Good afternoon, and welcome back to the Barclays Global TMT Conference. I'm Tom O'Malley. I cover midcaps semiconductors here at Barclays. We're happy to have MaxLinear here and Steve Litchfield, the CFO. Steve, thank you for joining us this afternoon. Great. Thanks, Tom. I think that the best way to start. I think you had a couple slides. Why don't you walk through those, and then we can just hop into Q&A afterwards. Sure. Sounds good. I don't know who's controlling the slides, but maybe we can if someone can help me navigate that. Operator, you wanna go to slide 1 there? Yeah, there we go. Perfect. Thank you. Yeah, so just a bit, thanks, Tom. A bit about MaxLinear for those unfamiliar. Founded in 2003. We did go public in 2010. You can kinda see a brief overview. Been growing nicely over the last several years. Did a couple of big acquisitions in 2020, which has kinda ramped up the scale of the company. Tons of patents, employee base up to 400 employees. You can kinda see the mix of our end markets. We do focus on connectivity and broadband as well as infrastructure in our industrial multi-markets, and we'll go through a few of those here in the next couple of slides. Maybe next slide then. Whoa. Looks like there's a little bit of a. I don't know if everyone's seeing that or not, but I'll roll with it. Here's the 4 end markets that we participate in. Broadband and connectivity, these are the two biggest markets. They're growing double digits. Really exciting times right now as you see carriers as well as operators starting to upgrade networks around the world. I mean, we're seeing that happen in North America. We happen to have a big PON customer that we recently won that'll ramp next year. We're seeing numerous PON guys, which we historically haven't played much in, but that's a market that's quite sizable, and it's getting a lot of this government money. We've seen some of the RDOF money come through last year and this year. Now we're starting to see the new Biden infrastructure bill that's supposed to throw another $60 billion, a lot of which, you know, goes to a lot of these fiber build-outs. I think one of the things that's interesting here is that you do see these infrastructure guys rolling out around the world, and we're seeing more broadband needs in general, and so we do benefit from that with our broadband SoCs, but we also have Wi-Fi. Wi-Fi has been a big grower for us, and that's kinda highlighted here. We're expecting double-digit growth here for some time. I mean, Wi-Fi this year will double over our previous year, which we don't break it out specifically, but it kind of implies a $50 million-ish dollar number, which we do expect to see another doubling next year. you know, based on the size of the market and the share gains that we're seeing, you know, hopefully we can even take that further and see it doubling again. But this is a big market opportunity. Not only are the units growing, but we're also seeing content grow, right? Where Wi-Fi 5 historically was, you know, lower dollars, I mean, maybe in the $5-$7 dollar range, and now that's bumping up to, you know, $10-$12 for Wi-Fi 6 and even higher than that for Wi-Fi 6E and Wi-Fi 7. So that's kinda some of the drivers within broadband connectivity. Our industrial multi-market's another area that we focus on power analog and a lot of interface products. and then lastly, infrastructure. I'm sure Tom will have tons of questions for me on infrastructure. This is our PAM4 DSP. We've also got 5G transceivers that we're selling in this market. As of late, I mean, this year, I think our infrastructure business should grow, you know, 55%-60% is where most of the folks are landing. I mean, the year is not over yet. We've seen substantial growth happening there. A lot of it's even been driven by our backhaul business, which has performed well, not only from a market perspective, but we're also winning new content. We've got some transceivers that we've not had historically that are driving some of that revenue ramp. Next slide. All right, it's a little challenging if these slides don't show up correctly. I can roll with this, Tom, but you know Yeah, I mean. If the slide doesn't If the tech isn't there, the tech isn't there. We can hop into it. I mean, from a broad level overview, I think maybe do you wanna just hop in and then we can make it work. Yeah. I'll just make one comment here. Yeah. I mean, I think you can see this on our website, but you... I will just emphasize. This reiterates some of the market SAMs that we're pursuing in broadband connectivity and infrastructure, and that's where we're seeing substantial growth. The markets themselves are growing, but then our content and, you know, our market share is growing in each of these markets. With that, Tom, I'll Perfect. I'll field the questions here. First, great to have you here, and thank you for putting up with some of the technical difficulties today, so appreciated. Before we hop into all the fun end markets, I wanted to start on the high level and kinda where most people are talking about in the market today, which is supply. We've even talked about this in the past, but could you just start with just the general comments, you know, the health of the market today in terms of supply and demand? Anything that you're seeing that's changed over the past couple of months? Let's just start there, and then I can ask a couple follow-ups. Sure. Well, supply chain dynamics have been particularly challenging for us. No doubt about that, as many others have seen as well. I think we've done a pretty good job. I mean, we've been at this a year now. We started seeing these constraints. It's kind of amazing that we're sitting here in Q4 of 2021- Yeah Still talking about this. It has been challenging and you know, we've seen increases sequentially each quarter and making continued improvements. I think you're seeing the industry pick up and you know, deliver more capacity. I think from a MaxLinear standpoint, we've also been very diligent about. I mean, early on, we put a lot of resources in this and tried to get up new suppliers, you know, change packages. I mean, packaging has been a particular you know, challenge with some of the substrates out there. We've made changes on that front. We've gotten things requalified. We've gotten up new vendors back-end. I mean, even foundries, we've looked to explore as well. I think we've done a pretty good job. I think we're gonna see this persist through at least the first half of next year, and to some degree, probably all of next year. I think Mm-hmm. You know, the bigger headwinds, probably Q1 and Q2. I do think that you'll continue to see increases of capacity, and you'll see volumes continue to go up in that timeframe. Okay. We've had this conversation in the past, which is just the handoff of supply and demand, right? Supply seems to be, you know, it's still an issue, but you're seeing the end of you know, maybe the light at the end of the tunnel as you make your way through next year. Right. You have demand as well, right? You have customers out there who are like, "I wanna get every piece of product I possibly can." The question that you always get from a straightforward perspective is. Do you see any double ordering? Do you see the supply chain kind of stocking up on parts? Obviously, that's a really difficult question, but can you talk to the data points that you use when you say, "Hey, like, maybe we aren't seeing that"? How do you see that supply dynamic shifting over to, you know, a rationalized demand environment into next year? Yeah. Yeah. I mean, look, I think everyone's naturally concerned about the over-ordering. I mean, I guess a couple of things about our industries that we participate in. You know, it's not a commodity-like industry or where you have a lot of competitors. In most of these cases, there's maybe one competitor or two competitors. Both of those are pretty rational, and these are industries that we've been in for a long time. Pretty good visibility. Early on, we encouraged our customers to start placing orders in the out quarters so that we could in turn pass that along to our suppliers, and that was helpful. I think it's been managed a little bit better. I mean, I'm not saying that it's not perfect by any means. You know, some of the pickups that we saw early on, I mean, if I go back to some of our broadband business and Wi-Fi business for that matter, we saw a big pickup in 2020. I think we've seen really the numbers moderate or kind of normalize to some degree this year. Now, our revenues are up substantially, driven by those market share gains, driven by those content increases. So I think that kind of explains a lot of our growth. But as far as the underlying industry growth, it doesn't seem completely out of hand to me. I mean, we're not shipping to the demand levels yet. I mean, I think I'm sure sometime next year we'll see that catch up happen. But I think it's you know, I mean, we're getting through this. I think the order situation is probably a little more challenging in some of the other, you know, broader markets, automotive markets. I think those dynamics are pretty challenging. Some of the places- Mm-hmm. That we play, I think are a little more straightforward. Okay, fair enough. Why don't I check off the last box on the question you guys always get. In terms of M&A, you guys did a pretty transformational deal. I think from a timing perspective, you really couldn't have timed it any better than you did. Can you talk about, you know, that market? It's obviously been very strong, but what are the underlying trends that have driven that success? And then can you talk about what you guys are doing uniquely to kind of take that business from where it was from an investment perspective and kind of turn it into your own, you know, growth driver? Yeah. Yeah. Sure. No, it is something that, it's always good during tough times. Like in 2020, during the pandemic, we were able to get two deals done, one of which was the Intel deal. The other one was a DPD technology that we bought, called NanoSemi. You know, I think your point is a little around the Intel deal. Yeah. Look, I mean, this is a business, you know, we highlighted the Wi-Fi and connectivity piece of the business, Ethernet, as well as PON. These are all capabilities that Intel invested in heavily and was very committed to. I think during kind of a cleanup process at some point when Bob Swan was there, just felt like it wasn't gonna get you know, they had bigger problems if you will, which I think has probably turned out to be the case. Nonetheless, I think they wanted to clean things up quickly. We were able to kind of step in at the right time. This business, while it had been invested in heavily, especially getting Wi-Fi 6 technology and Ethernet technology up and running, they had not done, you know, the profitability of the business was poor. I think when we came into it, we were pretty cautious not to get ahead of ourselves. We kind of came out, and we also announced the deal in April 2020, which is a pretty dark time in the industry. Came out with some pretty conservative estimates. That being said, this business was running, you know, upwards of $400 million previous. We kind of caught up, but we needed to see gross margins improve, right? They were running the business in the 40% gross margin range. We negotiated a pretty good supply agreement, and then we also kind of recognized that we were gonna have to raise prices, we were gonna have to move foundry processes. We're gonna have to do a lot of work, so pretty cautious in that regard. But we've gone off, we've executed. The Wi-Fi business has definitely gotten a lot of traction. Our customers are very excited about the product. You know, keep in mind, those gateways are taking, you know, it's like $15 worth of content going to $30 worth of content. Yeah. A lot of which is driven by Wi-Fi. We had to make sure that we had the right product, the right performance, and we are seeing tremendous performance out of our Wi-Fi 6 products, soon to be our Wi-Fi 6E products. You know, we're already working on Wi-Fi 7. Performance criteria on the Wi-Fi product, on the SoCs as well. I mean, one of the real differentiators we have right now is our processing capability. Yeah. These gateways are having to do more and more, and so I think the team had done a very good job in architecting the chip. Having that horsepower there today is really paying some nice dividends. Our customers are excited to have that capability to be able to do more within the home. Then that distribution, I mean, this is more of a market dynamic than the asset itself. You know, Wi-Fi within the home is really expanding. I mean, not just within the home, I mean, enterprise as well. In the home, in particular, you're seeing more and more needs, you know, from a security standpoint, from a health standpoint. I mean, there's all these applications from AR, VR, security, really expanding there. I think Intel had invested smartly in those areas. Our job is just to go off and clean up the asset. I think we've streamlined the product roadmaps and even some of the architectures as well, making sure that we're designing these products with the right architecture that are cost-effective for our customers and frankly, our investors. You know, because our intent here is to get this thing up into the mid-60% gross margin range, which we feel confident that we can do. When we bought the asset, this was, you know, the consolidated number was probably around 57% gross margins. We highlighted that we wanted to get to 60% gross margins by the end of this year, which we got to six months early. We did 61.3% gross margins last quarter. You know, we see a path to continue to execute on that. I mean, that was done in a pretty tough environment where costs are going up. Yeah I think that'll ultimately subside, but also our architectures will continue to improve. I do see the ability to continue to make improvements on gross margins. We'll improve margins. I think the traction with the customer has been incredible. The other thing that I think that this asset brought us is a much, much tighter relationship with the operators. Intel had a tight relationship with their operator, but having the entire platform for a carrier or for an operator is very meaningful, right? Because they wanna have one guy to come to that is handling all the firmware and software. They want one guy, you know, that controls everything. That, what has that done? I mean, that means they're very reliant on us. We're working closely with them. They're making commitments to us, whether it be on share or NRE dollars. I think, you know, you've probably seen this, Tom, a lot across the industry right now. I think everyone's seeing more NRE dollars being deployed. I think that kinda speaks to the fragility of the ecosystem, right? Yeah. I mean, they've recognized post-consolidation that there's, you know, that they need to kinda nurture this. I mean, they've lost some of the pricing power that they used to have. Now semis are really taking that pricing leverage. But at the same time, we've got to invest heavily and make sure that we're supporting the future development of these programs. Yeah. It sounds like a bit of a virtuous cycle where, you know, you're getting some investment dollars, and then maybe you get a locked-in contract longer term where you have a little bit more visibility. It does sound like things are. That's right. Things are going a bit better, yeah. The obvious question is, you do a really good deal at the right time in the market. People always come back and say, "Okay, so when's the next one," right? When you look at M&A, you've obviously done some tuck-ins, and you've done some more transformative deals. Can you talk about what your criteria is when you're going to look at a new asset? You know, what's the timeline looking like from, you know, the health of your core financials to go out and do one of those? You know, are you starting to look already? Right. Yeah, no, it's a good question. Yeah, that has been a part of our strategy to do acquisitions as well as grow organically. Kinda post-deal, I mean, we did this asset transaction and it did require some working capital, so we were fairly cautious in the beginning, but I think we've gotten past that. Cash flow's improved nicely to the extent that we're, you know, paying down debt aggressively. We authorized a buyback, so we've been buying back the stock as well. Yes, acquisitions. I mean, we absolutely wanna get back in the market. We have been looking. Things are expensive to some degree, especially during some of the private sector areas, has been expensive with some of the SPAC, you know, developments that have happened there. We are looking. What are the criteria? I mean, I think ideally, we look in places. We're not looking for yet, you know, something way adjacent to what we do, something with mixed-signal technology where we can really differentiate on the technology front. Ideally, it's products that we can sell into the same customer. I mean, semiconductors, as you know, it's all about scale. To the extent that we can find more products to sell to the same customer or more products into the same application, where we can have an application engineer add another, you know, block onto that board, that's what ideally that we look for. With regard to end markets, I mean, infrastructure is a place we've been investing heavily. We've done some acquisitions. We'd like to continue to do acquisitions there. Broadband connectivity, I mean, that's another area that we do intend to continue to invest. We'll look at acquisitions there also. Mm-hmm particularly on the connectivity side. Industrial multi-market, I mean, that's more of our power and interface, and it's easy to kind of beef things up there, so we could definitely do that. I don't think you'll see us move, you know, way far out of our kinda core competencies. We'd like to, you know, just bring more product to the same customer. Awesome. All right, so I held off as long as I could before jumping into the infrastructure side. Why don't we turn there first? No problem. Within infrastructure, let's start on the optical side. We're, you know, on this precipice of this big speed transition within the data center. Could you talk about, you know, what you view that market as for you guys? Potentially, you know, what are you looking at in terms of the size of the opportunity, and just what is your product offering to kind of meet that market right now? Sure. No problem. That was good. You constrained yourself very well. So yeah. Look, optical is something that is very exciting for us, and we've been investing in it for probably the last three years. I think we've got a PAM4 DSP chip, which, you know, look, we've been investing for, I guess, three-plus years now. We've seen a lot of the competitive dynamics change. I mean, it's really narrowed down to kind of the Broadcom, Marvell, and MaxLinear. Look, it's a new market for us. As you're aware, Tom, we didn't target the 200G market. We thought that would be somewhat short-lived. Being the first one, we wanted to target the 400G market. That's what we've done. It admittedly took longer for that market to roll out and. It is rolling out, and I think the market size hasn't changed. We've kind of identified this, the 400G plus market, you know, is a $300+ million market. This ultimately says that it can be an $80-$100 million product line for MaxLinear. Kind of split somewhat. You know, you get 25%-30% of that business, you know, kinda almost shared equally with Broadcom and Marvell. It can be very meaningful to us. I think it is growing. I think it fits with our core competencies. We've made a lot of traction. To date, you know, Amazon's kind of been, as you know, the only guy rolling out a 400G data center, so we've been somewhat kind of waiting on them. We talked about modest revenues this quarter and then really ramping more next year. It's nice to finally see Amazon, you know, kind of deploying product more aggressively. I would say from a competitive landscape, I think we're doing extremely well with our existing solutions. Soon to be our 5nm solutions, but right now on our existing solutions that are being deployed, you know, competing head-to-head against the big guys. I think where we, not being the incumbent, we were probably slightly behind by not having enough of these module guys up and running. As you're aware, some of the big hyperscalers, they wanna have 4, 5, 6 module vendors, so we've had to get up to speed. You know, while we've had one or two, they wanna see us having, you know, three or four module guys, and that's important in the short term and the long run. That's something that we've jumped on and made some nice improvements just resourcing-wise and getting those, you know, expanding the relationships, the knowledge of our technology and our capability with those partners. We've seen good progress. Moving forward, the other thing with those partners, they're starting to work with our 5 nm solution, so. Yeah, I was gonna ask. Yeah, I was gonna say, I'm sure that's on your list. Yeah. 5nm is coming fast. Very excited. We had silicon out in the summer and first one to come out with 5nm silicon ahead of Broadcom, ahead of Marvell. I usually say, look, they're coming, they're working with 5nm IP, so not surprising when they do indeed come. It's always good to have a lead to be able to have, you know, that first silicon in our customers' hands, and they're working with it. That brings lower power levels, which as you know is very important. Our differentiator has been in power. It's been integration levels. I mean, that's how we entered the market originally, having more integration. That'll continue to be a play for MaxLinear in optical, but in all of our end markets. I think it'll 5nm, my belief is it probably doesn't go, at least material revenues probably don't come until 2023. Mm-hmm. We're making, you know, significant progress there and excited about it. It'll address the 400 gig market, kind of the. Talked a little about the, you know, 4 by 100 lanes versus, you know, as they move to 800, you're talking 8 by 100. So we can address that, and we can address our 5nm product. We'll be able to address the 800 gig market as well as the 400 gig market, which is pretty exciting. Yeah. I was gonna say, you know, you saw the advantage of being a node first with Inphi and now Marvell, right? Yes. I think that being first in that market is really critical. You know, when you look at your runway, right, there's a, there's a bit of a debate in the market right now. Once you get past 400G, you know, at 800G to some of these, you know, monstrous, you know, the big companies kind of, you know, take things in-house, right? You've heard some guys say, "Hey, I think there's gonna be, you know, a lot of runway for discrete suppliers." Then you hear some guys say, "Hey, you know, maybe, you know, larger guys will internalize optics." What's your feeling on that runway? Obviously, you've invested a lot in this product, so you do think that there is runway for this business to succeed. Can you just speak to kinda the future of, you know, your solution as you move past 400G to, you know, that 800G and beyond type speed? Sure. Yeah, absolutely. Well, I might maybe for clarification a little bit. Yeah. I think we do see more and more vertical integration. I mean, Broadcom's been out talking about it, Marvell's been talking about it. I think you're also alluding to, you know, hyperscalers themselves are doing some development also. Do you have to vertically integrate? No. Do you have to partner and work closely with these guys? Of course you do. You know, as some of the bigger guys are trying to integrate, I mean, that to some degree works against what the end customer would like to have. You know, I mean, a closer integration sometimes leads to better performance, but if there's a strong partnership there, I think we feel very confident. Our customers have pushed us in the direction just to continue some of the partnerships that we've already been doing. I'm not concerned that we have to vertically integrate. In fact, I mean, you're already hearing rumblings that that's gonna push out into 1.6T. Yep. Which is fine. I think even at 1.6, I think a partnership still solves that as well. Does it help having the top of rack switch, having the optics? Of course, those are all beneficial, and it does drive closer integration which frankly it's always been a must. I mean, you have to have close integration with each of these suppliers, regardless. Great. Yeah, I you know, as much as I'd like to continue down this road all day, I will switch gears briefly just to at least get to talk about a couple other areas. We'll stay in infrastructure for now and talk about the 5G side just really briefly. You know, you've seen so much turbulence in that market with what happened in China and the ramp kind of you know, being disrupted. Now you're hearing rumblings of a you know, a second kind of deployment with U.S. and European operators. Are you starting to see that dynamic from a 5G perspective? Can you just remind us, you know, do you feel as though you're well-positioned versus your typical incumbents there, and why are you know, so well-positioned versus guys who've been there for such a long time? Yeah, sure. 5G transceivers or 5G access, we've had a product here. We just moved into production in Q1 of this year. I mean, your last question there, the competitive landscape, I mean, it is primarily ADI and TI. Mm-hmm. How, you know, how do we differentiate? I mean, these are big, large incumbents that have been there for a long time. What I would say about that is you're seeing more and more, I know you're well aware of this integration that's happening within the base stations, and you're seeing integration even between the transceiver and the DFE. As that evolves, I think it actually fits our core competencies, where we can do the analog portion. I mean, we're real pure mixed signal guys, where we know the analog portion super well, but we also can do that digital side. I mean, we just got finished talking about 5nm, right? Yep, DFEs. DFEs. Yep. Yeah, that DFE is gonna move to lower nodes, right? That's not typically what ADI and TI love to do. Now, I think ADI seems, you know, very committed, and TI to some extent also committed, but I think that's where we can really differentiate and bring something unique to the customer base. We also mentioned the DPD or digital pre-distortion technology. That's something else that I think we've brought to the customer. These algorithms are making these power amplifiers much more efficient. That's a huge challenge for these operators. The power levels that these things are drawing are quite problematic. The linearization techniques that we're bringing are unique, does bring us differentiation, and coupled with the transceiver technology, I think we can win here. It's a big market, sizable. Now, it's not growing quite as fast as I think the whole world had expected. Yeah. I mean, we're seeing things slow a bit. I mean, it's happening. I don't wanna imply that. China clearly fell behind. The Huawei you know situation with the trade war and the like has been problematic. We didn't see 5G roll out as aggressively in China. Now, I mean, they'll catch up. They're still you know running on either inventory or older technologies, and I think over time, we'll see that change. The good thing is we're starting to see North America deploy, Europe will deploy. I remain very optimistic, and it's not like this market. You know, it's gonna be a very sizable market, but it's definitely kind of pushed to the right a little bit. Awesome. We talked about two really awesome areas of growth for you guys, growth areas where you see a lot of opportunity in the future. We've got about 50 seconds left. I just wanna give you the CFO layup question at the end. Obviously, you've gotten a lot of leverage just from the outsized revenue growth you've seen, but when you look at the financial metrics inside of that, what areas are you most focused on in the next year where you're trying to drive the business towards some key, you know, some KPIs, and where should we be looking to kinda, you know, the company transformation below the line? Sure. Yeah. So yeah, revenue growth has been important, and we've shown a lot of success there. Gross margins, I briefly hit on that a little bit earlier, but gross margins are improving. I do expect to see continued improvement. I mean, over the long term, we see this kinda getting up into the mid-60s%. Lots more work to be done there. Operating margins, I mean, when we did this deal, was in the low 20s%. Our guidance this quarter kind of got you pretty darn close to 30% op margin. Mm-hmm. We've seen that improvement. I mean, our biggest competitor, you know, that we compete against all these markets is Broadcom. They're doing well north of 40% operating margins. You know, look, we're not as big as Broadcom, but I have no doubt in my mind that we can continue to push, you know, to 30% and beyond on operating margins. We'll continue to invest because at the end of the day, we wanna grow the top line. But I think we can kinda grow that OpEx number kinda half the rate of the top line, which will continue to show material, you know, EPS improvements going forward. Great. Well, with that, I think we are out of time. It's always a pleasure, Steve. Thank you for joining us today and have a great rest of the day, and good luck as you go forward into this next year. Great. Thanks a lot, Tom. I appreciate the time.