MACOM Technology Solutions Holdings, Inc. (MTSI) DCF Valuation & Fundamental Primer
MACOM Technology Solutions Holdings, Inc. (MTSI) currently trades at $171.28 with an enterprise value of $3.96B. Our proprietary institutional model rates MACOM Technology Solutions Holdings, Inc. at 66/100 (Grade: B+ · Quality Software Operator). The current market price prices in an implied 5-year revenue CAGR of 45.9% vs. historical growth of 12.4% (Aggressive Growth Expectations Priced In).
Institutional fundamental teardown of MACOM Technology Solutions Holdings, Inc. (MTSI) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
MACOM Technology Solutions Holdings, Inc. (MTSI) 3-Scenario DCF Valuation Range
Stress-test MTSI's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $171.28).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $53.05 -69% | $56.71 -67% | $60.97 -64% | $66.01 -61% | $72.06 -58% |
| 9.3% | $47.10 -73% | $49.97 -71% | $53.28 -69% | $57.11 -67% | $61.61 -64% |
| 10.0% | $42.20 -75% | $44.51 -74% | $47.13 -72% | $50.13 -71% | $53.59 -69% |
| 10.8% | $38.10 -78% | $39.99 -77% | $42.11 -75% | $44.51 -74% | $47.23 -72% |
| 11.5% | $34.62 -80% | $36.19 -79% | $37.93 -78% | $39.88 -77% | $42.07 -75% |
Institutional Software Quality Scorecard (66/100 · Grade B+)
Solid software model with clear operating leverage, partially offset by standard SBC or moderate burn.
Elite deferred revenue float; FCF exceeds operating income by >20%
Disciplined equity compensation well below software industry average
Sub-par gross margins; higher cost of delivery or hardware/services mix
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 149% of EBIT driven by upfront annual collections
Key Operational & Dilution Risks
- Lower software gross margins (54.9%), indicating higher hosting or service delivery drag
Reverse-DCF Solver: What Growth is Priced Into MTSI?
The current share price demands 45.9% 5-year CAGR (55.6% net of SBC & dilution)—a +33.6% acceleration over historical run-rate (12.4%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (8.9% of revenue) and annual share dilution (1.1%/yr). Accounting for both requires 55.6% 5-year revenue CAGR to justify $171.28/sh on a true per-share economic cash flow basis.
MACOM Technology Solutions Holdings, Inc. (MTSI) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $967.3M | $967.3M | $1.09B | $1.22B | $1.37B | $1.54B | $1.73B |
| Gross Profit | $531.4M | $531.4M | $597.1M | $670.9M | $753.8M | $847.0M | $951.7M |
| Operating Income (EBIT) | $129.7M | $129.6M | $145.6M | $163.6M | $183.9M | $206.6M | $232.1M |
| Stock-Based Compensation (SBC) | $86.1M | $86.2M | $96.8M | $108.8M | $122.3M | $137.4M | $154.3M |
| Unlevered Free Cash Flow (FCF) | $192.8M | $192.8M | $216.6M | $243.4M | $273.5M | $307.3M | $345.2M |
| SBC-Adjusted True Cash Flow | $106.7M | $106.6M | $119.8M | $134.6M | $151.2M | $169.9M | $190.9M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -1.4 + 0.28 × (Rule of 40) · R² = 22%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| MACOM Technology Solutions Holdings, Inc. | MTSI | $12.83B | $967.3M | 54.9% | 19.9% | 32.3% | 8.9% | 13.7× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 13.7× | $13.26B | $12.83B | $171.28 | 0.0% |
| -20% Multiple Compression | 11.0× | $10.61B | $10.18B | $135.89 | -20.0% |
| -35% Multiple Compression | 8.9× | $8.62B | $8.19B | $109.34 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $4.84B | $4.41B | $58.86 | -63.5% |
Frequently Asked Questions: MACOM Technology Solutions Holdings, Inc. (MTSI) Valuation
What is MACOM Technology Solutions Holdings, Inc. (MTSI)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, MACOM Technology Solutions Holdings, Inc. (MTSI) has a Base Case implied value of $47.13 per share (with a Bear Case of $20.74 and a Bull Case of $80.06), compared to its current price of $171.28. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is MACOM Technology Solutions Holdings, Inc. (MTSI)'s Rule of 40 score and Free Cash Flow margin?
MACOM Technology Solutions Holdings, Inc. achieves a Rule of 40 score of 32.3%, combining a 12.4% revenue growth run-rate with a 19.9% TTM free cash flow margin on $967.3M in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into MTSI stock according to Reverse-DCF analysis?
At $171.28 per share (Enterprise Value of $13.26B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 45.9%, compared to MACOM Technology Solutions Holdings, Inc.'s historical CAGR of 12.4%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
How does MACOM Technology Solutions Holdings, Inc. compare to Software & Cloud Services software peers?
MACOM Technology Solutions Holdings, Inc. (MTSI) earns an institutional Software Quality Score of 66/100 (Grade B+ — Quality Software Operator). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact MACOM Technology Solutions Holdings, Inc. (MTSI)'s valuation?
MACOM Technology Solutions Holdings, Inc. recorded $86.1M in TTM stock-based compensation (8.9% of revenue). When treating SBC as a cash-equivalent compensation expense, MACOM Technology Solutions Holdings, Inc.'s SBC-adjusted free cash flow yield is 0.8%, scoring 21/25 on our Shareholder Dilution Friction pillar.