MaxLinear, Inc

Greetings and welcome to the Max Linear First Quarter 2024 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 Store 0 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, and good afternoon, everyone, and thank you for joining us on today's conference call to discuss Max Lanier's first quarter 2024 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 comments, we will take questions. Our comments today include forward-looking statements within the meaning of applicable securities law, including statements relating to our guidance, for the second quarter of 2024, including revenue, GAAP and non-GAAP growth margin, GAAP and non-GAAP operating expenses, GAAP and non-GAAP interest and other expense, 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, expected production ramps and timing for the launches of new products, our design wind pipeline, demand for an adoption of certain technologies, our serviceable addressable market, the effects of cost reduction measures and product announcements. These forward-looking statements involve substantial risks and uncertainties, including risks outlined in our risk factors section of our SAC filings, including our Form 10-Q for the quarter ended March 31, 2024, which we intend to file later 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 2024 earnings release is available on 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 and the press release available on our website. We do not provide 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 a replay will be available on our website for two weeks. And now let me turn the call over to Dr. Kishore Sindhipu, CEO of MaxLinear. Kishore?

Thank you, Leslie, and good afternoon, everyone. Our Q1 revenues were $95.3 million, posting a non-GAAP gross margin of 60.6%. Overall, we believe that our revenues have reached a bottom, and we are now poised for sequential growth in 2024. Our conviction is the result of improving market conditions and exciting new product launches in high-growth markets, including optical data center interconnect, enterprise Ethernet and storage accelerators, 5G wireless, multi-gigabit PON broadband access, and Wi-Fi connectivity. All of these new products have been launched in the market today and will begin to reshape our revenue profile towards high-value data infrastructure applications. While this market recovery is driving improve revenues a strong fiscal discipline will help us position to deliver highly favorable leverage in our business model highlighting our infrastructure business which we believe is on track to become a 300 to 500 million dollar business over the next several years led by solid traction high speed optical interconnect market coming into 2024 we expect to deliver revenue in the 10 to 30 million dollar range for the year We now expect to exceed the high end of that revenue range in 2024. As we demonstrated and announced at the Optical Fiber Conference in San Diego, our 5-nanometer CMOS Keystone 800-gigabit PAM-4 DSP is in several reference designs for virtually all of the leading module makers, including JBL for silicon photonics-based pluggable modules and OptoMind for LRO modules, which we announced last month. Collectively, we are building an exciting AI-related design wind portfolio within the hyperscale and large enterprise markets. Early-stage revenues have already begun, and we expect new production ramps later in the second half of the year to drive meaningful run rate growth in 2025. The ongoing adoption of AI in the cloud is providing a strong catalyst for the transition to 800 gigabit and beyond speeds. During Q1, we were very pleased to announce a Rushmore family of 200 gigabit per lane PAM430s and DSPs. Built on Samsung's leading-edge CMOS, it delivers best-in-class power consumption, double the data rates, and significantly reduce latency across optical transceivers, active optical cables, and active electrical cables. Industry estimates indicate that shipments of PAM4 DSPs are expected to grow at a CAGR of 50% through 2027, providing an exciting opportunity for us to significantly grow our revenue and market presence over the next several years. In 5G wireless infrastructure, the expanding global rollout of new millimeter wave, microwave, and hybrid backhaul technologies to upgrade the data rates of wireless transport links continues to drive our growth and our silicon content per platform. At Mobile World Congress in February, we announced our new and differentiated Sierra family a single-chip platform for 5G Open RAN radio units for both massive MIMO and macro-based station solutions. The response has been overwhelmingly positive. We expect our growing portfolio of wireless backhaul and access infrastructure products to drive significant revenue expansion over a multi-year cycle. Within our infrastructure revenues, our Panther 3 series hardware storage accelerators for the enterprise all-flash array and hybrid storage enterprise appliance systems is providing exciting incremental growth opportunities, particularly with the growth in high-speed computing and AI. Our PAN33 DPU is the only hardware-based solution on the market delivering 12-to-1 ratio data compression, ultra-reliable data protection, low latency, and low power performance. This month, we were excited to announce a collaboration with Dell Technologies to integrate our Panther 3 storage accelerator into Dell's PowerMax storage platform to deliver unparalleled performance gains for mission-critical workloads. We are currently in production ramp with the solution and expect additional customer product ramps later this year. We are confident that we can double our storage-related revenues in 24 with continued strong growth through 2025 and beyond. In Ethernet connectivity, with the recent launch of our new octal 2.5 gigabit Ethernet PHY and switch products, we expanded our addressable market by $300 million to include both the enterprise and small and medium business switch markets in addition to our traditional gateway and router markets. Customers are expected to upgrade today's more than 2 billion copper 1 gigabit Ethernet ports to 2.5 gigabit Ethernet speeds over time using the existing standard Cat PHY cabling. We are seeing exciting design win activity for our solution, including a Tier 1 North American Enterprise OEM customer that is expected to ramp to production in the late 2024. As we look ahead, we believe our Ethernet business could reach $100 million over the next 18 to 24 months. Turning to broadband, we continue to gain traction in the fiber pawn market with new design wins driving our growth, as many of you know in 2023 we began ramping our single chip integrated fiber pawn plus 10 gigabit processor gateway soc and connectivity solutions with the major g1 north american service provider but now ramping a new opportunity with the second major g1 north american service provider together these wins confirm our competitive product offering and demonstrate significant growth opportunities for us in the coming years Last year, our PON revenue was approximately $50 million. We expect to be able to more than double that over the next two years. In connectivity, our Wave 700 single-chip tri-band quad MIMO Wi-Fi 7 device continues to do extremely well in qualifications. We expect service providers to begin the initial rollout late this year. with adoption peaking in two to three years. For MaxLinear, Wi-Fi 7 has the exciting potential to drive significant ASP growth and higher attach rates in a broadband access platform versus previous generations. Overall, as we finally project a return to sequential revenue growth, it is both gratifying and exciting to see years of product development and business execution begin to culminate in our next stage of growth as a data-centric infrastructure company. Across our portfolio, we have the right solution production today to meet high-value market trends and drive significant revenue growth. With that, let me turn the call over to Steve Litchfield, our Chief Financial Officer, Chief Corporate Strategy Officer. Steve?