MaxLinear, Inc

Greetings, and welcome to the next linear first quarter 2025 earnings 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Leslie Green of Investor Relations. Please go ahead.

Thank you, Joe. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss Max Lanier's first quarter 2025 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 your questions. Our comments today include forward-looking statements within the meaning of applicable securities laws, including statements relating to our guidance for the second quarter of 2025, including revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, GAAP and non-GAAP interest and other expense, GAAP and non-GAAP income tax, 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 the future financial and operating results, opportunities for revenue and market share across our target markets, new products, including the timing of production and launches of such products, demand for and adoption of certain technologies, and our total addressable market. These forward-looking statements involve substantial risks and uncertainties, including risks outlined in our risk factors, section of our recent SEC filings, including our Form 10-Q for the quarter ended March 31, 2025, 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 first quarter 2025 earnings release is available in the Investor Relations section of our website at maxlinear.com. In addition, we will report certain historical financial metrics, including but not limited to gross margin, operating margin, operating expense, and interest in other expense on both a GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP to non-GAAP presentations and 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 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 Sindhripu, CEO of MaxLinear.

Thank you, Leslie, and good afternoon, everyone. Our Q1 results reflect the continued growth and recovery of our business. We exceeded the midpoint of our guidance with $95.9 million in revenue, non-GAAP gross margin of 59.1%, and a meaningful reduction in operating expenses. We not only expect to be profitable on a non-GAAP basis in Q2, but also, most importantly, to be able to generate positive free cash flow in Q2. In total, in Q1, we made strong progress towards our return to profitability and are solidly executing with new product wins in high-speed data center interconnects, on Wi-Fi and Ethernet. We are also seeing meaningful improvement in our customer order rates and backlog, which gave us confidence that we can continue to deliver growth in 2025 and 2026. Now, looking at our key markets. In infrastructure, the increasing demand for high-speed data is driving significant growth and design activity around high-speed interconnects in data centers, cloud infrastructure, and next-generation telecom networks. We continue to make strong progress with product calls across multiple customers for our 5-nanometer Keystone PAM4 DSP product. At the Optical Fiber Conference, we demonstrated nearly a dozen Keystone-powered optical and active electrical cable modules for OSFP switches. We also highlighted a reverse gearbox application using Keystone from one of the world's leading module makers, as well as a half-retimed active electrical cable wide cable solution, also using Keystone. Our products were featured in demos at the booths of several partners, which are in various forms of production or qualification stages. We are also pleased to showcase the live demo of our Rushmore 1.6 terabit 200 gigabit per lane PAM-4 DSP. Like Keystone, our Rushmore family of PAM-4 TIAs and DSPs for 1.6 terabit interconnections offers superior power and performance advantages. This continues the basis of our competitive differentiation and design win success. We anticipate additional qualification and rollout for 800 gigabit and 1.6 terabit data center applications throughout 25 with exciting revenue growth in 2026. In wireless infrastructure at the Mobile World Congress, we demonstrated a highly integrated Sierra radio system on chip as a complete open RAN macro radio unit solution. It seamlessly interoperated with all major GAN power amplifier suppliers, utilizing MaxLinear's proprietary digital brain distortion technology. Our wireless 5G access single-chip radio SOCs and our millimeter wave and microwave backhaul transceivers and modems are essential for supporting increasing mobile usage and data rates, as well as new functionalities such as edge AI. We believe we are positioned strongly for content growth and share gains this year as service provider capital expenses improves and as our continued design wins at tier one customers begin to ramp later this year. Also within our infrastructure revenues, our Panther family of hardware storage accelerator SOCs is strongly positioned within the data center, enterprise storage applications, and the edge of the network with multiple design wins with major customers. and value-added resellers across key geographies. It enables optimized cost, power, performance, and efficiency of storage and compute server systems by offloading complex tasks that otherwise require long and costly CPU cycles to execute in software. It provides unique and best-in-class capabilities around data compression, integrity, and security with support for 200 gigabits per second throughput and the lowest latency essential for AI applications. Shifting to broadband and Wi-Fi connectivity, in the near term, we feel increasingly confident in the ongoing recovery of the broadband and connectivity markets. Now, with several quarters of improvement behind us, we're excited to begin the ramp of our single-chip integrated fiber, PON, and 10-gigabit processor gateway SOC plus tri-band Wi-Fi 7 single-chip platform solution with the second major tier 1 North American carrier later this year. This is both a major win and a significant validation of our technology and competitive positioning in the fiber pawn market. We expect that it will drive meaningful growth for our fiber revenues in 2026 and give us a strong foothold to continue to expand our presence in pawn. Overall, bookings have continued to strengthen, and we are seeing incremental growth in demand for our cable data DOCSIS products, as well as our Wi-Fi and Ethernet solutions. With a broad portfolio of newly refreshed products ramping into this market and a healthier demand environment, we expect continued growth in these categories throughout the balance of the year. In conclusion, we view Q2 and 2025 as a year of strong growth and return to profitability transition as we begin to drive growth in strategic areas of our product portfolio and enjoy the incremental tailwind of the ongoing recovery in our core markets. Investments made in high-value categories such as high-speed interconnect for the data center, multi-gigabit bond access, Wi-Fi connectivity, Ethernet, storage accelerators, and wireless infrastructure are resulting in strong product traction with Tier 1 customers and partners. We believe these positions as well to accelerate our growth as these markets continue to gain traction in 2026. With that, let me turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve?

Thank you, Kishore. Total revenue for the first quarter was $95.9 million, up from $92.2 million in the previous quarter. Infrastructure revenue for the first quarter was approximately $27 million. Broadband revenue was approximately $41 million. Connectivity revenue was $20 million, and our industrial multi-market revenue was $8 million. GAAP and non-GAAP gross margin for the first quarter were approximately 56.1% and 59.1% of revenue. The delta between GAAP and non-GAAP gross margin in the first quarter was primarily driven by 2.6 million of acquisition-related intangible asset amortization. First quarter GAAP operating expenses were 99.9 million and non-GAAP operating expenses were 58.4 million. The delta between GAAP and non-GAAP operating expenses was primarily due to stock-based compensation and performance-based equity accruals of $28.9 million combined, restructuring costs of $7.9 million, and acquisition-related costs of $3.2 million. GAAP and non-GAAP loss from operations for Q1 2025 was 48% and 2% of net revenue. GAAP and non-GAAP interest and other expense during the quarter was $2.9 million and $2.7 million respectively. In Q1, cash flow used in operating activities was approximately $11.4 million. We exited Q1 of 2025 ahead of plan with approximately $104 million in cash, cash equivalents, and restricted cash. With the overall improvement of our business, we expect that in Q2, we will have positive operating cash flow and thus begin to generate cash again. Our day sales outstanding was approximately 94 days in Q1. Our gross inventory was down versus the previous quarter by approximately 4.3 million as we continue to make improvements with inventory turns at 1.3. This concludes the discussion of our Q1 financial results. Before providing our guidance for Q2, I'd like to comment on the tariff situation and the geopolitical dynamics around semiconductors. As you are all aware, the market has a tremendous amount of uncertainty with regards to the trade environment. We are working closely with customers to address the changing landscape and have taken the current environment into consideration with our guidance. It's important to acknowledge, though, that the guidelines are still evolving, so it's difficult to know exactly how the demand drivers will play out for the quarter and for the rest of the year. With that, let's turn to our guidance. For Q2 of 2025, we currently expect revenue in the second quarter of 2025 to be between $95 million and $115 million. Looking at Q2 by end market, we expect all end markets, infrastructure, broadband, connectivity, and industrial multi-market to be up in the quarter. We expect second quarter GAAP gross margin to be approximately 54.5 to 57.5%, and non-GAAP gross margin to be in the range of 57.5 and 60.5% of revenue. We expect Q2 2025 GAAP operating expenses to be in the range of 92 to 98 million. We expect Q2 2025 non-GAAP operating expenses to be in the range of 55 million to 61 million. We expect our Q2 GAAP and non-GAAP interest and other expense each to be in the range of 2 to 3 million. We expect a 2.4 million dollar tax expense on a GAAP basis and non-GAAP tax rate of 10.5%. We expect our Q2 GAAP and non-GAAP diluted share count to be approximately 87.0 to 87.5 million. In closing, Another quarter of improvement in customer orders and continued new product traction gives us confidence that we will continue to see growth and recovery in 2025 and beyond. We're excited that our innovation and our investment in strategic applications such as optical high-speed interconnects, wireless infrastructure, storage, Ethernet, Wi-Fi, and fiber pond gateways are beginning to deliver new and transformative business opportunities. Our continued growth, coupled with our strong focus on operational efficiency, is positioning us for a sustainable return to profitability and cash generation this quarter. With that, I'd like to open up the call for questions.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And our first question comes from the line of Christopher Rollin with Susquehanna International Group. Please proceed.

Hey guys, thank you so much for the question. And I guess Just as we all care about tariffs right now, I'll ask on the supply chain, and I understand the uncertainty, but if you could perhaps walk us through some of the risks that you see in your own, but also your customers' supply chain. Like, for example, I believe a lot of broadband equipment is manufactured in China. How transferable would this be to other geographies? um just just generally if you could give us a sense of these risks uh you know how these risks could be mitigated and and if there's anything that kind of keeps you guys up at night thanks yeah chris thanks for the question and there's plenty keeping us keeping us up at night right now uh

So, I mean, just maybe to start with, look, we don't have a lot of real direct impact, right? I mean, semiconductors are not included here, so we're not seeing direct tariffs. So our supply chain actually is pretty good. So we feel pretty good about that. Your second part of your question kind of alluded to the customers. I think where we're just watching closely is what's customer demand look like. Does that, you know, how do the tariffs kind of get transferred to the consumer ultimately? Does that slow demand? So we're watching that. I guess in between all of that, you know, watching the ODMs and OEMs and how they're navigating this environment. You mentioned that China is a bigger kind of box manufacturing broadband. That's a whole lot less true today than it was five years ago. Five years ago, we saw some impacts here. most of those customers have moved out of China. So we actually see less of a risk around that. But as you know, there's tariffs that are being proposed on all the countries. I think the one that everyone seems to be circling around is China having the biggest impact. And so that's the one that we're watching closely. It seems like a lot of the other ones hopefully will be reduced a little bit and have less of an impact, at least on our ecosystem anyway. Thank you, Steve.

Yeah, no, that was... I would say that all our... Hey, Chris, I would say that not all for broadband CPE customers make any boxes in China for our customers. So, I can say that not almost, it's all of them. So we are safe from a China manufacturing perspective. We don't have any exposure there. But more importantly, I think our bookings have been pretty strong. Even let's say, so we look at it in two buckets. the craziness that may come later versus what was, let's say, two weeks ago. And our bookings have been very strong. We've been taking bookings even into Q3, Q4. So we're seeing a nice recovery that's now been going on for several quarters on our broadband business. So I would put it in two categories in terms of what is the true demand versus what is the supply chain driven yanking, whether it's in an accelerated demand versus maybe a delayed demand. We see both sides of it. But from our perspective, with our lead times for manufacturing being anywhere between 60 to 20 weeks, any gyrations that come from the 90-day tariff pause is not going to have any effect on our ability to supply chips in an accelerated manner or a decelerated manner. We are well past that.

Great. Thank you, guys. And I also, just as you brought up bookings, Keyshore, I was just wondering, you know, it was great that you think everything's going to be up next quarter. But if you look at bookings, if you look at that order book, if you take a guess and maybe you can fill us in in those inventory situations per end market, Could you force rank those segments for us into the next quarter by strength?

I think in general, our problem is very different from the ones who have been enjoying the demand in the data center for some time now. We are recovering from what was a 2022 peak consumption of a product, specifically broadband and telecom markets. So that depletion is almost fully set in now. And that's why we're seeing where we think the channel inventories are lower than they should be. So we have been seeing strong bookings from Q4 onwards, even from Q3 last year. And we are actually now taking bookings for Q3, Q4. So I believe that the channel inventory issues that may develop because of, for some of the customers are not necessarily particular to the issues we faced in the previous two years. So we are pretty much right now in a filling pattern rather than waiting to deplete pattern.

Okay, could you see any strength, you know, one segment versus the other?

Actually, we are seeing generally a broad-based strengthening of demand, except we are seeing some weakness in our industrial markets that has got China exposure. from an end demand perspective, but otherwise we are feeling pretty positive that we will continue to grow strongly for the rest of the year and beyond.

Great. Thank you so much for the update, guys. Appreciate it.

Yep. Thanks, Chris.

And the next question comes from the line of David Williams with the Benchmark Company. Please proceed.

Hey, good afternoon. Thanks for taking my questions, and congrats on the stabilization and the positive outlook here. So my first question is maybe, Keisha, where you pointed to the design wind progress on the DSP side for Keystone, and that continued through the quarter. Can you help us try to understand the magnitude of maybe that progress and where you are in terms of the design winds and maybe that ramp as you think about the next maybe six to 12 months?

So, David, thank you. You know, we're feeling very, very positive finally, right? When you reach there is only when then you can sort of, you know, exhale. So we're very happy that we are expecting to break even in Q2 and turn cash flow positive as well. It's a major milestone given what's happened in the last few quarters, right? So that's the good news. And we think that the rest of the year we will keep generating positive cash flow. So moving to the data center, the Optical Fiber Conference, we displayed about 20 designs on display that are done in our booth. And there are partners who are showing that they were all actually Keystone-based. And we had four demonstrations of evaluation platforms for our Rushmore design. So if you look at those 20 designs, that's one way to look at all those 20 designs that are in various stages of qualification and I think Steve has already guided in the last earnings call that we would land somewhere between 50 to $80 million. I think specifically set 60 to $70 million, which will be a doubling of last year's revenue. So I would say given how long it takes to qualify in this market, you know, and because it's a pretty highly demanding market, it's a pretty complex product, even though you call it the OSFP, So the fact that we can double our revenue is proof that the quality of our designs and the caliber of our customers is quite different from last year. Otherwise you won't be able to double your revenue. So we feel very good. And that leads to my own sort of musings. What does next year look like? Obviously we hope that if the calls all go in a nice way, can be doubled from here in 2026. But that requires some key calls to complete. and they're all slated for the second half of this year, and we expect all the revenue next year actually coming from Keystone for a while. Okay? I hope that's helpful.

Oh, fantastic, Culler. Thanks so much there. And then maybe just secondly on the North American, that second tier one, it sounds like you're expecting that kind of ramp at the back end of the year and then more fully next year. Can you kind of talk, maybe size the magnitude of that and how we should think about that ramp going forward? Thanks.

So I think you're talking about broadband PON tier one operator in North America. Yes. I mean, we're pretty excited. We were the first ones to be selected for the new category of high-end boxes against what you all know is a pretty vicious competition, right? And so it'll be a nice anchor that adds to our other tier one operator in North America for the gateway design. But this clearly is a bigger player. So we're very excited about it. And I think one of these guys ramp will be ship a few quantities. They have this year towards the end of the year, for sure, of course. But next year would be the ramp. And hopefully we're the first ones to ramp before the second supplier comes online. And we seem to have a good lead on that. So we should enjoy significant growth. So if you think of our pond revenue today as some in the $50 million range, next year, can you double overall? Absolutely. That's the goal here.

Thanks so much.

And the next question comes from the line of Jeremy Quan with Stifel. Please proceed.

Yes, good afternoon, and let me add my congratulations on the recovery here. I guess maybe asking the end market question just on a longer-term basis, you know, it looks like you're seeing some nice recovery in broadband and connectivity, infrastructure, you know, looks like it's going to be a nice growth driver. Would you, can you rank order those for us? Maybe as we look out to calendar 26 in terms of a growth contribution.

So let me, maybe Steve can answer those sort of quantitative questions a little bit better than I can, but I would just say that infrastructure has clearly been the focus of massive investment for us. It's strategically important because I look at infrastructure as a very, very core American market, right? If you really look at it, There are two markets that are the biggest ones. One is the enterprise infrastructure market, which is now primarily the cloud market. The other one is the consumer market, and we are not a consumer products company. So for us, being in the infrastructure market is a strategic imperative, and it drives a lot of differentiation, you know, and gross margin improvement for the company. So I would think that the infrastructure would be the most exciting growth on a new product cycle basis, right? What you will see in broadband is some level of pretty rapid recovery. I'm not going to comment on tariffs here, right? I'll just leave that aside. If you just look at it in a secular term, there'll be a strong growth driven by recovery in the core market and a pretty decent team sort of growth from new product cycles. I think that's a pretty healthy product. And then... You know, you add to that what's happening in, you know, the new product like PON, we talked about, I gave the size of it. These are pretty, cable also, we should start seeing some outside of PON in the cable docks as data market. So networks are still being upgraded. There's a lot of demand for increasing their competitive position against PON. And I think for us, broadband actually is kind of exciting, though data center and infrastructure are kind of a strategic imperative. On wireless, a lot of good things are happening. Actually, we have very strong growth in 26 on the back of our Sierra product, access market. We will start pivoting towards being maybe one of the top silicon providers, as a merchant silicon providers. So, yeah, I would say infrastructure, broadband would be the new product cycle growth. And then you have, you know, we'll have some other new product cycle growth, but it won't be as exciting in the industrial markets because the market is up and down in some areas. So those two would be outranked pretty high.

Great, thank you. And I guess just, you know, maybe digging a little deeper into the storage accelerated market, it sounds like, you know, that's finally close to contribution. Can you give us an idea of maybe what are, you know, some of the key applications, any sense of how many know customers you can talk about um just quantity wise um and you know this more enterprise or is it more um data center um any call you can provide would be very helpful so at the end of the day uh even if it's enterprise i just want to make sure that they're selling these boxes to if it's a storage appliance server or compute server boxes

They're all ending up in some form of AI edge data center or in the data center. Having said that, we have 20-odd proof of concepts going on, right? And the revenue we talk about somewhere between $10 to $20 million in 2025 is driven by enterprise storage today and some royalty software license revenues as well because we also have sort of a a paired offering using our superior algorithms for better compression storage in the traditional systems. And then we have these compute servers that are being – actually, they're being demonstrated, right? We had the Atlanta Supercomputer Conference where we demonstrated with QCT, which is a major compute server manufacturer. There they use storage compression. But the key point is why do they need it? it's not just about compression and security for reducing the amount of storage space. It's actually a very, very powerful enabling capability where we reduce the latency of compute by really having a very, very low latency storage with very, very high density compression. So what that does is when you think about AI-type applications, whether it is inside the data center or outside the data center, it becomes very critical not to have bottlenecks in the, whether it's a training or inference systems. So I think at this point, to be honest with you, our revenues are coming from enterprise, which is basically storage appliances and compute servers. However, we have a lot of strong traction after our reference platform announcement with AMD, a joint development platform, So we're getting a lot of traction in the other non-enterprise markets as well. So I think if you just fast forward this year, $10 to $20 million, can it double or triple next year? Absolutely. Because once you're qualified, it just takes off. So I had told a year ago that in two to three years, we should see, based on enterprise storage alone somewhere, peaking out at maybe $75 million revenue. I said $50 to $75 million. I think, yes, it's delayed a little bit, but nothing beyond what we had forecast. I think we should be able to hit that benchmark purely of enterprise storage. Now, if we were to get one or two calls on the compute side, I think this could easily be a two X on that in a five to seven year window. So very, very nice differentiated product that nobody else having such an offering in the world.

Okay. Perfect. Thank you very much.

And the next question comes from the line of Quinn Bolton with Needham & Company. Please proceed.

Hey, guys. I wanted to come back just to a couple of clarifications on tariffs. One, you mentioned none of the CPE boxes manufactured in China, but my guess is there are probably a number of them manufactured elsewhere in Southeast Asia where there are reciprocal tariffs. I know there's been paused for 90 days, but to the extent that those aren't totally taken away, would you expect some greater tariff effect possibly in the second half of the year? And then the second clarification is you guys manufacture everything overseas, right? So there's no reciprocal tariffs for any semiconductor chips you ship into China, whether it's consumed in China or whether it's re-exported, right? So no tariff costs on your products to the extent that they flow through China?

That's correct, Quint. With regard to the first part of your question, yeah, I mean, all of the other Southeast Asia countries where a lot of these boxes are manufactured are at least currently planned to be subject to these tariffs, right? And I think this is the part that there's plenty of uncertainty. in trying to figure out, you know, how things move around, right, and what the ODMs and OEMs kind of decide to do on this front. And, you know, we don't have 100% clarity. It's all pretty new right now. And so this is where I mentioned, you know, kind of working with the customers, trying to help them, you know, get those boxes kind of through the whole tariff malaise, if you will, And that's what we're doing right now.

Look, if you really step back a little bit, the broadband CPEs have been sort of tired offerings for the last two, three years because of the excess inventory in the system. But now they're transitioning to new generation boxes, whether it's 10 gigabit PON and so on and so forth. So my surmise is that these are needed to be competitive offerings, and that's where the applications are going on. And I think while I cannot, I'm not a macroeconomist, but I think that, you know, the demand is the demand and that, you know, the prices will be adjusted within the supply chains here. But I don't think the demand goes away because I think broadband is a very inelastic market. What makes it boring and what makes it exciting depends on which viewpoint you take. And so I feel very comfortable that we will be able to continue to grow in broadband.

Got it. And then maybe just, you know, given all of this uncertainty, can you give us a sense, like, how you approached guidance in this, like, you know, is the $105 million midpoint, did you kind of say, hey, you know, we're going to take our forecast, judge it down, and you came up with $105 million at the midpoint, or is 105, kind of where you think things fall, and then you just broadened out the range given the uncertainty. Just any sort of sense, you know, how you might have accounted for this tariff uncertainty in the guidance. And then I do have one business question, if I could squeeze in a third.

Yeah, Glenn, look, I think I covered this in the prepared remarks. Yeah, we've done our best to anticipate the tariffs that we have in front of us, and that's what we base our guidance on. What was your other question?

The other question, just I think last quarter you talked about, you know, some variability in the optical DSP ramp depending on the timing of hyperscaler 800 gig ramps in the second half of 2025. Wondering, you know, as you sit here today, how are you feeling about timing of those 800 gig ramps? Are you feeling better that those hit in 2025? Is there still some uncertainty on when those 800 gig deployments at the hyperscalers start to kick in?

So I think you sure covered this in his question. I mean, we've had a guidance of 60 to 70 million. I think we stand by that. We're comfortable with that. As you're well aware, I mean, most of those 800 gig ramps are in the second half of the year. So that's also consistent with the way we've talked about them. And I think we're completely comfortable with that. Okay, great. Thank you. Good. Thank you.

And the next question comes from the line of Ananda Barua with Loop Capital Markets. Please proceed.

Hey, guys. Good afternoon. Thanks for taking the question. Good afternoon. I really appreciate it. Yeah, yeah, good to talk to you guys. I guess Kishore and Steve, this may be implied in all the comments you guys have already made about demand environment, but let me also just ask it this way to make sure I cover it. cover the bases here. So it sounds like Kishore, no macro, no signs of macro impact yet in your order book. And let me also ask, do you think you're seeing any pull forward revenue? It doesn't sound like it, but let me ask that question as well. Thanks.

I was wondering when that question was going to come of the pull forward. It looks like COVID, huh?

No, not really.

Yeah. Okay. We are pretty early in our earnings call in that 90-day window pause announcement a few days ago, right? So the reaction time will take a little longer. So if ads and bookings spike up, let's say, this week or next week, some people have talked about it, and we talked to colleagues in the industry, we will take them with more than a grain of salt, let's put it that way, and we will try to be measured about it. But I want to repeat again that our lead time for chips is about 16 to 20 weeks. There is nothing you can do in the 90 days that's going to change our ability to ship product. So we will not be able to mobilize even if they were to spike orders on us. So that's the reality.

And Ananda, I'll just echo the overall demand. I mean, because Yeah, the world's kind of been turned upside down in the last two weeks, but I really want to echo the last quarter or two or three quarters, for that matter. We've continued to see, you know, improvements, right? That's the recovery that, you know, we both talked about a little bit earlier in the prepared remarks. That backlog has continued to improve. The bookings have continued to improve for six quarters now. And so, you know, a lot of encouraging signs on the new products as well as existing products.

That's super helpful. And I guess just my quick follow-up on the demand side is, Kishore, your comments about data center, it sounds like this all applies to data center as well and that data centers are, I'm paraphrasing here, you say full speed ahead and maybe I'm making that up, but I thought there was some comment about data center energy spend and AWS and Google have come out in the last couple of weeks and reaffirmed spending plans. Vertiv this morning was like super bullish, not just for Hyperscaler, but for Neoclouds and Colos. So I just want to just sort of clarify that as well. Sounds like you're seeing no change in activity in the data center space either. Is that accurate?

For us, it's still about digging, right? Knitting the products together, so to speak, right? Qualifying and that sort of work, right? So we don't have the levels of incumbency where the dialogue is very different. So I think at this point, no change for us how we have to go about our actions. So I really cannot comment on what a large incumbent exposure means to this situation.

I got it. That's helpful. I appreciate it. Thanks, guys.

Yep. Thanks, Anand.

And the next question comes from the line of Richard Shannon with Craig Hallam. Please proceed.

Thanks, guys, for taking my questions. You'll ask one on the wireless infrastructure side. Kishore, I think you've mentioned this briefly here, but I'd love to get a sense of of your confidence of the, you know, the ramp up here later this year. Maybe you can talk to the extent to which you see the revenue growth coming more from the content side or also from the unit side as well.

Absolutely. If you look at it, up until now, our revenues were primarily a constituent of two parts to our wireless infrastructure, right? One is millimeter wave and microwave backhaul transceivers and modems. and last year the and this year sort of you know suddenly uh not last year this year the revenues came really really down because the telco stopped spending because but however we are now uh seeing bookings picking up very nicely uh strengthening and we we hope to double from what we did last year on on that product line alone but in addition the access We have a Sierra product where the content in the platform is going to increase quite a bit. It's a single chip macro radio unit. There is a very good customer design interaction in Mobile World Congress. We had so much sort of presence and traction in terms of all the things we were showcasing. So we expect that to be a strong driver next year as it starts picking up this year. So, and that's a brand new platform where it's a single, we own the platform, just like in the microwave and millimeter waveforms, we expect revenues to access to continue to grow for the next five to six years. On the back wall side, there's a lot of strong demand now for E-band. That means that these AI edge applications are driving more and more data requirements. And so we're seeing demand for millimeter wave products, which did not exist in the previous revenues. So we are actually seeing strong growth in the millimeter wave transceivers and backhaul modems. So those two would be the big drivers of growth. On top of that, we expect a recovery of the normal core business as well. So that would be the layering of it. So you will see a strong revenue growth coming from just recovery. And then product cycle, secular growth over the next few years by content growth. both millimeter wave, microwave modems, and transceivers, and also the brand new category of single-chip, macro platform, Sierra-type product for the base stations.

Okay, and Kishore, if I could just confirm one of your comments here. I think you said doubling from last year alone. I don't know if that was a comment across the whole wireless exposure or something specific. Can you clarify that, please? Yes, it's across the whole wireless exposure category. Got it. Okay, perfect. My follow-on question is related to optical DSP here. I guess I wanted to get a sense of when and how do you expect to get and look for higher allocations of share with your Keystone platform and or to what degree do you see that success there happening and also being applied to Rushmore as well?

Very, very, very good question. But let me first answer the Rushmore scenario. Look, we're not the first one with the Rushmore product, but our general competitive anchor is extremely low power and superior performance, right? That's the focus on. And it's just the way the cycle plays out, right? But the only customer who is deploying the 1.6 terabit platform is NVIDIA, and they have made their choices. So if any opportunities come, They'll have to come later on when they actually start shipping reasonable volumes, right? Now, the volume is not that much. And then they need a third supplier, right, just to diversify the chain. So our entire premise is anchored on really penetration on the non-NVIDIA type market. And those ramps won't happen until the latter half of next year. I'm sure there are some that are happening now. But our product will really be the end of 26 revenues on the 1.6 trillion bit Rushmore product. We showcase and demo. We'll have to do evaluation, sampling to customers. And then we have to qualify to production. And then, you know, the intro qualification and so on. So it's a bit of a train there where to get through. So the revenue backing is really on our Keystone product, which is the 400 gigabit per second application, 800 gigabit per second application. And there, where the US is going to more and more transition to 800 gigabit per second, you have the China hyperscalers sort of more really transitioning heavily to 400 gigabits per second, and later to 800 gigabits per second. So the way we think about these markets over the next five years, about 70% of the market would be the 800 gigabit category, and the 30% of the market would be the 1.6 terabit category. From an allocation perspective, we expect that over the course of time, we expect and plan the business to be about 20% of the market. And that's all we get over the next three years or four years about, you know, anywhere between 200 to, you know, we're given range of outcomes somewhere between, you know, let's call it 200 to $300 million revenue. That's the business plan, okay? And with regard to 1.76 terabit, it's a continuation of credibility and our commitment to the market and investment. But Keystone will be the bigger anchor of revenues in the near to mid-term.

I appreciate all that detail, Kishore. Thank you. Yes.

The next question comes from the line of Suji De Silva with Roth Capital. Please proceed.

Hi, Kishore. Hi, Steve. Maybe, Kishore, same question as Richard asked a few questions ago. On the broadband side, is there a content gain booster to the unit recovery or growth you're seeing in broadband for MaxLinear?

Very good question. I think the prepared remarks, I don't know if you mentioned this or not, but all the new product cycles are based on BOM expansions. And here is where the BOM expands. Firstly, the PON world is transitioning to XGS PON, right? And then that means you have a heftier processor, you have a more bulky modem, and then there's a Wi-Fi that goes with it. It's Wi-Fi 7. It's no longer Wi-Fi 6, right? So on the cable side, the new product cycles are driven by DOCSIS 4.0. More precisely, ultra-DOCSIS, right? That's going to be the real driver more than FDX DOCSIS 4.0. Yes, there'll be delays from 2025 to 2026 due to network upgrades and making sure everything is fine, but that would drive the content increase as well. And then, you know, in these platforms, whether it's a modem or a gateway, you get content expansion even on the Ethernet side, right? Because all of these are ports for Ethernet. We offer multi-port, multi-gigabit, multi... or two and a half gigabit ethernet and gigabit ethernet five solutions is quad port or a dual port and so on and then you know you also add add to the uh to the fact that you know uh all of these require higher upgraded sort of you know capability to support so much content for power efficiency and so on so forth so all new product cycles are content expansion And the core recovery in the market is going to be driven by incumbent solutions, if you call them legacy, so be it, where Wi-Fi 6 and DOCSIS 3.1 and 2.5 gigabit PON are the prevailing solutions. Okay? Yep. So a 30% BOM expansion on legacy platforms as they transition is the normal metric we use for BOM expansion.

Okay. Appreciate that. I'm putting a number on it. And then a question for Steve, your 2Q guidance for expenses kind of reflects some of the cost efforts. Is the 2Q level sort of the new baseline to go forward, or are there more cost-restructuring benefits that would flow through the second half before we get to a new level?

Yeah, so I think we've made some great progress. kind of post some of the announcements that we made in Q3 of last year. So as projects kind of ramp down, then you've seen us come down. So I do think there's a little bit further to go where we see kind of another step down in the back half of the year on the OPEC side.

Okay, great. Thanks, Steve. Thanks, Chris.

The next question comes from the line of Tim Savageau with Northland Capital Markets. Please proceed.

Hey, good afternoon. A couple of questions to start with just about moving parts within segments in Q1. Broadband came in much better than expected, up nearly 40% sequential. And I wonder if there are any particular drivers there on either the pawn or table side for that upside, and then I'll follow up.

Yes, Tim. You're right to point out it was up a little more than what we'd expected, kind of had seen this coming for a while, and so you're kind of seeing a follow through. It was particularly high for kind of a typically seasonal Q1 in broadband, so it was up quite a bit more. It was kind of across the board, honestly. And because I think Kishore mentioned this previously, but like some of the bigger pond ones really don't even ramp till late this year or next year. So some of the newer pond stuff is still to come, but so it's mostly across the board.

Okay, sounds like cable. That's what I'll take away on that. And similar question on the infrastructure side where you were flat in the quarter. And I know you had a big Q4 on the AI kind of optical side. I don't know whether that might have backed off a little bit and you saw growth elsewhere, but looking for color there. And at this point, I'm assuming that your AI optical chip business is more than half of infrastructure revenue. In Q1, at least. Any comments?

I think the only color around infrastructure in the quarter, I mean, as you know, I mean, optical will grow quite a bit this year and start to be a more meaningful percentage of the infrastructure business that's on track. I think that performed as expected in the quarter. You know, we've been talking about wireless a little bit today. that's the piece that, you know, is still kind of recovering, and I would expect to see more growth out of that in the second half of the year than, say, we saw in the first quarter.

Okay, thanks. Onward and upward. To the final question, and that's you mentioned OFC. You had a A lot of modules running in a lot of places with your chips in them. I think in your booth, you know, guys who are potentially facing some really high volumes like Applied Opto and currently seeing them like Coherent. Jabil seemed to have a pretty good show. Cisco's talking more about Klein Optics. I mean, as you look at this group, I guess, how concentrated or not would you expect your AI optical revenue to be this year going out into next year and should we look at it as fairly broad-based or do you have a couple of real important design wins and you have some guys in China too that we should be thinking of as key drivers for the business?

Look, if you just round up the data center module makers, there are five big ones, right? And if you do not have them, all of them, or at least the majority of them, there is no way you can build up your revenue. So by definition, you'll have concentration. And the remaining five will be there to sort of do the other, you know, the other 30% of your revenues, let's call it that, right? So I think with the size of these revenues, you should expect a two-thirds, one-third spread. Now, this is a very theoretical notion. So as we build up more customers, you know, usually the way it starts, initially all your revenues are a bunch of guys, right? This is the way the market's played. Then you get that success, and then one big guy comes online. Then you get a couple of others, and then from there on, you grow with the market, you grow share, and that sort of a thing. I think we're playing the classic trend. So I think in the long term, we should expect two-thirds, one-third, two-thirds coming from two or three players and remaining one-third coming from a range of players. I think that's the way I would distribute them.

That's a great color. Appreciate it.

The next question comes from the line of Carl Ackerman with BNP Paribas. Please proceed.

Yes, thanks, gentlemen. I wanted to circle back on broadband and connectivity. Kishore, I think you indicated that that combined business could double next year. And then, Steve, you were talking about how the PON content is in front of you. So if I just tie those two together, is the perhaps doubling or the opportunity to double this business next year, is that driven by primarily by a cyclical recovery in cable near term, or is that driven by just this growing mix toward FiberPON and perhaps the opportunity you see with your integrated FiberPON and 10-gig gateway SOC? Have a follow-up, please.

Carl, I'm sorry. I mean, there might have been a miscommunication there, because I think you sure were talking about the doubling on the wireless side, not on the broadband side. I mean, with regard to broadband, as you know, we've had more exposure in the cable market, but we're seeing additional traction with PON. We spoke with the other big North America guy that we've closed, and that's expected to ramp late this year, early next year. So we do expect to see PON revenues ramp, DOCSIS 4.0 ramp or 3.1 Ultra, you know, at some point next year. um will definitely contribute and so as we see i think a broadband kind of you'll see a nice recovery this year and then you're going to see some good follow-on growth as we you know bring on either more customers or more wins or more market share gains in all of our markets got it yep thank you for the clarification i want to go back to uh bookings and visibility you know you spoke earlier how

you're not seeing any pull forward related to any tariff impacts, just given the fact that lead times for chips remains in the 16 to 20-week window. You also spoke about how bookings are growing and perhaps you're seeing bookings extend beyond Q2 and into Q3 and Q4. I was hoping with that backdrop you could give a bit more color on whether you're seeing a similar dynamic play out across all end markets and across geographies. and or are you seeing perhaps a larger amount of order visibility in certain geographies in the markets than others? Thank you.

So I would say that, you know, pretty much orders track our growth in revenues, right? They have to at some core level. And when I talk of no spike in demand, I'm just saying it's too fresh the last two weeks to understand. to really the 90-day pause or 90-day tariff window to create the spike, right? And even if what we were saying, even if there's a spike, we won't be able to supply that spike in demand. So that's the reality of it. So the bookings, what we refer to is we are referring to prior to this tariff vacillations, right? So based on that, we are seeing strong bookings because of recovery in our core business. that both Steve and I referred to in our script. So I think that you shouldn't worry about what if there is a spike, what it's going to mean for us, right? So when you look at the market, if you look at our revenues, almost all of our revenues outside of broadband and data center are, I would say, 80% to 90% outside the U.S. So the tariff should not have an impact on that. But if you look at the revenues in the U.S., it's broadband and data center. So that's how I would categorize them. So therefore, this strategy is really primarily a U.S. scenario. And then I would categorize it more broadband if and when it materializes. So far, we don't have any reason to say that the macro demand is impacted or not impacted. So... So I think that's how I would explain the story.

Thank you.

I have a next question. We'll come from the line of Torres Vanberg with Stiefel. Please proceed.

Yes, thank you. I just had a couple of follow-ups. I'm sorry for staying on the topic of tariffs, Kishore, but I understand the order discussion in relation to lead times but have you had conversations with your customers or supply chain members about contingencies? I mean, it sounds like the supply chain views this tariff mess as transitory, but have you started having conversations with them about some contingencies, especially if some tariffs are going to be higher in certain regions versus others?

It's too chaotic for us. We have conversations, but we all agree it's chaotic. Right, so it's like a slow-moving train, the response, right? I don't think you can respond to these unprecedented changes in, you know, daily sort of changes in the policy, right? So it's very hard to have cogent conversations. And especially because we don't build systems, we sell chips, right? It's a very different discussion.

Right. No, that's fair. As my follow-up, the multimedia and industrial business continues to be very, very volatile. I know you pointed out some China volatility there, but if you just explain why that business is so volatile quarter to quarter.

Yeah, I mean, it has been volatile. I mean, as you know, the industrial market has been soft. And I think just later on that the China, you know, dynamic had just made that a lot worse. And I think, you know, just softness in Q1 in general. So, yeah, there was a big downturn. I do expect it to improve nicely in Q2, but it's definitely been volatile. You're right, Tori.

Great. Just one last one. You guided to operating cash flow positive for Q2, obviously at the 105 run rate. You know, just curious, you know, now that you are sort of starting that recovery phase with cash flows, what's your inventory date target? I know it sort of was flattish or maybe came down a little bit this quarter, but, you know, where would it eventually land, you know, sort of in the 120, 130 range or? or even lower than that?

Yeah, well, I mean, I think we've got another couple of quarters of it coming down, you know, and then, but yet, you know, again, as we said earlier, a little tariffs aside, you know, we would expect it to come down for another couple of quarters. And then at some point, we're going to have to start to build again as the growth outlook, you know, starts to improve. So down for the next two quarters and then probably kind of stabilize.

Even with whatever you're seeing, we are building for the new products that are in the pipe. So we are building inventory also for the right product mix, you know, so that we're not turning short in supply for the new product cycle ramps. Very good.

Thank you.

Thanks, Tori. Thank you, Tori.

Thank you. This will conclude the question and answer session. I'll hand the call back to Kishore Sindripu for closing remarks.

Well, thank you all. We're very excited about the turning point in our business here to returning to cash flow positive and also on a non-GAAP earnings basis. So this quarter, we also have a mini number of financial conferences and virtual events. And we'll be participating in them and we'll post details on these on our investors relations page. So with that, thank you all for joining us today and we look forward to speaking with you again soon.

This concludes today's conference. You may disconnect your lines at this time. Enjoy the rest.