MXL earnings call analysis

NASDAQ:MXL Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Diego | Operator: Greetings and welcome to the MaxLinear fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow a formal presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to our host, Leslie Green, Investor Relations. Thank you. You may begin. Leslie Green | Investor Relations: Thank you, Diego. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss MaxLinear's fourth quarter 2025 financial results. Today's call is being hosted by Dr. Kishore Sindhipu, CEO, and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer. After our prepared comments, we will take your questions. Our comments today include forward-looking statements within the meaning of applicable securities laws including statements relating to our guidance for the first quarter of 2026, including revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, GAAP and non-GAAP interest in other expense, GAAP and non-GAAP income taxes, and basic and diluted share count. In addition, we will make forward-looking statements relating to trends, opportunities, execution of our business plan, and potential growth and uncertainties, in various product and geographic markets, including without limitation, statements concerning future financial and operating results, opportunities for revenue and market share across our target markets, new products, including the timing of production and launches of such products, demand for and adoption of certain technologies, and our total addressable market. These forward-looking statements involve substantial risks and uncertainties, including risks outlined in our risk factor section of our recent SEC filings, including our Form 10-K for the year-ended December 31, 2025, which we filed today. Any forward-looking statements are made as of today, and MaxLinear has no obligation to update or revise any forward-looking statements. The fourth quarter 2025 earnings release is available in the investor relations section of our website at maxlinear.com. In addition, we report certain historical financial metrics, including but not limited to gross margin, income or loss from operations, operating expenses, interest in other expense, and income tax on both a GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations in the press release available on our website. We do not provide a reconciliation of non-GAAP guidance for future periods, because of the inherent uncertainty associated with our ability to project certain future changes, including stock-based compensation and its related tax effects, as well as potential impairments. Non-GAAP financial measures discussed today are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures. We are providing this information because management believes it is useful to investors as it reflects how management measures our business. Lastly, this call is also being webcast, and the replay will be available on our website for two weeks. And now let me turn the call over to Dr. Kishore Sindripu, CEO of MaxLinear. Kishore? Dr. Kishore Sindhipu | CEO: Thank you, Leslie, and wishing you all a very happy new year and good afternoon. For MaxLinear, 2025 marked a clear inflection year with resurgent growth. We delivered 30% revenue growth year over year, driven by strong execution and accelerating adoption of our newest products across multiple high-growth end markets. We delivered profitability and positive cash flow ahead of plan. During the fourth quarter, we repurchased $20 million worth of our common stock, reflecting our confidence in our sustained growth expectations and market momentum. Bookings remain robust, visibility continues to improve, and we are entering 26 with strong momentum across our portfolio. We are executing against a focus strategy that is working and will drive sustained strong growth in 26 and 27, investing in high-value multiyear growth markets with performance, power efficiency, and integration matter most. These include data center connectivity, wireless infrastructure, storage acceleration, on broadband access, Wi-Fi 7, and Ethernet in markets. Our infrastructure business is scaling rapidly. Revenue grew 30% for the full year and 76% in Q4 year-on-year, driven by strong growth in data center optical interconnects, wireless infrastructure, and early but meaningful contributions from storage accelerators. Importantly, multiple new design wins are now entering production, positioning us to grow faster in 26 than we did in 25. In 2026, we expect to achieve a significant and exciting milestone. Our infrastructure category should emerge as the single largest contributor to our overall revenues. In high-speed data center optical interconnects, our keystone PAM4 DSP family is now ramping at major hyperscale data centers in both the U.S. and Asia. supporting 400 gig and 800 gig deployments, both for scale-up and scale-out applications. Additional customer ramps are expected throughout the year. Based on this improved visibility, we expect Keystore to generate about $130 million in revenue in 26, with potential upside along with a further step function increase in run rate as we move into 2027. Power efficiency has been a defining competitive advantage for MaxLinear. And we are extending that leadership with Rushmore, our next generation family of BAM4 TIAs and 200 gig per lane DSPs targeting 1.6 terabits interconnects. Rushmore is foundational for next wave of data center optical architectures, including LRO, electrical retimers, AECs, LPOs, and co-packaged optics. With Keystone validating our execution performance leadership, customer engagement for Rushmore is accelerating faster than expected. We expect Rushmore production revenue ramp starting at the end of 2026. We expect a strong showing at OFC in March this year. Also, cloud data centers are now deploying 10-gigabit XGS PON as a robust, dedicated fail-proof control plane conduit for managing high-speed data traffic between data centers. In Q4, we secured our first PON data center design win, addressing this application at a major tier one US OEM provider to tier one data centers in this next generation design. Recently, we also won analog serial transceiver and bridge interface designs for rack management in AI servers at two major US data centers. This is further evidence of how Maximia's broad and deep technology portfolio comprising optical interconnect storage accelerators, spawn, and analog offerings is growing inside the AI data center. Within infrastructure, our Panther hardware storage accelerator SOC family continues to gain design traction with Tier 1 network appliance and cloud service providers. Ongoing storage and high-bit memory constraints for AI scale-up and compute are reinforcing the value of Panther's hardware-based compression high throughput, and ultra-low latency memory data access. In Q3-Q4, we started sampling Panther 5 to leading customers and our partners, including advanced micro-devices or AMD. Panther 5 delivers unprecedented ultra-low latency at 450 gigabits per second throughput and PCIe Gen 5 connectivity. Based on our engagements, we expect strong accelerator revenue to at least double in 2026 versus 2025 and potentially again in 2027. In wireless infrastructure, increasing spending is expected to drive sustained demand through 2026 and beyond as the need for cloud and edge AI functionality continues to grow. Additionally, our wireless access single-chip radio SOC and our millimeter wave and microwave backhaul transceivers and modems are seeing robust OEM customer design and activity, and deployments and multiple tier one carriers are going as per plan. Moving to broadband and connectivity, we delivered another strong revenue quarter across fiber form, cable docks, and Wi-Fi, driven by the early increases in service provider cap expense and continued booking strength and incremental demand. In Q4, we began the large-scale deployment of our single-chip fiber-pawn and 10-gigabit processor gateway SOC plus tri-band Wi-Fi 7 solution with the second major Tier 1 North American carrier. This was a significant competitive win that expands content per box fiber-pawn revenue and market share in 2026. In cable broadband, after a strong 2025, we expect a seasonally soft first half and cable revenue to be down in 26 as the industry transitions and pending a multi-year DOCSIS 4 upgrade cycle starting at the end of 2026. Additionally, in the standalone Ethernet market, we expect 2026 to be strong as a 2.5 gigabit Ethernet switch and PHY portfolio expands into commercial, enterprise, and industrial applications. In summary, we entered 2026 with multiple growth engines ramping simultaneously driven by expanding customer adoption and secular market trends moving in our favor. Our investments over the past several years have uniquely positioned MaxLinear to deliver sustained growth, operating leverage, and long-term shareholder value. We are excited about the opportunities ahead and confident in our ability to execute. With that, let me now turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Thanks, Vishal. Total revenue for the fourth quarter was 136.4 million, up 8% from 126.5 million in the previous quarter, and up 48% from 92.2 million in the fourth quarter of 2024. Infrastructure revenue for the fourth quarter was approximately 47 million. Broadband revenue was approximately 58 million. Connectivity revenue was approximately 18 million. and industrial multi-market revenue was approximately 14 million. GAAP and non-GAAP gross margins for the fourth quarter increased approximately 57.6% and 59.6% of revenue. The delta between GAAP and non-GAAP gross margin in the fourth quarter was primarily driven by 2.6 million of acquisition-related intangible asset amortization. Fourth quarter GAAP operating expenses were 93.5 million, and non-GAAP operating expenses were $59.2 million. The delta between GAAP and non-GAAP operating expenses was primarily due to stock-based compensation and performance-based equity accruals of $28.1 million combined and acquisition-related costs of $6 million. GAAP loss from operations for Q4 2025 was 11%. and non-GAAP income from operations in Q4 was 16% of net revenue. GAAP and non-GAAP interest and other expense during the quarter was $2.9 million and $2.8 million. In Q4, net cash flow from operating activities was approximately $10.4 million. As Kishore mentioned, we were active in our buyback program in Q4, repurchasing approximately $20 million of our common stock. As such, we exited Q4 of 2025 with approximately $101.4 million in cash, cash equivalents, and restricted cash ahead of our 2025 plan. Our day sales outstanding was down in Q4 to approximately 31 days. Our inventory was down by approximately $8 million versus the previous quarter, with days of inventory improving to approximately 130. This concludes the discussion of our Q4 financial results. With that, let's turn to our guidance for Q1 of 2026. We currently expect revenue in the first quarter of 2026 to be between $130 million and $140 million. Looking at Q1 by end market, we expect to see growth from infrastructure, but some seasonal declines in broadband connectivity and industrial multi-market. We expect first quarter GAAP gross margin to be approximately 56 to 59%, and non-GAAP gross margin to be in the range of 58% and 61% of revenue. We expect Q1 2026 GAAP operating expenses to be in the range of 85 to 90 million. We expect Q1 2026 non-GAAP operating expenses to be in the range of 58 million to 64 million. We expect our Q1 gap interest and other expense to be in the range of approximately 2.1 million to 2.7 million. We expect our Q1 non-gap interest and other expense to be in the range of approximately 2 million to 2.6 million, with FX volatility being the primary risk. We expect a $4 million tax provision on a gap basis and a non-gap tax provision of approximately 0.8 million. We expect our Q1 basic and diluted share count to be approximately 88 million and 91 million, respectively. In closing, with strong bookings and improving visibility, we expect to see solid growth in 2026, driven by new design wins and expanding content opportunities across our product portfolio. We believe we are well positioned, well in large and growing markets, that will be transformative to our business as well as continue to innovate on high-value solutions for our customers that solve next-generation challenges. We will continue to focus on our investment in areas of strategic importance and confident that we will build a solid foundation to deliver sustainable growth and profitability in 2026 and beyond. With that, I'd like to open up the call for questions. Operator? Diego | Operator: Thank you. And at this time, we'll be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, to ask a question, press star 1. We'll pause for a moment while we pull for questions. And your first question comes from Tori Sponberg with Stifel. Please state your question. Tori Sponberg | Analyst, Stifel: Yes, thank you, and I forgot some of the results here. Kishore, I was hoping you could talk a little bit more about the time for DSP business. So there's obviously a lot of headlines and things out there on LPO and CPO, but, you know, you seem to be seeing, you know, more and more correction, more and more design wins. sounds like, you know, Rushmore is getting pulled in somewhat. So, could you just walk through some of those dynamics, you know, because obviously that will give us better confidence about the continuous growth of PAMFOR in 26 and 27. Dr. Kishore Sindhipu | CEO: So, thank you, Ross. Sorry. Thank you, Tori, for the question. Obviously, you know, this is a pretty significantly confidence-boosting growth that we are seeing. We were guiding to $110 to $130 million. That's, you know, that's a very positive statement about our traction. And we are in the initial phase of the ramp of our 800 gig product solution. And it really pick up more steam and energy the second half. The market as a whole is still a pluggable market, which is going very, very fast. And the LPO deployments as such are very niche-y right now. and i i really look at the lpos per se as a very small fracture of the market and not long term the lros for example i think they have got some traction but there'll be a market that is substantially pluggables and there'll be a fraction of the market in lros and lpos will be sort of you know very very controlled environment limited deployments potentially an 800 geek but less so on 1.6 terabytes So that's our view of the marketplace. Obviously, there's a market that's also beyond that, which is as the scale-up continues, there will be electrical retimers, and that's going to be a huge volume in the scale-up world as well. Talking of CPOs, people are doing CPOs today as sort of, you know, that's your feat in the market, but it still is early innings for CPO. And in the long term, there will be a market that is going to be more varietal than just pure CPOs. You know, the O in the CPO being many number of ways of doing it. Obviously, there's a silicon plane within the CVO market as well. That is what I call a wide IF fast throughput through the optical, and we expect ourselves to be a player as the market evolves. As MaxLia, we are very focused and disciplined, and PAM4 is a huge growing market. We are developing a strong foothold, though we are not the incumbents. But I think today in the world, we are the – We can safely claim we're the top three deployers of PAM-4 DSP. And, you know, as the market strengthens, you know, we hope to branch out and diversify our offerings of what you all know is a very, very robust technology portfolio. I hope that gives you some sense of our technology positioning. From a growth point of view, you know, this year we expect that, you know, they could even be upside depending on how the ramps proceed beyond the one that we feel fairly confident on the visibility and the outlook we have based on the bookings so far in 2026. I hope that answers your question. Tori Sponberg | Analyst, Stifel: Yeah, no, that's great, Kala. Thank you, Kishore. And as my follow-up, I had a question on the broadband business and how should we think about, you know, The trajectory there has been moved throughout the year. You did mention you expected to be down year over year because of the sort of transition to DOCSIS 4.0 or the industry waiting for 4.0. What type of decline are we talking about? I know you're guided to be down seasonally in Q1, but, you know, will it sort of decline every quarter this year? Is it going to be more of a moderate decline? Any more color there would be very helpful. Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Maybe, Tori, I'll take that one. So we did mention that the seasonality certainly plays a role. We're also seeing the upgrade cycle, right, in DOCSIS 4.0. That probably starts the latter half of the year. And so it'll come down in the first half of the year and then probably start to build in the second half. So overall for the year, I do expect it to be down. We did talk a lot about the pond business right in the wind that we have there. So we are excited about that. But even with that, it's still early days in it. And so that's why we do expect to see the broadband business down for the year. Dr. Kishore Sindhipu | CEO: Yes. I think the pond is a substantial opportunity, the new tier one that's ramping. And based on the ramp itself, there is potential for growth. for, you know, not to see a downturn, so to speak. And Pond is going very nicely, and we're grabbing market share. And we have many number of designs that we did not have before that will really kick steam in 27 as well. Tori Sponberg | Analyst, Stifel: Sounds good. I'll go back in line. Thank you. Diego | Operator: Thank you. And your next question comes from David Williams with Benchmark Company. Please state your question. David Williams | Analyst, Benchmark Company: Good afternoon. Thanks for taking my questions and congrats on the solid execution. Maybe first, just around the data center opportunity, obviously the DSP is doing really well, but you've got other components that are going into that segment as well. Can you help us kind of understand maybe what the magnitude of opportunity within the data center is and where you're playing and kind of how you think that plays out through the year in addition to the DSP? Dr. Kishore Sindhipu | CEO: So, David, this is early innings for us, right? I mean, we have to say that. And the big, big entree is right now with the PAM4 transceivers. And this year, we could do anywhere between 4 to 6 million units of PAM4 transceivers, right? So, but on the other hand, the data center is not just a PAM4 world. There are compute tracks. There are communications between data centers. And that market still will grow as the data center clusters increase and the number of data centers increase as well. So we talked about this exciting design with the tier 1 OEM who is applying to tier 1 data centers and of using PON as a control play layer, not where the data itself is going to be with data centers. And there we are clearly the leaders in the pawn silicon offering, and so we should be very well positioned. So that could be a few. That market size, some of these OEMs have talked about hundreds of millions of dollars of value for the silicon plate. So that's one opportunity. So it won't happen in this one year. It will roll out over the next two years. Hopefully we'll start seeing in 27, and then it grows beyond that. And then there's the other thing where these racks have become really, these compute racks and server racks have become very, very, very sophisticated. They have their own telemetrics. Even the racks are being controlled with microcontrollers and so on and so forth. So you need industry of quality. sort of, you know, transceivers, serial bridges, and so on and so forth, and even smart, you know, smart power management and stuff, and then overall controlling the rack. So, the rack itself is a huge beast by itself. So, we're beginning to start getting design wins in that, and that could be a pretty huge play for rack, if you will. So, at this point, you know, I am not very what I call I don't want to provide market sizing at a level that, you know, we need as a team. But that market is very, very huge. There are a number of players. But we have the portfolio depth to participate in all the big spend that is happening as data centers are being built out. Great. David Williams | Analyst, Benchmark Company: Thanks for the color there. And then maybe just finally for you, Steve, just looking at the share repurchase authorization, that clearly signals some confidence, I think, in the growth trajectory, but also on the potential arbitration there. So maybe if you could just kind of speak around the share repurchase authorization and how we should be thinking about that and what you're telegraphing to the street. Thank you. Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Yeah, David, absolutely. No, I think the board took some actions last quarter, authorizing $75 million of buybacks, took action on it in the quarter, felt the stock was a good place that we wanted to act on it. But frankly, I think the board really wanted to just convey the confidence in the balance sheet. The cash flow improvement, we've talked about it running ahead of plan. It has run ahead of plan now for three quarters in a row. revenue stability and the outlook that we have from the business continues to improve. And so I think our actions kind of follow that, and including the mention of the arbitration as well. David Williams | Analyst, Benchmark Company: Thanks again. Ross Seymour | Analyst, Deutsche Bank: Thanks, David. Diego | Operator: Your next question comes from Ross Seymour with Deutsche Bank. Please state your question. Ross Seymour | Analyst, Deutsche Bank: Hi, guys. Thanks for that question, and congrats on the strong end to the year beginning of this one. Because you're on the optical side, a couple of different questions have already been asked, but the competitive landscape, how are you envisioning that going from Keystone to Rushmore? Do you think your positioning gets even stronger? Are there, you know, the different technologies coming in create more competitive pressure? Just how do you think MaxLinear is positioned as we look forward? Thank you, Ross. Dr. Kishore Sindhipu | CEO: I won't call you Tori, but just jokingly, a very, very good question. You know, both of you are complimented. So the strengthening is absolutely a word I love. On the next generation 1.6 terabit, our position is strengthening. We're gaining some ground and strengthening versus the competition. And I really feel that we are actually now speeding up a bit related to where we were. And we are now, you know, we feel that we will really start pulling our weight as 1.6 terabit rolls out. And beyond that, what we call our big sky product, 4 gig, 400 gigabit per lane, you know, I think we show our capabilities, our strong, low-power implementation capabilities, integration, and our, very, very well-developed, you know, RF mix signal skills. I think we will strengthen our position, and we are strengthening. In certain geographies, at 800 gig, we have strengthened our relative position. Within the U.S., just the timing of our product offerings, we got late at the number three. And, you know, from there, you're fighting to get to the number one and number two. It takes a little bit of a taller order, and income busy has incredible value. So I hope that puts things in perspective. Ross Seymour | Analyst, Deutsche Bank: It does. Thank you very much. And I guess pivoting over to Steve, just on the margin front, it sounds like you guys have a strong growth here, especially on the infrastructure side coming in 2026. How should we think about both gross margin trajectory just directionally and OPEX? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Yeah, I mean, look, on the gross margin side, I mean, we've been talking about the improvement. We've been demonstrating that over the last four quarters. So we're seeing – As you're aware, the product mix is kind of moving in our favor as infrastructure products typically drive a higher gross margins. Remain confident that we can exit the year at the, you know, kind of starting with a six versus a five. We did guide to the 59.5 at the midpoint of our guidance. I mean, you've got some headwinds with cost increases that are out there, but that being said, I think the mix longer term throughout the year, we'll move in our favor and we'll see some nice improvements. With regard to the OPEX question, look, I don't want to necessarily guide for the whole year, but I mean, I think you've heard from us in the past. Typically, we want to grow OPEX about half the rate of the top line. That being said, I don't think we necessarily – we've been really dialing things back a little bit. We're seeing some nice improvements in efficiency for lots of reasons. And so I actually think we'll see a little bit lower than that. So maybe it's in the 4% to 5% increase this year. Thank you. Diego | Operator: Thank you. And your next question comes from Tim Savageau with Northland Capital Markets. Please state your question. Thanks. Tim Savageau | Analyst, Northland Capital Markets: All right, go ahead. Yep, sorry. Congrats on the numbers. And first question was, where did we end up 25 in terms of optical DSP revenue? I think you were guiding 60 to 70 million. And can you give us any color there? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Yeah, so Tim, I think, so as you know, we don't break out these numbers. I think what we're Consistent with what we've delivered over the last two to three years, I think the guidance that Kishore shared earlier is kind of evidence of what you've seen over the last three years of this doubling that we saw. I mean, keep in mind three years ago we were doing less than $20 million of revenue. And so I think we're really pleased with the progress we've made and very excited about, you know, where we're at. I would probably maybe take the opportunity to – I mean, some of the background of where we exited the year, where we're entering this year. I mean, we mentioned in the prepared remarks about the visibility that we have, the backlog that we have. It's in a much better position, I mean, across all of our businesses, but particularly in the optical side. As you know, we've got 28-week lead times. And really confident in this kind of first half of the year where you've already got backlog. We're you know, pushing to get some upsides in here. And we've already seen a lot of success on that front. Tim Savageau | Analyst, Northland Capital Markets: Okay, great. I think we might have talked a little about this last quarter. But just based on the, you know, comments early in the call, I just want to make sure I'm hearing this right. Do you guys think you can go faster than 30% overall in 26? Was that the comment? Because I think the comment was go faster in 26 than 25. Or is there some more nuance or detail around that? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: So, Tim, I mean, look, as you know, we don't guide the whole year, and we're not going to do it here. We're not going to start today, I guess I would say. But clearly you see from, you know, the – mainly the infrastructure growth, but we're seeing a lot of good traction on the pond side. We're seeing industrial multi-market really see a nice recovery this year. So I'm confident that we can outgrow the industry in 2026. Tim Savageau | Analyst, Northland Capital Markets: Okay, thanks. Diego | Operator: Thank you. And your next question comes from Carl Ackerman with BNP Paribas Asset Management. Please state your question. Sam Feldman | Analyst, BNP Paribas Asset Management: Hi, this is Sam Feldman on for Carl Ackerman. Thanks for taking my question. On optical DSP, do you expect RAM to be linear throughout the year? And is there a reason for the $40 million range? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Hey, Sam. So, I mean, actually, just to kind of follow on what I was just speaking about, I do think it will grow throughout the year as we have new programs that will come on and we have share gains that will continue to gain traction throughout the year. But I would also say that it will be very strong right out of the gate in Q1 and Q2 because we do have really good visibility and we have a few customers that are ramping right now. Sam Feldman | Analyst, BNP Paribas Asset Management: Got it. Any follow-up? Can you discuss the timing and growth within broadband for the second major tier one North American carrier in calendar 26? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Yeah, so it'll, look, we've already started shipping some products. We mentioned that we'd even start in Q4. It'll be still pretty minor in Q1 and start more in earnest in Q2 and Q3. Dr. Kishore Sindhipu | CEO: Obviously, if you have good visibility based on the lead times of the supply chain, and the bookings that we have in place. Sam Feldman | Analyst, BNP Paribas Asset Management: Understood. Thank you. Diego | Operator: Thank you. And your next question comes from Christopher Roland with Susquehanna International Group. Please state your question. Christopher Roland | Analyst, Susquehanna International Group: Hey, guys. Thanks for the question. So in your press release and also in your prepared remarks, you talked about gaining market share. I think it was a general comment across your product set, but I was wondering if there are some specific kind of needle-moving opportunities, like in broadband, are you gaining share versus Broadcom? Like what were you specifically trying to highlight there as actual revenue-moving opportunities? Dr. Kishore Sindhipu | CEO: Hey, Chris, that's a very good question. It's a very broad statement. I think it's broadly true as well across the various categories, honestly. I mean, if you look at optical transceivers, our revenue forecast reflects that we are gaining share, right, in some form. If you just go by the units, I mentioned 46 million units of transceiver opportunities. Then you see that on the pond side, it's a very, very large Tier 1 player. and in that particular category, we are gaining share versus our competition. On cable as well, we're beginning to gain share that, you know, many years ago was ours. We're gaining share against our competition. And then when you go to storage accelerators, a completely new market that we are paving the path forward with hardware acceleration and compression, so that we have established incumbency as, and that market itself is poised to grow both on the cloud side and the appliance side. And then what else? I mean, it's broadly correct statement, but actually now that you asked the question, I think about it and say, you know what? Damn right, you know? So that would be my response to you. Christopher Roland | Analyst, Susquehanna International Group: Excellent. And then back to DSP, you know, we track the transceiver market pretty closely and, you know, we underestimated growth in the market there. It's I think growing faster than anyone expected, at least in terms of expectations for 26. You did suggest that there could be upside to your optical number, but why don't you even have more confidence there just given the upside in demand? And then maybe paired with that, Are there any supply chain constraints that you're seeing out there that would lower your outlook? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Hey, Chris. So, look, I mean, I think we're very excited about the ramps that are underway, right, that have already started, and we're picking up traction. I mean, Kishore spoke about the share gains, I mean, where we've won against the competition. So we're seeing that in the beginning of the year. So really excited about those. great visibility into future ramps that are coming with some of the new customers, new wins. You mentioned supply chain. Yes, certainly there's supply chain tightness out there. We're not concerned about that. I mean, we're working with our suppliers. We've seen improvements thus far, so we haven't had any trouble. As you also know, even outside of the optical world, you know, 80 plus percent of our business is really not exposed to that tightness, so that's good. Optical side certainly is, but we've had a lot of success there, and we're very confident in the outlook for this year. Diego | Operator: Great. Christopher Roland | Analyst, Susquehanna International Group: Thanks, guys. Diego | Operator: Your next question comes from Quinn Bolton with Needham & Company. Please state your question. Ross Seymour | Analyst, Deutsche Bank: I'll offer my congratulations as well. In the past, you guys have sort of said your GSP wins were more for front end networks. As you start to ramp the 800 gig products here, are you starting to see some of those designs moving into the scale out networks? Or do you think we need to wait for the Rushmore 1.6T product before you start moving into scale out? Dr. Kishore Sindhipu | CEO: You know, it's very, very hard to parse. Usually, we already scale up and scale out, you know, They're broad categories, right? There are short reaches and long reaches and mid-reaches, and usually the short reaches are in what you would call the scale-up network, and the longer ones are usually on the scale-out side. So that's happening on the 800-gig side. And so, yes, we are shipping in the scale-up side now, but – I still feel that most of it is still in the scale-out network, the traditional scale-out network. Ross Seymour | Analyst, Deutsche Bank: Sorry, just so we're clear, you're shipping in, I guess, what I would call front-end networks, sort of the storage networks driven off the GPU, or are you starting to ship in the GPU to GPU scale-out? Dr. Kishore Sindhipu | CEO: That's a more detailed question, but I would just say I'll leave it here. It's just leave it at scale-up networks, and is a smaller portion of the revenue that's starting, and most of it is scale-out networks. Ross Seymour | Analyst, Deutsche Bank: Okay. And then I guess, Keisha, you gave us some numbers, both revenue forecast for 26 for optical DSP, and you said that could equate to 4 to 6 million units. If I just do the math, it seems like it could imply an ASP of $25, which seems pretty aggressive. Can you just... Talk about the pricing environment. Do you guys feel like you're pricing below some of the other peers in the market? Is that helping you to gain share? Do you think you're pricing, you know, in line with others in the market? Dr. Kishore Sindhipu | CEO: I mean, that's – I think your conclusions are – what you're going is absolutely not true. We try to be very competitive in the marketplace, and we try to ride the product competitiveness of our product, right? And so I don't think in this market you win by pricing. You win, your performance is a must. And it is such an exciting worldwide great phenomenon that's going on. Pricing is the last thing that they would make decisions on, especially in a very, very sophisticated technology. So I think anybody says they're bidding on pricing, they really are not looking in the right market. Ross Seymour | Analyst, Deutsche Bank: Got it. Okay. Thank you, Kishore. Diego | Operator: Your next question comes from Alec Valero with Loop Capital Markets. Please state your question. Alec Valero | Analyst, Loop Capital Markets: Hey, thank you for taking my question. I wanted to ask, what do you see as being the biggest opportunities to gain market share in 2026? Dr. Kishore Sindhipu | CEO: I think it's very, very clear, right? We started with optical transceivers as a category that is very meaningful. We have talked about our gains in the storage accelerators in the, for the infrastructure market. We've talked about, I'm listing the sequence of the value, right? Then where the growth is coming, the pawn market share, market revenues increases. And the fourth one is the wireless infrastructure growth. I mean, I'm exactly laying down the sequence of where the big growth in absolute dollars are coming. And I think they'll hopefully track the percentages as well. Alec Valero | Analyst, Loop Capital Markets: Got it. Super helpful on that. And just a quick follow-up. You sparked my curiosity on scale-up. I know you mentioned it's small for now, but I wanted to ask you if you can maybe provide some more color on the opportunities there for scale-up. Dr. Kishore Sindhipu | CEO: Look, it's a very, very concentrated market from a scale-up point of view, right, if you really look at it. However, it's a huge opportunity inside the rack, if you will, right, the compute systems. And the scale-up opportunity is not just PAM4 interconnects, but there are PAM4 Ethernet retimers and so on on those things. which we have not hit upon. At the UFC, we will be announcing our electrical retimers for the Ethernet product category, and then there is the CPU opportunities as well, right? So it's all playing for us. It's very, very early innings, and right now, let's stay focused. It is a heavy growth engine for us, and we're very excited about it. Alec Valero | Analyst, Loop Capital Markets: That's great. I really appreciate it. Thank you and congrats. Thank you. Diego | Operator: Your next question comes from Tori Sponberg with Stifel. Please state your question. Tori Sponberg | Analyst, Stifel: Yes, thank you. Just two quick follow-ups. Yeah, this is Tori, not Ross, and I'm a big Ross fan. So first of all, the connectivity segment, how should we think about the puts and takes there this year? Because obviously, part of connectivity is tied to cable. or broadband, yet you also have the Ethernet business, obviously, that's doing quite well. So, should we think of connectivity as also being down this year, or, you know, does it have other subsegments growing fast enough to actually make it a growth segment in 26? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Hey, Tori. Yes, connectivity certainly grows this year. Wi-Fi will grow this year as Wi-Fi 7 starts to ramp. And then, you know, a lot of our Ethernet products that are transitioning to a nap gig certainly grow this year as well. So both of those. Tori Sponberg | Analyst, Stifel: Very good. And my last question is. Dr. Kishore Sindhipu | CEO: I just want to remind that of the, sorry, Tori, I want to let you know that cable is a huge part of the market that we have revenues that is not paired with Wi-Fi. So, you know, so. there lies the sort of the dissociation and the association. So, it depends on all that trance as well. Tori Sponberg | Analyst, Stifel: Understood. And my last question is sort of going back to the opportunities beyond DSPs. So, you know, you've talked about, you know, having products for AECs. Obviously, you have the high-speed analog products to go after LPO, LRO, and sort of so forth. But, you know, you continue to call those out as very niche markets. So, I guess my question is, You know, if you do see those segments getting more traction, you know, how long would it take for you to become a more material player in some of those areas? Dr. Kishore Sindhipu | CEO: Very good question, Tori. So I just want to lay the landscape of the sort of what I call the derivative product roadmap, right? You start with the PAM-4 DSP products. And I know LRO is not an analog product. It is a DSP product. So the LROs is a natural derivative. It doesn't take us long to get there, and we will be pursuing that opportunity. In a short while, we'll have something to show as well. I think there is some traction because in the marketplace, the LROs, because it has led beyond just one particular speed node, if you will, like, So the LPOs have limited niche nature to it because the amount of reach that the LPOs can reach is quite constrained and has to be very structured and controlled. So I do believe that that is a sequence in which it works out, for us at least. And I think that the market revenues in arrows grows much stronger as the speeds increase and the power increases. benefits that LROs will deliver. And I think there are some people who are beginning to try them out. And then, you know, and then there'll be a follow-through on that. So for us, the next 12 months is a place where we will start taking advantage of the product offerings and do these derivative product offerings. Tori Sponberg | Analyst, Stifel: Great. Thank you. Dr. Kishore Sindhipu | CEO: Yep. Thanks, sir. Diego | Operator: Thank you, and we have reached the end of the question and answer session. I'll now turn the floor back to Leslie Green for closing remarks. Leslie Green | Investor Relations: Thank you, Diego, and thank you all for joining us. This quarter we will be presenting at a number of financial and industry conferences. Details will be posted to our investor relations site, and we look forward to speaking with you again soon. Diego | Operator: This concludes today's call. All parties may disconnect. jsPDF 3.0.3 D:20260606090258-00'00'

NASDAQ:MXL Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Greetings and welcome to the MaxLinear Q3 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Leslie Green, Investor Relations. Leslie Green | Investor Relations: Thank you, Leslie. You may begin. Thank you, Alicia. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss Max Lanier's third quarter 2025 financial results. Today's call is being hosted by Dr. Kishore Sindhribut, CEO, and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer. After our prepared comments, we will take questions. Our comments today include forward-looking statements within the meaning of applicable securities laws including statements relating to our guidance for the fourth quarter of 2025, including revenue, gap and non-gap growth margin, gap and non-gap operating expenses, gap and non-gap interest and other expense, gap and non-gap income taxes, and basic and diluted share count. In addition, we will make forward-looking statements relating to trends, opportunities, execution of our business plan, and potential growth and uncertainties in various product and geographic markets, including without limitation, statements concerning future financial and operating results, opportunities for revenue and market share across our target markets, new products, including the timing of production and launches of such products, demand for and adoption of certain technologies, and our total addressable market. These forward-looking statements involve substantial risks and uncertainties, including risks outlined in our risk factor section of our recent SEC filings including our Form 10-Q for the quarter ended September 30, 2025, which we filed today. Any forward-looking statements are made as of today, and MaxLinear has no obligation to update or revise any forward-looking statements. The third quarter 2025 earnings release is available in the investor relations section of our website at maxlinear.com. In addition, we report certain historical financial metrics, including but not limited to gross margin, income or loss from operations, operating expenses, interest in other expense, and income tax on both a GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations and the press release available on our website. We do not provide a reconciliation of non-GAAP guidance for future periods because the inherent uncertainty associated with our ability to project certain future changes including stock-based compensation and its related tax effects, as well as potential impairments. Non-GAAP financial measures discussed today are not meant to be considered in isolation or as a substitute for comparable GAAP financial figures. We are providing this information because management believes it is useful to investors as it reflects how management measures our business. Lastly, this call is also being webcast, and the replay will be available on our website for two weeks. And now let me turn the call over to Dr. Kishore Singh-Reboot, CEO of MaxLinear. Kishore. Dr. Kishore Sindhribut | Chief Executive Officer: Thank you, Leslie, and good afternoon, everyone. We are excited about our strong Q3 2025 results and the strengthening momentum of our overall business over the last 12 months. Our Q3 2025 revenue of $126.5 million represents 16% sequential and 56% revenue growth year-over-year, and drive the substantial increase in non-GAAP net income both sequentially and year-over-year. Our focused investments in data center, optical interconnects, wireless infrastructure, PON broadband access, Wi-Fi 7, Ethernet, and storage accelerator products are enabling us to lay the significant groundwork required for broadening customer traction, new and increased content opportunities, and sustained growth in 2026. In our infrastructure end market, in Q3, revenues were up 16% sequentially and up 75% on a year-over-year basis. We also expect strong revenue acceleration in 2026 as new design wins begin to ramp across our portfolio. In high-speed data center optical interconnects, we are on track to deliver $60 to $70 million in revenue in 2025 and accelerating growth in 2026. As evidence, our Keystone PAM4 DSP family is now qualified at several major data centers in the US and Asia for 400 gig and 800 gig deployment starting 2026 as part of their AI infrastructure build out. We also made significant progress with our Rushmore family of PAM4 TIAs and 200 gigabit per lane DSPs for 1.6 terabit interconnections and are on track for production ramp in 2026. Rushmore advances our DSP roadmap and provides foundational technology for emerging optical connectivity trends, such as active electrical cable, LROs, LPOs, and co-packaged optics for 200 gigabit per lane and 400 gigabit per lane implementations. In wireless infrastructure, we expect increases in carrier capex spending to drive demand later this year and throughout 2026. Our Sierra 5G wireless access single-chip radio SOC and our millimeter wave and microwave backhaul transceivers and modems are seeing a significant increase in design activity and customer traction. In Q3, two major North American telecom providers launched new Sierra-based 5G macro remote radio unit products, which will continue to ramp through the end of 2025 and in 2026. At the IMC conference earlier this month, we also jointly announced and showcased Pegatron's next generation 5G Open RAN macro radio unit powered by our Sierra product. As we look ahead, we project sustained growth in 5G wireless access and backhaul as the needs for cloud and edge AI functionality continue to grow in 2026 and beyond. Beyond wireless infrastructure, within our infrastructure category, we continue to see strong design and success for our Panther family of hardware storage accelerator systems on chip solutions across Tier 1 network appliance and cloud service providers. In Q3, we announced our Panther 5 storage accelerator that delivers ultra-low latency, 450 gigabits per second throughput, and PCIe Gen 5 connectivity. The announcement coincided with a joint keynote address with advanced micro devices at the FMS 2025 storage conference on the transformation of enterprise data storage. Panther delivers significant advantages over traditional software-based compression, including a four times improvement in power savings and more efficient usage of CPUs and CPU cores and AI accelerators. Moving to broadband connectivity, we saw another exceptional quarter of growth for the combined portfolio of fiber ponds, cable docks, and Wi-Fi solutions, driven by the early increases in service provider cap expanding that has contributed to continued booking strength and incremental demand. Broadband was up 80% year-on-year, and connectivity was up 50% year-on-year. This quarter, we're beginning ramp of our single-chip integrated fiber, PON, and 10-gigabit processor gateway SOC, plus tri-band Wi-Fi 7 single-chip platform solution with a second major tier 1 North American carrier. In cable broadband, we are seeing the initial commercial rollouts of DOCSIS 4.0 led by smaller MSOs. We expect DOCSIS 4.0 RAM to accelerate in 2026, which in turn drives content opportunities for our Wi-Fi 7 and Ethernet solutions. In the Ethernet market, we continue to see the adoption of our innovative high-functionality, low-power consumption, 2.5 gigabit Ethernet switch and PHY portfolio into commercial, enterprise, and industrial applications. This market continues to grow as demand for higher data rates and increased bandwidth intensifies, and 2.5 gigabit Ethernet is well positioned to bridge the gap between gigabit Ethernet and costly higher speed options of 10 gigabit Ethernet. In conclusion, in the last 12 months, we delivered significant and sustained improvement in our business, driven by strong revenue growth, growing profitability, and positive cash flow generation. Through our strategic investments in high-value end markets, such as high-speed data center optical interconnects, wireless infrastructure, multi-gigabit PON access, storage accelerators, Wi-Fi connectivity, and Ethernet. We're driving strong product traction with Tier 1 customers and partners. Our success in these areas, combined with the incremental tailwind from the ongoing recovery in our core markets, strongly positions MaxLinear for exceptional growth in 2026 and beyond. With that, let me now turn the call over to Mr. Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Thank you, Kishore. Total revenue for the third quarter was $126.5 million, up 16% from $108.8 million in the previous quarter and up 56% from $81.1 million in the third quarter of 2024. Infrastructure revenue for the third quarter was approximately $40 million, broadband revenue was approximately $58 million, connectivity revenue was approximately $19 million, and our industrial multi-market revenue was approximately $9 million. GAAP and non-GAAP gross margin for the third quarter were approximately 56.9% and 59.1% of revenue. The delta between GAAP and non-GAAP gross margin in the third quarter was primarily driven by $2.6 million of acquisition-related intangible asset amortization. Third quarter GAAP operating expenses were $113.2 million, and non-GAAP operating expenses were $59.5 million. The delta between GAAP and non-GAAP operating expenses was primarily due to stock-based compensation and performance-based equity accruals of $32.5 million combined, restructuring costs of $11.3 million, and acquisition-related costs of $9.6 million. GAAP losses from operations for Q3 2025 was 33%, and non-GAAP income from operations in Q3 was 12% of net revenue. GAAP and non-GAAP interest and other expense during the quarter was 2.1 million and 1.8 million, respectively. In Q3, net cash flow provided in operating activities was approximately 10.1 million, We exited Q3 of 2025 with approximately $113 million in cash, cash equivalents, and restricted cash ahead of our 2025 plan. Our day sales outstanding was down in Q3 to approximately 39 days. Our gross inventory was approximately flat versus the previous quarter with inventory turns improving to 1.8 times. This concludes the discussion of our Q3 financial results. With that, let's turn to our guidance for Q4 of 2025. We currently expect revenue in the fourth quarter of 2025 to be between $130 and $140 million. Looking at Q4 by end market, we expect to see some seasonal moderation in broadband and connectivity coming down from Q3, but expect growth from infrastructure and the industrial multi-market. We expect fourth quarter GAAP gross margin to be approximately 56.0% to 59%, and non-GAAP gross margin to be in the range of 58 and 61% of revenue. We expect Q4 2025 GAAP operating expenses to be in the range of 92 to 98 million. We expect Q4 2025 non-GAAP operating expenses to be in the range of 57 to 63 million. We expect our Q4 GAAP interest and other expense to be in the range of approximately $2.2 to $2.8 million. We expect our Q4 non-GAAP interest and other expense to be in the range of $1.9 million to $2.5 million, with FX volatility being the primary risk. We expect a $2.5 million tax benefit on the GAAP basis and a non-GAAP tax provision of approximately $2 million. We expect our Q3 basic and diluted share count to be approximately 87.5 and 91.1. In closing, it's gratifying to see some strong improvement in our business over the past four quarters, marked by continued growth in customer orders, expanding traction across product portfolio, and our solid return to profitability. Our focused investments in strategic high-growth areas such as optical high-speed interconnects, wireless infrastructure, storage, Ethernet, Wi-Fi, and fiber PON gateways are beginning to generate exciting business opportunities that we expect to further grow in revenues in 2026. This reinforces our confidence in our sustainable growth and profitability into 2026 and beyond. With that, I'd like to open up the call for questions. Operator | Conference Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Tor Savinberg with Stifel. Please proceed. Tor Savinberg | Analyst, Stifel: Yes, thank you, and congratulations for the results. So I had a question for you, Kishore. So, you know, with the Q4 guidance, companies pretty much tracking to 30% year-over-year growth during 25. You did say you expect exceptional growth in 26 and beyond. I know you typically don't give guidance, obviously, more than a quarter out, but Can you, you know, maybe put some context on that comment in relation to the, you know, about 30% that the company is going to grow here in 2025? Dr. Kishore Sindhribut | Chief Executive Officer: Thank you, Tory. Obviously, you know, 2025, if you compare it to 2024, was exceptional growth overall, and the return to profitability now is pretty solid. So, and that's quite a significant growth in the overall of the semiconductor company. You look forward, if you look at the street numbers, they're about 20% odd into 2026. And that, I think, is about two times what the industry is expecting. Having said that, we have a lot of optimism based on the design win activities across our product portfolio, be it infrastructure, inside infrastructure, the optical customer wins, and the timing of the volume ramps. And then we have our uh winds in wireless infrastructure those are accelerating and also our store is actually a business we do expect broadband to moderate somewhat if you look at how strongly broadband has grown as the recovery has set in but we still see growth with taking market share in these areas so overall we try to be very cautious because a big part of the growth is coming through the infrastructure markets And it's a pretty large, complex systems. And, you know, and there's a lot of customer concentration, some of these big markets. So we are just, we are being conservative, but we also are at the same time displaying optimism in terms of the sheer breadth of the acceleration that we are seeing based on design and customer activity. And, you know, what I call booking strength that we are seeing, you know, so. I would like to tell you more, but at this point, you know, let's continue to deliver the numbers is the way I look at it. Tor Savinberg | Analyst, Stifel: Yeah, no, that's fair. And as far as the infrastructure segment, so, you know, obviously, you know, we know what's going on on the data center side and the optical business you have there. But I think the one with the more surprising thing is all the strength that you're starting to see on the wireless side. Obviously, you have some, you know, company-specific companies product cycles there, but it also sounds like the service providers are starting to spend some more CapEx again. So, you know, just hoping you could add a little bit more color there and, you know, how should we think about the wireless part of the infrastructure segment for Canada 26? Dr. Kishore Sindhribut | Chief Executive Officer: Absolutely. I do see the wireless infrastructure, you know, there's a the telecom operators are beginning to spend on their infrastructure now. So I know three years ago that was the topic du jour, but really now they're spending coming from a period of lean investment. And we are seeing a lot of traction for our Sierra product line. And we are the only single chip solution provider for the remote radio units for the RAN network. So we're getting pretty strong traction. And I talked about And the quality of the product speaks for itself with the two big North American telecom operators who are actually Q3 qualified are in the ramp phase. Now, how much do we expect it to grow? If you combine our millimeter wave, microwave backhaul infrastructure and wireless access is still in its initial ramp with Sierra, I think we see a pretty strong growth, maybe in the same order of, you know, as optical, let me put it that way, in the same order of magnitude. But I do want to emphasize this point, right, is that infrastructure is a category of a max linear now you're seeing is getting substantially as a big percentage of overall revenue. That was the growth that we had invested strategically for the last five years. And now I still remain by my position that in the next two to three years, this infrastructure revenue should be in the $300 to $500 million range. And I feel really, really proud of our team that we stick with the plan and we're executing to it. Okay? That's great, Carlos. Thank you, Kishore. Thank you, Dory. Operator | Conference Operator: Thank you. Our next question comes from the line of David Williams with Benchmark Company. Please proceed. David Williams | Analyst, Benchmark Company: Hey, congrats on the really strong progress here. It's great to see, and thanks for letting me ask the question here. So maybe first, George, if you kind of think about the optical side of the business and the strength that you've had there, you've got some qualifications, you've talked about some ramps. Just kind of wondering if you maybe could give us some insight into how you think that will trend for next year. Could it be another doubling of that revenue? Or maybe how do you think about just that infrastructure piece or the optical piece and infrastructure things? Dr. Kishore Sindhribut | Chief Executive Officer: I would like to say everything is a possibility, given where the traction is right now, but we have also seen movements in the shifting of where we think a certain particular data center is going to ramp or a large enterprise customer. Currently, a big part of the revenue in this year on the optical at the data center connectivity is coming from 400 gigabit solutions, but now towards the end of the year, in 25 and into 2026 800 gigabit is is beginning to grow so that that kind of gives you a sense of our momentum in terms of what which data centers where what we are tracking and i feel that the 800 gigabit side we are not any different than any and and the normal course of where the data center guys are in terms of the various rollout um so i think I would have liked to see even more traction than I'm speaking about, but I am also now, while we're very proud of where we are, but we butted against pretty entrenched to other competitors, and that's taken a while to start cracking open, and it is definitely cracked open. And as far as OEMs are concerned, all the major OEMs, we are part of their solution portfolio, and I hope we are their favorite one, if not today, in the future, right? That's our goal here. Okay? David Williams | Analyst, Benchmark Company: Perfect. Thanks for the color there. And then maybe, Steve, just kind of thinking about the gross margin guidance, I think just the – 30 basic points there that you're guiding to would imply maybe a 64%, 65% type of incremental margin. Does that seem fair? And what are maybe the moving pieces there for that margin improvement for next quarter things? Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Yeah, David, I think we're kind of finally starting to see things improve a little bit. I mean, as revenue, you know, really starts to ramp back up to some more material levels and naturally the mix. as we talked about a while. I mean, you're seeing our infrastructure business continue to grow at a faster rate than the rest of the business, has a little higher gross margin mix. And so, pleased with the progress looking into next year. You know, hopefully we can continue to see that. Dr. Kishore Sindhribut | Chief Executive Officer: You know, and as the growth is picking some momentum and, you know, the lead times and the fabs and everything have dramatically increased as well. We're not the only one, looks like, who needs capacity. And, you know, the fabs have been increasing prices as well. And, So we are not where we wanted to be on gross margins, but all the good work our team does seems like the facts are consuming it. So, yes, we are making good progress, but not as much as I'd hope on the gross margin front. David Williams | Analyst, Benchmark Company: Well, thanks again for the time, Dylan. Certainly appreciate it. It's great to hear the much better, more optimistic outlook here. Dr. Kishore Sindhribut | Chief Executive Officer: Thank you, David. Operator | Conference Operator: Thank you. Our next question comes from the line of Joe Quattrochi with Wells Fargo. Please proceed. Joe Quattrochi | Analyst, Wells Fargo: Yeah, thanks for taking the question. Maybe another one on the data center optical side. You know, just trying to take another stab at your expectations for 26. I mean, we've seen a lot of, a number of AI data center, you know, announcements over the last few weeks. Just curious how your visibility or pipeline of opportunities has changed since a quarter ago. Dr. Kishore Sindhribut | Chief Executive Officer: Look, a quarter is a long time, but also it's a very short time in the data center world, right? These interops, one of the biggest learnings for me is the interops always take longer than they tell you, and they're always juggling their current build-outs versus qualifying new players. So having passed the threshold with the major data centers on the interops, it has a way of generating its own momentum of maxillaneous product. So naturally, you can tell by our tone, we're very, very excited, and we're getting a lot of what I call pull now in terms of design win activity and such. So obviously, we're feeling very, very better. And like I told in response to Tori's question, we feel very, very good. And the growth that we expect for optical or wireless infrastructure is of the same order, and infrastructure will grow very, very nicely next year. Joe Quattrochi | Analyst, Wells Fargo: Got it. And then on the broadband connectivity side, you know, I appreciate that it's typically seasonally down in the December quarter. Any sort of help in just terms of kind of framing, you know, this year relative to normal seasonality, just given I think there's been some inventory kind of, you know, things at play there? Dr. Kishore Sindhribut | Chief Executive Officer: Okay, maybe Steve will give you a little bit more. Normally we see seasonality that sometimes December, sometimes is the Q1. So we have always had that uncertainty for the ones who have followed us historically. So I would say this year is a little bit different in the sense the core recovery was happening, but the big growth came through what I call cable recovery and But we are winning designs on the pawn side. We're very excited about the major telecom provider. Hopefully you'll get one of our boxes at your home, so to speak. So pawn is poised for very strong growth, but we do expect moderation. Look, we grew 80% year over year. So I think by any means, the broadband market is not naturally that kind of a growth vehicle, but it will moderate. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Yeah, I think the only thing I would add, Joe, is maybe speak a little bit broader in 26 and 27. I mean, we are seeing nice CapEx spends over the next two years. You know, you're seeing the telco guys rolling that out right now. We're certainly participating, as Kishore stated, and that's exciting because it's new business for us. At the same time, you still got kind of this DOCSIS upgrade that's happening that has a meaningful content improvement. And, you know, that's going to start kind of late 26 and even into 2027. I think some of the cable operators have been delayed a little bit with some of the amps and the node upgrades that are happening. So maybe to the earlier point, yes, a little bit of moderation in the short term with regard to seasonality. But I think our outlook is, you know, continues to be strong over the next couple of years. Suji Del Silvia | Analyst, Roth: Thank you. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Thanks, Joe. Operator | Conference Operator: Thank you. Our next question comes from the line of Tim Savojo with Northland Capital Markets. Please proceed. Tim Savojo | Analyst, Northland Capital Markets: Hey, good afternoon, and my congrats as well on the strong results. I want to come back and touch on a couple of questions that have already been asked, and I guess it has to do with the accelerating growth commentary. which I don't know if that first comment was relative to the entire business, 26 over 25, but I think I definitely heard that comment made with regard to the optical data center piece. I just wanted to kind of clarify that and, you know, get, I guess, a little more color on where you guys are headed with those comments. Thanks. Dr. Kishore Sindhribut | Chief Executive Officer: So, uh, clearly, uh, it's not related to where the business was 24 versus 25 is really related to the new opportunities that we are in front of us. Obviously the new opportunities will grow much faster than what the overall business that it's pointing to based on streets, uh, numbers around 20% growth or so for the company. So, uh, the acceleration we're talking about is really in terms of, uh, the various opportunities here. Okay. The first one is the data center connectivity. Then I told wireless is in the same order infrastructure. And then we have storage accelerators. Those are all brand new or exciting data center type driven markets. Those are where the exciting growth is. Very, very strong growth. They're all about the company's overall growth rate. then we said broadband will moderate to its potentially normal level. But within broadband with the puts and takes, PON is going to grow strongly because it's large North American operator coming online. And so those are the buckets I would look at as strong growth opportunities that are accelerating. And at the overall company level, that translates to a pretty robust growth that I referred to earlier. Okay. Tim Savojo | Analyst, Northland Capital Markets: Yeah. Okay. Um, let me, let me try one more time. So if we take AI optical in particular, you know, somewhere in the middle of your range, and I'd be interested in as an aside as to whether you have any thoughts about the higher low end of that 60, 70 million ranges that we stand here in October. Um, but assuming we're mid range, that's, you know, 80, 90% growth, something like that. So accelerating growth there would be, you know, up toward triple digits. And from an absolute dollar standpoint, I think what you're telling us is that growth you should see on the wireless side as well. I want to make sure I got that right. And I'll have one more very quick one. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Yeah, so Tim, since nobody likes too short answers, I'll try it. Joking aside, look, I think we're very excited about the outlook on the infrastructure side. I mean, optical is clearly where we've been spending a lot of time and efforts, and we're seeing, you know, that potential that you're referring to. I think we're having a great year this year. It's very back-end loaded, and, you know, looking out into next year as these new data center wins. know ramp into production uh yeah i mean these numbers go up meaningfully and we're very excited about that are there other pieces in infrastructure that continue to do well yes absolutely and and you know we're excited about those also uh but but data center is going to lead the way from a growth number nonetheless great and that's actually very relevant to my very brief final question which is on the q4 guide Tim Savojo | Analyst, Northland Capital Markets: Looks like infrastructure is doing most of the work there, maybe up 20% plus sequentially. Could you break that down between optical or wireless or any other big drivers for that sequential growth in Q4? Thanks. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Yeah, look, it's a good question. I guess I would just say with regard to some of that in-market guidance. So you're right. Infrastructure is the biggest contributor in Q4. um i i think that was for the most part expected that you would see uh that particular end market growing the most i mean some of the moderation that we spoke of earlier on broadband and connectivity is modest i mean indeed modest it's not that big uh industrial multi-market is on on the mend i would say and and we're starting to see some some improvements there but i'll I'll keep from going into specifics on all the line items that drive infrastructure growth. But, you know, but suffice it to say, we're very excited about some strong backend infrastructure growth that'll lead to nice revenues in 2026. Okay, operator, maybe next question. Operator | Conference Operator: Yep, next question. comes from the line of Christopher Roland with Susquehanna International Group. Please proceed. Christopher Roland | Analyst, Susquehanna International Group: Thanks for the question and congrats, guys. So this one's probably for Kishore. So Kishore, I felt like I sensed a bit of hesitation to really extend yourself in the optical guide or comments for next year. You did mention stuff like competition, and, you know, there's a lot to this beyond just kind of pure DSP performance, like laser availability and or bundling and other dynamics. So I was wondering if you could kind of expand a little bit more there on your outlook and what gets you to, like, hyper growth outcome for next year for MaxLinear versus like just a solid growth outlook? Dr. Kishore Sindhribut | Chief Executive Officer: That's a very complicated question with lots of dynamics there. I would say, Chris, Yes, availability will be a big issue, whether it is optics or silicon even, for example, that's a big factor. And the other factor is also the timing of our wins and when they translate to actual revenue growth. So at this point, our growth assumption is based on what's already started ramping. So based on that, I can qualify that it'll be very solid growth, very solid growth. Hyper growth is a very hyperbolic question. So it'll take things that are already ramping to be much more, we get even more share than we planned for is one way to look at it. So whatever growth we're referring to, we're not referring to based on many more new design wins, right? We can only project growth based on what we have won and what has started ramping, okay? So I think that kind of sets the stage. So hyperbolic growth would be based off getting much more share than we thought, and solid growth would be based on the shares we assume at this stage in our play in the data center, okay? Christopher Roland | Analyst, Susquehanna International Group: Perfect. And then also probably following up on your broadband comments, just as we, you know, you had some comments around DOCSIS 4 as well. Like is this going to be a big driver of new upgrades here and for this business finally? Or do you think like the fiber opportunity and growth there is more meaningful for you guys as we look forward? Dr. Kishore Sindhribut | Chief Executive Officer: You know, as the professor always said, it depends. You know, it depends on a number of things. One of the things that it depends upon is, you know, DOCSIS 4.0 ramp. And clearly the main players have delayed their DOCSIS 4.0 ramp because the network upgrades have that they plan for, they have sort of slowed down for whatever reasons, right, due to the complexity of it or not. So that could make a huge meaningful difference on the cable growth. So that brings the question, as you rightly pointed out, on the fiber side. So we have a large North America operator ramping. We are winning a bunch of shares right now and the timing of those. So at this point, when I think of broadband, There are two factors that would make for a meaningful broadband growth and not overly moderated as we were alluding to. One is the DOCSIS 4.0 ramp and rollout. And we are very confident of the North American telecom operator ramping, the second one, the big one. And there are a couple of others that, if the timing is right, that could also set up a nice growth for broadband. Fantastic. Christopher Roland | Analyst, Susquehanna International Group: Thanks, guys. Dr. Kishore Sindhribut | Chief Executive Officer: Thank you. Christopher Roland | Analyst, Susquehanna International Group: Thanks, Chris. Operator | Conference Operator: Thank you. Our next question comes from the line of Ananda Barua with Loop Capital Markets. Please proceed. Ananda Barua | Analyst, Loop Capital Markets: Hey, yeah, thanks, guys. And, yeah, congrats on the steady progress here. It's good to see. Look, this is a bigger picture growth question. We're all thinking the same way. Let me just ask you this, Kishore. Coming out of COVID, you know, you put up a good growth year coming out of COVID, not dissimilar to 2025, the growth rate. And then you had an amplified growth rate coming off of that year as well with the first year coming out of COVID off of a negative Comp 2. So there's similarities. I think that's why people are probably focused on it. What would be the things, are there any meaningful differences with the business, any meaningful differences with the supply chain, you know, any meaningful differences with inventory right now that would have the pattern coming out of this time around be different than COVID. Obviously, I understand COVID is unique, but the growth rates are actually similar. And you guys have more incremental punchy opportunities market opportunities that you've been preparing for coming out of this pause than you actually did back then. So let me ask that. And then I have a quick follow-up as well. Dr. Kishore Sindhribut | Chief Executive Officer: Thanks. Let me try to take a stab at your question. There's a fundamental difference between what we are talking today versus what you saw in the COVID phenomenon, as they call it. That was a very broadband-driven growth scenario. And now it's really infrastructure being a huge part of the growth. And secondly, as always, these events happen. Businesses change, legacy businesses. And so right now, the infrastructure goes, there are components of it that are really primarily brand new revenues. And they have a huge TAM and massive TAMs, much more than anything we were looking at before, where our share of the market is very tiny. So there's a large growth front in front of us as we become successful and continue in our strategy focus and investments. That's I would say. Secondly, the inventory situation is totally different. Nobody is doing excess talking whatsoever, right? So now we are in a place where sell through and sell in, if you will, are kind of in balance equilibrium, let's call it, right? So there's no unusual sort of events of that nature. So on the supply chain side, dramatically different. There are geopolitical issues that are in play now, right? And then there's a large dependency on the foundry choices one can have in the associate markets versus non-associate markets. So very, very different. And the advanced nodes are much more entrenched now than they used to be before. So if you look at 16 nanometer and beyond, it's all FinFET based, versus previously, it was older nodes than 16 nanometers. So I just want to leave it there. And the fabs have now completely muscled on their pricing power. So you have to be incredibly more innovative to maintain your margins, then it's sort of one trick scenario that you can charge margins because you were there at the right time for the right market, but if you're going to be a company like MaxLinear that cross portfolios, you really have to have a sustainable, consistent execution and value proposition to maintain or grow your gross margins. I would say that with the comprehensive color. Okay, so let me allow you to ask your second question. Let's see, maybe Steve is in a better position for that. Ananda Barua | Analyst, Loop Capital Markets: Yeah, go for it. That's awesome. Yeah, just real quick on neoclouds. With more hyperscale workloads, AI workloads moving to neoclouds, large ALIs moving to neoclouds, does that necessitate you guys? This is really a infrastructure question, a DSP question. Does that necessitate you guys having to broaden out your relationship set to participate in those. Just fill out that sort of whole paradigm for us. That would be great. Thanks. So that's it for me. Dr. Kishore Sindhribut | Chief Executive Officer: Okay. That's a very, very broad, generically generic question, right? We have to broaden our relationships, but we also have to deepen our relationships, which is a very challenging proposition, right? Unless you are in the revenues, conversations are difficult to play. Now that we are in the revenues, those conversations get... It's like a natural, spontaneous, you know, de-frictionization of the system, right? So what I would call acceleration. I'm just worried about the acceleration word, but yeah, I'll use it here. So as you start generating revenue and win the conference, they naturally lead to more dialogues. That's just part for the course. So where you're successful, you have more and more conversations and you can broaden those conversations. Where you're trying to get in, you really have to narrow and deepen those conversations because the general question to you is prove yourself first before you want to talk about everything in the world. But that's pretty standard in any market and the data is much more challenging because they are a world unto themselves, right? So that's how I would describe it. And, you know, the amount of money you have to spend in marketing and support and all is incredibly higher even before you have any revenue. So that's been the other mitigating experience trying to get into these markets. Okay? Ananda Barua | Analyst, Loop Capital Markets: Great context, Kishore. Thank you so much. Appreciate it. Dr. Kishore Sindhribut | Chief Executive Officer: Yes. Ananda Barua | Analyst, Loop Capital Markets: Thanks, Anand. Operator | Conference Operator: Thank you. Our next question comes from the line of Quinn Bolton. with Needham and Company. Please proceed. Quinn Bolton | Analyst, Needham and Company: Thanks for letting me ask a couple of questions. I guess maybe I'm a little just thick-headed, but I just wanted to come back on the broadband comments. You were talking about moderating or moderation in that business. Are you talking about the growth rate is going to moderate from something like 80% year-on-year to a lower percentage but still growing, or are you talking about the business actually potentially declining next year or And if it declines, is it simply just maybe normalization in cable, the DOCSIS 4 ramp really not ramping into late calendar 26? And so the moderation cable kind of offsets the growth in pawn. Is that the right way to be thinking about it? Or do you think the overall business just still grows? It's just not going to grow at 80%. Dr. Kishore Sindhribut | Chief Executive Officer: Hey, Quinn, nobody accused you ever of being thick-headed. I just want to clarify that first, okay? The second part of it is you're absolutely right. We're talking absolute terms and not in percentage terms, right? We don't see overall decline, but on the broadband side, we just see sort of, you know, ho-hum growth through the next year, so to speak, range we are thinking about. Can it grow? I think it was asked by Chris Rowan. that you got the fiber pond design bins that are in place and the DOCSIS IV ramp has to set in to see some good growth beyond this year. That's fairly correct. So, Steve, do you want to add anything more? Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: No, no. I mean, look, the moderation comment is around Q4. That was the guidance. We just talked about Q4. We haven't given any guidance beyond that. But my comments about the market and the CapEx spend, I mean, kind of to Kishore's point, ponds picking up, there's lots of great opportunities. These are all market share gains from X linear market we haven't been in. So really exciting times from that standpoint. And then I think the excitement around DOCSIS is a 50% constant increase, right? So you got the DOCSIS rolling out. You know, we're shipping products this year, but it'll kind of pick up next year and even into 2027. So that content increase, you know, is exciting. Quinn Bolton | Analyst, Needham and Company: Got it. Makes sense. And maybe a longer term question for you, Kishore. I think it's pretty well known that optical modules are somewhat supply limited in the near term by supply of EML lasers. But you mentioned silicon as a potential constraint as well. And I think your Keystone product being manufactured at Samsung instead of TSMC, where all your competitors manufacture their GSPs. How much of an advantage do you think that could become if the market for three to five nanometers stays tight? Dr. Kishore Sindhribut | Chief Executive Officer: Oh, our keystone, I think it's public information, is the first probably the only 5 nanometer CMOS solution for 100 gig lane product that's in production. And our Rushmore, which is the 1.6 terabit solution, 200 gig per lane, is in Samsung. So that gives you some level of natural diversification because the biggest demand between 800 gig and 400 gig and 1.6 terabit will center around those 5 nanometer node process. And the tightness comes in in the supply there because there's a lot of GPU vendors, et cetera, that are really in mass production in five nanometer and moved into three nanometer moving there. So these are the two nodes that are the most highest occupancy where scale is super, super important for getting more capacity. So while that is a generic comment, it also shows that We have to be cautious about growth. People are constrained, what I call the hyperbolic growth. There are all kinds of factors, right? So it should help in the long run, but in the short run, we are in production in fine animator with our keystone product line, and that's the node we are in. And we're very happy with the support we are getting, of course. Will we need more? There is more growth that just comes our way? Absolutely. It's very hard to plan at this point because everybody's allocated their capacity, and then you have to fight for the extra if you will. Okay? Got it. Thank you, Kishore. Operator | Conference Operator: Thank you. Our next question comes from the line of Richard Shannon with Craig Hallam. Please proceed. Richard Shannon | Analyst, Craig-Hallum Capital Group: Well, thanks, guys, for letting me ask a couple questions here. First one's probably for Keyshore on DSP here. On the last earnings call, you talked about the potential with your Rushmore family to potentially have some level of incumbency being the first one to be a supplier in any one particular situation. Wondering if that's playing out here. You're expressing certainly a lot of enthusiasm for how things are going there. Would love to get a sense of the degree to which that is happening or you think there's a good chance of it happening. Dr. Kishore Sindhribut | Chief Executive Officer: So, obviously, we talked of Keystone, which is what is driving the revenues, the Keystone family of products. But Rushmore is our 200 gigabit per lane that we demoed at OFC. As you are all aware, the incumbents announced that product maybe a few months before us, and so they're a little bit farther along. But our product is highly more differentiated in our view and our belief. so we hope to win we not hope we know we'll be in production in 2026 but at this point we're not making any revenues associated with in my mind uh based on what we have been through on the 200 gig per lane and there's also a a rollout issue on 1.6 derivate at the data centers as well that's really you know 800 gig is not fully rolled out yet too i know we like to get ahead of it and focus on roadmap I think there's time for 1.6 terabit and, uh, but we're in a very good place. So, so Rushmore, yes. Uh, best case would be the end of 26. Uh, but you know, I'm not, uh, I'm being realistic and, uh, but Keystone, Keystone, Keystone, right. Rushmore would be, uh, is a good plan for 27. Absolutely. spk09: Okay. Richard Shannon | Analyst, Craig-Hallum Capital Group: Okay. Thanks for that feedback. Uh, my second question in an effort to, uh, Express some love for all of our children. Let's ask one quick question here on the industrial multi-market business here. Obviously, it's come down a lot the last few years. Looks to be kind of bubbling along the bottom here so far this year. How do we think about the potential scale of this business in the next one to two years? Is this something where you're applying much effort here from a product and sales and marketing point of view to grow it nicely, or is this just more of an afterthought relative to some of the other dynamics in your business? Thank you. Dr. Kishore Sindhribut | Chief Executive Officer: Look, There are some businesses, how much ever money you put in, they take their own time, right? So I would call that we're doing what I call sustainable growth rate investments, as you should in this marketplace. The big hit happened because of geopolitics issues and generally in the industrial market space itself. It's distant memory now, but we lost significant revenue when we were hit with the expiry of our licenses for the government to ship to certain customers in Asia. So the drop was associated with that. And then at the same time, When the market went down, we exercised pricing discipline to maintain a healthy gross margin business. So you could argue that some of those are very deliberate decisions, and some of them were really, really we were recipients of things out of our control. Having talked about investments, even on our industrial multi-market investments are really, really focused around edge cloud data center level of investment. There's a lot of new ways of doing old things inside a data center. You know, I don't want to go into the details into that stuff. And those are giving us opportunities to reposition a portfolio and investments really focused on edge and cloud data center. And we are investing in those elements of it. As a company, our focus right now is a huge focus is on the hugest dollars that are going on are really on the edge and enterprise and cloud infrastructure. And they consume so many components, even in the industrial analog space. And that's where our focus of our investments is. So in short, we are investing, right? That's the statement. Okay. Okay. Okay, fair enough. Thank you, Kishore. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Thanks, Richard. Operator | Conference Operator: Thank you. Our next question comes to the line of Carl Ackerman with BNP Paribas. Please proceed. Carl Ackermann | Analyst, BNP Paribas: Yes, thank you. I have two as well. First question, you know, as we think about your ability to see the broadband segment revenue returning to $100 million a quarter, Could you help us frame the opportunity from your, I guess, your gateway opportunity within that now that it is broadening beyond the single carrier today? Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: So, well, okay, a couple of things. So the pond business is new for us, right? This business has been growing over the last, call it, year and a half. We've gotten a lot of traction. Kishore spoke earlier about the, you know, the two big North America guys that are now using our product. So that's very exciting. But we have several other customers that we're either in production with or designed into on the pawn front. Maybe, I'm not sure if this is exactly your question, Carl, but if I think of content opportunities inside of the gateway, from a dollar content standpoint, a pawn gateway or even a cable gateway, you're talking could be $40 to $50 of content. You know, a lot of that comes from Wi-Fi, Ethernet, the SOC itself. So those are the bigger drivers. We continue to see content increases, right? So that's a big part of the opportunity. It's not necessarily just about unit growth or share gains, which, you know, we're seeing both of right now and expect to see over the next two years. But then that content gain is, I think, the other big driver of revenue. Carl Ackermann | Analyst, BNP Paribas: Got it, understood. Shifting gears a bit, could you speak to the breadth of design engagements you have in optical DSPs for 800 gig? And second, when should we expect your revenue from 800 gig to cross over your revenue from 400 gig? Dr. Kishore Sindhribut | Chief Executive Officer: Thank you. Okay, let me try to answer the question on the breadth of design engagements. There is... The breadth of the design engagements from our point of view, from where we are, is really all the OEMs or module makers, if you will, where it engages all the major module makers in Asia and in America, whether they're headquarters or not, okay? And so that's a massive engagement across all variations and configurations of not just transceivers, but beyond optical transceivers, okay? And so, So you have to take that into perspective. Now, if you go to the data centers, every data center has got their own roadmap and timeline when they're transitioning. For example, Google is well gone beyond 800. That's well past lost. Let's call it that. We never even engaged with them. I don't think anybody else is engaged except one player. And then there's NVIDIA, which is a whole different new magnitude and size of themselves. We are not participating with that, we talked to you about. But then the remaining areas are going at their own different cadence on, and they're lagging, if you will, in the terms of the deployments. So each engagement, how broad it is, it depends on when you ask the question. At this point, you know, we are engaged with them, but where are we shipping? That's a subset of the hyperscalers between the U.S. and Asia. Okay? Got it. Thank you. Operator | Conference Operator: Okay. Thank you. Our next question comes from the line of Suji Del Silvia with Roth. Please proceed with your question. Suji Del Silvia | Analyst, Roth: Hi, Kishore. Hi, Steve. Congrats on the progress here. Kishore, you talked about DOCSIS IV having adoption delays or pushouts. Are there technical issues that you could talk about in a little detail to help us understand what is maybe gating larger flagship adoption of DOCSIS IV? Dr. Kishore Sindhribut | Chief Executive Officer: Okay, great question. No news. It's as I expected versus what you guys think it should be, right? We know the cable world incredibly well. As I suspected, as we told that, there'll be a lot of DOCSIS 4.0, but most of the deployments will be ultra-DOCSIS. So because the network upgrade, whether it is the node, whether it is the amplifiers, the amps in the system, it's a lot of work. And they just have stability issues in the network to get there. So it's a very slow process. And so they're doing the incremental approach where they hurry us all to invest and be ready, but the deployment is taking the way it does. So that's the only reason. And so... So I still will conjecture that the ultra-doxys 3.0 will be the massive deployment. And, yeah, that would be one statement. And that will go across continents. It's not just a – because you just want to keep in mind 4.0 is a very North American phenomenon. So, Steve, you wanted to say something? Go ahead, yeah. No, it was 3.1. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Oh, sorry, 3.1. Yeah, okay, great. Suji Del Silvia | Analyst, Roth: Okay, great. Thanks, guys. And then perhaps for Steve, any update on the arbitration? I know that we're approaching the time for that to commence. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Sure, sure. Yeah, no big update. I think we're on track arbitration this quarter, but that's going to extend next year. So hopefully we see some resolution sometime in the first half of next year. So on track. I think we're feeling very positive about it. Okay. Suji Del Silvia | Analyst, Roth: All right, great. Thanks, guys. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Yeah, thanks. Operator | Conference Operator: Thank you. Our last question comes from the line of Tori Fabenberg with Stifel. Please proceed. Tor Savinberg | Analyst, Stifel: Yeah, two quick follow-ups. I promise they're quick. First of all, so when I look at your various segments, it looks like broadband right now is running about, you know, 10 percentage points above infrastructure. But given the moving parts in calendar 26, it sounds like infrastructure will potentially be slightly bigger as a percentage of revenue. Do I sort of have that direction right? Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Well, so certainly I think we've been consistent in saying infrastructure is going to be quite a bit bigger, and I think it's on its way. I think you're heading in the right direction. Tor Savinberg | Analyst, Stifel: Very good. And then the last one for you, Steve. So OpEx is coming in a little bit higher than where it was. I mean, obviously, you know, your revenues are $6 million higher from Q4, so that's probably expected. But I was just wondering how we should think about OPEX, especially in relation to the restructuring you had early in the year. Does OPEX come down a little bit in the first half, or is this sort of a new baseline? Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer: Yeah, so I think we feel – so you're right. It was a little bit higher in the quarter, and the guidance a little bit higher as well. I mean, look, you can see the revenue ramps that – we guided to or we delivered and guided to, I think as you look into next year, that's going to continue. And so I think we've got a lot of big customers that are asking, hey, we need software, we need platform support. Those are the type of efforts that we have to make. And so there's probably a little bit of an adjustment there versus what we had started the year at. I wouldn't say there's much. I think as you look into next year, you start to see some nice operating margins developing throughout the year, and we're really starting to see the leverage in the model that we're excited about. Dr. Kishore Sindhribut | Chief Executive Officer: Very good. Thank you. Cool. Thank you, Tori. Operator | Conference Operator: Thank you. I'd like to turn the floor back over to Dr. Kisor Sindripu for closing comments. Dr. Kishore Sindhribut | Chief Executive Officer: Thank you, operator, and also thank you all to those who joined this Q3 quarterly call, earnings call. There are a number of investor financial conferences that are both in-person and virtual that we'll be attending this year. And the details are literally posted on our investor relations page. So we look forward to seeing you there. And thank you for joining us, joining today as well. And yeah, with that, happy Halloween, guys. Okay, talk to you later. Thank you, bye. Operator | Conference Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090259-00'00'

NASDAQ:MXL Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Julian | Conference Operator: Greetings, and welcome to the MaxLinear Q2 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone requires operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Leslie Green, Investor Relations. Thank you, Leslie. You may begin. Leslie Green | Investor Relations: Thank you, Julian. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss Max Lanier's second quarter 2025 financial results. Today's call is being hosted by Dr. Kishore Sindripu, CEO, and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer. After our prepared comments, we will take questions. Our comments today include forward-looking statements within the meaning of applicable securities laws, including statements relating to our guidance for the third quarter of 2025. including revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, GAAP and non-GAAP interest and other expense, GAAP and non-GAAP income taxes, and GAAP and non-GAAP diluted share count. In addition, we will make forward looking statements relating to trends, opportunities, execution of our business plan, and potential growth and uncertainties in various product and geographic markets, including, without limitation, statements concerning future financial and operating results, opportunities for revenue and market share across our target markets, new products, including the timing and production of launches of products, demand for and adoption of certain technologies, and our total addressable market. These forward-looking statements involve risks and uncertainties, including risks outlined in our risk factor section of our recent SEC filings, including our Form 10-Q for the quarter ended June 30, 2025, which we filed today. Any forward-looking statements are made as of today, and MaxLinear has no obligation to update or revise any forward-looking statements. The second quarter 2025 earnings release is available in the investor relations section of our website at maxlinear.com. In addition, we report certain historical financial metrics, including but not limited to gross margin, income from operations, operating expenses, and interest and other expense on both a GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations in the press release available on our website. We do not provide a reconciliation of non-GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future changes, including stock-based compensation and its related tax effects, as well as potential impairments. Non-GAAP financial measures discussed today are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures. We are providing this information because management believes it is useful to investors as it reflects how management measures our business. Lastly, this call is also being webcast, and the replay will be available on our website for two weeks. And now let me turn the call over to Dr. Kishore Sindhripu, CEO of MaxLinear. Kishore? Dr. Kishore Sindripu | Chief Executive Officer: Thank you, Leslie, and good afternoon, everyone. Our Q2 results not only reflect 13% sequential performance, and 18% year-over-year growth in our business, but also point to a strong positive inflection in our business recovery and growth trajectory. Our revenue of $109 million approximately exceeded the midpoint of our guidance. Non-GAAP gross margin was 59.1%, and we delivered a meaningful reduction in our operating expenses. With solid execution in Q2, we returned to profitability on a non-GAAP basis and generated positive free cash flow. We continue to drive strong customer and product traction in high-speed data center optical interconnects, on broadband access, Wi-Fi, and Ethernet. Our growing success in the strategic markets, robust customer order rates and backlog, coupled with increasing telco cap expanding, reinforce our confidence in the strength of our growth for 2025 and 2026. In our infrastructure end market, we're excited by the sustained growth trajectory in 2025, and expect revenue acceleration in 2026 as new design wins begin to ramp across our portfolio. In high-speed data center optical interconnects, we are on track to deliver $60 to $70 million in revenue this year, primarily from our 800-gigabit 5-nanometer keystone PAM4DSP product family. We anticipate additional 800-gigabit PAM4DSP customer calls and production rollout throughout 2025, which will drive incremental revenue growth in 26. further customer interest and design in activity for our rushmore 200 gigabit per lane 1.64 terabit pam4 dsp has been robust since our live demonstration at the optical fiber conference 2025 this year in san francisco like keystone our rushmore family of pam4 TIAs and 200 gigabit per lane DSPs for 1.6 terabit interconnects offer superior low power and performance advantages. This continues to be the basis of our competitive differentiation and expectations of design wind momentum. In wireless infrastructure, the market continues to recover with expected increases in carrier cap expending driving demand for the second half of 25 as well as 26. Our Sierra 5G wireless access, single-chip radio SOC, and our millimeter wave and microwave backhaul transceivers and modems are essential for supporting increasing mobile usage and data rates as well as new functionality such as Edge AI. We have new design wings with our Sierra-based product with two major North American telecom providers launching Sierra-based macro base station RU products in Q3. We expect to see sustained growth in 5G wireless access and backhaul, and the needs for cloud and edge AI functionality continue to increase in 2026 and beyond. Also, within our infrastructure category, we continue to see strong design and success for our Panther family of hardware storage accelerators, SOCs across Tier 1 network appliance and cloud service providers. In August, we will showcase our next generation Panther 5 storage accelerator at the Future of Memory and Storage FMS 2025 conference in Santa Clara. Also at FMS 2025, we will have a joint keynote address with Advanced Micro Devices on the Transformation of Enterprise Data Storage. Panther delivers significant advantages over traditional software-based compression including more than afford X improvement in power savings and much more efficient usage of CPUs and CPU cores and AI accelerators. Panther 5 is PCIe Gen 5 capable, and at 500 gigabits per second throughput speeds, it delivers more than two times the performance of Panther 3 to enable ultra-low latency data processing across file, block, and object storage. Moving to broadband and connectivity, we continue to see steady growth and are excited by the market outlook for meaningful increases in service provider capex spending. For example, both major North American carriers have announced plans to increase the scope and pace of their fiber pond access buildouts. These increased infrastructure investments by carriers and operators are driving continued booking strength and incremental demand for our fiber pawn cable docks and wi-fi solutions later this year we will ramp our single chip integrated fiber pawn and 10 gigabit processor gateway soc plus tri-band wi-fi 7 single chip platform solution with a second major tier 1 north american carrier this new gateway soc platform represents an exciting growth opportunity and is also a significant validation of our technology on competitive positioning in the growing fiber pawn market. In the Ethernet market, we continue to expand our 2.5 gigabit Ethernet switch and FI portfolio into commercial, enterprise, and industrial applications. MaxLinia has one of the broadest and most competitive offerings to enable the upgrade from 1 gigabit per second to Ethernet legacy data rates to 2.5 gigabit per second using existing Cat5 cabling. This upgrade is driven by edge cloud expansion, IoT gateways, and enterprise access point transition to Wi-Fi 6 and Wi-Fi 7. It represents a significant opportunity size for MaxLinear of approximately $100 million per year in revenues by 2028. In Q2, we were pleased to announce 2.5 gigabit Ethernet-based multi-port PHY and switch adoption by several notable partners, including ASUS, Hisource, and others. We look forward to closing the additional Tier 1 names in our DesignWin pipeline. In conclusion, we are proud of our strong growth, return to profitability, and positive cash flow generation in Q2. Our success in the strategic areas of our product portfolio includes and the incremental tailwind from the ongoing recovery in our core markets has enabled us to turn an important corner in our business. Our investments in high-value categories, such as high-speed interconnect for the data center, multi-gigabit PON access, Wi-Fi connectivity, Ethernet, storage accelerators, and wireless infrastructure are all driving strong product traction with Tier 1 customers and partners. We believe these positions as well for accelerated growth in 26 and beyond. With that, let me now turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Thanks, Kishore. Total revenue for the second quarter was $108.8 million, up 13% from $95.9 million in the previous quarter and up 18% from the $92 million in second quarter of 2024. Infrastructure revenue for the second quarter was approximately $35 million. Broadband revenue was approximately $48 million. Connectivity revenue was approximately $21 million. And industrial multi-market revenue was approximately $6 million. Gap and non-gap gross margin for the second quarter were approximately 56.5% and 59.1% of revenue. The delta between GAAP and non-GAAP gross margin in the second quarter was primarily driven by 2.6 million of acquisition-related intangible asset amortization. Second quarter GAAP operating expenses were 86.1 million, and non-GAAP operating expenses were 56.6 million. The delta between GAAP and non-GAAP operating expenses were primarily due to stock-based compensation and performance-based equity accruals of $19.3 million combined, restructuring costs of $5.6 million, and acquisition-related costs of $4.1 million. GAAP loss from operations for Q2 2025 was 22%, and non-GAAP income from operations in Q2 was 7% of net revenue. GAAP and non-GAAP interest and other expense during the quarter was 6.1 million and 5.9 million respectively. The increase over prior quarter was primarily due to 4 million in foreign exchange costs. In Q2, net cash flow provided in operating activities was approximately 10.5 million, We exited Q2 of 2025 with approximately $110 million in cash, cash equivalents, and restricted cash ahead of our 2025 plan. Our day sales outstanding was down in Q2 to approximately 89 days. Our gross inventory was approximately flat versus the previous quarter with inventory turns improving to 1.5 times. This concludes the discussion of our Q2 financial results. With that, let's turn to the guidance for Q3 of 2025. We currently expect revenue in the third quarter of 2025 to be between $115 million and $135 million. Looking at Q3 by end market, we expect all end markets, infrastructure, broadband, connectivity, and industrial multi-market to be up in the quarter. We expect third quarter gap gross margin to be approximately 55% to 58%. and non-GAAP gross margin to be in the range of 57.5% and 60.5% of revenue. We expect Q3 2025 GAAP operating expenses to be in the range of 84 to 90 million. We expect Q3 2025 non-GAAP operating expenses to be in the range of 55 million to 61 million. We expect our Q3 gap and non-gap interest and other expense each to be in the range of approximately $3.5 million to $4.5 million. We expect a $0.6 million tax benefit on gap basis and a non-gap tax of $1.3 million or 11%. We expect our Q3 basic and diluted share count to be approximately 87.1 and 87.5, respectively. In closing, we're pleased to report another quarter of solid progress marked by continued improvement in customer orders and growing traction across our product portfolio. Our focused investments in strategic high-growth areas such as optical high-speed interconnects, wireless infrastructure, storage, Ethernet, Wi-Fi and FiberPond gateways are beginning to generate exciting business opportunities that we expect to accelerate revenues in 2026. This reinforces our confidence in our sustainable growth and profitability through 2025 and beyond. With that, I'd like to open up the call for questions. Jillian? Julian | Conference Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. And our first question comes from the line of Torrey Sponberg with Stifel. Please proceed with your question. Torrey Sponberg | Analyst, Stifel: Yes, thank you and congratulations on the continuous recovery here. I guess my first question is on the Q3 outlook. I do appreciate that all segments are going to be up sequentially, but I mean, they have been quite volatile, right? So, can you maybe give us a little bit more granularity on how the segments are going to perform in the quarter or at least maybe, you know, which segments could potentially be stronger than the others? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Hey, Tori, this is Steve. Yeah, I mean, look, I think you can see, I mean, one of the biggest commitments that we've had here is infrastructure. I think that's the one that, you know, we continue to see nice performance, particularly in the back half of the year. So I think that should continue. I mean, clearly you're seeing continued recovery in the broadband and connectivity in markets. And so those are two other ones that are getting good traction with some of the newer products. as well as a recovery. And then probably industrial multi-market would be the third one there, which has clearly been a struggle. But, you know, we do expect to see a recovery there. Torrey Sponberg | Analyst, Stifel: Very good. And specifically on broadband, it was, you know, very, very strong this quarter. I know this can be a little bit difficult for you to assess, but Any sense for how much of that is growth is driven by inventory replenishment versus some of the newer products that you have there, you know, especially when I start thinking about some of the, you know, newer gateways that your end customers are launching? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Well, Tori, I mean, as you know, I mean, there has been a recovery underway, but I think what you're seeing in the market, and I think this is reflected in our numbers and our guidance and outlook, I guess, is is kind of beyond that recovery. I mean, we're seeing CapEx dollars being deployed. You're hearing a lot about that in the market right now about people reinvested. The service providers in particular cares are being a lot more aggressive. You're also seeing the cable folks, you know, start to upgrade as well. So, For all those reasons, we're seeing, you know, excitement around our business. I would also add that, you know, we're continuing to gain market share and really win in the market, and I think that speaks to the value of our products themselves, the support that we're giving these customers, and our commitment to these customers. Torrey Sponberg | Analyst, Stifel: Very good. I'll go back in line. Thank you. Julian | Conference Operator: Thanks, Tori. Thank you. And our next question comes from the line of Christopher Rowland with Susquehanna International Group. Please proceed with your question. Christopher Rowland | Analyst, Susquehanna International Group: Thanks for the question, guys, and congrats on the results. I'd love to kind of dig a little bit deeper into Rushmore and Keystone kind of design wins you're seeing in terms of like the makeup of those design wins or qualifications? Are they module makers? Has anything shifted? Do you have any anchor hyperscale customers? Just yeah, and any more details around optical DSP in particular would be great. Dr. Kishore Sindripu | Chief Executive Officer: Hello, Chris, this is Kishore. Yes, thank you. I'm also feeling pretty encouraged that we've finally turned the corner on the business here, and we see very strong, robust growth continuing moving forward, not just second half, 25 into 2026 and beyond, and with all the new products that are going to add to the mix here. Coming back to the optical, you know, like we said, we're going to double our revenue compared to last year, $60 to $70 million range, we feel. There is obviously some expected ramps towards the end of the year that will follow through into 2026 growth. And almost all of it is at the strength of on the back of Keystone. And I just want to point out that our Keystone design wins are not inside. We have never participated in the NVIDIA ramps. So it's really more on the front side of the network, if you will. So, yes, we have a number of, we have designs with all the major module makers. In fact, I would like to say 100%, but I don't want to say that because I don't know what I'm missing, so to speak. So, we are really, in some sense, are sort of dragged along in terms of the wait times where something takes to call at the various data centers. So, we really don't dictate the acceleration of it sometimes. The interop is related to the DSP issues, sometimes really optics issues, but we work them together. And having said that, we are in multiple qual interop stages with your data centers. With some, we are already shipping. And some, we are in the pilot ramp phase, various phases. So I hope that answers your question. That's why we have never disclosed who the end customers are. And we have been very careful because we don't want to mislead you either. But the revenues are high. And with the lead times expanding, threatening to move, increasing as well, we should start seeing more order pick up as we move into 2026. So that's one side of the story on Keystone. Moving to Rushmore, we really feel that Rushmore may be the tipping point for us from a technology incumbency point of view, now really building on what Keystone has offered as the number three guy. And maybe, maybe, hopefully move into the top two players, right? All our competitors are in very nascent phases. They originally came out with a five-nanometer solution. Now they're scrambling to offer a three-nanometer solution. But we feel we made the right bet as the first guys to move into a more advanced note. Our power, low-power offering, and our superior performance we are focused on. And we're getting a lot of product filters from all the vendors who have tried the competitive solutions. So, I think it's going to be a long game because 1.6 terabit is still starting innings. Why do you not see much discussions about AECs and such yet on 1.6 terabit? You know, technically, I feel that if there's a play for copper, AECs will be real as we move towards 1.6 terabit and beyond. So to that extent, they're very heavily engaged with both optical module makers and with what you call the copper dies. And you're also seeing the module makers also trying to now get into copper cables as well. And our track record on Keystone is what gives them confidence that they're going to be a pretty viable and a differentiating supplier and with a long-term roadmap. With all the hoopla surroundings that Pam forced up, I can still claim, legitimately, there are only three vendors with credible solution for optical transceivers and the quality of the offering that is required in an AI network where grouplessness is even more important than in the interrupt scenario. I hope that answers your question. Christopher Rowland | Analyst, Susquehanna International Group: That does. Thank you, Kishore. Maybe a second. question for Steve. I think OpEx was a little bit higher than we were expecting, just wondering what that was about and where the investment was. Also, interest and other expense was higher. And then lastly, the FIMO arbitration still expected, I think, for the end of the year, if I remember correctly. Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: There's a real savvy way to get three questions into one, but I'm going to roll with it. So, real quick, a really important one, OpEx. OpEx is actually below our midpoint of our guide, and honestly, I think what you're referring to is the guidance was probably a little bit higher than your expectation. So, we did have some expenses that were pushed into Q3, and that kind of moves that number up a little bit more than we expected. I do expect it to come back down in Q4. But we're making great progress. I mean, if you look at the improvement that we made year over year on OPEX, it's been exceptional. And I think we'll continue to make improvements there. I mean, we are making big investments as well. We're seeing nice growth. And so we've got some good commitment to some of the newer products that Kishore spoke about earlier. So we're definitely spending on that front. Interest in other was a little higher. Yes, I called out in my prepared remarks about the $4 million of FX impact that we had in the quarter. That rolls up in that interest in other line. I mean, I think the whole world has seen what's gone on with the weakness of the dollar, and so that did impact us. I think it really speaks to the strength to the rest of the business because we've been able to overcome that. You know, we'll see where the dollar goes. Still feels like there might be a little more headwind in the back half of the year. But regardless, I think we're really focused on our core business and executing there. Dr. Kishore Sindripu | Chief Executive Officer: I think bringing back to where the investments are, our absolute strategic focus is on investing on the, you know, what's the future of the AI world. data center related and the other important thing we are focused on is cost down improvements of our products you know uh i think i don't think they're the only ones but the way the foundry business has evolved that we got tremendous cost pressures coming from the foundry suppliers and uh we have to take steps now to invest for cost reduction so that we maintain and improve our gross margin as we move forward so i think The second answer may be a little bit of a surprise for you, but I think that's absolutely a prudent thing to do to shore up our profitability and bring back more leverage in our business model. Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Understood. I think Chris probably dropped off, but I'll answer that last part you did ask about, Silicon Motion. So, no change on that front. We do expect arbitration in Q4 of this year. And then hopefully we kind of get some resolution in the first half of next year. And then I think the ultimate finalization probably comes somewhere in 27 or 28. If there was any, you know, cash to transact, I mean, it probably wouldn't push, it would probably push until 2027 or 2028. Christopher Rowland | Analyst, Susquehanna International Group: Thanks, guys. You can still hear me. Julian | Conference Operator: Thank you. And our next question comes from the line of Ananda Baru with Loop Capital Markets. Please proceed with your question. Ananda Baru | Analyst, Loop Capital Markets: Hey, thanks, guys, for taking the question. Yeah, Kishore, just a little bit more on Panford DSP. You mentioned, you know, great accelerating growth in 2026, RevRamp. Do you think that comes from the current, from the wins you have going into 2026? primarily, or can you see a big impact from the new qualifications as well from Rushmore? And I have a quick follow-up as well. Thanks. Dr. Kishore Sindripu | Chief Executive Officer: So, good question. I just want to be very clear that the revenues in 2026 will still be 800 gigabit dominated. I don't see 1.6 terabit Rushmore shipping It's all at the end of next year leading into 2027, honestly. And what has come as a huge surprise or shouldn't be anymore after these years is that the qualification is indeed pretty vigorous. Everybody has their own timeline, and they go in phases from small volumes to bigger volumes and larger volumes after that. And from a deployment point of view, I don't think anybody outside of the AI back-end network guys are really, really in a position to deploy 1.6 terabit yet on the front-end networks. So, and the AI, even from an NVIDIA point of view, they don't expect, this is my hearsay story, they don't expect revenues of 1.6 terabit to pick up until the second half of next year. That is peaking today. And I would dare say that 800 gigabit will be the dominant shipment node for the next a few years to come. Ananda Baru | Analyst, Loop Capital Markets: That's helpful. Yeah, they're thinking it's the Rubin thing. It sounds like you guys are thinking along the same lines as well. And then just given your remarks that as of right now, it's really the module makers where the calls are, does that position you well for the growing NeoCloud opportunity and the Sovereign opportunity if Sovereign can get the licenses signed as you go through 26th? Dr. Kishore Sindripu | Chief Executive Officer: We hope so. One of the things you really want to keep this account is that this market has been starving for a third supplier. Yeah. Whichever way you look at it. And we have been a steady 80 in terms of not being there and doing the stuff and really putting an effort in differentiation, enabling our module customers rather than dragging along the module guys with us, right? Right. And I think that really helps us in favor. And they have opportunities where they're not beholden to using the incumbents. They give us a chance every time. And I think that really helps us in all the other opportunities you're referring to. Ananda Baru | Analyst, Loop Capital Markets: Yeah, that's great. I'll leave it there, guys. I appreciate it. Thanks. Thanks, Ananda. Julian | Conference Operator: Thank you. And our next question comes from the line of Quinn Bolton with Needham & Company. Please proceed with your question. Quinn Bolton | Analyst, Needham & Company: Hey, guys. I guess I have a couple of questions, and congratulations on the nice outlook. First, I hate to ask, but since some other analog signal guys have talked about starting to see some pull-in activity or inventory builds given tariff uncertainty, especially ahead of August 1st, wondering if you think any of the orders you've seen I know you've seen orders strengthening now for several quarters if any of that you might be able to distinguish a sort of tariff or pulling related or do you think it's been pretty steady and then I've got a follow-up it's so the orders have been very steady and strengthening I think I referred to that at the last quarter itself when you asked the same question and I said Dr. Kishore Sindripu | Chief Executive Officer: You know, I cannot speak for the future orders, but I can definitely speak for the orders that we already have that they've preceded these will try to fresh. Now, look, from my point of view, we have been, you know, post-pandemic peak ordering and all the things that you're dealt with, we were not in a hurry to order or acknowledge orders, so to speak. But I think we will start seeing accelerating orders now related to sort of, you know, late reaction from some of our And, however, we are not in a position to respond to them because the lead time has already stretched very, very rapidly. So I don't think it's going to benefit us all in terms of the revenues that we expect to generate in the next, at least the next couple of quarters to come because right now, the lead times of the OSAT, the S&P houses, now is as long as the foundries now. So you can assume that you're looking at six months of lead time now, right? Okay, maybe thereabouts. So I don't think you can respond to that. I think the orders don't make a difference as to what the bean store revenue is moving forward. Got it. Quinn Bolton | Analyst, Needham & Company: No, that was, I think, consistent with how you addressed that last quarter. And then you guys, I think, in the prepared script, talked about seeing, you know, strength in the second half of 25 and accelerating growth in 2026. And I just want to make sure I'm not, you know, misinterpreting your comments. Are you sort of suggesting you think annual growth in 26 is even higher than what you're growing here or appear to be growing in 2025? Or just should we be thinking about the acceleration comment is specifically talking about you know, year-over-year growth, 26 versus 25, or are you just sort of talking about orders or other parts of the business and it's not sort of a comment per se about the revenue? Dr. Kishore Sindripu | Chief Executive Officer: So, when we talk about accelerating revenues, I was talking about certain design wins within categories. So, I think you want to parse through the script and section by section. We have this great design team with the major new North America operator, tier one operator, And we expect that to ramp in pretty serious heavy volume at the end of this year. So that clearly is an acceleration, my view. We talked about all these quals that are going on the optical in the infrastructure, so then that will result in such an outcome. We also talked of access customers of our 5G product that are just beginning to ship in the second half for 5G applications to major North America operators. So I think it is the context of sort of new design means with major players that will start ramping, and obviously that's a great outcome for those product categories. Quinn Bolton | Analyst, Needham & Company: Can I squeeze in one quick one for Steve? I don't think you guys have ever sort of called out significant FX effects in past quarters. So the $4 million kind of FX charge this or charge expense kind of caught me by surprise. Can you just sort of say where is that FX – coming from, I assume you're pricing most stuff in dollars, but you maybe have employees or fixed costs located overseas. Is that the origin of the FX? Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer: Yeah. So, I mean, as you know, I mean, these are kind of historical moves in the dollar. I mean, it's been over 30 years since you've seen this much, but we, I mean, we transact in dollars. And so this is really just employees that we have is where it gets impacted. And it's, You know, a few of the regions that were impacted, the euro is probably the biggest is where we saw the worst. Shekel as well. I mean, we're exposed in Israel. And in some of these places, you know, we do hold some cash. I mean, yeah, it ended up being bigger than expected in the quarter. We've had it from time to time in the past. And, you know, we've been able to overcome it with the strength of the business. Got it. Okay. Thank you. Julian | Conference Operator: Thank you. And our next question comes from the line of David Williams with the Benchmark Company. Please proceed with your question. David Williams | Analyst, Benchmark Company: Hey, Dylan. Thanks for taking the question, and let me also give you my congrats on the solid progress here. So maybe first, Kishore, maybe from a geographic standpoint and in China specifically, can you talk about any of the dynamics you're seeing there in terms of the strength that's building or where there are still areas that are not quite up to where you would hope they would be in terms of demand? Dr. Kishore Sindripu | Chief Executive Officer: So, hi, David. Thank you. Look from a geographic point of view, the strength areas for us are U.S. and Europe, but China, we're seeing different parts of the market behave very differently. I mean, Steve talked about an industrial multi-market segment being down, and there's really two parts to that. One is there's a strong push for made-in-China product, and at the same time, that alone creates surprising pressure. And we are taking a very disciplined approach where we are walking away from businesses and revenues where the margins are not accretive to what we feel is the right benchmark for max linear. And some cases we are taking the business because strategically positioned as far for holding out right now with the pressures, but later it'll strengthen our offering and therefore we can build back. So those are puts and takes in how we go about it. But in China, there's a big push now developing for them deploying their data center networks. So there's going to be a lot of spend in data center in China. In fact, if you look at today's data center volumes for transceivers, they are maybe less than 20% of the market. But if you just forecast it three years out, China will be 40% of the transceiver volumes in the world. So that's a significant acceleration more than on a unit basis than what the U.S. sees. Yes, they are lagging by a generation or so, the U.S. technology. And their incumbency is not very well established yet, right, because we are not behind in our offering timings. And so that gives us a very great position to work and see how we can build and grab more market share. And likewise, we are seeing strengthening in other infrastructure areas in where there's some spend going on, related spend, but just generally seeing a certain weakness in industrial sort of areas besides the pressure from internal made in China stories. So, I hope that gives you some cover. If you, when you think broadband and connectivity, please think North America, Europe, and some Latin America. When you think data centers, please think U.S.-China. And then when you think about our other infrastructure that's Ethernet or storage accelerators, it's across-the-board geographies where there are enterprise providers. So I think that would give you a good sense of where the product mix is playing out. Okay? David Williams | Analyst, Benchmark Company: Yes, very good color there. Thank you for that. And maybe just from a technology progression, we're clearly in the early stages. with Keystone Rushmore, but as you think further out in the silicon photonics and co-packaged optics, do you have a roadmap to get there? And how do you think Max Linear plays into that trend as we move that direction? Thank you. Dr. Kishore Sindripu | Chief Executive Officer: Yeah, very, very good question. I was really looking forward to that question, actually. If you just look at the offering of any PAM4 DSP and TIA companies, They have all the product technology platform to offer CPO-related products. Whether it is, you know, we can get into the details of that. So, for us, it's about filling out our portfolio through derivatives and some level of customization with working with customers. So, the most important thing is to work with optics companies to develop our CPO offerings and get engaged with optics companies. to really customize your offerings related to CPU solutions. Having talked about CPUs, it's going to be a very mixed world. CPU is going to be a very, very, what I call contained offering, whereas much of the network is going to be pretty much a pluggable offering with more sophisticated DSP transceivers or LROs, you know, that sort of mixed mode offering. So I think that CPO is one thing we're definitely beginning to engage in to fill out our portfolio, but there's time yet to come. But there's no scenario in the world where CPO is sort of a broad base across the network. It's very much more sort of, I don't want to use the word be cheap, but a containerized solution offering where everything is predetermined, okay? So when you talk of CPOs, you generally talk about an NVIDIA or a Broadcom switch offering, but it's really not a broad across-the-network offering. And all hyperscale network providers will readily acknowledge, if not even some of them even completely dismissing it. Julian | Conference Operator: Okay? Dr. Kishore Sindripu | Chief Executive Officer: But we as a silicon company, we are working with all these companies to offer a CPO, CPO silicon solution. The offering is much more analog intensive when you go CPOs and less on the mixed signal side, less digital intensive. David Williams | Analyst, Benchmark Company: Okay? Great color. Thanks again. Yep. Julian | Conference Operator: Thank you. And our next question comes from the line of Carl Ackerman with BNP Paribas. Please proceed with your question. Carl Ackerman | Analyst, BNP Paribas: Yes, thank you. I was hoping you could discuss which areas you've seen the most improvement in order visibility, just given the fact of the beat and raise this quarter. And in particular, with the second major Tier 1, you know, U.S. carrier ramping your integrated pond and Wi-Fi gateway SOC, is this where you have the strongest visibility and confidence in order recovery or other areas as well? Can I have a follow-up, please? Dr. Kishore Sindripu | Chief Executive Officer: You know, across the board, really, if the uncertainty is there, it's really about the call timings or optical when we get through each call. But that really is sometimes like a whiplash. It goes, you know, and that's where the uncertainty is in the forecasting. But having said that, we put a stake in the ground saying we feel good that we'll get to that $60 to $70 million revenue for the year in our data center revenues. Otherwise, across the board, we have very good visibility. And I would say that's got nothing to do with the new design lean that we have in broadband. Carl Ackerman | Analyst, BNP Paribas: Yep. Understood. Thank you. And for my follow-up, you know, you mentioned again just some of the opportunities you've seen in front of you with regard to your Panther family of hardware SOCs, storage hardware SOCs. I was hoping you could discuss the breadth of WINS. and the visibility that you see there because it does appear to be picking up. So, if you could discuss that, that would be helpful. Thank you. Dr. Kishore Sindripu | Chief Executive Officer: So, you know, we have been investing in this Panther storage compression and hardware accelerators for both storage compression, decryption, and security. for a while now, and, you know, it's again one of those heavy duty, you know, like a lot of validation drops, just like any high-end infrastructure product is going to be. But we got a number of proof of concept design means complete, a number of major players in enterprise who are now incorporating, and the only one we have talked about publicly is the Dell PowerMax platform, but it's proliferating across various competitors in the storage appliance market. Having said that, we have just started initial forays and proof of concept at cloud compute hyperscale data center companies as well, and I'm very pleased with the receptions having the dose, so I hope to break into one of those as well. So, and then, obviously, this product was, you know, the cloud data center is evolving very, very rapidly, and the specification requirements also evolve very rapidly. So we're really engaged in making sure the next generation offering has got all the bells and whistles that is perfectly and beautifully tuned for the cloud data centers. Having said that, it's a strong pipeline. And I say that again, next year, we're going to maybe triple the revenue of this year, range 2x to 3x. And I said the product line definitely in two or three years will be 75 to $100 million based on the offerings we know now. But with the proof of concept traction we have, could it be double that? I really hope so. But I just want to save the verdict for a little bit more time. Okay? Carl Ackerman | Analyst, BNP Paribas: Thank you. Julian | Conference Operator: Thank you. And our next question comes from the line of Suji Da Silva with Roth Capital Partners. Please proceed with your question. Suji Da Silva | Analyst, Roth Capital Partners: Hi, Kishore. Hi, Steve. Thanks for the progress here. In the high-speed interconnect, if I heard you correctly, I think you talked about your optical module customers exploring AEC opportunities. I'm wondering if you have a roadmap to support any effort they're doing in terms of moving to either copper or from the front end to the back end, or any thoughts there as to your roadmap and how that could play? Dr. Kishore Sindripu | Chief Executive Officer: So, gee, yes, absolutely. I mean, all our products – are designed to handle now the AAC requirements, and they've always been. However, so far, AACs have been super niche-y, so it's like a watch-and-go sort of environment. However, by the time you, but now, you know, it is really, it really remains to be seen, you know, who are the ones who adopt AACs beyond. I believe that even though optical transceiver companies are looking at it and try to keep their options open, so they're now working towards creating their own AECs and ACCs and so on. So we are readily able to support them. And remember that power is incredibly important. You can imagine an end-to-end copper cable. And, you know, you don't have all the fancy coolings and everything that others can do in an optical transceiver module. This is really, really power-consumption-sensitive product. And we always say Max Vigna's reason for existence is low power, low power, low power, and high speed. And I think it's a perfect application. Hopefully, it becomes a big application. But right now, we are just doing the cockroach thing, laying eggs that will become cockroaches later, so to speak, you know, the survivor of the longest time. Sorry, I got carried away. But, yes, we are engaged in this product line. Okay? Suji Da Silva | Analyst, Roth Capital Partners: Yeah. And then a quick question on Panther. I figured you mentioned enterprise quite a bit there. I'm just curious if there's an application for Panther as well to AI infrastructure. Sure. Dr. Kishore Sindripu | Chief Executive Officer: Absolutely. Very, very, very, very much so. Look, if you think of Panther, what are the biggest drivers for AI scenarios right now? Power, power, power is one part. Memory, memory, memory. We talk of high bandwidth throughput memories. How do you get more out of the HBMs? How do you relieve the bottlenecks that happens in the connection to these memories, right? And all of these are incredibly important. And latency is super important. So, an audio offload, some level of inline compute, right? These are all very, very important factors. And I don't think there is a more sweeter place for storage accelerators and smart storage accelerators than AI, actually. So, however, it will require some level of futuristic sort of engagements and repositioning of the product features. So I think that this is going to be very, very important and for AI is very, very valuable. Having said that, small cloud service providers right now are actually, one of them is already using it. There's one more is about to use it. And there's some big guys are looking at it as well. So I think it's very, very, very, very conceivable that it's going to become a pretty AI-centric product as well. And I will not be surprised if the biggest AI system solution providers, are not doing one of these things themselves as well, internally. I don't see why they won't be doing it, really, frankly. That's my own conjecture. So we feel very good that we will be in a leadership position in this project. Julian | Conference Operator: Thanks, Kishore. And our final question comes from the line of Tore Svanberg with Stifel. Please proceed with your question. Torrey Sponberg | Analyst, Stifel: Yeah, sure. I just had two follow-ups. The first one, and it's kind of related to the last question there, you know, your infrastructure, especially on the data center side, your two main competitors are building more and more custom silicon. And, you know, as we think about rack-level infrastructure, I'm just curious, you know, are you sort of getting pulled into, you know, potentially developing any sort of custom technology at this point, or are you, you know, still very much focused on shipping infrastructure? commercial products. Dr. Kishore Sindripu | Chief Executive Officer: Okay. I guess your second question will come later. Let me answer the first question here. Look, one of the most important, what does our incumbents have as an advantage? They're already suppliers to these guys, and they have these qualifications that are beyond interconnects, right? So for us, too, it's the same credit path we are right now. establishing credibility with our interconnects, and we are showing various colors of all the technologies we bring. Nobody can dispute the breadth of our technology platform in depth, but I think that's the dazzle, right? We are engaged with them, but right now from a scale positioning point of view, we are not doing any custom silicon like one of our competitors is doing. However, we are customizing or offering to the differentiation requirements that these guys are looking forward to. I think it's very, very different. We do not have an internal custom AC business yet. We are still a standard product offering. However, the standard – product offering comes with some custom features for certain customers. And so I would differentiate that customization from the custom basic business that you are asking. Having said that, we have recently loaded up on some, you know, leadership here to do business development work to get business beyond the interconnect. Because if you really think about it, interconnect is a bookended solution. And the interest having a third player in the system cannot just be for the bookended solution. It has to be for something even more of a strategic vendor, and I think that's what we are working towards right now is to be really a broad-based strategic partner for these hyperscale data centers so that buying interconnect is just a fait accompli. It's not really the be-all, end-all for the company. That makes sense. Thank you. Thanks, Trey. Julian | Conference Operator: Thank you. Dr. Kishore Sindripu | Chief Executive Officer: With that, I want to thank everyone for this call today. As you have seen, we are really excited about where things are headed now, the recovery in our business, generating strong positive cash flow now moving forward. And further, in this quarter, we're presenting a number of financial conferences, virtual events. I'm sure we're We'll meet again, and the details of these events will be on our investor relations page with that. Thank you very much, and look forward to the next meeting. Thank you. Bye. Julian | Conference Operator: Thank you. And with that, this does conclude today's teleconference. We thank you for your participation. You may now disconnect your lines. jsPDF 3.0.3 D:20260606090301-00'00'