MXL earnings call analysis

NASDAQ:MXL Q1 2026 Earnings Call Transcript Generated on 6/6/2026 Maria | Conference Operator: Greetings and welcome to the MaxLinear first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Leslie Green, Investor Relations. Thank you.

You may begin. Leslie Green | Investor Relations

Thank you, Maria. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss MaxLinear's first quarter of 2026 financial results. Today's call is being hosted by Dr. Kishore Sigriput, CEO, and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer. After our prepared comments, we will take 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 2026, 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 taxes, 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 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 risks and uncertainties, including risks outlined in our risk factors section of our recent SEC filings, including our 10Q for the quarter ended March 31, 2026, which we filed today. Any forward-looking statements are made as of today, and Max Linear has no obligation to update or revise any forward-looking statements. The first quarter 2026 earnings release is available in the investor relations section of our website at maxlinear.com. In addition, we report certain historical financial metrics, including but not limited to gross margin, income or loss from operations, operating expenses, interest and other expense, and income tax on a both GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations in 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 the replay will be available on our website for two weeks. And now let me turn the call over to Dr. Kishore Sindhipu, CEO of MaxLinear.

Kishore. Dr. Kishore Sindhipu | Chief Executive Officer

Thank you, Leslie, and good afternoon, everyone. Q1 was a strong and important start to the year, and we believe it marks the beginning of a multi-year growth phase for MaxLinear, led by our optical data center business. Revenue grew 43% year-over-year, reflecting strong execution, accelerating adoption of our newest products, improving visibility and bookings, and sustained momentum across our infrastructure programs. Infrastructure is now our largest revenue category, growing 136% year-over-year in Q1, driven by robust production ramps and optical data center-oriented platforms. We see this momentum continuing to build as hyperscale customers rapidly scale AI-centric architectures. Based on customer orders and rising visibility of the program ramps, we are increasing our expectations for 2026 optical data center revenue to $150 million to $170 million range. We also expect a step function data center revenue increase beginning in Q2 with expected strong upside as run rates expand into 2027. At the center of this data center momentum is our Keystone PAMFORD DSP optical transceiver platform. Keystone is now ramping at multiple major high-skill customers across both the U.S. and Asia, supporting 400G and 800G PAMFORD deployments for scale-up and scale-out applications. These ramps validate our differentiation performance, power efficiency, and integration standards. At OFC this year, we showcased our 1.6 terabit data center platform featuring Rushmore, our 200 gigabit per lane PAM4 DSP, Washington, our matching 200 gigabit per lane TIA, and Annapurna, which is our 1.6 terabit AEC and 3.2 terabit onboard electrical retimer platform for scale-up applications. Rushmore and Annapurna are foundational to the next wave of data center optical architectures, including LPO, LRO, AECs, XPO, and co-packaged optics. With Keystone validating our ability to execute at scale, customer engagement around Rushmore has accelerated faster than expected. We anticipate production ramps beginning in late 2026 with revenue growth expected to continue strong growth through 2027 as the next generation speed and bandwidth cycle unfolds. We are also expanding our footprint within hyperscale data centers beyond PAM4-based optical and electrical interconnects. We have secured our first XGS PON design win at a US hyperscale data center through a Tier 1 OEM partner as cloud operators deploy resilient, dedicated, pond-based control plane architectures spanning multiple data centers. Adjacent to compute, we have also run USB bridge controller designs with two major hyperscalers to support rack-level AI system management, which opens the door to increasing content per rack over time. Our Panther Hardware Storage Accelerator SoC family continues to build momentum with growing design-win activity among tier one network appliance and cloud service providers. Persistent memory constraints are highlighting Panther's advantages in hardware accelerated compression, high throughput, and ultra-low latency memory access. We're actively sampling next generation Panther 5 with key customers, and based on current engagement, we expect storage accelerator revenue to at least double in 2026 compared to 2025. Beyond data centers, wireless infrastructure momentum is improving as carriers increase investments in 5G RAN access and backhaul to support cloud-connected and edge AI functionality. Our Sierra single-chip radio associates are now deployed with multiple North American operators with expanding opportunities as 5G networks continue to evolve. In broadband and connectivity, we are executing large-scale deployments of our single-chip fiber pawn and Wi-Fi 7 gateway platforms with the second major tier one service provider in North America with additional ramps expected later in the year in Europe. These long-cycle deployments provide a stable foundation, leverage the same strengths in integration and power efficiency that clearly differentiate MaxLinear's data center portfolio. In summary, we are very pleased with the strong start to 26 and are especially excited by the momentum accelerating in our optical data center business. With multiple customers entering meaningful ramps of our 800-gigabit Keystone family and broader engagement across our 1.6-terabit Rushmore and Annapura product families across scale-out and scale-up AI architectures, we believe MaxLinux is exceptionally well-positioned for sustained transformative growth. Our disciplined focus on execution and innovation gives us confidence that 2026 will be a pivotal year as we continue to evolve our strategy and deliver long-term value for our customers and shareholders. With that, let me now turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Thanks, Kishore. Total revenue for the first quarter was $137.2 million. up from $136.4 million in the previous quarter and up 43% from the $95.5 million in the first quarter of 2025. Infrastructure revenue for the first quarter of 26 was approximately $63 million. Broadband revenue was approximately $44 million. Connectivity revenue was approximately $19 million. And industrial multi-market revenue was approximately $12 million. GAAP and non-GAAP gross margins for the first quarter was 57.5% and 59.5% 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 96.1 million, and non-GAAP operating expenses were 59.9 million. The delta between GAAP and non-GAAP operating expenses was primarily due to stock-based compensation and performance-based equity accruals of $28.5 million combined and acquisition-related costs and other costs of $6.5 million. GAAP loss from operations for Q1 2026 was 13% and non-GAAP income from operations in Q1 was 16% of net revenues. GAAP and non-GAAP interest and other expense during the quarter was $1.4 million and $1.3 million, respectively. In Q1, net cash flow used in operating activities was approximately $8.9 million. We exited Q1 of 2026 with approximately $89.9 million in cash, cash equivalents, and restricted cash. The primary use of cash was due to substantial prepayment for waivers supporting rising demand for our data center low geometry products for which we have increasing order backlog in the second half of the year. Our day sales outstanding was down in Q1 to approximately 27 days. Our inventory was up by approximately 8 million versus the previous quarter with days of inventory improving to approximately 128 days. This concludes the discussion of our Q1 financial results. With that, let's turn to our guidance for Q2. We currently expect revenue in the second quarter of 2026 to be between $160 million and $170 million. Looking at Q2 buy-in market, we expect to see growth from all four of our business segments with particular strength in infrastructure driven by data center optical interconnects. We expect second quarter GAAP gross margin to be approximately 56% to 59%, and non-GAAP gross margin to be in the range of 58 and 61% of revenue. We expect Q2 2026 GAAP operating expenses to be in the range of 91 to 97 million. We expect Q2 2026 non-GAAP operating expenses to be in the range of 61 million to 66 million. We expect our Q2 gap interest and other expense to be in the range of approximately $1.8 million to $2.2 million. We expect our Q2 non-gap interest and other expense to be in the range of $1.8 million to $2.2 million with FX volatility being the primary risk. We expect a $2 million tax benefit on a gap basis and a non-gap tax provision of approximately $1 million. We expect our GAAP and non-GAAP dilutive share count in Q2 to be approximately 95 million each. In summary, with strong growth in our data center optical business and several additional high-value products still early in their market ramp, we have transformed MaxLinear into an infrastructure-focused company. Our investments over the past several years have brought us to this point where we are well-positioned to deliver sustained growth operating leverage, and increasing shareholder value. We're excited about the opportunities ahead and confident in our ability to execute. With that, I'd like to open up the call for questions. Operator?

Maria | Conference Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that 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. We ask that analysts limit themselves to one question and a follow-up so that others may have an opportunity to do so as well. One moment, please, while we poll for questions. Our first question comes from Tori Sandberg with Stiefel. Please proceed with your question.

Tori Sandberg | Analyst, Stiefel

Yes, thank you, and congrats on the momentum here. Kishore, you mentioned optical DSP revenue now tracking to 150 to 170. I think that's about $30 million, $40 million higher than what you had expected before. Just wondering, you know, what transpired, you know, in per quarter, you know, to see such a, you know, steep increase. Is there new customers? Are you basically just seeing steeper ramp at existing customers? You know, any more color you can add on that additional revenue would be great.

Thank you. Dr. Kishore Sindhipu | Chief Executive Officer

Thank you, Tory. Yes, at the time when we set the guidance, we obviously are looking at a number of ramps, at a number of customers, and we were being conservative. And at the same time, we were also fairly optimistic internally that we should be seeing strong growth coming in the latter half of this year. Now, with all the visibility and the lead times that are necessary for providing the product, we have very good visibility. And the ramps are setting in very nicely, both across 400 gig and 800 gig solutions. So I just think it's all about timing of the ramps and the success of the calls and our ability to scale up to meet the demand, the surging demand we are seeing now.

Tori Sandberg | Analyst, Stiefel

Very good. And as a follow-up for you, Steve, so you mentioned that prepayment for wafer capacity. I'm just wondering, are you sort of done with that now? Or, you know, should we expect more cash outflows in the coming quarters? And I also noticed you increased the revolver by 30 million. So, you know, anything you can say here on the balance sheet and cash position going forward?

Thank you. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yeah, sure, Tory. Not a problem. So, Consistent with what we raised back in Q4 of last year, we knew we would have some working capital needs kind of going in Q4 as well as Q1, so that certainly played out the way that we expected. Are we through it entirely? I mean, I guess to some degree it depends on how much demand continues to improve, right? As that demand improves, certainly we may continue to see some prepayments, but we do, you know, you'll start to see this inflect as the revenues increase. Second part of your question on the revolver, yeah, we did have a revolver that was expiring in June. So, we renewed the revolver. We did, took it up slightly, a pretty minor move for the size of the company and the direction of the company.

Tori Sandberg | Analyst, Stiefel

Great.

Thank you. Maria | Conference Operator

Our next question comes from Joe Quattrari with Wells Fargo and Co. Please proceed with your question.

Joe Quattrari | Analyst, Wells Fargo & Co.

Yeah, thanks for taking the question. Maybe just to follow up on that, I guess, you know, can you talk about just your supply chain and capacity to support the growth that you're seeing? You know, clearly the mix of your growth is a bit different than maybe previously when you were at kind of similar revenue levels.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yeah, Joe, I'll take this. I mean, look, I mean, I don't think it's any surprising when there's some supply constraints out there. But, I mean, I think we planned well for this and worked really closely with the partners on this front. I think we've seen really good success, and we expect to continue to see that going forward.

Joe Quattrari | Analyst, Wells Fargo & Co.

Okay. And then as a follow-up, can you talk maybe a little bit about the puts and takes on the gross margin guidance? you know, why wouldn't we see maybe a little bit more leverage on the sequential revenue step up that's pretty significant here?

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yeah, no, I mean, obvious question. I think this is consistent with what we've been seeing. You've heard my caution on this, Joe, and it's a little bit of the input cost. So certainly there's some concerns out there, waiver costs, packaging, et cetera, are moving up. A lot of cases, you know, The industry, ourselves included, have been able to pass along these costs. And so we expect that to be the case. But just kind of given the uncertainty out there, I think we just want to remain cautious. But you're absolutely right from the understanding that the infrastructure business typically does drive a higher gross margin. So we're very optimistic as we look out, you know, the rest of this year and even into next year in that being a positive influence on our gross margins.

Maria | Conference Operator

Our next question comes from Tim Savage with Northland Capital Markets. Please proceed with your question.

Tim Savage | Analyst, Northland Capital Markets

Hi, and congrats on the results and especially guidance. Question on the infrastructure side, and I know that's mostly data center driven, but looks like you grew something, you know, mid-30s sequentially in Q1. and I imagine data center was a big driver there. Given what you're guiding to, do you expect some sequential growth of a similar magnitude in Q2 infrastructure?

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yeah, I think, Tim, from my standpoint, I mean, we obviously didn't, we don't typically guide in markets in that level of detail. We did say that it was going up. We did emphasize in our prepared remarks that I mean, as we look at this year, now clearly the infrastructure business has much bigger growth drivers. We have a lot of new products that are ramping with some new customers. So we would certainly expect infrastructure to be a much bigger driver of growth in the coming year.

Tim Savage | Analyst, Northland Capital Markets

Okay. And to follow up once again, given the step up we're seeing in Q2, do you have any comments about Overall revenue growth expectations for 26 looks like we could be tracking, I don't know, 35, 40%, but any comment from the company?

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yeah, I mean, look, we only got one quarter, and we're not going to change that here today. we are very excited about the growth potential that we have and these new customers and the new product ramps. And, yeah, so I think – and, frankly, with the visibility that we have, we start to roll into 27 as well. I mean, I think we're excited to see the growth in 26 and even backlog starting to build into 2027.

Tim Savage | Analyst, Northland Capital Markets

Thanks very much.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Thanks, Tim.

Maria | Conference Operator

Our next question comes from with Loop Capital Markets. Please proceed with your question.

Unnamed Analyst | Analyst, Loop Capital Markets

Yeah, good afternoon, guys. Really appreciate the question. And yeah, congrats on doing all the work to get to this place with DSP. It's cool to see it play out. Yeah, you guys are very welcome. Kishore, you mentioned, just this first question is a DSP question. You mentioned to one of the prior questions that around magnitude of step up and guide that you guys had baked in some conservatism, sort of that program start ramp here, and that that contributed to sort of the magnitude of step up and guide Can you guys tell though – I guess what I'm also – what I'm wanting to ask is can you tell if the market ramp feels bigger than what you guys had originally anticipated as distinct of conservatism? And I guess what I'm just – let me just ask that question. Do you have any sense that if the market ramp feels bigger, if the market TAM feels bigger? And then I have a quick follow-up as well.

Thanks. Dr. Kishore Sindhipu | Chief Executive Officer

So let me answer the first question. Obviously, the TAM expansion is real, or the SAM expansion even more so, the PAM4 DSP expansion is very real as both, you know, U.S. and China Harper scalers are deploying very, very rapidly. And depending on the architecture implementation, the amount of PAM4 DSPs use can vary completely based on the GPU configurations. And so scale up and scale are both equally growing very strongly. So the extent that we are conservative, it's in the balance of thing that's our general positioning as a company, right? So I don't think that's behaviorally any different from us. Do we expect more upsides? Absolutely. We do expect more upsides. That is compensated all the programs reaching full run rates. So I hope that answers the first question. So your second question, please.

Unnamed Analyst | Analyst, Loop Capital Markets

Oh yeah, on Panther. You had mentioned Panther benefiting from some of the memory dynamics in the marketplace. Can you just walk us through Is that walking through the ways in which Panther is holistically benefiting? Is it as simple as, you know, memory's short, Panther provides performance, and you've been waiting here at Panther as well, so you're benefiting? Or are there more sophisticated, nuanced reasons as well that Panther is benefiting?

Dr. Kishore Sindhipu | Chief Executive Officer

Yeah. you know, there's always obviously been sophisticated nuance to Panther, right? And now, of course, memory is fashionable, right? Not three years ago when we got punished for some of our actions. But, you know, 60% of the data center spend is in memory. But all memory is not equal. As the AI engine moves forward, accelerates, Low latency, high capacity memory access is super important. So the big benefit of Panther is it's an accelerator, so it reduces latency dramatically and the power efficiency that brings to it, so it enables much more capability than just a memory compression, right? So I really feel that the performance part related to low latency, high bandwidth access enablement that Panther provides is the key differentiator Thus far, our use of Panther has been really at the enterprise appliance level, if you will, but now these enterprise storage appliances are getting increasingly deployed into mainstream cloud centers. So I really feel there's much more to come with Panther 5 and Panther 6 in the future, and this is just the beginning of our Panther roadmap product family. So we expect this year the revenues to double. We have said that before. And hopefully next year as well, we got very strong growth based on the visibility we have.

Unnamed Analyst | Analyst, Loop Capital Markets

With all that said, do you feel bigger about the ultimate TAM potential for Panther?

Big picture. Dr. Kishore Sindhipu | Chief Executive Officer

In the big picture, you know, absolutely Panther has a lot of potential. But Panther as it is today, would not be sufficient, right? The world and the deployment models evolve, so there'll be more investment required, but the TAM is pretty huge, and we just have to keep on converting more of the TAM into our SAM, and that will drive our roadmap.

Unnamed Analyst | Analyst, Loop Capital Markets

Thank you.

Appreciate it. Maria | Conference Operator

Our next question comes from Christopher Rowland with Susquehanna International Group. Please proceed with your question.

Christopher Rowland | Analyst, Susquehanna International Group

hey guys uh thanks for the question congrats on the strong results and i apologize if this was asked but in your prepared remarks or actually in the press release you talked about for optical multiple hyperscalers and previously i think your messaging around optical was it was very broad-based i think you know at ofc we see all the design wins across so many different optical vendors. But this seems like it's a big change and might be changing customer concentration. Perhaps if you could talk a little bit about that. Are you now diversifying around these key hyperscaler opportunities? Is it like one or two or all of them? And... And, yeah, if you could elaborate a little bit as to what seems like is a pretty meaningful change here, that would be great.

Dr. Kishore Sindhipu | Chief Executive Officer

Yes. Thank you, Chris. It is pretty broad-based, our design, because all the module vendors in the world, so we have designs. We've always maintained that we have designs across all the module vendors. It's taken a while to map the module vendors' victories with the various end data centers while we ourselves had to sort of do the business development work that creates the pull for various module vendors. So even at the end, customers, it's pretty broad-based. Obviously, we'll be concentrating on a few during the ramps, and as the ramp expands into 2027, we'll have other data centers that come online. But even as we speak now, it's a pretty broad-based success. Is there more work to do to expand further? Yes, I think we are only halfway there to our – end data center diversification across all the hyperscalers. So there's more work to be done, but what Keystone provides is an affirmative statement of Max Glee's ability to successfully get through the interops, supply product at scale. Remember, we were worried about our ability to supply. And provided a scale where it's very confidence-boosting in terms of our credibility as a world-class chip supplier.

Christopher Rowland | Analyst, Susquehanna International Group

Thank you for that, Kishore. Maybe a quick follow-up, I guess. If you could perhaps talk about... 1.6T, like how you think design wins and the ramp will go there is 800, just kind of the beginning. You know, they're qualifying on 800, and then they have plans to use you guys at 1.6, and they've communicated these plans. And then you also mentioned scale up, optical for scale up. uh in your press release as well um i i i don't think there's a huge transceiver usage for scale up right now mostly scale out so if you could talk about that uh and uh and and what that means for you guys that'd be great as well okay so uh you hit many many number of topics here right so there are going to be different deployment models for scale up Dr.

Kishore Sindhipu | Chief Executive Officer

to start with, right? There are many, many different product categories on scale-up that are discovered. Having said that, the optical transceivers, 30% of the market is for scale-up, right? And that's a pretty substantial part of the TAM, and 70% is for scale-out today. Our participation in scale-up derives from, you know, from the optical transceivers as well as now the new offering in 1.6 terabit for electrical retimers, which is onboard retimers, and for the active electrical cables as well. Those are all scale-up-based applications. So, So I hope that answers your question of where our scale-up opportunities are coming from. They're really in that 30% of the time I talked about. So moving forward to 1.60, the critical thing to keep in mind is that, you know, there is enormous confidence out there. We're shipping Keystone to major data centers today, and they're ramping very strongly in 2026. And we are now rolled out our 1.60-bit Rushmore product in Annapurna family. for electrical applications. And I think that this level of execution apart and the success with the cloud relationships, module partnerships, and the call and interrupt completion is creating a far more pull for our 1.6G participation than I would have guessed at this point in time. So in a sense, we hope that by the end of the year, we'll have called them 1.60 and start transitioning, not transitioning, I just want to keep this point that 800G 1.6 terabits will probably be one of the most long-lasting interconnect applications in the data center world. So having 1.60 will actually expand our ability to garner more revenues and more market share.

Christopher Rowland | Analyst, Susquehanna International Group

Excellent. Thank you, guys, and congrats again.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Thank you.

Maria | Conference Operator

Our next question comes from Richard Shannon with Craig Hallam Capital Markets. Please proceed with your question.

Richard Shannon | Analyst, Craig Hallam Capital Markets

Well, thanks, guys, for taking my question. Maybe I'll follow up on the topic of DSP here and ask a question a slightly different way here, which is obviously your 400 and 800 gig with Keystone are going very well. And I've heard some relatively positive comments about Rushmore so far here. I'd love to get a sense here since it seems like you're gaining some very nice share in Rushmore here, excuse me, in Keystone. To what degree is this conveying directly or could it convey directly to success in Rushmore? And how do you view the potential revenue trajectory over a period of time relative to what you've seen so far with Keystone?

Dr. Kishore Sindhipu | Chief Executive Officer

Thank God for Keystone, right? So it's, you know, Everything valuable takes a long time. It has taken us a long journey through two, three generations of investment. Now we are into Rushmore. And the success of Keystone makes us an incumbent, right? And the power of incumbency is the ability to have the relationships with the cloud customers, the module makers, the confidence in your ability to supply, and the quality of your product. On the 1.6 terabit solution, I dare say we are in the top tier on the performance category. And our customers acknowledge that. So they are readily going to develop solutions that would be quickly, you know, move to the next phase with calls, et cetera, with the data center folks. As you know, we are not the first ones with 1.6 terabit relative to our incumbent competitors, two of them. So I really feel it bodes very, very well. And with 1.6 terabit, you expect the ASPs to increase, right? So clearly for the same units or even expanding units that are happening, the TAM dollars substantially increase. So as the mix becomes more and more 1.6 terabit, I really believe that it'll have an uplifting effect on our revenues and gross margins, even as our market share expands.

Richard Shannon | Analyst, Craig Hallam Capital Markets

Okay. Kishore, thanks for that detail. My following question is on the cable and broadband space here. Just generally, I'd love to get a sense of your expectations for the trajectory of this year. Last call, you talked about a soft first half. Certainly, your starting point shows that here. And then talking about calendar 2016 being down, which I completely believe here. But I want to get a sense of any update on that and whether you have any visibility into when DOCSIS 4.0 starts to have an impact.

Dr. Kishore Sindhipu | Chief Executive Officer

Thank you for the question. Right. You know, we had a spectacular growth here in 25 for broadband grew about 75 percent. And so we had a pullback in Q1, which is also some seasonality built into it. But happy to say that looking forward, all our businesses are growing, actually, you know, which is sort of a. a tailwind that we, as our data center-centric and infrastructure revenues grow, we also have other segments of our diversified portfolio really generating some positive momentum as well. So I'm happy to share that we expect our broadband business to continue to start growing from Q2 and into 2027. And I think cable docks is 4.0 certifications that happen, but some of the operators are still delayed on their network readiness. However, a big growth is coming with UltraDocs in 3.1 and 4.2 into 2027. The one thing that's happened post-COVID is that, you know, during the The down period, right, we have been winning market share in broadband, which bodes very well for our fiber play. In fact, fiber pawn business continues to grow through Q1, Q2. And we started major deployment with the major tier one operator in North America. And that's happening in the second half of the year, for which we've already done pre-shipments. And then later we have European deployments. I think it's all good. It's all growing, and we've been waiting for a time to recover through the COVID slowdown. I think we feel very good about that.

Richard Shannon | Analyst, Craig Hallam Capital Markets

Okay, great. Thank you, guys.

Maria | Conference Operator

Yep. Our next question comes from Carl Ackerman with BNP Paribas Asset Management. Please proceed with your question.

Carl Ackerman | Analyst, BNP Paribas Asset Management

Yes, thank you. I have two qualifications, if I may. Keisha, we're just going back to the – you spoke briefly about cable and broadband just now, but could you be more specific with respect to the June quarter guide? It seems like most of the growth is coming from infrastructure, but can you talk about what your outlook is for broadband, connectivity, and multi-market, and whether they can all grow on a sequential basis in June quarter two? Not in the fall, please.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Carl, Steve, yeah, thanks for the question. Yeah, I think we mentioned earlier – All four end markets will be up. I mean, I do expect, you know, a lot of that growth to be from infrastructure, just seeing the inflection that we're seeing from particularly some of the data center products. So, yeah, that is our expectation.

Carl Ackerman | Analyst, BNP Paribas Asset Management

Got it. Got it. Okay. And then just to follow up on Chris's earlier question, is much of your optical DSP growth coming from hyperscaler-owned designs, and therefore you are qualifying with them directly? or is your hyperscaler exposure predominantly through module vendors providing a merchant solution? Both. Got it.

Thank you very much. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Thank you, Carl.

Maria | Conference Operator

Our next question comes from Quinn Bolton with Needham & Co. Please proceed with your question.

Quinn Bolton | Analyst, Needham & Co.

Thank you, guys. Let me offer my congratulations on the nice results and outlook. Keisha, I guess I wanted to follow up on Tim's question earlier about just the breadth of the growth in the infrastructure business and Q1. Was it predominantly from the optical DSPs or did you see a good contribution from Panther, the wireless access products as well?

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Quinn, I'll jump in here on this one. Look, so really across the board, I mean, we saw some really good growth from all of the products within the infrastructure segment. I would say from here, you start to see kind of data center really break out. I mean, the other product lines absolutely contribute. Kishore mentioned earlier about Panther. Panther is going extremely well. Wireless infrastructure, which was pretty soft last year, talked about the improvements. We expect to see more of that this year. I mean, those are probably the top three or four products there.

Got it. Quinn Bolton | Analyst, Needham & Co.

And then I know sometimes gross margin takes a couple of quarters to reflect your product mix because you've got a flow product. you know, sitting in inventory, but you had a, you know, I think 30-ish percent increase in infrastructure in the quarter, maybe a 25% decrease in broadband quarter-on-quarter. I would have thought that would have been a nice tailwind for you. Gross margins were relatively flat. So just wondering, was there anything that sort of held back a gross margin given the mixed shift, or do you think it's just sort of a timing issue? Obviously, the go-forward look and the mixed infrastructure Sounds like it's a nice tailwind to gross margin, just trying to think when we might start to see it show up in the income statement. Thanks, Steve.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yep, certainly. Yeah, no problem, Quinn. Yeah, look, I mean, we came in, you know, more like right at our guidance, what we had talked about. The mix is definitely continuing to improve. I mentioned a little earlier in a separate question about just input costs. I think we're just trying to be cautious as we look forward. But I do, just as you stated, yes, I do believe it's a tailwind. especially as you move into 800 gig, 1.6T, all of those have higher gross margins. So we will certainly continue to see nice benefits on the gross margin side as infrastructure gets to be a larger percentage of our business.

Quinn Bolton | Analyst, Needham & Co.

Great.

Thank you. Congrats again. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Thanks, Gwen.

Maria | Conference Operator

Our next question comes from Suji De Silva with Roth Capital Partners. Please proceed with your questions.

Suji De Silva | Analyst, Roth Capital Partners

Hi, Kishore. Hi, Steve. Congratulations on the progress here. You talked about 2Q, some of the optical stepping up here. Are the programs all commencing RAMP, or are the other programs phasing in and starting in 3Q, 4Q, just to give us a set of layers across the year, or really are we in RAMP for all of the key programs already?

Dr. Kishore Sindhipu | Chief Executive Officer

Hi, Suji. There are different product cycles with different RAMPs, and They're all kicking in now, and there'll be some more that'll catch up later in the end of the year. So, you know, it really took a while for them all to start deploying with the drop calls and everything complete, so now we're strengthening, we're seeing strength in each of these layerings based on the bookings we have. Okay, that's helpful, Kalar. Thank you, Kishore.

Suji De Silva | Analyst, Roth Capital Partners

And then, Kishore, you mentioned in the prepared remarks, I believe I heard wireless infrastructure having playing a part in data center connectivity, maybe data center interconnect or something along those lines. Can you help us understand that opportunity and how big that is as a niche or can that become a mainstream opportunity? Could you repeat that question, Suzy? Oh, the wireless infrastructure, the connectivity helping backhaul for data center and so forth. Is that a niche application or is that a growing application?

Yep. Dr. Kishore Sindhipu | Chief Executive Officer

You know, if you look at the prepared remarks, I talked about 5G access and transport, and you have seen a number of announcement investments where There's a lot of AI at the edge and AI-enabled network infrastructure. So we see a lot of the telecom infrastructure people on the wireless now gathering some momentum about deployment increases, and especially that means that it changes the transport overhaul, backhaul stuff, as well as certain elements of the access will change as well. So this should all provide us a tailwind on the wireless infrastructure infrastructure. Now, the growth mechanisms in wireless infrastructure, the rates of RAMs will never match those of the data centers. However, you now started seeing, you saw the announcement between NVIDIA and, you know, Marvell, and you're seeing now genuine interest to move towards AI in the DU side of the network on the edge in the wireless side as well. So we should definitely benefit as being one of the top two players in the wireless infrastructure space. Okay, very helpful Kishore, thanks.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Operator, do we have one more question?

Maria | Conference Operator

Yes, our next question comes from Tori Sandberg with Steeple. Please proceed with your question.

Tori Sandberg | Analyst, Stiefel

Yeah, thank you. Just two quick follow-ups, especially on your new products. So, Kishore, first of all, on Annapurna, obviously this starts with 1.6T, but I'm just wondering, you know, if you could talk a bit about Max Center's positioning there. Are you going to go after all the standards? Obviously, there's Ethernet standards, there's UA-Linked. Are you going to participate perhaps also with some end-to-end fusion protocols? Just trying to understand exactly where you're trying to intersect the market with Annapurna, especially in the retail world.

Dr. Kishore Sindhipu | Chief Executive Officer

Especially, you know, I know there's a lot of hoopla about AECs because of success of one very successful company on AECs. But if you look at the market size opportunity for a silicon player, the AEC, the retimer market electrical for AI scale it inside the compute server is humongous as the speeds increase. So you're going to see a lot of retimers. Currently, our retimer offering is Ethernet-based, naturally. However, the fundamental physics and the challenges of doing a very, very demanding PHY for the electrical retimer application is done now. So with regard to adding the various standards, that's just an interface game. Now, you can imagine this also lends itself to, you know, other chiplet sort of stories and things like that. So we're laying the framework and the groundwork of building a platform from which we'll have the optionality chase where the SAM and the TAM goes. So at this point, we are in the electrical retimer market for Ethernet-based application.

Tori Sandberg | Analyst, Stiefel

That's very helpful. And on Washington, I mean, I assume that obviously gets sold with either Keystone or Rushmore, but are you seeing designs as well where your KIAs are perhaps participating on other people's DSP platforms?

Dr. Kishore Sindhipu | Chief Executive Officer

Right now, Rushmore and Washington are sampling. Customers are using them, but they're very, very excited about the performance. But honestly, I mean, the TIA is beyond the TIA for Rushmore, right? If you think of an LPO strategy, the TIA is a fundamental block. If you think about, you know, LRO strategy, the TIA is a fundamental block. And, you know, Max Day is very well known for his great RF analog skills. So the CPO markets, if they're going to be bare bones, then, you know, the TIA and drive is a natural fit. If they go more sophisticated on the half DSB-based one, we already have the platform offering. But the real question comes as you go towards XPOs, CPOs, and the various manifestations of it. So the full offering is super important. So Washington is the first step in the direction of a fundamental platform that will have multiple derivatives and incarnations.

Tori Sandberg | Analyst, Stiefel

Makes a lot of sense.

Thank you. Dr. Kishore Sindhipu | Chief Executive Officer

Yep.

Maria | Conference Operator

Our next session comes from Tim Savage with Northland Capital Markets. Please proceed with your question.

Tim Savage | Analyst, Northland Capital Markets

Thanks. Quick follow-up for me as well. And that's on the hyperscale win for PON, which sounds like the data center management stuff. I guess, can you talk a little bit more about the timing there and how significant this opportunity? When would you expect this design win to ramp? Could it be a needle mover of some sort?

Thanks. Dr. Kishore Sindhipu | Chief Executive Officer

So absolutely, you know, we just secured the win, so we expect a ramp. It is a lot of, you know, qualification that goes through it. So sometime in 27, it ramps, starts ramping. But how big that can be today, I think, you know, this is one of the first of its kind sort of, you know, what I call a very, very interesting development where the data centers are seeing the value of a dedicated, reliable link to control the entire data center network, right? So we expect this time to expand to over hundreds of millions of dollars, but currently our expectation that at our revenues, it's going to be quite a bit of needle mover, even in the next year itself, in the second half on a run rate basis.

Thanks. Maria | Conference Operator

Our next question comes from Richard Shannon with Craig Hallam Capital Markets. Please proceed with your question.

Richard Shannon | Analyst, Craig Hallam Capital Markets

Hi, guys. Just have one follow-up from me here, and let's dig in a little bit on the TSP side here. I want to get a sense of how big the other applications outside of what most people assume, and I certainly do, would be. the duplex optical DSP being a big part of it, but how could the rest of that business, that LOR, LPO, CPO, AEC, Retimer, et cetera, how big can that be in a year or two? Can that be 10 or even 20% of that total portfolio? Any sense of that would be great.

Thank you. Dr. Kishore Sindhipu | Chief Executive Officer

So, you know, we're still in the early innings of how this whole market is going to play out, whether it's CPOs or whether it is, I know people get excited, but still, I think we are three years or out away from determining that. At this point, it's a very small share of the market from a unit's point of view, okay, from a silicon unit's point of view. So I don't expect it to be a huge part of our revenues, but from a TAM-wise, I would rate the optical transceiver DSPs to be the number one TAM, substantially overwhelming the rest. Second would be electrical retimers when that happens, and the third would be AECs. And AECs is C as we go story because there is a certain level of point-in-time application nature to the AEC, and that itself will evolve. So I would rank them in that order, but at this point it's going to be massively overwhelmed by revenues in the optical transceiver PAM4DSP.

Richard Shannon | Analyst, Craig Hallam Capital Markets

Okay. That's kind of what I thought. Just wanted to hear that. Thanks all for me. Thanks, Kishore.

Thank you. Maria | Conference Operator

We have reached the end of our question and answer session, which there are no further questions at this time. I would now like to turn the floor back over to Leslie Green for closing comments.

Leslie Green | Investor Relations

Thank you all. This quarter we will be presenting at several financial conferences, and the details will be posted on our investor relations page. Thank you all for joining us today, and we look forward to speaking with you again soon.

Maria | Conference Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090257-00'00'

NASDAQ:MXL Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Diego | Operator: Greetings and welcome to the MaxLinear fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow a formal presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to our host, Leslie Green, Investor Relations. Thank you.

You may begin. Leslie Green | Investor Relations

Thank you, Diego. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss MaxLinear's fourth quarter 2025 financial results. Today's call is being hosted by Dr. Kishore Sindhipu, 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 first quarter of 2026, including revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, GAAP and non-GAAP interest in other expense, GAAP and non-GAAP income taxes, and basic and 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 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 factor section of our recent SEC filings, including our Form 10-K for the year-ended December 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 fourth quarter 2025 earnings release is available in the investor relations section of our website at maxlinear.com. In addition, we report certain historical financial metrics, including but not limited to gross margin, income or loss from operations, operating expenses, interest in other expense, and income tax on both a GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations in 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 the replay will be available on our website for two weeks. And now let me turn the call over to Dr. Kishore Sindripu, CEO of MaxLinear. Kishore?

Dr. Kishore Sindhipu | CEO

Thank you, Leslie, and wishing you all a very happy new year and good afternoon. For MaxLinear, 2025 marked a clear inflection year with resurgent growth. We delivered 30% revenue growth year over year, driven by strong execution and accelerating adoption of our newest products across multiple high-growth end markets. We delivered profitability and positive cash flow ahead of plan. During the fourth quarter, we repurchased $20 million worth of our common stock, reflecting our confidence in our sustained growth expectations and market momentum. Bookings remain robust, visibility continues to improve, and we are entering 26 with strong momentum across our portfolio. We are executing against a focus strategy that is working and will drive sustained strong growth in 26 and 27, investing in high-value multiyear growth markets with performance, power efficiency, and integration matter most. These include data center connectivity, wireless infrastructure, storage acceleration, on broadband access, Wi-Fi 7, and Ethernet in markets. Our infrastructure business is scaling rapidly. Revenue grew 30% for the full year and 76% in Q4 year-on-year, driven by strong growth in data center optical interconnects, wireless infrastructure, and early but meaningful contributions from storage accelerators. Importantly, multiple new design wins are now entering production, positioning us to grow faster in 26 than we did in 25. In 2026, we expect to achieve a significant and exciting milestone. Our infrastructure category should emerge as the single largest contributor to our overall revenues. In high-speed data center optical interconnects, our keystone PAM4 DSP family is now ramping at major hyperscale data centers in both the U.S. and Asia. supporting 400 gig and 800 gig deployments, both for scale-up and scale-out applications. Additional customer ramps are expected throughout the year. Based on this improved visibility, we expect Keystore to generate about $130 million in revenue in 26, with potential upside along with a further step function increase in run rate as we move into 2027. Power efficiency has been a defining competitive advantage for MaxLinear. And we are extending that leadership with Rushmore, our next generation family of BAM4 TIAs and 200 gig per lane DSPs targeting 1.6 terabits interconnects. Rushmore is foundational for next wave of data center optical architectures, including LRO, electrical retimers, AECs, LPOs, and co-packaged optics. With Keystone validating our execution performance leadership, customer engagement for Rushmore is accelerating faster than expected. We expect Rushmore production revenue ramp starting at the end of 2026. We expect a strong showing at OFC in March this year. Also, cloud data centers are now deploying 10-gigabit XGS PON as a robust, dedicated fail-proof control plane conduit for managing high-speed data traffic between data centers. In Q4, we secured our first PON data center design win, addressing this application at a major tier one US OEM provider to tier one data centers in this next generation design. Recently, we also won analog serial transceiver and bridge interface designs for rack management in AI servers at two major US data centers. This is further evidence of how Maximia's broad and deep technology portfolio comprising optical interconnect storage accelerators, spawn, and analog offerings is growing inside the AI data center. Within infrastructure, our Panther hardware storage accelerator SOC family continues to gain design traction with Tier 1 network appliance and cloud service providers. Ongoing storage and high-bit memory constraints for AI scale-up and compute are reinforcing the value of Panther's hardware-based compression high throughput, and ultra-low latency memory data access. In Q3-Q4, we started sampling Panther 5 to leading customers and our partners, including advanced micro-devices or AMD. Panther 5 delivers unprecedented ultra-low latency at 450 gigabits per second throughput and PCIe Gen 5 connectivity. Based on our engagements, we expect strong accelerator revenue to at least double in 2026 versus 2025 and potentially again in 2027. In wireless infrastructure, increasing spending is expected to drive sustained demand through 2026 and beyond as the need for cloud and edge AI functionality continues to grow. Additionally, our wireless access single-chip radio SOC and our millimeter wave and microwave backhaul transceivers and modems are seeing robust OEM customer design and activity, and deployments and multiple tier one carriers are going as per plan. Moving to broadband and connectivity, we delivered another strong revenue quarter across fiber form, cable docks, and Wi-Fi, driven by the early increases in service provider cap expense and continued booking strength and incremental demand. In Q4, we began the large-scale deployment of our single-chip fiber-pawn and 10-gigabit processor gateway SOC plus tri-band Wi-Fi 7 solution with the second major Tier 1 North American carrier. This was a significant competitive win that expands content per box fiber-pawn revenue and market share in 2026. In cable broadband, after a strong 2025, we expect a seasonally soft first half and cable revenue to be down in 26 as the industry transitions and pending a multi-year DOCSIS 4 upgrade cycle starting at the end of 2026. Additionally, in the standalone Ethernet market, we expect 2026 to be strong as a 2.5 gigabit Ethernet switch and PHY portfolio expands into commercial, enterprise, and industrial applications. In summary, we entered 2026 with multiple growth engines ramping simultaneously driven by expanding customer adoption and secular market trends moving in our favor. Our investments over the past several years have uniquely positioned MaxLinear to deliver sustained growth, operating leverage, and long-term shareholder value. We are excited about the opportunities ahead and confident in our ability to execute. With that, let me now turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve?

Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer

Thanks, Vishal. Total revenue for the fourth quarter was 136.4 million, up 8% from 126.5 million in the previous quarter, and up 48% from 92.2 million in the fourth quarter of 2024. Infrastructure revenue for the fourth quarter was approximately 47 million. Broadband revenue was approximately 58 million. Connectivity revenue was approximately 18 million. and industrial multi-market revenue was approximately 14 million. GAAP and non-GAAP gross margins for the fourth quarter increased approximately 57.6% and 59.6% of revenue. The delta between GAAP and non-GAAP gross margin in the fourth quarter was primarily driven by 2.6 million of acquisition-related intangible asset amortization. Fourth quarter GAAP operating expenses were 93.5 million, and non-GAAP operating expenses were $59.2 million. The delta between GAAP and non-GAAP operating expenses was primarily due to stock-based compensation and performance-based equity accruals of $28.1 million combined and acquisition-related costs of $6 million. GAAP loss from operations for Q4 2025 was 11%. and non-GAAP income from operations in Q4 was 16% of net revenue. GAAP and non-GAAP interest and other expense during the quarter was $2.9 million and $2.8 million. In Q4, net cash flow from operating activities was approximately $10.4 million. As Kishore mentioned, we were active in our buyback program in Q4, repurchasing approximately $20 million of our common stock. As such, we exited Q4 of 2025 with approximately $101.4 million in cash, cash equivalents, and restricted cash ahead of our 2025 plan. Our day sales outstanding was down in Q4 to approximately 31 days. Our inventory was down by approximately $8 million versus the previous quarter, with days of inventory improving to approximately 130. This concludes the discussion of our Q4 financial results. With that, let's turn to our guidance for Q1 of 2026. We currently expect revenue in the first quarter of 2026 to be between $130 million and $140 million. Looking at Q1 by end market, we expect to see growth from infrastructure, but some seasonal declines in broadband connectivity and industrial multi-market. We expect first quarter GAAP gross margin to be approximately 56 to 59%, and non-GAAP gross margin to be in the range of 58% and 61% of revenue. We expect Q1 2026 GAAP operating expenses to be in the range of 85 to 90 million. We expect Q1 2026 non-GAAP operating expenses to be in the range of 58 million to 64 million. We expect our Q1 gap interest and other expense to be in the range of approximately 2.1 million to 2.7 million. We expect our Q1 non-gap interest and other expense to be in the range of approximately 2 million to 2.6 million, with FX volatility being the primary risk. We expect a $4 million tax provision on a gap basis and a non-gap tax provision of approximately 0.8 million. We expect our Q1 basic and diluted share count to be approximately 88 million and 91 million, respectively. In closing, with strong bookings and improving visibility, we expect to see solid growth in 2026, driven by new design wins and expanding content opportunities across our product portfolio. We believe we are well positioned, well in large and growing markets, that will be transformative to our business as well as continue to innovate on high-value solutions for our customers that solve next-generation challenges. We will continue to focus on our investment in areas of strategic importance and confident that we will build a solid foundation to deliver sustainable growth and profitability in 2026 and beyond. With that, I'd like to open up the call for questions. Operator?

Diego | Operator

Thank you. And at this time, we'll be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 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. Once again, to ask a question, press star 1. We'll pause for a moment while we pull for questions. And your first question comes from Tori Sponberg with Stifel.

Please state your question. Tori Sponberg | Analyst, Stifel

Yes, thank you, and I forgot some of the results here. Kishore, I was hoping you could talk a little bit more about the time for DSP business. So there's obviously a lot of headlines and things out there on LPO and CPO, but, you know, you seem to be seeing, you know, more and more correction, more and more design wins. sounds like, you know, Rushmore is getting pulled in somewhat. So, could you just walk through some of those dynamics, you know, because obviously that will give us better confidence about the continuous growth of PAMFOR in 26 and 27.

Dr. Kishore Sindhipu | CEO

So, thank you, Ross. Sorry. Thank you, Tori, for the question. Obviously, you know, this is a pretty significantly confidence-boosting growth that we are seeing. We were guiding to $110 to $130 million. That's, you know, that's a very positive statement about our traction. And we are in the initial phase of the ramp of our 800 gig product solution. And it really pick up more steam and energy the second half. The market as a whole is still a pluggable market, which is going very, very fast. And the LPO deployments as such are very niche-y right now. and i i really look at the lpos per se as a very small fracture of the market and not long term the lros for example i think they have got some traction but there'll be a market that is substantially pluggables and there'll be a fraction of the market in lros and lpos will be sort of you know very very controlled environment limited deployments potentially an 800 geek but less so on 1.6 terabytes So that's our view of the marketplace. Obviously, there's a market that's also beyond that, which is as the scale-up continues, there will be electrical retimers, and that's going to be a huge volume in the scale-up world as well. Talking of CPOs, people are doing CPOs today as sort of, you know, that's your feat in the market, but it still is early innings for CPO. And in the long term, there will be a market that is going to be more varietal than just pure CPOs. You know, the O in the CPO being many number of ways of doing it. Obviously, there's a silicon plane within the CVO market as well. That is what I call a wide IF fast throughput through the optical, and we expect ourselves to be a player as the market evolves. As MaxLia, we are very focused and disciplined, and PAM4 is a huge growing market. We are developing a strong foothold, though we are not the incumbents. But I think today in the world, we are the – We can safely claim we're the top three deployers of PAM-4 DSP. And, you know, as the market strengthens, you know, we hope to branch out and diversify our offerings of what you all know is a very, very robust technology portfolio. I hope that gives you some sense of our technology positioning. From a growth point of view, you know, this year we expect that, you know, they could even be upside depending on how the ramps proceed beyond the one that we feel fairly confident on the visibility and the outlook we have based on the bookings so far in 2026. I hope that answers your question.

Tori Sponberg | Analyst, Stifel

Yeah, no, that's great, Kala. Thank you, Kishore. And as my follow-up, I had a question on the broadband business and how should we think about, you know, The trajectory there has been moved throughout the year. You did mention you expected to be down year over year because of the sort of transition to DOCSIS 4.0 or the industry waiting for 4.0. What type of decline are we talking about? I know you're guided to be down seasonally in Q1, but, you know, will it sort of decline every quarter this year? Is it going to be more of a moderate decline? Any more color there would be very helpful.

Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer

Maybe, Tori, I'll take that one. So we did mention that the seasonality certainly plays a role. We're also seeing the upgrade cycle, right, in DOCSIS 4.0. That probably starts the latter half of the year. And so it'll come down in the first half of the year and then probably start to build in the second half. So overall for the year, I do expect it to be down. We did talk a lot about the pond business right in the wind that we have there. So we are excited about that. But even with that, it's still early days in it. And so that's why we do expect to see the broadband business down for the year.

Dr. Kishore Sindhipu | CEO

Yes. I think the pond is a substantial opportunity, the new tier one that's ramping. And based on the ramp itself, there is potential for growth. for, you know, not to see a downturn, so to speak. And Pond is going very nicely, and we're grabbing market share. And we have many number of designs that we did not have before that will really kick steam in 27 as well.

Tori Sponberg | Analyst, Stifel

Sounds good. I'll go back in line.

Thank you. Diego | Operator

Thank you. And your next question comes from David Williams with Benchmark Company.

Please state your question. David Williams | Analyst, Benchmark Company

Good afternoon. Thanks for taking my questions and congrats on the solid execution. Maybe first, just around the data center opportunity, obviously the DSP is doing really well, but you've got other components that are going into that segment as well. Can you help us kind of understand maybe what the magnitude of opportunity within the data center is and where you're playing and kind of how you think that plays out through the year in addition to the DSP?

Dr. Kishore Sindhipu | CEO

So, David, this is early innings for us, right? I mean, we have to say that. And the big, big entree is right now with the PAM4 transceivers. And this year, we could do anywhere between 4 to 6 million units of PAM4 transceivers, right? So, but on the other hand, the data center is not just a PAM4 world. There are compute tracks. There are communications between data centers. And that market still will grow as the data center clusters increase and the number of data centers increase as well. So we talked about this exciting design with the tier 1 OEM who is applying to tier 1 data centers and of using PON as a control play layer, not where the data itself is going to be with data centers. And there we are clearly the leaders in the pawn silicon offering, and so we should be very well positioned. So that could be a few. That market size, some of these OEMs have talked about hundreds of millions of dollars of value for the silicon plate. So that's one opportunity. So it won't happen in this one year. It will roll out over the next two years. Hopefully we'll start seeing in 27, and then it grows beyond that. And then there's the other thing where these racks have become really, these compute racks and server racks have become very, very, very sophisticated. They have their own telemetrics. Even the racks are being controlled with microcontrollers and so on and so forth. So you need industry of quality. sort of, you know, transceivers, serial bridges, and so on and so forth, and even smart, you know, smart power management and stuff, and then overall controlling the rack. So, the rack itself is a huge beast by itself. So, we're beginning to start getting design wins in that, and that could be a pretty huge play for rack, if you will. So, at this point, you know, I am not very what I call I don't want to provide market sizing at a level that, you know, we need as a team. But that market is very, very huge. There are a number of players. But we have the portfolio depth to participate in all the big spend that is happening as data centers are being built out.

Great. David Williams | Analyst, Benchmark Company

Thanks for the color there. And then maybe just finally for you, Steve, just looking at the share repurchase authorization, that clearly signals some confidence, I think, in the growth trajectory, but also on the potential arbitration there. So maybe if you could just kind of speak around the share repurchase authorization and how we should be thinking about that and what you're telegraphing to the street.

Thank you. Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer

Yeah, David, absolutely. No, I think the board took some actions last quarter, authorizing $75 million of buybacks, took action on it in the quarter, felt the stock was a good place that we wanted to act on it. But frankly, I think the board really wanted to just convey the confidence in the balance sheet. The cash flow improvement, we've talked about it running ahead of plan. It has run ahead of plan now for three quarters in a row. revenue stability and the outlook that we have from the business continues to improve. And so I think our actions kind of follow that, and including the mention of the arbitration as well.

David Williams | Analyst, Benchmark Company

Thanks again.

Ross Seymour | Analyst, Deutsche Bank

Thanks, David.

Diego | Operator

Your next question comes from Ross Seymour with Deutsche Bank.

Please state your question. Ross Seymour | Analyst, Deutsche Bank

Hi, guys. Thanks for that question, and congrats on the strong end to the year beginning of this one. Because you're on the optical side, a couple of different questions have already been asked, but the competitive landscape, how are you envisioning that going from Keystone to Rushmore? Do you think your positioning gets even stronger? Are there, you know, the different technologies coming in create more competitive pressure? Just how do you think MaxLinear is positioned as we look forward? Thank you, Ross.

Dr. Kishore Sindhipu | CEO

I won't call you Tori, but just jokingly, a very, very good question. You know, both of you are complimented. So the strengthening is absolutely a word I love. On the next generation 1.6 terabit, our position is strengthening. We're gaining some ground and strengthening versus the competition. And I really feel that we are actually now speeding up a bit related to where we were. And we are now, you know, we feel that we will really start pulling our weight as 1.6 terabit rolls out. And beyond that, what we call our big sky product, 4 gig, 400 gigabit per lane, you know, I think we show our capabilities, our strong, low-power implementation capabilities, integration, and our, very, very well-developed, you know, RF mix signal skills. I think we will strengthen our position, and we are strengthening. In certain geographies, at 800 gig, we have strengthened our relative position. Within the U.S., just the timing of our product offerings, we got late at the number three. And, you know, from there, you're fighting to get to the number one and number two. It takes a little bit of a taller order, and income busy has incredible value. So I hope that puts things in perspective.

Ross Seymour | Analyst, Deutsche Bank

It does. Thank you very much. And I guess pivoting over to Steve, just on the margin front, it sounds like you guys have a strong growth here, especially on the infrastructure side coming in 2026. How should we think about both gross margin trajectory just directionally and OPEX?

Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer

Yeah, I mean, look, on the gross margin side, I mean, we've been talking about the improvement. We've been demonstrating that over the last four quarters. So we're seeing – As you're aware, the product mix is kind of moving in our favor as infrastructure products typically drive a higher gross margins. Remain confident that we can exit the year at the, you know, kind of starting with a six versus a five. We did guide to the 59.5 at the midpoint of our guidance. I mean, you've got some headwinds with cost increases that are out there, but that being said, I think the mix longer term throughout the year, we'll move in our favor and we'll see some nice improvements. With regard to the OPEX question, look, I don't want to necessarily guide for the whole year, but I mean, I think you've heard from us in the past. Typically, we want to grow OPEX about half the rate of the top line. That being said, I don't think we necessarily – we've been really dialing things back a little bit. We're seeing some nice improvements in efficiency for lots of reasons. And so I actually think we'll see a little bit lower than that. So maybe it's in the 4% to 5% increase this year.

Thank you. Diego | Operator

Thank you. And your next question comes from Tim Savageau with Northland Capital Markets. Please state your question.

Thanks. Tim Savageau | Analyst, Northland Capital Markets

All right, go ahead. Yep, sorry. Congrats on the numbers. And first question was, where did we end up 25 in terms of optical DSP revenue? I think you were guiding 60 to 70 million. And can you give us any color there?

Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer

Yeah, so Tim, I think, so as you know, we don't break out these numbers. I think what we're Consistent with what we've delivered over the last two to three years, I think the guidance that Kishore shared earlier is kind of evidence of what you've seen over the last three years of this doubling that we saw. I mean, keep in mind three years ago we were doing less than $20 million of revenue. And so I think we're really pleased with the progress we've made and very excited about, you know, where we're at. I would probably maybe take the opportunity to – I mean, some of the background of where we exited the year, where we're entering this year. I mean, we mentioned in the prepared remarks about the visibility that we have, the backlog that we have. It's in a much better position, I mean, across all of our businesses, but particularly in the optical side. As you know, we've got 28-week lead times. And really confident in this kind of first half of the year where you've already got backlog. We're you know, pushing to get some upsides in here. And we've already seen a lot of success on that front.

Tim Savageau | Analyst, Northland Capital Markets

Okay, great. I think we might have talked a little about this last quarter. But just based on the, you know, comments early in the call, I just want to make sure I'm hearing this right. Do you guys think you can go faster than 30% overall in 26? Was that the comment? Because I think the comment was go faster in 26 than 25. Or is there some more nuance or detail around that?

Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer

So, Tim, I mean, look, as you know, we don't guide the whole year, and we're not going to do it here. We're not going to start today, I guess I would say. But clearly you see from, you know, the – mainly the infrastructure growth, but we're seeing a lot of good traction on the pond side. We're seeing industrial multi-market really see a nice recovery this year. So I'm confident that we can outgrow the industry in 2026.

Tim Savageau | Analyst, Northland Capital Markets

Okay, thanks.

Diego | Operator

Thank you. And your next question comes from Carl Ackerman with BNP Paribas Asset Management.

Please state your question. Sam Feldman | Analyst, BNP Paribas Asset Management

Hi, this is Sam Feldman on for Carl Ackerman. Thanks for taking my question. On optical DSP, do you expect RAM to be linear throughout the year? And is there a reason for the $40 million range?

Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer

Hey, Sam. So, I mean, actually, just to kind of follow on what I was just speaking about, I do think it will grow throughout the year as we have new programs that will come on and we have share gains that will continue to gain traction throughout the year. But I would also say that it will be very strong right out of the gate in Q1 and Q2 because we do have really good visibility and we have a few customers that are ramping right now.

Sam Feldman | Analyst, BNP Paribas Asset Management

Got it. Any follow-up? Can you discuss the timing and growth within broadband for the second major tier one North American carrier in calendar 26?

Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer

Yeah, so it'll, look, we've already started shipping some products. We mentioned that we'd even start in Q4. It'll be still pretty minor in Q1 and start more in earnest in Q2 and Q3.

Dr. Kishore Sindhipu | CEO

Obviously, if you have good visibility based on the lead times of the supply chain, and the bookings that we have in place.

Sam Feldman | Analyst, BNP Paribas Asset Management

Understood.

Thank you. Diego | Operator

Thank you. And your next question comes from Christopher Roland with Susquehanna International Group.

Please state your question. Christopher Roland | Analyst, Susquehanna International Group

Hey, guys. Thanks for the question. So in your press release and also in your prepared remarks, you talked about gaining market share. I think it was a general comment across your product set, but I was wondering if there are some specific kind of needle-moving opportunities, like in broadband, are you gaining share versus Broadcom? Like what were you specifically trying to highlight there as actual revenue-moving opportunities?

Dr. Kishore Sindhipu | CEO

Hey, Chris, that's a very good question. It's a very broad statement. I think it's broadly true as well across the various categories, honestly. I mean, if you look at optical transceivers, our revenue forecast reflects that we are gaining share, right, in some form. If you just go by the units, I mentioned 46 million units of transceiver opportunities. Then you see that on the pond side, it's a very, very large Tier 1 player. and in that particular category, we are gaining share versus our competition. On cable as well, we're beginning to gain share that, you know, many years ago was ours. We're gaining share against our competition. And then when you go to storage accelerators, a completely new market that we are paving the path forward with hardware acceleration and compression, so that we have established incumbency as, and that market itself is poised to grow both on the cloud side and the appliance side. And then what else? I mean, it's broadly correct statement, but actually now that you asked the question, I think about it and say, you know what? Damn right, you know? So that would be my response to you.

Christopher Roland | Analyst, Susquehanna International Group

Excellent. And then back to DSP, you know, we track the transceiver market pretty closely and, you know, we underestimated growth in the market there. It's I think growing faster than anyone expected, at least in terms of expectations for 26. You did suggest that there could be upside to your optical number, but why don't you even have more confidence there just given the upside in demand? And then maybe paired with that, Are there any supply chain constraints that you're seeing out there that would lower your outlook?

Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer

Hey, Chris. So, look, I mean, I think we're very excited about the ramps that are underway, right, that have already started, and we're picking up traction. I mean, Kishore spoke about the share gains, I mean, where we've won against the competition. So we're seeing that in the beginning of the year. So really excited about those. great visibility into future ramps that are coming with some of the new customers, new wins. You mentioned supply chain. Yes, certainly there's supply chain tightness out there. We're not concerned about that. I mean, we're working with our suppliers. We've seen improvements thus far, so we haven't had any trouble. As you also know, even outside of the optical world, you know, 80 plus percent of our business is really not exposed to that tightness, so that's good. Optical side certainly is, but we've had a lot of success there, and we're very confident in the outlook for this year.

Diego | Operator

Great.

Christopher Roland | Analyst, Susquehanna International Group

Thanks, guys.

Diego | Operator

Your next question comes from Quinn Bolton with Needham & Company.

Please state your question. Ross Seymour | Analyst, Deutsche Bank

I'll offer my congratulations as well. In the past, you guys have sort of said your GSP wins were more for front end networks. As you start to ramp the 800 gig products here, are you starting to see some of those designs moving into the scale out networks? Or do you think we need to wait for the Rushmore 1.6T product before you start moving into scale out?

Dr. Kishore Sindhipu | CEO

You know, it's very, very hard to parse. Usually, we already scale up and scale out, you know, They're broad categories, right? There are short reaches and long reaches and mid-reaches, and usually the short reaches are in what you would call the scale-up network, and the longer ones are usually on the scale-out side. So that's happening on the 800-gig side. And so, yes, we are shipping in the scale-up side now, but – I still feel that most of it is still in the scale-out network, the traditional scale-out network.

Ross Seymour | Analyst, Deutsche Bank

Sorry, just so we're clear, you're shipping in, I guess, what I would call front-end networks, sort of the storage networks driven off the GPU, or are you starting to ship in the GPU to GPU scale-out?

Dr. Kishore Sindhipu | CEO

That's a more detailed question, but I would just say I'll leave it here. It's just leave it at scale-up networks, and is a smaller portion of the revenue that's starting, and most of it is scale-out networks.

Ross Seymour | Analyst, Deutsche Bank

Okay. And then I guess, Keisha, you gave us some numbers, both revenue forecast for 26 for optical DSP, and you said that could equate to 4 to 6 million units. If I just do the math, it seems like it could imply an ASP of $25, which seems pretty aggressive. Can you just... Talk about the pricing environment. Do you guys feel like you're pricing below some of the other peers in the market? Is that helping you to gain share? Do you think you're pricing, you know, in line with others in the market?

Dr. Kishore Sindhipu | CEO

I mean, that's – I think your conclusions are – what you're going is absolutely not true. We try to be very competitive in the marketplace, and we try to ride the product competitiveness of our product, right? And so I don't think in this market you win by pricing. You win, your performance is a must. And it is such an exciting worldwide great phenomenon that's going on. Pricing is the last thing that they would make decisions on, especially in a very, very sophisticated technology. So I think anybody says they're bidding on pricing, they really are not looking in the right market.

Ross Seymour | Analyst, Deutsche Bank

Got it. Okay. Thank you, Kishore.

Diego | Operator

Your next question comes from Alec Valero with Loop Capital Markets.

Please state your question. Alec Valero | Analyst, Loop Capital Markets

Hey, thank you for taking my question. I wanted to ask, what do you see as being the biggest opportunities to gain market share in 2026?

Dr. Kishore Sindhipu | CEO

I think it's very, very clear, right? We started with optical transceivers as a category that is very meaningful. We have talked about our gains in the storage accelerators in the, for the infrastructure market. We've talked about, I'm listing the sequence of the value, right? Then where the growth is coming, the pawn market share, market revenues increases. And the fourth one is the wireless infrastructure growth. I mean, I'm exactly laying down the sequence of where the big growth in absolute dollars are coming. And I think they'll hopefully track the percentages as well.

Alec Valero | Analyst, Loop Capital Markets

Got it. Super helpful on that. And just a quick follow-up. You sparked my curiosity on scale-up. I know you mentioned it's small for now, but I wanted to ask you if you can maybe provide some more color on the opportunities there for scale-up.

Dr. Kishore Sindhipu | CEO

Look, it's a very, very concentrated market from a scale-up point of view, right, if you really look at it. However, it's a huge opportunity inside the rack, if you will, right, the compute systems. And the scale-up opportunity is not just PAM4 interconnects, but there are PAM4 Ethernet retimers and so on on those things. which we have not hit upon. At the UFC, we will be announcing our electrical retimers for the Ethernet product category, and then there is the CPU opportunities as well, right? So it's all playing for us. It's very, very early innings, and right now, let's stay focused. It is a heavy growth engine for us, and we're very excited about it.

Alec Valero | Analyst, Loop Capital Markets

That's great. I really appreciate it. Thank you and congrats.

Thank you. Diego | Operator

Your next question comes from Tori Sponberg with Stifel.

Please state your question. Tori Sponberg | Analyst, Stifel

Yes, thank you. Just two quick follow-ups. Yeah, this is Tori, not Ross, and I'm a big Ross fan. So first of all, the connectivity segment, how should we think about the puts and takes there this year? Because obviously, part of connectivity is tied to cable. or broadband, yet you also have the Ethernet business, obviously, that's doing quite well. So, should we think of connectivity as also being down this year, or, you know, does it have other subsegments growing fast enough to actually make it a growth segment in 26?

Steve Litchfield | Chief Financial Officer and Chief Corporate Strategy Officer

Hey, Tori. Yes, connectivity certainly grows this year. Wi-Fi will grow this year as Wi-Fi 7 starts to ramp. And then, you know, a lot of our Ethernet products that are transitioning to a nap gig certainly grow this year as well.

So both of those. Tori Sponberg | Analyst, Stifel

Very good. And my last question is.

Dr. Kishore Sindhipu | CEO

I just want to remind that of the, sorry, Tori, I want to let you know that cable is a huge part of the market that we have revenues that is not paired with Wi-Fi. So, you know, so. there lies the sort of the dissociation and the association. So, it depends on all that trance as well.

Tori Sponberg | Analyst, Stifel

Understood. And my last question is sort of going back to the opportunities beyond DSPs. So, you know, you've talked about, you know, having products for AECs. Obviously, you have the high-speed analog products to go after LPO, LRO, and sort of so forth. But, you know, you continue to call those out as very niche markets. So, I guess my question is, You know, if you do see those segments getting more traction, you know, how long would it take for you to become a more material player in some of those areas?

Dr. Kishore Sindhipu | CEO

Very good question, Tori. So I just want to lay the landscape of the sort of what I call the derivative product roadmap, right? You start with the PAM-4 DSP products. And I know LRO is not an analog product. It is a DSP product. So the LROs is a natural derivative. It doesn't take us long to get there, and we will be pursuing that opportunity. In a short while, we'll have something to show as well. I think there is some traction because in the marketplace, the LROs, because it has led beyond just one particular speed node, if you will, like, So the LPOs have limited niche nature to it because the amount of reach that the LPOs can reach is quite constrained and has to be very structured and controlled. So I do believe that that is a sequence in which it works out, for us at least. And I think that the market revenues in arrows grows much stronger as the speeds increase and the power increases. benefits that LROs will deliver. And I think there are some people who are beginning to try them out. And then, you know, and then there'll be a follow-through on that. So for us, the next 12 months is a place where we will start taking advantage of the product offerings and do these derivative product offerings.

Tori Sponberg | Analyst, Stifel

Great.

Thank you. Dr. Kishore Sindhipu | CEO

Yep. Thanks, sir.

Diego | Operator

Thank you, and we have reached the end of the question and answer session. I'll now turn the floor back to Leslie Green for closing remarks.

Leslie Green | Investor Relations

Thank you, Diego, and thank you all for joining us. This quarter we will be presenting at a number of financial and industry conferences. Details will be posted to our investor relations site, and we look forward to speaking with you again soon.

Diego | Operator

This concludes today's call. All parties may disconnect. jsPDF 3.0.3 D:20260606090258-00'00'

NASDAQ:MXL Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Greetings and welcome to the MaxLinear Q3 2025 Earnings Conference 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 during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Leslie Green, Investor Relations.

Leslie Green | Investor Relations

Thank you, Leslie. You may begin. Thank you, Alicia. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss Max Lanier's third quarter 2025 financial results. Today's call is being hosted by Dr. Kishore Sindhribut, CEO, and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer. After our prepared comments, we will take questions. Our comments today include forward-looking statements within the meaning of applicable securities laws including statements relating to our guidance for the fourth quarter of 2025, including revenue, gap and non-gap growth margin, gap and non-gap operating expenses, gap and non-gap interest and other expense, gap and non-gap income taxes, and basic and 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 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 factor section of our recent SEC filings including our Form 10-Q for the quarter ended September 30, 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 third quarter 2025 earnings release is available in the investor relations section of our website at maxlinear.com. In addition, we report certain historical financial metrics, including but not limited to gross margin, income or loss from operations, operating expenses, interest in other expense, and income tax on both a GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and 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 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 figures. 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 the replay will be available on our website for two weeks. And now let me turn the call over to Dr. Kishore Singh-Reboot, CEO of MaxLinear.

Kishore. Dr. Kishore Sindhribut | Chief Executive Officer

Thank you, Leslie, and good afternoon, everyone. We are excited about our strong Q3 2025 results and the strengthening momentum of our overall business over the last 12 months. Our Q3 2025 revenue of $126.5 million represents 16% sequential and 56% revenue growth year-over-year, and drive the substantial increase in non-GAAP net income both sequentially and year-over-year. Our focused investments in data center, optical interconnects, wireless infrastructure, PON broadband access, Wi-Fi 7, Ethernet, and storage accelerator products are enabling us to lay the significant groundwork required for broadening customer traction, new and increased content opportunities, and sustained growth in 2026. In our infrastructure end market, in Q3, revenues were up 16% sequentially and up 75% on a year-over-year basis. We also expect strong revenue acceleration in 2026 as new design wins begin to ramp across our portfolio. In high-speed data center optical interconnects, we are on track to deliver $60 to $70 million in revenue in 2025 and accelerating growth in 2026. As evidence, our Keystone PAM4 DSP family is now qualified at several major data centers in the US and Asia for 400 gig and 800 gig deployment starting 2026 as part of their AI infrastructure build out. We also made significant progress with our Rushmore family of PAM4 TIAs and 200 gigabit per lane DSPs for 1.6 terabit interconnections and are on track for production ramp in 2026. Rushmore advances our DSP roadmap and provides foundational technology for emerging optical connectivity trends, such as active electrical cable, LROs, LPOs, and co-packaged optics for 200 gigabit per lane and 400 gigabit per lane implementations. In wireless infrastructure, we expect increases in carrier capex spending to drive demand later this year and throughout 2026. Our Sierra 5G wireless access single-chip radio SOC and our millimeter wave and microwave backhaul transceivers and modems are seeing a significant increase in design activity and customer traction. In Q3, two major North American telecom providers launched new Sierra-based 5G macro remote radio unit products, which will continue to ramp through the end of 2025 and in 2026. At the IMC conference earlier this month, we also jointly announced and showcased Pegatron's next generation 5G Open RAN macro radio unit powered by our Sierra product. As we look ahead, we project sustained growth in 5G wireless access and backhaul as the needs for cloud and edge AI functionality continue to grow in 2026 and beyond. Beyond wireless infrastructure, within our infrastructure category, we continue to see strong design and success for our Panther family of hardware storage accelerator systems on chip solutions across Tier 1 network appliance and cloud service providers. In Q3, we announced our Panther 5 storage accelerator that delivers ultra-low latency, 450 gigabits per second throughput, and PCIe Gen 5 connectivity. The announcement coincided with a joint keynote address with advanced micro devices at the FMS 2025 storage conference on the transformation of enterprise data storage. Panther delivers significant advantages over traditional software-based compression, including a four times improvement in power savings and more efficient usage of CPUs and CPU cores and AI accelerators. Moving to broadband connectivity, we saw another exceptional quarter of growth for the combined portfolio of fiber ponds, cable docks, and Wi-Fi solutions, driven by the early increases in service provider cap expanding that has contributed to continued booking strength and incremental demand. Broadband was up 80% year-on-year, and connectivity was up 50% year-on-year. This quarter, we're beginning 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 a second major tier 1 North American carrier. In cable broadband, we are seeing the initial commercial rollouts of DOCSIS 4.0 led by smaller MSOs. We expect DOCSIS 4.0 RAM to accelerate in 2026, which in turn drives content opportunities for our Wi-Fi 7 and Ethernet solutions. In the Ethernet market, we continue to see the adoption of our innovative high-functionality, low-power consumption, 2.5 gigabit Ethernet switch and PHY portfolio into commercial, enterprise, and industrial applications. This market continues to grow as demand for higher data rates and increased bandwidth intensifies, and 2.5 gigabit Ethernet is well positioned to bridge the gap between gigabit Ethernet and costly higher speed options of 10 gigabit Ethernet. In conclusion, in the last 12 months, we delivered significant and sustained improvement in our business, driven by strong revenue growth, growing profitability, and positive cash flow generation. Through our strategic investments in high-value end markets, such as high-speed data center optical interconnects, wireless infrastructure, multi-gigabit PON access, storage accelerators, Wi-Fi connectivity, and Ethernet. We're driving strong product traction with Tier 1 customers and partners. Our success in these areas, combined with the incremental tailwind from the ongoing recovery in our core markets, strongly positions MaxLinear for exceptional growth in 2026 and beyond. With that, let me now turn the call over to Mr. Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Thank you, Kishore. Total revenue for the third quarter was $126.5 million, up 16% from $108.8 million in the previous quarter and up 56% from $81.1 million in the third quarter of 2024. Infrastructure revenue for the third quarter was approximately $40 million, broadband revenue was approximately $58 million, connectivity revenue was approximately $19 million, and our industrial multi-market revenue was approximately $9 million. GAAP and non-GAAP gross margin for the third quarter were approximately 56.9% and 59.1% of revenue. The delta between GAAP and non-GAAP gross margin in the third quarter was primarily driven by $2.6 million of acquisition-related intangible asset amortization. Third quarter GAAP operating expenses were $113.2 million, and non-GAAP operating expenses were $59.5 million. The delta between GAAP and non-GAAP operating expenses was primarily due to stock-based compensation and performance-based equity accruals of $32.5 million combined, restructuring costs of $11.3 million, and acquisition-related costs of $9.6 million. GAAP losses from operations for Q3 2025 was 33%, and non-GAAP income from operations in Q3 was 12% of net revenue. GAAP and non-GAAP interest and other expense during the quarter was 2.1 million and 1.8 million, respectively. In Q3, net cash flow provided in operating activities was approximately 10.1 million, We exited Q3 of 2025 with approximately $113 million in cash, cash equivalents, and restricted cash ahead of our 2025 plan. Our day sales outstanding was down in Q3 to approximately 39 days. Our gross inventory was approximately flat versus the previous quarter with inventory turns improving to 1.8 times. This concludes the discussion of our Q3 financial results. With that, let's turn to our guidance for Q4 of 2025. We currently expect revenue in the fourth quarter of 2025 to be between $130 and $140 million. Looking at Q4 by end market, we expect to see some seasonal moderation in broadband and connectivity coming down from Q3, but expect growth from infrastructure and the industrial multi-market. We expect fourth quarter GAAP gross margin to be approximately 56.0% to 59%, and non-GAAP gross margin to be in the range of 58 and 61% of revenue. We expect Q4 2025 GAAP operating expenses to be in the range of 92 to 98 million. We expect Q4 2025 non-GAAP operating expenses to be in the range of 57 to 63 million. We expect our Q4 GAAP interest and other expense to be in the range of approximately $2.2 to $2.8 million. We expect our Q4 non-GAAP interest and other expense to be in the range of $1.9 million to $2.5 million, with FX volatility being the primary risk. We expect a $2.5 million tax benefit on the GAAP basis and a non-GAAP tax provision of approximately $2 million. We expect our Q3 basic and diluted share count to be approximately 87.5 and 91.1. In closing, it's gratifying to see some strong improvement in our business over the past four quarters, marked by continued growth in customer orders, expanding traction across product portfolio, and our solid return to profitability. Our focused investments in strategic high-growth areas such as optical high-speed interconnects, wireless infrastructure, storage, Ethernet, Wi-Fi, and fiber PON gateways are beginning to generate exciting business opportunities that we expect to further grow in revenues in 2026. This reinforces our confidence in our sustainable growth and profitability into 2026 and beyond. With that, I'd like to open up the call for questions.

Operator | Conference Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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. One moment please while we poll for questions. Thank you. Our first question comes from the line of Tor Savinberg with Stifel.

Please proceed. Tor Savinberg | Analyst, Stifel

Yes, thank you, and congratulations for the results. So I had a question for you, Kishore. So, you know, with the Q4 guidance, companies pretty much tracking to 30% year-over-year growth during 25. You did say you expect exceptional growth in 26 and beyond. I know you typically don't give guidance, obviously, more than a quarter out, but Can you, you know, maybe put some context on that comment in relation to the, you know, about 30% that the company is going to grow here in 2025?

Dr. Kishore Sindhribut | Chief Executive Officer

Thank you, Tory. Obviously, you know, 2025, if you compare it to 2024, was exceptional growth overall, and the return to profitability now is pretty solid. So, and that's quite a significant growth in the overall of the semiconductor company. You look forward, if you look at the street numbers, they're about 20% odd into 2026. And that, I think, is about two times what the industry is expecting. Having said that, we have a lot of optimism based on the design win activities across our product portfolio, be it infrastructure, inside infrastructure, the optical customer wins, and the timing of the volume ramps. And then we have our uh winds in wireless infrastructure those are accelerating and also our store is actually a business we do expect broadband to moderate somewhat if you look at how strongly broadband has grown as the recovery has set in but we still see growth with taking market share in these areas so overall we try to be very cautious because a big part of the growth is coming through the infrastructure markets And it's a pretty large, complex systems. And, you know, and there's a lot of customer concentration, some of these big markets. So we are just, we are being conservative, but we also are at the same time displaying optimism in terms of the sheer breadth of the acceleration that we are seeing based on design and customer activity. And, you know, what I call booking strength that we are seeing, you know, so. I would like to tell you more, but at this point, you know, let's continue to deliver the numbers is the way I look at it.

Tor Savinberg | Analyst, Stifel

Yeah, no, that's fair. And as far as the infrastructure segment, so, you know, obviously, you know, we know what's going on on the data center side and the optical business you have there. But I think the one with the more surprising thing is all the strength that you're starting to see on the wireless side. Obviously, you have some, you know, company-specific companies product cycles there, but it also sounds like the service providers are starting to spend some more CapEx again. So, you know, just hoping you could add a little bit more color there and, you know, how should we think about the wireless part of the infrastructure segment for Canada 26?

Dr. Kishore Sindhribut | Chief Executive Officer

Absolutely. I do see the wireless infrastructure, you know, there's a the telecom operators are beginning to spend on their infrastructure now. So I know three years ago that was the topic du jour, but really now they're spending coming from a period of lean investment. And we are seeing a lot of traction for our Sierra product line. And we are the only single chip solution provider for the remote radio units for the RAN network. So we're getting pretty strong traction. And I talked about And the quality of the product speaks for itself with the two big North American telecom operators who are actually Q3 qualified are in the ramp phase. Now, how much do we expect it to grow? If you combine our millimeter wave, microwave backhaul infrastructure and wireless access is still in its initial ramp with Sierra, I think we see a pretty strong growth, maybe in the same order of, you know, as optical, let me put it that way, in the same order of magnitude. But I do want to emphasize this point, right, is that infrastructure is a category of a max linear now you're seeing is getting substantially as a big percentage of overall revenue. That was the growth that we had invested strategically for the last five years. And now I still remain by my position that in the next two to three years, this infrastructure revenue should be in the $300 to $500 million range. And I feel really, really proud of our team that we stick with the plan and we're executing to it. Okay? That's great, Carlos. Thank you, Kishore. Thank you, Dory.

Operator | Conference Operator

Thank you. Our next question comes from the line of David Williams with Benchmark Company.

Please proceed. David Williams | Analyst, Benchmark Company

Hey, congrats on the really strong progress here. It's great to see, and thanks for letting me ask the question here. So maybe first, George, if you kind of think about the optical side of the business and the strength that you've had there, you've got some qualifications, you've talked about some ramps. Just kind of wondering if you maybe could give us some insight into how you think that will trend for next year. Could it be another doubling of that revenue? Or maybe how do you think about just that infrastructure piece or the optical piece and infrastructure things?

Dr. Kishore Sindhribut | Chief Executive Officer

I would like to say everything is a possibility, given where the traction is right now, but we have also seen movements in the shifting of where we think a certain particular data center is going to ramp or a large enterprise customer. Currently, a big part of the revenue in this year on the optical at the data center connectivity is coming from 400 gigabit solutions, but now towards the end of the year, in 25 and into 2026 800 gigabit is is beginning to grow so that that kind of gives you a sense of our momentum in terms of what which data centers where what we are tracking and i feel that the 800 gigabit side we are not any different than any and and the normal course of where the data center guys are in terms of the various rollout um so i think I would have liked to see even more traction than I'm speaking about, but I am also now, while we're very proud of where we are, but we butted against pretty entrenched to other competitors, and that's taken a while to start cracking open, and it is definitely cracked open. And as far as OEMs are concerned, all the major OEMs, we are part of their solution portfolio, and I hope we are their favorite one, if not today, in the future, right? That's our goal here. Okay?

David Williams | Analyst, Benchmark Company

Perfect. Thanks for the color there. And then maybe, Steve, just kind of thinking about the gross margin guidance, I think just the – 30 basic points there that you're guiding to would imply maybe a 64%, 65% type of incremental margin. Does that seem fair? And what are maybe the moving pieces there for that margin improvement for next quarter things?

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yeah, David, I think we're kind of finally starting to see things improve a little bit. I mean, as revenue, you know, really starts to ramp back up to some more material levels and naturally the mix. as we talked about a while. I mean, you're seeing our infrastructure business continue to grow at a faster rate than the rest of the business, has a little higher gross margin mix. And so, pleased with the progress looking into next year. You know, hopefully we can continue to see that.

Dr. Kishore Sindhribut | Chief Executive Officer

You know, and as the growth is picking some momentum and, you know, the lead times and the fabs and everything have dramatically increased as well. We're not the only one, looks like, who needs capacity. And, you know, the fabs have been increasing prices as well. And, So we are not where we wanted to be on gross margins, but all the good work our team does seems like the facts are consuming it. So, yes, we are making good progress, but not as much as I'd hope on the gross margin front.

David Williams | Analyst, Benchmark Company

Well, thanks again for the time, Dylan. Certainly appreciate it. It's great to hear the much better, more optimistic outlook here.

Dr. Kishore Sindhribut | Chief Executive Officer

Thank you, David.

Operator | Conference Operator

Thank you. Our next question comes from the line of Joe Quattrochi with Wells Fargo.

Please proceed. Joe Quattrochi | Analyst, Wells Fargo

Yeah, thanks for taking the question. Maybe another one on the data center optical side. You know, just trying to take another stab at your expectations for 26. I mean, we've seen a lot of, a number of AI data center, you know, announcements over the last few weeks. Just curious how your visibility or pipeline of opportunities has changed since a quarter ago.

Dr. Kishore Sindhribut | Chief Executive Officer

Look, a quarter is a long time, but also it's a very short time in the data center world, right? These interops, one of the biggest learnings for me is the interops always take longer than they tell you, and they're always juggling their current build-outs versus qualifying new players. So having passed the threshold with the major data centers on the interops, it has a way of generating its own momentum of maxillaneous product. So naturally, you can tell by our tone, we're very, very excited, and we're getting a lot of what I call pull now in terms of design win activity and such. So obviously, we're feeling very, very better. And like I told in response to Tori's question, we feel very, very good. And the growth that we expect for optical or wireless infrastructure is of the same order, and infrastructure will grow very, very nicely next year.

Joe Quattrochi | Analyst, Wells Fargo

Got it. And then on the broadband connectivity side, you know, I appreciate that it's typically seasonally down in the December quarter. Any sort of help in just terms of kind of framing, you know, this year relative to normal seasonality, just given I think there's been some inventory kind of, you know, things at play there?

Dr. Kishore Sindhribut | Chief Executive Officer

Okay, maybe Steve will give you a little bit more. Normally we see seasonality that sometimes December, sometimes is the Q1. So we have always had that uncertainty for the ones who have followed us historically. So I would say this year is a little bit different in the sense the core recovery was happening, but the big growth came through what I call cable recovery and But we are winning designs on the pawn side. We're very excited about the major telecom provider. Hopefully you'll get one of our boxes at your home, so to speak. So pawn is poised for very strong growth, but we do expect moderation. Look, we grew 80% year over year. So I think by any means, the broadband market is not naturally that kind of a growth vehicle, but it will moderate.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yeah, I think the only thing I would add, Joe, is maybe speak a little bit broader in 26 and 27. I mean, we are seeing nice CapEx spends over the next two years. You know, you're seeing the telco guys rolling that out right now. We're certainly participating, as Kishore stated, and that's exciting because it's new business for us. At the same time, you still got kind of this DOCSIS upgrade that's happening that has a meaningful content improvement. And, you know, that's going to start kind of late 26 and even into 2027. I think some of the cable operators have been delayed a little bit with some of the amps and the node upgrades that are happening. So maybe to the earlier point, yes, a little bit of moderation in the short term with regard to seasonality. But I think our outlook is, you know, continues to be strong over the next couple of years.

Suji Del Silvia | Analyst, Roth

Thank you.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Thanks, Joe.

Operator | Conference Operator

Thank you. Our next question comes from the line of Tim Savojo with Northland Capital Markets.

Please proceed. Tim Savojo | Analyst, Northland Capital Markets

Hey, good afternoon, and my congrats as well on the strong results. I want to come back and touch on a couple of questions that have already been asked, and I guess it has to do with the accelerating growth commentary. which I don't know if that first comment was relative to the entire business, 26 over 25, but I think I definitely heard that comment made with regard to the optical data center piece. I just wanted to kind of clarify that and, you know, get, I guess, a little more color on where you guys are headed with those comments.

Thanks. Dr. Kishore Sindhribut | Chief Executive Officer

So, uh, clearly, uh, it's not related to where the business was 24 versus 25 is really related to the new opportunities that we are in front of us. Obviously the new opportunities will grow much faster than what the overall business that it's pointing to based on streets, uh, numbers around 20% growth or so for the company. So, uh, the acceleration we're talking about is really in terms of, uh, the various opportunities here. Okay. The first one is the data center connectivity. Then I told wireless is in the same order infrastructure. And then we have storage accelerators. Those are all brand new or exciting data center type driven markets. Those are where the exciting growth is. Very, very strong growth. They're all about the company's overall growth rate. then we said broadband will moderate to its potentially normal level. But within broadband with the puts and takes, PON is going to grow strongly because it's large North American operator coming online. And so those are the buckets I would look at as strong growth opportunities that are accelerating. And at the overall company level, that translates to a pretty robust growth that I referred to earlier.

Okay. Tim Savojo | Analyst, Northland Capital Markets

Yeah. Okay. Um, let me, let me try one more time. So if we take AI optical in particular, you know, somewhere in the middle of your range, and I'd be interested in as an aside as to whether you have any thoughts about the higher low end of that 60, 70 million ranges that we stand here in October. Um, but assuming we're mid range, that's, you know, 80, 90% growth, something like that. So accelerating growth there would be, you know, up toward triple digits. And from an absolute dollar standpoint, I think what you're telling us is that growth you should see on the wireless side as well. I want to make sure I got that right. And I'll have one more very quick one.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yeah, so Tim, since nobody likes too short answers, I'll try it. Joking aside, look, I think we're very excited about the outlook on the infrastructure side. I mean, optical is clearly where we've been spending a lot of time and efforts, and we're seeing, you know, that potential that you're referring to. I think we're having a great year this year. It's very back-end loaded, and, you know, looking out into next year as these new data center wins. know ramp into production uh yeah i mean these numbers go up meaningfully and we're very excited about that are there other pieces in infrastructure that continue to do well yes absolutely and and you know we're excited about those also uh but but data center is going to lead the way from a growth number nonetheless great and that's actually very relevant to my very brief final question which is on the q4 guide Tim Savojo | Analyst, Northland Capital Markets: Looks like infrastructure is doing most of the work there, maybe up 20% plus sequentially. Could you break that down between optical or wireless or any other big drivers for that sequential growth in Q4?

Thanks. Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yeah, look, it's a good question. I guess I would just say with regard to some of that in-market guidance. So you're right. Infrastructure is the biggest contributor in Q4. um i i think that was for the most part expected that you would see uh that particular end market growing the most i mean some of the moderation that we spoke of earlier on broadband and connectivity is modest i mean indeed modest it's not that big uh industrial multi-market is on on the mend i would say and and we're starting to see some some improvements there but i'll I'll keep from going into specifics on all the line items that drive infrastructure growth. But, you know, but suffice it to say, we're very excited about some strong backend infrastructure growth that'll lead to nice revenues in 2026. Okay, operator, maybe next question.

Operator | Conference Operator

Yep, next question. comes from the line of Christopher Roland with Susquehanna International Group.

Please proceed. Christopher Roland | Analyst, Susquehanna International Group

Thanks for the question and congrats, guys. So this one's probably for Kishore. So Kishore, I felt like I sensed a bit of hesitation to really extend yourself in the optical guide or comments for next year. You did mention stuff like competition, and, you know, there's a lot to this beyond just kind of pure DSP performance, like laser availability and or bundling and other dynamics. So I was wondering if you could kind of expand a little bit more there on your outlook and what gets you to, like, hyper growth outcome for next year for MaxLinear versus like just a solid growth outlook?

Dr. Kishore Sindhribut | Chief Executive Officer

That's a very complicated question with lots of dynamics there. I would say, Chris, Yes, availability will be a big issue, whether it is optics or silicon even, for example, that's a big factor. And the other factor is also the timing of our wins and when they translate to actual revenue growth. So at this point, our growth assumption is based on what's already started ramping. So based on that, I can qualify that it'll be very solid growth, very solid growth. Hyper growth is a very hyperbolic question. So it'll take things that are already ramping to be much more, we get even more share than we planned for is one way to look at it. So whatever growth we're referring to, we're not referring to based on many more new design wins, right? We can only project growth based on what we have won and what has started ramping, okay? So I think that kind of sets the stage. So hyperbolic growth would be based off getting much more share than we thought, and solid growth would be based on the shares we assume at this stage in our play in the data center, okay?

Christopher Roland | Analyst, Susquehanna International Group

Perfect. And then also probably following up on your broadband comments, just as we, you know, you had some comments around DOCSIS 4 as well. Like is this going to be a big driver of new upgrades here and for this business finally? Or do you think like the fiber opportunity and growth there is more meaningful for you guys as we look forward?

Dr. Kishore Sindhribut | Chief Executive Officer

You know, as the professor always said, it depends. You know, it depends on a number of things. One of the things that it depends upon is, you know, DOCSIS 4.0 ramp. And clearly the main players have delayed their DOCSIS 4.0 ramp because the network upgrades have that they plan for, they have sort of slowed down for whatever reasons, right, due to the complexity of it or not. So that could make a huge meaningful difference on the cable growth. So that brings the question, as you rightly pointed out, on the fiber side. So we have a large North America operator ramping. We are winning a bunch of shares right now and the timing of those. So at this point, when I think of broadband, There are two factors that would make for a meaningful broadband growth and not overly moderated as we were alluding to. One is the DOCSIS 4.0 ramp and rollout. And we are very confident of the North American telecom operator ramping, the second one, the big one. And there are a couple of others that, if the timing is right, that could also set up a nice growth for broadband.

Fantastic. Christopher Roland | Analyst, Susquehanna International Group

Thanks, guys.

Dr. Kishore Sindhribut | Chief Executive Officer

Thank you.

Christopher Roland | Analyst, Susquehanna International Group

Thanks, Chris.

Operator | Conference Operator

Thank you. Our next question comes from the line of Ananda Barua with Loop Capital Markets.

Please proceed. Ananda Barua | Analyst, Loop Capital Markets

Hey, yeah, thanks, guys. And, yeah, congrats on the steady progress here. It's good to see. Look, this is a bigger picture growth question. We're all thinking the same way. Let me just ask you this, Kishore. Coming out of COVID, you know, you put up a good growth year coming out of COVID, not dissimilar to 2025, the growth rate. And then you had an amplified growth rate coming off of that year as well with the first year coming out of COVID off of a negative Comp 2. So there's similarities. I think that's why people are probably focused on it. What would be the things, are there any meaningful differences with the business, any meaningful differences with the supply chain, you know, any meaningful differences with inventory right now that would have the pattern coming out of this time around be different than COVID. Obviously, I understand COVID is unique, but the growth rates are actually similar. And you guys have more incremental punchy opportunities market opportunities that you've been preparing for coming out of this pause than you actually did back then. So let me ask that. And then I have a quick follow-up as well.

Dr. Kishore Sindhribut | Chief Executive Officer

Thanks. Let me try to take a stab at your question. There's a fundamental difference between what we are talking today versus what you saw in the COVID phenomenon, as they call it. That was a very broadband-driven growth scenario. And now it's really infrastructure being a huge part of the growth. And secondly, as always, these events happen. Businesses change, legacy businesses. And so right now, the infrastructure goes, there are components of it that are really primarily brand new revenues. And they have a huge TAM and massive TAMs, much more than anything we were looking at before, where our share of the market is very tiny. So there's a large growth front in front of us as we become successful and continue in our strategy focus and investments. That's I would say. Secondly, the inventory situation is totally different. Nobody is doing excess talking whatsoever, right? So now we are in a place where sell through and sell in, if you will, are kind of in balance equilibrium, let's call it, right? So there's no unusual sort of events of that nature. So on the supply chain side, dramatically different. There are geopolitical issues that are in play now, right? And then there's a large dependency on the foundry choices one can have in the associate markets versus non-associate markets. So very, very different. And the advanced nodes are much more entrenched now than they used to be before. So if you look at 16 nanometer and beyond, it's all FinFET based, versus previously, it was older nodes than 16 nanometers. So I just want to leave it there. And the fabs have now completely muscled on their pricing power. So you have to be incredibly more innovative to maintain your margins, then it's sort of one trick scenario that you can charge margins because you were there at the right time for the right market, but if you're going to be a company like MaxLinear that cross portfolios, you really have to have a sustainable, consistent execution and value proposition to maintain or grow your gross margins. I would say that with the comprehensive color. Okay, so let me allow you to ask your second question. Let's see, maybe Steve is in a better position for that.

Ananda Barua | Analyst, Loop Capital Markets

Yeah, go for it. That's awesome. Yeah, just real quick on neoclouds. With more hyperscale workloads, AI workloads moving to neoclouds, large ALIs moving to neoclouds, does that necessitate you guys? This is really a infrastructure question, a DSP question. Does that necessitate you guys having to broaden out your relationship set to participate in those. Just fill out that sort of whole paradigm for us. That would be great. Thanks. So that's it for me.

Dr. Kishore Sindhribut | Chief Executive Officer

Okay. That's a very, very broad, generically generic question, right? We have to broaden our relationships, but we also have to deepen our relationships, which is a very challenging proposition, right? Unless you are in the revenues, conversations are difficult to play. Now that we are in the revenues, those conversations get... It's like a natural, spontaneous, you know, de-frictionization of the system, right? So what I would call acceleration. I'm just worried about the acceleration word, but yeah, I'll use it here. So as you start generating revenue and win the conference, they naturally lead to more dialogues. That's just part for the course. So where you're successful, you have more and more conversations and you can broaden those conversations. Where you're trying to get in, you really have to narrow and deepen those conversations because the general question to you is prove yourself first before you want to talk about everything in the world. But that's pretty standard in any market and the data is much more challenging because they are a world unto themselves, right? So that's how I would describe it. And, you know, the amount of money you have to spend in marketing and support and all is incredibly higher even before you have any revenue. So that's been the other mitigating experience trying to get into these markets. Okay?

Ananda Barua | Analyst, Loop Capital Markets

Great context, Kishore. Thank you so much.

Appreciate it. Dr. Kishore Sindhribut | Chief Executive Officer

Yes.

Ananda Barua | Analyst, Loop Capital Markets

Thanks, Anand.

Operator | Conference Operator

Thank you. Our next question comes from the line of Quinn Bolton. with Needham and Company.

Please proceed. Quinn Bolton | Analyst, Needham and Company

Thanks for letting me ask a couple of questions. I guess maybe I'm a little just thick-headed, but I just wanted to come back on the broadband comments. You were talking about moderating or moderation in that business. Are you talking about the growth rate is going to moderate from something like 80% year-on-year to a lower percentage but still growing, or are you talking about the business actually potentially declining next year or And if it declines, is it simply just maybe normalization in cable, the DOCSIS 4 ramp really not ramping into late calendar 26? And so the moderation cable kind of offsets the growth in pawn. Is that the right way to be thinking about it? Or do you think the overall business just still grows? It's just not going to grow at 80%.

Dr. Kishore Sindhribut | Chief Executive Officer

Hey, Quinn, nobody accused you ever of being thick-headed. I just want to clarify that first, okay? The second part of it is you're absolutely right. We're talking absolute terms and not in percentage terms, right? We don't see overall decline, but on the broadband side, we just see sort of, you know, ho-hum growth through the next year, so to speak, range we are thinking about. Can it grow? I think it was asked by Chris Rowan. that you got the fiber pond design bins that are in place and the DOCSIS IV ramp has to set in to see some good growth beyond this year. That's fairly correct. So, Steve, do you want to add anything more?

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

No, no. I mean, look, the moderation comment is around Q4. That was the guidance. We just talked about Q4. We haven't given any guidance beyond that. But my comments about the market and the CapEx spend, I mean, kind of to Kishore's point, ponds picking up, there's lots of great opportunities. These are all market share gains from X linear market we haven't been in. So really exciting times from that standpoint. And then I think the excitement around DOCSIS is a 50% constant increase, right? So you got the DOCSIS rolling out. You know, we're shipping products this year, but it'll kind of pick up next year and even into 2027. So that content increase, you know, is exciting.

Quinn Bolton | Analyst, Needham and Company

Got it. Makes sense. And maybe a longer term question for you, Kishore. I think it's pretty well known that optical modules are somewhat supply limited in the near term by supply of EML lasers. But you mentioned silicon as a potential constraint as well. And I think your Keystone product being manufactured at Samsung instead of TSMC, where all your competitors manufacture their GSPs. How much of an advantage do you think that could become if the market for three to five nanometers stays tight?

Dr. Kishore Sindhribut | Chief Executive Officer

Oh, our keystone, I think it's public information, is the first probably the only 5 nanometer CMOS solution for 100 gig lane product that's in production. And our Rushmore, which is the 1.6 terabit solution, 200 gig per lane, is in Samsung. So that gives you some level of natural diversification because the biggest demand between 800 gig and 400 gig and 1.6 terabit will center around those 5 nanometer node process. And the tightness comes in in the supply there because there's a lot of GPU vendors, et cetera, that are really in mass production in five nanometer and moved into three nanometer moving there. So these are the two nodes that are the most highest occupancy where scale is super, super important for getting more capacity. So while that is a generic comment, it also shows that We have to be cautious about growth. People are constrained, what I call the hyperbolic growth. There are all kinds of factors, right? So it should help in the long run, but in the short run, we are in production in fine animator with our keystone product line, and that's the node we are in. And we're very happy with the support we are getting, of course. Will we need more? There is more growth that just comes our way? Absolutely. It's very hard to plan at this point because everybody's allocated their capacity, and then you have to fight for the extra if you will. Okay? Got it. Thank you, Kishore.

Operator | Conference Operator

Thank you. Our next question comes from the line of Richard Shannon with Craig Hallam.

Please proceed. Richard Shannon | Analyst, Craig-Hallum Capital Group

Well, thanks, guys, for letting me ask a couple questions here. First one's probably for Keyshore on DSP here. On the last earnings call, you talked about the potential with your Rushmore family to potentially have some level of incumbency being the first one to be a supplier in any one particular situation. Wondering if that's playing out here. You're expressing certainly a lot of enthusiasm for how things are going there. Would love to get a sense of the degree to which that is happening or you think there's a good chance of it happening.

Dr. Kishore Sindhribut | Chief Executive Officer

So, obviously, we talked of Keystone, which is what is driving the revenues, the Keystone family of products. But Rushmore is our 200 gigabit per lane that we demoed at OFC. As you are all aware, the incumbents announced that product maybe a few months before us, and so they're a little bit farther along. But our product is highly more differentiated in our view and our belief. so we hope to win we not hope we know we'll be in production in 2026 but at this point we're not making any revenues associated with in my mind uh based on what we have been through on the 200 gig per lane and there's also a a rollout issue on 1.6 derivate at the data centers as well that's really you know 800 gig is not fully rolled out yet too i know we like to get ahead of it and focus on roadmap I think there's time for 1.6 terabit and, uh, but we're in a very good place. So, so Rushmore, yes. Uh, best case would be the end of 26. Uh, but you know, I'm not, uh, I'm being realistic and, uh, but Keystone, Keystone, Keystone, right. Rushmore would be, uh, is a good plan for 27. Absolutely.

spk09

Okay.

Richard Shannon | Analyst, Craig-Hallum Capital Group

Okay. Thanks for that feedback. Uh, my second question in an effort to, uh, Express some love for all of our children. Let's ask one quick question here on the industrial multi-market business here. Obviously, it's come down a lot the last few years. Looks to be kind of bubbling along the bottom here so far this year. How do we think about the potential scale of this business in the next one to two years? Is this something where you're applying much effort here from a product and sales and marketing point of view to grow it nicely, or is this just more of an afterthought relative to some of the other dynamics in your business?

Thank you. Dr. Kishore Sindhribut | Chief Executive Officer

Look, There are some businesses, how much ever money you put in, they take their own time, right? So I would call that we're doing what I call sustainable growth rate investments, as you should in this marketplace. The big hit happened because of geopolitics issues and generally in the industrial market space itself. It's distant memory now, but we lost significant revenue when we were hit with the expiry of our licenses for the government to ship to certain customers in Asia. So the drop was associated with that. And then at the same time, When the market went down, we exercised pricing discipline to maintain a healthy gross margin business. So you could argue that some of those are very deliberate decisions, and some of them were really, really we were recipients of things out of our control. Having talked about investments, even on our industrial multi-market investments are really, really focused around edge cloud data center level of investment. There's a lot of new ways of doing old things inside a data center. You know, I don't want to go into the details into that stuff. And those are giving us opportunities to reposition a portfolio and investments really focused on edge and cloud data center. And we are investing in those elements of it. As a company, our focus right now is a huge focus is on the hugest dollars that are going on are really on the edge and enterprise and cloud infrastructure. And they consume so many components, even in the industrial analog space. And that's where our focus of our investments is. So in short, we are investing, right? That's the statement. Okay. Okay. Okay, fair enough. Thank you, Kishore.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Thanks, Richard.

Operator | Conference Operator

Thank you. Our next question comes to the line of Carl Ackerman with BNP Paribas.

Please proceed. Carl Ackermann | Analyst, BNP Paribas

Yes, thank you. I have two as well. First question, you know, as we think about your ability to see the broadband segment revenue returning to $100 million a quarter, Could you help us frame the opportunity from your, I guess, your gateway opportunity within that now that it is broadening beyond the single carrier today?

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

So, well, okay, a couple of things. So the pond business is new for us, right? This business has been growing over the last, call it, year and a half. We've gotten a lot of traction. Kishore spoke earlier about the, you know, the two big North America guys that are now using our product. So that's very exciting. But we have several other customers that we're either in production with or designed into on the pawn front. Maybe, I'm not sure if this is exactly your question, Carl, but if I think of content opportunities inside of the gateway, from a dollar content standpoint, a pawn gateway or even a cable gateway, you're talking could be $40 to $50 of content. You know, a lot of that comes from Wi-Fi, Ethernet, the SOC itself. So those are the bigger drivers. We continue to see content increases, right? So that's a big part of the opportunity. It's not necessarily just about unit growth or share gains, which, you know, we're seeing both of right now and expect to see over the next two years. But then that content gain is, I think, the other big driver of revenue.

Carl Ackermann | Analyst, BNP Paribas

Got it, understood. Shifting gears a bit, could you speak to the breadth of design engagements you have in optical DSPs for 800 gig? And second, when should we expect your revenue from 800 gig to cross over your revenue from 400 gig?

Dr. Kishore Sindhribut | Chief Executive Officer

Thank you. Okay, let me try to answer the question on the breadth of design engagements. There is... The breadth of the design engagements from our point of view, from where we are, is really all the OEMs or module makers, if you will, where it engages all the major module makers in Asia and in America, whether they're headquarters or not, okay? And so that's a massive engagement across all variations and configurations of not just transceivers, but beyond optical transceivers, okay? And so, So you have to take that into perspective. Now, if you go to the data centers, every data center has got their own roadmap and timeline when they're transitioning. For example, Google is well gone beyond 800. That's well past lost. Let's call it that. We never even engaged with them. I don't think anybody else is engaged except one player. And then there's NVIDIA, which is a whole different new magnitude and size of themselves. We are not participating with that, we talked to you about. But then the remaining areas are going at their own different cadence on, and they're lagging, if you will, in the terms of the deployments. So each engagement, how broad it is, it depends on when you ask the question. At this point, you know, we are engaged with them, but where are we shipping? That's a subset of the hyperscalers between the U.S. and Asia. Okay?

Got it. Thank you. Operator | Conference Operator

Okay. Thank you. Our next question comes from the line of Suji Del Silvia with Roth. Please proceed with your question.

Suji Del Silvia | Analyst, Roth

Hi, Kishore. Hi, Steve. Congrats on the progress here. Kishore, you talked about DOCSIS IV having adoption delays or pushouts. Are there technical issues that you could talk about in a little detail to help us understand what is maybe gating larger flagship adoption of DOCSIS IV?

Dr. Kishore Sindhribut | Chief Executive Officer

Okay, great question. No news. It's as I expected versus what you guys think it should be, right? We know the cable world incredibly well. As I suspected, as we told that, there'll be a lot of DOCSIS 4.0, but most of the deployments will be ultra-DOCSIS. So because the network upgrade, whether it is the node, whether it is the amplifiers, the amps in the system, it's a lot of work. And they just have stability issues in the network to get there. So it's a very slow process. And so they're doing the incremental approach where they hurry us all to invest and be ready, but the deployment is taking the way it does. So that's the only reason. And so... So I still will conjecture that the ultra-doxys 3.0 will be the massive deployment. And, yeah, that would be one statement. And that will go across continents. It's not just a – because you just want to keep in mind 4.0 is a very North American phenomenon. So, Steve, you wanted to say something? Go ahead, yeah. No, it was 3.1.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Oh, sorry, 3.1. Yeah, okay, great.

Suji Del Silvia | Analyst, Roth

Okay, great. Thanks, guys. And then perhaps for Steve, any update on the arbitration? I know that we're approaching the time for that to commence.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Sure, sure. Yeah, no big update. I think we're on track arbitration this quarter, but that's going to extend next year. So hopefully we see some resolution sometime in the first half of next year. So on track. I think we're feeling very positive about it.

Okay. Suji Del Silvia | Analyst, Roth

All right, great. Thanks, guys.

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yeah, thanks.

Operator | Conference Operator

Thank you. Our last question comes from the line of Tori Fabenberg with Stifel.

Please proceed. Tor Savinberg | Analyst, Stifel

Yeah, two quick follow-ups. I promise they're quick. First of all, so when I look at your various segments, it looks like broadband right now is running about, you know, 10 percentage points above infrastructure. But given the moving parts in calendar 26, it sounds like infrastructure will potentially be slightly bigger as a percentage of revenue. Do I sort of have that direction right?

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Well, so certainly I think we've been consistent in saying infrastructure is going to be quite a bit bigger, and I think it's on its way. I think you're heading in the right direction.

Tor Savinberg | Analyst, Stifel

Very good. And then the last one for you, Steve. So OpEx is coming in a little bit higher than where it was. I mean, obviously, you know, your revenues are $6 million higher from Q4, so that's probably expected. But I was just wondering how we should think about OPEX, especially in relation to the restructuring you had early in the year. Does OPEX come down a little bit in the first half, or is this sort of a new baseline?

Steve Litchfield | Chief Financial Officer & Chief Corporate Strategy Officer

Yeah, so I think we feel – so you're right. It was a little bit higher in the quarter, and the guidance a little bit higher as well. I mean, look, you can see the revenue ramps that – we guided to or we delivered and guided to, I think as you look into next year, that's going to continue. And so I think we've got a lot of big customers that are asking, hey, we need software, we need platform support. Those are the type of efforts that we have to make. And so there's probably a little bit of an adjustment there versus what we had started the year at. I wouldn't say there's much. I think as you look into next year, you start to see some nice operating margins developing throughout the year, and we're really starting to see the leverage in the model that we're excited about.

Dr. Kishore Sindhribut | Chief Executive Officer

Very good. Thank you. Cool. Thank you, Tori.

Operator | Conference Operator

Thank you. I'd like to turn the floor back over to Dr. Kisor Sindripu for closing comments.

Dr. Kishore Sindhribut | Chief Executive Officer

Thank you, operator, and also thank you all to those who joined this Q3 quarterly call, earnings call. There are a number of investor financial conferences that are both in-person and virtual that we'll be attending this year. And the details are literally posted on our investor relations page. So we look forward to seeing you there. And thank you for joining us, joining today as well. And yeah, with that, happy Halloween, guys. Okay, talk to you later. Thank you, bye.

Operator | Conference Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090259-00'00'