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MI

MAXLINEAR, INC (MXL)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue climbed to $108.8M, up 13% QoQ and 18% YoY; non-GAAP EPS returned to positive at $0.02 and free cash flow turned positive, driven by strength in broadband and continued momentum in optical interconnects .
  • The company beat Wall Street consensus on both revenue and EPS; revenue of $108.8M vs $104.9M consensus and EPS of $0.02 vs $0.018 (non-GAAP), and exceeded the midpoint of prior Q2 guidance; guidance for Q3 calls for broad-based sequential growth across all end markets (*Values retrieved from S&P Global) .
  • Gross margins improved sequentially on GAAP (56.5%) and held steady on non-GAAP (59.1%); GAAP OpEx fell materially to $86.1M vs Q1’s $99.9M, while FX drove higher interest/other expense ($6.1M) versus guidance .
  • Management emphasized strong order rates, backlog, and design-win traction in data center PAM4 DSP (Keystone) and storage accelerators (Panther), with confidence in 2025/2026 acceleration; key catalysts include ramps at tier-1 carriers for PON/Wi‑Fi gateways and growing Ethernet 2.5G adoption .

What Went Well and What Went Wrong

  • What Went Well

    • Returned to non-GAAP profitability (EPS $0.02) and positive operating cash flow ($10.5M) with GAAP gross margin expansion to 56.5% QoQ; “exceeded the mid-point of our revenue guidance, returned to profitability on a non-GAAP basis, and generated positive free cash flow” .
    • Strong segment performance: broadband ~$48M, connectivity ~$21M, infrastructure ~$35M, industrial ~$6M; CFO: “we expect all end markets…to be up” in Q3 .
    • Strategic traction: Keystone 800G PAM4 DSP tracking toward $60–$70M 2025 revenue; robust interest in 1.6T Rushmore; multiple Ethernet 2.5G partner adoptions (ASUS, HiSource) .

  • What Went Wrong

    • FX headwinds pushed interest/other expense to ~$6.1M vs prior expectations; CFO cited ~$4M FX impact, mainly euro and shekel exposure .
    • Industrial multi-market remains volatile and weak, particularly with China exposure, pressuring near-term growth; management expects recovery but noted volatility .
    • Tariff uncertainty could affect customer ordering cadence and ODM/OEM logistics; management sees limited direct semiconductor tariff exposure but is monitoring demand transmission effects .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$92.2 $95.9 $108.8
GAAP Gross Margin %55.6% 56.1% 56.5%
Non-GAAP Gross Margin %59.1% 59.1% 59.1%
GAAP Operating Expenses ($USD Millions)$92.4 $99.9 $86.1
Non-GAAP Operating Expenses ($USD Millions)$61.3 $58.4 $56.6
GAAP Diluted EPS ($USD)$(0.68) $(0.58) $(0.31)
Non-GAAP Diluted EPS ($USD)$(0.09) $(0.05) $0.02
Q2 2025 vs EstimatesConsensus*Actual
Revenue ($USD Millions)$104.9*$108.8
Non-GAAP EPS ($USD)$0.018*$0.02
# of EPS Estimates11*—
# of Revenue Estimates11*—
Segment Revenue ($USD Millions)Q1 2025Q2 2025
Infrastructure~$27 ~$35
Broadband~$41 ~$48
Connectivity~$20 ~$21
Industrial Multi-Market~$8 ~$6
KPIsQ1 2025Q2 2025
DSO (days)~94 ~89
Inventory Turns (x)1.3x 1.5x
Cash, Cash Equivalents & Restricted Cash ($USD Millions)$104.1 $110.3

Note: Values with asterisk (*) were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q2 2025$95–$115 Actual $108.8 Achieved above midpoint
GAAP Gross Margin %Q2 202554.5–57.5 Actual 56.5 In-range (upper half)
Non-GAAP Gross Margin %Q2 202557.5–60.5 Actual 59.1 In-range
GAAP OpEx ($M)Q2 2025$92–$98 Actual $86.1 Lower than guided (positive surprise)
Non-GAAP OpEx ($M)Q2 2025$55–$61 Actual $56.6 In-range
Interest & Other ($M)Q2 2025$2.0–$3.0 GAAP $6.1 Above guided (FX headwind)
GAAP Tax ($M)Q2 2025Expense $2.4 Benefit $(4.1) Better (benefit vs expense)
Diluted Shares (M)Q2 202587.0–87.5 86.6 Lower than guided
MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q3 2025N/A$115–$135 New
GAAP Gross Margin %Q3 2025N/A55–58 New
Non-GAAP Gross Margin %Q3 2025N/A57.5–60.5 New
GAAP OpEx ($M)Q3 2025N/A$84–$90 New
Non-GAAP OpEx ($M)Q3 2025N/A$55–$61 New
Interest & Other ($M)Q3 2025N/A$3.5–$4.5 New
GAAP Tax ($M)Q3 2025N/ABenefit $0.6 New
Non-GAAP Tax ($M)Q3 2025N/AProvision $1.3 New
Basic/Diluted Shares (M)Q3 2025N/A87.1 / 87.5 New
Segment DirectionQ3 2025N/AAll segments up sequentially New
DividendsQ3 2025N/ANone disclosed No change

Earnings Call Themes & Trends

TopicQ4 2024 (Prior-2)Q1 2025 (Prior-1)Q2 2025 (Current)Trend
AI/Optical Interconnects (Keystone 800G, Rushmore 1.6T)>1M units shipped across multiple customers; entering 2025 growth stage Strong OFC presence; Keystone demos; Rushmore demo; 2026 acceleration anticipated Keystone rev guide $60–$70M in 2025; robust 1.6T interest; ramps continuing into 2026 Strengthening; 800G ramps in 2H25, 1.6T later
Supply Chain & Tariffs—Semis not directly tariffed; ODMs moved out of China; watching demand transmission Orders steady; lead times ~6 months; tariffs not expected to alter near-term revenues Monitoring; manageable
Broadband/PON/Wi‑FiPositioning for growth in gateways and Wi‑Fi Ramp with 2nd major North American carrier later in 2025; bookings strengthening Broadband ~$48M; gateway SoC plus Wi‑Fi 7 platform win affirmed; continued growth expected Recovery + new product ramps
Ethernet 2.5G—Portfolio expansion into enterprise/industrial use cases Partner adoptions (ASUS, HiSource); ~$100M 2028 opportunity Building momentum
Regional Trends (China)—CPE manufacturing diversified; limited China box exposure Industrial softness and pricing pressure in China; data center volumes expected to grow to ~40% of transceiver units over 3 years (management view) Mixed: industrial weak; DC favorable
Regulatory/Legal (SIMO arbitration)——Arbitration expected Q4 2025; potential resolution 1H 2026; cash flows possibly 2027–2028 Pending, multi-year timeline
R&D Execution / Cost Down—OpEx reductions progressing; more to come in 2H25 Investing for foundry cost reductions to protect GM; continued OpEx discipline Ongoing efficiency
Storage Accelerators (Panther)—$10–$20M in 2025; tripling possible next year; Dell reference; AMD joint platform Panther V unveiled (450Gbps, PCIe Gen5 x16); multi-card scalability; enterprise + hyperscale focus Product roadmap advancing

Management Commentary

  • CEO: “With solid execution, we exceeded the mid-point of our revenue guidance, returned to profitability on a non-GAAP basis, and generated positive free cash flow in Q2… strong customer and product traction in high-speed interconnects… PON access, Wi‑Fi, ethernet, and wireless infrastructure” .
  • CFO: “Infrastructure revenue… ~$35M; Broadband… ~$48M; Connectivity… ~$21M; Industrial… ~$6M… GAAP and non-GAAP gross margin… 56.5% and 59.1%… GAAP OpEx $86.1M; non-GAAP OpEx $56.6M” .
  • CEO on optical: “On track to deliver $60–$70M in revenue this year, primarily from our 800-Gb 5nm Keystone PAM4 DSP… robust design-in activity for our 1.6-Tb Rushmore” .
  • CFO on FX: “$4 million of FX impact… euro and shekel… ended up being bigger than expected in the quarter” .
  • CEO on PON gateway: “Ramp… later this year… with a second major tier one North American carrier… validation of our technology” .
  • CEO on Panther: “Panther delivers… 4x improvement in power savings… PCIe Gen5 capable… more than 2x performance vs Panther 3” .

Q&A Highlights

  • Segment trajectory: Infrastructure continuing to perform into 2H; broadband and connectivity recovering; industrial expected to improve from weak levels .
  • Optical DSP details: Keystone design wins across major module makers; 800G to dominate shipments near term; Rushmore (1.6T) more of 2026–2027 story .
  • Expenses and FX: Q2 OpEx below midpoint; some costs pushed to Q3; ~$4M FX impact elevated interest/other expense .
  • Tariffs and orders: Orders strengthening ahead of tariff changes; semiconductors not directly tariffed; lead times (~6 months) limit near-term pull-forward effects .
  • Arbitration (SIMO): Arbitration targeted for Q4 2025; potential resolution 1H 2026; any cash transactions likely 2027–2028 .
  • Copper (AEC/ACC) roadmap: Products designed to handle AEC requirements; power efficiency cited as differentiation .

Estimates Context

  • Q2 beat vs consensus: revenue $108.8M vs $104.9M consensus*, non-GAAP EPS $0.02 vs $0.018 consensus*. Given Q3 guidance ($115–$135M), the midpoint aligned with then-street expectations for Q3 revenue; management’s “all segments up” outlook suggested potential upward revisions, particularly in broadband/infrastructure (*Values retrieved from S&P Global) .
  • Street coverage breadth: 11 estimates for both revenue and EPS in Q2/Q3*, indicating a reasonably followed name within small/mid-cap semis (*Values retrieved from S&P Global).

Key Takeaways for Investors

  • Momentum and mix shift: Sequential and YoY revenue growth, positive non-GAAP EPS, and operating cash flow confirm recovery; mix benefits from broadband and data center optical should support margins .
  • Optical path: Keystone 800G remains the near-term revenue driver; Rushmore 1.6T ramps are later-cycle (2026+), but design-in traction underpins medium-term TAM expansion .
  • Broadband catalyst: Tier-1 North America PON/Wi‑Fi 7 gateway ramps in late 2025/2026, plus DOCSIS upgrades and Ethernet 2.5G adoption, position connectivity for sustained growth .
  • Expense discipline vs investment: GAAP OpEx down materially; ongoing cost-down initiatives to offset foundry pressures while funding AI/data-center roadmaps—supports GM resilience .
  • FX and tariffs: FX can swing other expense; tariff uncertainty likely affects OEM logistics more than chip supply; limited direct semiconductor tariff exposure mitigates risk .
  • Legal overhang: SIMO arbitration timeline stretches into 2026–2028 for final cash impacts; watch headlines but core operations are the stock driver near term .
  • Trading setup: Near-term catalysts include continued optical order flow, Q3/Q4 sequential growth across segments, and Panther V traction; monitor FX and industrial China softness for potential volatility .

Note: Values marked with an asterisk (*) were retrieved from S&P Global.