MaxLinear, Inc

Hello, and welcome to the Max Linear, Inc. First Quarter 2022 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. Question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Nick Averly. Please go ahead.

Nick Averly Okay. Thank you, operator. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss Max Linear's first quarter 2022 financial results. Today's call is being hosted by Dr. Kishore Sindhripu, CEO, and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer. After our prepared remarks, we will take questions. Our comments today include board-looking statements within the meaning of applicable securities laws, including statements relating to our guidance for the second quarter 2022 revenue, revenue growth expectations in our principal target markets, gap and non-gap gross margin, operating expenses, effective tax rates, and interest and other expenses. In addition, we will make forward-looking statements relating to trends, opportunities, and uncertainties in various product and geographic markets, including, and without limitation, statements concerning opportunities arising from our broadband, wireless infrastructure, and connectivity markets, opportunities for improved revenue across our target markets. These forward-looking statements involve substantial risks and uncertainties, including risks arising from competition, supply constraints facing the semiconductor industry, global trade and export restrictions, the impact of the COVID-19 pandemic, our dependence on a limited number of customers, average selling price trends, and risks that our markets and growth opportunities may not develop as we currently expect, and that our assumptions concerning these opportunities may prove incorrect. More information on these and other risks is outlined in our risk factors section in our recent SEC filings, including on our Form 10-Q for the quarter ended March 31, 2022, which was 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 first quarter 2022 earnings release is available in the investor relations section of our website at maxlinear.com. In addition, we report certain historical financial metrics including net revenues, gross margins, operating expenses, income from operations, interest and other expense, income taxes, net income, and net income per share 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 charges, including stock-based compensation and its associated tax effects. Non-GAAP financial measures discussed today do not replace the presentation of Maxillanier's GAAP financial results. We are providing this information to enable investors to perform more meaningful comparisons of our operating results in a manner similar to management's analysis of our business. Lastly, this call is also being webcast, and a replay will be available on our website for two weeks. And with that, let me turn the call over to Kishore Sindhripu, CEO of Maxlink.

Thank you, Nick, and good afternoon, everyone. Our Q1 revenue was $263.9 million, up 6% sequentially and 26% year-on-year. while gross margin was 62.8% and non-GAAP operating margins expanded to 33.5%. During Q1, we saw accelerating growth in our Wi-Fi connectivity, fiber broadband access, and 5G wireless infrastructure end markets. These end markets continue to be the most significant growth drivers for the company, where our new products have solid traction and are gaining multi-year business opportunities. We are seeing tailwinds to our growth driven by the increasing infrastructure capital expense spend. Specifically, telco carriers are upgrading to support multi-gigabit fiber, porn, broadband, home access, and expanding 5G network build-outs. Our gathering business strength is born of product development success, content increases in customer platforms, as well as the strategic expansion of our portfolio into adjacent technologies and markets. Turning to the business highlights, in broadband and connectivity, Wi-Fi 6 and fiber gateways are the two most significant drivers of growth for the company, and we expect continued revenue expansion over the next several years. Most notably, in Q1, Wi-Fi had another breakout performance, growing 37% quarter on quarter and nearly tripling year on year. We are benefiting with the transition to Wi-Fi 6 and Wi-Fi 6E, increased market share, higher attach rates, and higher average selling prices. Furthermore, the Wi-Fi market itself continues to demonstrate strong growth as consumers demand speed and reliability within the connected home to support voice, video, gaming, and internet in parallel. Looking into Q2, we expect to diversify and expand our Wi-Fi revenues beyond operator-driven broadband gateway markets as we begin ramping into third-party standalone routers. The standalone Wi-Fi router addressable market opportunity exceeds 100 million units annually. Based on these trends and our strong product traction, we confidently expect to more than double our Wi-Fi product revenues in 2022 and are firmly on a trajectory to deliver at least $200 million of revenue in Wi-Fi in 2023. Lastly, our soon-to-be-launched innovative next-generation Wi-Fi 7 standards-compliant product will be a strong positive catalyst for increased average selling prices, future share grains, and market expansion opportunities in Wi-Fi connectivity. In broadband gateway, we are ramping into several new fiber access applications with new products, technology, and renewed focus driving meaningful design interaction. One example is our industry-leading URX family of gateway SOCs and network processors for 10 gigabit WAN access that is driving customers to build around our fiber gateway platform offering. Additionally, new fiber gateway wins will pull through over $20 of bill of material content, additional content of peripheral content including Wi-Fi, Ethernet, and power management solutions. As a reminder, fiber as a category within the broadband end market is seeing strong unit growth driven by the move to 10 gigabits per second broadband data home access, increased capital deployment by carriers to add subscribers, and to benefit from government funds to deliver services to underserved homes. We are very bullish about our fiber pawn growth. Moving to infrastructure, our 5G wireless access and backhaul products grew in aggregate by over 50% year-on-year in Q1, driven by early-stage build-outs of 5G infrastructure in North America. Even as we benefit from the long-term 5G secular trends, new products are driving higher content opportunities per platform and incremental growth. For example, our bill of material per platform has doubled as we ran per 5G millimeter wave products into multi-band radios for wireless backhaul applications. Another example of content increase opportunity is within the 5G wireless access portfolio. We recently announced product Sierra, which is a fully integrated single chip per 5G open RAN remote radio units. Sierra's integrated approach dramatically optimizes performance and cost for customers while more than doubling our content. For high-speed optical data center interconnect, we continue to have positive strategic engagements with Tier 1 customers and remain bullish on our long position in the large and quickly growing hyperscale data center market. At the Optical Fiber Communication Conference in March, we demonstrated Keystone product family, our 5-nanometer 800 gigabit per second BAM for DSP, deploying 100 gigabit single-lane optics. Customer reception was very positive and further supports our confidence in our competitive position as the market continues to expand. In summary, we have multiple company-specific growth drivers, including market share gains, product cycles, and increased silicon content per platform, which are fueling growth in all our target markets at both new and existing customers. With our continued focus on developing new and disruptive technologies across our high-value end markets, we expect to outperform semiconductor industry growth rates over the long term. With that, now let me turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve?