MaxLinear, Inc. (NASDAQ:MXL) Q3 2019 Earnings Conference Call October 24, 2019 4:30 PM ET Company Participants Brian Nugent - IR Kishore Seendripu - CEO Steve Litchfield - CFO and Chief Corporate Strategy Officer Conference Call Participants Alessandra Vecchi - William Blair JiHyung Yoo - Deutsche Bank Quinn Bolton - Needham & Company Gary Mobley - Wells Fargo Securities Bill Peterson - JPMorgan Tore Svanberg - Stifel, Nicolaus & Company Operator Greetings, and welcome to the MaxLinear 2019 Q3 Earnings Call ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From to Commission file number: 001-34666 MaxLinear Inc. (Exact name of Registrant as specified in its charter) Delaware 14-1896129 (State or other jurisdiction of incorp ...

Financial Data and Key Metrics Changes - MaxLinear reported Q2 2019 revenue of $82.5 million, consistent with updated guidance, despite headwinds from Huawei shipment restrictions [11][23] - GAAP gross margins were approximately 53.4%, while non-GAAP gross margins were 63.9%, with non-GAAP gross margin improving by 40 basis points sequentially [25][26] - GAAP operating expenses were approximately $47 million, below guidance, primarily due to lower stock-based bonus accruals [27] Business Line Data and Key Metrics Changes - Infrastructure business revenue increased by 2% sequentially, driven by demand for wireless backhaul RF portfolio [23] - Connected home business decreased by 11%, impacted by softness in cable and satellite markets [24] - Industrial multimarket business grew by 12% sequentially, supported by broad-based demand improvements, particularly in China [24] Market Data and Key Metrics Changes - The connected home market faced challenges due to weak operator spending and technology transitions, leading to a forecasted decline of 5% to 10% sequentially [34] - Industrial multimarket showed resilience with high single-digit revenue growth expected, driven by improved distributor sell-through patterns [35] Company Strategy and Development Direction - The company is focused on expanding its infrastructure initiatives, particularly in 5G wireless and optical data center markets, with expectations of stronger revenue streams in the second half of 2019 [12][40] - MaxLinear aims to maintain strong profitability and cash flow generation while investing in strategic development programs to support long-term growth [41][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in infrastructure revenue growth prospects for 2020, despite current challenges in the connected home market [12][40] - The company is navigating a turbulent environment but remains optimistic about upcoming upgrade cycles in data center and wireless markets [42] Other Important Information - The company made $15 million in debt prepayments during Q2, with total debt prepayments reaching $198 million [29] - A test house shutdown in Indonesia may lead to potential supply constraints for approximately 80 products in Q3 [34][46] Q&A Session Summary Question: Impact of the test house strike on supply constraints - Management indicated that most affected products are from the HPA portfolio, which falls under industrial multimarket and infrastructure categories [45][46] Question: Revenue impact from Huawei restrictions - Management noted that the impact from Huawei is expected to be around $3 million for Q3, with ongoing evaluations for potential legal resumption of shipments [47][32] Question: Components of the connected home business - Management discussed the challenges in the cable and satellite markets, indicating that the connected home business is currently at lower levels than two years ago [49][50] Question: Sustainability of demand in industrial multimarket - Management expressed cautious optimism regarding industrial multimarket revenues, noting that while there are uncertainties, new product launches are expected to drive growth [72][79] Question: CapEx trends - Management indicated that the low CapEx in the current quarter is likely a one-time occurrence, with expectations of around $10 million annually [90] Question: Competitive landscape for massive-MIMO - Management expressed confidence in their product's competitive position, emphasizing unique attributes and integration advantages over competitors [92][94]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Exact name of Registrant as specified in its charter) Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From to Commission file number: 001-34666 MaxLinear Inc. Delaware 14-1896129 (State or other jurisdiction of incorporati ...

MaxLinear Investor Presentation June 2019 Disclaimer 2 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, statements concerning our future financial performance and operating results forecasts as well as trends and growth opportunities in our product markets, our product development ini ...

MaxLinear, Inc. (NASDAQ:MXL) Q1 2019 Earnings Conference Call May 1, 2019 4:30 PM ET Company Participants Brian Nugent - Investor Relations Kishore Seendripu - Chairman, President and Chief Executive Officer Steve Litchfield - Chief Financial Officer and Chief Corporate Strategy Officer Conference Call Participants Quinn Bolton - Needham & Company Christopher Rolland - Susquehanna International Tore Svanberg - Stifel Bill Peterson - JPMorgan Alessandra Vecchi - William Blair Darrell Gustafson - Deutsche Ban ...

[Part I - FINANCIAL INFORMATION](index=3&type=section&id=Part%20I) [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Q1 2019 saw a **net loss of $4.9 million**, reversing **$1.8 million net income** in Q1 2018, driven by a **24% revenue decline** Consolidated Statements of Operations Highlights (Q1 2019 vs Q1 2018) | Metric | Q1 2019 (in thousands) | Q1 2018 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | $84,635 | $110,827 | -23.6% | | Gross Profit | $45,077 | $62,668 | -28.1% | | Income (Loss) from Operations | $(7,830) | $4,430 | -276.7% | | Net Income (Loss) | $(4,851) | $1,847 | -362.6% | | Diluted EPS | $(0.07) | $0.03 | -333.3% | Consolidated Balance Sheets Highlights | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $71,102 | $73,142 | | Total Current Assets | $179,320 | $180,611 | | Goodwill | $238,330 | $238,330 | | Total Assets | $748,882 | $738,831 | | Long-term debt | $241,044 | $255,757 | | Total Liabilities | $340,678 | $338,895 | | Total Stockholders' Equity | $408,204 | $399,936 | - The company adopted the new lease accounting standard ASC 842 on January 1, 2019, recognizing approximately **$24.8 million** of right-of-use assets and a net increase of **$25.1 million** in lease-related liabilities[37](index=37&type=chunk) - Net cash provided by operating activities was **$16.0 million**, while net cash used in financing activities was **$16.8 million**, primarily due to a **$15.0 million** repayment of debt[25](index=25&type=chunk)[170](index=170&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue declined **24%** due to cable market slowdown, gross margin fell to **53%**, and operating expenses decreased due to cost controls [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q1 2019 net revenue fell **24%** to **$84.6 million**, mainly due to a **34% drop** in Connected Home, with gross margin contracting to **53%** Net Revenue by Market (Q1 2019 vs Q1 2018) | Market | Q1 2019 (in thousands) | Q1 2018 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Connected home | $43,432 | $65,658 | (34)% | | Infrastructure | $22,102 | $20,490 | 8% | | Industrial and multi-market | $19,101 | $24,679 | (23)% | | **Total Net Revenue** | **$84,635** | **$110,827** | **(24)%** | - The decrease in Connected Home revenue was driven by a slowdown in the cable market transition from DOCSIS 3.0 to DOCSIS 3.1 and related customer inventory reductions[147](index=147&type=chunk) - Gross margin decreased from **57%** to **53%** year-over-year, attributed to lower revenue and product mix[148](index=148&type=chunk)[149](index=149&type=chunk) - R&D expense decreased by **12%** (**$3.7 million**) due to lower headcount, depreciation, and prototype expenses. SG&A expense decreased by **13%** (**$3.5 million**) primarily from lower intangible asset amortization and payroll expenses[151](index=151&type=chunk)[153](index=153&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company held **$71.1 million** cash, generated **$16.0 million** from operations, and repaid **$15.0 million** debt in Q1 2019 Cash Flow Summary (Three Months Ended March 31) | Cash Flow Activity | 2019 (in thousands) | 2018 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,045 | $11,971 | | Net cash used in investing activities | $(2,155) | $(2,381) | | Net cash used in financing activities | $(16,791) | $(26,411) | - Financing activities in Q1 2019 included a **$15.0 million** repayment of debt and **$4.4 million** for tax withholding on employee stock units, offset by **$2.6 million** in proceeds from stock option exercises[170](index=170&type=chunk) - The company had **$247.0 million** in long-term debt obligations remaining as of March 31, 2019, all due in more than 5 years[178](index=178&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Primary market risks are foreign currency and interest rates, with a swap fixing a portion of the **$247.0 million** variable-rate debt at **4.25%** - The company has limited exposure to foreign currency risk as most international customer and vendor agreements are denominated in U.S. dollars[183](index=183&type=chunk) - To hedge interest rate risk on its term loan, the company entered into a fixed-for-floating interest rate swap, effectively fixing the rate on a substantial portion of its debt at approximately **4.25%**[184](index=184&type=chunk) - The company is still subject to variable interest rates on the portion of its debt principal that exceeds the notional amount of the interest rate swap[184](index=184&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2019, with no material changes to internal controls during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report (March 31, 2019)[187](index=187&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[188](index=188&type=chunk) [Part II - OTHER INFORMATION](index=44&type=section&id=Part%20II) [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company faces ongoing legal proceedings with CrestaTech over patent disputes and Trango Systems regarding fraud and contract claims - In the CrestaTech litigation, the District Court case was dismissed in April 2018, but disputes related to the '585 Patent continue through the inter parties review (IPR) process[191](index=191&type=chunk) - In the Trango Systems, Inc. litigation, the court granted MaxLinear's motion for summary judgment in part on April 5, 2019, dismissing Trango's fraud-based claims. The trial for remaining claims is scheduled for August 9, 2019[192](index=192&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) The company faces intense competition, customer concentration, market/geographic dependence, supply chain, acquisition/debt, and IP litigation risks - **Competition:** The company faces intense competition from large, international semiconductor companies, which could result in price pressure, reduced profitability, and loss of market share[197](index=197&type=chunk)[198](index=198&type=chunk) - **Customer Concentration:** A significant portion of revenue depends on a limited number of customers. In Q1 2019, one customer accounted for **12%** of net revenue, and the top ten accounted for **60%**[201](index=201&type=chunk)[202](index=202&type=chunk) - **Market & Geographic Dependence:** The business is heavily reliant on the connected home market (**51%** of Q1 2019 revenue) and sales to Asia (**85%** of revenue), with China alone accounting for **67%** of revenue, creating vulnerability to market downturns and trade policy changes[207](index=207&type=chunk)[266](index=266&type=chunk)[270](index=270&type=chunk) - **Supply Chain Risk:** The company operates a fabless model, relying on a limited number of third-party foundries located primarily in the Pacific Rim region (China, Taiwan, Singapore), which presents risks of capacity shortages and geopolitical or natural disaster disruptions[239](index=239&type=chunk)[241](index=241&type=chunk) - **Acquisition & Debt Risk:** The company faces risks integrating acquired businesses and managing the **$425.0 million** in debt incurred for the Exar acquisition, which could limit operational flexibility and require significant cash for servicing[295](index=295&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) - **Intellectual Property Risk:** The company is party to ongoing IP litigation (Trango) and faces the risk of future infringement claims, which are costly and time-consuming to defend[220](index=220&type=chunk)[298](index=298&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales or repurchases of equity securities during the quarter - There were no unregistered sales of equity securities during the period[314](index=314&type=chunk) - There were no repurchases of equity securities by the company during the period[315](index=315&type=chunk) [Defaults Upon Senior Securities](index=67&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults on its senior securities during the period - None[316](index=316&type=chunk) [Mine Safety Disclosures](index=67&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[317](index=317&type=chunk) [Other Information](index=67&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - None[318](index=318&type=chunk) [Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including officer certifications and XBRL data - The exhibits include certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[319](index=319&type=chunk)

MaxLinear, Inc. (NASDAQ:MXL) Q4 2018 Earnings Conference Call February 5, 2019 4:30 PM ET Company Participants Brian Nugent - Investor Relations Steve Litchfield - Chief Financial Officer & Chief Corporate Strategy Officer Conference Call Participants Quinn Bolton - Needham & Company Tore Svanberg - Stifel Ross Seymore - Deutsche Bank Bill Peterson - JPMorgan Chase Gary Mobley - The Benchmark Company Suji Desilva - Roth Capital Chris Rolland - Susquehanna Alessandra Vecchi – William Blair Operator Greetings ...

PART I [ITEM 1. BUSINESS](index=4&type=section&id=Item%201.%20Business) MaxLinear designs RF, analog, and mixed-signal systems-on-chip for connected home, infrastructure, and industrial markets - MaxLinear is a **fabless integrated circuit design company** specializing in **RF, high-performance analog, and mixed-signal communications systems-on-chip solutions**[14](index=14&type=chunk)[28](index=28&type=chunk)[413](index=413&type=chunk) - Key target markets include connected home (e.g., cable modems, set-top boxes), wired and wireless infrastructure (e.g., 5G, data centers), and industrial/multi-market applications (e.g., IoT, power management)[14](index=14&type=chunk)[17](index=17&type=chunk)[22](index=22&type=chunk) - The company's core competency lies in designing analog and mixed-signal circuits in standard CMOS processes, enabling **high integration, small die size, and low power consumption**[15](index=15&type=chunk)[16](index=16&type=chunk)[29](index=29&type=chunk) - Sales are made directly and indirectly to OEMs, module makers, and ODMs, with a significant portion (**81% in 2018**) shipped to Asia, though end products are often sold globally[36](index=36&type=chunk)[38](index=38&type=chunk)[238](index=238&type=chunk) Net Revenue by Key Customer (2016-2018) | Customer | 2018 (% of Net Revenue) | 2017 (% of Net Revenue) | 2016 (% of Net Revenue) | | :--------- | :---------------------- | :---------------------- | :---------------------- | | Arris Group, Inc. | 18% | 25% | 27% | | Technicolor | <10% | <10% | 10% | - The company holds **1050 issued patents** and **285 pending patent applications** in the United States, along with **59 issued foreign patents** and **17 pending foreign applications**[52](index=52&type=chunk) Research and Development Expense (2016-2018) | Year | R&D Expense (Millions USD) | | :--- | :------------------------- | | 2018 | $120.0 | | 2017 | $112.3 | | 2016 | $97.7 | [ITEM 1A. RISK FACTORS](index=16&type=section&id=Item%201A.%20Risk%20Factors) MaxLinear faces risks from competition, customer concentration, product declines, R&D, IP, and global operations - The semiconductor market is highly competitive, with risks of **price pressure, reduced profitability, and loss of market share** due to industry consolidation and larger competitors[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - Dependence on a limited number of customers (top 10 accounted for **61% of net revenue in 2018**) and their consolidation trends pose a significant risk to revenue and operating results[68](index=68&type=chunk)[69](index=69&type=chunk) Revenue Attributable to Connected Home Applications (2016-2018) | Year | % of Net Revenue | | :--- | :--------------- | | 2018 | 54% | | 2017 | 69% | | 2016 | 89% | - The company experienced a decline in net revenues in 2018 (**$385.0 million**) from 2017 (**$420.3 million**), primarily due to anticipated declines in legacy video SoC applications and a slowdown in the cable market (DOCSIS 3.0 to 3.1 transition)[81](index=81&type=chunk)[293](index=293&type=chunk) - The complexity of products may lead to undetected defects or bugs, potentially damaging reputation, reducing market acceptance, and incurring significant costs for recalls or warranty claims[83](index=83&type=chunk)[85](index=85&type=chunk) - The company relies on third-party foundries and assembly/test contractors, primarily located in the Pacific Rim (China, Taiwan, Singapore), exposing it to risks of capacity shortages, quality control issues, and disruptions from natural disasters or political unrest[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - Intellectual property litigation is a recurring risk in the semiconductor industry, with past and ongoing cases (e.g., CrestaTech, Trango Systems) potentially leading to substantial costs, diversion of management attention, and loss of significant rights[89](index=89&type=chunk)[90](index=90&type=chunk)[104](index=104&type=chunk) - Changes in trade policies, such as tariffs, could adversely affect gross profit margins and make products less competitive, particularly given the substantial business conducted in Asia, especially China (**63% of 2018 revenues shipped to China**)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - The company incurred **$425.0 million** in secured term loan indebtedness for the Exar acquisition, with **$262.0 million** outstanding as of December 31, 2018, introducing interest rate risk and operational covenants[187](index=187&type=chunk)[188](index=188&type=chunk)[523](index=523&type=chunk) [Risks Related to Our Business](index=16&type=section&id=Risks%20Related%20to%20Our%20Business) [Risks Relating to Our Common Stock](index=34&type=section&id=Risks%20Relating%20to%20Our%20Common%20Stock) [Risks Relating to Our Acquisitions](index=36&type=section&id=Risks%20Relating%20to%20Our%20Acquisitions) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=41&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved staff comments from the SEC were reported - No unresolved staff comments were reported[200](index=200&type=chunk) [ITEM 2. PROPERTIES](index=41&type=section&id=Item%202.%20Properties) MaxLinear's headquarters is in Carlsbad, California, with leased facilities globally for business and engineering - Corporate headquarters: Carlsbad, California (**68,000 sq ft**, lease expires June 2022)[201](index=201&type=chunk) - Global presence: Leased facilities in Irvine, San Jose (California), Burnaby (Canada), Bangalore (India), Singapore, Taipei, Hsinchu (Taiwan), Shenzhen, Shanghai (China), Seoul (South Korea), Tokyo (Japan), and Paterna (Spain)[201](index=201&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=41&type=section&id=Item%203.%20Legal%20Proceedings) Ongoing legal proceedings include patent infringement lawsuits (CrestaTech) and contract disputes (Trango Systems) - CrestaTech Litigation: All 13 asserted patent claims (U.S. Patent Nos. 7,075,585 and 7,265,792) were found unpatentable by the PTAB and Federal Circuit, and the District Court Litigation was dismissed in April 2018[101](index=101&type=chunk)[103](index=103&type=chunk)[211](index=211&type=chunk)[213](index=213&type=chunk) - Trango Systems, Inc. Litigation: Trango alleges fraud, breach of contract, and interference with economic relations concerning a chip line acquired from Broadcom in 2016; MaxLinear filed a motion for summary judgment in December 2018, with a trial date set for May 3, 2019[180](index=180&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) - The company believes no other pending litigation would have a material effect on its business or would not be covered by existing liability insurance[217](index=217&type=chunk)[602](index=602&type=chunk) [CrestaTech Litigation](index=41&type=section&id=CrestaTech%20Litigation) [Trango Systems, Inc. Litigation](index=42&type=section&id=Trango%20Systems%2C%20Inc.%20Litigation) [Other Matters](index=43&type=section&id=Other%20Matters) [ITEM 4. MINE SAFETY DISCLOSURES](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to MaxLinear, Inc - Not applicable[218](index=218&type=chunk) PART II [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=44&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) MaxLinear's common stock trades on NYSE (MXL); no dividends paid, earnings retained for business development - Common stock is traded on the NYSE under the symbol **MXL**[221](index=221&type=chunk) - As of January 29, 2019, there were **60 record holders** and approximately **22,000 beneficial holders** of common stock[6](index=6&type=chunk)[221](index=221&type=chunk) - The company has never paid cash dividends and plans to retain all future earnings for business development[175](index=175&type=chunk)[222](index=222&type=chunk) - No recent sales of unregistered securities or repurchases of equity securities were reported[227](index=227&type=chunk)[228](index=228&type=chunk) [ITEM 6. SELECTED FINANCIAL DATA](index=46&type=section&id=Item%206.%20Selected%20Financial%20Data) Presents five-year selected financial data (2014-2018), noting ASC 606 adoption's impact on 2018 revenue recognition - The company adopted ASC 606 on January 1, 2018, using the modified retrospective method, which changed revenue recognition for certain distributor sales from sell-through to sell-in; prior periods were not adjusted[230](index=230&type=chunk)[244](index=244&type=chunk) Selected Consolidated Statement of Operations Data (2014-2018, in thousands) | Years Ended December 31, | 2018 | 2017 | 2016 | 2015 | 2014 | | :----------------------- | :----- | :----- | :----- | :----- | :----- | | Net revenue | $384,997 | $420,318 | $387,832 | $300,360 | $133,112 | | Gross profit | $208,774 | $207,963 | $229,990 | $155,423 | $81,958 | | Research and development | $120,046 | $112,279 | $97,745 | $85,405 | $56,625 | | Selling, general and administrative | $101,789 | $105,831 | $64,454 | $77,981 | $34,191 | | Income (loss) from operations | $(19,097) | $(21,671) | $63,059 | $(43,649) | $(8,858) | | Net income (loss) | $(26,199) | $(9,187) | $61,292 | $(42,331) | $(7,041) | | Basic EPS | $(0.38) | $(0.14) | $0.96 | $(0.79) | $(0.19) | | Diluted EPS | $(0.38) | $(0.14) | $0.91 | $(0.79) | $(0.19) | Selected Consolidated Balance Sheet Data (2014-2018, in thousands) | As of December 31, | 2018 | 2017 | 2016 | 2015 | 2014 | | :----------------- | :----- | :----- | :----- | :----- | :----- | | Cash, cash equivalents, restricted cash, and short- and long-term investments, available-for-sale | $74,191 | $74,412 | $136,805 | $130,498 | $79,351 | | Working capital | $110,044 | $124,918 | $158,304 | $134,170 | $67,668 | | Total assets | $738,831 | $824,862 | $422,652 | $334,505 | $135,711 | | Total stockholders' equity | $399,936 | $387,424 | $352,424 | $262,924 | $99,102 | [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses financial condition and operations, noting 2018 revenue decrease, significant expenses, and acquisition-related debt - Net revenue decreased by **$35.3 million (8%)** to **$385.0 million** in 2018, from **$420.3 million** in 2017[293](index=293&type=chunk) Net Revenue by Market Segment (2016-2018, in thousands) | Market Segment | 2018 Net Revenue | % Change YoY (2018) | 2017 Net Revenue | % Change YoY (2017) | 2016 Net Revenue | | :--------------- | :--------------- | :------------------ | :--------------- | :------------------ | :--------------- | | Connected home | $207,336 | (28)% | $288,610 | (17)% | $346,990 | | Infrastructure | $82,388 | 15% | $71,779 | 92% | $37,411 | | Industrial and multi-market | $95,273 | 59% | $59,929 | 1,647% | $3,431 | | **Total Net Revenue** | **$384,997** | **(8)%** | **$420,318** | **8%** | **$387,832** | - Gross profit percentage increased to **54%** in 2018 from **49%** in 2017, primarily due to a decrease in acquired inventory step-up amortization[297](index=297&type=chunk) Operating Expenses (2016-2018, in thousands) | Expense Category | 2018 | 2017 | 2016 | | :----------------- | :----- | :----- | :----- | | Research and development | $120,046 | $112,279 | $97,745 | | Selling, general and administrative | $101,789 | $105,831 | $64,454 | | Impairment losses | $2,198 | $2,000 | $1,300 | | Restructuring charges | $3,838 | $9,524 | $3,432 | - Net cash provided by operating activities was **$102.7 million** in 2018, up from **$75.1 million** in 2017[324](index=324&type=chunk) - Net cash used in investing activities was **$7.8 million** in 2018, significantly lower than **$432.2 million** in 2017, which included the Exar acquisition[327](index=327&type=chunk)[328](index=328&type=chunk) - Net cash used in financing activities was **$93.8 million** in 2018, primarily due to **$93.0 million** in debt prepayments[330](index=330&type=chunk) - The company's cash and cash equivalents were **$73.1 million** as of December 31, 2018, deemed sufficient for projected operating requirements for at least the next twelve months[319](index=319&type=chunk)[333](index=333&type=chunk) [Overview](index=47&type=section&id=Overview) [Critical Accounting Policies and Estimates](index=49&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) [Recently Adopted Accounting Pronouncements](index=53&type=section&id=Recently%20Adopted%20Accounting%20Pronouncements) [Recently Issued Accounting Pronouncements](index=55&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) [Results of Operations](index=57&type=section&id=Results%20of%20Operations) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) [Warranties and Indemnifications](index=65&type=section&id=Warranties%20and%20Indemnifications) [Off-Balance Sheet Arrangements](index=65&type=section&id=Off-Balance%20Sheet%20Arrangements) [Contractual Obligations](index=65&type=section&id=Contractual%20Obligations) [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) MaxLinear manages foreign currency and interest rate risks, hedging variable-rate debt with a fixed-for-floating swap - Primary market risks are foreign currency exchange rates and interest rates[340](index=340&type=chunk) - Limited foreign currency exposure as international agreements are mostly USD-denominated; a hypothetical **100 basis point change** in foreign currency exchange rates would result in a **$0.3 million** change to translation gain/loss[341](index=341&type=chunk) - To hedge interest rate risk on its **$262.0 million** variable-rate term loan, the company entered a fixed-for-floating interest rate swap in November 2017, effectively fixing a substantial portion of the interest rate at approximately **4.25%** (**1.74685% swap rate + 2.5% fixed margin**)[342](index=342&type=chunk)[343](index=343&type=chunk) - A hypothetical **10% (1000 basis points)** increase in LIBOR interest rates would have increased interest expense by approximately **$1.8 million** during the periods presented[343](index=343&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=66&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Financial statements and supplementary data are cross-referenced to Part IV, Item 15 - Financial statements and supplementary data are located in Part IV, Item 15[344](index=344&type=chunk) [ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=66&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes or disagreements with accountants on accounting and financial disclosure were reported - No changes in or disagreements with accountants on accounting and financial disclosure were reported[345](index=345&type=chunk) [ITEM 9A. Controls and Procedures](index=66&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management affirmed effective disclosure controls and internal control over financial reporting as of December 31, 2018 - Disclosure controls and procedures were evaluated and deemed effective as of December 31, 2018[347](index=347&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2018, based on COSO (2013) framework[348](index=348&type=chunk)[349](index=349&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended December 31, 2018[350](index=350&type=chunk) [ITEM 9B. Other Information](index=67&type=section&id=Item%209B.%20Other%20Information) No other information was reported under this item - No other information was reported[359](index=359&type=chunk) PART III [ITEM 10. Directors, Executive Officers and Corporate Governance](index=69&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Director, executive, and governance information is incorporated by reference from the 2019 Proxy Statement - Information on directors, executive officers, and corporate governance will be incorporated by reference from the 2019 Proxy Statement[361](index=361&type=chunk)[365](index=365&type=chunk) - The company has a Code of Conduct for its board and employees, accessible on its website[363](index=363&type=chunk)[364](index=364&type=chunk) [ITEM 11. Executive Compensation](index=69&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the 2019 Proxy Statement - Information on executive compensation will be incorporated by reference from the 2019 Proxy Statement[366](index=366&type=chunk) [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=69&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership and equity compensation plan data are incorporated by reference from the 2019 Proxy Statement - Information on security ownership and equity compensation plans will be incorporated by reference from the 2019 Proxy Statement[367](index=367&type=chunk) [ITEM 13. Certain Relationships and Related Transactions, and Director Independence](index=69&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Related party transactions and director independence information are incorporated by reference from the 2019 Proxy Statement - Information on related person transactions and director independence will be incorporated by reference from the 2019 Proxy Statement[368](index=368&type=chunk) [ITEM 14. Principal Accounting Fees and Services](index=69&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Principal accounting fees and services information is incorporated by reference from the 2019 Proxy Statement - Information on principal accounting fees and services will be incorporated by reference from the 2019 Proxy Statement[369](index=369&type=chunk) PART IV [ITEM 15. Exhibits, Financial Statement Schedules](index=70&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) Lists financial statements, schedules, and exhibits, including consolidated financials, valuation accounts, and key agreements - Includes consolidated financial statements and Schedule II – Valuation and Qualifying Accounts for 2016-2018[371](index=371&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk) - A detailed list of exhibits is provided, covering merger agreements (e.g., Exar acquisition), corporate governance documents (e.g., Certificate of Incorporation, Bylaws), equity incentive plans, employment offer letters, and various other agreements[374](index=374&type=chunk)[375](index=375&type=chunk)[376](index=376&type=chunk) [Report of Independent Registered Public Accounting Firm](index=78&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Grant Thornton LLP issued unqualified opinions on 2018 financials and internal controls, noting ASC 606 adoption - Grant Thornton LLP issued an unqualified opinion on the consolidated financial statements for the period ended December 31, 2018[391](index=391&type=chunk) - An unqualified opinion was also issued on the effectiveness of internal control over financial reporting as of December 31, 2018[392](index=392&type=chunk) - The report highlights the change in accounting principle for revenue recognition in 2018 due to the adoption of ASC 606[393](index=393&type=chunk) [Consolidated Balance Sheets](index=79&type=section&id=Consolidated%20Balance%20Sheets) Presents MaxLinear's financial position as of December 31, 2018 and 2017, detailing assets and equity Consolidated Balance Sheet Highlights (in thousands) | Item | December 31, 2018 | December 31, 2017 | | :------------------------------------------------ | :------------------ | :------------------ | | Cash and cash equivalents | $73,142 | $71,872 | | Accounts receivable, net | $59,491 | $66,099 | | Inventory | $41,738 | $53,434 | | Total current assets | $180,611 | $201,304 | | Intangible assets, net | $244,900 | $315,045 | | Goodwill | $238,330 | $237,992 | | Total assets | $738,831 | $824,862 | | Total current liabilities | $70,567 | $76,386 | | Long-term debt | $255,757 | $347,609 | | Total liabilities | $338,895 | $437,438 | | Total stockholders' equity | $399,936 | $387,424 | [Consolidated Statements of Operations](index=80&type=section&id=Consolidated%20Statements%20of%20Operations) Details financial performance for 2016-2018, showing net losses in 2018 and 2017, and net income in 2016 Consolidated Statements of Operations Highlights (in thousands, except per share data) | Item | 2018 | 2017 | 2016 | | :-------------------------------- | :------- | :------- | :------- | | Net revenue | $384,997 | $420,318 | $387,832 | | Gross profit | $208,774 | $207,963 | $229,990 | | Total operating expenses | $227,871 | $229,634 | $166,931 | | Income (loss) from operations | $(19,097) | $(21,671) | $63,059 | | Net income (loss) | $(26,199) | $(9,187) | $61,292 | | Basic net income (loss) per share | $(0.38) | $(0.14) | $0.96 | | Diluted net income (loss) per share | $(0.38) | $(0.14) | $0.91 | [Consolidated Statements of Comprehensive Income (Loss)](index=81&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Presents net income/loss and other comprehensive income/loss components for 2016-2018 Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Item | 2018 | 2017 | 2016 | | :------------------------------------------ | :-------- | :-------- | :-------- | | Net income (loss) | $(26,199) | $(9,187) | $61,292 | | Foreign currency translation adjustments, net of tax | $(1,572) | $2,122 | $(749) | | Unrealized gain on interest rate swap, net of tax | $702 | $477 | — | | Other comprehensive income (loss) | $(870) | $2,599 | $(738) | | Total comprehensive income (loss) | $(27,069) | $(6,588) | $60,554 | [Consolidated Statements of Stockholders' Equity](index=82&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Details changes in stockholders' equity for 2016-2018, reflecting capital, net income/loss, and comprehensive income Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Item | December 31, 2018 | December 31, 2017 | December 31, 2016 | | :-------------------------- | :------------------ | :------------------ | :------------------ | | Total Stockholders' Equity | $399,936 | $387,424 | $352,424 | | Additional Paid-In Capital | $493,287 | $455,497 | $413,909 | | Accumulated Deficit | $(93,630) | $(69,119) | $(59,932) | | Stock-based compensation | $31,734 (2018) | $32,603 (2017) | $21,975 (2016) | - In March 2017, Class A and Class B common stock automatically converted into a single class of common stock, with no impact on the total number of shares outstanding[535](index=535&type=chunk)[536](index=536&type=chunk) [Consolidated Statements of Cash Flows](index=83&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Provides cash flow breakdown for 2016-2018, highlighting operating cash, acquisition investing, and debt financing Consolidated Statements of Cash Flows Highlights (in thousands) | Item | 2018 | 2017 | 2016 | | :------------------------------------------ | :-------- | :-------- | :-------- | | Net cash provided by operating activities | $102,689 | $75,064 | $117,317 | | Net cash used in investing activities | $(7,825) | $(432,151) | $(101,313) | | Net cash provided by (used in) financing activities | $(93,784) | $347,021 | $(670) | | Increase (decrease) in cash, cash equivalents and restricted cash | $(221) | $(8,484) | $14,940 | - Cash used in acquisitions, net of cash acquired, was **$473.3 million** in 2017 (primarily Exar) and **$101.0 million** in 2016 (wireless infrastructure businesses)[328](index=328&type=chunk)[329](index=329&type=chunk) - Net proceeds from debt issuance were **$416.8 million** in 2017, with debt repayments of **$93.0 million** in 2018 and **$70.0 million** in 2017[330](index=330&type=chunk)[331](index=331&type=chunk) [Notes to Consolidated Financial Statements](index=85&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [1. Organization and Summary of Significant Accounting Policies](index=85&type=section&id=1.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) Describes MaxLinear's business and significant accounting policies, including ASC 606 revenue recognition and impairment - MaxLinear is a fabless integrated circuit design company providing RF, analog, and mixed-signal communications system-on-chip solutions for connected home, wired/wireless infrastructure, and industrial/multi-market applications[413](index=413&type=chunk) - Adopted ASC 606 on January 1, 2018, accelerating revenue recognition for certain distributor sales from sell-through to sell-in, and requiring estimation of pricing credits and stock rotation rights[431](index=431&type=chunk)[432](index=432&type=chunk)[434](index=434&type=chunk) Impact of ASC 606 Adoption on 2018 Financials (in thousands) | Item | Amounts under Legacy GAAP | Impact of Adoption | As reported | | :-------------------------------- | :------------------------ | :----------------- | :---------- | | Net revenue | $370,033 | $14,964 | $384,997 | | Gross profit | $199,314 | $9,460 | $208,774 | | Net loss | $(33,672) | $7,473 | $(26,199) | | Total assets | $738,563 | $268 | $738,831 | | Deferred revenue and deferred profit | $19,499 | $(19,499) | $0 | | Total liabilities | $347,734 | $(8,839) | $338,895 | | Accumulated deficit | $(102,737) | $9,107 | $(93,630) | - Goodwill and indefinite-lived intangible assets (IPR&D) are tested for impairment annually on October 31 or more frequently if indicators exist[425](index=425&type=chunk)[426](index=426&type=chunk) - The Tax Cuts and Jobs Act (2017) significantly impacted income taxes, including a reduction in the U.S. federal corporate tax rate to **21%**; the company completed its accounting for the Tax Act in 2018[453](index=453&type=chunk)[455](index=455&type=chunk) [2. Net Income (Loss) Per Share](index=94&type=section&id=2.%20Net%20Income%20(Loss)%20Per%20Share) Details basic and diluted net income (loss) per share computation, excluding anti-dilutive equivalents during losses Net Income (Loss) Per Share Computation (in thousands, except per share amounts) | Item | 2018 | 2017 | 2016 | | :-------------------------------------- | :------- | :------- | :------- | | Net income (loss) | $(26,199) | $(9,187) | $61,292 | | Weighted average common shares outstanding—basic | 68,490 | 66,252 | 63,781 | | Dilutive common stock equivalents | — | — | 3,872 | | Weighted average common shares outstanding—diluted | 68,490 | 66,252 | 67,653 | | Basic net income (loss) per share | $(0.38) | $(0.14) | $0.96 | | Diluted net income (loss) per share | $(0.38) | $(0.14) | $0.91 | - For 2018 and 2017, **3.7 million** and **4.5 million** common stock equivalents, respectively, were excluded from diluted EPS calculations due to net losses[482](index=482&type=chunk) [3. Business Combinations](index=95&type=section&id=3.%20Business%20Combinations) Outlines recent business acquisitions, including Exar, Marvell G.hn, Broadcom, and Microsemi wireless businesses - Acquired Exar Corporation on May 12, 2017, for **$688.1 million** in cash, funded by cash on hand and **$416.8 million** in net proceeds from new transaction debt[483](index=483&type=chunk) - Acquired certain assets and liabilities of Marvell Semiconductor's G.hn business on April 4, 2017, for **$21.0 million** in cash[485](index=485&type=chunk) - Acquired Broadcom's wireless infrastructure backhaul business on July 1, 2016, for **$80.0 million** in cash[488](index=488&type=chunk) - Acquired Microsemi's wireless infrastructure access business on April 28, 2016, for **$21.0 million** in cash[489](index=489&type=chunk) [4. Restructuring Activity](index=97&type=section&id=4.%20Restructuring%20Activity) Details restructuring charges for 2016-2018, primarily for employee separation and lease-related expenses Restructuring Charges (in thousands) | Item | 2018 | 2017 | 2016 | | :------------------------ | :----- | :----- | :----- | | Employee separation expenses | $2,094 | $8,353 | $1,038 | | Lease related expenses | $1,608 | $1,025 | $2,264 | | Other | $136 | $146 | $130 | | **Total Restructuring Charges** | **$3,838** | **$9,524** | **$3,432** | - 2017 restructuring charges included **$5.1 million** in stock-based compensation from accelerated Exar awards due to change in control provisions[490](index=490&type=chunk)[308](index=308&type=chunk) - Total sublease income from vacated facilities was **$2.4 million** in 2018, **$2.1 million** in 2017, and **$1.3 million** in 2016[491](index=491&type=chunk)[583](index=583&type=chunk) [5. Goodwill and Intangible Assets](index=98&type=section&id=5.%20Goodwill%20and%20Intangible%20Assets) Details goodwill and intangible assets, including finite-lived assets, amortization, and impairment losses Goodwill Carrying Amount (in thousands) | Item | 2018 | 2017 | | :---------------- | :----- | :----- | | Beginning balance | $237,992 | $76,015 | | Acquisitions | — | $162,318 | | Adjustments | $338 | $(341) | | **Ending balance** | **$238,330** | **$237,992** | - No goodwill impairment was recognized as of October 31, 2018[497](index=497&type=chunk) Finite-Lived Intangible Assets, Net (in thousands) | Asset Category | Weighted Average Useful Life (Years) | December 31, 2018 Net Carrying Amount | December 31, 2017 Net Carrying Amount | | :------------------- | :--------------------------------- | :------------------------------------ | :------------------------------------ | | Licensed technology | 3.7 | $940 | $1,495 | | Developed technology | 6.9 | $164,331 | $202,309 | | Trademarks and trade names | 6.1 | $9,548 | $11,808 | | Customer relationships | 4.6 | $65,453 | $94,439 | | Non-compete covenants | 3.0 | $228 | $594 | | **Total** | **6.1** | **$240,500** | **$310,645** | Amortization Expense of Finite-Lived Intangible Assets (in thousands) | Item | 2018 | 2017 | 2016 | | :-------------------------------- | :----- | :----- | :----- | | Cost of net revenue | $35,821 | $25,316 | $8,512 | | Research and development | $150 | $551 | $619 | | Selling, general and administrative | $31,976 | $28,827 | $6,953 | | **Total** | **$67,947** | **$54,694** | **$16,084** | - Impairment losses of **$2.2 million** were recognized on acquired developed technology in 2018; no impairment losses on finite-lived intangible assets in 2017 and 2016[503](index=503&type=chunk) - Indefinite-lived IPR&D assets were **$4.4 million** at December 31, 2018 and 2017; impairment losses of **$2.0 million** were recognized in 2017 and **$1.3 million** in 2016 related to abandoned IPR&D projects[505](index=505&type=chunk) [6. Financial Instruments](index=101&type=section&id=6.%20Financial%20Instruments) Details financial instruments, primarily an interest rate swap measured at fair value as a cash flow hedge Fair Value of Financial Instruments (in thousands) | Item | December 31, 2018 | December 31, 2017 | | :---------------- | :------------------ | :------------------ | | Interest rate swap | $1,623 | $734 | - The interest rate swap is classified within **Level 2** of the fair value hierarchy, valued using market observable inputs[510](index=510&type=chunk) - The fair value of the interest rate swap asset increased by **$0.9 million** in 2018 and **$0.7 million** in 2017, recognized in other comprehensive income[511](index=511&type=chunk) [7. Balance Sheet Details](index=103&type=section&id=7.%20Balance%20Sheet%20Details) Provides detailed breakdowns of balance sheet accounts, including cash, inventory, property, and various liabilities Cash, Cash Equivalents, and Restricted Cash (in thousands) | Item | December 31, 2018 | December 31, 2017 | | :-------------------------------------- | :------------------ | :------------------ | | Cash and cash equivalents | $73,142 | $71,872 | | Short-term restricted cash | $645 | $1,476 | | Long-term restricted cash | $404 | $1,064 | | **Total** | **$74,191** | **$74,412** | Inventory Composition (in thousands) | Item | December 31, 2018 | December 31, 2017 | | :-------------- | :------------------ | :------------------ | | Work-in-process | $17,618 | $21,823 | | Finished goods | $24,120 | $31,611 | | **Total** | **$41,738** | **$53,434** | Property and Equipment, Net (in thousands) | Item | December 31, 2018 | December 31, 2017 | | :-------------------------- | :------------------ | :------------------ | | Gross Property and Equipment | $72,191 | $66,711 | | Less accumulated depreciation and amortization | $(53,787) | $(44,053) | | **Net Property and Equipment** | **$18,404** | **$22,658** | Accrued Price Protection Liability (in thousands) | Item | 2018 | 2017 | | :-------------------------- | :----- | :----- | | Beginning balance | $21,571 | $15,176 | | Charged as a reduction of revenue | $34,288 | $46,520 | | Reversal of unclaimed rebates | $(2,413) | $(101) | | Payments | $(36,992) | $(40,024) | | **Ending balance** | **$16,454** | **$21,571** | [8. Debt and Interest Rate Swap](index=105&type=section&id=8.%20Debt%20and%20Interest%20Rate%20Swap) Details long-term debt, primarily a secured term loan for the Exar acquisition, and an interest rate swap hedge Long-Term Debt Carrying Amount (in thousands) | Item | December 31, 2018 | December 31, 2017 | | :-------------------------------- | :------------------ | :------------------ | | Principal | $262,000 | $355,000 | | Less: Unamortized debt discount | $(1,630) | $(1,930) | | Less: Unamortized debt issuance costs | $(4,613) | $(5,461) | | **Net carrying amount of long-term debt** | **$255,757** | **$347,609** | - The Initial Term Loan facility was **$425.0 million**, with **$262.0 million** outstanding as of December 31, 2018; it matures on May 12, 2024[523](index=523&type=chunk)[524](index=524&type=chunk)[533](index=533&type=chunk) - The loan bears interest at an Adjusted LIBOR or Adjusted Base Rate plus an applicable margin (**2.50% for LIBOR, 1.50% for base rate**); the weighted average effective interest rate was approximately **4.6%** in 2018 and **4.1%** in 2017[524](index=524&type=chunk)[529](index=529&type=chunk) - A fixed-for-floating interest rate swap was entered in November 2017, effectively fixing the interest rate on a substantial portion of long-term debt at approximately **4.25%**; the swap expires in October 2020[534](index=534&type=chunk) [9. Stock-Based Compensation and Employee Benefit Plans](index=106&type=section&id=9.%20Stock-Based%20Compensation%20and%20Employee%20Benefit%20Plans) Details stock-based compensation and employee benefit plans, including equity incentive plans and expense - In March 2017, Class A and Class B common stock converted to a single class of common stock, with identical voting rights[535](index=535&type=chunk)[536](index=536&type=chunk) - The 2010 Equity Incentive Plan was amended in December 2018 to include a clawback policy for executive officers' incentive compensation in case of financial restatements due to fraud or intentional misconduct[541](index=541&type=chunk) Stock-Based Compensation Expense by Department (in thousands) | Department | 2018 | 2017 | 2016 | | :-------------------------------- | :----- | :----- | :----- | | Cost of net revenue | $489 | $332 | $210 | | Research and development | $17,953 | $16,190 | $14,403 | | Selling, general and administrative | $13,279 | $11,016 | $7,152 | | Restructuring expense | — | $5,130 | — | | **Total** | **$31,721** | **$32,668** | **$21,765** | - Total unrecognized compensation cost for unvested restricted stock units was **$53.4 million** as of December 31, 2018, with a weighted average vesting period of **2.62 years**[547](index=547&type=chunk) Restricted Stock Unit and Award Activity (in thousands) | Item | Number of Shares | Weighted-Average Grant-Date Fair Value per Share | | :-------------------------- | :--------------- | :--------------------------------------------- | | Outstanding at Dec 31, 2017 | 3,183 | $20.13 | | Granted | 2,460 | $19.40 | | Vested | (1,736) | $18.64 | | Canceled | (644) | $20.90 | | **Outstanding at Dec 31, 2018** | **3,263** | **$20.23** | Stock Option Activity (in thousands) | Item | Number of Options | Weighted-Average Exercise Price | | :-------------------------------- | :---------------- | :------------------------------ | | Outstanding at Dec 31, 2017 | 3,069 | $8.95 | | Granted | 335 | $18.40 | | Exercised | (636) | $7.04 | | Canceled | (109) | $16.82 | | **Outstanding at Dec 31, 2018** | **2,659** | **$10.27** | [10. Income Taxes](index=110&type=section&id=10.%20Income%20Taxes) Details income tax provision/benefit, deferred tax assets/liabilities, and the impact of the Tax Cuts and Jobs Act Income (Loss) Before Income Taxes by Component (in thousands) | Component | 2018 | 2017 | 2016 | | :---------- | :------- | :------- | :------- | | Domestic | $16,405 | $42,580 | $75,778 | | Foreign | $(49,257) | $(76,578) | $(12,088) | | **Total** | **$(32,852)** | **$(33,998)** | **$63,690** | Income Tax Provision (Benefit) (in thousands) | Item | 2018 | 2017 | 2016 | | :-------------------------- | :-------- | :-------- | :-------- | | Current | $4,969 | $15,280 | $2,297 | | Deferred | $(11,622) | $(40,091) | $101 | | **Total** | **$(6,653)** | **$(24,811)** | **$2,398** | - The 2018 income tax benefit was primarily due to a partial release of the valuation allowance (**$11.3 million**) resulting from the Tax Act, and the mix of pre-tax income among jurisdictions[568](index=568&type=chunk)[571](index=571&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk) Net Deferred Tax Assets (in thousands) | Item | December 31, 2018 | December 31, 2017 | | :-------------------------- | :------------------ | :------------------ | | Deferred tax assets (gross) | $152,938 | $162,632 | | Less valuation allowance | $(79,196) | $(84,560) | | Deferred tax liabilities | $(22,224) | $(38,194) | | **Net deferred tax assets** | **$51,518** | **$39,878** | - As of December 31, 2018, the company had federal, state, and foreign net operating loss carryforwards of **$261.4 million**, **$95.5 million**, and **$13.6 million**, respectively[564](index=564&type=chunk) - Unrecognized tax benefits totaled **$61.5 million** at December 31, 2018[572](index=572&type=chunk) [11. Employee Retirement Plan](index=114&type=section&id=11.%20Employee%20Retirement%20Plan) MaxLinear offers a 401(k) defined contribution plan but has not made company contributions - The company has a 401(k) defined contribution retirement plan for eligible employees[579](index=579&type=chunk) - MaxLinear is not required to contribute and has not contributed to the 401(k) Plan for the periods presented[579](index=579&type=chunk) [12. Commitments and Contingencies](index=114&type=section&id=12.%20Commitments%20and%20Contingencies) Details contractual obligations and legal proceedings, including debt, leases, and ongoing litigation Contractual Obligations as of December 31, 2018 (in thousands) | Item | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :-------------------------- | :------ | :--------------- | :-------- | :-------- | :---------------- | | Long-term debt obligations | $262,000 | — | — | — | $262,000 | | Operating lease obligations | $33,943 | $9,365 | $18,862 | $5,716 | — | | Inventory purchase obligations | $65,661 | $65,661 | — | — | — | | Other obligations | $14,375 | $8,386 | $5,117 | $872 | — | | **Total** | **$375,979** | **$83,412** | **$23,979** | **$6,588** | **$262,000** | - Exar's iML divestiture indemnification obligations range from **$13.6 million** (general) to **$34.0 million** (IP) and up to **$136.0 million** (fundamental representations); the company believes it does not have a material indemnification obligation as of December 31, 2018[584](index=584&type=chunk) - CrestaTech Litigation: All 13 asserted patent claims were found unpatentable, and the District Court Litigation was dismissed in April 2018; the company cannot predict if the litigation will be reinstated[595](index=595&type=chunk)[597](index=597&type=chunk)[599](index=599&type=chunk) - Trango Systems, Inc. Litigation: Ongoing lawsuit alleging fraud and breach of contract related to an acquired chip line; MaxLinear filed a motion for summary judgment in December 2018, with a trial set for May 3, 2019[600](index=600&type=chunk)[601](index=601&type=chunk) [13. Concentration of Credit Risk, Significant Customers and Geographic Information](index=117&type=section&id=13.%20Concentration%20of%20Credit%20Risk%2C%20Significant%20Customers%20and%20Geographic%20Information) Highlights credit risk, significant customer concentration, and geographic revenue distribution, particularly in Asia Significant Customers (% of Net Revenues) | Customer | 2018 | 2017 | 2016 | | :--------- | :--- | :--- | :--- | | Customer A | 18% | 25% | 27% | | Customer B | * | * | 10% | Geographic Net Revenues (Ship-to Location, in thousands) | Region | 2018 Amount | % of total net revenue | 2017 Amount | % of total net revenue | 2016 Amount | % of total net revenue | | :------------ | :------------ | :--------------------- | :------------ | :--------------------- | :------------ | :--------------------- | | Asia | $312,877 | 81% | $372,103 | 89% | $360,325 | 93% | | United States | $18,060 | 5% | $10,829 | 2% | $9,181 | 2% | | Rest of world | $54,060 | 14% | $37,386 | 9% | $18,326 | 5% | | **Total** | **$384,997** | **100%** | **$420,318** | **100%** | **$387,832** | **100%** | - China accounted for **63%** of total net revenue in 2018, **71%** in 2017, and **78%** in 2016[613](index=613&type=chunk) Long-Lived Assets by Geographic Area (in thousands) | Region | December 31, 2018 Amount | % of total | December 31, 2017 Amount | % of total | | :------------ | :----------------------- | :--------- | :----------------------- | :--------- | | United States | $426,321 | 85% | $481,638 | 84% | | Singapore | $71,945 | 14% | $92,414 | 16% | | Rest of world | $3,368 | 1% | $1,643 | <1% | | **Total** | **$501,634** | **100%** | **$575,695** | **100%** | [14. Revenue from Contracts with Customers](index=120&type=section&id=14.%20Revenue%20from%20Contracts%20with%20Customers) Disaggregates net revenues by market segment and details contract liabilities, reflecting ASC 606 adoption Net Revenues by Market (in thousands) | Market | 2018 | 2017 | 2016 | | :------------------------ | :------- | :------- | :------- | | Connected home | $207,336 | $288,610 | $346,990 | | % of net revenue | 54% | 69% | 89% | | Infrastructure | $82,388 | 21% | $71,779 | 17% | $37,411 | 10% | | Industrial and multi-market | $95,273 | 25% | $59,929 | 14% | $3,431 | 1% | | **Total net revenue** | **$384,997** | **$420,318** | **$387,832** | - Customer contract liabilities for rebates were approximately **$0.1 million** as of December 31, 2018[616](index=616&type=chunk) - Obligations to customers for price protection rights totaled **$16.5 million**, and for price adjustments and stock rotation rights were **$7.6 million** and **$1.5 million**, respectively, as of December 31, 2018[618](index=618&type=chunk) [15. Selected Quarterly Financial Data (Unaudited)](index=120&type=section&id=15.%20Selected%20Quarterly%20Financial%20Data%20(Unaudited)) Presents unaudited quarterly financial data for 2017-2018, including revenue, gross profit, and net income/loss Selected Quarterly Financial Data (2018, in thousands, except per share amounts) | Quarter | Net revenue | Gross profit | Net income (loss) | Basic EPS | Diluted EPS | | :-------------- | :---------- | :----------- | :---------------- | :-------- | :---------- | | First Quarter | $110,827 | $62,668 | $1,847 | $0.03 | $0.03 | | Second Quarter | $101,533 | $56,330 | $(14,422) | $(0.21) | $(0.21) | | Third Quarter | $85,010 | $43,876 | $(13,935) | $(0.20) | $(0.20) | | Fourth Quarter | $87,627 | $45,900 | $311 | $0.00 | $0.00 | Selected Quarterly Financial Data (2017, in thousands, except per share amounts) | Quarter | Net revenue | Gross profit | Net income (loss) | Basic EPS | Diluted EPS | | :-------------- | :---------- | :----------- | :---------------- | :-------- | :---------- | | First Quarter | $88,841 | $52,924 | $8,463 | $0.13 | $0.12 | | Second Quarter | $104,175 | $51,104 | $10,965 | $0.17 | $0.16 | | Third Quarter | $113,581 | $51,842 | $(9,167) | $(0.14) | $(0.14) | | Fourth Quarter | $113,721 | $52,093 | $(19,448) | $(0.29) | $(0.29) |

MaxLinear Investor Presentation January 2019 Disclaimer 2 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, statements concerning our future financial performance; trends and growth opportunities in our product markets; anticipated benefits and synergies arising from our recent acquisi ...