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Call sheet · Q2'24

MACOM Technology Solutions Holdings (MTSI)

Q2'24 earnings call · held May 2, 2024 · compared with the Q1'24 call · management-credibility review
10/12
Disclosure score
3 medium, 3 low flags
Financial quality
Bottom line
The sleeper story is two massive contract wins totaling $80M that derisk FY25/26 growth while everyone obsesses over a temporary data center pause. The $55M satellite deal alone validates their millimeter wave strategy that nobody's been modeling. The obvious 'data center weakness' narrative misses that Q1 was a pull-forward, not sustainable run rate, and they're already building 200G backlog. The binding constraint is fab control: they can't fully optimize RF margins until 2026 when Wolfspeed transfers the fab, capping near-term margin expansion at 50%. Management's tell: 'We were just handed a bazooka and we're ready to go into the market.' My view changes if the satellite contract gets delayed or defense program doesn't ramp by Q1 FY25.

The 30-second version

  • Two massive contract wins ($80M combined) signal defense/satellite transformation nobody's modeling
  • Data center 'pause' is actually healthy digestion after record Q1
  • RF acquisition gross margins already improving from 'low 40s' despite fab control limitations

What changed this quarter

MetricQ1'24Q2'24Change
Revenue$157.1M (Q1)$181.2M (Q2)+15.3% sequential acceleration
Adjusted EPS$0.58 (Q1)$0.59 (Q2)+$0.01 despite margin pressure
Data Center Revenue$49.5M (Q1)$43.1M (Q2)-12.9% sequential after record Q1
I&D Revenue$77.0M (Q1)$90.9M (Q2)+18% sequential surge
Telecom Revenue$30.6M (Q1)$47.2M (Q2)+54.1% sequential explosion
Gross Margin59.2% (Q1)57.1% (Q2)-210 bps compression from RF mix
Operating Margin24.5% (Q1)22.2% (Q2)-230 bps despite revenue growth
Operating Cash Flow$33.1M (Q1)$18.2M (Q2)-45% on working capital build
Book-to-Bill0.9:1 (Q1)1.0:1 (Q2)Back to parity despite large wins
Inventory$159.5M (Q1)$177.8M (Q2)+$18.3M build for new programs

Accountability tracked

7 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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