MaxLinear, Inc. Announces First Quarter 2020 Financial Results

CARLSBAD, Calif. — (BUSINESS WIRE) — April 29, 2020 — 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 first quarter ended March 31, 2020.

First Quarter Financial Highlights

GAAP basis:

  • Net revenue was $62.0 million, down 11% sequentially, and down 27% year-on-year.
  • GAAP gross margin was 49.6%, compared to 52.3% in the prior quarter, and 53.3% in the year-ago quarter.
  • GAAP operating expenses were $50.9 million in the first quarter 2020, or 82% of net revenue, compared to $44.6 million in the prior quarter, or 64% of net revenue, and $52.9 million in the year-ago quarter, or 63% of net revenue.
  • GAAP loss from operations was 33% of revenue, compared to loss from operations of 11% in the prior quarter, and loss from operations of 9% in the year-ago quarter.
  • Net cash flow provided by operating activities was $6.6 million, compared to $28.1 million in the prior quarter, and $16.0 million in the year-ago quarter.
  • GAAP diluted loss per share was $0.21, compared to diluted loss per share of $0.11 in the prior quarter, and diluted loss per share of $0.07 in the year-ago quarter.

Non-GAAP basis:

  • Non-GAAP gross margin was 63.8%. This compares to 64.6% in the prior quarter, and 63.5% in the year-ago quarter.
  • Non-GAAP operating expenses were $31.7 million, or 51% of revenue, compared to $30.0 million or 43% of revenue in the prior quarter, and $35.7 million or 42% of revenue in the year-ago quarter.
  • Non-GAAP income from operations was 13% of revenue, compared to 22% in the prior quarter, and 21% in the year-ago quarter.
  • Non-GAAP diluted earnings per share was $0.07, compared to diluted earnings per share of $0.16 in the prior quarter, and diluted earnings per share of $0.19 in the year-ago quarter.

Recent Business Highlights

  • Announced that MxL93616 100G PAM4 DSP with EA-EML Integrated Driver was recognized as among the best in the industry by the 2020 Lightwave Innovations Review.
  • Announced that Optoway Technology and Centera Photonics have each selected MaxLinear’s second generation PAM4 DSP to deliver sub-3.5W 100G optical modules for hyperscale data centers.
  • Announced that Technetix Group’s Virtual SegmentationTM driven by MaxLinear’s high-speed MxL85110 broadband modem is in production for wireless backhaul deployment over cable.
  • Announced that uSenlight Corporation has selected MaxLinear’s MxL93542 PAM4 DSP to develop next-generation 400G optical modules for hyperscale data centers.
  • Announced that GiaX GmBH is in production with its HelEOSTM Solution powered by MxL85110 gigabit modem SoC in field trials for 5G mobile backhaul over the cable network.
  • Announced that Aviat Networks has selected MxL1105 CMOS transceiver along with the MxL8552 and MxL85110 modems for its new line of WTM 480 Multi-Band radios.
  • Announced that Siklu EtherHaulTM product family has deployed MxL85110 baseband SoC to fuel backhaul connectivity.

Management Commentary

“In the first quarter, revenue results were in line with our recent preliminary revenue guidance, gross margin was strong, and operating expenses declined on continued operating discipline. We continue to execute well on our 400 and 100Gbps PAM4 fiber optic data center products, which are expected to ramp this year in an expanding work-from-home market environment that is straining data center capacity. In the 5G wireless access market, which is a focus area for us, our new RF transceiver product introductions are particularly suited for the early stage 5G network rollout. We feel very encouraged by these new product areas of growth and the stabilization of our connected home broadband data market due to much needed bandwidth upgrades inside homes and the network itself,” commented Kishore Seendripu, Ph.D., Chairman and CEO.

“We also recently announced plans to acquire Intel’s Home Gateway Platform Division in the third quarter of this year. These assets add significant scale to our entire business while enabling us to provide compelling WiFi products and expanded broadband product offerings with tremendous growth opportunities that we will discuss in the near future,” Dr. Seendripu continued.

“Finally, the recent outbreak of COVID-19 has brought disruptions and uncertainty to the global business environment. While we continue to assess its impact on our business, we are taking every prudent measure to ensure the health and safety of our worldwide employees, as well as our customers and partners in this challenging environment,” Dr. Seendripu added.

Second Quarter 2020 Business Outlook

The company expects revenue in the second quarter 2020 to be approximately $60 million to $64 million. The Company also estimates the following:

  • GAAP gross margin of approximately 49.0% to 49.5%;
  • Non-GAAP gross margin of approximately 63.5% to 64.0%;
  • GAAP operating expenses of approximately $54.0 million to $55.0 million; and
  • Non-GAAP operating expenses of approximately $32.5 million to $33.5 million.

Webcast and Conference Call

MaxLinear will host its first quarter financial results conference call today, April 29, 2020 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 https://investors.maxlinear.com, and will be archived and available after the call at https://investors.maxlinear.com until May 13, 2020. A replay of the conference call will also be available until May 13, 2020 by dialing US toll free: 1-877-660-6853 / International: 1-201-612-7415 and Conference ID#: 13702209.

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 second quarter 2020 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. In particular, our future operating results are substantially dependent on our assumptions about market trends and conditions and our expectations with respect to the impact of our pending acquisition of the Home Gateway Platform Division of Intel Corporation, which we refer to as the WiFi and Broadband assets business. With respect to our pending acquisition of the WiFi and Broadband assets business, we face particular risks associated with our ability to close and complete the acquisition and integrate the acquired business and maintain relationships with employees, customers, and vendors. The WiFi and Broadband assets business operates in jurisdictions materially affected by the novel coronavirus (COVID-19) pandemic, which enhances integration risks, particularly relating to employee hiring and retention. The WiFi and Broadband assets business has operations that differ from those of MaxLinear, and we may be unable to realize anticipated strategic, financial, and operating synergies. In addition, we anticipate incurring substantial incremental acquisition-related indebtedness, which will enhance specific risks relating to our ability to service interest and principal payments on our combined indebtedness and limitations on our operating flexibility based on financial and operating covenants in the applicable term loan agreements, including (without limitation) debt covenant restrictions that may limit our ability to obtain additional financing, issue guarantees, create liens, make certain restricted payments or repay certain obligations or to pursue future acquisitions. Additional risks and uncertainties affecting our business and future operating results and our anticipated acquisition include, without limitation, intense competition in our industry; our dependence on a limited number of customers for a substantial portion of our revenues; 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; impact of the COVID-19 pandemic on customer demand and on our business and global financial markets in general; 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; our reliance on a limited number of third party manufacturers; our lack of long-term supply contracts and dependence on limited sources of supply; uncertainties concerning how end user markets for our products will develop, including in particular markets we have entered more recently such as the 5G wireless and fiber-optic data center high-speed interconnect infrastructure markets but also existing markets such as connected home; and uncertainties concerning the outcome of global trade negotiations, export control limitations, and heightened geopolitical risks generally.

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