MaxLinear, Inc. Announces First Quarter 2018 Financial Results

First Quarter 2018 GAAP Revenue of $110.8 million;
GAAP Diluted Earnings per Share of $0.03
and Non-GAAP Diluted Earnings per Share of $0.37

CARLSBAD, Calif., May 08, 2018 (GLOBE NEWSWIRE) -- MaxLinear, Inc. (NYSE:MXL), a leading provider of radio-frequency, mixed-signal and high-performance analog integrated circuits for the connected home, wired and wireless infrastructure, and industrial and multi-market applications, today announced financial results for the first quarter ended March 31, 2018.

Management Commentary

“We are pleased to announce the financial results of first quarter 2018, in which we delivered GAAP net revenue of $110.8 million. We realized strong GAAP and non-GAAP gross margins of 56.5% and 64.9%, and GAAP and non-GAAP income from operations of 4% and 29%. We are proud to have been able to expand our margins even as we continued to invest aggressively in our network infrastructure platform initiatives to drive long-term growth and value for MaxLinear shareholders.

More specifically, in the first quarter, we witnessed a seasonal step-up in DOCSIS cable revenues, increases in shipments of wired connectivity solutions across a variety of end markets, and strong tier-1 customer traction and engagement for our wireless backhaul infrastructure products. In the first quarter, we also saw a slight seasonal pause in industrial and multi-market revenues. Like many of our peers, we continue to experience weakness in our optical products addressing China long-haul and metro telecom markets. As we aggressively pursue our revenue diversification strategy into the cloud datacenter, 5G wireless access and backhaul, high performance analog industrial and multi-market applications, our core connected home business has continued to provide a strong base of revenue support. We are currently anticipating and preparing for the ramp of several new customer design-win platforms across a range of our infrastructure growth initiatives starting in the second half of 2018.

In Q1 2018, at the Optical Fiber Conference (OFC), we demonstrated the industry’s first 400G PAM4 data center transceiver chipset integrated inside three of the largest OEM optical module suppliers' offerings. During the quarter, we also started sampling the industry's first Full-Duplex (FDX) DOCSIS 3.1 cable fiber node infrastructure remote PHY system-on-chip device, which enables 10-Gigabit cable data services to subscriber homes. Additionally, we entered into a formal partnership agreement with the world’s largest wireless networking equipment maker for wireless backhaul products. These three achievements testify to our continued progress towards becoming a diversified analog mixed-signal supplier across the network communication industry,” commented Kishore Seendripu, Ph.D., Chairman and CEO.

First Quarter 2018 Business Highlights

Demonstrated industry's first 400G data center transceiver chipset at OFC, showcasing MaxLinear’s lead position in the 400G PAM4 market.
Announced the industry’s first and only CMOS transceiver enabling channel aggregation functionality for the wireless backhaul market leading to a design win with Aviat Networks.
Announced new Virtual Fiber™ product capable of delivering 20 Gbps of throughput over coaxial cable, alleviating the need for operators to deploy costly fiber. This led to a new design win with Technetix, which will commence volume shipments in the 1H 2018.
Announced new AirPHY™ solution selected by ZINWELL for 5G high-bandwidth fixed wireless access communication. AirPHY™ enables wireless transfer of more than 2 Gbps through low-E windows and walls.
Announced a 5Gbps,16K QAM-based microwave modem SoC supporting the highest throughput bit rate for microwave point-to-point wireless transport.
Announced selection of new universal PMIC by Raspberry Pi to power its latest single-board computer, the Raspberry Pi 3 Model B+.
Announced the addition of two quad TIA devices to the Telluride family of components for linear PAM4 400Gbps network systems.
Announced new design win with Geniatech to bring live digital television to mobile devices. Geniatech will leverage the industry’s first single-channel integrated ATSC receiver IC.

First Quarter Financial Highlights

GAAP basis:

The first quarter 2018 results continue to be influenced by the acquisitions and related purchase price accounting impacts of Marvell’s G.hn business in April 2017 and Exar in May 2017, and interest on the term loan related to the Exar transaction. Additionally, on January 1, 2018, we adopted new revenue accounting guidance that accelerated recognition of revenue and costs on certain distributor sales to be recorded upon sale to the distributor, or the sell-in method, from sale to the distributor’s end customer, or the sell-through method. The impact of adopting the new revenue accounting guidance resulted in an incremental $13.3 million of revenue, and GAAP and non-GAAP gross profits of $8.2 million in the first quarter of 2018 as we replenished and returned distributor inventory to normal levels. Due to the prospective method of adoption, our results for the periods prior to first quarter 2018 have not been adjusted to reflect the change in timing of revenue recognition on such distributor sales.

Net revenue was $110.8 million, down 3% sequentially and up 25% year-on-year.
GAAP gross margin was 56.5%, compared to 45.8% in the prior quarter, and 59.6% in the year-ago quarter.
GAAP operating expenses were $58.2 million in the first quarter 2018, or 53% of revenue, compared to $57.8 million in the prior quarter, and $42.5 million in the year-ago quarter.
GAAP income from operations was 4% of revenue, compared to loss from operations of 5% in the prior quarter, and income from operations of 12% in the year-ago quarter.
Net cash flow provided by operating activities of $12.0 million, compared to $21.7 million in the prior quarter and $22.7 million in the year-ago quarter.
GAAP pre-tax losses were 0% of revenue, compared to pre-tax losses that were 9% of revenue in the prior quarter, and pre-tax income that was 12% of revenue in the year-ago quarter.
GAAP income tax benefit was $1.9 million, compared to an income tax provision of $9.0 million in the prior quarter, and an income tax provision of $2.0 million in the year-ago quarter.
GAAP net income was $1.8 million, compared to net loss of $19.4 million in the prior quarter, and net income of $8.5 million in the year-ago quarter.
GAAP diluted earnings per share was $0.03, compared to diluted loss per share of $0.29 in the prior quarter, and earnings per share of $0.12 in the year-ago quarter.

Non-GAAP basis:

Non-GAAP gross margin was 64.9%. This compares to 62.0% in the prior quarter, and 62.7% in the year-ago quarter.
Non-GAAP operating expenses were $39.3 million, or 35% of revenue, compared to $38.3 million or 34% of revenue in the prior quarter, and $30.1 million and 34% of revenue in the year-ago quarter.
Non-GAAP income from operations was 29% of revenue, compared to 28% in the prior quarter, and 29% in the year-ago quarter.
Non-GAAP pre-tax margin was 25% of revenue, compared to 24% in the prior quarter, and 29% in the year-ago quarter.
Non-GAAP effective tax rate was 7% of non-GAAP pre-tax income, compared to 4% in the prior quarter, and 10% in the year-ago quarter.
Non-GAAP net income was $26.2 million, compared to $26.3 million in the prior quarter, and $23.2 million in the year-ago quarter.

Non-GAAP diluted earnings per share was $0.37, compared to $0.38 in the prior quarter, and $0.33 in the year-ago quarter.

Second Quarter 2018 Business Outlook
The company expects revenue in the second quarter to be in the range of $100 million to $110 million, and also estimates the following:

GAAP and non-GAAP gross margin of approximately 54.5% and 63.5%, respectively.
GAAP and non-GAAP operating expenses of approximately $57 million and $38 million, respectively.
GAAP and non-GAAP interest expenses of approximately $3.8 million.
GAAP income taxes of approximately $0.5 million and non-GAAP cash tax rate of approximately 7%.

Webcast and Conference Call
MaxLinear will host its first quarter financial results conference call today, May 8, 2018 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 investors.maxlinear.com until May 22, 2018. A replay of the conference call will also be available until May 22, 2018 by dialing US toll free: 1-877-660-6853 / International: 1-201-612-7415 and Conference ID#: 13653123.

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