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” 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.

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 facts 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 apply significant estimates and judgments in order to determine the fair value of the identified tangible and intangible assets acquired, liabilities assumed and goodwill recognized in business combinations. The value of all assets and liabilities are recognized at fair value as of the acquisition date using a market participant approach. In measuring the fair value, we utilize a number of valuation techniques. When determining the fair value of property and equipment acquired, generally we must estimate the cost to replace the asset with a new asset taking into consideration such factors as age, condition and the economic useful life of the asset. When determining the fair value of intangible assets acquired, typically determined using a discounted cash flow valuation method, we use assumptions such as the timing and amount of future cash flows, discount rates, weighted average cost of capital and estimated useful lives. These assessments can be significantly affected by our judgments.

Current wording

We apply significant estimates and judgments in order to determine the fair value of the identified tangible and intangible assets acquired, liabilities assumed and goodwill recognized in business combinations. The value of all assets and liabilities are recognized at fair value as of the acquisition date using a market participant approach. In measuring fair values, we utilize a number of valuation techniques. When determining the fair value of property and equipment acquired, generally we must estimate the cost to replace the asset with a new asset taking into consideration such factors as age, condition and the economic useful life of the asset. When determining the fair value of intangible assets acquired, typically determined using a discounted cash flow valuation method, we use assumptions such as the timing and amount of future cash flows, discount rates, weighted average cost of capital and estimated useful lives. These assessments can be significantly affected by our judgments.

Previous 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):

Current wording

(1) Includes (a) Amortization expense related to intangible assets arising from acquisitions, purchased software licenses and licensed technology 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 Months Ended January 2, 2026 to the Three Months Ended January 3, 2025

Current wording

Comparison of the Three and Six Months Ended April 3, 2026 to the Three and Six Months Ended April 4, 2025

Previous 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.

Current wording

Revenue. Our revenue increased by $53.1 million, or 22.5%, to $289.0 million for the three months ended April 3, 2026, from $235.9 million for the three months ended April 4, 2025, and our revenue increased by $106.6 million, or 23.5%, to $560.6 million for the six months ended April 3, 2026, from $454.0 million for the six months ended April 4, 2025. The increase in revenue in the three and six months ended April 3, 2026 is described by end market in the following paragraphs.

Previous 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.

Current wording

In the three months ended April 3, 2026, our I&D market revenue increased by $22.1 million, or 22.4%, compared to the three months ended April 4, 2025. In the six months ended April 3, 2026, our I&D market revenue increased by $42.4 million, or 21.7%, compared to the six months ended April 4, 2025. The increase in the three and six months ended April 3, 2026 was primarily driven by revenue growth from defense programs.

Previous 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.

Current wording

In the three months ended April 3, 2026, our Data Center market revenue increased by $26.0 million, or 36.0%, compared to the three months ended April 4, 2025. In the six months ended April 3, 2026, our Data Center market revenue increased by $46.5 million, or 33.8%, compared to the six months ended April 4, 2025. The increase in the three and six months ended

Previous wording

In the three months ended January 2, 2026, our Telecom market revenue increased by $12.7 million, or 22.9%, 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 products for 5G, broadband access and SATCOM applications.

Current wording

In the three months ended April 3, 2026, our Telecom market revenue increased by $5.0 million, or 7.6%, compared to the three months ended April 4, 2025. In the six months ended April 3, 2026, our Telecom market revenue increased by $17.7 million, or 14.6%, compared to the six months ended April 4, 2025. The increase in the three and six months ended April 3, 2026 was primarily driven by higher sales of products for PON, metro long haul, broadband access and SATCOM applications.

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

Current wording

Certain areas of our end markets could be negatively affected by any weakening of global economic conditions, including as a result of geopolitical conflicts and related trade restrictions, the evolving impacts from tariffs, sanctions, obtaining required licenses or other trade tensions (including implementation of new tariffs or retaliatory trade measures).

Previous wording

Gross profit. Gross margin was 55.9% and 53.7% for the three months ended January 2, 2026 and January 3, 2025, respectively. Gross profit increased by $34.7 million, or 29.6%, to $151.8 million, or 55.9% of our revenue, for the three months ended January 2, 2026, compared to $117.1 million, or 53.7% of our revenue, for the three months ended January 3, 2025. Gross profit increased primarily as a result of higher sales, lower intangible asset amortization and share-based compensation expense, partially offset by increases in employee-related costs, due to additional headcount from the RTP Fab, and higher maintenance expense.

Current wording

Gross profit. Gross margin was 56.9% and 55.2% for the three months ended April 3, 2026 and April 4, 2025, respectively, and 56.4% and 54.5% for the six months ended April 3, 2026 and April 4, 2025, respectively. Gross profit increased by $34.3 million, or 26.3%, to $164.4 million, or 56.9% of our revenue, for the three months ended April 3, 2026, compared to $130.2 million, or 55.2% of our revenue, for the three months ended April 4, 2025. Gross profit increased by $68.9 million, or 27.9%, to $316.2 million, or 56.4% of our revenue, for the six months ended April 3, 2026, compared to $247.3 million, or 54.5% of our revenue, for the six months ended April 4, 2025. Gross profit increased for the three and six months ended April 3, 2026 as compared to the three and six months ended April 4, 2025 primarily as a result of higher sales, partially offset by increases in employee-related costs, primarily due to additional headcount from the RTP Fab, higher maintenance expense and increases in production supplies.

Previous 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.

Current wording

Research and development. Research and development expense increased by $11.1 million, or 19.3%, to $69.0 million, or 23.9% of our revenue, for the three months ended April 3, 2026, compared to $57.8 million, or 24.5% of our revenue, for the three months ended April 4, 2025. Research and development expense increased $17.2 million, or 14.6%, to $135.4 million, or 24.2% of our revenue, for the six months ended April 3, 2026, compared to $118.2 million, or 26.0% of our revenue, for the six months ended April 4, 2025. Research and development expense increased in the three months ended April 3, 2026 primarily due to increases in employee-related costs, including increases in headcount, higher R&D-related material costs and share-based compensation expense. Research and development expense increased in the six months ended April 3, 2026 primarily due to employee-related costs, including increases in headcount, higher R&D-related material costs and depreciation expense.

Previous 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.

Current wording

Selling, general and administrative. Selling, general and administrative expense increased by $7.2 million, or 19.1%, to $44.6 million, or 15.4% of our revenue, in the three months ended April 3, 2026, compared to $37.4 million, or 15.9% of our revenue, for the three months ended April 4, 2025. Selling, general and administrative expense increased by $10.0 million, or 13.0%, to $86.6 million, or 15.5% of our revenue, in the six months ended April 3, 2026, compared to $76.7 million, or 16.9% of our revenue, for the six months ended April 4, 2025. Selling, general and administrative expense increased in the three months ended April 3, 2026 primarily due to increases in employee-related costs, share-based compensation expense and professional service fees. Selling, general and administrative expense increased in the six months ended April 3, 2026 primarily due to increases in employee-related costs, software costs and variable selling costs.

Previous 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.

Current wording

Interest income. In the three months ended April 3, 2026, interest income was $7.8 million, compared to $7.2 million for the three months ended April 4, 2025. In the six months ended April 3, 2026, interest income was $15.7 million, compared to $14.2 million for the six months ended April 4, 2025. The increase for the three and six months ended April 3, 2026 is primarily due to the interest income earned from the higher cash and cash equivalents and short-term investments balance prior to the settlement of the 2026 Convertible Notes.

Previous 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.

Current wording

Our estimated annual effective tax rate for the fiscal year ending October 2, 2026 is expected to be approximately 17.3%, 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 fiscal quarter ended April 3, 2026 was reduced by excess tax benefits related to share-based compensation.

Previous wording

The effective income tax rate for the quarter ended January 3, 2025 was impacted by the non-deductibility of the charge for extinguishment of debt as well as excess tax benefits related to share-based compensation.

Current wording

The effective income tax rate for the fiscal quarter ended April 4, 2025 was impacted by the non-deductibility of the charge for extinguishment of debt as well as excess tax benefits related to share-based compensation.

Previous wording

Our cash flow from operating activities for the three months ended January 2, 2026 of $42.9 million consisted of a net income of $48.8 million, which included non-cash charges of $36.9 million, primarily related to share-based compensation expense of $22.1 million and depreciation and intangible asset amortization expense of $15.4 million and a net increase in working capital of $42.7 million. The net increase in working capital of $42.7 million was primarily driven by a decrease in accrued and other liabilities of $19.0 million, a decrease in accounts payable of $5.1 million and by an increase in accounts receivables of $11.4 million.

Current wording

Our cash flow from operating activities for the six months ended April 3, 2026 of $121.6 million consisted of net income of $95.1 million, which included non-cash charges of $80.5 million, primarily related to share-based compensation expense of $44.8 million and depreciation and intangible asset amortization expense of $31.0 million and a net increase in working capital of $54.0 million. The net increase in working capital of $54.0 million was primarily driven by an increase in inventories of $14.4 million, an increase in accounts receivables of $11.0 million, an increase in prepaid expenses and other assets of $10.9 million and a decrease in accrued and other liabilities of $9.1 million.

Previous 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.

Current wording

Our cash flow from operating activities for the six months ended April 4, 2025 of $105.3 million consisted of a net loss of $135.9 million plus adjustments of $263.1 million, to reconcile our net loss to cash provided by operating activities, less cash used in operating assets and liabilities of $21.9 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 $44.3 million and depreciation and intangible amortization expense of $30.8 million. In addition, cash used in operating assets and liabilities was $21.9 million for the six months ended April 4, 2025, primarily driven by an increase in accounts receivables of $24.7 million, an increase in inventories of $15.0 million, partially offset by an increase in accounts payable of $14.8 million.

Previous 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.

Current wording

Our cash flow provided by investing activities for the six months ended April 3, 2026 of $73.5 million consisted primarily of proceeds of $176.1 million for the sale and maturity of short-term investments, offset by purchases of $70.5 million of short-term investments, capital expenditures of $26.1 million and purchases of software licenses and licensed technology of $7.4 million.

Previous 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.

Current wording

Our cash flow used in investing activities for the six months ended April 4, 2025 of $167.1 million consisted primarily of cash paid for acquisitions, net of cash acquired of $12.7 million, capital expenditures of $13.5 million and purchases of $320.5 million of short-term investments and other investing activities of $8.0 million, offset by proceeds of $187.6 million for the sale and maturity of short-term investments.

Previous 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.

Current wording

During the six months ended April 3, 2026, our cash used in financing activities of $208.7 million was primarily related to repayment of the 2026 Convertible Notes of $161.2 million and $51.5 million of common stock withheld associated with employee taxes on vested equity awards, partially offset by $5.2 million of proceeds from employee stock purchases.

Previous 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.

Current wording

During the six months ended April 4, 2025, our cash provided by financing activities of $26.3 million was primarily related to $86.6 million of proceeds from 2029 Convertible Notes and $4.5 million of proceeds from employee stock purchases, partially offset by $41.3 million of common stock withheld associated with employee taxes on vested equity awards and $23.1 million of fees for the convertible note exchange and payments for debt issuance costs.

Previous 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.

Current wording

As of April 3, 2026, we held $98.5 million of cash and cash equivalents, primarily deposited with financial institutions, as well as $566.3 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 April 3, 2026, cash held by our indefinitely reinvested foreign subsidiaries was $8.8 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

On January 14, 2025, we announced the execution of a preliminary, non-binding agreement with the CHIPS Program Office, which could provide for proposed direct funding from the U.S. Department of Commerce under the CHIPS Act of up to $70 million.

Current wording

On January 14, 2025, we announced the execution of a preliminary, non-binding agreement with the CHIPS Program Office (“CPO”), which could provide for proposed direct funding from the U.S. Department of Commerce under the CHIPS Act of up to $70 million. The potential direct funding arrangement and the associated definitive agreement remain under discussion with the CPO.

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 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.

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 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.