Macom Q2 Revenue Up 39 Percent On 2016

Strong performance in cloud datacentres holds promise for future growth, says Croteau

RF, microwave and opto company Macom Technology has announced its financial results for Q2 ended March 31, 2017.

GAAP revenue was $186.1 million, an increase of 39.3 percent, compared to $133.6 million in Q2 2016 and an increase of 22.6 percent compared to $151.8 million in the prior fiscal quarter;

Gross profit was $68.9 million, an increase of 5.1 percent, compared to $65.5 million in Q2 2016 and a decrease of 12.3 percent compared to $78.5 million in the prior fiscal quarter;

Gross margin was 37.0 percent, compared to 49.1 percent in Q2 2016 and 51.7 percent in the prior fiscal quarter.

John Croteau, Macom’s CEO said: “We had yet another quarter of solid execution, achieving the top end of guidance for revenue and adjusted earnings per share. Aerospace & Defense and Multi-market were both up sequentially and year on year.

“Networks was also up sequentially with and without the contribution of Applied Micro, with strong growth in cloud datacentres more than offsetting cyclical weakness in our carrier-based optical businesses. We are excited about the opportunity in cloud datacentres which is now a separate and distinct secular growth driver for Macom and believe we are uniquely positioned in one of the highest growth markets of the electronics industry.”

Croteau concluded: “Also during the quarter, the AppliedMicro integration has gone exceptionally well. The opportunity for our combined businesses has exceeded our expectations, elevating our strategic status at many of the cloud data centre customers.”

Operating loss, however, was $33.6 million, compared to $7.2 million in Q2 2016 and operating income of $10.5 million in the prior fiscal quarter.

Net loss from continuing operations was $134.3 million, resulting in $2.21 loss per diluted share, compared to a net loss from continuing operations of $12.0 million, or $0.23 loss per diluted share, in Q2 2016 and net loss from continuing operations of $2.2 million, or $0.04 loss per diluted share, in the prior fiscal quarter.

The net loss from continuing operations of $134.3 million for the Q2 2017 includes expenses related to the January 26, 2017 acquisition of Applied Micro Circuits such as the amortisation of inventory stepped up to fair value, recorded as cost of revenue, transaction expenses and change in control payments to former AppliedMicro employees, recorded as selling general and administrative expenses, as well as establishing a deferred tax asset valuation allowance of $88.0 million, recorded as income tax expense.

Adjusted Non-GAAP results include an adjusted gross margin was 58.5 percent, compared to 58.1 percent in Q2 2016 and 57.2 percent in the prior fiscal quarter. Adjusted operating income was $48.6 million, or 26.1 percent of revenue, compared to $32.4 million, or 24.3 percent of revenue, in Q2 2016 and $41.0 million, or 27.0 percent of revenue, in the prior fiscal quarter.

Adjusted net income was $39.4 million, or $0.63 per diluted share, compared to adjusted net income of $25.7 million, or $0.46 per diluted share, in Q2 2016 and adjusted net income of $31.8 million, or $0.57 per diluted share, in the prior fiscal quarter; and

Adjusted EBITDA was $56.7 million, compared to $39.0 million for Q2 2016 and $48.4 million for the prior fiscal quarter.

Business Outlook

For the fiscal third quarter ending June 30, 2017, Macom expects revenue to be in the range of $194 million to $198 million. Adjusted gross margin is expected to be between 58 percent and 61 percent, and adjusted earnings per share between $0.67 and $0.71, on an anticipated 66.3 million fully diluted shares outstanding.