MaxLinear, Inc. Q3 FY2025 earnings call

Kishore Seendripu expressed excitement about MaxLinear's strong Q3 2025 results. The company's $126.5 million revenue showed 16% sequential and 56% year-over-year growth. Focused investments in data center, optical interconnects, wireless infrastructure, PON broadband access, Wi-Fi 7, Ethernet, and storage accelerator products are driving growth. Infrastructure revenue saw a 16% sequential increase and 75% year-over-year growth. High-speed data center optical interconnects are on track to generate $60 - $70 million in revenue in 2025 and are expected to accelerate in 2026, with the Keystone PAM4 DSP family qualified in data centers. The Rushmore family of PAM4 TIAs and 200 gigabit per lane DSPs is set for production ramp in 2026. Wireless infrastructure anticipates carrier CapEx spending to boost demand, with the Sierra 5G wireless access single-chip radio SoC and millimeter wave and microwave backhaul transceivers experiencing increased design activity. The combined portfolio of broadband and connectivity had exceptional growth, with the ramp of a single-chip integrated fiber PON and 10 gigabit processor gateway SoC plus tri-band Wi-Fi 7 single-chip platform solution. Cable broadband is witnessing initial commercial rollouts of DOCSIS 4.0, and the Ethernet market is seeing adoption of high-functionality, low-power consumption 2.5 gigabit Ethernet switch and PHY portfolio.

Total revenue for the third quarter was $126.5 million, marking a 16% sequential increase from $108.8 million in the previous quarter and a 56% year-over-year rise from $81.1 million in the third quarter of 2024. Infrastructure revenue in the third quarter was approximately $40 million, broadband revenue was around $58 million, connectivity revenue was about $19 million, and industrial multimarket revenue was approximately $9 million. GAAP and non-GAAP gross margins for the third quarter were approximately 56.9% and 59.1% of revenue respectively.

MaxLinear currently anticipates Q4 2025 revenue to be between $130 million and $140 million. There is expected seasonal moderation in broadband and connectivity from Q3, but growth is foreseen from infrastructure and the industrial multi-market. For Q4 2025, GAAP gross margin is projected to be approximately 56.0% - 59% and non-GAAP gross margin is expected to range from 58% to 61% of revenue. Q4 2025 GAAP operating expenses are expected to be in the range of $92 million to $98 million, and non-GAAP operating expenses are projected to be between $57 million and $63 million. Q4 GAAP interest and other expense is expected to be approximately $2.2 million - $2.8 million, and non-GAAP interest and other expense is expected to be in the range of $1.9 million - $2.5 million, with FX volatility being the primary risk. A $2.5 million tax benefit is expected on a GAAP basis, and a non-GAAP tax provision of approximately $2 million is anticipated. Q3 basic and diluted share count is expected to be approximately 87.5 million and 91.1 million respectively.

FX volatility poses a risk to the Q4 non-GAAP interest and other expense. There are also risks related to supply chain constraints, including capacity allocation and pricing of foundry nodes, as well as market competition in certain segments such as optical DSPs.

Q: Congratulations for the results. So with the Q4 guidance, the company is pretty much tracking to 30% year-over-year growth in '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 maybe put some context on that comment in relation to the about 30% that the company is going to grow here in '25?

A: Thank you, Tore. Obviously, 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 in the semiconductor company. You look forward, if you look at the Street numbers, they are about 20%-odd into 2026. And that, I think, is about 2x 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 wins in wireless infrastructure. Those are accelerating and also our storage accelerator 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 these are pretty large complex systems and there's a lot of customer concentration in 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 win and customer activity and what I call booking strength that we are seeing. So I would like to tell you more, but at this point, let's continue to deliver the numbers is the way I look at it.

Q: As far as the infrastructure segment, so obviously, 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 company-specific product cycles there, but it also sounds like the service providers are starting to spend some more CapEx again. So just hoping you could add a little bit more color there. And how should we think about the wireless part of the infrastructure segment for calendar '26?

A: Absolutely. I do see the wireless infrastructure, there's -- the telecom operators are beginning to spend on their infrastructure now. So I know 3 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 2 big North American telecom operators who are actually Q3 qualified it 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 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 where MaxLinear 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 5 years. And now I still remain by my position that in the next 2 to 3 years, this infrastructure revenue should be in the $300 million to $500 million range. And I feel really very proud of our team that we stick with the plan and they're executing to it.