MaxLinear, Inc

Hello, and welcome to the MaxLinear second quarter 2023 earnings conference call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may press star one at any time to be placed into question queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Leslie Green, Investor Relations. Please go ahead, Leslie.

Thank you, Kevin. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss Max Linear's second quarter 2023 financial results. Today's call is being hosted by Dr. Kishore Sindhiput, 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 meeting of applicable securities laws, including statements relating to our guidance for the third quarter 2023, including revenue, GAAP and non-GAAP gross profit margin, GAAP and non-GAAP operating expenses, GAAP and non-GAAP tax rate, GAAP and non-GAAP interest and other expenses, and GAAP and non-GAAP diluted share count. 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, connectivity and industrial markets, timing for the launch of our products, and opportunities for improved revenue and market share across our target markets. These forward-looking statements involve substantial risks and uncertainties, including risks related to increased indebtedness, competition, the impact of a global economic downturn, and high inflation. The cyclical nature of the semiconductor industry, our ability to sustain current level of revenue, including... from impacts of excess inventory on our customers' expected demand for certain of our products, our ability to obtain or retain government authorization to export certain of our products or technology, and a failure to manage our relationships with or negative impacts from third parties. More information on these and other risk factors is outlined in the risk factor section of our recent SEC filings. including our Form 10-Q for the quarter ended June 30, 2023, which will be 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 2023 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, operating margin, 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 charges, including stock-based compensation and its associated tax effects. Non-GAAP financial measures discussed today are not meant to be considered in isolation or as a substitute for the comparable GAAP financial measures. We are providing this information because management believes it to be useful to investors as it reflects how management measures our business. Lastly, this call is also being webcast and a replay will be available on 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. In Q2, our revenues were $183.9 million, and non-GAAP gross margin was strong at 61%. Our non-GAAP operating margin came in at 16.2%, and cash flow from operating activities was $30.6 million. In Q2, infrastructure was the highlight, recording 6% sequential and 37% year-on-year growth, with 5G wireless backhaul continuing to be the strongest driver. In wireless infrastructure, Q2 marked a record revenue contribution for a wireless backhaul business. In particular, wireless backhaul deployments of multiband hybrid millimeter wave and microwave radios are allowing us to double the silicon content per platform of our modem and RF transfer products. We are very well positioned to benefit from the expanding rollout of millimeter wave technologies across several large geographies and are currently partnered with Tier 1 equipment suppliers to support ongoing 5G network rollouts. In our high-speed optical data center interconnects, the ongoing adoption of AI in cloud is driving meaningful design and activity for our 5-nanometer CMOS Keystone 800-gigabit optical PAMFOR solution. The growth and scale of AI is accelerating the adoption of 800-gigabit solutions and increasing the need for a broader customer-supplier base. We are strategically positioned with the industry's first 5-nanometer CMOS 400-gigabit and 800-gigabit PAM-4 DSP production-ready silicon. Based on our design-win activity and ongoing customer call pipeline, we expect to ship small volumes in the back half of this year, leading to volume ramps throughout 2024. In Q2, as expected, our broadband access, connectivity, and industrial multi-markets continue to be challenged owing to excess customer inventories and the ongoing cyclical semiconductor downturn. Despite the challenging market in broadband access, we continue to have solid market action with our industry-leading single-chip integrated fiber PON and 10-gigabit processor gateway system solution. Our PON access revenue continues to show strong growth off a modest baseline, and we continue to win new designs due to the breadth of our integrated access and connectivity technologies. We expect to see a multiyear growth cycle for our solutions as the industry migrates from legacy DSL and older PON technologies to 10 gigabit PON. In connectivity, though we are early in the design cycle for Wi-Fi 7, we believe that our Wave 700 product family has the exciting potential to drive significant ASP growth and higher attach rates over our previous generations. Wave 700 is the industry's first and only single-chip tri-band Wi-Fi 7 solution targeting access points and gateways. We expect Wave 700 product to ramp across multiple platforms starting in 2024. In our Ethernet connectivity portfolio at Computex in Taiwan, we announced our new four-port and eight-port 2.5 gigabit Ethernet PHY switch solutions for the SMB switch market, and also our 8-port 2.5 gigabit Ethernet PHYs for the enterprise market. While this new and unique product family, we are enabling the industry's transition from 1 gigabit to 2.5 gigabit Ethernet or existing Cat-PHY cabling by offering significant performance enhancement with superior cost structure and power consumption. Owing to the strong positive customer pull and design-in activity, we expect to begin revenue ramp in the first half of 2024. In 2023, despite the near-term challenging market environment, MaxLinear is laying the critical groundwork for future growth with design-in activity, technology innovation, and customer relationship building, spanning fiber broadband, Wi-Fi connectivity, Ethernet, wireless infrastructure, and high-speed optical data center interconnect and enterprise markets. Our discipline initiatives are driving robust design and activities across all our strategic markets, and we expect to have new revenue growth opportunities beginning late 2023 and throughout 2024. We believe that these initiatives will both increase our market share and expand our silicon content in our proven successful customer platforms. With that, let me now turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve?