- Total Revenue: $92 million, down 3% from $95.3 million in the previous quarter.
- Broadband Revenue: $22 million.
- Connectivity Revenue: $13 million.
- Infrastructure Revenue: $32 million.
- Industrial Multi-Market Revenue: $25 million.
- GAAP Gross Margin: 54.6% of revenue.
- Non-GAAP Gross Margin: 60.2% of revenue.
- GAAP Operating Expenses: $91 million.
- Non-GAAP Operating Expenses: $74.8 million.
- Non-GAAP Loss from Operations: 21% of net revenue.
- GAAP Interest and Other Expense: $0.5 million.
- Non-GAAP Interest and Other Expense: $0.4 million.
- Cash Flow Used in Operating Activities: Approximately $3 million.
- Cash, Cash Equivalents, and Restricted Cash: Approximately $186 million.
- Days Sales Outstanding: Approximately 84 days.
- Inventory Turns: 1.1 times.
- Q3 2024 Revenue Guidance: Between $70 million and $90 million.
- Q3 2024 GAAP Gross Margin Guidance: Approximately 52.5% to 55.5%.
- Q3 2024 Non-GAAP Gross Margin Guidance: 57% to 60% of revenue.
- Q3 2024 GAAP Operating Expenses Guidance: $102 million to $108 million.
- Q3 2024 Non-GAAP Operating Expenses Guidance: $70 million to $76 million.
- Q3 2024 GAAP and Non-GAAP Interest and Other Expense Guidance: Approximately $0 to $2 million each.
- Q3 2024 GAAP and Non-GAAP Diluted Share Count Guidance: Approximately 84.1 million.
- Expected Reduction in Operating Expenses for Fiscal 2025: Approximately 20% to 25% over fiscal 2024.
Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MaxLinear Inc (MXL, Financial) reported Q2 revenues of $92 million with a non-GAAP gross margin of 60.2%.
- The company is on track to exceed the high end of its expected optical revenue target range of $10 to $30 million for 2024.
- MaxLinear Inc (MXL) has launched several new products in high-value markets, including optical data center interconnect, enterprise Ethernet, and 5G wireless.
- The company expects strong profitability growth as new products ramp up and R&D investment starts to moderate.
- Channel inventory continues to come down and is expected to bottom in the second half of the year, indicating a potential recovery.
Negative Points
- Broadband demand remains weak due to prolonged excess customer inventory buildup during the supply chain crisis.
- Telecom market softness is exacerbated by US-China tensions and regulatory compliance requirements, impacting shipments and Q2 results.
- Total revenue for Q2 was down 3% from the previous quarter, indicating ongoing challenges.
- Q3 revenue guidance is between $70 million and $90 million, reflecting continued uncertainty and potential declines in key markets.
- GAAP operating expenses for Q2 were high at $91 million, with non-GAAP operating expenses at $74.8 million, indicating significant cost pressures.
Q & A Highlights
Q: Kishore, could you elaborate on the impact of not being able to make shipments in telecom due to restrictions? How much revenue could you have shipped?
A: Towards the end of the quarter, we faced a revocation of a government license to ship some low technology industrial products and high technology products. This prevented us from shipping revenues in the quarter, impacting us by approximately $5 to $8 million in Q2 and potentially $10 to $15 million in the second half of the year. β Kishore Seendripu, CEO and Steven Litchfield, CFO
Q: Can you explain why infrastructure revenue is expected to be flat to down in Q3 despite momentum in PAM4 DSP?
A: The weakness in infrastructure is primarily due to the wireless infrastructure segment, not the optical broadband side. Optical is doing very well, and we are on track to hit or exceed the high end of our revenue range. β Kishore Seendripu, CEO
Q: How do you see the inventory situation and end demand evolving into 2025?
A: We have seen improvements in bookings and channel inventory moving down, but not as quickly as hoped. We expect inventory to bottom in the second half of the year, with a stronger recovery in 2025. β Steven Litchfield, CFO and Kishore Seendripu, CEO
Q: Can you provide more details on the cost reduction measures and their impact on operating expenses for 2025?
A: We expect a 20% to 25% reduction in operating expenses for fiscal 2025 over fiscal 2024, primarily due to the completion of several key product initiatives. This reduction will be realized gradually throughout the year. β Steven Litchfield, CFO
Q: What is the size of the opportunity from the second tier one US carrier for your integrated fiber PON and 10 gig processor gateway?
A: The opportunity could be around $40 million per year on the gateway side, with additional high single-digit revenue from fiber termination. The ramp depends on the carrier's rollout plans, but we expect significant contributions in 2025 and 2026. β Kishore Seendripu, CEO
Q: How do you see the linearity of revenue through the quarter?
A: Revenue is heavily back-end loaded, with improvements in bookings and customer urgency increasing towards the end of the quarter. However, some revenue disappeared due to the China export restrictions. β Kishore Seendripu, CEO and Steven Litchfield, CFO
Q: Can you clarify the impact of the recent export restrictions on your revenue and future guidance?
A: The export restrictions impacted us by $5 to $8 million in Q2 and will affect the second half by $10 to $15 million. However, this is not expected to limit our ability to sell in China overall. β Steven Litchfield, CFO
Q: What are the main factors contributing to the decline in gross margin guidance for Q3?
A: The decline is primarily due to fixed cost coverage given the lower revenues. Pricing pressure remains consistent with past levels, and the mix of products also contributes to the margin volatility. β Steven Litchfield, CFO and Kishore Seendripu, CEO
Q: How do you view the competitive landscape and potential share shifts in the broadband and connectivity markets?
A: While there may be some implicit share shifts due to long-term agreements, we are gaining new design wins in the fiber PON market. The future growth will come from new technologies and market transitions. β Kishore Seendripu, CEO
Q: Can you provide more details on the expected revenue contributions from your optical data center products in 2025?
A: We expect multiple customers to drive revenue in 2025, with our 800 gigabit product being the mainstay. The 1.6 terabit generation investment ensures continuity for future growth. β Kishore Seendripu, CEO and Steven Litchfield, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
