MaxLinear, Inc. (NYSE:MXL), a provider of highly integrated,
radio-frequency (RF) and mixed-signal integrated circuits for
broadband communications applications, today announced financial
results for the fourth quarter and fiscal year ended December 31,
2010.
Generally Accepted Accounting Principles (GAAP)
Results
Net revenue for the fourth quarter of 2010 was $15.9 million,
which came in at the high end of our prior guidance of $14.5
million to $16 million. This represents a decrease of 14 percent
compared to the third quarter of 2010 and a 4 percent increase over
the fourth quarter of 2009.
Gross profit in the fourth quarter of 2010 was 66 percent of
revenue, compared to 70 percent in the third quarter of 2010 and 70
percent in the fourth quarter of 2009. Loss from operations in the
fourth quarter of 2010 was 7 percent of revenue, compared with
income from operations of 9 percent of revenue in the third quarter
of 2010 and 13 percent of revenue in the fourth quarter of
2009.
Net income for the fourth quarter of 2010 was $5.7 million, or
$0.17 per share (diluted), which included a one-time tax benefit of
$6.7 million, or $0.20 per share (diluted), associated with the
release of the valuation allowance related to federal deferred tax
assets, compared with net income of $1.4 million, or $0.04 per
share (diluted), for the third quarter of 2010, and net income of
$1.9 million, or $0.05 per share (diluted), for the fourth quarter
of 2009.
For the fiscal year 2010, net revenue was $68.7 million,
representing an increase of 34 percent compared to $51.4 million in
2009. Gross profit was 69 percent of revenue for fiscal 2010,
representing a 2 percentage point increase compared with 67 percent
for 2009. For the fiscal year 2010, income from operations was 5
percent of revenue, compared to 9 percent of revenue in fiscal
2009. Net income attributable to common stockholders for fiscal
2010 was $8.9 million, or $0.30 per share (diluted), and without
the one-time tax benefit associated with the release of the
valuation allowance related to federal deferred tax assets, would
have been $2.2 million, or $0.08 per share (diluted), compared to
$0.6 million, or $0.06 per share (diluted), in fiscal 2009.
Cash, cash equivalents and investments totaled $94.5 million at
December 31, 2010, compared to $17.9 million at December 31, 2009.
Cash flow used in operations totaled $3.5 million in the fourth
quarter of 2010 and cash flow provided by operations totaled $4.8
million for the full year of 2010. Net proceeds of $72.9 million
from MaxLinear’s March 24, 2010 initial public offering contributed
to the increase in cash, cash equivalents and investments at
December 31, 2010 as compared to December 31, 2009.
Non-GAAP Results
MaxLinear believes that non-GAAP financial measures can provide
useful information to both management and investors by excluding
certain non-cash expenses that are not indicative of our core
operating results. These measures should only be viewed in
conjunction with corresponding GAAP measures. MaxLinear’s non-GAAP
financial measures exclude the effect of stock-based compensation,
the correction of an error related to the tax treatment of deferred
revenue for the years ended December 31, 2009 and 2008, and the
release of the valuation allowance related to federal deferred tax
assets. They also include the assumed conversion of all outstanding
shares of preferred stock into shares of common stock which
occurred in connection with our initial public offering. The
reconciliation between GAAP and non-GAAP financial measures is
provided in the financial statements portion of this release.
Non-GAAP gross profit in the fourth quarter of 2010 was 66
percent of revenue, compared to 70 percent in the third quarter of
2010 and 70 percent in the fourth quarter of 2009. Non-GAAP income
from operations in the fourth quarter of 2010 was 1 percent of
revenue, compared to 15 percent of revenue in the third quarter of
2010 and 16 percent of revenue in the fourth quarter of 2009.
Non-GAAP net income for the fourth quarter of 2010 was $0.2
million, or $0.01 per share (diluted), compared with $2.9 million,
or $0.08 per share (diluted), for the third quarter of 2010, and
$2.4 million, or $0.09 per share (diluted), for the fourth quarter
of 2009.
For the fiscal year 2010, non-GAAP gross profit was 69 percent
of revenue, representing a 2 percentage point increase compared
with 67 percent for 2009. For the fiscal year 2010, non-GAAP income
from operations was 11 percent of revenue, compared with 11 percent
of revenue in fiscal 2009. Non-GAAP net income attributable to
common stockholders for fiscal 2010 was $7.9 million, or $0.24 per
share (diluted), compared to $5.3 million, or $0.20 per share
(diluted), in fiscal 2009.
Business Summary
“2010 was a tremendously successful year for MaxLinear, one
where revenues grew 34% year over year while actually increasing
gross margins by almost 2 percentage points to 69%. Not only did we
grow in our existing markets, but we expanded our TAM by commencing
volume shipments into the cable market with industry leading SoC
solutions. We made significant investments in other areas yet to be
announced as part of our strategy to expand our TAM further,”
commented Kishore Seendripu, Ph.D, Chairman and CEO. “In addition,
completing our IPO during 2010 provided us with additional capital
resources for expanding our business and enhanced our credibility
with our customers.”
Conference Call Details
MaxLinear will host its fourth quarter 2010 financial results
conference call today, February 3, 2011 at 1:30 p.m. Pacific Time
(4:30 p.m. Eastern Time). To access this call, dial US toll free:
1-877-941-1427 / US toll: 1-480-629-9664 with conference ID:
4402616. A live webcast of the conference call will be accessible
from the investor relations section of the MaxLinear website at
http://www.maxlinear.com, and will be archived and available after
the call at www.investors.maxlinear.com until February 17, 2011. A
replay of the conference call will also be available until February
17, 2011 by dialing toll free 1-800-406-7325 or 1-303-590-3030 and
referencing passcode: 4402616.
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, our product
development efforts, and trends and opportunities in our product
markets, including expansion into new product markets. These
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, including, among others,
competition in our industry; uncertainties concerning how end user
markets for our products will develop, including end user markets
for the cable, digital television, and automotive applications of
our products as well as end user markets for products currently in
development; our dependence on a limited number of customers for a
substantial portion of our revenues; intense competition in our
industry; the timing and development of the global transition from
analog to digital television; our lack of long-term supply
contracts and dependence on limited sources of supply; our ability
to continue to develop and introduce new and enhanced products on a
timely basis; and potential decreases in average selling prices for
our products. 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).
Additional risks, uncertainties, and other information will be
contained in our Annual Report on Form 10-K for the year ended
December 31, 2010, which MaxLinear will file with the SEC in
February 2011.
Use of Non-GAAP Financial Measures
To supplement our unaudited condensed consolidated financial
statements presented on a basis consistent with GAAP, we disclose
certain non-GAAP financial measures, including non-GAAP net income,
income from operations, gross profit, and earnings per share. These
supplemental measures exclude stock-based compensation, the
correction of an error related to the tax treatment of deferred
revenue for the years ended December 31, 2009 and 2008, and the
release of the valuation allowance related to federal deferred tax
assets. They include the assumed conversion of all outstanding
shares of preferred stock into shares of common stock using the
as-if converted method. 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 cash 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.
While we include the dilutive impact of such 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.
The provision for income taxes for the twelve months ended
December 31, 2010 includes the correction of an error related to
the tax treatment of deferred revenue for the years ended December
31, 2009 and 2008 of $0.3 million and the release of $6.7 million
of the valuation allowance related to federal deferred tax assets.
The correction of the error is a one-time out-of-period adjustment,
and the release of the valuation allowance is a one-time benefit;
therefore, these are not indicative of our core operating
performance.
The shares used to compute non-GAAP basic and diluted net income
per share for the twelve months ended December 31, 2010 and the
three and twelve months ended December 31, 2009 include the assumed
conversion of all outstanding shares of preferred stock into shares
of common stock using the as-if converted method as of the
beginning of each period presented or the date of issuance, if
later. In March 2010, in connection with the closing of our initial
public offering, all of our outstanding preferred stock was
converted into shares of our Class B common stock.
Reconciliations of non-GAAP measures disclosed in this press
release appear below.
About MaxLinear, Inc.
MaxLinear, Inc. is a provider of highly integrated,
radio-frequency (RF) and mixed-signal semiconductor solutions for
broadband communications applications. MaxLinear is located in
Carlsbad, California, and its address on the Internet is
www.maxlinear.com.
MXL is MaxLinear’s registered trademark. Other trademarks
appearing herein are the property of their respective owners.
MAXLINEAR, INC.
UNAUDITED GAAP CONDENSED CONSOLIDATED
BALANCE SHEETS
(in thousands)
December 31, December 31,
2010 2009 Assets Current
assets: Cash and cash equivalents $ 21,563 $ 17,921 Investments,
available-for-sale 72,923 — Accounts receivable 3,047 9,707
Inventory 7,425 2,850 Deferred income taxes, prepaid expenses and
other current assets 4,232 262 Total
current assets 109,190 30,740 Property and equipment, net 4,535
2,627 Intangible assets 980 — Deferred income taxes and other
long-term assets 4,213 2,406 Total
assets $ 118,918 $ 35,773
Liabilities and
stockholders’ equity (deficit) Current liabilities $ 13,746 $
19,711 Deferred rent 257 71 Capital lease obligations, net of
current portion 18 115 Convertible preferred stock — 35,351 Total
stockholders’ equity (deficit) 104,897 (19,475 )
Total liabilities and stockholders’ equity (deficit) $
118,918 $ 35,773
MAXLINEAR, INC.
UNAUDITED GAAP CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except per share
data)
Three Months Ended
December 31,
September 30, December 31,
2010 2010 2009
Net revenue $ 15,865 $ 18,523 $ 15,203 Cost of net
revenue 5,444 5,487 4,523
Gross profit 10,421 13,036 10,680 Operating expenses:
Research and development 7,426 7,298 5,648 Selling, general and
administrative 4,071 4,120 3,125
Total operating expenses 11,497 11,418 8,773
Income (loss) from operations (1,076 ) 1,618 1,907 Interest income
105 106 24 Interest expense (7 ) (6 ) (12 ) Other expense, net
(29 ) (20 ) (5 ) Income (loss) before
income taxes (1,007 ) 1,698 1,914 Provision (benefit) for income
taxes (6,669 ) 346 (4 ) Net
income 5,662 1,352 1,918 Net income allocable to preferred
stockholders — — (1,280 )
Net income attributable to common stockholders $ 5,662 $
1,352 $ 638 Net income per share attributable
to common stockholders: Basic $ 0.18 $ 0.04 $ 0.06
Diluted $ 0.17 $ 0.04 $ 0.05
Shares used to compute net income per share attributable to
common stockholders: Basic 31,618 31,264
10,624 Diluted 33,979
34,036 12,985
MAXLINEAR, INC.
UNAUDITED GAAP CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except per share
data)
Twelve Months Ended December
31,
2010 2009
Net revenue $ 68,701 $ 51,350 Cost of net revenue 21,560
17,047 Gross profit 47,141 34,303
Operating expenses: Research and development 27,725 19,790 Selling,
general and administrative 15,912 9,921
Total operating expenses 43,637 29,711 Income from
operations 3,504 4,592 Interest income 326 51 Interest expense (29
) (52 ) Other expense, net (58 ) (32 ) Income
before income taxes 3,743 4,559 Provision (benefit) for income
taxes (6,371 ) 230 Net income 10,114
4,329 Net income allocable to preferred stockholders (1,215
) (3,691 ) Net income attributable to common
stockholders $ 8,899 $ 638 Net income per
share attributable to common stockholders: Basic $ 0.33 $
0.06 Diluted $ 0.30 $ 0.06
Shares used to compute net income per share attributable to common
stockholders: Basic 26,743 10,129
Diluted 29,478 11,512
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF NON-GAAP
ADJUSTMENTS
(in thousands, except per share
data)
Three Months Ended December 31,
September 30, December 31, 2010
2010 2009 GAAP net income $ 5,662 $ 1,352 $
1,918 Stock-based compensation: Cost of net revenue 24 23 —
Research and development 815 757 275 Selling, general and
administrative 399 447 210 Total
stock-based compensation 1,238 1,227 485 Income tax adjustments*
(6,669 ) 286 — Non-GAAP net income $
231 $ 2,865 $ 2,403 Shares used in computing
GAAP basic earnings per share 31,618 31,264 10,624 Weighted average
effect of the assumed conversion of convertible preferred stock
from date of issuance — — 14,526
Shares used in computing non-GAAP basic earnings per share
31,618 31,264 25,150 Shares used in
computing GAAP diluted earnings per share 33,979 34,036 12,985
Weighted average effect of the assumed conversion of convertible
preferred stock from date of issuance — —
14,526 Shares used in computing non-GAAP diluted
earnings per share 33,979 34,036 27,511
Non-GAAP basic earnings per share $ 0.01 $
0.09 $ 0.10 Non-GAAP diluted earnings per share $ 0.01
$ 0.08 $ 0.09
* Income tax adjustments illustrate the
financial results for the three months ended December 31, 2010 and
the three months ended September 30, 2010 without the effects of
the release of the valuation allowance related to federal deferred
tax assets and the correction of an error related to the tax
treatment of deferred revenue for the years ended December 31, 2009
and 2008, respectively, for comparison to the three months ended
December 31, 2009.
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF NON-GAAP
ADJUSTMENTS
(in thousands, except per share
data)
Twelve Months Ended December
31,
2010 2009 GAAP net
income $ 10,114 $ 4,329 Stock-based compensation: Cost of net
revenue 80 — Research and development 2,589 583 Selling, general
and administrative 1,546 376 Total
stock-based compensation 4,215 959 Income tax adjustments*
(6,383 ) — Non-GAAP net income $ 7,946 $ 5,288
Shares used in computing GAAP basic earnings per
share 26,743 10,129 Weighted average effect of the assumed
conversion of convertible preferred stock from date of issuance
3,263 14,526 Shares used in computing
non-GAAP basic earnings per share 30,006
24,655 Shares used in computing GAAP diluted earnings per
share 29,478 11,512 Weighted average effect of the assumed
conversion of convertible preferred stock from date of issuance
3,263 14,526 Shares used in computing
non-GAAP diluted earnings per share 32,741
26,038 Non-GAAP basic earnings per share $ 0.26
$ 0.21 Non-GAAP diluted earnings per share $ 0.24
$ 0.20
* Income tax adjustments illustrate the
financial results for the twelve months ended December 31, 2010
without the effects of the release of the valuation allowance
related to federal deferred tax assets and the correction of an
error related to the tax treatment of deferred revenue for the
years ended December 31, 2009 and 2008 for comparison to the twelve
months ended December 31, 2009.
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL
MEASURES
Three Months Ended December 31,
September 30, December 31, 2010
2010 2009 GAAP gross profit as a % of revenue
65.7 % 70.4 % 70.2 % Stock-based compensation: Cost of net revenue
0.2 % 0.1 % — Non-GAAP gross profit as a % of revenue
65.9 % 70.5 % 70.2 % GAAP income (loss) from
operations as a % of revenue (6.8 )% 8.7 % 12.5 % Stock-based
compensation: Cost of net revenue 0.2 % 0.1 % — Research and
development 5.1 % 4.1 % 1.8 % Selling, general and administrative
2.5 % 2.4 % 1.4 % Non-GAAP income from operations as a % of
revenue 1.0 % 15.3 % 15.7 %
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL
MEASURES
Twelve Months Ended December
31,
2010 2009 GAAP gross profit as a % of
revenue 68.6 % 66.8 % Stock-based compensation: Cost of net revenue
0.1 % — Non-GAAP gross profit as a % of revenue 68.7
% 66.8 % GAAP income from operations as a % of
revenue 5.1 % 8.9 % Stock-based compensation: Cost of net revenue
0.1 % — Research and development 3.8 % 1.1 % Selling, general and
administrative 2.3 % 0.7 % Non-GAAP income from operations
as a % of revenue 11.3 % 10.7 %
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