MaxLinear(US:MXL)2019-07-26 02:20Financial 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]