MACOM Technology Solutions Holdings, Inc.

Previous wording

This Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10-Q contain “forward-looking statements.” In addition, we may make other written and oral communications from time to time that contain such statements. Forward-looking statements include statements regarding our business outlook, strategic plans and priorities, expectations, anticipated drivers of future revenue growth, our ability to develop new products, achieve market acceptance of those products and better address certain markets, expand our capabilities and extend our product offerings, including through the ENGIN-IC acquisition and the RF Business Acquisition, including our ability to effectively integrate the RTP Fab, risks related to any weakening of global economic conditions, including as a result of the evolving impacts from tariffs, sanctions or other trade tensions (including implementation of new tariffs or retaliatory trade measures), the impact of the July 4, 2025 Bill on our business, industry trends, our strategic investment plan, including negotiation and finalization of a definitive agreement with, and receipt of funding from the Federal and State governments, our estimated annual effective tax rate, our plans for use of our cash and cash equivalents and short-term investments, interest rate and foreign currency risks, our ability to meet working capital requirements, estimates and objectives for future operations, our future results of operations and our financial position, including liquidity, and other matters that do not relate strictly to historical facts. Forward-looking statements generally may be identified by terms such as “anticipates,” “believes,” “could,” “continue,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “targets,” “will,” “would” or similar expressions or variations or the negatives of those terms. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q and the 2024 Annual Report on Form 10-K. We caution the reader to carefully consider such factors. Furthermore, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Current wording

This Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10-Q contain “forward-looking statements” including statements regarding our business outlook, strategic plans and priorities, expectations, anticipated drivers of future revenue growth, industry trends, our plans for use of our cash and cash equivalents and short-term investments, interest rate and foreign currency risks, our ability to meet working capital requirements, estimates and objectives for future operations, our future results of operations and our financial position, including liquidity, and other matters that do not relate strictly to historical facts. Forward-looking statements generally may be identified by terms such as “anticipates,” “believes,” “could,” “continue,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “targets,” “will,” “would” or similar expressions or variations or the negatives of those terms. Forward-looking statements are neither historical factors nor assurances about future performance. Instead, they are based only on our current beliefs, expectations and assumptions. Because forward-looking statements relate to the future, such statements involve inherent risks, changes and uncertainties that are difficult to predict and many of which are outside of our control. A number of important factors could cause actual results and outcomes to differ materially and adversely from those expressed or implied by our forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in the section entitled “Item 1A - Risk Factors” in this Quarterly Report on Form 10-Q and our 2025 Annual Report on Form 10-K. We caution the reader to carefully consider such factors. Furthermore, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to revise or update our forward-looking statements to reflect any event or circumstance that may arise after the date of this Quarterly Report on Form 10-Q.

Previous wording

We design, develop and manufacture differentiated semiconductor products and solutions for the Industrial and Defense (“I&D”), Data Center and Telecommunications (“Telecom”) industries for customers who demand high performance, quality and reliability. We are headquartered in Lowell, Massachusetts, with operational facilities throughout North America, Europe and Asia. We have more than 70 years of application expertise, combined with expertise in analog and mixed signal circuit design, compound semiconductor fabrication (including gallium arsenide (GaAs), gallium nitride (GaN), indium phosphide (InP) and specialized silicon), advanced packaging and back-end assembly and test. We offer a broad portfolio of thousands of standard and custom devices, which include integrated circuits (IC), multi-chip modules (MCM), diodes, amplifiers, switches and switch limiters, passive and active components and radio frequency (RF) and optical subsystems, which make up dozens of product lines that service over 6,000 end customers in our three primary markets. Our 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, Data Center Interconnect (DCI) applications, at 100G, 200G, 400G, 800G, 1.6T 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, satellite communications (“SATCOM”) and Fiber-to-the-X (FTTx)/passive optical network (PON), among others.

Current wording

We design, develop and manufacture differentiated semiconductor products and solutions for the Industrial and Defense (“I&D”), Data Center and Telecommunications (“Telecom”) industries for customers who demand high performance, quality and reliability. We are headquartered in Lowell, Massachusetts, with operational facilities throughout North America, Europe and Asia. We have more than 70 years of application expertise, combined with expertise in analog and mixed signal circuit design, compound semiconductor fabrication (including GaAs, GaN, indium phosphide (“InP”) and specialized silicon), advanced packaging and back-end assembly and test. We offer a broad portfolio of thousands of standard and custom devices, which include integrated circuits (“ICs”), multi-chip modules (MCM), diodes, amplifiers, switches and switch limiters, passive and active components and radio frequency (RF) and optical subsystems, which make up dozens of product lines that service over 6,000 end customers in our three primary markets. Our 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, Data Center Interconnect (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, satellite communications (“SATCOM”) and Fiber-to-the-X (FTTx)/passive optical network (PON), among others.

Previous wording

We expect our revenue in the Data Center market to be driven by the adoption of higher speed processing technologies and the upgrade of data center architectures to 100G, 200G, 400G, 800G and 1.6T interconnects, which we expect will drive adoption of higher speed optical and photonic components.

Current wording

We expect our revenue in the Data Center market to be driven by the adoption of higher speed processing technologies and the upgrade of data center architectures to 100G, 200G, 400G, 800G, 1.6T and 3.2T interconnects, which we expect will drive adoption of higher speed optical and photonic components.

Previous wording

(1) Includes (a) Amortization expense related to intangible assets arising from acquisitions and (b) Share-based compensation expense included in our condensed consolidated statements of operations as set forth below (in thousands):

Current wording

(1) Includes (a) Amortization expense related to intangible assets arising from acquisitions and purchased software licenses and (b) Share-based compensation expense included in our condensed consolidated statements of operations as set forth below (in thousands):

Previous wording

Comparison of the Three and Nine Months Ended July 4, 2025 to the Three and Nine Months Ended June 28, 2024

Current wording

Comparison of the Three Months Ended January 2, 2026 to the Three Months Ended January 3, 2025

Previous wording

Revenue. Our revenue increased by $61.6 million, or 32.3%, to $252.1 million for the three months ended July 4, 2025, from $190.5 million for the three months ended June 28, 2024, and our revenue increased by $177.2 million, or 33.5%, to $706.1 million for the nine months ended July 4, 2025, from $528.9 million for the nine months ended June 28, 2024. The increase in revenue in the three and nine months ended July 4, 2025 is described by end market in the following paragraphs.

Current wording

Revenue. Our revenue increased by $53.5 million, or 24.5%, to $271.6 million for the three months ended January 2, 2026, from $218.1 million for the three months ended January 3, 2025. The increase in revenue in the three months ended January 2, 2026 is described by end market in the following paragraphs.

Previous wording

In the three months ended July 4, 2025, our I&D market revenue increased by $17.3 million, or 19.0%, compared to the three months ended June 28, 2024. In the nine months ended July 4, 2025, our I&D market revenue increased by $45.4 million, or 17.5%, compared to the nine months ended June 28, 2024. The increase in the three months ended July 4, 2025 was primarily driven by an increase in defense program revenue and higher sales of legacy products for industrial markets. The increase in the nine months ended July 4, 2025 was primarily driven by revenue growth from defense programs, partially offset by lower sales of legacy products for industrial markets.

Current wording

In the three months ended January 2, 2026, our I&D market revenue increased by $20.3 million, or 20.9%, compared to the three months ended January 3, 2025. The increase in the three months ended January 2, 2026 was primarily driven by revenue growth from defense programs.

Previous wording

In the three months ended July 4, 2025, our Data Center market revenue increased by $26.8 million, or 54.7%, compared to the three months ended June 28, 2024. In the nine months ended July 4, 2025, our Data Center market revenue increased by $71.6 million, or 50.6%, compared to the nine months ended June 28, 2024. The increase in the three and nine months ended July 4, 2025 was primarily driven by an increase in sales of high-performance analog Data Center products and fees primarily supporting high speed data rates from 100G up to 1.6T.

Current wording

In the three months ended January 2, 2026, our Data Center market revenue increased by $20.5 million, or 31.4%, compared to the three months ended January 3, 2025. The increase in the three months ended January 2, 2026 was primarily driven by higher sales of high-performance analog, coherent and lightwave Data Center products primarily supporting high speed data rates from 100G to 1.6T.

Previous 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, sanctions or other trade tensions (including implementation of new tariffs or retaliatory trade measures).

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, sanctions, obtaining required licenses or other trade tensions (including implementation of new tariffs or retaliatory trade measures).

Previous wording

Research and development. Research and development expense increased by $15.8 million, or 33.3%, to $63.4 million, or 25.1% of our revenue, for the three months ended July 4, 2025, compared to $47.5 million, or 25.0% of our revenue, for the three months ended June 28, 2024. Research and development expense increased by $49.0 million, 37.0%, to $181.6 million, or 25.7% of our revenue, for the nine months ended July 4, 2025, compared to $132.6 million, or 25.1% of our revenue, for the nine months ended June 28, 2024. Research and development expense increased in the three and nine months ended July 4, 2025 primarily due to increases in employee-related costs, partially due to acquisitions, share-based compensation expense and development-related supply costs.

Current wording

Research and development. Research and development expense increased by $6.1 million, or 10.1%, to $66.5 million, or 24.5% of our revenue, for the three months ended January 2, 2026, compared to $60.4 million, or 27.7% of our revenue, for the three months ended January 3, 2025. Research and development expense increased in the three months ended January 2, 2026 primarily due to employee-related costs, including increases in headcount, and depreciation expense.

Previous wording

Selling, general and administrative. Selling, general and administrative expense increased by $4.2 million, or 12.4%, to $38.4 million, or 15.2% of our revenue, for the three months ended July 4, 2025, compared to $34.2 million, or 17.9% of our revenue, for the three months ended June 28, 2024. Selling, general and administrative expense increased by $9.8 million, or 9.3%, to $115.1 million, or 16.3% of our revenue, for the nine months ended July 4, 2025, compared to $105.2 million, or 19.9% of our revenue, for the nine months ended June 28, 2024. Selling, general and administrative expense increased in the three months ended July 4, 2025 primarily due to an increase in employee-related costs and share-based compensation, partially offset by lower intangible asset amortization. Selling, general and administrative expense increased in the nine months ended July 4, 2025 primarily due to an increase in employee-related costs and share-based compensation, partially offset by decreases in acquisition-related transaction costs and intangible asset amortization.

Current wording

Selling, general and administrative. Selling, general and administrative expense increased by $2.8 million or 7.2%, to $42.0 million or 15.5% of our revenue in the three months ended January 2, 2026, compared to $39.2 million, or 18.0% of our revenue, for the three months ended January 3, 2025. Selling, general, and administrative expense increased in the three months ended January 2, 2026 primarily due to an increase in employee-related costs, partially offset by lower intangible asset amortization.

Previous wording

Interest income. In the three months ended July 4, 2025, interest income was $7.6 million, compared to $5.8 million for the three months ended June 28, 2024. In the nine months ended July 4, 2025, interest income was $21.8 million, compared to $16.7 million for the nine months ended June 28, 2024. The increase for the three and nine months ended July 4, 2025 is primarily due to an increase in short-term investments and associated interest income.

Current wording

Interest income. In the three months ended January 2, 2026, interest income was $8.0 million, compared to $7.0 million for the three months ended January 3, 2025. The increase for the three months ended January 2, 2026 is primarily due to an increase in short-term investments.

Previous wording

Loss on extinguishment of debt. In the nine months ended July 4, 2025, we recognized a $193.1 million loss on exchange of our 2026 Convertible Notes. See Note 9 - Debt to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.

Current wording

Loss on extinguishment of debt. In the three months ended January 3, 2025, we recognized a $193.1 million loss on exchange of our 2026 Convertible Notes. See Note 10 - Debt to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.

Previous wording

Our estimated annual effective tax rate for the fiscal year ending October 3, 2025 is expected to be approximately 15%, adjusted for discrete taxation matters arising during the interim periods, primarily the removal of the loss on extinguishment of debt of $193.1 million.

Current wording

Our estimated annual effective tax rate for the fiscal year ending October 2, 2026 is expected to be approximately 16.2%, which reflects the statutory rate adjusted for expected tax credits, primarily for R&D. This effective tax rate does not reflect the adjustment for any discrete tax matters arising during the year, such as the excess deduction related to share-based compensation. The actual effective income tax rate for the quarter ended January 2, 2026 was reduced by excess tax benefits related to share-based compensation.

Previous wording

Our cash flow from operating activities for the nine months ended July 4, 2025 of $165.7 million consisted of a net loss of $99.3 million plus adjustments of $299.3 million, to reconcile our net loss to cash provided by operating activities, less cash used in operating assets and liabilities of $34.3 million. Adjustments to reconcile our net loss to cash provided by operating activities primarily included loss on extinguishment of debt of $193.1 million, share-based compensation expense of $61.6 million and depreciation and intangible amortization expense of $45.6 million. In addition, cash used in operating assets and liabilities was $34.3 million for the nine months ended July 4, 2025, primarily driven by an increase in accounts receivables of $22.8 million and an increase in inventories of $20.6 million, partially offset by an increase in accounts payable of $16.5 million.

Current wording

Our cash flow from operating activities for the three months ended January 3, 2025 of $66.7 million consisted of a net loss of $167.5 million, which included non-cash charges of $225.3 million, primarily related to loss on extinguishment of debt of $193.1 million, share-based compensation expense of $25.5 million and depreciation and intangible asset amortization expense of $16.0 million, and a net decrease to working capital of $8.9 million. The net decrease in working capital of $8.9 million was primarily driven by a decrease in accounts receivables of $14.9 million, partially offset by an increase in inventories of $4.6 million. The decrease in accounts receivable is primarily due to improved revenue linearity during the three months ended January 3, 2025.

Previous wording

Our cash flow used in investing activities for the nine months ended July 4, 2025 of $246.1 million consisted primarily of purchases of $450.9 million of short-term investments, purchase of property under financing arrangement of $28.8 million, capital expenditures of $22.3 million, cash paid for acquisitions, net of cash acquired of $12.7 million and other investing activities of $11.0 million, offset by proceeds of $279.6 million for the sale and maturity of short-term investments.

Current wording

Our cash flow provided by investing activities for the three months ended January 2, 2026 of $8.8 million consisted primarily of proceeds of $71.4 million for the sale and maturity of short term investments, offset by purchases of $45.7 million of short-term investments, capital expenditures of $12.9 million and purchases of software licenses of $4.3 million.

Previous wording

Our cash flow used in investing activities for the nine months ended June 28, 2024 of $148.6 million consisted primarily of cash paid for acquisitions, net of cash acquired of $72.6 million for acquisitions, capital expenditures of $17.3 million and purchases of $330.7 million of short-term investments, offset by proceeds of $274.1 million for the sale and maturity of short-term investments. For additional information on the consideration paid for our acquisitions, see Note 3 - Acquisitionsto our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Current wording

Our cash flow used in investing activities for the three months ended January 3, 2025 of $10.2 million consisted primarily of cash paid for acquisitions, net of cash acquired of $12.5 million for acquisitions, capital expenditures of $5.3 million and purchases of $61.4 million of short-term investments and purchases of software licenses of $6.1 million, offset by proceeds of $72.4 million for the sale and maturity of short-term investments and other investing activity of $2.7 million. For additional information on the consideration paid for our acquisitions, see Note 3 - Acquisitionsto our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Previous wording

During the nine months ended June 28, 2024, our cash used in financing activities of $8.4 million was primarily related to $13.9 million of common stock withheld associated with employee taxes on vested equity awards, partially offset by $6.5 million of proceeds from stock option exercises and employee stock purchases.

Current wording

During the three months ended January 2, 2026, our cash used in financing activities of $44.2 million was primarily related to $47.9 million of common stock withheld associated with employee taxes on vested equity awards, partially offset by $5.2 million of proceeds from stock option exercises and employee stock purchases.

Previous wording

During the nine months ended July 4, 2025, our cash provided by financing activities of $58.8 million was primarily related to $86.6 million of proceeds from convertible notes, $28.8 million of proceeds from financing arrangement and $10.2 million of proceeds from stock option exercises and employee stock purchases, partially offset by $42.7 million of common stock withheld associated with employee taxes on vested equity awards and $23.2 million of fees for the convertible note exchange and payments for debt issuance costs.

Current wording

During the three months ended January 3, 2025, our cash provided by financing activities of $30.1 million was primarily related to $86.6 million of proceeds from convertible notes and $4.5 million of proceeds from stock option exercises and employee stock purchases, partially offset by $37.9 million of common stock withheld associated with employee taxes on vested equity awards and $22.9 million of fees for the convertible note exchange and payments for debt issuance costs.

Previous wording

As of July 4, 2025, we held $125.5 million of cash and cash equivalents, primarily deposited with financial institutions, as well as $609.8 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 July 4, 2025, cash held by our indefinitely reinvested foreign subsidiaries was $8.7 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 January 2, 2026, we held $119.6 million of cash and cash equivalents, primarily deposited with financial institutions, as well as $648.8 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 January 2, 2026, cash held by our indefinitely reinvested foreign subsidiaries was $5.7 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.