MaxLinear, Inc

Greetings and welcome to the Max Linear Q2 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief 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. Thank you, Leslie. You may begin.

Thank you, Paul. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss Max Linear's second quarter 2022 financial results. Today's call is being hosted by Kishore Sindhipu, 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 2022 revenue, revenue growth expectations in our principal target markets, and gap and non-gap gross margin operating expenses, effective tax rate, and interest and other expense. In addition, we will make forward-looking statements relating to trends, opportunities, and uncertainties in various product and geographic markets, including without limitation, statements concerning opportunities arising from our broadband, wireless, infrastructure, and connectivity markets, and opportunities for improved revenues across our target markets. Additionally, we will make forward-looking statements relating to the completion of the pending Silicon Motion transaction and its anticipated timing. These forward-looking statements involve substantial risks and uncertainties, including risks arising from current geopolitical concerns, competition, supply constraints facing the semiconductor industry, global trade and export restrictions, the impact of 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 the risk factor section of our recent SEC filings, including our Form 10-Q for the quarter ended June 30, 2022, 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 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 revenue, gross margins, operating expense, 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 benefits. Non-GAAP financial measures discussed today do not replace the presentation of MaxLinear'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 now let me turn the call over to Dr. Kishore Sindripu, CEO of MaxLinear. Kishore.

Thank you, Leslie, and good afternoon, everyone. Our Q2 revenue was $280 million, up 6% sequentially and 36% year-over-year. Non-GAAP gross margin was 62.3%, and non-GAAP operating margin was 32.7% with strong cash flows from operating activities of slightly more than $123 million. We continue to see robust demand across our expanding product portfolio. In particular, fiber gateway access, Wi-Fi connectivity, and wireless infrastructure are driving exciting growth. They also represent the most significant long-term growth drivers for the company, with strong market share gains and content increase opportunities, which are independent of general end market trends. Our long-term and ongoing investments towards expanding our product portfolio to address high-value adjacent markets are bearing fruit, and we are excited about the meaningful multi-year revenue growth opportunities ahead. Turning to the business highlights, near-term in Wi-Fi, the industry transition to Wi-Fi 6 and Wi-Fi 6E is providing us new design wins along with higher blended ASPs to continue to drive revenues above market growth. With each new growth, we are benefiting from improved differentiation, increased market share, higher attached rates, and higher ASPs. In particular, the new Wi-Fi 7 standard is a major step up in performance and features, which should further accelerate our Wi-Fi revenue growth mid to longer term, along with driving Broadway access gateway platform churn. During Q2, we also began ramping Wi-Fi shipments into third-party standalone routers, with the increased momentum continuing into Q3. This will also beneficially diversify and expand our Wi-Fi revenues beyond service provider gateways. We now expect to not only double our Wi-Fi revenues in 2022 versus 2021, but also maintain strong momentum to achieve $200 million of sales in 2023. Moving to fiber broadband access gateways, multiple customers in North America are currently ramping our product shipments, and a healthy backlog is driving growth in 2022. In 2022, we are not only on target to increase fiber access revenues by more than four times versus 2021, but also expect strong continued growth into 2023. In 2023, we expect continued accelerated ramp at a large tier one customer in North America and to also proliferate our solutions into other regions as well. As you know, fiber broadband market is significantly larger than cable broadband, which is currently the larger portion of our sales today. We are excited and confident in our ability to drive meaningful multi-year growth and market share expansion in the fiber gateway end market, owing to, one, the ongoing and existing CapEx commitments from the carriers and governmental incentives for fiber upgrades, two, our industry-leading integrated PON and 10-gigabit fiber processor gateway SOCs, And three, our significant fiber platform below material content and the breadth of it. Moving to 5G wireless infrastructure, our products continue to grow despite tight back-end supply, driven by continued strength in access and backhaul demand, market share gains, and increasing content per platform. Our backhaul content per platform more than doubles as we ramp our 5G millimeter wave products into multi-band millimeter wave and microwave radios. During Q2, we announced a single-chip solution to enable network OEMs and operators to deliver ultra-high capacity 5G payloads on existing frequency spectrum. We also announced enabling a high-efficiency power amplifier solution that addresses size, weight, and power consumption challenges for massive MIMO 5G radios. In high-speed optical data center interconnect, we have the most advanced 5-nanometer 800-gigabit PAMP4 and 400 gigabit BAM4 solutions, which are being qualified by multiple OEMs targeting hyperscale data centers. With the right technology at the right time, we feel positive about our strategic position in BAM4 and our opportunities to grow in 2023. Before I turn the call over to Steve, a few words about our pending acquisition of Silicon Motion, which remains on track. Since May, our leadership teams have been actively engaged in integration planning, and I'm excited about the opportunities for our combined business. Our discussions further reinforce to me the potential of the strong innovation we can bring to the market as a combined company. Silicon Motion has proven its world-class SSD controller technology with great success in its target markets. We look to continue supporting its ongoing efforts to differentiate its products and expand into rapidly growing markets you know, including consumer and enterprise. We're excited about bringing our two technology-focused cultures together very soon. With that, let me turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve?