MaxLinear, Inc. Announces Fourth Quarter 2017 Financial Results
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MaxLinear, Inc. Announces Fourth Quarter 2017 Financial Results

Fourth Quarter 2017 GAAP Net Revenue of $113.7 million,
GAAP Diluted Loss per Share of $0.29,
and Non-GAAP Diluted Earnings per Share of $0.38

CARLSBAD, Calif., Feb. 13, 2018 (GLOBE NEWSWIRE) -- MaxLinear, Inc. (NYSE:MXL), a leading provider of radio-frequency, mixed-signal and high-performance analog integrated circuits for the connected home, wired and wireless infrastructure, and industrial and multi-market applications, today announced financial results for the fourth quarter ended December 31, 2017.

Management Commentary

“We are pleased to announce the financial results of fourth quarter 2017, which brings to close a very eventful 2017. In the fourth quarter, we delivered GAAP net revenue of $113.7 million and generated $21.7 million of net cash flow from operating activities.  These strong cash flows enabled a further $20.0 million in debt repayment in the quarter. As a result, our 2017 total debt repayment stands at $70.0 million since the closing of the Exar acquisition in May 2017, which is consistent with our stated objective of using net cash generation to aggressively deleverage. Our ability to find efficiencies in our combined operations has enabled MaxLinear to maintain its aggressive pace of new technology platform innovations that will yield benefits to MaxLinear shareholders well into the future.

“In 2017, we recorded another year of record revenue with total GAAP net revenue of $420.3 million, or 8% sequential growth, in the face of legacy Entropic product declines in analog channel-stacking solutions and video SoCs, and persistent China macro optical fiber headwinds. We were able to weather these challenges due to revenue strength in our broadband franchise, revenue contributions from our Exar acquisition and the acquisition of Marvell’s G.hn business, as well as contributions from our expanding portfolio of network infrastructure solutions.

“Most excitingly, 2017 was undoubtedly the most significant year for the company from an engineering execution and market expansion perspective. In 2017, we started mass production of the industry’s first 28nm CMOS RF transceiver spanning the 5-45Ghz frequency for the wireless backhaul market. We also completed the tape-out of the industry’s first 400Gbps PAM-4 SerDes device for the hyperscale data-center market. For the cable infrastructure market, we completed the tape-out of the industry's first Full-Duplex (FDX) DOCSIS cable fiber node infrastructure remote PHY system-on-chip device. We also successfully integrated two strategic technology platform acquisitions in the form of Exar Corporation and Marvell's G.hn home networking business. We are very excited by our expanding technology footprint, which addresses some of the most complex analog and mixed-signal communications platforms in the industry. As a result, we continue to expand our existing TAM and solidify our position as one of the industry’s leading providers of CMOS mixed-signal ICs,” commented Kishore Seendripu, Ph.D., Chairman and CEO.

Fourth Quarter 2017 Business Highlights

Fourth Quarter Financial Highlights

GAAP basis:

The fourth quarter 2017 results continue to be influenced by the acquisitions and related purchase price accounting impacts of Marvell’s G.hn business in April 2017 and Exar in May 2017, and interest on the term loan related to the Exar transaction.

Non-GAAP basis:

First Quarter 2018 Business Outlook
The company expects revenue in the first quarter 2018 to be in the range of $110 million to $114 million, and also estimates the following:

Webcast and Conference Call
MaxLinear will host its fourth quarter financial results conference call today, February 13, 2018 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). To access this call, dial US toll free: 1-877-407-3109 / International: 1-201-493-6798. A live webcast of the conference call will be accessible from the investor relations section of the MaxLinear website at http://investors.maxlinear.com, and will be archived and available after the call at investors.maxlinear.com until February 27, 2018. A replay of the conference call will also be available until February 27, 2018 by dialing US toll free: 1-877-660-6853 / International: 1-201-612-7415 and Conference ID#: 13653123.

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 (including our current guidance for first quarter 2018 revenue, gross margins, operating expenses, interest expenses, and tax rates). These forward-looking 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. In particular, our future operating results are substantially dependent on our assumptions about market trends and conditions and our expectations with respect to recently completed acquisitions.  With respect to recently completed acquisitions, Exar’s target markets and business operations differ substantially from those of MaxLinear, and we may be unable to realize anticipated strategic, financial, and operating synergies to the same relative extent as we were able to achieve in other recent acquisitions.  In addition, our decisions with respect to all our acquisitions were based on management’s current expectations with respect to the size of the available markets and growth opportunities presented by these acquisitions, all of which are subject to material risks and uncertainties.  In connection with the acquisition of Exar, we incurred substantial acquisition-related indebtedness, which materially changed our financial profile and presents specific risks relating to our ability to service interest and principal payments and limitations on our operating flexibility based on operating covenants in the applicable term loan agreements, including (without limitation) debt covenant restrictions that limit our ability to obtain additional financing, issue guarantees, create liens, make certain restricted payments or repay certain obligations or to pursue future acquisitions.  Additional risks and uncertainties arising from our operations generally and our recently completed acquisitions include intense competition in our industry; our dependence on a limited number of customers for a substantial portion of our revenues; uncertainties concerning how end user markets for our products will develop; potential uncertainties arising from continued consolidation among cable television and satellite operators in our target markets and continued consolidation among competitors within the semiconductor industry generally; our ability to develop and introduce new and enhanced products on a timely basis and achieve market acceptance of those products, particularly as we seek to expand outside of our historic markets; potential decreases in average selling prices for our products; risks relating to intellectual property protection and the prevalence of intellectual property litigation in our industry; indemnification obligations of Exar arising from a recent divestiture; the impact on our financial condition of the incurred acquisition indebtedness and cash usage arising from the Exar transaction; our reliance on a limited number of third party manufacturers; and our lack of long-term supply contracts and dependence on limited sources of supply. Our forward-looking GAAP income tax rate includes preliminary assumptions regarding the Tax Act, whereas our forward-looking non-GAAP income tax rate excludes impacts of the Tax Act. The final impact of the Tax Act on our income taxes may differ from our estimates, possibly materially, due to, among other things, changes in interpretations and assumptions made, additional guidance that may be issued, and actions taken by MaxLinear as a result of the Tax Act. 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 our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 and our Current Reports on Form 8-K, as well as the information to be set forth under the caption “Risk Factors” in MaxLinear’s Annual Report on Form 10-K for the year ended December 31, 2017, which we expect to file in the next week. All forward-looking statements are based on the estimates, projections and assumptions of management as of February 13, 2018, and MaxLinear is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a basis consistent with GAAP, we disclose certain non-GAAP financial measures, including non-GAAP gross margin, operating expenses, operating expenses as a percentage of revenue, income from operations as percentage of revenue, pre-tax margins, effective tax rate, net income and diluted earnings per share. These supplemental measures include the gross margin impact of Exar's deferred profit eliminated in purchase price accounting and exclude the effects of (i) stock-based compensation expense; (ii) an accrual related to our performance based bonus plan for 2017, which we currently intend to settle in shares of our common stock; (iii) accruals related to our performance based bonus plan for 2016, which we settled in shares of our class A common stock in 2016 and 2017; (iv) amortization of purchased intangible assets and inventory step up; (v) depreciation of fixed assets step-up; (vi) restricted merger proceeds and contingent consideration and incentive award; (vii) acquisition and integration costs related to our recently completed acquisitions; (viii) professional fees and settlement costs related to our previously disclosed IP and commercial litigation matters; (ix) IPR&D impairment losses; (x) severance and other restructuring charges; and (xi) non-cash income tax benefits and expenses and effects of the Tax Act. 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 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.

Bonuses under our executive and non-executive bonus programs have been excluded from our non-GAAP net income for all periods reported. Bonus payments for the first and second half of the 2016 performance periods were settled through the issuance of shares of Class A common stock under our equity incentive plans in August 2016 and February 2017, respectively. We currently expect that bonus awards under our fiscal 2017 program will be settled in common stock in the first quarter of fiscal 2018. While we include the dilutive impact of 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.

Expenses incurred in relation to acquisitions include amortization of purchased intangible assets and step-up of inventory to fair value, depreciation of step-up of property and equipment to fair value, acquisition and integration costs primarily consisting of professional and consulting fees, incentive awards, and restricted merger proceeds which represent the change in fair value of contingent consideration related to a 2014 acquisition and one-time impact on gross margin from elimination of Exar's deferred profit in purchase price accounting.

IPR&D impairment losses relate to our abandonment of IPR&D technology assets.

Restructuring charges incurred are related to our restructuring plans which address issues primarily relating to the integration of the Company and acquired businesses or internal operations and primarily include severance and restructuring costs related to exiting certain facilities.

Expenses incurred in relation to our intellectual property and commercial litigation include professional fees incurred.

Income tax benefits and expense adjustments are those that do not affect cash income taxes payable. Effects of the Tax Act were excluded from Non-GAAP effective tax rate.

Reconciliations of non-GAAP measures for the historic periods disclosed in this press release appear below. Because of the inherent uncertainty associated with our ability to project future charges, particularly related to stock-based compensation and its related tax effects as well as potential impairments, we have not provided a reconciliation for non-GAAP guidance provided for the first quarter 2018.

About MaxLinear, Inc.

MaxLinear, Inc. (NYSE:MXL) is a leading provider of radio frequency (RF) and mixed-signal and high-performance analog integrated circuits for the connected home, wired and wireless infrastructure, and industrial and multi-market applications.  MaxLinear is headquartered in Carlsbad, California. For more information, please visit www.maxlinear.com.

MXL is MaxLinear’s registered trademark. Other trademarks appearing herein are the property of their respective owners.

MaxLinear, Inc. Investor Relations Contact:
Gideon Massey
Investor Relations Specialist
Tel: 949-333-0056
gmassey@maxlinear.com

 
MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
 Three Months Ended
 December 31, 2017 September 30, 2017 December 31, 2016
Net revenue$113,721  $113,581  $87,136 
Cost of net revenue61,628  61,739  36,733 
Gross profit52,093  51,842  50,403 
Operating expenses:     
Research and development30,116  29,270  24,035 
Selling, general and administrative26,843  29,037  16,720 
IPR&D impairment losses  2,000   
Restructuring charges800  2,178  1,326 
Total operating expenses57,759  62,485  42,081 
Income (loss) from operations(5,666) (10,643) 8,322 
Interest income14  1  146 
Interest expense(4,044) (4,133) (7)
Other income (expense), net(793) (668) 130 
Total interest and other income (expense), net(4,823) (4,800) 269 
Income (loss) before income taxes(10,489) (15,443) 8,591 
Income tax provision (benefit)8,959  (6,276) 243 
Net income (loss)$(19,448) $(9,167) $8,348 
Net income (loss) per share:     
Basic$(0.29) $(0.14) $0.13 
Diluted$(0.29) $(0.14) $0.12 
Shares used to compute net income (loss) per share:     
Basic67,147  66,712  64,752 
Diluted67,147  66,712  68,421 
         


 
MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
 Years Ended
 December 31, 2017 December 31, 2016
Net revenue$420,318  $387,832 
Cost of net revenue212,355  157,842 
Gross profit207,963  229,990 
Operating expenses:   
Research and development112,279  97,745 
Selling, general and administrative105,831  64,454 
IPR&D impairment losses2,000  1,300 
Restructuring charges9,524  3,432 
Total operating expenses229,634  166,931 
Income (loss) from operations(21,671) 63,059 
Interest income274  572 
Interest expense(10,378) (104)
Other income (expense), net(2,223) 163 
Total interest and other income (expense), net(12,327) 631 
Income (loss) before income taxes(33,998) 63,690 
Income tax provision (benefit)(24,811) 2,398 
Net income (loss)$(9,187) $61,292 
Net income (loss) per share:   
Basic$(0.14) $0.96 
Diluted$(0.14) $0.91 
Shares used to compute net income (loss) per share:   
Basic66,252  63,781 
Diluted66,252  67,653 
      


 
MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 Three Months Ended
 December 31, 2017 September 30, 2017 December 31, 2016
Operating Activities     
Net income (loss)$(19,448) $(9,167) $8,348 
Adjustments to reconcile net income (loss) to cash provided by operating activities:     
Amortization and depreciation20,236  21,342  7,960 
Impairment of IPR&D assets  2,000   
Provision for losses on accounts receivable  46   
Amortization of investment premiums, net    74 
Amortization of inventory step-up9,715  10,207  2,652 
Amortization of debt issuance costs287  301   
Stock-based compensation7,770  7,796  5,290 
Deferred income taxes16,650  (1,163) (114)
(Gain) loss on disposal of property and equipment(33) 286  318 
(Gain) loss on foreign currency738  733  (282)
Excess tax benefits on stock-based awards(1,961) (841) (2,249)
Change in fair value of contingent consideration    11 
Impairment of leases    388 
Changes in operating assets and liabilities:     
Accounts receivable9,492  7,063  (815)
Inventory543  5,060  2,882 
Prepaid expenses and other assets(424) 2,374  767 
Accounts payable, accrued expenses and other current liabilities(2,494) (17,453) 752 
Accrued compensation1,351  1,498  2,252 
Deferred revenue and deferred profit(12,862) 3,907  697 
Accrued price protection liability(6,658) 3,606  (1,936)
Other long-term liabilities(1,159) 144  608 
Net cash provided by operating activities21,743  37,739  27,603 
Investing Activities     
Purchases of property and equipment(3,070) (2,500) (1,684)
Proceeds from sale of property and equipment30     
Purchases of intangible assets  (53)  
Purchases of available-for-sale securities    (10,044)
Maturities of available-for-sale securities    10,185 
Net cash used in investing activities(3,040) (2,553) (1,543)
Financing Activities     
Net proceeds from issuance of common stock2,960  1,074  2,199 
Minimum tax withholding paid on behalf of employees for restricted stock units(1,718) (1,426) (1,132)
Repayment of debt(20,000) (50,000)  
Net cash provided by (used in) financing activities(18,758) (50,352) 1,067 
Effect of exchange rate changes on cash and cash equivalents371  (829) (307)
Increase (decrease) in cash, cash equivalents and restricted cash316  (15,995) 26,820 
Cash, cash equivalents and restricted cash at beginning of period74,096  90,091  56,076 
Cash, cash equivalents and restricted cash at end of period$74,412  $74,096  $82,896 
            


 
MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 Years Ended
 December 31, 2017 December 31, 2016
Operating Activities   
Net income (loss)$(9,187) $61,292 
Adjustments to reconcile net income (loss) to cash provided by operating activities:   
Amortization and depreciation66,738  26,703 
Impairment of IPR&D assets2,000  1,300 
Provision for losses on accounts receivable133  87 
Amortization (accretion) of investment premiums (discount), net(60) 169 
Amortization of inventory step-up25,557  5,641 
Amortization of debt issuance costs763   
Stock-based compensation32,668  21,765 
Deferred income taxes(31,767) 101 
Loss on disposal of property and equipment168  366 
(Gain) loss on sale of available-for-sale securities38  (50)
(Gain) loss on foreign currency2,153  (216)
Excess tax benefits on stock-based awards(8,559) (8,291)
Change in fair value of contingent consideration  220 
Impairment of leases  388 
Changes in operating assets and liabilities:   
Accounts receivable(4,377) (8,175)
Inventory(1,788) 9,846 
Prepaid expenses and other assets1,272  402 
Accounts payable, accrued expenses and other current liabilities(1,918) 3,249 
Accrued compensation1,567  5,609 
Deferred revenue and deferred profit(1,629) 1,925 
Accrued price protection liability6,395  (4,850)
Other long-term liabilities(5,103) (164)
Net cash provided by operating activities75,064  117,317 
Investing Activities   
Purchases of property and equipment(7,468) (8,512)
Proceeds from sale of property and equipment30   
Purchases of intangible assets(5,378) (390)
Cash used in acquisition, net of cash acquired(473,304) (101,000)
Purchases of available-for-sale securities(30,577) (90,307)
Maturities of available-for-sale securities84,546  98,896 
Net cash used in investing activities(432,151) (101,313)
Financing Activities   
Repurchases of common stock(334) (3)
Net proceeds from issuance of common stock12,052  6,649 
Minimum tax withholding paid on behalf of employees for restricted stock units(11,543) (7,316)
Proceeds from issuance of debt416,846   
Repayment of debt(70,000)  
Net cash provided by (used in) financing activities347,021  (670)
Effect of exchange rate changes on cash and cash equivalents1,582  (394)
Increase (decrease) in cash, cash equivalents and restricted cash(8,484) 14,940 
Cash, cash equivalents and restricted cash at beginning of period82,896  67,956 
Cash, cash equivalents and restricted cash at end of period$74,412  $82,896 
        



 
MAXLINEAR, INC.
UNAUDITED GAAP CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 December 31, 2017 September 30, 2017 December 31, 2016
Assets     
Current assets:     
Cash and cash equivalents$71,872  $71,576  $81,086 
Short-term restricted cash1,476  615  614 
Short-term investments, available-for-sale    47,918 
Accounts receivable, net66,099  75,618  50,487 
Inventory53,434  63,692  26,583 
Prepaid expenses and other current assets8,423  7,917  6,159 
Total current assets201,304  219,418  212,847 
Long-term restricted cash1,064  1,905  1,196 
Property and equipment, net22,658  23,336  20,549 
Long-term investments, available-for-sale    5,991 
Intangible assets, net315,045  332,409  104,261 
Goodwill237,992  239,673  76,015 
Deferred tax assets39,878  53,985  116 
Other long-term assets6,921  6,288  1,677 
Total assets$824,862  $877,014  $422,652 
      
Liabilities and stockholders’ equity     
Current liabilities$76,386  $98,381  $54,543 
Long-term debt347,609  367,322   
Other long-term liabilities13,443  14,663  15,685 
Total stockholders’ equity387,424  396,648  352,424 
Total liabilities and stockholders’ equity$824,862  $877,014  $422,652 
            



 
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(in thousands, except per share data)
 
 Three Months Ended
 December 31, 2017 September 30, 2017 December 31, 2016
GAAP gross profit$52,093  $51,842  $50,403 
Stock-based compensation101  93  59 
Performance based equity35  34  31 
Amortization of inventory step-up9,715  10,207  2,652 
Amortization of purchased intangible assets8,465  7,907  2,572 
Depreciation of fixed asset step-up112  113   
Deferred profit eliminated in purchase price accounting  810   
Non-GAAP gross profit70,521  71,006  55,717 
      
GAAP R&D expenses30,116  29,270  24,035 
Stock-based compensation(4,349) (4,337) (3,319)
Incentive award compensation    (169)
Performance based equity(1,031) (961) (1,133)
Amortization of purchased intangible assets(97) (96) (97)
Depreciation of fixed asset step-up(297) (561)  
Restricted merger proceeds and contingent consideration    (35)
Non-GAAP R&D expenses24,342  23,315  19,282 
      
GAAP SG&A expenses26,843  29,037  16,720 
Stock-based compensation(3,105) (2,965) (1,724)
Incentive award compensation    (18)
Performance based equity(937) (517) (673)
Amortization of purchased intangible assets(8,760) (9,924) (2,914)
Depreciation of fixed asset step-up(20) (30)  
Acquisition and integration costs(54) (1,005) (572)
Restricted merger proceeds and contingent consideration    (11)
IP litigation costs, net(38) (4) (28)
Non-GAAP SG&A expenses13,929  14,592  10,780 
      
GAAP IPR&D impairment losses  2,000   
IPR&D impairment losses  (2,000)  
Non-GAAP IPR&D impairment losses     
      
GAAP restructuring expenses800  2,178  1,326 
Restructuring charges(800) (2,178) (1,326)
Non-GAAP restructuring expenses     
      
GAAP income (loss) from operations(5,666) (10,643) 8,322 
Total non-GAAP adjustments37,916  43,742  17,333 
Non-GAAP income from operations32,250  33,099  25,655 
      
GAAP and non-GAAP interest and other income (expense), net(4,823) (4,800) 269 
      
GAAP income (loss) before income taxes(10,489) (15,443) 8,591 
Total non-GAAP adjustments37,916  43,742  17,333 
Non-GAAP income before income taxes27,427  28,299  25,924 
      
GAAP income tax provision (benefit)8,959  (6,276) 243 
Adjustment for non-cash tax benefits/expenses and effects of the Tax Act(7,853) 7,476  (13)
Non-GAAP income tax provision1,106  1,200  230 
      
GAAP net income (loss)(19,448) (9,167) 8,348 
Total non-GAAP adjustments before income taxes37,916  43,742  17,333 
Less: total tax adjustments(7,853) 7,476  (13)
Non-GAAP net income$26,321  $27,099  $25,694 
      
Shares used in computing non-GAAP basic net income per share67,147  66,712  64,752 
Shares used in computing non-GAAP diluted net income per share70,175  69,668  68,421 
Non-GAAP basic net income per share$0.39  $0.41  $0.40 
Non-GAAP diluted net income per share$0.38  $0.39  $0.38 
            


 
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(in thousands, except per share data)
 
 Years Ended
 December 31, 2017 December 31, 2016
GAAP gross profit$207,963  $229,990 
Stock-based compensation332  210 
Performance based equity139  (10)
Amortization of inventory step-up25,557  5,641 
Amortization of purchased intangible assets25,316  8,512 
Depreciation of fixed asset step-up337   
Deferred profit eliminated in purchase price accounting4,682   
Non-GAAP gross profit264,326  244,343 
    
GAAP R&D expenses112,279  97,745 
Stock-based compensation(16,190) (13,681)
Incentive award compensation  (722)
Performance based equity(4,001) (4,707)
Amortization of purchased intangible assets(386) (386)
Depreciation of fixed asset step-up(1,618)  
Restricted merger proceeds and contingent consideration  (694)
Non-GAAP R&D expenses90,084  77,555 
    
GAAP SG&A expenses105,831  64,454 
Stock-based compensation(11,016) (7,014)
Incentive award compensation  (137)
Performance based equity(2,514) (2,951)
Amortization of purchased intangible assets(28,827) (6,952)
Depreciation of fixed asset step-up(106)  
Acquisition and integration costs(10,062) (2,424)
Restricted merger proceeds and contingent consideration  (220)
IP litigation costs, net(272) (699)
Non-GAAP SG&A expenses53,034  44,057 
    
GAAP IPR&D impairment losses2,000  1,300 
IPR&D impairment losses(2,000) (1,300)
Non-GAAP IPR&D impairment losses   
    
GAAP restructuring expenses9,524  3,432 
Restructuring charges(9,524) (3,432)
Non-GAAP restructuring expenses   
    
GAAP income (loss) from operations(21,671) 63,059 
Total non-GAAP adjustments142,879  59,672 
Non-GAAP income from operations121,208  122,731 
    
GAAP and non-GAAP interest and other income (expense), net(12,327) 631 
    
GAAP income (loss) before income taxes(33,998) 63,690 
Total non-GAAP adjustments142,879  59,672 
Non-GAAP income before income taxes108,881  123,362 
    
GAAP income tax provision (benefit)(24,811) 2,398 
Adjustment for non-cash tax benefits/expenses and effects of the Tax Act32,433  (151)
Non-GAAP income tax provision7,622  2,247 
    
GAAP net income (loss)(9,187) 61,292 
Total non-GAAP adjustments before income taxes142,879  59,672 
Less: total tax adjustments32,433  (151)
Non-GAAP net income$101,259  $121,115 
    
Shares used in computing non-GAAP basic net income per share66,252  63,781 
Shares used in computing non-GAAP diluted net income per share69,665  67,653 
Non-GAAP basic net income per share$1.53  $1.90 
Non-GAAP diluted net income per share$1.45  $1.79 
    


 
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
 
 Three Months Ended
 December 31, 2017 September 30, 2017 December 31, 2016
GAAP gross profit45.8%  45.6%  57.8% 
Stock-based compensation0.1%  0.1%  0.1% 
Performance based equity—%  —%  —% 
Amortization of inventory step-up8.5%  9.0%  3.0% 
Amortization of purchased intangible assets7.4%  7.0%  3.0% 
Depreciation of fixed asset step-up0.2%  0.1%  —% 
Deferred profit eliminated in purchase price accounting—%  0.7%  —% 
Non-GAAP gross profit62.0%  62.5%  63.9% 
      
GAAP R&D expenses26.5%  25.8%  27.6% 
Stock-based compensation(3.8)%  (3.8)%  (3.9)% 
Incentive award compensation—%  —%  (0.2)% 
Performance based equity(1.0)%  (0.9)%  (1.3)% 
Amortization of purchased intangible assets(0.1)%  (0.1)%  (0.1)% 
Depreciation of fixed asset step-up(0.2)%  (0.5)%  —% 
Restricted merger proceeds and contingent consideration—%  —%  —% 
Non-GAAP R&D expenses21.4%  20.5%  22.1% 
      
GAAP SG&A expenses23.6%  25.6%  19.2% 
Stock-based compensation(2.7)%  (2.6)%  (2.0)% 
Incentive award compensation—%  —%  —% 
Performance based equity(1.0)%  (0.5)%  (0.8)% 
Amortization of purchased intangible assets(7.7)%  (8.7)%  (3.3)% 
Depreciation of fixed asset step-up—%  (0.1)%  —% 
Acquisition and integration costs—%  (0.9)%  (0.7)% 
Restricted merger proceeds and contingent consideration—%  —%  —% 
IP litigation costs, net—%  —%  —% 
Non-GAAP SG&A expenses12.2%  12.8%  12.4% 
      
GAAP IPR&D impairment losses—%  1.8%  —% 
IPR&D impairment losses—%  (1.8)%  —% 
Non-GAAP IPR&D impairment losses—%  —%  —% 
      
GAAP restructuring expenses0.7%  1.9%  1.5% 
Restructuring charges(0.7)%  (1.9)%  (1.5)% 
Non-GAAP restructuring expenses—%  —%  —% 
      
GAAP income (loss) from operations(5.0)%  (9.4)%  9.7% 
Total non-GAAP adjustments33.3%  38.5%  19.8% 
Non-GAAP income from operations28.3%  29.1%  29.5% 
      
GAAP and non-GAAP interest and other income (expense), net(4.2)%  (4.2)%  0.3% 
      
GAAP income (loss) before income taxes(9.2)%  (13.6)%  9.9% 
Total non-GAAP adjustments before income taxes33.3%  38.5%  19.8% 
Non-GAAP income before income taxes24.1%  24.9%  29.7% 
      
GAAP income tax provision (benefit)7.9%  (5.5)%  0.3% 
Adjustment for non-cash tax benefits/expenses and the effects of the Tax Act(7.0)%  6.5%  —% 
Non-GAAP income tax provision0.9%  1.1%  0.3% 
      
GAAP net income (loss)(17.1)%  (8.1)%  9.6% 
Total non-GAAP adjustments before income taxes33.3%  38.5%  19.8% 
Less: total tax adjustments(7.0)%  6.5%  —% 
Non-GAAP net income23.1%  23.9%  29.5% 
         


 
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
 
 Years Ended
 December 31, 2017 December 31, 2016
GAAP gross profit49.5%  59.3% 
Stock-based compensation0.1%  0.1% 
Performance based equity—%  —% 
Amortization of inventory step-up6.0%  1.5% 
Amortization of purchased intangible assets6.0%  2.1% 
Depreciation of fixed asset step-up0.2%  —% 
Deferred profit eliminated in purchase price accounting1.1%  —% 
Non-GAAP gross profit62.9%  63.0% 
    
GAAP R&D expenses26.7%  25.2% 
Stock-based compensation(3.9)%  (3.5)% 
Incentive award compensation—%  (0.2)% 
Performance based equity(1.0)%  (1.2)% 
Amortization of purchased intangible assets(0.1)%  (0.1)% 
Depreciation of fixed asset step-up(0.3)%  —% 
Restricted merger proceeds and contingent consideration—%  (0.2)% 
Non-GAAP R&D expenses21.4%  20.0% 
    
GAAP SG&A expenses25.2%  16.6% 
Stock-based compensation(2.6)%  (1.8)% 
Incentive award compensation—%  —% 
Performance based equity(0.6)%  (0.7)% 
Amortization of purchased intangible assets(6.9)%  (1.8)% 
Depreciation of fixed asset step-up—%  —% 
Acquisition and integration costs(2.4)%  (0.6)% 
Restricted merger proceeds and contingent consideration—%  (0.1)% 
IP litigation costs, net(0.1)%  (0.2)% 
Non-GAAP SG&A expenses12.6%  11.4% 
    
GAAP IPR&D impairment losses0.5%  0.3% 
IPR&D impairment losses(0.5)%  (0.3)% 
Non-GAAP IPR&D impairment losses—%  —% 
    
GAAP restructuring expenses2.3%  0.9% 
Restructuring charges(2.3)%  (0.9)% 
Non-GAAP restructuring expenses—%  —% 
    
GAAP income (loss) from operations(5.2)%  16.2% 
Total non-GAAP adjustments34.0%  15.4% 
Non-GAAP income from operations28.8%  31.6% 
    
GAAP and non-GAAP interest and other income (expense), net(2.9)%  0.2% 
    
GAAP income (loss) before income taxes(8.1)%  16.4% 
Total non-GAAP adjustments before income taxes34.0%  15.4% 
Non-GAAP income before income taxes25.9%  31.8% 
    
GAAP income tax provision (benefit)(5.9)%  0.6% 
Adjustment for non-cash tax benefits/expenses and the effects of the Tax Act7.7%  —% 
Non-GAAP income tax provision1.8%  0.6% 
    
GAAP net income (loss)(2.2)%  15.8% 
Total non-GAAP adjustments before income taxes34.0%  15.4% 
Less: total tax adjustments7.7%  —% 
Non-GAAP net income24.1%  31.2% 

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