as the company scaled headcount and invested in both engineering resources and IT infrastructure. Total adjusted operating expenses (non-GAAP) rose 18.7% year over year in the second quarter of fiscal year 2025, reflecting the company’s commitment to innovation and customer support. Cash and short-term investments totaled $735.3 million, providing flexibility for future investments and working capital, while net cash from operations (GAAP) for 9M FY2025 reached $165.7 million.
Business Segments, Product Families, and Market Drivers
Macom Technology Solutions divides its business by end markets: Data Center, Telecom, and Industrial & Defense (I&D). Adoption of optical products in data center networks is driving the strongest growth, amid customer migration to higher data rates and new technologies, such as linear pluggable optics (LPO).
Telecom revenue, generated from chips and modules used in 5G infrastructure and satellite communication, benefited from growing demand in broadband access and metro network upgrades in Q2 FY2025. Within Industrial & Defense, high-frequency amplifiers and integrated modules support radar and communications. The company continued to see new design wins and volume ramps in European defense projects and major U.S. upgrades to radar and drone systems, offsetting softer demand in traditional industrial verticals.
Product development remained a highlight, with recent launches also including indium phosphide photodetectors for 800G and emerging 1.6T data center applications, as well as advanced MMICs (monolithic microwave integrated circuits) for wireless and radar use. Macom’s ability to introduce new technology—supported by eight design centers worldwide—and adapt to market shifts remains central to the business as it targets applications in photonics, high-frequency radio, and next-generation connectivity.
No material one-time events or step-changes in dividend policy were disclosed for the quarter, and no dividends were paid or declared. MTSI does not currently pay a dividend.
Financial Outlook and What to Watch
Looking ahead, management offered guidance, projecting revenue between $256 million and $264 million. Non-GAAP gross margins are expected in a range of 56.0% to 58.0%, with adjusted (non-GAAP) earnings per share anticipated at $0.91 to $0.95. This outlook points to ongoing, but modest, sequential growth and continued margin stability. Management noted that additional margin improvements may be limited until the Wolfspeed RF fab integration is fully complete and utilization of internal manufacturing increases further.
Other factors to monitor include potential volatility in key end markets such as data center and industrial segments. Progress in the Wolfspeed fab ramp and emerging business in European defense and next-generation data centers could influence margin evolution and long-term growth. Macom did not announce any new or revised dividend plans this quarter.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
