MaxLinear, Inc. Announces Third Quarter 2021 Financial Results

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 Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 11, 2021, 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, which we expect to file soon. All forward-looking statements are based on the estimates, projections and assumptions of management as of October 27, 2021, 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, and diluted earnings per share. These supplemental measures exclude the effects of (i) stock-based compensation expense; (ii) accruals related to our performance based bonus plan for 2021, which we currently intend to settle in shares of our common stock; (iii) accruals related to our performance based bonus plan for 2020, which we settled in shares of common stock in 2021; (iv) amortization of inventory fair value adjustments; (v) amortization of purchased intangible assets; (vi) research and development funded by others; (vii) acquisition and integration costs related to our acquisitions; (viii) professional fees and settlement costs related to IP and commercial litigation matters; (ix) severance and other restructuring charges; (x) impairment losses on intangible assets; (xi) loss from extinguishment of debt; (xii) other non-recurring interest and other income (expenses), net attributable to acquisitions and (xiii) non-cash income tax benefits and expenses. 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. 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.

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 2020 performance periods were settled through the issuance of shares of common stock under our equity incentive plans in February 2021. We currently expect that bonus awards under our fiscal 2021 program will be settled in common stock in the first quarter of fiscal 2022.

Expenses incurred in relation to acquisitions include amortization of purchased intangible assets, amortization of inventory fair value adjustments, acquisition and integration costs primarily consisting of professional and consulting fees, and amortization of discount on deferred purchase price payments to interest expense.

Research and development funded by others represents proceeds received under a contract for a jointly funded R&D project to develop technology that may be commercialized into a product in the future. Such proceeds have not yet been recognized in GAAP results as the Company may be required to repay all or a portion of the funds provided by the other party under certain conditions. Management believes it is not probable that it will trigger such conditions.

Impairment losses relate to certain intangible assets.

Restructuring charges incurred are related to our restructuring plans which eliminate redundancies and primarily include severance and restructuring costs related to impairment of leased right-of-use assets or from exiting certain facilities.

Loss on extinguishment of debt is related to the charge-off of remaining unamortized debt discount and issuance costs on debt we repaid early with proceeds from a new term loan in June 2021.

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.

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 fourth quarter 2021.

About MaxLinear, Inc.

MaxLinear, Inc. (NYSE: MXL) is a leading provider of radio frequency (RF), analog, digital and mixed-signal integrated circuits for access and connectivity, 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. UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)

	Three Months Ended
	September 30, 2021			June 30, 2021			September 30, 2020
Net revenue	$	229,774		$	205,376		$	156,633
Cost of net revenue	99,981			92,833			90,427
Gross profit	129,793			112,543			66,206
Operating expenses:
Research and development	67,538			74,416			55,816
Selling, general and administrative	38,469			35,885			41,685
Restructuring charges	—			38			3,280
Total operating expenses	106,007			110,339			100,781
Income (loss) from operations	23,786			2,204			(34,575		)
Interest income	28			18			27
Interest expense	(2,649		)	(3,741		)	(3,569		)
Loss on extinguishment of debt	—			(5,221		)	—
Other income (expense), net	(105		)	(537		)	(719		)
Total other income (expense), net	(2,726		)	(9,481		)	(4,261		)
Income (loss) before income taxes	21,060			(7,277		)	(38,836		)
Income tax provision (benefit)	11,802			(8,010		)	(2,191		)
Net income (loss)	$	9,258		$	733		$	(36,645	)
Net income (loss) per share:
Basic	$	0.12		$	0.01		$	(0.50	)
Diluted	$	0.12		$	0.01		$	(0.50	)
Shares used to compute net income (loss) per share:
Basic	76,582			75,930			73,402
Diluted	79,815			79,026			73,402

MAXLINEAR, INC. UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)

	Nine months ended
	September 30, 2021			September 30, 2020
Net revenue	$	644,509		$	283,880
Cost of net revenue	290,454			154,169
Gross profit	354,055			129,711
Operating expenses:
Research and development	205,120			109,489
Selling, general and administrative	110,823			93,787
Impairment losses	—			86
Restructuring charges	2,204			3,833
Total operating expenses	318,147			207,195
Income (loss) from operations	35,908			(77,484		)
Interest income	46			283
Interest expense	(10,596		)	(8,228		)
Loss on extinguishment of debt	(5,221		)	—
Other income (expense), net	(746		)	(620		)
Total other income (expense), net	(16,517		)	(8,565		)
Income (loss) before income taxes	19,391			(86,049		)
Income tax provision (benefit)	5,598			(12,128		)
Net income (loss)	$	13,793		$	(73,921	)
Net income (loss) per share:
Basic	$	0.18		$	(1.02	)
Diluted	$	0.17		$	(1.02	)
Shares used to compute net income (loss) per share:
Basic	75,795			72,729
Diluted	79,048			72,729

MAXLINEAR, INC. UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

	Three Months Ended
	September 30, 2021			June 30, 2021			September 30, 2020
Operating Activities
Net income (loss)	$	9,258		$	733		$	(36,645	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization and depreciation	23,117			21,997			20,554
Amortization of inventory fair value adjustments	—			—			14,445
Amortization of debt issuance costs and accretion of discount on debt and leases	513			918			579
Stock-based compensation	16,022			13,966			14,145
Deferred income taxes	6,866			(6,002		)	3,834
Loss on disposal of property and equipment	145			20			—
Impairment of leasehold improvements	—			—			156
Impairment of leased right-of-use assets	—			—			1,464
Loss on extinguishment of debt	—			5,221			—
(Gain) loss on foreign currency and other	(24		)	387			601
Excess tax benefits on stock based awards	(738		)	(2,822		)	(152		)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	28,454			(47,800		)	(63,569		)
Inventory	(28,844		)	(6,254		)	(17,349		)
Prepaid expenses and other assets	39			3,588			(35,131		)
Leased right-of-use assets	—			36			79
Accounts payable, accrued expenses and other current liabilities	28,743			8,652			61,958
Accrued compensation	8,616			13,857			15,364
Accrued price protection liability	(5,319		)	(344		)	12,108
Lease liabilities	(2,723		)	(2,345		)	(1,566		)
Other long-term liabilities	(48		)	4,043			(7,459		)
Net cash provided by (used in) operating activities	84,077			7,851			(16,584		)
Investing Activities
Purchases of property and equipment	(9,624		)	(11,158		)	(5,196		)
Purchases of intangible assets	(5,504		)	—			(375		)
Cash used in acquisitions, net of cash acquired	(7,500		)	(7,500		)	(160,000		)
Net cash used in investing activities	(22,628		)	(18,658		)	(165,571		)
Financing Activities
Proceeds from the issuance of debt	—			350,000			—
Payment of debt issuance cost	(17		)	(4,127		)	(2,696		)
Repayment of debt	(20,000		)	(349,813		)	—
Net proceeds from issuance of common stock	192			4,796			628
Minimum tax withholding paid on behalf of employees for restricted stock units	(976		)	(2,663		)	(1,393		)
Repurchase of common stock	(1,008		)	(4,464		)	—
Net cash provided by (used in) financing activities	(21,809		)	(6,271		)	171,539
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(520		)	(681		)	(71		)
Increase (decrease) in cash, cash equivalents and restricted cash	39,120			(17,759		)	(10,687		)
Cash, cash equivalents and restricted cash at beginning of period	131,434			149,193			107,429
Cash, cash equivalents and restricted cash at end of period	$	170,554		$	131,434		$	96,742

MAXLINEAR, INC. UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

	Nine months ended
	September 30, 2021			September 30, 2020
Operating Activities
Net income (loss)	$	13,793		$	(73,921	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Amortization and depreciation	67,439			53,819
Impairment losses	—			86
Amortization of inventory fair value adjustments	—			14,445
Amortization of debt issuance costs and accretion of discount on debt and leases	2,584			1,386
Stock-based compensation	42,943			33,057
Deferred income taxes	1,405			(5,253		)
Loss on disposal of property and equipment	533			—
Impairment of leasehold improvements	226			319
Impairment of leased right-of-use assets	429			1,508
Loss on extinguishment of debt	5,221			—
Loss on foreign currency	384			375
Excess tax benefits on stock-based awards	(5,369		)	(530		)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(39,425		)	(54,592		)
Inventory	(29,440		)	(20,180		)
Prepaid expenses and other assets	33,487			(34,357		)
Leased right-of-use assets	72			405
Accounts payable, accrued expenses and other current liabilities	35,054			67,193
Accrued compensation	23,849			23,121
Accrued price protection liability	1,636			5,439
Lease liabilities	(7,070		)	(4,275		)
Other long-term liabilities	4,449			(8,721		)
Net cash provided by (used in) operating activities	152,200			(676		)
Investing Activities
Purchases of property and equipment	(26,934		)	(10,132		)
Purchases of intangible assets	(6,616		)	(388		)
Cash used in acquisitions, net of cash acquired	(35,000		)	(160,000		)
Purchases of available-for-sale securities	(5,000		)	—
Net cash used in investing activities	(73,550		)	(170,520		)
Financing Activities
Proceeds from the issuance of debt	350,000			175,000
Payment of debt issuance cost	(4,144		)	(2,696		)
Repayment of debt	(389,813		)	—
Net proceeds from issuance of common stock	6,286			5,270
Minimum tax withholding paid on behalf of employees for restricted stock units	(11,081		)	(2,892		)
Repurchase of common stock	(8,145		)	—
Net cash provided by (used in) financing activities	(56,897		)	174,682
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,233		)	139
Increase in cash, cash equivalents and restricted cash	20,520			3,625
Cash, cash equivalents and restricted cash at beginning of period	150,034			93,117
Cash, cash equivalents and restricted cash at end of period	$	170,554		$	96,742

MAXLINEAR, INC. UNAUDITED GAAP CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)

	September 30, 2021		June 30, 2021		September 30, 2020
Assets
Current assets:
Cash and cash equivalents	$	169,424	$	130,312	$	96,570
Short-term restricted cash	107		107		111
Accounts receivable, net	106,867		135,321		105,355
Inventory	127,347		98,502		104,471
Prepaid expenses and other current assets	14,535		13,866		43,546
Total current assets	418,280		378,108		350,053
Long-term restricted cash	1,023		1,015		61
Property and equipment, net	53,022		48,104		37,258
Leased right-of-use assets	23,668		22,847		11,876
Intangible assets, net	163,894		174,964		232,148
Goodwill	302,828		302,828		302,576
Deferred tax assets	84,660		91,526		72,537
Other long-term assets	6,519		7,235		1,270
Total assets	$	1,053,894	$	1,026,627	$	1,007,779

Liabilities and stockholders’ equity
Current liabilities	$	231,274	$	211,789	$	211,374
Long-term lease liabilities	21,400		20,445		9,406
Long-term debt	326,027		343,022		372,457
Other long-term liabilities	17,650		17,704		17,734
Stockholders’ equity	457,543		433,667		396,808
Total liabilities and stockholders’ equity	$	1,053,894	$	1,026,627	$	1,007,779

MAXLINEAR, INC. UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS (in thousands, except per share data)

	Three Months Ended
	September 30, 2021			June 30, 2021			September 30, 2020
GAAP gross profit	$	129,793		$	112,543		$	66,206
Stock-based compensation	151			148			143
Performance based equity	123			127			180
Amortization of inventory fair value adjustments	—			—			14,445
Amortization of purchased intangible assets	10,743			10,743			9,901
Non-GAAP gross profit	140,810			123,561			90,875

GAAP R&D expenses	67,538			74,416			55,816
Stock-based compensation	(7,691		)	(7,268		)	(6,056		)
Performance based equity	(6,642		)	(8,249		)	(6,190		)
Research and development funded by others	—			(3,800		)	—
Acquisition and integration costs	—			(38		)	—
Non-GAAP R&D expenses	53,205			55,061			43,570

GAAP SG&A expenses	38,469			35,885			41,685
Stock-based compensation	(8,179		)	(6,551		)	(7,349		)
Performance based equity	(3,120		)	(3,357		)	(2,991		)
Amortization of purchased intangible assets	(5,811		)	(5,816		)	(6,057		)
Acquisition and integration costs	(135		)	(25		)	(7,762		)
IP litigation costs, net	—			—			(35		)
Non-GAAP SG&A expenses	21,224			20,136			17,491

GAAP restructuring expenses	—			38			3,280
Restructuring charges	—			(38		)	(3,280		)
Non-GAAP restructuring expenses	—			—			—

GAAP income (loss) from operations	23,786			2,204			(34,575		)
Total non-GAAP adjustments	42,595			46,160			64,389
Non-GAAP income from operations	66,381			48,364			29,814

GAAP loss on extinguishment of debt	—			(5,221		)	—
Loss on extinguishment of debt	—			5,221			—
Non-GAAP loss on extinguishment of debt	—			—			—

GAAP and non-GAAP interest and other income (expense), net	(2,726		)	(4,260		)	(4,261		)
Non-recurring interest and other income (expense), net	73			133			—
Non-GAAP interest and other income (expense), net	(2,653		)	(4,127		)	(4,261		)

GAAP income (loss) before income taxes	21,060			(7,277		)	(38,836		)
Total non-GAAP adjustments	42,668			51,514			64,389
Non-GAAP income before income taxes	63,728			44,237			25,553

GAAP income tax provision (benefit)	11,802			(8,010		)	(2,191		)
Adjustment for non-cash tax benefits/expenses	(7,979		)	10,665			3,724
Non-GAAP income tax provision	3,823			2,655			1,533

GAAP net income (loss)	9,258			733			(36,645		)
Total non-GAAP adjustments before income taxes	42,668			51,514			64,389
Less: total tax adjustments	(7,979		)	10,665			3,724
Non-GAAP net income	$	59,905		$	41,582		$	24,020

Shares used in computing non-GAAP basic net income per share	76,582			75,930			73,402
Shares used in computing non-GAAP diluted net income per share	79,815			79,026			75,324
Non-GAAP basic net income per share	$	0.78		$	0.55		$	0.33
Non-GAAP diluted net income per share	$	0.75		$	0.53		$	0.32

MAXLINEAR, INC. UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS (in thousands, except per share data)

	Nine months ended
	September 30, 2021			September 30, 2020
GAAP gross profit	$	354,055		$	129,711
Stock-based compensation	468			417
Performance based equity	332			358
Amortization of inventory fair value adjustments	—			14,445
Amortization of purchased intangible assets	32,233			27,063
Non-GAAP gross profit	387,088			171,994

GAAP R&D expenses	205,120			109,489
Stock-based compensation	(22,121		)	(14,842		)
Performance based equity	(19,489		)	(9,994		)
Research and development funded by others	(3,800		)	—
Acquisition and integration costs	(130		)	—
Non-GAAP R&D expenses	159,580			84,653

GAAP SG&A expenses	110,823			93,787
Stock-based compensation	(20,354		)	(17,202		)
Performance based equity	(8,367		)	(5,271		)
Amortization of purchased intangible assets	(17,697		)	(17,329		)
Acquisition and integration costs	(1,721		)	(13,122		)
IP litigation costs, net	(11		)	(149		)
Non-GAAP SG&A expenses	62,673			40,714

GAAP impairment losses	—			86
Impairment losses	—			(86		)
Non-GAAP impairment losses	—			—

GAAP restructuring expenses	2,204			3,833
Restructuring charges	(2,204		)	(3,833		)
Non-GAAP restructuring expenses	—			—

GAAP income (loss) from operations	35,908			(77,484		)
Total non-GAAP adjustments	128,927			124,111
Non-GAAP income from operations	164,835			46,627

GAAP loss on extinguishment of debt	(5,221		)	—
Loss on extinguishment of debt	5,221			—
Non-GAAP loss on extinguishment of debt	—			—

GAAP and non-GAAP interest and other income (expense), net	(11,296		)	(8,565		)
Non-recurring interest and other income (expense), net	516			—
Non-GAAP interest and other income (expense), net	(10,780		)	(8,565		)

GAAP income (loss) before income taxes	19,391			(86,049		)
Total non-GAAP adjustments	134,664			124,111
Non-GAAP income before income taxes	154,055			38,062

GAAP income tax provision (benefit)	5,598			(12,128		)
Adjustment for non-cash tax benefits/expenses	3,645			14,412
Non-GAAP income tax provision	9,243			2,284

GAAP net income (loss)	13,793			(73,921		)
Total non-GAAP adjustments before income taxes	134,664			124,111
Less: total tax adjustments	3,645			14,412
Non-GAAP net income	$	144,812		$	35,778

Shares used in computing non-GAAP basic net income per share	75,795			72,729
Shares used in computing non-GAAP diluted net income per share	79,048			73,925
Non-GAAP basic net income per share	$	1.91		$	0.49
Non-GAAP diluted net income per share	$	1.83		$	0.48

MAXLINEAR, INC. UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

	Three Months Ended
	September 30, 2021		June 30, 2021		September 30, 2020
GAAP gross profit	56.5	%	54.8	%	42.3	%
Stock-based compensation	0.1	%	0.1	%	0.1	%
Performance based equity	0.1	%	0.1	%	0.1	%
Amortization of inventory fair value adjustments	—	%	—	%	9.2	%
Amortization of purchased intangible assets	4.7	%	5.2	%	6.3	%
Non-GAAP gross profit	61.3	%	60.2	%	58.0	%

GAAP R&D expenses	29.4	%	36.2	%	35.6	%
Stock-based compensation	(3.4)	%	(3.5)	%	(3.9)	%
Performance based equity	(2.9)	%	(4.0)	%	(4.0)	%
Research and development funded by others	—	%	(1.9)	%	—	%
Acquisition and integration costs	—	%	—	%	—	%
Non-GAAP R&D expenses	23.2	%	26.8	%	27.8	%

GAAP SG&A expenses	16.7	%	17.5	%	26.6	%
Stock-based compensation	(3.6)	%	(3.2)	%	(4.7)	%
Performance based equity	(1.4)	%	(1.6)	%	(1.9)	%
Amortization of purchased intangible assets	(2.5)	%	(2.8)	%	(3.9)	%
Acquisition and integration costs	(0.1)	%	—	%	(5.0)	%
IP litigation costs, net	—	%	—	%	—	%
Non-GAAP SG&A expenses	9.2	%	9.8	%	11.2	%

GAAP impairment losses	—	%	—	%	—	%
Impairment losses	—	%	—	%	—	%
Non-GAAP impairment losses	—	%	—	%	—	%

GAAP restructuring expenses	—	%	—	%	2.1	%
Restructuring charges	—	%	—	%	(2.1)	%
Non-GAAP restructuring expenses	—	%	—	%	—	%

GAAP income (loss) from operations	10.4	%	1.1	%	(22.1)	%
Total non-GAAP adjustments	18.5	%	22.5	%	41.1	%
Non-GAAP income from operations	28.9	%	23.6	%	19.0	%

GAAP loss on extinguishment of debt	—	%	(2.5)	%	—	%
Loss on extinguishment of debt	—	%	2.5	%	—	%
Non-GAAP loss on extinguishment of debt	—	%	—	%	—	%

GAAP and non-GAAP interest and other income (expense), net	(1.2)	%	(2.1)	%	(2.7)	%
Non-recurring interest and other income (expense), net	—	%	0.1	%	—	%
Non-GAAP interest and other income (expense), net	(1.2)	%	(2.0)	%	(2.7)	%

GAAP income (loss) before income taxes	9.2	%	(3.5)	%	(24.8)	%
Total non-GAAP adjustments before income taxes	18.6	%	25.1	%	41.1	%
Non-GAAP income before income taxes	27.7	%	21.5	%	16.3	%

GAAP income tax provision (benefit)	5.1	%	(3.9)	%	(1.4)	%
Adjustment for non-cash tax benefits/expenses	(3.5)	%	5.2	%	2.4	%
Non-GAAP income tax provision	1.7	%	1.3	%	1.0	%

GAAP net income (loss)	4.0	%	0.4	%	(23.4)	%
Total non-GAAP adjustments before income taxes	18.6	%	25.1	%	41.1	%
Less: total tax adjustments	(3.5)	%	5.2	%	2.4	%
Non-GAAP net income	26.1	%	20.3	%	15.3	%

MAXLINEAR, INC. UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

	Nine months ended
	September 30, 2021		September 30, 2020
GAAP gross profit	54.9	%	45.7	%
Stock-based compensation	0.1	%	0.2	%
Performance based equity	0.1	%	0.1	%
Amortization of inventory fair value adjustments	—	%	5.1	%
Amortization of purchased intangible assets	5.0	%	9.5	%
Non-GAAP gross profit	60.1	%	60.6	%

GAAP R&D expenses	31.8	%	38.6	%
Stock-based compensation	(3.4)	%	(5.2)	%
Performance based equity	(3.0)	%	(3.5)	%
Research and development funded by others	(0.6)	%	—	%
Acquisition and integration costs	—	%	—	%
Non-GAAP R&D expenses	24.8	%	29.8	%

GAAP SG&A expenses	17.2	%	33.0	%
Stock-based compensation	(3.2)	%	(6.1)	%
Performance based equity	(1.3)	%	(1.9)	%
Amortization of purchased intangible assets	(2.8)	%	(6.1)	%
Acquisition and integration costs	(0.3)	%	(4.6)	%
IP litigation costs, net	—	%	(0.1)	%
Non-GAAP SG&A expenses	9.7	%	14.3	%

GAAP impairment losses	—	%	0.03	%
Impairment losses	—	%	(0.03)	%
Non-GAAP impairment losses	—	%	—	%

GAAP restructuring expenses	0.3	%	1.4	%
Restructuring charges	(0.3)	%	(1.4)	%
Non-GAAP restructuring expenses	—	%	—	%

GAAP income (loss) from operations	5.6	%	(27.3)	%
Total non-GAAP adjustments	20.0	%	43.7	%
Non-GAAP income from operations	25.6	%	16.4	%

GAAP loss on extinguishment of debt	(0.8)	%	—	%
Loss on extinguishment of debt	0.8	%	—	%
Non-GAAP loss on extinguishment of debt	—	%	—	%

GAAP and non-GAAP interest and other income (expense), net	(1.8)	%	(3.0)	%
Non-recurring interest and other income (expense), net	0.1	%	—	%
Non-GAAP interest and other income (expense), net	(1.7)	%	(3.0)	%

GAAP income (loss) before income taxes	3.0	%	(30.3)	%
Total non-GAAP adjustments	20.9	%	43.7	%
Non-GAAP income before income taxes	23.9	%	13.4	%

GAAP income tax provision (benefit)	0.9	%	(4.3)	%
Adjustment for non-cash tax benefits/expenses	0.6	%	5.1	%
Non-GAAP income tax provision	1.4	%	0.8	%

GAAP net income (loss)	2.1	%	(26.0)	%
Total non-GAAP adjustments before income taxes	20.9	%	43.7	%
Less: total tax adjustments	0.6	%	5.1	%
Non-GAAP net income	22.5	%	12.6	%

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