Q2 2025 MaxLinear Inc Earnings Call
Greetings and welcome to the max linear Q2 2025 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 requires operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded is now my pleasure to introduce Leslie green and best relations. Thank you Leslie. You may begin.
Thank you, Julian. Good afternoon, everyone. And thank you for joining us on today's conference call to discuss maxliner. Second quarter, 2025 Financial results. Today's call is being hosted by Dr. Kishore sindri boot 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 third quarter of 2025 including revenue, gaap and non-gaap gross, margin gaap, and non-gaap operating expenses, gaap and non-gaap interest, and other expense gaap, and non-gaap income, taxes, and 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 products. And Geographic markets, including without limitation statements concerning future financial and operating results opportunities for revenue and market share across our Target markets.
New products, including the timing and production of launches of of products.
Risk factor section of our recent SEC filings, including our form 10q for the quarter ended June 30 2025, which we filed today. Any forward-looking statements are made as of today, and Max linear has no obligation to update or revise, any forward-looking statements. The second quarter 2025 earnings release is available in the investor relations section of our website at maxliner.com. In addition, we report certain historical Financial metrics including, but not limited to growth margin income from operations, operating expenses and interest in 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 changes, including stock.
Makes 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 is useful to investors as it reflects how management measures are business. Lastly this call is also being webcast and the replay will be available on our website for 2 weeks and now let me turn the call.
Speaker Change: Over to Dr. Keshore syndrome CEO of maxliner keshore. Thank you Leslie and good afternoon everyone. Our Q2 results, not only reflect 13% sequential and 18% year-over-year growth in our business. But also point to strong positive inflection in our business recovery and growth, trajectory our revenue of 109 million approximately exceeded. The midpoint of our guidance. Non-gaap gross margin was 59.1%, and we delivered a meaningful reduction in our operating expenses.
Speaker Change: With solid execution, in Q2, we return to profitability on a non-gaap basis and generated positive free cash flow.
Speaker Change: We continue to drive, strong customer and product Traction. In high-speed data center, Optical interconnects.
Speaker Change: Khan brought by an Access Wi-Fi and ethernet, our growing success in the Strategic markets robust, customer order rates and backlog. Coupled with increasing Telco cap expending reinforcer confidence in the strength of our growth for 2025 and 2026.
Speaker Change: In our infrastructure and Market, we're excited by the sustained growth trajectory in 2025 and expect Revenue acceleration in 2026 as new design wins. Begin to ramp across our portfolio.
Speaker Change: In high-speed data center Optical interconnects. We are on track to deliver 60 to 70 million dollars in Revenue. This year primarily from our 800 gigabit fine. Nanometer Keystone Pam 4 DSP product family.
Speaker Change: We anticipate additional 800 GB, Pam, 4dsp customer calls and production. Rollout throughout 2025, which will drive incremental Revenue growth in 26,
Further customer interest and design in activity for our Rushmore, 200. GB per Lane 1.64, terabyte, Pam 4. DSP has been robust since our live demonstration at the optical fiber conference 2025 this year in San Francisco.
Speaker Change: Like Keystone our Rushmore family of Pam 4.
Speaker Change: Toss and 200 gigabytes per Lane dsps for 1.6, terabyte interconnects office, Superior low, power and performance advantages.
This continues to be the basis of our competitive differentiation and expectations of design win momentum.
Speaker Change: The in Wireless infrastructure, the market continues to recover with expected increases in carrier capex. Spending driving demand for the second half of 25 as well as 26.
Our Sierra 5G wireless access single chip radio SOC and our millimeter wave and microwave back. Call transceivers and modems are essential for supporting increasing, mobile usage, and data rates, as well as new functionality. Such as Edge AI, we have new design wins with our Sierra based product with 2 major North American Telecom providers launching. Sierra bass macro base station, Roux products in Q3
Speaker Change: We expect to see sustained growth in 5G wireless access and back call as the needs for cloud and Edge. AI functionality, continue to increase in 2026 and Beyond.
Speaker Change: At the future of memory and Storage.
Speaker Change: FMS 2025 conference in Santa Clara.
Speaker Change: Also, at FMS 2025, we will have a joint keynote address with Advanced Micro Devices.
Speaker Change: On the transformation of Enterprise data storage.
Panther delivers significant advantages over traditional software based compression including more than a Ford X Improvement in power savings and much more efficient usage of CPUs and CPU cores and AI accelerators.
Panther 5 is pcie Gen 5 capable and that and that 500 gigabits per second. Throughput speeds, it delivers more than 2 times the performance of Panther 3 to enable ultra low latency data processing across file block and object storage.
Moving to broadband and connectivity. We continue to see steady growth and are excited by the market outlook, for Meaningful increases in service, provider capex spending
Speaker Change: For example, both major North American carriers have announced plans to increase the scope and pace of their fiber Pawn access build outs.
Speaker Change: These increase infrastructure Investments by carriers and operators are driving continued booking strength and incremental demand. For our fiber Pond cable docs is and Wi-Fi Solutions
Speaker Change: Later, this year, we will ramp our single ship. Integrated fiber pawn, and 10, GB processor Gateway, SOC plus, triband Wi-Fi, 7, single chip, platform solution with a second. Major tear 1, North American Carrier.
Speaker Change: This new Gateway SOC. Platform, win represents an exciting growth opportunity and is also a significant validation of our technology on competitive positioning in the growing fiber Pawn Market.
In the ethernet Market. We continue to expand our tuner 2 and a half gigabit, Ethernet switch. And 5 portfolio into commercial Enterprise industrial applications.
Speaker Change: Max linear is 1 of the broadest and most competitive offerings, we enable the upgrade from 1 gigabit per second.
Speaker Change: Ethernet Legacy data rates to 2 and a half gig gigabit per second using existing Cat 5 cabling.
Speaker Change: This upgrade is driven by Edge Cloud expansion. Iot. Gateways and Enterprise access point transition to Wi-Fi, 6 and Wi-Fi 7.
Speaker Change: It represents a significant opportunity size for Max, linear of approximately 100 million dollars per year in revenues by 2028.
In Q2, we were pleased to announce 2 and a half gigabit. Ethernet based multi-port fee and switch it. Option by several notable Partners including Asus high source and others.
Speaker Change: We look forward to closing the additional Tier 1 names in our design, win pipeline.
Speaker Change: In conclusion, we are proud of our strong growth return to profitability and positive cash flow generation in Q2. Our success in the Strategic areas of our product portfolio and incremental Tailwind from the ongoing recovery. In our core markets, has enabled us to turn an important Corner in our business. Our investments, in high value categories, such as high speed, interconnect for the data center, multi gigabit Pawn Access Wi-Fi connectivity, ethernet storage accelerators, and virus infrastructure are all driving strong product traction, with Tier 1, customers, and partners.
Speaker Change: we believe this positions as well for Accelerated growth in 26 and Beyond with that, let me now turn the call over to Steve Litchfield, our Chief Financial Officer and chief corporate strategy Officer Steve
Steve Litchfield: Thank you, sure.
Steve Litchfield: total revenue for the second quarter was 108.8 Million up, 13% from 95.9 million in the previous quarter and up 18% from the 92 million and second quarter of 2024
Steve Litchfield: Infrastructure revenue for the second quarter Ros approximately 35 million Broadband Revenue was approximately 48 million connectivity, Revenue was approximately 21 million, and industrial multimarket revenue was approximately 6 months.
Steve Litchfield: Gaap and non-gaap gross. Margin for the second quarter were approximately 56.5% and 59.1% of Revenue, the Delta between gaap and non-gaap gross margin in the second quarter was primarily driven by 2.6 million of acquisition related. Intangible asset amortization
Second quarter Gap. Operating expenses were 86.1 million and non-gaap operating expenses were 56.6 million.
The Delta between gaap and non-gaap operating expenses were primarily due to stock based compensation and performance-based Equity across of 19.3 million combined.
Steve Litchfield: Restructuring costs of 5.6 million and acquisition related cost of 4.1 million.
Steve Litchfield: And non-gaap income from operations in Q2 was 7% of net revenue.
Interest in other expense during the quarter with 6.1 million and 5.9 million respectively. Respectively.
Steve Litchfield: The increase over prior quarter was primarily due to 4 million in foreign exchange cost.
Steve Litchfield: In Q2 net, cash flow provided in operating activities was approximately 10.5 million.
Steve Litchfield: We exited Q2 of 2025 with approximately 110 million in cash, cash equivalents and restricted, cash ahead of our 2025 plan.
Steve Litchfield: Our day, sales outstanding was down in Q2 to approximately 89 days. Our gross inventory was approximately flat versus the previous quarter with inventory, turns improving to 1.5 times.
Steve Litchfield: This concludes the discussion of our Q2 Financial results.
Steve Litchfield: With that. Let's turn to the guidance for Q3 of 2025. We currently expect Revenue in the third quarter of 2025 to be between 115 million and 135 million.
Looking at Q3 3 by n Market. We expect all in markets, infrastructure Broadband, connectivity and Industrial multi-market to be up in the quarter.
Steve Litchfield: We expect third quarter, gaap gross margin to be approximately 55% to 58%.
Steve Litchfield: And non-gaap gross margin to be in the range of 57.5% and 60.5% of Revenue.
Steve Litchfield: We expect Q3 2025 Gap, operating expenses to be in the range of 84 to 90 million.
We expect Q3 20259 Gap, operating expenses to be in the range of 55 million to 61 million.
Steve Litchfield: We expect our Q3 gaap and non-gaap interest in another expense each to be in the range of approximately 3.5 million to 4.5 million.
We expect a 0.6 million tax benefit on gaap basis and a non-gaap tax.
Steve Litchfield: Of 1.3 million or 11%.
Steve Litchfield: We expect our Q3 basic and diluted. Share count to be approximately 87.1 and 87.5 respectively.
Steve Litchfield: In closing, we're pleased to report another quarter of solid progress marked by continued Improvement in customer orders, and growing traction across our product portfolio. Our Focus investments in strategic high growth areas such as Optical high-speed interconnects. Wireless infrastructure storage ethernet.
Steve Litchfield: Wi-Fi and fiber, Pond gateways are beginning to generate exciting business opportunities that we expect to accelerate revenues in 2026. This reinforces our confidence and our sustainable growth and profitability through 2025 and Beyond.
Speaker Change: With that. I'd like to open up the call for questions Julian.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad and Confirmation tool will indicate that your line is in the question queue, you may press star 2 to remove yourself from the cube for participants using speaker equipment, it may be necessary to pick up the handset before pressing the star Keys. 1 moment, while we pull for questions.
And our first question comes from the line of tore espon with stifel please, proceed with your question.
Speaker Change: Yes. Uh, thank you and um, congratulations on the continuous recovery here. Um, I guess my first question is on the Q3 Outlook, I, I do appreciate that. All segments are going to be up sequentially, but I mean, they have been quite volatile, right? So can you maybe give us a little bit more granularity on on how the segments are going to perform in the quarter? Or at least maybe, you know, which segments could potentially be stronger? Uh, uh, than the others.
Steve Litchfield: Hey toy. This is Steve. Um,
Steve Litchfield: Yeah, I mean look I I uh I think you can see I mean 1 of the biggest commitments that we've had here is infrastructure. I think that's the 1 that you know, we continue to see nice performance particularly in the back half of the year, so I think that should continue. I mean, clearly you're seeing continued recovery in the broadband.
And uh, connectivity in markets. And so those are 2. Other ones that are getting good traction with some of the newer products as well as a recovery. Um, and then probably industrial multi Market would be the the third 1 there uh, which is clearly been a struggle. Um, but you know, we do expect to see a recovery there.
Speaker Change: Um, you know, very, very strong this quarter. I know this can be a little bit difficult for for you to assess. But any any sense for how much of that is growth is driven by inventory replenishment versus, uh, some of the newer products that you have there, you know, especially when I start thinking about some of the, uh, you know, newer gateways, that your end customers are launching.
Steve Litchfield: Um,
Steve Litchfield: Tori. I mean, as you know this, I mean, there has been a recovery underway, but I think what you're seeing in the market, and I think this is reflected in our numbers and our guidance and, uh, Outlook I guess is, is, is kind of beyond that recovery. I mean, we're seeing capex dollars being deployed. You're hearing a lot about that in the market right now, about people reinvested the service providers in particular carers are being a lot more aggressive. Uh, you're also seeing the, the cable folks, you know, start to upgrade as well. So, uh, for, for all those reasons we're seeing, you know, excitement around our business. I would also add that, you know, we're continuing to gain market, share, and really win in the market. And I think that speaks to the value of our, our products themselves. Uh, the support that we're giving these customers and our commitment to these customers.
Steve Litchfield: Very good. I'll go back in line. Thank you.
Steve Litchfield: Thanks Tori.
Thank you.
Speaker Change: And our next question comes from the line of Kristopher Rollins with Susana International Group, please proceed with your question.
Speaker Change: Thanks for the question, guys, and congrats on the results. Um, uh, I, I'd love to kind of dig a little bit deeper into Rushmore and
Speaker Change: Keystone, um, kind of design wins your seeing in terms of like the
Um, makeup of those design wins or qualifications. Are they module makers? Like has, any has anything shifted? Do you have any anchor? Hyperscale customers. Um, just yeah. And any more details around Optical DSP in particular, would be great.
Speaker Change: Hello Chris. This is kishor. Uh yes. Uh thank you. Uh, I'm also feeling pretty increased that we we finally turned the corner on the business here and uh we we see you very strong robust uh growth continuing moving forward, not just a second half, 25 into 2026 and Beyond. And with all the new products that we are going to add to the mix here, coming back to the optical. You know, like we said, we go to double our Revenue compared to last year 60 to 70 million dollars range. We feel
Speaker Change: There is obviously some expected ramps towards the end of the year that will follow through into 2026 growth.
Speaker Change: Um and almost all of it is at the strength of on the back of Keystone.
And I just want to point out that our Keystone design wins are not inside. Uh, we have never participated in the Nvidia ramps, so it's really more on the front side of the network, if you will.
So yes we have a number of uh we we have designed with all the major module makers. In fact, I would like to see 100% but I don't want to say that because I don't know what I'm missing so to speak. Uh, so we are really in in some sense our, our sort of, uh, dragged along in terms of the wait, times for something takes to call at the at the various data centers, so we really don't dictate the acceleration of it. Sometimes, it's the interop is related to the DSP issues sometimes through the Optics issues. But we work them together. And having said that we're in multiple call interrupt stages with your data centers with some, we already shipping
and somewhere in the pilot, ramp phase, uh, uh, uh, various places. So, I hope that answers your question. That's why we have all. We have never disclosed over the end. Customers are, and we have been very careful because we don't want to mislead you either. So but the revenues are are very good and the lead times expanding, uh, threading to move, uh, increasing as well. Uh, we should start seeing more order, pick up as we move into 202.
6. So that's
Lot of product in is from all the vendors, who have tried the competitive Solutions?
Speaker Change: So, I think it's going to be a long game because, uh, 1.6 trillion is just still starting Innings. Uh, why we not? You do not see much discussions about aecs and such yet on 1. 6 8.
You know, technically, I feel that if there's a play for copper aecs, will be real as we move towards 1.6 trillion and Beyond so. So in that to that extent we're very heavily engaged with both Optical module makers and with uh what you call the copper copper guys and it also seeing the module makers. Also trying to now get into uh, copper cables as well. And our track record on Keystone is what gives them confidence that we are going to be a pretty viable and the differentiating supplier and with a long-term roadmap
Speaker Change: And with all the hoopla surrounding, uh, the pan for stuff. I can still claim legitimately. There are only 3 vendors with credible solution for optical transceivers and the quality of the offering that is required in an AI Network where robustness is even more important than an end to end. Uh, more in the interop scenario. I hope that answers your question.
That does thank you, Kesha. Um maybe uh a second, uh, question uh for Steve. Um I think uh Opex was a little bit higher than we were expecting. Just wondering what that was about and where the investment was also interest in. Other expense was higher. Uh, and then, lastly, um, the SEMO arbitration still expected. I think for the end of the year, if I remember correctly.
Speaker Change: Those are real Savvy. Way to get 3 questions into 1 but I'm gonna I'm Gonna Roll With It. Uh,
Speaker Change: So, so real quick, uh, really important 1, Ops Opex was actually below our midpoint of our guide and honestly, some of, I think what you're referring to is, the guidance was probably a little bit higher than your expectation. So we did have some expenses that, uh, that were pushed into Q3 and that kind of moves that number up a little bit more than we expected. I do expect it to come back down in Q4, uh, but we're making great progress. I mean, if you look at the Improvement that we made year-over-year on Opex, it's been exceptional and I think we'll continue to make improvements there. I mean we we are making big Investments as well. Uh, we're seeing nice growth. And so we've got some good commitment to some of the newer products that key store spoke about earlier. So we're definitely spending on that front. Um, interest and other was a little higher. Yes, I I called out in my prepared remarks, about the 4 million of
Speaker Change: Of, uh, of FX impact that we had in the quarter that rolls up in in that interest in other line. Um, I mean, I think, the whole world is seeing what's going on with the weakness of the dollar. And so that did, did that did impact us, I think it really speaks to the strength to the rest of the business. Because we've been able to overcome that, uh, you know, we'll see where the dollar goes, uh, still feels like there might be a little more headwind in the back half of the year, but, um, regardless I think we're really focused on our Core Business and executing their, I think, uh, uh, bringing back to where the Investments are are absolute strategic. Focus is on investing on the, you know, what's what's the future of the EI World data center related? And the other important thing we are focused on is cost down improvements of a products. You know, uh, I think
I don't think they're the only ones, but the way The Foundry business has evolved that we got tremendous cost pressures coming from The Foundry suppliers and, uh, we have to take steps now to invest for cost reduction, so that we maintain and improve our gross margin as we move forward. So I think, uh, the second answer may be a little bit of a surprise for you, but I think that's absolutely a prudent thing to do to show up our profitability and bring back more leverage in our business model.
Speaker Change: Understood.
Speaker Change: Uh, I think Chris probably dropped off, but, uh, I'll answer that last part. You did ask about silicon motion, so no change on that front. Uh, we do expect arbitration in Q4 of this year. Um, and then, hopefully, we kind of get some resolution in the first half of next year. And then I think the ultimate, uh, finalization, uh, probably come somewhere in 27 or 28. If, if there was any, you know, cash to transact. I mean, it probably wouldn't push. I it would probably push until 2027 or 2028.
Thanks, guys. If you can still hear me,
Ananda Baru: Comes from the line of Ananda baru with loop capital markets. Please proceed with your question.
Ananda Baru: Hey thanks guys for taking the questions. Um yeah you sure just uh a little bit more on uh on pay for DSP, do you you mentioned you know greater accelerating growth in 2026 revamp. Do you think that comes from the current from the winds? You have going into 2026, uh, primarily or, or can you see a big impact from the new policy cations, uh, as well from from Rushmore? And I have a quick quick follow-up as well. Thanks.
Ananda Baru: Like so on a good question, I just want to be very clear that the revenues in 2026 will still be 800 gigabit dominated. I don't see expect 1.6 terabyte, Rushmore shipping.
Speaker Change: It till at the end of next year, leading into 2027 honestly and what has come as a huge surprise, or shouldn't be any more after these years is that the qualification is indeed pretty rigorous. Everybody has their own timeline and they go and faces from small volumes to bigger volumes, and larger volumes after that. And even from a deployment point of view, I don't think anybody outside of the E EI.
Speaker Change: back at it for guys are really, really um
Uh in a position to deploy 1.6 DB, yet on the front end networks. So and the AI even from an Nvidia point of view they don't expect. This is my here say story, they don't expect revenues at 1.6 DB to pick up until the second half of next year that is speaking today. And I I would dare say that 800 gigabit will be the dominant shipment node for the next uh few years to come.
That's helpful. Yeah they're thinking it's a Reuben thing. It sounds like you guys are are thinking along the same lines as well.
Speaker Change: and, and then,
Speaker Change: just giving your your remarks to that, as of right now, it's really the module makers where the calls are does that position you well for
Speaker Change: The, the growing nio Cloud opportunity and The Sovereign opportunity of sovereign key gets the licenses side as you go through 26.
Speaker Change: We hope so, uh, 1 of the things, you know, you really want to keep this account, is that this Market has been starving for the third supplier.
Yeah, whichever way you look at it.
Speaker Change: And we have been a steady 80 in terms of not being there and doing the stuff and, and really putting an effort in differentiation enabling our module customers rather than dragging along the module guys with us, right?
Speaker Change: and I think that really helps us in favor and where they have opportunities where they're not beholden to
Speaker Change: Uh using the incumbents they they give us chance every time and I think that that really helped us with all these other opportunities you're referring to.
Yeah, that's great. I'll leave. I'll leave it there, guys. I appreciate it. Thanks. Hey, thanks Ananda.
Thank you. And our next question comes from the line of Quinn Bolton with Needham and Company. Please proceed with your question.
Quinn Bolton: Hey guys. Um I guess a couple questions and and congratulations on the uh the the nice Outlook first. Um I hate to ask but, but since some other analogic signal, guys have talked about starting to see some pulling activity or inventory, builds, given Tara, fun certainty, especially ahead of August, 1st wondering, if you think any of the orders you've seen, I I know you've seen um, orders strengthening now for several quarters, if, if any of that you might be able to distinguish as sort of Tara for pulling related, or do you think it's been pretty steady and that I've got to follow up?
it's so the orders have been very steady and strengthening I think I refer to that as the last quarter itself, when you ask the same question and I said, you know, I cannot speak for the future orders, but I can definitely speak for the orders that we already have that they preceded, these whole
Speaker Change: Chatty fresh. Now look from my point of view, uh,
we have been, you know, we you know,
Speaker Change: Post-pandemic Peak ordering and and all the things that you are dealt with. We were not in a hurry to order or acknowledge order so to speak. But uh I think we will start seeing accelerating orders now related to sort of you know, late reaction from some of our customers and
Speaker Change: Uh, the lead times of the oads that simply houses now, is, as long as the found Breeze now, so you can assume that you're looking at 6 months of lead time now, right? Okay. Maybe they're about.
So I don't think we can respond to you. So I think the orders don't make a difference as to what it means to a revenues moving forward.
Speaker Change: Sir, thank you.
Speaker Change: I said, last quarter and then
Speaker Change: You guys, I think of the prepared script talked about seeing, you know, strength in the second half of 25 and accelerating growth in 2026. And I just want to make sure. Um, I'm not, you know, misinterpreting your comments are you sort of suggesting you think annual growth in 26 is even higher than what you're growing here or appear to be growing in 2025. I just, should we be thinking about the acceleration comment is specifically talking about, you know, year-over-year growth, 26 versus 25 or you just sort of talking about orders or other parts of the business and it's not sort of a comment per se about the revenue.
Speaker Change: So uh, when we talk about accelerating revenues, I was talking to a design wins within categories. Um, so I think you want to pass through the script and section by section. We had this great design being with the major new North American Medical operator here when operator, and we expect that to ramp, didn't pretty serious, uh, heavy volume at the end of this year. So, that clearly
Speaker Change: Is an acceleration in my view. We talked about all these calls that are going on the optical, uh, in the infrastructure. So when that will result in such an outcome, we also talked of access customers of our 5G product that, uh, are just beginning to ship in the second half.
Uh, for 5G applications uh, to Major North America Cooperators. So I think it is a context of of sort of new design means with major players that will start ramping. And obviously that's a great outcome for those product categories.
Speaker Change: Can you squeeze in 1, quick 1 for for Steve? I, I don't think you guys have ever sort of called out significant FX effects, in past quarters. So the 4 million, you know, kind of FX charge this or charge expense, you know, kind of caught me by surprise. Can you just sort of say where, where is that FX coming from? I assume your pricing most stuff in dollars, but you maybe have employees or fixed costs located overseas, is that is that the origin of of the FX,
Speaker Change: Yeah, so, I mean, as you know, I mean, these are kind of historical moves in the dollar. I mean, it's been over 30 years since you've seen this much. Uh, but we, I mean, we transact in dollars. And so this is really just employees that we have, is where it gets impacted. And it's, um, you know, a few of the reasons that were impacted the Euros. Probably the biggest is where we saw the the worst shekel as well. I mean, we're we're exposed in Israel and, uh, and some of these places.
Speaker Change: You know, we we do hold, uh, some cash. I mean, yeah, it ended up being bigger than expected in the quarter. We've had it from time to time in the past and uh, you know, we've been able to overcome it with the strength of the business.
Speaker Change: Got it. Okay, thank you.
Speaker Change: Thank you. And our next question comes from the line of David Williams with the Benchmark Company. Please proceed with your question.
Speaker Change: Hey Dylan! Thanks for taking the question. And let me also give you my congrats on the the solid progress here. So, uh, maybe first Kesha or um, maybe from a geographic standpoint and in China specifically can you talk about any of the Dynamics you're seeing there in terms of the strength that's building or where there's still areas that are, uh, not quite up to where you would hope they would be in terms of demand
Speaker Change: So hi David. Thank you. Uh look from a geographic point of view, the strength data as far as our us and uh Europe but China we're seeing different parts of the market behave very differently. I mean Steve talked about an industrial multi-market segment being down and that's really 2 parts to that 1 is. There's a strong push for made in China products. And at the same time, that alone creates a pricing pressure and we are taking very disciplined approach where, uh, where we are walking away from businesses or revenues, where the margins are not accretive to what we feel, is the right.
Speaker Change: uh, benchmarks for, Max linear and some cases we are taking the business because strategically positioned as for
Speaker Change: For holding holding up, holding out right now with, uh, with with the pressures. But later, it'll, it'll strengthen our offering and therefore, we can build back.
Of spending data center in China. In try to look at today's data center volumes were transceivers. They are maybe less than 20% of the market, but if you just forecast to 3 years out, China will be 40% of the transceiver volumes in the world.
Uh, so that's a significant acceleration more than on a unit basis than uh, than what the USC. So it's a great of, yes, they're lagging by a generation or so the US technology.
Speaker Change: And they are. The incumbency is not very well established yet, right? Because we are not behind in our offering timings and so that gives us a very great position to work and see how we can build and the great grab more market share. And, uh, likewise we are seeing uh,
Speaker Change: Strengthening in other infrastructure areas in uh where there's some spend going on related spend and uh, but we are just generally seeing a certain weakness in um, industrial sort of areas, besides the pressure from internal made in China, China story. So, I hope that gives you some color. Um, if you, when you think broadband and connectivity, please think North America Europe and some Latin America. When you think data centers, please think us China. And then when you think about, uh, when you think about our other infrastructure, that's Ethernet or storage accelerators,
Speaker Change: It's across the board geographies, where, where their Enterprise, uh, providers. So, I think that would give you a good sense of where the product mix is playing out.
Speaker Change: Okay.
That's very uh, very good color there. Thank you for that. Um, and and then maybe just uh, from a technology progression, we're clearly in the early stages with Keystone Rushmore. But as you think further out in the as we get the silicon, photonics and co-packaged, uh, Optics, do you have a, a road map to get there? And how do you think Max linear plays into that that Trend as as we move that direction. Thank you.
Speaker Change: Yeah, uh, very, very good question. I, I was really looking forward to that question. Actually, if you just look at the offering of any bam for DSP and tia companies,
Speaker Change: they have all the product technology platform to offer CPU related products.
Speaker Change: Whether it is, you know, we can get to the details of that. So for us, it's about fulfilling order, portfolio through derivatives.
Speaker Change: And, and, and some level of customization, we working with customers.
So the most important thing is to work with Optics companies to develop our CPU offerings. And we are engaged with Optics companies to really customize your offerings uh related to uh CPU of solutions.
Speaker Change: Having talk talking about CPUs, it's going to be a very mixed World. CPA is going to be a very very uh what I call contained offering. Where much of the network is going to be pretty much a pluggable uh offering with more sophisticated DSP transceivers or lro's, you know that sort of mixed mode offering. So I think that
Speaker Change: Uh, CPU is 1 thing. We, we definitely beginning to engage in to fill out our portfolio, but this time you have to come for but there's no scenario in the world.
Speaker Change: Where CPU is, is sort of a broad-based across the network is going to be much more sort of, I don't use the word d but a containerized containerized solution offering where everything is predetermined, okay? So when you talk of cpos you generally talk about and Nvidia or a broadcom switch offering, but it's really not uh uh uh abroad across the network offering and all hyperscale Network providers will.
Speaker Change: Readily acknowledge acknowledge, it's not even some of them even completely dismissing it. Okay.
But we, as a silicon company, we are working with the Optics companies to offer a CPO CPU silicon solution to obviously.
Speaker Change: The offering is much more analog intensive when you go cpos and less on the mix signals, digital less, digital intensive. Okay.
Speaker Change: Thanks again.
Speaker Change: Yep.
Speaker Change: Thank you. And our next question comes from the line of Carl acraman with BNP paribus. Please receive with your question.
Carl acraman: Yes. Thank you. Um, I was hoping you could discuss, which areas you've seen the most Improvement in order visibility. Uh, just giving the, uh, that's like a big raise this quarter. Uh, and in particular with the second major Tier 1, um, you know, us carrier ramping your integrated pawn and Wi-Fi, Gateway SOC. Is this where you have a strongest visibility and confidence in order recovery or
Speaker Change: Other other areas as well. And I have a follow-up, please.
Speaker Change: Oh, you know uh across the board really. Uh, if the uncertainty is there, it's really about the call timings and our Optical when we get through each call because that can that really is. Sometimes like a vlash, it goes, you know, and that's where the uncertainties in the forecasting, but having said that they put a stake in the ground saying we feel good that we'll get to the 60 to 70 million, dollars revenue for the year in uh in our data center Revenue. Otherwise, they cross the board, we have very good uh, visibility
and uh, I would say
That's got nothing to do with the new design team that we have.
Speaker Change: In program.
Speaker Change: Yep. Uh, understood. Thank you. And for my follow-up, you know, you, you mentioned again, just some of the, the opportunities you see in front of you with regard to your Panther Family, Hardware, ssc's, Stow storage, Hardware ssc's. Um, I was hoping you could discuss the breadth of wins, uh, in the visibility that you see there, uh, because it does appear to be picking up. So if you could discuss, that, that would be helpful. Thank you.
Speaker Change: So, uh,
Speaker Change: You know, uh, you know, we have the investing in this Panther storage compression and the hardware accelerators for both storage compression, decryption and security for a while now. And you know, it's again 1 of those heavy duty uh, you know in you know like a lot of validation drops, just like any high-end infrastructure product is going to be. But we got a number of
Speaker Change: Uh, proof of concept. Design means complete be a number of major players in Enterprise who are now, uh, incorporating and the only 1 we have talked about publicly is the Dell power Max platform, but it's proliferating across various, uh, competitors, uh, in uh, in the storage Appliance Market. Having said that, we have just started initial 4 days and proof of concept at, uh, Cloud compute, uh, hyperscale data center companies as well. And, uh, I'm very pleased with the receptionist having with those. So, I hope to break break into 1 of those as well. So, and then obviously, this product was, you know, the cloud data center is evolving, very, very rapidly. And the specification requirements, also evolved very rapidly. So we really engaged in. Making sure the Next Generation offering has got all the bells and whistles that is perfectly and beautifully tuned for the cloud data, uh, data centers. Having said that, uh, he's a strong Pipeline and they say that again.
Uh, next year, we're going to maybe triple the revenue of this year range. 2x to 3x and they said that product line, definitely 2 to 3 years. Could be 75 to 100 million dollars based on the offerings. We know now. But with the proof of concept traction we have, could it be double that? I really hope so. And uh, but I just want to save the wording for a little bit more time.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Yep.
Speaker Change: Got our next question comes from the line of a suji d Silva with Roth Capital Partners, please receive with your question.
Hi Kesha. Hi Steve. Can you back to the progress here in the high-speed interactive? I heard you correctly. I think you talked about your optimal topical module customers, exploring aec opportunities. I'm wondering if you have a roadmap to support any effort, they're doing in terms of moving to either copper or from the front end to the back end or any thoughts, there is your road map and how that could play.
Speaker Change: So G. Yes, absolutely. I mean all our products are designed to handle now, the EC requirements and they always been how our so far is these have been super Niche. So it's like a watch and go sort of environment. Uh, however by the time you, uh, but now, you know, it is really a uh, it is really the remains to be seen, uh, you know, uh, who are the ones with it. Now these these Beyond and so I I I didn't even believe that even them Optical transceiver companies are looking at it and try to create keep their options open. So they're now working towards creating their own aec's and AC's and so on. So,
Speaker Change: So we are readily able to support them. And remember that power is incredibly important. You can imagine an end to end copper cable and uh, you know, you don't have all the fancy coolings and everything that others can do in an optical transceiver module. This is really, really, uh, power consumption sensitive product. And uh, we've always been Max, seniors reason for existence is low power, low power, low power, and high speed, and I think there's a perfect application. Hopefully, it becomes a big application, but right now, we are just, uh, Doing The Cockroach things laying eggs that will become cockroaches later. So to speak, you know, uh, the, the Survivor of the longest time, sorry, I got carried away, but yes, we are engaged in this product line. Okay? Yeah.
Speaker Change: And then a quick question on Panther. Um, I figured you mentioned Enterprise quite a bit there. I'm just curious if there are application for Panther as well to AI infrastructure.
Speaker Change: Absolutely very, very, very much. So look, if you think of Panther, uh, what are the biggest drivers for AI scenarios right now? Power, power power is 1 part memory memory memory, we talk of high bandwidth throughput memories. How do you, how do you get more out of the hbm? How do you relieve? The bottlenecks that happens in the connection to these memories, right?
Speaker Change: And all of these are incredibly important and latency is super important. So, and how do you offload, some level of inline compute, right? These are all very, very important factors and, uh, I don't think there is a more sweeter place for stories, accelerators and, and smart stories actually is than AI actually. So, however, it will require some level of future futuristic, sort of engagements and, and, and repositioning of the product features. So I think that this is going to be very, very important. And for AI is very, very valuable. Having said that small cloud service providers, right now are actually 1 of them is already using it. There's 1 more is about to use it and there's some big guys are looking at it as well. So I think it's a very very, very very, very conceivable that is going to become pretty enticing product as well. And I will not be surprised if the biggest are
My system solution providers.
Speaker Change: Are not are not doing 1 of these things themselves as well. Internally, I don't see why they won't be doing it. It really frankly, that's my own conjecture. But uh, so we feel very good that we will be in a leadership position in this product.
Speaker Change: Thanks Keisha.
Speaker Change: And our final question comes from the line of Torres vanberg with stifel, please receive with your question.
Yeah. Uh, to sure. I just had, uh, 2 follow ups, uh, the first 1 and it's kind of related to the last question there. Uh, you know, you're you're in in infrastructure, especially in the data center side. You 2, main competitors are building more and more custom silicon. And, you know, as we think about rack level infrastructure, I'm just curious, you know, are, are you sort of getting pulled into, you know, potentially developing any sort of custom technology at this point or you, you know, still very much, uh, focused on on, uh, shipping. Um, Merchant products
Speaker Change: Okay. Uh,
I guess your second question will come later. Let me answer the first question here. Um,
Speaker Change: Look, 1 of the most important. What is the our incumbents have as an advantage? They've already suppliers to these guys and they have these conversations that are Beyond interconnects,
Right. So for us too. It's the same treaded path. We are right now. Establishing a credibility with our interconnects and we are showing various colors of all the Technologies. We bring nobody can dispute the breadth of our technology platform and depth that I think that's, that's, that's the Dazzle, right? And so, uh, we are engaged with them and but right now from a scale, positioning point of view and, you know, we are not doing any custom silicon, like 1 of our computers is doing, however, we are customizing your offering to the differentiation requirements, that these guys are looking forward to. I think a very, very different, we do not have an internal custom Asic business yet. Uh, we are still a standard product offering, however, uh, the standard of product offering comes with some custom features, which are in customers. And, uh, so I would differentiate that customization from the custom basic business that you are asking. Having said that we have, we have recently loaded up
Speaker Change: On some, uh, you know leadership here to do business development, work to get business beyond the interconnect because we really think about it. Interconnect is a bookended solution. And the interest is having in the third player in the system, cannot be just be for the bookended solution. It has to be for something even more as a strategic vendor and I think that's what we are working towards right now is to be really a broad-based strategic partner for this, hyperscale data centers.
Speaker Change: So that buying interconnect is just a phase accompany, it's not really the be all end, all for the company.
Speaker Change: That makes sense. Thank you.
Troy: Thanks Troy.
Troy: Thank you. I want to uh,
With that, I want to thank everyone. Uh, for this call today as, as you have seen, uh, uh, we are really excited about where uh, things are headed now. Uh, the recovery in our business, uh, generating strong cash, positive cash flow numbers.
Representing a number of financial conferences, virtually events, I'm sure where we'll meet again and the details of these events will be on our investor relations uh paid with that. Thank you very much and look forward to the next meeting. Thank you. Bye.
Troy: Thank you. And with that, this does conclude today's teleconference, we thank you for your participation. You may now disconnect your lines.