MACOM Technology Solutions Holdings, Inc.

Previous wording

We design and manufacture semiconductor products and solutions for I&D, Data Center and Telecom industries. Headquartered in Lowell, Massachusetts, we have more than 70 years of application expertise, with silicon, GaAs, GaN and InP fabrication, manufacturing, assembly and test, and operational facilities throughout North America, Europe and Asia. We design, develop and manufacture differentiated semiconductor products and solutions for customers who demand high performance, quality and reliability. We offer a broad portfolio of thousands of standard and custom devices, which include ICs, MCMs, diodes, amplifiers, switches and switch limiters, passive and active components and RF and optical subsystems, which make up dozens of product lines that service over 6,000 end customers in our three primary markets. Our semiconductor products are electronic components that our customers generally incorporate into larger electronic systems, such as wireless basestations, high-capacity optical networks, data center networks, radar, medical systems and test and measurement applications. Our primary end markets are: (1) I&D, which includes military and commercial radar, RF jammers, electronic countermeasures, communication data links, satellite communications and various wired and wireless multi-market applications, which include industrial, medical, test and measurement and scientific applications; (2) Data Center, enabled by our broad portfolio of analog ICs and photonic components for high speed connectivity customers; and (3) Telecom, which includes carrier infrastructure such as long-haul/metro, 5G and future generation infrastructure, satellite communications and FTTx/PON, among others.

Current wording

We design and manufacture semiconductor products and solutions for I&D, Data Center and Telecom industries. Headquartered in Lowell, Massachusetts, we have more than 70 years of application expertise, with silicon, GaAs, GaN and InP fabrication, manufacturing, assembly and test, and operational facilities throughout North America, Europe and Asia. We design, develop and manufacture differentiated semiconductor products and solutions for customers who demand high performance, quality and reliability. We offer a broad portfolio of thousands of standard and custom devices, which include ICs, MCMs, diodes, amplifiers, switches and switch limiters, passive and active components and RF and optical subsystems, which make up dozens of product lines that service over 6,000 end customers in our three primary markets. Our semiconductor products are electronic components that our customers generally incorporate into larger electronic systems, such as wireless basestations, high-capacity optical networks, data center networks, radar, medical systems, satellite networks and test and measurement applications. Our primary end markets are: (1) I&D, which includes military and commercial radar, RF jammers, electronic countermeasures, communication data links, space-related electronics and various wired and wireless multi-market applications, which include industrial, medical, test and measurement and scientific applications; (2) Data Center, which includes intra-Data Center, DCI applications, at 100G, 200G, 400G, 800G, 1.6T, 3.2T and higher speeds, enabled by our broad portfolio of analog ICs and photonic components for high speed connectivity customers; and (3) Telecom, which includes carrier infrastructure such as long-haul/metro, 5G and 6G infrastructure, SATCOM and FTTx/PON, among others.

Previous wording

We have a 52 or 53-week fiscal year ending on the Friday closest to the last day of September. Fiscal years 2024, 2023 and 2022 each consisted of 52 weeks. To offset the effect of holidays, for fiscal years in which there are 53 weeks, we typically include the extra week in the first quarter of our fiscal year.

Current wording

We have a 52 or 53-week fiscal year ending on the Friday closest to the last day of September. Fiscal year 2025 included 53 weeks and fiscal years 2024 and 2023 each consisted of 52 weeks. To offset the effect of holidays, for fiscal years in which there are 53 weeks, we typically include the extra week in the first quarter of our fiscal year. Our first quarter of fiscal year 2025, ended January 3, 2025, included 14 weeks.

Previous wording

We expect our revenue in the I&D market to be driven by the expanding product portfolio that we offer which services applications such as test and measurement, satellite communications, civil and military radar, industrial, automotive, scientific and medical applications, further supported by growth in applications for our multi-market catalog products.

Current wording

We expect our revenue in the I&D market to be driven by the expanding product portfolio that we offer which services applications such as test and measurement, space-related electronics, civil and military radar, industrial, automotive, scientific and medical applications, further supported by growth in applications for our multi-market catalog products.

Previous wording

We expect our revenue in the Telecom market to be driven by 5G deployments, with continued upgrades and expansion of communications equipment, satellite communications networks and increasing adoption of our high-performance RF, millimeter wave, optical and photonic components.

Current wording

We expect our revenue in the Telecom market to be driven by 5G deployments, with continued upgrades and expansion of communications equipment, SATCOM networks and increasing adoption of our high-performance RF, millimeter wave, optical and photonic components.

Previous wording

We account for share-based compensation arrangements using the fair value method as described in Note 2 - Summary of Significant Accounting Policies to our Consolidated Financial Statements in this Annual Report. There are a significant number of estimates and assumptions required for the initial valuation as well as for the ongoing valuation of certain share-based compensation items. These estimates may vary significantly and the assumptions may not be accurate resulting us to make adjustments to historically recorded balances.

Current wording

We account for share-based compensation arrangements using the fair value method as described in Note 2 - Summary of Significant Accounting Policies to our Consolidated Financial Statements in this Annual Report. There are a significant number of estimates and assumptions required for the initial valuation as well as for the ongoing valuation of certain share-based compensation items. These estimates may vary significantly, and the assumptions may not be accurate resulting in us having to make adjustments to historically recorded balances.

Previous wording

We are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our current tax exposure together and assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our Consolidated Balance Sheets. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income within the relevant jurisdiction. To the extent we believe that recovery is not likely, we must establish a valuation allowance. We provide valuation allowances for certain deferred tax assets where it is more likely than not that any portion will not be realized.

Current wording

We are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our current tax exposure and assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our Consolidated Balance Sheets. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income within the relevant jurisdiction. To the extent we believe that recovery is not likely, we must establish a valuation allowance. We provide valuation allowances for certain deferred tax assets where it is more likely than not that any portion will not be realized.

Previous wording

The application of tax laws and regulations to calculate our tax liabilities is subject to legal and factual interpretation, judgment and uncertainty in a multitude of jurisdictions. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations, and court rulings. We recognize potential liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes and interest will be due. We record an amount as an estimate of probable additional income tax liability at the largest amount that we feel is more likely than not, based upon the technical merits of the position, to be sustained upon audit by the relevant tax authority.

Current wording

The application of tax laws and regulations to calculate our tax liabilities is subject to legal and factual interpretation, judgment and uncertainty in a multitude of jurisdictions. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations, including the federal statute controlling tax and spending policies passed by the U.S. Congress on July 4, 2025 (the “July 4, 2025 Bill”), as well as court rulings. We recognize potential liabilities for anticipated tax audit matters in the United States and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes and interest will be due. We record an amount as an estimate of probable additional income tax liability at the largest amount that we feel is more likely than not, based upon the technical merits of the position, to be sustained upon audit by the relevant tax authority.

Previous wording

(2)Fiscal years 2024 and 2023 includes $7.7 million and $9.1 million, respectively, of acquisition transaction costs.

Current wording

(2)Fiscal years 2025, 2024 and 2023 includes $0.1 million, $7.7 million and $9.1 million, respectively, of acquisition transaction costs.

Previous wording

(4)Fiscal years 2024, 2023 and 2022 includes a non-cash benefit of $3.6 million, $12.1 million and $202.8 million, respectively, related to the partial release of our valuation allowance. See Note 20 - Income Taxes to the Consolidated Financial Statements included in this Annual Report for additional information.

Current wording

(3)Fiscal year 2025 includes a non-cash expense of $10.1 million, primarily related to establishing a valuation allowance on foreign NOLs, and fiscal years 2024 and 2023 includes a non-cash benefit of $3.6 million and $12.1 million, respectively, related to the partial release of our valuation allowance. See Note 20 - Income Taxes to the Consolidated Financial Statements included in this Annual Report for additional information.

Previous wording

Revenue. In fiscal year 2024, our revenue increased by $81.2 million, or 12.5%, to $729.6 million from $648.4 million for fiscal year 2023. Fiscal years 2024 and 2023 each consisted of 52 weeks.

Current wording

Revenue. In fiscal year 2025, our revenue increased by $237.7 million, or 32.6%, to $967.3 million from $729.6 million for fiscal year 2024. Fiscal year 2025 included 53 weeks and fiscal year 2024 consisted of 52 weeks. Our first quarter of fiscal year 2025, ended January 3, 2025, included 14 weeks.

Previous wording

In fiscal year 2024, our I&D market revenue increased by $34.5 million, or 10.9%, compared to fiscal year 2023. The increase was primarily driven by revenue from recent acquisitions, partially offset by lower sales of legacy products for industrial markets.

Current wording

In fiscal year 2025, our I&D market revenue increased by $68.1 million, or 19.4%, compared to fiscal year 2024. The increase was primarily driven by revenue growth from defense programs and the full year contribution of acquisitions.

Previous wording

In fiscal year 2024, our Data Center market revenue increased by $50.9 million, or 34.6%, compared to fiscal year 2023. The increase was primarily driven by an increase in sales of 400G and 800G high-performance analog Data Center products, partially offset by a decrease in sales of our legacy connectivity products.

Current wording

In fiscal year 2025, our Data Center market revenue increased by $95.0 million, or 48.0%, compared to fiscal year 2024. The increase was primarily driven by an increase in sales of high-performance analog and coherent Data Center products primarily supporting high speed data rates from 100G up to 1.6T.

Previous wording

We continue to be negatively impacted by the current macroeconomic conditions, which we expect may result in weaker near-term demand for our products across all three of our primary markets.

Current wording

Certain areas of our end markets continue to be negatively impacted by macroeconomic and geopolitical conditions, which we expect may result in weaker near-term demand for our products across all three of our primary markets. In addition, we could be negatively affected by any weakening of global economic conditions, including as a result of the evolving impacts from tariffs, export bans, sanctions or other trade tensions (including implementation of new tariffs or retaliatory trade measures).

Previous wording

Gross profit. In fiscal year 2024, our gross profit increased by $8.0 million, or 2.1%, compared to fiscal year 2023. Gross margin of 54.0% in fiscal year 2024 decreased 550 basis points, compared to fiscal year 2023. The increase in gross profit during 2024 was primarily as a result of higher sales primarily driven by recent acquisitions, partially offset by product mix, increased employee-related costs, primarily driven by headcount from acquisitions, higher intangible asset amortization and depreciation expense.

Current wording

Gross profit. In fiscal year 2025, our gross profit increased by $135.2 million, or 34.3%, compared to fiscal year 2024. Gross margin of 54.7% in fiscal year 2025 increased 70 basis points, compared to fiscal year 2024. The increase in gross profit during 2025 was primarily as a result of higher sales, partially offset by increases in employee-related costs and share-based compensation.

Previous wording

Research and development. In fiscal year 2024, research and development expense increased by $33.6 million, or 22.6%, to $182.2 million, representing 25.0% of revenue, compared with $148.5 million, representing 22.9% of revenue, in fiscal year 2023. Research and development expense increased during fiscal year 2024 primarily as a result of increases in employee-related costs, driven by higher headcount associated with acquisitions, higher intangible asset amortization and share-based compensation expense.

Current wording

Research and development. In fiscal year 2025, research and development expense increased by $62.3 million, or 34.2%, to $244.5 million, representing 25.3% of revenue, compared with $182.2 million, representing 25.0% of revenue, in fiscal year 2024. Research and development expense increased during fiscal year 2025 primarily due to increases in headcount and employee-related costs, including variable compensation, share-based compensation expense and development-related supply costs.

Previous wording

Selling, general and administrative. In fiscal year 2024, selling, general and administrative expenses increased by $8.1 million, or 6.2%, to $137.9 million, or 18.9% of revenue, compared with $129.9 million, or 20.0% of revenue, for fiscal year 2023. Selling, general and administrative expenses increased during fiscal year 2024 primarily due to increases in employee-related costs, primarily driven by headcount from acquisitions, and share-based compensation, partially offset by lower professional fees and intangible amortization.

Current wording

Selling, general and administrative. In fiscal year 2025, selling, general and administrative expenses increased by $16.9 million, or 12.3%, to $154.9 million, or 16.0% of revenue, compared with $137.9 million, or 18.9% of revenue, for fiscal year 2024. Selling, general and administrative expenses increased during fiscal year 2025 primarily due to an increase in employee-related costs, including variable compensation and share-based compensation, partially offset by decreases in acquisition-related transaction costs and intangible asset amortization.

Previous wording

Interest income. In fiscal year 2024, interest income was $23.0 million, or 3.1% of our revenue, compared to $20.8 million of interest income, or 3.2% of our revenue, for fiscal year 2023. The change in fiscal year 2024 is primarily due to the general increase in interest rates on our short-term investments and due to the increase in our short-term investments.

Current wording

Interest income. In fiscal year 2025, interest income was $29.9 million, or 3.0% of our revenue, compared to $23.0 million of interest income, or 3.1% of our revenue, for fiscal year 2024. The change in fiscal year 2025 is primarily due to an increase in short-term investments and associated interest income.

Previous wording

Interest expense. In fiscal year 2024, interest expense was $5.1 million, or 0.7% of our revenue, compared to $12.4 million of interest expense, or 1.9% of our revenue, for fiscal year 2023. The decrease in fiscal year 2024 is primarily due to the August 2023 payment of the total outstanding principal balance of the Term Loans (as defined in Note 15 - Debtto the Consolidated Financial Statements included in this Annual Report).

Current wording

Interest expense. In fiscal year 2025, interest expense was $5.5 million, or 0.6% of our revenue, compared to $5.1 million of interest expense, or 0.7% of our revenue, for fiscal year 2024. The increase in fiscal year 2025 is primarily due to increases in interest expense on financing obligations and amortization of debt issuance costs, partially offset by a decrease in interest expense on convertible notes (see Note 15 - Debtand Note 16- Financing Obligation to the Consolidated Financial Statements included in this Annual Report).

Previous wording

For fiscal year 2024, our effective tax rate was 16.0%. Our effective tax rate for fiscal year 2024, as compared to the U.S. federal income tax rate of 21%, is impacted primarily by income earned outside the U.S. (i.e., global intangible low taxed income), resulting in a 12.7% increase, offset primarily by research and development credits, resulting in a 9.4% decrease, Foreign-derived intangible income deduction, resulting in a 4.5% decrease and partial release of our valuation allowance, resulting in a 4.0% decrease. See Note 20 - Income Taxes to the Consolidated Financial Statements included in this Annual Report for additional information.

Current wording

For fiscal year 2025, our effective tax rate was (86.8)%. The difference between our effective tax rate for fiscal year 2025 and the U.S. federal income tax rate of 21% was primarily driven by non-deductibility of the loss on extinguishment of debt. See Note 20 - Income Taxes to the Consolidated Financial Statements included in this Annual Report for additional information.

Previous wording

Our cash flow from operating activities for fiscal year 2023 was $166.9 million and consisted of a net income of $91.6 million, plus adjustments to reconcile our net income to cash provided by operating activities of $103.1 million, and cash used by operating assets and liabilities of $27.8 million. Adjustments to reconcile our net income to cash provided by operating activities of $103.1 million primarily included depreciation and intangible amortization expense of $52.2 million, share-based compensation expense of $38.1 million and deferred income tax expense of $19.8 million, partially offset by $11.8 million in amortization on marketable securities. In addition, cash used by operating assets and liabilities was $27.8 million for fiscal year 2023, primarily driven by a decrease in accrued and other liabilities of $21.3 million, an increase in inventory of $10.6 million, a decrease in accounts payable of $6.7 million, partially offset by a decrease in accounts receivable of $12.3 million.

Current wording

Our cash flow from operating activities for fiscal year 2025 was $235.4 million and consisted of a net loss of $54.2 million, plus adjustments to reconcile our net loss to cash provided by operating activities of $327.4 million, and cash used by operating assets and liabilities of $37.8 million. Adjustments to reconcile our net loss to cash provided by operating activities primarily included loss on extinguishment of debt of $193.1 million, depreciation and intangible amortization expense of $63.3 million, share-based compensation expense of $79.4 million. In addition, cash used by operating assets and liabilities was $37.8 million for fiscal year 2025, primarily driven by an increase in inventory of $26.6 million, an increase in accounts receivable of $42.0 million, partially offset by an increase in accounts payable of $22.2 million and an increase in accrued and other liabilities of $11.8 million.

Previous wording

Our cash flow from operating activities for fiscal year 2024 was $162.6 million and consisted of a net income of $76.9 million, plus adjustments to reconcile our net income to cash provided by operating activities of $116.8 million, and cash used by operating assets and liabilities of $31.0 million. Adjustments to reconcile our net income to cash provided by operating activities of $116.8 million primarily included depreciation and intangible amortization expense of $67.2 million, share-based compensation expense of $45.6 million and deferred income tax expense of $4.9 million, partially offset by $7.6 million in amortization on marketable securities. In addition, cash used by operating assets and liabilities was $31.0 million for fiscal year 2024, primarily driven by an increase in inventory of $30.2 million, an increase in accounts receivable of $16.8 million and a decrease in accrued and other liabilities of $7.3 million, partially offset by an increase in accounts payable of $18.2 million.

Current wording

Our cash flow from operating activities for fiscal year 2024 was $162.6 million and consisted of a net income of $76.9 million, plus adjustments to reconcile our net income to cash provided by operating activities of $116.8 million, and cash used by operating assets and liabilities of $31.0 million. Adjustments to reconcile our net income to cash provided by operating activities of $116.8 million primarily included depreciation and intangible amortization expense of $67.2 million, share-based compensation expense of $45.6 million and deferred income tax expense of $4.9 million, partially offset by $7.6 million in amortization on marketable securities. In addition, cash used by operating assets and liabilities was $31.0 million for fiscal year 2024, primarily driven by an increase in inventory of $30.2 million, an increase in accounts receivable of $16.8 million, and a decrease in accrued and other liabilities of $7.3 million, partially offset by a decrease in accounts payable of $18.2 million.

Previous wording

Our cash flow from investing activities for fiscal year 2023 of $36.3 million consisted primarily of proceeds of $515.8 million related to the sale and maturities of short-term investments and proceeds from the sale of equipment of $8.0 million, partially offset by $375.1 million in purchases of short-term investments, $87.7 million for acquisitions, net of cash acquired and capital expenditures of $24.7 million. For additional information on the cash paid for our acquisitions, net of cash acquired, see Note 4 -Acquisitions to our Consolidated Financial Statements included in this Annual Report.

Current wording

Our cash flow used in investing activities for fiscal year 2025 of $328.3 million consisted primarily of purchases of $592.4 million of short-term investments, capital expenditures of $42.6 million, purchase of property under financing arrangement of $28.8 million and cash paid for acquisitions, net of cash acquired of $12.7 million, offset by proceeds of $360.2 million for the sale and maturities of short-term investments.

Previous wording

As of September 27, 2024, we held $146.8 million of cash and cash equivalents, primarily deposited with financial institutions as well as $435.1 million of liquid short-term investments. The undistributed earnings of certain foreign subsidiaries are considered indefinitely reinvested for the periods presented and we do not intend to repatriate such earnings. We believe the decision to reinvest these earnings will not have a significant impact on our liquidity. As of September 27, 2024, cash held by our indefinitely reinvested foreign subsidiaries was $6.5 million, which, along with cash generated from foreign operations, is expected to be used in the support of international growth and working capital requirements as well as the repayment of certain intercompany loans.

Current wording

As of October 3, 2025, we held $112.1 million of cash and cash equivalents, primarily deposited with financial institutions as well as $673.8 million of liquid short-term investments. The undistributed earnings of certain foreign subsidiaries are considered indefinitely reinvested for the periods presented and we do not intend to repatriate such earnings. We believe the decision to reinvest these earnings will not have a significant impact on our liquidity. As of October 3, 2025, cash held by our indefinitely reinvested foreign subsidiaries was $5.2 million, which, along with cash generated from foreign operations, is expected to be used in the support of international growth and working capital requirements as well as the repayment of certain intercompany loans.

Previous wording

Holders of the 2026 Convertible Notes (as defined in Note 15 - Debt to the Consolidated Financial Statements included in this Annual Report) may convert their notes at their option at any time prior to the close of business on the business day immediately preceding December 15, 2025 in multiples of $1,000 principal amount, if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to $106.76 for the notes on each applicable trading day. We made an irrevocable election to pay cash for the principal amount of notes to be converted. The aggregate principal balance of the 2026 Convertible Notes is $450.0 million.

Current wording

During the fiscal quarter ended October 3, 2025, our common stock price for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending October 3, 2025 was greater than $106.76 on each applicable trading day. Therefore, holders of our 2026 Convertible Notes (as defined in Note 15 - Debt to the Consolidated Financial Statements included in this Annual Report) may convert their notes at their option at any time during the subsequent first fiscal quarter ended January 2, 2026 in multiples of $1,000 principal amount. On or after December 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes in multiples of $1,000 principal amount. We made an irrevocable election to pay cash for the principal amount of notes to be converted. The aggregate principal balance of the 2026 Convertible Notes is $161.2 million. For additional information related to our Liquidity and Capital Resources, see Note 15 -Debt to our Consolidated Financial Statements included in this Annual Report.

Previous wording

We plan to use our remaining available cash and cash equivalents and short-term investments for general corporate purposes, including working capital, payment on the 2026 Convertible Notes and leases, or for the acquisition of or investment in complementary technologies, design teams, products and businesses. We believe that our cash and cash equivalents, short-term investments and cash generated from operations will be sufficient to meet our working capital requirements for at least the next twelve months. We may need to raise additional capital from time to time through the issuance and sale of equity or debt securities, and there is no assurance that we will be able to do so on favorable terms or at all.

Current wording

We plan to use our remaining available cash and cash equivalents and short-term investments for general corporate purposes, including working capital, payment on the 2026 Convertible Notes and 2029 Convertible Notes, or for the acquisition of or investment in complementary technologies, design teams, products and businesses. We believe that our cash and cash equivalents, short-term investments and cash generated from operations will be sufficient to meet our working capital requirements for at least the next twelve months. We may need to raise additional capital from time to time through the issuance and sale of equity or debt securities, and there is no assurance that we will be able to do so on favorable terms or at all.

Previous wording

Our other significant contractual payment obligations consist of purchase agreements and other commitments. We have purchase commitments of $151.1 million primarily related to services and inventory supply arrangements of which approximately $138.7 million is non-cancelable. In addition, we have $23.9 million in fixed payments associated with a power purchase agreement that commenced in fiscal 2023 and has a remaining 13-year term. See Note 16- Financing Obligationfor additional detail on the power purchase agreement. Lastly, we have a purchase commitment of $6.7 million related to amounts payable for software over a two year period.

Current wording

Our other significant contractual payment obligations consist of purchase agreements and other commitments. We have purchase commitments of $157.1 million primarily related to services and inventory supply arrangements of which approximately $145.1 million are payments due within one year. Some of these purchase commitments may be cancellable.