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 third quarter ended September 30, 2011.
Generally Accepted Accounting Principles (GAAP)
Results
Net revenue for the third quarter of 2011 was $17.6 million, a
decrease of 3 percent compared with the second quarter of 2011 and
a decrease of 5 percent compared to the third quarter of 2010.
Gross profit in the third quarter of 2011 was 64 percent of
revenue, compared to 63 percent in the second quarter of 2011 and
70 percent in the third quarter of 2010. Loss from operations in
the third quarter of 2011 was 18 percent of revenue, compared with
32 percent in the second quarter of 2011 and income from operations
of 9 percent in the third quarter of 2010.
Net loss for the third quarter of 2011 was $11.4 million, or
$0.35 per share (diluted), compared with a net loss of $4.8
million, or $0.15 per share (diluted), for the second quarter of
2011 and net income of $1.4 million, or $0.04 per share (diluted),
for the third quarter of 2010.
Included in GAAP operating results is an $8.2 million charge
associated with the establishment of a valuation allowance on the
Company’s federal deferred tax assets.
Cash, cash equivalents and investments totaled $87.9 million at
September 30, 2011, compared to $94.5 million at December 31, 2010.
Cash flow used in operations totaled $2.7 million in the third
quarter of 2011 and $5.2 million for the first three quarters of
2011.
Non-GAAP Results
Non-GAAP gross profit in the third quarter of 2011 was 64
percent of revenue, compared to 63 percent in the second quarter of
2011 and 70 percent in the third quarter of 2010. Non-GAAP loss
from operations in the third quarter of 2011 was 6 percent of
revenue, compared with 5 percent in the second quarter of 2011 and
income from operations of 15 percent in the third quarter of
2010.
Non-GAAP net loss for the third quarter of 2011 was $1.5
million, or $0.05 per share (diluted), compared with non-GAAP net
loss of $0.6 million, or $0.02 per share (diluted), for the second
quarter of 2011, and non-GAAP net income of $2.9 million, or $0.08
per share (diluted), for the third quarter of 2010.
Business Summary and Outlook
“The third quarter 2011 financial results are reflective of the
successful evolution of our business to new product cycle driven
growth in Cable. As a result, we are successfully overcoming the
impact of declining revenue from our legacy mobile TV market, which
has become a negligible portion of our total sales in the current
quarter. We are encouraged by the strong revenue growth within
several Cable verticals, including Media Gateways and Cable server
set-top boxes, and we continue to experience strong design win
momentum across a range of cable platforms,” commented Kishore
Seendripu, Ph.D., Chairman and CEO. “We are also increasingly
optimistic about our prospects in new markets, such as integrated
digital television (iDTV). We recently sampled and secured major
design wins with our new 65nm CMOS hybrid TV RF receiver solution,
which sets a new benchmark for overall TV reception performance,
silicon integration, and power consumption. We continue to execute
on our longer-term growth strategies and invest appropriately in
expanding our technology product portfolio and strategic platform
target addressable markets.”
Conference Call Details
MaxLinear will host its third quarter 2011 financial results
conference call today, November 1, 2011 at 1:30 p.m. Pacific Time
(4:30 p.m. Eastern Time). To access this call, dial US toll free:
1-877-941-4774 / US toll: 1-480-629-9760 with conference ID:
4481005. A live webcast of the conference call will be accessible
from the investor relations section of the MaxLinear website and
will be archived and available after the call at
www.investors.maxlinear.com until November 11, 2011. A replay of
the conference call will also be available until November 11, 2011
by dialing toll free 1-800-406-7325 or 1-303-590-3030 and
referencing passcode: 4481005.
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 and trends
and opportunities in specific product markets such as cable as well
as new markets we may seek to address through new product
introductions. 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, intense 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 ability
to continue to develop and introduce new and enhanced products on a
timely basis and achieve market acceptance of those products; our
dependence on a limited number of customers for a substantial
portion of our revenues; 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; 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) including in our most
recent Form 10-Q. Additional risks, uncertainties, and other
information will be contained in our Quarterly Report on Form 10-Q
for the quarter ended September 30, 2011, which MaxLinear expects
to file with the SEC in November 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
(loss), income (loss) from operations, gross profit, and earnings
(loss) per share. These supplemental measures exclude the effects
of (i) stock-based compensation expense and its related tax effect,
if any, (ii) expenses associated with our acquisition of MoCA®
(Multimedia over Coax Alliance) Physical Layer IP and connectivity
related software IP licenses, and (iii) the valuation allowance on
federal deferred tax assets. In addition, our non-GAAP results
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. In addition, we exclude the related tax effect
of stock-based compensation expense, if any, from non-GAAP net
income.
Expenses incurred in relation to the purchase of MoCA®
(Multimedia over Coax Alliance) Physical Layer IP and connectivity
related software IP licenses are non-recurring; therefore, we do
not believe these are indicative of our core operating
performance.
The provision for income taxes for the three and nine months
ended September 30, 2011 includes a valuation allowance related to
federal deferred tax assets. The recording of the valuation
allowance is non-recurring; therefore, we do not believe this is
indicative of our core operating performance.
The shares used to compute non-GAAP basic and diluted net income
per share for the nine months ended September 30, 2010 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 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) September
30, December 31, 2011 2010
Assets Current assets: Cash and cash equivalents $
43,521 $ 21,563 Investments, available-for-sale 44,353 72,923
Accounts receivable 8,385 3,047 Inventory 9,228 7,425 Deferred
income taxes, prepaid expenses and other current assets
1,486 4,232 Total current assets 106,973 109,190 Property
and equipment, net 4,866 4,535 Intangible assets 1,216 980 Deferred
income taxes and other long-term assets 108 4,213
Total assets $ 113,163 $ 118,918
Liabilities and stockholders’
equity Current liabilities $ 17,712 $ 13,746 Other long-term
liabilities 978 257 Capital lease obligations, net of current
portion 4 18 Total stockholders’ equity 94,469
104,897 Total liabilities and stockholders’ equity $ 113,163 $
118,918
MAXLINEAR, INC. UNAUDITED GAAP CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except
per share data) Three Months Ended
September 30, June 30, September 30,
2011 2011 2010
Net revenue $ 17,639 $ 18,094 $ 18,523 Cost of net
revenue 6,307 6,659 5,487
Gross profit 11,332 11,435 13,036 Operating expenses: Research and
development 9,456 12,655 7,298 Selling, general and administrative
5,033 4,464 4,120 Total
operating expenses 14,489 17,119
11,418 Income (loss) from operations (3,157 ) (5,684 ) 1,618
Interest income 63 78 106 Interest expense (32 ) (2 ) (6 ) Other
expense, net (35 ) (24 ) (20 ) Income (loss)
before income taxes (3,161 ) (5,632 ) 1,698 Provision (benefit) for
income taxes 8,227 (836 ) 346
Net income (loss) $ (11,388 ) $ (4,796 ) $ 1,352 Net income
(loss) per share: Basic $ (0.35 ) $ (0.15 ) $ 0.04 Diluted $
(0.35 ) $ (0.15 ) $ 0.04 Shares used to compute net income
(loss) per share: Basic 32,743 32,442
31,264 Diluted 32,743 32,442
34,036
MAXLINEAR, INC. UNAUDITED
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except per share data) Nine Months
Ended September 30, September 30,
2011 2010 Net revenue $
52,641 $ 52,836 Cost of net revenue 19,043
16,116 Gross profit 33,598 36,720 Operating expenses:
Research and development 29,977 20,299 Selling, general and
administrative 14,329 11,841 Total
operating expenses 44,306 32,140 Income
(loss) from operations (10,708 ) 4,580 Interest income 234 221
Interest expense (38 ) (22 ) Other expense, net (110 )
(29 ) Income (loss) before income taxes (10,622 ) 4,750
Provision for income taxes 6,710 298
Net income (loss) (17,332 ) 4,452 Net income allocable to preferred
stockholders - (1,215 ) Net income (loss)
attributable to common stockholders $ (17,332 ) $ 3,237 Net
income (loss) per share attributable to common stockholders: Basic
$ (0.53 ) $ 0.13 Diluted $ (0.53 ) $ 0.12 Shares used
to compute net income (loss) per share attributable to common
stockholders: Basic 32,410 25,100
Diluted 32,410 27,960
MAXLINEAR,
INC. UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(in thousands, except per share data)
Three Months Ended September 30, June 30,
September 30, 2011 2011 2010
GAAP net income (loss) $ (11,388 ) $ (4,796 ) $ 1,352 Stock-based
compensation: Cost of net revenue 15 - 23 Research and development
1,308 911 757 Selling, general and administrative 846
521 447 Total stock-based compensation 2,169
1,432 1,227 Acquisition of technology licenses - 3,298 - Income
taxes* 7,701 (487 ) 286 Non-GAAP net
income (loss) $ (1,518 ) $ (553 ) $ 2,865 Shares used in computing
non-GAAP basic net income (loss) per share 32,743
32,442 31,264 Shares used in computing
non-GAAP diluted net income (loss) per share 32,743
32,442 34,036 Non-GAAP basic net income (loss)
per share $ (0.05 ) $ (0.02 ) $ 0.09 Non-GAAP diluted net income
(loss) per share $ (0.05 ) $ (0.02 ) $ 0.08 *
Income taxes for the three months ended September 30, 2011
illustrate the financial results without the effects of the
recording of the valuation allowance related to federal deferred
tax assets. The income taxes for the three months ended June 30,
2011 excludes the related tax effect of stock-based compensation.
Income taxes for the three months ended September 30, 2010 excludes
the correction of an error related to the tax treatment of deferred
revenue for the years ended December 31, 2009 and 2008,
respectively.
MAXLINEAR, INC. UNAUDITED RECONCILIATION OF
NON-GAAP ADJUSTMENTS (in thousands, except per share
data) Nine Months Ended September
30, September 30, 2011 2010 GAAP
net income (loss) $ (17,332 ) $ 4,452 Stock-based compensation:
Cost of net revenue 38 56 Research and development 3,014 1,774
Selling, general and administrative 2,154
1,147 Total stock-based compensation 5,206 2,977 Acquisition of
technology licenses 3,298 - Income taxes* 6,668
286 Non-GAAP net income (loss) $ (2,160 ) $ 7,715 Shares
used in computing GAAP basic net income (loss) per share 32,410
25,100 Weighted average effect of the assumed conversion of
convertible preferred stock from date of issuance -
4,363 Shares used in computing non-GAAP basic net income
(loss) per share 32,410 29,463 Shares used in
computing GAAP diluted net income (loss) per share 32,410 27,960
Weighted average effect of the assumed conversion of convertible
preferred stock from date of issuance - 4,363
Shares used in computing non-GAAP diluted net income (loss) per
share 32,410 32,323 Non-GAAP basic net income
(loss) per share $ (0.07 ) $ 0.26 Non-GAAP diluted net income
(loss) per share $ (0.07 ) $ 0.24 * Income
taxes for the nine months ended September 30, 2011 illustrate the
financial results without the effects of the recording of the
valuation allowance related to federal deferred tax assets. Income
taxes for the nine months ended September 30, 2010 excludes the
correction of an error related to the tax treatment of deferred
revenue for the years ended December 31, 2009 and 2008,
respectively.
MAXLINEAR, INC. UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
Three Months Ended September 30, June 30,
September 30, 2011 2011 2010
GAAP gross profit as a % of revenue 64.2 % 63.2 % 70.4 %
Stock-based compensation: Cost of net revenue 0.1 % - 0.1 %
Non-GAAP gross profit as a % of revenue 64.3 % 63.2 % 70.5 %
GAAP income (loss) from operations as a % of revenue (17.9 )% (31.4
)% 8.7 % Stock-based compensation: Cost of net revenue 0.1 % - 0.1
% Research and development 7.4 % 5.0 % 4.1 % Selling, general and
administrative 4.8 % 2.9 % 2.4 % Acquisition of technology licenses
0.0 % 18.2 % - Non-GAAP income (loss) from operations as a %
of revenue (5.6 )% (5.3 )% 15.3 %
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES Nine Months Ended September
30, September 30, 2011 2010 GAAP
gross profit as a % of revenue 63.8 % 69.5 % Stock-based
compensation: Cost of net revenue 0.1 % 0.1 % Non-GAAP gross profit
as a % of revenue 63.9 % 69.6 % GAAP income (loss) from
operations as a % of revenue (20.3 )% 8.7 % Stock-based
compensation: Cost of net revenue 0.1 % 0.1 % Research and
development 5.7 % 3.4 % Selling, general and administrative 4.1 %
2.2 % Acquisition of technology licenses 6.3 % - Non-GAAP
income (loss) from operations as a % of revenue (4.1 )% 14.4 %
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