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MaxLinear, Inc. Announces Third Quarter 2018 Financial Results

Third Quarter 2018 Net Revenue of $85.0 million and GAAP and Non-GAAP Gross Margins of 51.6% and 62.5%

CARLSBAD, Calif. — (BUSINESS WIRE) — October 30, 2018 — MaxLinear, Inc. (NYSE: MXL), a leading provider of radio frequency (RF), analog and mixed-signal integrated circuits for the connected home, wired and wireless infrastructure, and industrial and multimarket applications, today announced financial results for the third quarter ended September 30, 2018.

Third Quarter 2018 Business Highlights

Third Quarter Financial Highlights

GAAP basis:

Non-GAAP basis:

Management Commentary

“We delivered strong profitability despite the lower revenue run rate we guided to in Q3. We executed solidly towards expanding our pipeline of new products and customer design-wins that will drive strong future revenue growth in the large and rapidly transforming wired and wireless network infrastructure markets,” commented Kishore Seendripu, Ph.D., Chairman and CEO. “While the transition to our new cable broadband DOCSIS data standard product has been slow, we continue to believe that the second half of 2018 represents the trough of our DOCSIS and Connected Home businesses. We are beginning to see a resumption of growth in our cable business starting in Q4. Our continued strong profitability, progress in our target infrastructure markets, and the steady performance of our high-performance analog business together provide us confidence in our forward outlook,” continued Dr. Seendripu.

Fourth Quarter 2018 Business Outlook

The Company expects revenue in the fourth quarter to be in the range of $85 million to $89 million, and also estimates the following:

Webcast and Conference Call

MaxLinear will host its third quarter financial results conference call today, October 30, 2018 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 http://investors.maxlinear.com, and will be archived and available after the call at http://investors.maxlinear.com until November 13, 2018. A replay of the conference call will also be available until November 13, 2018 by dialing US toll free: 1-877-660-6853 / International: 1-201-612-7415 and Conference ID#: 13653123.

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 our current guidance for fourth quarter 2018 revenue, gross margins, and operating expense and statements concerning expectations of potential developments in our target markets, including management’s views with respect to trends in our DOCSIS and Connected Home 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 but also existing markets such as cable; 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; 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; our reliance on a limited number of third party manufacturers; 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 most recent Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 20, 2018, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, which we expect to file shortly. All forward-looking statements are based on the estimates, projections and assumptions of management as of October 30, 2018, 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 a percentage of revenue, net income, 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 2018, which we currently intend to settle in shares of our common stock in 2019; (iii) accruals related to our performance based bonus plan for 2017, which we settled in shares of our common stock in 2018; (iv) amortization of purchased intangible assets and inventory step up; (v) depreciation of fixed assets step-up; (vi) acquisition and integration costs related to 2017 acquisitions; (vii) professional fees and settlement costs related to our previously disclosed IP and commercial litigation matters; (viii) impairment losses on acquired intangible assets; (ix) severance and other restructuring charges; and (x) non-cash income tax benefits and expenses and effects of the Tax Act. 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.

We believe that non-GAAP financial measures can provide useful information to both management and investors by excluding certain non-cash and other one-time expenses that are not indicative of our core operating results. Among other uses, our management uses non-GAAP measures to compare our performance relative to forecasts and strategic plans and to benchmark our performance externally against competitors. In addition, management’s incentive compensation will be determined in part using these non-GAAP measures because we believe non-GAAP measures better reflect our core operating performance.

The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:

Stock-based compensation expense relates to equity incentive awards granted to our employees, directors, and consultants. Our equity incentive plans are important components of our employee incentive compensation arrangements and are reflected as expenses in our GAAP results. Stock-based compensation expense has been and will continue to be a significant recurring expense for MaxLinear.

Bonuses under our executive and non-executive bonus programs have been excluded from our non-GAAP net income for all periods reported. Bonus payments for the 2017 performance periods were settled through the issuance of shares of common stock under our equity incentive plans in February 2018. We currently expect that bonus awards under our fiscal 2018 program will be settled in common stock in the first quarter of fiscal 2019. While we include the dilutive impact of equity awards in weighted average shares outstanding, the expense associated with stock-based awards reflects a non-cash charge that we exclude from non-GAAP net income.

Expenses incurred in relation to acquisitions include amortization of purchased intangible assets and step-up of inventory to fair value, depreciation of step-up of property and equipment to fair value, and acquisition and integration costs primarily consisting of professional and consulting fees.

Restructuring charges incurred are related to our restructuring plans which address issues primarily relating to the integration of the Company and acquired businesses or internal operations and primarily include severance and restructuring costs related to exiting certain facilities.

Expenses incurred in relation to our intellectual property and commercial litigation include professional fees incurred.

Income tax benefits and expense adjustments are those that do not affect cash income taxes payable. Effects of the Tax Act were excluded from Non-GAAP income taxes.

Reconciliations of non-GAAP measures for the historic periods disclosed in this press release appear below. Because of the inherent uncertainty associated with our ability to project future charges, particularly related to stock-based compensation and its related tax effects as well as potential impairments, we have not provided a reconciliation for non-GAAP guidance provided for the fourth quarter 2018.

About MaxLinear, Inc.

MaxLinear, Inc. (NYSE: MXL) is a leading provider of radio frequency (RF), analog and mixed-signal integrated circuits for the connected home, wired and wireless infrastructure, and industrial and multimarket applications. MaxLinear is headquartered in Carlsbad, California. For more information, please visit www.maxlinear.com.

MXL and the MaxLinear Logo are trademarks of MaxLinear, Inc. Other trademarks appearing herein are the property of their respective owners.

MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
  Three Months Ended
September 30, 2018   June 30, 2018   September 30, 2017
Net revenue $ 85,010 $ 101,533 $ 113,581
Cost of net revenue   41,134     45,203     61,739  
Gross profit 43,876 56,330 51,842
Operating expenses:
Research and development 29,047 30,211 29,270
Selling, general and administrative 24,963 24,501 29,037
Impairment losses 2,198 — 2,000
Restructuring charges   236     1,865     2,178  
Total operating expenses   56,444     56,577     62,485  
Loss from operations (12,568 ) (247 ) (10,643 )
Interest income 17 19 1
Interest expense (3,473 ) (3,694 ) (4,133 )
Other income (expense), net   39     725     (668 )
Total interest and other income (expense), net   (3,417 )   (2,950 )   (4,800 )
Loss before income taxes (15,985 ) (3,197 ) (15,443 )
Income tax provision (benefit)   (2,050 )   11,225     (6,276 )
Net loss $ (13,935 ) $ (14,422 ) $ (9,167 )
Net loss per share:
Basic $ (0.20 ) $ (0.21 ) $ (0.14 )
Diluted $ (0.20 ) $ (0.21 ) $ (0.14 )
Shares used to compute net loss per share:
Basic   68,742     68,335     66,712  
Diluted   68,742     68,335     66,712  
 
MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
  Nine Months Ended
September 30, 2018   September 30, 2017
Net revenue $ 297,370 $ 306,597
Cost of net revenue   134,496     150,727  
Gross profit 162,874 155,870
Operating expenses:
Research and development 90,379 82,163
Selling, general and administrative 76,581 78,988
Impairment losses 2,198 2,000
Restructuring charges   2,101     8,724  
Total operating expenses   171,259     171,875  
Loss from operations (8,385 ) (16,005 )
Interest income 54 260
Interest expense (11,061 ) (6,334 )
Other income (expense), net   193     (1,430 )
Total interest and other income (expense), net   (10,814 )   (7,504 )
Loss before income taxes (19,199 ) (23,509 )
Income tax provision (benefit)   7,311     (33,770 )
Net income (loss) $ (26,510 ) $ 10,261  
Net income (loss) per share:
Basic $ (0.39 ) $ 0.16  
Diluted $ (0.39 ) $ 0.15  
Shares used to compute net income (loss) per share:
Basic   68,256     65,950  
Diluted   68,256     69,491  
 
MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
  Three Months Ended
September 30, 2018   June 30, 2018   September 30, 2017
Operating Activities
Net loss $ (13,935 ) $ (14,422 ) $ (9,167 )
Adjustments to reconcile net loss to cash provided by operating activities:
Amortization and depreciation 19,767 20,051 21,342
Impairment losses 2,198 — 2,000
Provision for losses on accounts receivable — — 46
Amortization of inventory step-up — — 10,207
Amortization of debt issuance costs and discount 287 287 301
Stock-based compensation 7,940 7,309 7,796
Deferred income taxes 304 (1,289 ) (1,163 )
Loss on disposal of property and equipment — — 286
(Gain) loss on foreign currency (184 ) (828 ) 733
Excess tax benefits on stock-based awards (93 ) (318 ) (841 )
Impairment of leasehold improvements — 700 —
Changes in operating assets and liabilities:
Accounts receivable 25,016 6,979 7,063
Inventory 2,581 1,420 5,060
Prepaid expenses and other assets 712 2,213 2,374
Accounts payable, accrued expenses and other current liabilities (10,606 ) 11,540 (17,453 )
Accrued compensation 2,671 1,401 1,498
Deferred revenue and deferred profit — — 3,907
Accrued price protection liability (5,662 ) (132 ) 3,606
Other long-term liabilities   (275 )   913     144  
Net cash provided by operating activities 30,721 35,824 37,739
 
Investing Activities
Purchases of property and equipment (1,609 ) (2,423 ) (2,500 )
Purchases of intangible assets   —     —     (53 )
Net cash used in investing activities (1,609 ) (2,423 ) (2,553 )
 
Financing Activities
Repayment of debt (35,000 ) (18,000 ) (50,000 )
Net proceeds from issuance of common stock 91 3,036 1,074
Minimum tax withholding paid on behalf of employees for restricted stock units   (1,178 )   (1,448 )   (1,426 )
Net cash used in financing activities (36,087 ) (16,412 ) (50,352 )
Effect of exchange rate changes on cash and cash equivalents   103     793     (829 )
Increase (decrease) in cash, cash equivalents and restricted cash (6,872 ) 17,782 (15,995 )
Cash, cash equivalents and restricted cash at beginning of period   75,115     57,333     90,091  
Cash, cash equivalents and restricted cash at end of period $ 68,243   $ 75,115   $ 74,096  
 
MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
  Nine Months Ended
September 30, 2018   September 30, 2017
Operating Activities
Net income (loss) $ (26,510 ) $ 10,261
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Amortization and depreciation 59,902 46,502
Impairment losses 2,198 2,000
Provision for losses on accounts receivable — 133
Accretion of investment discount — (60 )
Amortization of inventory step-up — 15,842
Amortization of debt issuance costs and discount 861 476
Stock-based compensation 23,722 24,898
Deferred income taxes (3,317 ) (48,417 )
Loss on disposal of property and equipment — 201
Loss on sale of available-for-sale securities — 38
(Gain) loss on foreign currency (541 ) 1,415
Excess tax benefits on stock-based awards (1,208 ) (6,598 )
Impairment of leasehold improvements 700 —
Changes in operating assets and liabilities:
Accounts receivable 7,462 (13,869 )
Inventory 11,677 (2,331 )
Prepaid expenses and other assets 3,928 1,696
Accounts payable, accrued expenses and other current liabilities 513 576
Accrued compensation 6,574 216
Deferred revenue and deferred profit (138 ) 11,233
Accrued price protection liability (7,153 ) 13,053
Other long-term liabilities   (154 )   (3,944 )
Net cash provided by operating activities 78,516 53,321
 
Investing Activities
Purchases of property and equipment (6,413 ) (4,398 )
Purchases of intangible assets — (5,378 )
Cash used in acquisition, net of cash acquired — (473,304 )
Purchases of available-for-sale securities — (30,577 )
Maturities of available-for-sale securities   —     84,546  
Net cash used in investing activities (6,413 ) (429,111 )
 
Financing Activities
Net proceeds from issuance of debt — 416,846
Repayment of debt (78,000 ) (50,000 )
Repurchases of common stock — (334 )
Net proceeds from issuance of common stock 4,107 9,092
Minimum tax withholding paid on behalf of employees for restricted stock units   (5,017 )   (9,825 )
Net cash provided by (used in) financing activities (78,910 ) 365,779
Effect of exchange rate changes on cash and cash equivalents   638     1,211  
Decrease in cash, cash equivalents and restricted cash (6,169 ) (8,800 )
Cash, cash equivalents and restricted cash at beginning of period   74,412     82,896  
Cash, cash equivalents and restricted cash at end of period $ 68,243   $ 74,096  
 
MAXLINEAR, INC.
UNAUDITED GAAP CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
  September 30, 2018   June 30, 2018   September 30, 2017
Assets
Current assets:
Cash and cash equivalents $ 67,185 $ 74,059 $ 71,576
Short-term restricted cash 349 345 615
Accounts receivable, net 58,633 83,648 75,618
Inventory 41,757 44,338 63,692
Prepaid expenses and other current assets   6,329   7,305   7,917
Total current assets 174,253 209,695 219,418
Long-term restricted cash 709 711 1,905
Property and equipment, net 19,413 20,886 23,336
Intangible assets, net 261,813 281,017 332,409
Goodwill 238,330 238,330 239,673
Deferred tax assets 42,691 42,995 53,985
Other long-term assets   4,935   4,732   6,288
Total assets $ 742,144 $ 798,366 $ 877,014
 
Liabilities and stockholders’ equity
Current liabilities $ 66,464 $ 80,160 $ 98,381
Long-term debt 270,470 305,183 367,322
Other long-term liabilities 12,816 13,102 14,663
Total stockholders’ equity   392,394   399,921   396,648
Total liabilities and stockholders’ equity $ 742,144 $ 798,366 $ 877,014
 
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(in thousands, except per share data)
 
  Three Months Ended
September 30, 2018   June 30, 2018   September 30, 2017
GAAP gross profit $ 43,876 $ 56,330 $ 51,842
Stock-based compensation 131 120 93
Performance based equity 53 47 34
Amortization of inventory step-up — — 10,207
Amortization of purchased intangible assets 8,969 8,968 7,907
Depreciation of fixed asset step-up 95 96 113
Deferred profit eliminated in purchase price accounting   —     —     810  
Non-GAAP gross profit 53,124 65,561 71,006
 
GAAP R&D expenses 29,047 30,211 29,270
Stock-based compensation (4,726 ) (4,454 ) (4,337 )
Performance based equity (1,517 ) (1,297 ) (961 )
Amortization of purchased intangible assets — — (96 )
Depreciation of fixed asset step-up   (321 )   (324 )   (561 )

Non-GAAP R&D expenses

22,483 24,136 23,315
 
GAAP SG&A expenses 24,963 24,501 29,037
Stock-based compensation (3,070 ) (2,735 ) (2,965 )
Performance based equity (785 ) (730 ) (517 )
Amortization of purchased intangible assets (7,994 ) (7,994 ) (9,924 )
Depreciation of fixed asset step-up (12 ) (12 ) (30 )
Acquisition and integration costs — — (1,005 )
IP litigation costs, net   (19 )   (19 )   (4 )
Non-GAAP SG&A expenses 13,083 13,011 14,592
 
GAAP impairment losses 2,198 — 2,000
Impairment losses   (2,198 )   —     (2,000 )
Non-GAAP impairment losses — — —
 
GAAP restructuring expenses 236 1,865 2,178
Restructuring charges   (236 )   (1,865 )   (2,178 )
Non-GAAP restructuring expenses — — —
 
GAAP loss from operations (12,568 ) (247 ) (10,643 )
Total non-GAAP adjustments   30,126     28,661     43,742  
Non-GAAP income from operations 17,558 28,414 33,099
 
GAAP and non-GAAP interest and other income (expense), net (3,417 ) (2,950 ) (4,800 )
 
GAAP loss before income taxes (15,985 ) (3,197 ) (15,443 )
Total non-GAAP adjustments   30,126     28,661     43,742  
Non-GAAP income before income taxes 14,141 25,464 28,299
 
GAAP income tax provision (benefit) (2,050 ) 11,225 (6,276 )
Adjustment for non-cash tax benefits/expenses   3,040     (9,443 )   7,476  
Non-GAAP income tax provision 990 1,782 1,200
 
GAAP net loss (13,935 ) (14,422 ) (9,167 )
Total non-GAAP adjustments before income taxes 30,126 28,661 43,742
Less: total tax adjustments   3,040     (9,443 )   7,476  
Non-GAAP net income $ 13,151   $ 23,682   $ 27,099  
 
Shares used in computing non-GAAP basic net income per share   68,742     68,335     66,712  
Shares used in computing non-GAAP diluted net income per share   70,634     70,473     69,668  
Non-GAAP basic net income per share $ 0.19   $ 0.35   $ 0.41  
Non-GAAP diluted net income per share $ 0.19   $ 0.34   $ 0.39  
 
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(in thousands, except per share data)
 
  Nine Months Ended
September 30, 2018   September 30, 2017
GAAP gross profit $ 162,874 $ 155,870
Stock-based compensation 357 231
Performance based equity 178 104
Amortization of inventory step-up — 15,842
Amortization of purchased intangible assets 26,906 16,851
Depreciation of fixed asset step-up 303 225
Deferred profit eliminated in purchase price accounting   —     4,682  
Non-GAAP gross profit 190,618 193,805
 
GAAP R&D expenses 90,379 82,163
Stock-based compensation (13,554 ) (11,841 )
Performance based equity (3,954 ) (2,970 )
Amortization of purchased intangible assets — (289 )
Depreciation of fixed asset step-up   (974 )   (1,321 )
Non-GAAP R&D expenses 71,897 65,742
 
GAAP SG&A expenses 76,581 78,988
Stock-based compensation (9,798 ) (7,911 )
Performance based equity (2,564 ) (1,577 )
Amortization of purchased intangible assets (23,982 ) (20,067 )
Depreciation of fixed asset step-up (34 ) (86 )
Acquisition and integration costs — (10,008 )
IP litigation costs, net   (80 )   (234 )
Non-GAAP SG&A expenses 40,123 39,105
 
GAAP impairment losses 2,198 2,000
Impairment losses   (2,198 )   (2,000 )
Non-GAAP impairment losses — —
 
GAAP restructuring expenses 2,101 8,724
Restructuring charges   (2,101 )   (8,724 )
Non-GAAP restructuring expenses — —
 
GAAP loss from operations (8,385 ) (16,005 )
Total non-GAAP adjustments   86,983     104,963  
Non-GAAP income from operations 78,598 88,958
 
GAAP and non-GAAP interest and other expense, net (10,814 ) (7,504 )
 
GAAP loss before income taxes (19,199 ) (23,509 )
Total non-GAAP adjustments   86,983     104,963  
Non-GAAP income before income taxes 67,784 81,454
 
GAAP income tax provision (benefit) 7,311 (33,770 )
Adjustment for non-cash tax benefits/expenses   (2,566 )   40,286  
Non-GAAP income tax provision 4,745 6,516
 
GAAP net income (loss) (26,510 ) 10,261
Total non-GAAP adjustments before income taxes 86,983 104,963
Less: total tax adjustments   (2,566 )   40,286  
Non-GAAP net income $ 63,039   $ 74,938  
 
Shares used in computing non-GAAP basic net income per share   68,256     65,950  
Shares used in computing non-GAAP diluted net income per share   70,521     69,491  
Non-GAAP basic net income per share $ 0.92   $ 1.14  
Non-GAAP diluted net income per share $ 0.89   $ 1.08  
 
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
 
  Three Months Ended
September 30, 2018   June 30, 2018   September 30, 2017
GAAP gross profit 51.6 % 55.5 % 45.6 %
Stock-based compensation 0.2 % 0.1 % 0.1 %
Performance based equity 0.1 % — % — %
Amortization of inventory step-up — % — % 9.0 %
Amortization of purchased intangible assets 10.6 % 8.8 % 7.0 %
Depreciation of fixed asset step-up 0.1 % 0.1 % 0.1 %
Deferred profit eliminated in purchase price accounting — % — % 0.7 %
Non-GAAP gross profit 62.5 % 64.6 % 62.5 %
 
GAAP R&D expenses 34.2 % 29.8 % 25.8 %
Stock-based compensation (5.6 )% (4.4 )% (3.8 )%
Performance based equity (1.8 )% (1.3 )% (0.9 )%
Amortization of purchased intangible assets — % — % (0.1 )%
Depreciation of fixed asset step-up (0.5 )% (0.4 )% (0.5 )%
Non-GAAP R&D expenses 26.4 % 23.8 % 20.5 %
 
GAAP SG&A expenses 29.4 % 24.1 % 25.6 %
Stock-based compensation (3.6 )% (2.7 )% (2.6 )%
Performance based equity (0.9 )% (0.7 )% (0.5 )%
Amortization of purchased intangible assets (9.4 )% (7.9 )% (8.7 )%
Depreciation of fixed asset step-up — % — % (0.1 )%
Acquisition and integration costs — % — % (0.9 )%
Restricted merger proceeds and contingent consideration — % — % — %
Change in fair value of contingent consideration — % — % — %
Severance charges — % — % — %
IP litigation costs, net — % — % — %
Non-GAAP SG&A expenses 15.4 % 12.8 % 12.8 %
 
GAAP impairment losses 2.6 % — % 1.8 %
Impairment losses (2.6 )% — % (1.8 )%
Non-GAAP impairment losses — % — % — %
 
GAAP restructuring expenses 0.3 % 1.8 % 1.9 %
Restructuring charges (0.3 )% (1.8 )% (1.9 )%
Non-GAAP restructuring expenses — % — % — %
 
GAAP loss from operations (14.8 )% (0.2 )% (9.4 )%
Total non-GAAP adjustments 35.4 % 28.2 % 38.5 %
Non-GAAP income from operations 20.7 % 28.0 % 29.1 %
 
GAAP and non-GAAP interest and other income (expense), net (4.0 )% (2.9 )% (4.2 )%
 
GAAP loss before income taxes (18.8 )% (3.1 )% (13.6 )%
Total non-GAAP adjustments before income taxes 35.4 % 28.2 % 38.5 %
Non-GAAP income before income taxes 16.6 % 25.1 % 24.9 %
 
GAAP income tax provision (benefit) (2.4 )% 11.1 % (5.5 )%
Adjustment for non-cash tax benefits/expenses 3.6 % (9.3 )% 6.5 %
Non-GAAP income tax provision 1.2 % 1.8 % 1.1 %
 
GAAP net loss (16.4 )% (14.2 )% (8.1 )%
Total non-GAAP adjustments before income taxes 35.4 % 28.2 % 38.5 %
Less: total tax adjustments 3.6 % (9.3 )% 6.5 %
Non-GAAP net income 15.5 % 23.3 % 23.9 %
 
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
 
  Nine Months Ended
September 30, 2018   September 30, 2017
GAAP gross profit 54.8 % 50.8 %
Stock-based compensation 0.1 % 0.1 %
Performance based equity 0.1 % — %
Amortization of inventory step-up — % 5.1 %
Amortization of purchased intangible assets 9.0 % 5.5 %
Depreciation of fixed asset step-up 0.1 % 0.1 %
Deferred profit eliminated in purchase price accounting — % 1.5 %
Non-GAAP gross profit 64.1 % 63.2 %
 
GAAP R&D expenses 30.4 % 26.8 %
Stock-based compensation (4.6 )% (3.9 )%
Performance based equity (1.3 )% (1.0 )%
Amortization of purchased intangible assets — % (0.1 )%
Depreciation of fixed asset step-up (0.3 )% (0.4 )%
Non-GAAP R&D expenses 24.2 % 21.4 %
 
GAAP SG&A expenses 25.8 % 25.8 %
Stock-based compensation (3.3 )% (2.6 )%
Performance based equity (0.9 )% (0.5 )%
Amortization of purchased intangible assets (8.1 )% (6.5 )%
Depreciation of fixed asset step-up — % — %
Acquisition and integration costs — % (3.3 )%
IP litigation costs, net — % (0.1 )%
Non-GAAP SG&A expenses 13.5 % 12.8 %
 
GAAP impairment losses 0.7 % 0.7 %
Impairment losses (0.7 )% (0.7 )%
Non-GAAP impairment losses — % — %
 
GAAP restructuring expenses 0.7 % 2.8 %
Restructuring charges (0.7 )% (2.8 )%
Non-GAAP restructuring expenses — % — %
 
GAAP loss from operations (2.8 )% (5.2 )%
Total non-GAAP adjustments 29.3 % 34.2 %
Non-GAAP income from operations 26.4 % 29.0 %
 
GAAP and non-GAAP interest and other income (expense), net (3.6 )% (2.4 )%
 
GAAP loss before income taxes (6.5 )% (7.7 )%
Total non-GAAP adjustments before income taxes 29.3 % 34.2 %
Non-GAAP income before income taxes 22.8 % 26.6 %
 
GAAP income tax provision (benefit) 2.5 % (11.0 )%
Adjustment for non-cash tax benefits/expenses (0.9 )% 13.1 %
Non-GAAP income tax provision 1.6 % 2.1 %
 
GAAP net income (loss) (8.9 )% 3.3 %
Total non-GAAP adjustments before income taxes 29.3 % 34.2 %
Less: total tax adjustments (0.9 )% 13.1 %
Non-GAAP net income 21.2 % 24.4 %


Contact:

MaxLinear, Inc. Investor Relations Contact:
Steven Litchfield
Tel: 949-333-0080
Email Contact