MaxLinear, Inc. Announces Second Quarter 2019 Financial Results

CARLSBAD, Calif. — (BUSINESS WIRE) — July 25, 2019 — MaxLinear, Inc. (NYSE: MXL), a leading provider of RF, analog and mixed-signal integrated circuits for the connected home, and industrial and multi-market applications, today announced financial results for the second quarter ended June 30, 2019.

Second Quarter Financial Highlights

GAAP basis:

  • Net revenue was $82.5 million, down 3% sequentially, and down 19% year-on-year.
  • GAAP gross margin was 53.4%, compared to 53.3% in the prior quarter, and 55.5% in the year-ago quarter.
  • GAAP operating expenses were $47.0 million in the second quarter 2019, or 57% of net revenue, compared to $52.9 million in the prior quarter, or 63% of net revenue, and $56.6 million in the year-ago quarter, or 56% of net revenue.
  • GAAP loss from operations was 4% of revenue, compared to loss from operations of 9% in the prior quarter, and loss from operations of 0% in the year-ago quarter.
  • Net cash flow provided by operating activities was $12.4 million, compared to cash flow provided by operating activities of $16.0 million in the prior quarter and cash flow provided by operating activities of $35.8 million in the year-ago quarter.
  • GAAP income tax benefit was $3.4 million, compared to an income tax benefit of $6.5 million in the prior quarter, and income tax provision of $11.2 million in the year-ago quarter.
  • GAAP net loss was $2.2 million, compared to net loss of $4.9 million in the prior quarter, and net loss of $14.4 million in the year-ago quarter.
  • GAAP diluted loss per share was $0.03, compared to diluted loss per share of $0.07 in the prior quarter, and diluted loss per share of $0.21 in the year-ago quarter.

Non-GAAP basis:

  • Non-GAAP gross margin was 63.9%. This compares to 63.5% in the prior quarter, and 64.6% in the year-ago quarter.
  • Non-GAAP operating expenses were $32.8 million, or 40% of revenue, compared to $35.7 million or 42% of revenue in the prior quarter, and $37.1 million or 37% of revenue in the year-ago quarter.
  • Non-GAAP income from operations was 24% of revenue, compared to 21% in the prior quarter, and 28% in the year-ago quarter.
  • Non-GAAP effective tax rate was 7% of non-GAAP pre-tax income, compared to 7% in the prior quarter, and 7% in the year-ago quarter.
  • Non-GAAP net income was $16.0 million, compared to $13.5 million in the prior quarter, and $23.7 million in the year-ago quarter.
  • Non-GAAP diluted earnings per share was $0.22, compared to diluted earnings per share of $0.19 in the prior quarter, and diluted earnings per share of $0.34 in the year-ago quarter.

Recent Business Highlights

  • Announced that Cambridge Industries Group has selected the MxL3710 MoCA 2.5 SoC for their next-generation 10G PON ONT devices.
  • Announced that Raspberry Pi has selected MxL7704 Universal PMIC to power its latest single-board computer, the Raspberry Pi 4.
  • Announced that ZTE Strawcom Telecommunications Co., Ltd has selected MaxLinear's G.hn Wave-2 chipset to develop a new family of fiber-to-the-home (FTTH) fiber extenders.

Management Commentary

“In the second quarter, revenue results were in line with our revised guidance, gross margin improved nicely in the quarter and operating expenses continued to trend lower due to disciplined execution. We remain focused on succeeding in the new emerging 5G wireless and fiber-optic datacenter high-speed interconnect infrastructure markets as we grow the company beyond the connected home market, which remains weak due to delayed investment from the service providers and uncertainty around tariffs and customer supply chains,” commented Kishore Seendripu, Ph.D., Chairman and CEO.

“We continued to execute on our new 14nm CMOS 4x4 Quad RF transceiver system-on-chip solution for the 5G wireless infrastructure market. These efforts addressing the 5G market continue to be exciting due to the additional content that we are growing on a per-system basis and increasing confidence in realizing revenues in the coming year. Also, our 400 gigabit PAM4 DSP SoC with integrated laser drivers and companion quad-TIA system solution is progressing extremely well with continued traction in the hyperscale data center market,” continued Dr. Seendripu.

Third Quarter 2019 Business Outlook

The company expects revenue in the third quarter 2019 to be approximately $77 million to $83 million. Due to continued restrictions and lack of clarity from the U.S. Government on the ability to ship product to Huawei, related revenues are excluded from our guidance until further direction is given. The Company also estimates the following:

  • GAAP gross margin of approximately 52.0% to 52.5%;
  • Non-GAAP gross margin of approximately 63.0% to 63.5%;
  • GAAP operating expenses of approximately $46.5 million to $47.5 million; and
  • Non-GAAP operating expenses of approximately $31.0 million to $32.0 million.

Webcast and Conference Call

MaxLinear will host its second quarter financial results conference call today, July 25, 2019 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). To access this call, dial US toll free: 1-877-407-3109 / International: 1-201-493-6798. A live webcast of the conference call will be accessible from the investor relations section of the MaxLinear website at http://investors.maxlinear.com, and will be archived and available after the call at http://investors.maxlinear.com until August 8, 2019. A replay of the conference call will also be available until August 8, 2019 by dialing US toll free: 1-877-660-6853 / International: 1-201-612-7415 and Conference ID#: 13692485.

Cautionary Note Concerning Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, statements concerning our future financial performance (including specifically our current guidance for third quarter 2019 revenue, gross margins, and operating expenses) and statements concerning expectations of potential developments in our target markets, including management’s views with respect to the prospects for and trends in our connected home and 5G wireless and fiber-optic high-speed interconnect infrastructure markets. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any future results expressed or implied by the forward-looking statements. Forward-looking statements are based on management’s current, preliminary expectations and are subject to various risks and uncertainties. Risks and uncertainties affecting our business and future operating results include, without limitation, intense competition in our industry; our dependence on a limited number of customers for a substantial portion of our revenues; uncertainties concerning how end user markets for our products will develop, including in particular new markets we are entering such as the 5G wireless and fiber-optic data center high-speed interconnect infrastructure markets but also existing markets such as connected home; uncertainties concerning the outcome of global trade negotiations, export control limitations, and heightened geopolitical risks generally; potential uncertainties arising from continued consolidation among cable television and satellite operators in our target markets and continued consolidation among competitors within the semiconductor industry generally; our ability to develop and introduce new and enhanced products on a timely basis and achieve market acceptance of those products, particularly as we seek to expand outside of our historic markets; potential decreases in average selling prices for our products; risks relating to intellectual property protection and the prevalence of intellectual property litigation in our industry; the impact on our financial condition of the indebtedness arising from the Exar transaction; our reliance on a limited number of third party manufacturers; and our lack of long-term supply contracts and dependence on limited sources of supply.

In addition to these risks and uncertainties, investors should review the risks and uncertainties contained in our filings with the Securities and Exchange Commission (SEC), including our most recent Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 5, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 filed with the SEC on May 1, 2019, and our Current Reports on Form 8-K, as well as the information to be set forth under the caption “Risk Factors” in MaxLinear’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, which we expect to file shortly. All forward-looking statements are based on the estimates, projections and assumptions of management as of July 25, 2019, and MaxLinear is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

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