MaxLinear(US:MXL)2024-07-25 03:21Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was $92 million, down 3% from $95.3 million in the previous quarter [20] - Non-GAAP gross margin for Q2 was 60.2%, while GAAP gross margin was approximately 54.6% [21] - Non-GAAP loss from operations for Q2 2024 was 21% of net revenue [22] - Cash flow used in operating activities was approximately $3 million, with $186 million in cash, cash equivalents, and restricted cash at the end of Q2 [22] Business Line Data and Key Metrics Changes - Broadband revenue for Q2 was $22 million, connectivity revenue was $13 million, infrastructure revenue was $32 million, and industrial multi-market revenue was $25 million [20] - The infrastructure business, particularly high-speed optical interconnect, is expected to exceed $30 million in revenue this year [12] - Revenue in 5G wireless infrastructure grew strongly in Q2 compared to the prior quarter [14] Market Data and Key Metrics Changes - The company is experiencing weakness in broadband demand due to excess customer inventory from the supply chain crisis [9] - Continued softness in telecom markets is noted, impacted by U.S.-China tensions and regulatory compliance [9] - The company expects channel inventory to bottom in the second half of the year [10] Company Strategy and Development Direction - The company is focused on R&D investments in high-value markets, including optical data center interconnect and 5G wireless technologies [10] - The company anticipates strong profitability growth as new products ramp up and R&D spending moderates [10] - The strategy includes optimizing efforts around new opportunities in infrastructure, Ethernet, storage, and Wi-Fi 7 [19] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over slower business recovery than anticipated but remains confident in resuming growth in 2025 [9] - The company is aligning its cost structure with the current environment, expecting a 20% to 25% reduction in operating expenses for fiscal 2025 [25][26] - Management highlighted the importance of operational efficiency and fiscal discipline while planning for future growth [28] Other Important Information - The company is on track to exceed its optical revenue target range of $10 million to $30 million for 2024 [8] - The company expects Q3 2024 revenue to be between $70 million and $90 million, with GAAP gross margin expected to be approximately 52.5% to 55.5% [24] Q&A Session Summary Question: Impact of shipment restrictions in telecom - Management indicated that the revocation of a government license impacted shipments by approximately $5 million to $8 million in Q2, with a potential impact of $10 million to $15 million in the second half of the year [30][31] Question: Guidance on infrastructure revenue - Management clarified that the weakness in infrastructure revenue is primarily due to wireless infrastructure, while optical is performing well and on track [32][33] Question: Inventory drain and end demand outlook - Management acknowledged that inventory is depleting slower than expected but sees improvements in bookings and inventory levels [36][38] Question: Share loss concerns in broadband and connectivity - Management noted that while there may be some share shifts, the focus remains on new technologies and product transitions that could offset potential losses [42][44] Question: OpEx reduction and spending plans - Management confirmed a planned reduction in operating expenses of 20% to 25% for fiscal 2025, with a focus on maintaining investment in key product areas [53][56] Question: Future revenue drivers and customer base - Management indicated that multiple customers will drive revenues in 2025, with ongoing investments in optical and broadband technologies [91][92]