MaxLinear, Inc. Announces Second Quarter 2020 Financial Results

CARLSBAD, Calif. — (BUSINESS WIRE) — July 23, 2020 — MaxLinear, Inc. (NYSE: MXL), a leading provider of RF, analog and mixed-signal integrated circuits for the connected home, wired and wireless infrastructure, and industrial and multi-market applications, today announced financial results for the second quarter ended June 30, 2020.

Second Quarter Financial Highlights

GAAP basis:

  • Net revenue was $65.2 million, up 5% sequentially, and down 21% year-on-year.
  • GAAP gross margin was 50.2%, compared to 49.6% in the prior quarter, and 53.4% in the year-ago quarter.
  • GAAP operating expenses were $55.5 million in the second quarter 2020, or 85% of net revenue, compared to $50.9 million in the prior quarter, or 82% of net revenue, and $47.0 million in the year-ago quarter, or 57% of net revenue.
  • GAAP loss from operations was 35% of revenue, compared to loss from operations of 32% in the prior quarter, and loss from operations of 4% in the year-ago quarter.
  • Net cash flow provided by operating activities was $9.3 million, compared to $6.6 million in the prior quarter, and $12.4 million in the year-ago quarter.
  • GAAP diluted loss per share was $0.30, compared to diluted loss per share of $0.21 in the prior quarter, and diluted loss per share of $0.03 in the year-ago quarter.

Non-GAAP basis:

  • Non-GAAP gross margin was 63.7%. This compares to 63.8% in the prior quarter, and 63.9% in the year-ago quarter.
  • Non-GAAP operating expenses were $32.6 million, or 50% of revenue, compared to $31.7 million or 51% of revenue in the prior quarter, and $32.8 million or 40% of revenue in the year-ago quarter.
  • Non-GAAP income from operations was 14% of revenue, compared to 13% in the prior quarter, and 24% in the year-ago quarter.
  • Non-GAAP diluted earnings per share was $0.09, compared to diluted earnings per share of $0.07 in the prior quarter, and diluted earnings per share of $0.22 in the year-ago quarter.

Management Commentary

“In the second quarter, revenue results were in line with our recent preliminary revenue guidance, gross margin was strong, and operating expenses were tightly managed to below the mid-point of our guidance. Our business showed solid improvements due to stronger-than-expected revenues in broadband driven by demand uptick, as well as analog product sales recovery. The work-from-home environment has strongly benefited our connected home business owing to noticeable inflection in bandwidth demand at home. The infrastructure business also saw meaningful quarterly improvements over previous results, supporting our positive outlook on the new product ramps. Finally, the high-performance analog products selling into our industrial, multi-market segment recovered extremely well in the quarter with impressive results,” commented Kishore Seendripu, Ph.D., Chairman and CEO.

“Additionally, MaxLinear’s acquisition of Intel’s Home Gateway Platform Division is on track to close during the current quarter ending September 30, 2020,” continued Dr. Seendripu.

Third Quarter 2020 Business Outlook

The company expects revenue in the third quarter 2020 to be approximately $72 million to $76 million. The Company also estimates the following:

  • GAAP gross margin of approximately 51.5% to 52.5%;
  • Non-GAAP gross margin of approximately 63.5% to 64.5%;
  • GAAP operating expenses of approximately $60.0 million to $61.0 million; and
  • Non-GAAP operating expenses of approximately $32.5 million to $33.5 million.

Webcast and Conference Call

MaxLinear will host its second quarter financial results conference call today, July 23, 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 August 6, 2020. A replay of the conference call will also be available until August 6, 2020 by dialing US toll free: 1-877-660-6853 / International: 1-201-612-7415 and Conference ID#: 13707071.

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 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.

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, 2019 filed with the SEC on February 5, 2020, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on April 29, 2020, 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, 2020, which we expect to file shortly. All forward-looking statements are based on the estimates, projections and assumptions of management as of July 23, 2020, 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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