MaxLinear - Q3 2023

Transcript

Operator (participant)

Greetings! Welcome to MaxLinear's third quarter 2023 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. Please note this conference is being recorded. I will now turn the conference over to Leslie Green in Investor Relations. Thank you. You may begin.

Leslie Green (VP of Investor Relations)

Thank you, Sherry. Good afternoon, everyone, and thank you for joining us today on today's conference call to discuss MaxLinear's third quarter 2023 financial results. Today's call is being hosted by Dr. Kishore Seendripu, 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 2023, including revenue, GAAP and non-GAAP gross profit margin, GAAP and non-GAAP operating expenses, GAAP and non-GAAP tax rate, GAAP and non-GAAP interest in other expenses, 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 opportunities arising from our broadband, infrastructure, connectivity, industrial multimarket, as well as inventory levels, the timing for the launch of our products, and timing of opportunities for improved revenue and market share across our target markets. These forward-looking statements involve substantial risks and uncertainties, including risks outlined in our Risk Factors section of our recent SEC filings, including from our Form 10-Q for the quarter ended September 30, 2023, 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 2023 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, operating margin, operating expenses, interest and other expense 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 charges, 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 to be useful to investors as it reflects how management measures our business.

Lastly, this call is also being webcast, and a replay will be available on our website for two weeks. Now, let me turn the call over to Dr. Kishore Seendripu, CEO of MaxLinear. Kishore?

Kishore Seendripu (CEO)

Thank you, Leslie, and good afternoon, everyone. In Q3, our revenues were $135.5 million, and non-GAAP gross margin was 60.8%. Infrastructure revenue, specifically wireless infrastructure, was the main highlight, up 1% sequentially and 40% year over year. Our financial results and outlook continue to reflect the channel inventory overhang, especially in the broadband and Wi-Fi markets. We expect the effects of the inventory to persist into 2024, and Steve will talk more about the actions we are taking to align our financial structure. We continue to make strong progress growing our infrastructure business. Infrastructure represents $50 million in Q3 revenue and has grown substantially since its inception only a few years ago.

Within infrastructure, in wireless, the expanding 5G global rollout of new millimeter wave backhaul technologies and multiband and hybrid millimeter wave and microwave backhaul radios is allowing us to significantly increase the silicon content per platform of our modem and RF transceiver products. In our high-speed optical data center interconnect market, the ongoing adoption of AI in the cloud is driving exciting design win activity for our 5-nanometer CMOS Keystone 800 gigabit optical PAM4 solution. We have ongoing qualifications in multiple hyperscale and enterprise opportunities for which we expect to begin ramping in mid-2024. During Q3, we also announced a new member of our Keystone family, a 5-nanometer Keystone PAM4 DSP for 400 gigabit and 800 gigabit applications with integrated VCSEL laser drivers.

This product enables best-in-class power consumption for 800-gigabit short-reach optical transceivers and active optical cables for data centers, AI, and machine learning platforms, and high-performance computing applications. Earlier this month, at the OCP Global Summit in San Jose, we also demonstrated our Keystone solution supporting active electrical cables, or AECs. Keystone is the only 5-nanometer product with DSP available today for the AEC market, providing best-in-class power consumption and programmability. We're also making exciting progress with our Panther III series of storage accelerators for the enterprise all-flash array and hybrid storage appliance systems. We've entered initial mass production ramp with the tier one leading enterprise storage appliance maker and have visibility into additional new design win volume production ramps next year. We expect this business to double in 2024, with continued strong growth in 2025 and beyond.

Turning to broadband, despite the near-term challenging environment, the longer-term outlook for the broadband access networks is solid as the industry migrates from legacy DSL and older PON technologies to 10-gigabit PON fiber access. We continue to ramp with a major North American service provider and are layering additional design wins, including another tier one service provider, which will begin to contribute revenue in 2024. With our industry-leading single-chip integrated fiber PON and 10-gigabit processing gateway and connectivity solutions, we expect continued strong design win traction, leading to a multi-year fiber broadband growth cycle. Recently, we also announced Puma 8, our DOCSIS 4.0 system on chip, cable modem, and gateway platform, which enables the speed, latency, and low-power consumption necessary for next-generation 10-gigabit service rates for MSOs.

We expect to see initial DOCSIS 4.0 launches in the market as early as the end of 2024. In connectivity, the design activity for our Wi-Fi 7 is robust, and we anticipate early revenues coming in the second half of 2024. Wi-Fi 7 has the enhanced ability to efficiently manage the increasing number of connected devices, which have grown tenfold since 2018, and the higher bandwidth requirements in the home. As a result, globally, service providers are embracing the transition to Wi-Fi 7 to improve both user experience and performance. For MaxLinear, Wi-Fi 7 has the exciting potential to drive significant ASP growth and higher attach rates in our broadband access platforms versus previous generations. Moving to Ethernet connectivity, we continue to build on our core portfolio of 1 gigabit Ethernet and 2.5 gigabit Ethernet PHY technologies.

We not only offer single and quad 1 gigabit Ethernet and 2.5 gigabit Ethernet PHYs, but in Q3, we started sampling the industry's first octal 2.5 gigabit Ethernet PHY switch product. This new product family of switch significantly expands our addressable market by $300 million through 2027 and addresses both enterprise and SMB switch markets, as well as the gateway and router markets. We expect to raise more than 2 billion copper 1 gigabit Ethernet ports in the market or existing Cat 5 cabling to transition to an optimized and enhanced 2.5 gigabit Ethernet offering. With that strong design win activity, we expect to begin revenue ramp in the first half of 2024. As we head into 2024, we are laying the critical groundwork for future growth with robust design win activity and continued technology innovation.

Even as we drive operating efficiencies to navigate near-term headwinds, we are excited that many of our investments over the past several years in infrastructure, broadband access, connectivity, and high-performance analog markets are now poised to contribute meaningful revenue. With that, let me turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve?

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Thanks, Kishore. Total revenue for the third quarter was $135.5 million, down 26% versus Q2 and down 53% year-over-year. Broadband revenue was $34 million, down 36% versus Q2 and down 71% year-over-year. Connectivity revenue in the quarter was $15 million, down 60% sequentially and down 82% year-over-year. Our infrastructure end market continued to grow in Q3 as a result of solid demand and growing market opportunity. Infrastructure had revenue of $50 million, up 1% versus the prior quarter, and 40% year-over-year. Lastly, our industrial and multi-market revenue was $36 million in Q3, down 16% sequentially and 24% year-over-year. GAAP and non-GAAP gross margin for the third quarter were approximately 54.6% and 60.8% of revenue.

The delta between GAAP and non-GAAP gross margin in the third quarter was primarily driven by $8.3 million of acquisition-related intangible asset amortization. Third quarter GAAP operating expenses were $91.8 million, including stock-based compensation and performance-based equity accruals of $8.2 million combined, and acquisition and integration cost of $2.2 million. Non-GAAP operating expenses in Q3 were $75.1 million, down $7.3 million versus Q2, at the low end of our guidance range. Non-GAAP operating margin for Q3 was 5%. GAAP interest and other expense during the quarter was $23.7 million, driven by the ticking fee from the debt commitment associated with the terminated Silicon Motion transaction. Non-GAAP interest and other expense during the quarter was $5.3 million. In Q3, cash flow used in operating activities was $12.8 million.

We exited Q3 of 2023 with approximately $203 million in cash, cash equivalents, and short-term investments. Our days sales outstanding for the third quarter was approximately 106 days, up from the previous quarter due to shipment linearity. Our gross inventory turns were 1.4, down from Q2 levels. As Kishore mentioned, we've taken meaningful actions to align our cost structure with the current environment, and we expect to begin to see the benefit in Q4. These actions include a headcount reduction, site consolidation to drive efficiency and scale at our primary sites, and more prioritization around the projects that we believe will drive growth over the coming years.... MaxLinear has a solid track record of managing our business through downturns with strong fiscal discipline and focused spending. This concludes the discussion of our Q3 financial results.

With that, let me turn to the guidance for Q4 of 2023. We currently expect revenue in the fourth quarter of 2023 to be between $115 million and $135 million. Looking at Q4 by end market, we expect connectivity and industrial multi-market to be up, and broadband and infrastructure to be down quarter-over-quarter. We expect fourth quarter GAAP profit margin to be approximately 52.5%-55.5%, and non-GAAP gross profit margin to be in the range of 59.5% and 62.5% of revenue. Gross margin continues to be stable despite lower unit volumes, with the range being driven by the combination of near-term product, customer, and end market mix.

We expect Q4 2023 GAAP operating expenses to be in the range of $125 million-$135 million. We expect Q4 2023 non-GAAP operating expenses to be in the range of $72 million-$78 million. We expect our Q4 GAAP and non-GAAP interest and other expense to be negligible. We expect our Q4 GAAP and non-GAAP diluted share count to be between 82.5-83.5 million. In closing, we continue to navigate a dynamic environment in Q4, but are laying important groundwork and strategic applications that will drive our future growth. Our solid product innovation and execution in Wi-Fi, fiber, broadband access gateways, Ethernet, and wireless infrastructure is positioning us well across a number of exciting emerging markets.

As always, we will continue our strong focus on operational efficiency, fiscal discipline, and shareholder value as we optimize for today and plan for an exciting future. With that, I'd like to open up the call for questions. Operator?

Operator (participant)

Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate 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. Our first question is from Tore Svanberg with Stifel. Please proceed.

Tore Svanberg (Managing Director and Senior Analyst)

Yes, thank you. My first question is on broadband and connectivity. Obviously, these are both down quite materially year-over-year from this inventory digestion. It does sound like connectivity may have found the bottom as you're guiding for growth there. First of all, just want to make sure you confirm that. And then second of all, on broadband, are you seeing any sort of bottoming at all in that business, given its $34 million run rate?

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Yeah, Tore, so, so you're right, and I think you're also rightly looking at broadband and connectivity somewhat together. They have been influenced by some of the similar dynamics of just the massive amount of inventory that we've seen in the channel. It's definitely persisted, you know, more than I think what we had anticipated. But you're correct in we did say that we would see connectivity start to move up a little bit in Q4. I think for both broadband and connectivity, while connectivity has some growth drivers, as we've talked about over time, that are a little bit better, I mean, both are still being influenced by inventory in the channel, and I would expect to see that last through kind of Q1, you know, maybe even some residuals in Q2. But we are seeing an improvement.

I mean, we talked last quarter about bookings. I think we're starting to see some bookings. It's still early days. They're not super robust by any means, but there are some encouraging signs nonetheless.

Tore Svanberg (Managing Director and Senior Analyst)

Great. And on infrastructure, obviously, that was the highlight this quarter. You're expecting that to come down in Q4. I'm just hoping you could talk a little bit about the extent of the decline. And is this basically just sort of like, you know, volatility? Because obviously it was up a lot and maybe it's coming back down.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Um-

Tore Svanberg (Managing Director and Senior Analyst)

But yeah, any way we should think about infrastructure for the next few quarters would be great.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Yeah. So infrastructure, I mean, I think we've been really pleased with infrastructure. I think we're making tremendous amount of progress in a business that we've been investing in heavily for a long time. I think as we spoke over the last couple of quarters, the first half of the year was extremely strong. That carried through into Q3. But, you know, we still see some of those product ramps, particularly on wireless infrastructure, kind of slow down. They can be lumpy, and so we can see some slowness in Q4. You know, that probably carries over to the beginning of the year before it starts to pick back up and grow in 2024.

Kishore Seendripu (CEO)

There are several contributors beyond wireless, right? I mean, in fact, you know, optical data center investments, we're very confident the progress we're making. We expect to see ramps in the middle of next year. We are going through interop cycles right now and a lot of design win activity going on, whether it is in transceiver products or in active optical cables or even active electrical cables, right? And then on top of that, there is our storage accelerators, which we have not spent time much. A lot of great design win traction, a very, very strong design win pipeline. It's going to double next year into, you know, high teens, if you will. And then beyond that, you know, it's gonna keep, keep growing very robustly the next few years.

You want to keep in mind that infrastructure lasts. Revenues last a long period of time. That's why they're-

... so likewise, have a long lead-in time. So all in all, our anticipation is over the next five years, we should be able to, you know, get to double our infrastructure revenue from today's $200 million run rate to maybe in the $500 million vicinity. I mean, that's the ultimate goal we are after, and we feel that we're making very good progress towards it.

Tore Svanberg (Managing Director and Senior Analyst)

Great. Thank you for that. I'll go back in line.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Thanks, Tory.

Operator (participant)

Our next question is from Quinn Bolton with Needham & Company. Please proceed.

Quinn Bolton (Managing Director and Equity Research Analyst)

Hey, guys. I guess maybe a follow-up on Tore's question. Obviously, this inventory corrections lasted longer and, you know, causing a deeper revenue trough. But, you know, as you look to next year, can you give us any sense, you know, how much are you undershipping the channel? You know, these businesses are, you know, connectivity and broadband down well more than 50% peak to trough. Do you have any sense what natural run rate demand is? You know, what kind of, you know, snapback might you see, once we've flushed this, you know, current inventory? And then just any thoughts on all of the government spending or government funds that are available for broadband infrastructure, when does that start to benefit this business?

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Yeah, Quinn, so you're right. I mean, it's definitely been worse than anticipated. I mean, there's been a big build-up. We've seen some kind of bad practices, some overbuilding, definitely over the last couple of years. That's, you know, kind of playing out right now. You know, common question that we get is, what does it recover to and when? I guess I would just say that, we're confident that we're kind of seeing the bottoming here. You raised a couple of good points about the government spending that, you know, we've highlighted. We have seen CapEx commitments. You've seen a great transition to PON, more rural areas, deploying more broadband and more broadband upgrades. I think we continue to see that.

The outlook that our customers and the service providers in general have is the outlook does remain very good. So thus, our excitement and some of Kishore's remarks around Wi-Fi, Wi-Fi 7, some of our PON business. So there are some exciting things going on. Some of the bigger money, like the BEAD money and some of that, just part of that infrastructure bill, starts to be deployed, or I should say, it gets allocated at the end of next year. So it's still a little ways off, but we're seeing ramps, upgrades in Europe, in the US over the next two to three years. So we still have good visibility on this and do expect to see these upgrades, but in the meantime, unfortunately, we're having to work through this inventory.

Quinn Bolton (Managing Director and Equity Research Analyst)

You know, you guys thought last quarter that September would be the bottom. Obviously, you've updated that guidance today with December being down. Are you willing at all to make a comment? Do you think December is the bottom? Steve, you mentioned inventory, you know, overhang probably continues through at least Q1 and maybe residually into Q2. Could you know, could Q1 be down from the fourth quarter, or is it just too early to call? And then I'll have a quick follow-up.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Yeah. So if I recall correctly, last quarter we talked about Q4 expecting somewhat of a modest improvement, but we didn't say we would be out of the woods on the inventory side. We expected inventory to last into next year. But that being said, we thought we would see more of a recovery, and we didn't see that. So that is, that's correct. As we look out into next year, what's the shape of that look like? You know, it feels like we get back to the normal seasonality in our business. I wouldn't be surprised to see softness in Q1, but then you start to build off of that, you know, as we normally would. Our Q2 and Q3, as you know, have been historically much stronger than, say, Q1 and Q4.

And so I think there are some dynamics of seasonality that are starting to play a role again, but I think more than anything right now, it's just getting through the rest of the inventory that's sitting in the channel.

Quinn Bolton (Managing Director and Equity Research Analyst)

Got it. And then just quickly, you'd mentioned some of the actions you're taking, including reduction in force, site consolidation, prioritization of certain projects. Yet, you know, your guidance for OpEx, I think, is flattish, sequentially in December, kind of in line with where we were already looking for OpEx to be in Q4. And so I guess I didn't see much of a change in the OpEx outlook. Are these actions, I'm sorry, the cost reduction plans you've talked about, does that kick in really more in the first half of next year? Is 75 the right run rate, you know, kind of, as a baseline, or do you think it could move lower, next year?

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

So I'll comment a little bit on just overall expense reduction efforts, right? We did start early in the year. We've made some changes, and then more recently, we've made some additional changes that will start to impact Q4 and beyond. You don't see so much in the Q4 timeframe just because it's beginning now. You'll see that continue to come down throughout next year, pretty linearly. Sometimes that's masked a little bit by some of the NRE that we take as an offset to OpEx. But I would expect to see the overall OpEx number decline throughout the year. So I think, you know, I mean, if I was to put a number on it, it's probably $285 million-$290 million next year.

So that's the kind of the size of the decline, and that also offsets some additional NREs that we had taken, which were much larger in 2023.

Quinn Bolton (Managing Director and Equity Research Analyst)

Got it. Thanks for the additional color, Steve.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Sure.

Operator (participant)

...Our next question is from Gary Mobley with Wells Fargo. Please proceed.

Gary Mobley (Senior Analyst)

Hey, guys. Thanks for taking my question. Looking at your largest customer, looks like they purchased about $90 million of product from you in the third quarter of last year. That's probably down to something less than $10 million in this most recent quarter. So my question is: you know, what's the right level for purchases with this customer, which I presume is, you know, representative of your broadband, cable, and, and Wi-Fi business? And does your current fourth quarter guidance and maybe your longer-term view contemplate the transition of this business away from that customer into the hands of somebody else?

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

So, Gary, I mean, with regard to the, some of the disclosures and the top customers, we've had a very large customer for a while. I think you've heard us talk about our top customers are often. I'm going to refer to them more as kind of box vendors that kind of sit in between us and the operator. And I think you're well aware of, you know, most of these service providers are looking to kind of keep multiple silicon vendors in the mix so that they've got some leverage. We don't see that changing much, and so we don't necessarily, you know, put too much weight on these customers. They ebb and flow from time to time, and even this year, we've actually seen some of our top customers switch as different service providers start to ramp.

We've actually seen that through this year, and we've seen some nice improvements on some of these newer customers.

Gary Mobley (Senior Analyst)

Okay. Question for Kishore as my follow-up. Kishore, you mentioned in your prepared remarks some design win traction, I think, is how you phrased it, for Keystone in the data center market. So I think you also mentioned a revenue ramp into the second half of the year. How much visibility do you have this time in that revenue ramp? And how influential can some of these early days design wins be for MaxLinear?

Kishore Seendripu (CEO)

So I think there are two parts to this question. I mean, the visibility is very, very clear, right? In the sense that you work directly with the OEMs or module makers, whether it's transceivers or, you know, cable manufacturers, optical cable manufacturers. You directly work with them, and you work with them because they are being aligned up to utilize our silicon at the endpoints, which is usually the data center folks. And so you have direct visibility. Now, the timing of when each one, each one ramps and select, and how, how the distribution portioning of the revenue goes, is the one that you have a little bit of, what I call, uncertainty of.

However, the fact that we are in the mix, the fact that certain calls are going well, and, you know, and the interactions, the commitment to take us through all the qualification processes, the direct visibility you have. So having said that, like I said in my prepared remarks, the interops and calls are going on still, and we feel very good that our silicon is sound and strong, and the interops will go favorably, at this stage. That's our conviction, and that's our, what I call, reading the tea leaves, if you will. Regarding how much influence they will have on our revenues, absolutely, right? You know, even if you were to—you don't do a top-down game plan, you always have to do a bottom-up game plan for revenues.

But if I were to map all of that, we hope to expect about 20% share sometime in the 3- to 5-year window of each of our customers. That's our base plan, and if you exceed that, you'll do much better. So how big can the business be in five years? Obviously, it can be somewhere between $100 million to, you know, a few hundred million, right? That's the wild card here. So yes, and that's the basis on which, including wireless, optical, the accelerator business is where the confidence comes that, you know, in a 5-year window, our infrastructure business should be in the ballpark of, you know, the $500 million range, right? And that's the goal. And of all of which, I would say optical and storage activities have the greatest growth curve ahead of them.

Gary Mobley (Senior Analyst)

That's a good detail. Thanks, Kishore.

Kishore Seendripu (CEO)

Yep.

Operator (participant)

Our next question is from Christopher Rolland with Susquehanna. Please proceed.

Christopher Rolland (Senior Analyst)

Hey, guys. Thanks for the question. I guess the first one is just kind of the swings that we've seen here from peak to now trough, you know, going from $105 million in connectivity to $15 million, for example, have just kind of been incredible. So I guess, first of all, do you guys really view this as all inventory digestion? Like, are we done in connectivity? I don't see how it can get too much, you know, kind of lower than this. But do you have any idea of how much extra inventory is out there in the channel? And then moving forward, you know, are you guys rethinking kind of systems to judge this inventory level that's out there?

Are there new kind of processes that can be put in place to have a better view?

Kishore Seendripu (CEO)

So, you know, if you were not analyzing the channel and the inventory, you know, we, you know, we, we shouldn't be in this job, right, in the first place. So obviously we are analyzing this to death, and sometimes it's very difficult because, you know, there is a certain level of guarded disposition from your customer to their customer. So the closer they are to you, the more information you get, a little bit more accurate. But I just want to hark back a little bit more. You know, one of the most important things we need to start guessing or making educated guesses is about when did the old build start?

You know, you know, it started—let's assume the old shipments happened or in the pandemic period over the last 2 to 3 years. And if you think that there was a, let's assume, a 30% overshipment, then you're looking at probably three, three quarters worth of at least actual end demand that is sufficiently provisioned. And how far are we into it? Maybe we are into a quarter of it, right? If, if that is the logic you go run through, as all logical people should, then you should start expecting a recovery somewhere in the second half of next year. Can you dial it in within a quarter? No. The second part of it is like, you know, have the dynamics in the business changed? No.

I mean, always, we get excited about the latest and the greatest new offering technology, blah, blah, blah, and our customers talk a bit, and our customer's customer talk about it, because I hate to say it, that's what investors want to hear. Okay, but the real revenues are generated by all the products. Products that are actually long-term, they're sticky because of software or performance or whatsoever, and they're also costed down for the customer so they can ship more of it. In that sense, the dynamic hasn't changed the marketplace in terms of we have a robust Wi-Fi 6 portfolio, we have a robust Wi-Fi 7 offering, we have the SoCs to complement our broadband Wi-Fi offering, right?

I know that, you know, the broadband access, it's funny, when it does well, it gets discounted, when it goes down, well, that's the problem, sort of thing. No, honestly, if you step back, we're trying to build a broad-based portfolio company with potential to generate large profits and earnings per share for our shareholders and at the same time build scale and while investing in what I call more resilient businesses, like our infrastructure and so on and so forth, so that we can build comprehensively a large company. I mean, that's the ultimate goal, and no matter what happens now, we remain focused on the long-term goal, and at that, we're very committed to.

Christopher Rolland (Senior Analyst)

Thanks for that, Kishore. And then secondly, about your infrastructure business, the upside there, you guys kind of highlighted millimeter wave and 5G backhaul. I would say, first of all, on the millimeter wave side, I think it's been very slow adoption, so, it's interesting to see, you know, you guys picking up. Why now? And then secondly, on the 5G side, you know, we've seen builds really start to slow, even in India now. What are the specific programs that you guys are linked to, that are kind of, swimming upstream here?

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Yeah, just real quick, maybe a clarification, Chris. I think you're aware most of our business has been backhaul, so you know, these backhaul transceivers that we've been shipping this year has been a big driver, right? So very different than the markets, you know, the access, 5G access markets that you're describing. And so these are microwave backhaul that's replacing fiber, kind of in between base stations. So very, again, just want to emphasize, a very different market than the decline that you're referencing, which we also see. We sell into the wireless access market. We are familiar with it. Not surprising. There's definitely been weakness there. So but we've been able to gain traction in some of these other markets. They're a little nichey, nichier markets.

They're a little bit smaller, but they've been great growth drivers for MaxLinear.

Kishore Seendripu (CEO)

There is, you know, there's a trend in the microwave, millimeter wave backhaul deployments as well, right? People are deploying more and more multi-band deployments and multi-band, I mean, like millimeter wave band, microwave kind combined radios or hybrid radios. So that increases the content as well. Yes, India has been a driver, as India was rolling out strongly on 5G, and now we see a slowdown. So we expected the slowdown as of guidance, guided accordingly. And you also keep in mind that we did not have excess inventory in the infrastructure channel. We basically, we're running short on supply, and we supplied to the market.

So the growth you're seeing, what you call, the ability to pull us out and go upstream, is really based on the fact that the channel was not, you know, overstocked, so we are shipping to natural demand. Now, with the slowdown, we will be caught up with the slowdown as well. So really the growth is coming in the backhaul to these multi-band hybrid deployments, which millimeter wave is a part of. And you also want to think about the fact that as the access bandwidth increase, the front haul and backhaul data pipe is no longer going to be provisioned sufficiently by microwave, and they have to use millimeter wave, wherever it's cost effective to, in combined with microwave, and they're making trade-off versus fiber.

So you can imagine countries like India, and even in the US, in metropolitan zones and things like that, people are trying to do a lot of hybrid deployments. Now, does it slow down? Yes, absolutely. We have guided so accordingly, and it's going to be a little, what I call, the telecom CapEx being dramatically slowed down, as a lot of the telecom OEMs have talked about. In fact, some are pre-announced, right? We should see some impact of it, but this is where our infrastructure is going to really be driven by our growth in our storage accelerators and our optical data center investments. So I think it's turning out to be a pretty nice portfolio, which I'm quite pleased, actually, though it's been taking, taking a while.

Christopher Rolland (Senior Analyst)

Thank you, guys.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Yep.

Operator (participant)

Our next question is from Ross Seymore with Deutsche Bank. Please proceed.

Ross Seymore (Managing Director)

Hi, guys. Just wanted to ask a couple questions. For the fourth quarter not going up sequentially, was that, that demand change, more inventory was out there than you expected? And I know those two things are interlinked, but what changed from three months ago to today that leads the fourth quarter to be down sequentially?

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Yeah, I mean, I think it's exactly as you stated. I think it's both, right? I mean, there's definitely more inventory. We saw more push outs. I mean, we saw bookings in the quarter, so we saw some improvements, but, but it wasn't as much as what we had originally expected three months ago.

Kishore Seendripu (CEO)

Honestly, you know, we ourselves are sort of baffled, if you will, as to, you know, how much inventory is out there and the slowdown and how to reconcile that, right? So, you know, it it's getting clearer as the slowing economy sort of is all catching up with us. I think there are two parallel economies out there right now, a tech economy, and there's a chip economy, and maybe there's a consumer economy. I don't know, there maybe are three of them. We are definitely in the chip economy, and we're seeing some of the downsides of that.

Ross Seymore (Managing Director)

I guess the second question, I have two quick follow-ups. The first one, for next year as a whole, I know you're not going to guide to total revenues. You talked a little bit about the linearity of it with the seasonal comment earlier, but from a high level, what do you think are the idiosyncratic tailwinds or headwinds that you guys as a company have as you look at 2024?

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

I think it's pretty straightforward. I mean, I don't. I'm not gonna guide, of course, next year, but I mean, I think the shape of it is probably the opposite of this year, right? I mean, we started the year out really strong, and we saw that kind of deteriorate to some degree. We're working through this inventory, and I think you're likely to see us continue to improve, and a lot of that's coming from just naturally inventory burning off, but it's also coming from new programs, new products that are going to ramp in that, you know, kind of the second half of next year. I mean, you got a lot of new wins coming from optical. That starts to ramp next year. Wi-Fi 7 starts to ramp next year.

So, you've got several new programs that are going to ramp on top of, you know, the inventory just naturally burning off. So both of those will help. I mean, I guess the only other thing that I just mentioned on another question was seasonality. I think you probably see a little bit of softness in seasonality, but I think it's more influenced, at least in the short term, by the inventory that sits in the channel.

Ross Seymore (Managing Director)

Got it. And my last one, then forgive me for sneaking in three. I know it's a confidential process in the arbitration with Silicon Motion, but any sort of update on either the timing, you know, reiteration of what you said before, but the timing of it or the potential magnitude, any sort of color on that, as that tends to be the most frequent question I get, and I, again, I appreciate you're somewhat, if not significantly limited in what you can say.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Yeah, I don't think anything's changed, just as we had updated before. I mean, the only change is that Silicon Motion filed for arbitration, confidential process, so you're correct in that we can't add any more color there. Still expect, you know, that arbitration process to take 12-18 months.

Ross Seymore (Managing Director)

Thank you.

Operator (participant)

Our next question is from David Williams with The Benchmark Company. Please proceed.

David Williams (Senior Research Analyst)

Hey, good afternoon, and thanks for taking the question. Kishore, maybe you could talk a little bit more about the traction you're seeing in the Keystone platform, and what's the magnitude of that ramp, do you think, for next year? Is there any, maybe just a little more color that you provide around that to help us understand that, that traction and growth?

Kishore Seendripu (CEO)

You know, you know, we don't, we don't guide to the future in that sort of, you know, short timelines, but I think from where we are today, we are, we are at pilot build right now as the, you know, Interop cycles continue. And hopefully next year, we are somewhere in the teens or beyond that. And, hopefully beyond that, because that would be disappointing if it was in the teens. And then, you know, but I could talk to you in terms of three-year, in a three-year window, could we cross $100 million? Yes. I mean, that would be a natural expectation, right? So can we do better than that? Absolutely. That's based on share shifts.

I think one wild card is the timing of the deployments of multiple data centers, and they transition to 100 gigabit per lambda, whether it's 400 gig or 800 gig or 1.6 terabit on the 100 gig platform, if you will. And so you're counting on multiple players coming on. Right now, we have confirmed transitions from big one big data center guy. I know that in the NVIDIA AI clusters, they are deploying 100 gigabit, but you know what? We, you know, it's like we have to land into it rather than win into it right now, so we are trying to win into it. And as they increase their supplier base, hopefully we are one of the selected ones. But I'm not saying that we are selected or we are in it, so please don't mistake that.

I'm just trying to say our focus is right now winning and, and some good luck on the share, basically. Okay?

David Williams (Senior Research Analyst)

Okay. Can you say, is that progressing as you would have expected, or is it maybe a little slower than you had hoped?

Kishore Seendripu (CEO)

You know, it always be slower to me, honestly. It's been a few, several years since we've been investing in the optical data center, and I can't, every time, you know, it seems slower, slow for me because I'm dying with anticipation, right? But so far, we feel very good about where we are. And like I said, if you read the tea leaves, I should actually be more positively disposed than my forecasting will indicate to you.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

I think, David, another positive, I mean, you're starting to see, you know, our IP that we've developed in optical starting to broaden out. We can go after AEC opportunities, AOC opportunities, and that really helps us to leverage the, the development that we've done thus far. Those are also types of programs that can ramp quicker, versus some of the other transceiver platforms. Yes.

David Williams (Senior Research Analyst)

Great color. Thanks so much. And then maybe lastly, just on the carrier or maybe the operator side, if you look out, are you hearing anything in terms of the beginning of the year, of CapEx planning, or is there any sense of optimism that you're beginning to hear maybe for 2024 deployments and maybe CapEx spend?

Kishore Seendripu (CEO)

You know, it's always the hardest thing in all these years in broadband. I can tell you very clearly that, you know, they start the process sometime in Q3, and then, you know, Q3, you don't know anything, and Q1, by the time you end up Q1, then you, you know, sometimes they just go super aggressive as well. So but these are unique times, because there's a lot of inventory sitting out there. Even if they're going through that process, us feeling the impact of their OpEx decisions is going to be delayed for sure, right? Because they're going to be depleting every inventory date. So you won't feel the urgency they would they would come rushing towards the end of Q4 or in the middle of Q1 in the past, past pre-pandemic period, right?

But, now there's still enough inventory in the channel that it's going to be dampened, so we wouldn't be picking that signal as much. But I think, but I think we should all expect that everybody's going to be tightening their belts, right? You know, and so, it will be subdued, whatever they're going to be up to.

Operator (participant)

Our next question is from Karl Ackerman with BNP Paribas. Please proceed.

Karl Ackerman (Senior Research Analyst)

Yes, thank you. Hi to Kishore and Steve. Two questions for today.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Hi, Karl.

Karl Ackerman (Senior Research Analyst)

Hi. Hi, I guess I first want to ask, you know, there, there have been many questions on this call, sort of asking whether there are structural impairments to some of the broadband and connectivity portions of your business. So I'd, I'd like to ask specifically about your connectivity business. You know, how much of that business today is, on a rough and tough basis, split between wireless and wired? I think that would be certainly helpful as we contemplate, you know, some of the content drivers that you talked about earlier on this call as it relates to Wi-Fi 7 next year, as well as some of the growth opportunities today for Wi-Fi 6.

Kishore Seendripu (CEO)

Okay, I would say we have little or no exposure to wireless access from a connectivity side. To the extent that we have exposure to the wireless access on the broadband connectivity side for our Wi-Fi's offering, it's really in the telco platforms where they tend to be the gateway box, where, for example, they have a fiber PON chip with our gateway processor and a Wi-Fi, and they will be what I call an input to that box that comes from a 5G access value. So very little or no exposure to wireless broadband access gateway access, okay? So if you take out that on the wireline, we are pretty much 100% of our exposure to wireline access.

However, it may be, let's say, 90% of it, and 10% of it is what I call standalone router gateways that we started making progress toward at the beginning of the year to get revenues that are outside of the operator gateways, right? That would be the landscape. So you should, on a practical terms, you should associate 90% of our Wi-Fi connectivity revenues with our wireline broadband access gateways. Okay?

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Maybe, Karl, just to add on a little bit. So don't forget, on connectivity side, we also have Ethernet. So while, you know, a lot of our declines in the gateway, I mean, it's been driven by both Wi-Fi and Ethernet, one of the big things going on is we're seeing more exposure. Kishore shared some commentary around what's going on with this transition to 2.5 gig. We are seeing a lot more interest in that, and we do expect to see more growth in 2024 and 2025 from Ethernet as well as of course, the Wi-Fi opportunities.

Karl Ackerman (Senior Research Analyst)

That's very helpful. I appreciate that color. For my follow-up question, I guess, you know, are lead times and backlog back to normal, I guess, pre-COVID levels? Is that a fair way to think about it today? And then second, you know, it's nice to see the decline in inventory, but any thoughts in terms of a target level of inventory as you look to manage expenses over the next couple of quarters? Thank you.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Yeah, it's a good question. So I think we've been doing a really good job on inventory as far as bringing it down, but we got to do better, and we will continue to do better. We jumped on this pretty quick, going all the way back to the tail end of last year. But unfortunately, the revenue decline has just been such that we've not been able to get the inventory out as fast as we'd like to. With regard to lead times, I would say we're kind of back to normal. I mean, we're kind of quoting 16, 18-week lead times, which is pretty typical in our business. I mean, there's a couple of businesses that are probably a little faster than that, but that's kind of our normal. So I wouldn't say that-...

that is problematic whatsoever at this point. The backlog also, backlog and bookings. So, you know, bookings, as I've talked about, I mean, have been very low because you had super good backlog for well over a, I don't know, almost two years now. And so now I feel like we're getting through that adjustment phase where you're going into a quarter with, you know, whatever, 50, 60% backlog, whereas you know, historically, you've been running for the last two years, you've been running at a 100% backlog. And that, and that's changing, and that, getting back into that normal rhythm, that's what we're used to, that's what we know. And so actually looking forward to kind of getting back. Some of the uncertainty has been around backlog, pushing out of a quarter. That's really where the problem has been.

And so we're starting to see that improve.

Kishore Seendripu (CEO)

But to be honest, Steve, if to the extent I can say we want zero inventory in our books so that we get the PO bookings going on our customer side, I bet you I will support you on that.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Of course.

Karl Ackerman (Senior Research Analyst)

Thank you.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Thanks, Karl.

Operator (participant)

Our next question is from Ananda Baruah, with Loop Capital Markets. Please proceed.

Ananda Baruah (Senior Equity Analyst)

Hey, yes, good afternoon, guys. Thanks for taking the question. Maybe just, you know, kind of dovetailing right off of that last topic with Karl. It seems like everything you guys just talked about would suggest that new normalized inventory levels at customers, exiting this would be the same, as they previously were going in. You think that that's, based on what you can see, a fair assumption?

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

I'm not sure that I follow you, Ananda. I'm sorry.

Ananda Baruah (Senior Equity Analyst)

Well, your customers hold—I mean, they probably view their inventory level. Like, to them, they have what they would interpret as normalized inventory levels, I would imagine. And, you know, that was—that looked a particular way going into 2020. You know, they can change what that looks like, Steve, but it sounds like, I mean, they could, they could change it higher, they could change it lower, they could leave it the same coming out of this. But it sounds like based on what you're saying... Well, here, here's my thought. So does that make sense, though, what I'm saying? Like, they'd probably say, "We want to hold some number of weeks of MaxLinear inventory.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Sure. Yep.

Ananda Baruah (Senior Equity Analyst)

Yeah, yeah. So it sounds like, it sounds like what you're saying is the lead times are back to pretty typical, and you're at 50%-60% backlog. It sounds like ship out is meaningfully higher than, than ship in because you're-- you have typical lead times. You know, so it sounds like they're operating you guys in typical lead times and just working down the inventory to the 50%-60% backlog. So that would sort of suggest to me, I guess, really kind of the crux of the question. It sounds to me like they're already working you guys as if getting you back to pre-COVID inventory levels. I was just wondering if you have an opinion on where that might settle in.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Yeah. I mean-

Ananda Baruah (Senior Equity Analyst)

That would also inform when you guys inflect.

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Yeah. I look, I... If I understand your correct, your question correctly, I agree that they-- I mean, I think the whole industry sees that lead times have come down, and so they're waiting. They're taking more risks. They know-- They, actually, kind of, I'm not sure if we're seeing eye to eye on this, but I think customers do have, still have. If you look across the industry, there's still a lot of inventory, either in the channel or even sitting at end customers. And so while that is still high, I mean, they are still burning that down and, but we're getting back to, to those normal times, as I stated. I mean, I think it's another couple of three quarters, but we are seeing improvements.

Ananda Baruah (Senior Equity Analyst)

Yeah. I guess the question really was, do you think that they settle you in at lower levels than previously when things get back to normal? Do you think they settle you in at-

Steve Litchfield (CFO and Chief Corporate Strategy Officer)

Oh, look, I think yes. I mean, absolutely. That's what we see in every cycle. When it swings the other way, right? They will take more risks. They will wait too long. That's exactly what's going on right now, in my opinion, across the entire industry, is that they are waiting because they either know or they think they know that there's enough inventory out there, and so they're going to wait as long as they can, and nobody's, you know, every one of these customers, their operations guys, getting pounded on for having too much inventory. So they're gonna not order, and they're gonna risk being late. And in this environment, where demand is kind of so so, that's probably okay.

Ananda Baruah (Senior Equity Analyst)

Then just quick follow-up. Kishore, you mentioned a couple times about the storage accelerators and potentially picking up in 2024 and, and then potentially it'll be robust for a few years. Do you... Any, any context around how impactful those could be?

Kishore Seendripu (CEO)

It's very impactful, right? I mean, generally, by and large, whenever we invest in any new product areas, we hope to build at its peak run cycle, somewhere in the $50-$100 million per year product, if it's an infrastructure product. Otherwise, the economics don't make sense. And there's a rhythm to it, you know, what is the next product going to be built, and that sort of a thing. There's a sustaining revenue and growth, right? Self-sustaining growth and revenue, and revenue. So that is the expectation for this product, that it's going to be somewhere in the $50-$100 million per year revenue when it hits its peak revenue.

So initially, you have really rapid growth, like you said, double next year and maybe grow 50%, 60% the following year from there, and maybe it hits the peak point somewhere in the third and the fifth year from now... Right? Hopefully the third year, not the fifth year, and then it holds there for a long time, and we launch new products. And the more important thing, and this is where the, this is the key point here, and maybe we never, ever connected the dots very well here, is that there is a place and need for these accelerators in the cloud market as well. And as the AI and the cloud and the edge increase, the accelerators will become essential to it.

So right now, we're investigating partnerships with, with, you know, AI vendors, if you will, where there could be a joint offering. And we are seeing a lot of, what I call, openness for that joint collaboration of a joint this thing. And that really is the key to the storage business, is the enterprise is going to be a massive consumer of storage and latencies and access speeds, and all of those are going to be incredibly important at the edge and even inside the cloud moving forward, even with AI, it's going to get even worse. And really, this, this is a play that goes together with all the offerings on the AI processors as well. So that's the next step in the evolution of our storage accelerator business.

Maybe this is the first time I really connected the dots in that sense for you.

Ananda Baruah (Senior Equity Analyst)

That's really helpful context. All right, great. Thanks, guys.

Kishore Seendripu (CEO)

Thanks, Nanda.

Operator (participant)

Our next question is from Suji Desilva with Roth MKM. Please proceed.

Suji Desilva (Managing Director, Senior Research Analyst)

Hi, Kishore. Hi, Steve. A question about the carrier PON program. I'm curious if that is the rollouts happening as you'd expected, or whether that carrier is, you know, pushing out or delaying that rollout because of the macro environment.

Kishore Seendripu (CEO)

So, you know, the roll is already happening. We've been shipping for this whole year, actually. The only difference is that the earlier part of the year, the rollout was slower than we expected, so they were sitting on a bunch of inventory, and then they started shipping. Now they're shipping on a natural cadence, and we are already working on the next generation platform. But my expectation is the next generation is going to be delayed, and the existing generation platform with, you know, 10-gigabit PON, XGS-PON and Wi-Fi 6 R2, which is the enhanced throughput one, is going to have a long life. Having said that, we've got the next generation offering as well. So I don't think there's any change in plans yet.

There'll be natural slowdowns and seasonalities and that sort of a thing, but nothing out of the ordinary, because to start with, it is not as much inventory on our side as was in the beginning of the year.

Suji Desilva (Managing Director, Senior Research Analyst)

Okay. That's helpful, Kishore. And then, lastly, on the AEC market within optical, that's kind of coming online here. Can you help us just think about the relative size you think that market will be a year or two out versus the AOCs and the passive cables, just to understand how big you think that market grows as a share of the cabling?

Kishore Seendripu (CEO)

You know, this, that's a very, very interesting question. I know there's a lot of excitement in AEC, but AEC has been a very, very tiny market looking backwards. Right? The whole rationale for AEC comes in as the speeds have increased dramatically, where, you know, passive copper cannot meet, meet the performance and you need, you know, active electrical cables. There's a place for AOCs as well. If I'm in a AI cluster, I don't want to do anything with AECs, right? I want to go optical. So it really is a mix and match. So, this market can be huge, gigantic, and I think any forecast will underestimate the volume it can be over the long term. It's just like USB 3.0, right? It can just keep growing.

However, the prices are going to be a lot more optimistic than they really will play out to be, right? All in all, I expect the market, I don't know, anywhere between $200 million dollar size for a chip guy to as big as $1 billion for transceivers, active optical cable and active electrical cable combined. But there is this ceiling in the last 20 years of existing as MaxLinear for me, I've never seen a single chip supply in the communication segment more than $300 million a product.

Suji Desilva (Managing Director, Senior Research Analyst)

Okay.

Kishore Seendripu (CEO)

So the $1 billion TAM, a $300 million TAM is my point. So put it differently, it's going to take many generations of products to really access the $1 billion TAM, and that's going to take a few years to get there. But I think we're very well positioned with our technology evolution.

Suji Desilva (Managing Director, Senior Research Analyst)

Okay. Thanks, Kishore.

Operator (participant)

Our final question is a follow-up from Tore Svanberg with Stifel. Please proceed.

Tore Svanberg (Managing Director and Senior Analyst)

Yes, thank you. I just had a two-part question on the recent CommScope, Vantiva, deal. First of all, did that also have an impact on sort of purchasing behavior? Obviously, when you have an event like this, you know, perhaps customer is a bit more, you know, careful about buying inventory. And then the second part of the question, does this change anything at all for MaxLinear? And the reason I'm asking that question is because, you know, now that, you know, it's kind of, sort of like two customers in one, I would think that the qual for DOCSIS 4.0 is going to be a bit more simpler. So if you could answer those two questions, that'd be great. Thanks.

Kishore Seendripu (CEO)

So, Torsten, first part of the question is very, very easy. I don't think anybody knows which deal happens when. It's a very nonlinear process, the M&A activity. Having said that, there's so much inventory in the channel, I don't think this, the deal itself, had any impact on that. It's really driven by the end market throughput, and the end market itself has got a lot of inventory sitting on it, right? So I think our customers are in the same bad place we are in, number one. Number two, regarding the DOCSIS 4.0 cycle, yes, we got a great chip, the lowest power, the most beautiful thing in the world, that sort of a chip we have compared to any competition out there.... However, we have seen the way the DOCSIS cable market plays out.

It really takes 3-4 years to get to the ramp point where you hit 50% of the volume, at least 4 years to get to 50% of the market, and then a 7-year life to it, right? Having said that, DOCSIS 4.0 is not the same for everybody. It is already a schism in the marketplace. There are 2 flavors of it, and it's a very, very costly network rollout, and I think operators are going to be very, very selective about DOCSIS 4.0. It's going to be a very small share of the market. However, DOCSIS 3.1 has got many flavors. There's something called the Ultra DOCSIS 3.1, which is going to meet all the category of services that the market needs, whether it's 10 gigabit receive bandwidth and upstream multi-gigabit.

It's going to meet all those things. It's called a higher split Ultra DOCSIS 3.1, and that can roll out today based on all the network out there. And I think that's what the operators are going to lean towards, and that's going to be 80% of the market. And so DOCSIS 4.0 is great, but 3.1 is even more beautiful. Ultra DOCSIS 3.1 is what I put my bet on.

Ananda Baruah (Senior Equity Analyst)

Great perspective. Thank you.

Kishore Seendripu (CEO)

Thank you.

Operator (participant)

We have reached the end of our-

Kishore Seendripu (CEO)

Thank you.

Operator (participant)

Go ahead.

Kishore Seendripu (CEO)

Sorry, go ahead.

Operator (participant)

I was just going to hand it back over to Dr. Kishore Seendripu for closing comments.

Kishore Seendripu (CEO)

Oh, well, thank you. Thank you, operator. So I just want to thank you all for joining this call. You know, I would like to tell you that we'll be participating in a number of conferences in November through January. The Stifel Midwest Growth Conference, Chicago, on November 9. The Roth Capital Technology event in New York on November 15. The UBS Technology Conference in Scottsdale on November 28. The Wells Fargo TMT Summit in Rancho Palos Verdes, California, on November 29. And the Needham Growth Conference in New York on January 18. With that, I want to thank you all once again for joining us, and we look forward to speaking with you again soon. Thank you.

Operator (participant)

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.