MAXLINEAR, INC Q3 FY2024 earnings call

• Q3 2024 revenue was $81.1 million, slightly above midpoint of guidance; non-GAAP gross margin was 58.7%. • Saw improvements in customer order rates; new product traction noted. • Demonstrated new technology and products at industry events, e.g., partnership with AMD at Flash Memory Summit, 8 gigabit DR8 optical transceiver at ECOC, and Max AI at Network X Summit. • Received Best Emerging Supplier of the Year award from Cisco. • In infrastructure, growth in AI workloads driving design activity; product shipment volume run rate >1 million units per year across direct customers. • In 5G wireless infrastructure, making customer inroads with millimeter and microwave backhaul products. • In Ethernet connectivity, broad portfolio of 2.5 gigabit Ethernet switch and PHY products; Tier 1 North American enterprise OEM customer expected to ramp in 2025. • In broadband and Wi-Fi connectivity, focus on new growth; design win traction for PON platform and tri-band Wi-Fi 7 single chip solution; momentum with design wins and engagements.

Total revenue for the third quarter was $81.1 million. Broadband revenue was $32 million, connectivity was $13 million, infrastructure was $23 million, and industrial multi-market was $13 million. GAAP gross margin was approximately 54.4% and non-GAAP gross margin was 58.7% of revenue. The delta between GAAP and non-GAAP gross margin was due to acquisition-related intangible asset amortization. GAAP operating expenses were $110.8 million and non-GAAP operating expenses were $72.8 million, with the delta due to restructuring costs and stock-based compensation.

• Expect Q4 2024 revenue between $80 million and $100 million. • Q4 GAAP gross margin expected to be approximately 54% to 57%; non-GAAP gross margin in range of 57.5% to 60.5%. • Q4 GAAP operating expenses expected to be $88 million to $94 million; non-GAAP operating expenses $58 million to $64 million. • Q4 GAAP and non-GAAP interest and other expense each expected to be $1 million to $2.5 million. • Q4 GAAP and non-GAAP diluted share count expected to be approximately 84.5 million each.

• Uncertainties in projecting future financial and operating results, including stock-based compensation and potential impairments. • Geopolitical factors like China restrictions impacting industrial multi-market segment. • Delays in customer rollout plans for certain products (e.g., storage applications) due to inventory issues.

Q: Tore Svanberg asked about the $1 million optical transceiver comment, specifically mix between 400 gig and 800 gig and run rate into 2025.

A: Steven Litchfield responded that they are forecasting to ship over 1 million units by end of 2024, driven by both 800 gigabit and 400 gigabit transceivers, with 800 gigabit being a larger fraction, and optimistic about exceeding this run rate in 2025.

Q: Tore Svanberg followed up on broadband business, asking about inventory levels and 2025 outlook.

A: Kishore Seendripu said broadband order rates have picked up, but it's a chunky market; DOCSIS 4.0 is pilot quantities now, with growth expected in 2025 and beyond as market recovers.

Q: Ross Seymore asked about Q4 guidance and where growth is coming from.

A: Steven Litchfield said improved demand across the board, with strength in broadband bookings and optical front being a big contributor, and modest recovery expected in other segments.

Q: Quinn Bolton asked about book-to-bill and optical business revenue.

A: Steven Litchfield said bookings are up and backlogs are building; Kishore Seendripu mentioned optical business is strong but wireless infrastructure is a drag currently, with optimism for recovery next year.

Q: Christopher Rolland asked about normalized revenue for broadband and connectivity.

A: Steven Litchfield said they are getting through inventory challenges, with bookings and new wins encouraging, and expecting double-digit growth in broadband and connectivity next year.

Q: Christopher Rolland also asked about optical design wins and customer buckets.

A: Kishore Seendripu said they have many design wins with top module makers targeting major data centers, with progress in interop with data centers and China's AI boom expected to drive growth.

Q: David Williams asked about Max AI and its monetization.

A: Kishore Seendripu said Max AI has both default value add and customized pay-to-play elements, with a hybrid go-to-market model.

Q: Suji Desilva asked about China hyperscaler opportunity and Wi-Fi vs broadband.

A: Kishore Seendripu said differentiation is universal based on low power, and Steven Litchfield said Wi-Fi and Ethernet have overlap but are kept separate with growth in new markets.

Q: Ananda Baruah asked about optical run rate and working with Chinese module makers.

A: Kishore Seendripu clarified the run rate is over 1 million units per year and they work with all leading module makers, including Chinese ones.

Q: Karl Ackerman asked about China restrictions impact and PON recovery.

A: Steven Litchfield said China restrictions were a headwind in Q3 and Q4, but behind us; Kishore Seendripu said PON momentum is building with fiber rollout plans and revenue expected to grow in 2025 and beyond.

Q: Richard Shannon asked about wireless infrastructure recovery and storage progress.

A: Kishore Seendripu said wireless infrastructure is recovering with steady bookings, and storage progress is slow due to enterprise inventory delays but Panther's scope is expanding beyond storage.

Q: Tore Svanberg asked about Rushmore 200 gig per lane revenue timing.

A: Kishore Seendripu said Rushmore is geared for AI-type systems, primarily NVIDIA now, with plans to showcase at OFC and expand to other vendors in the future.