MaxLinear, Inc

Greetings. Welcome to MaxLinear's third quarter 2023 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. Please note this conference is being recorded. I will now turn the conference over to Leslie Green, Investor Relations. Thank you. You may begin.

Thank you, Sherry. Good afternoon, everyone, and thank you for joining us today on today's conference call to discuss Max Lanier's third quarter 2023 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 fourth 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 in other expenses, 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 limitations, statements concerning opportunities arising from our broadband, infrastructure, connectivity, industrial multi-market, as well as inventory levels, the timing for the launch of our products, and timing of opportunities for improved revenue and market share across our target markets. These forward-looking statements involve substantial risks and uncertainties, including risks outlined in our risk factors section of our recent SEC filings, including from our Form 10-Q for the quarter ended September 30, 2023, 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 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 growth margin, operating margin, operating expenses, 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 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 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 our website for two weeks. And now let me turn the call over to Dr. Kishore Sindhripu, CEO of Axon Air.

Thank you, Leslie, and good afternoon, everyone. In Q3, our revenues were $135.5 million, and non-GRAP gross margin was 60.8%. Infrastructure revenues, specifically wireless infrastructure, was the main highlight, up 1% sequentially and 40% year-over-year. Our financial results and outlook continue to reflect the channel inventory overhang, especially in our broadband and Wi-Fi markets. We expect the effects of the inventory to persist into 2024, and Steve will talk more about the actions we are taking to align our financial structure. We continue to make strong progress growing our infrastructure business, Infrastructure represents $50 million in Q3 revenue and has grown substantially since its inception only a few years ago. Within infrastructure, in wireless, the expanding 5G global rollout of new millimeter wave backhaul technologies and multiband and hybrid millimeter wave and microwave backhaul radios is allowing us to significantly increase the silicon content per platform of our modem and RF transceiver products. In our high-speed optical data center interconnect market, the ongoing adoption of AI in the cloud is driving exciting design-win activity for our 5-nanometer CMOS Keystone 800-gigabit optical PAM4 solution. We have ongoing qualifications in multiple hyperscale and enterprise opportunities for which we expect to begin ramping in mid-2024. During Q3, we also announced a new member of our Keystone family, a 5-nanometer Keystone PAM-4 DSP for 400-gigabit and 800-gigabit applications with integrated VIXL laser drivers. This product enables best-in-class power consumption for 800-gigabit short-reach optical transceivers and active optical cables for data centers, AI and machine learning platforms, and high-performance computing applications. Earlier this month, at the OCP Global Summit in San Jose, we also demonstrated our Keystone solution supporting active electrical cables, or AECs. Keystone is the only 5nm product with DSP available today for the AEC market, providing best-in-class power consumption and programmability. We are also making exciting progress with our Panther 3 series of storage accelerators for the enterprise all flash array and hybrid storage appliance systems. We've entered initial mass production ramp with the TA1 leading enterprise storage appliance maker and have visibility into additional new design wind volume production ramps next year. We expect this business to double in 2024 with continued strong growth in 2025 and beyond. Turning to broadband, despite the near-term challenging environment, the longer-term outlook for the broadband access networks is solid as the industry migrates from legacy DSL and older PON technologies to 10 gigabit PON fiber access. We continue to ramp with the major North American service provider and are layering additional design wins, including another Tier 1 service provider, which will begin to contribute revenue in 2024. With our industry-leading single-chip integrated fiber PON and 10-gigabit processing gateway and connectivity solutions, we expect continued strong design interaction leading to a multi-year fiber broadband growth cycle. Recently, we also announced PUMA 8, our DOCSIS 4.0 system-on-chip cable, modem, and gateway platform, which enables the speed, latency, and low-power consumption necessary for next-generation 10-gigabit service rates for MSOs. We expect to see initial DOCSIS 4.0 launches in the market as early as the end of 2024. In connectivity, the design activity for our Wi-Fi 7 is robust, and we anticipate early revenues coming in the second half of 24. Wi-Fi 7 has the enhanced ability to efficiently manage the increasing number of connected devices, which have grown tenfold since 2018, and their higher bandwidth requirements in the home. As a result, globally, service providers are embracing the transition to Wi-Fi 7 to improve both user experience and performance. For MaxLinear, Wi-Fi 7 has the exciting potential to drive significant ASP growth and higher attach rates in our broadband access platforms versus previous generations. Moving to Ethernet connectivity, we continue to build on our core portfolio of 1 Gigabit Ethernet and 2.5 Gigabit Ethernet PHY technologies. We not only offer single and quad 1-gigabit Ethernet and 2.5-gigabit Ethernet PHYs, but in Q3, we started sampling the industry's first octal 2.5-gigabit Ethernet PHY switch product. This new product family of switch significantly expands our addressable market by $300 million through 2027 and addresses both enterprise and SMB switch markets as well as the gateway and router markets. We expect today's more than 2 billion copper 1 gigabit Ethernet ports in the market or existing Cat5 cabling to transition to an optimized and enhanced 2.5 gigabit Ethernet offering. With that strong design-win activity, we expect to begin revenue ramp in the first half of 2024. As we head into 2024, we are laying the critical groundwork for future growth with robust design-win activity and continued technology innovation. Even as we drive operating efficiencies to navigate near-term headwinds, we are excited that many of our investments over the past several years in infrastructure, broadband access, connectivity, and high-performance analog markets are now poised to contribute meaningful revenue. With that, let me turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve.