CARLSBAD, Calif. — (BUSINESS WIRE) — February 5, 2020 — MaxLinear, Inc. (NYSE: MXL), a leading provider of RF, analog and mixed-signal integrated circuits for the connected home, and industrial and multi-market applications, today announced financial results for the fourth quarter ended December 31, 2019.

Fourth Quarter Financial Highlights

GAAP basis:

• Net revenue was $70.0 million, down 12% sequentially, and down 20% year-on-year.

• GAAP gross margin was 52.3%, compared to 52.4% in the prior quarter, and 52.4% in the year-ago quarter.

• GAAP operating expenses were $44.6 million in the fourth quarter 2019, or 64% of net revenue, compared to $45.2 million in the prior quarter, or 57% of net revenue, and $56.6 million in the year-ago quarter, or 65% of net revenue.

• GAAP loss from operations was 11% of revenue, compared to loss from operations of 4% in the prior quarter, and loss from operations of 12% in the year-ago quarter.

• Net cash flow provided by operating activities was $28.1 million, compared to $21.8 million in the prior quarter, and $24.2 million in the year-ago quarter.

• GAAP diluted loss per share was $0.11, compared to diluted loss per share of $0.07 in the prior quarter, and diluted earnings per share of $0.00 in the year-ago quarter.

Non-GAAP basis:

• Non-GAAP gross margin was 64.6%. This compares to 63.1% in the prior quarter, and 62.7% in the year-ago quarter.

• Non-GAAP operating expenses were $30.0 million, or 43% of revenue, compared to $30.8 million or 38% of revenue in the prior quarter, and $36.7 million or 42% of revenue in the year-ago quarter.

• Non-GAAP income from operations was 22% of revenue, compared to 25% in the prior quarter, and 21% in the year-ago quarter.

• Non-GAAP diluted earnings per share was $0.16, compared to diluted earnings per share of $0.23 in the prior quarter, and diluted earnings per share of $0.20 in the year-ago quarter.

Management Commentary

“In the fourth quarter, revenue results were in line with our guidance, gross margin was strong, and operating expenses declined on continued discipline. We delivered strong cash flow from operations in the quarter at approximately $28 million. As we enter 2020, we are excited about our new product launches coming to fruition with our new 5G wireless radio, and fiber-optic datacenter high-speed interconnect products expanding into new large, high-growth infrastructure markets. We also secured a new design-win at a major customer for our 5G Wireless radio transceiver, in addition to the tier-1 European OEM design-win in the previous quarter,” commented Kishore Seendripu, Ph.D., Chairman and CEO.

First Quarter 2020 Business Outlook

The company expects revenue in the first quarter 2020 to be approximately $65 million to $70 million. The Company also estimates the following:

• GAAP gross margin of approximately 53.5% to 54.0%;

• Non-GAAP gross margin of approximately 63.5% to 64.0%;

• GAAP operating expenses of approximately $46.5 million to $47.5 million; and

• Non-GAAP operating expenses of approximately $32.0 million to $32.5 million.

Webcast and Conference Call

MaxLinear will host its fourth quarter financial results conference call today, February 5, 2020 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). To access this call, dial US toll free: 1-877-407-3109 / International: 1-201-493-6798. A live webcast of the conference call will be accessible from the investor relations section of the MaxLinear website at https://investors.maxlinear.com, and will be archived and available after the call at https://investors.maxlinear.com until February 19, 2020. A replay of the conference call will also be available until February 19, 2020 by dialing US toll free: 1-877-660-6853 / International: 1-201-612-7415 and Conference ID#: 13697877.

Cautionary Note Concerning Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, statements concerning our future financial performance (including specifically our current guidance for first quarter 2020 revenue, gross margins, and operating expenses) and statements concerning expectations of potential developments in our target markets, including management’s views with respect to the prospects for and trends in our connected home and 5G wireless and fiber-optic high-speed interconnect infrastructure markets. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any future results expressed or implied by the forward-looking statements. Forward-looking statements are based on management’s current, preliminary expectations and are subject to various risks and uncertainties. Risks and uncertainties affecting our business and future operating results include, without limitation, intense competition in our industry; our dependence on a limited number of customers for a substantial portion of our revenues; uncertainties concerning how end user markets for our products will develop, including in particular new markets we are entering such as the 5G wireless and fiber-optic data center high-speed interconnect infrastructure markets but also existing markets such as connected home; uncertainties concerning the outcome of global trade negotiations, export control limitations, and heightened geopolitical risks generally; uncertainties arising from the impact of novel coronavirus on the market; potential uncertainties arising from continued consolidation among cable television and satellite operators in our target markets and continued consolidation among competitors within the semiconductor industry generally; our ability to develop and introduce new and enhanced products on a timely basis and achieve market acceptance of those products, particularly as we seek to expand outside of our historic markets; potential decreases in average selling prices for our products; our reliance on a limited number of third party manufacturers; risks relating to intellectual property protection and the prevalence of intellectual property litigation in our industry; the impact on our financial condition of the indebtedness arising from the Exar transaction; and our lack of long-term supply contracts and dependence on limited sources of supply.

In addition to these risks and uncertainties, investors should review the risks and uncertainties contained in our filings with the Securities and Exchange Commission (SEC), including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, and our Current Reports on Form 8-K, as well as the information to be set forth under the caption “Risk Factors” in MaxLinear’s Annual Report on Form 10-K for the year ended December 31, 2019, which we expect to file shortly. All forward-looking statements are based on the estimates, projections and assumptions of management as of February 5, 2020, and MaxLinear is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a basis consistent with GAAP, we disclose certain non-GAAP financial measures, including non-GAAP gross margin, operating expenses, operating expenses as a percentage of revenue, income from operations as percentage of revenue, and diluted earnings per share. These supplemental measures exclude the effects of (i) stock-based compensation expense; (ii) accruals related to our performance based bonus plan for 2019, which we currently intend to settle in shares of our common stock; (iii) accruals related to our performance based bonus plan for 2018 which we settled in shares of common stock in 2019; (iv) amortization of purchased intangible assets; (v) depreciation of fixed assets step-up; (vi) professional fees and settlement costs related to our previously disclosed IP and commercial litigation matters; (vii) severance and other restructuring charges; (viii) non-cash income tax benefits and expenses and effects of the 2017 Tax Cuts and Jobs Act, or Tax Act, as applicable; and (ix) non-recurring gain on reversal of liability. These non-GAAP measures are not in accordance with and do not serve as an alternative for GAAP. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our GAAP results of operations. These non-GAAP measures should only be viewed in conjunction with corresponding GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.