MaxLinear, Inc. (MXL) Q2 2012 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. And welcome to the MaxLinear Q2 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded, August 2, 2012. I would now like to turn the conference over to Nick Kormeluk with IR Sense. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss MaxLinear's Second Quarter 2012 Financial Results. Today's call is being hosted by Kishore Seendripu, CEO; and Adam Spice, CFO. During the course of this conference call, we will make projections or other statements regarding future conditions or events relating to our products and business. Among other statements concerning future events or projections, we will provide information relating to our current expectations for the third quarter 2012 revenue; estimated accruals relating to potential export control violations; our expectations concerning trends in our cable revenues; and our efforts to expand our addressable markets, gross profit percentage and operating expenses; our current views regarding trends in our markets, including the anticipated impact of new design wins and the size and potential for growth in our markets; and our competitive position in target markets. These statements are forward-looking statements within the meaning of federal securities laws, and actual results may differ materially from results reflected in these forward-looking statements. We are subject to substantial risks and uncertainties that could adversely affect our future results. Our business and future operating results could be adversely affected if our target markets, including the cable market, do not grow or if we are not successful in expanding our target addressable markets through the introduction of new products. In addition, substantial competition in our industry, potential declines in average selling prices, the cyclicality in the semiconductor industry, could adversely affect future operating results. The potential export control violations present risks of fines, penalties and other enforcement actions from applicable government entities. A more detailed discussion of these risk factors and other factors you should consider in evaluating MaxLinear and its prospects is included under the caption, Risk Factors, in our filings with the Securities and Exchange Commission, in particular, our most recently filed 10-K and our first quarter 10-Q, and our upcoming 10-Q for the second quarter of 2012. These forward-looking statements are made as of today, and MaxLinear does not currently intend and has no obligation to update or revise any forward-looking statements. The second quarter 2012 earnings release is available on the company website at maxlinear.com. In addition, MaxLinear reports gross profit, income or loss from operations and net income or loss and basic and diluted net income or loss per share in accordance with GAAP, and additionally on a non-GAAP basis. Our non-GAAP presentations exclude the effect of stock-based compensation expense and its related tax effect, estimated fines, penalties and professional fees related to export compliance matters, expenses related to our performance-based bonus plan, which, if achieved, will be settled in stock in 2013, and expenses related to our current patent litigation matter with Silicon Labs. Management believes that this non-GAAP information is useful because it can enhance the understanding of the company's ongoing economic performance. And MaxLinear, therefore, uses non-GAAP reporting internally to evaluate and manage the company's operations. MaxLinear has chosen to provide this information to investors and enable them to perform comparisons of operating results in a manner similar to how the company internally analyzes its operating results. A full reconciliation of the GAAP to non-GAAP financial data can be found in our earnings release issued earlier today and available on our website. We ask that you review it in conjunction with this call. And now, let me turn the call over to Kishore Seendripu, CEO of MaxLinear.

Thank you, Nick and good afternoon, everyone. Thank you all for joining us today. Before jumping into the financial highlights, I would like to note that in the second quarter of 2012, we sustained our momentum of strong product cycle growth in cable along with stabilization of our terrestrial revenues and a return of positive operating cash flow. Even more importantly, concurrent with the strong ramp of our third-generation cable solution, our fourth generation broadband RF platform, interesting [ph] Full-Spectrum reception for cable and satellite markets, has garnered significant momentum with key platform partners. We are now positioned to outpace our competition in cable, terrestrial and satellite markets with industry-leading product features, power consumption and RF performance. Despite challenging macro market dynamics for consumer terrestrial markets, we garnered a significant number of design wins for our market-leading hybrid TV tuner and tuner demodulator solutions. We are indeed excited about the investments we are making and our prospects in participating in large, synergistic new markets beyond cable and terrestrial. Now to the specifics. Net revenue in the second quarter was a record high for MaxLinear at $24.4 million, up 18% over the first quarter of 2012 and up 35% from the year-ago quarter, which exceeded the high end of our guidance. GAAP and non-GAAP gross profits in the fourth quarter were 62% of revenue, at the high-end of our prior guidance range of 60%, plus or minus 2%. GAAP net loss in the second quarter was $2.6 million or $0.08 per diluted share. Non-GAAP net income for the second quarter was $1.8 million or $0.05 per diluted share. I will now discuss current trends we are seeing in our business. Cable was once again the highlight of our business in the second quarter with cable revenues growing approximately 35% relative to the first quarter of 2012. In the second quarter of 2012, cable represented 66% of our total revenue. There were also significant beneficiaries of continued deployment DOCSIS 3.0 Voice & Data Gateways by large service providers. Our cable video solutions also grew strongly relative to the first quarter of 2012 in both high and low-end applications such as video server gateways and HD digital-to-analog converter set-top boxes. Following our March 2012 announcement of our fourth generation, Full-Spectrum cable -- Full-Spectrum Capture cable receiver products, we were also selected on the Intel Puma 6 DOCSIS 3.0 cable gateway reference design. Moving to the terrestrial market, despite very challenging macro market conditions for consumer terrestrial applications, revenue from terrestrial applications was slightly down by approximately 5% quarter-on-quarter. The majority of terrestrial softness came in -- came from in-cabin automotive, and to a lesser extent, television, with the remaining terrestrial applications being flat to slightly up. Macro softness in the terrestrial markets has not impeded our ability to garner strong design win momentum in hybrid television, and terrestrial set-top boxes that utilize our MxL600 family of super radio solution. We are both excited about and are confident in our target addressable market expanding terrestrial set-top SoC solutions, such our MxL683 tuner demodulator SOC that supports the ISDB-T digital TV standard deployed in large population regions consisting of Japan, South America, Indonesia and the Philippines. In conclusion, in the second quarter, we have delivered our third consecutive record quarterly revenue for the company, improved our gross margins and generated positive operating cash flow. We're on a path of strong design win momentum in both cable and terrestrial applications. We continue to bring industry-leading innovative solutions to the market and are outpacing our competition with new and superior product offerings. We are excited about both our near-term revenue growth opportunities and our TAM-expanding initiatives, which we are looking forward to discussing with you in the near future. Now let me turn the call over to Adam Spice, our Chief Financial Officer, for a review of the financials and our forward guidance.

Thank you, Kishore. I will first review our results and then briefly discuss our outlook. In summary, Q2 revenue was a record $24.4 million, as Kishore mentioned, above the high end of our guidance of $24 million. This represents sequential growth of 18% and 35% year-on-year. As Kishore noted, net revenue for the second quarter was driven by very strong sequential performance in cable, stabilizing revenues for terrestrial applications and strong design win momentum across a wide range of product areas. Now moving to the rest of the income statement. GAAP and non-GAAP gross profit for the second quarter were both approximately 62% of revenue, at the high-end of our prior guidance of 60%, plus or minus 2 percentage points versus 60% in the first quarter of 2011 and 63% in the year-ago quarter. The increased sequential gross margin is due not only to favorable mix changes, but also the great work by our supply chain and engineering teams to achieve meaningful cost reductions. Our Q2 GAAP operating expenses were $17.6 million, which includes $2.3 million of stock-based compensation, $1.5 million for an accrual related to our performance-based bonus plan for 2012, which if achieved, will be settled in stock and 2013, and $0.5 million of professional fees and potential penalties attributable to our ongoing export compliance matter and the patent litigation matter with Silicon Laboratories that was initiated in the quarter. Net of these items, OpEx was $13.3 million which is $1 million lower than the prior quarter and lower than our prior guidance of $14 million. Q2 GAAP OpEx included $11 million of R&D expenses which includes a stock-based compensation of $1.5 million and $1 million related to the accrual mentioned earlier, related to our performance-based equity bonus plan for the -- for 2012. The decline in R&D expenses quarter-over-quarter was due to certain engineering expenses pushing into the third quarter. The second quarter GAAP OpEx included $6.6 million of SG&A, which includes $0.8 million in stock-based compensation and the $0.5 million for professional fees and potential penalties attributable to our ongoing export compliance matter and patent litigation with Silicon Laboratories. At the end of the first quarter 2012, our headcount remained essentially flat versus the first quarter at 250. GAAP loss from operations was $2.5 million in Q2 compared to $6.5 million in the prior quarter, and GAAP loss from operations of $5.7 million in Q2 of last year. GAAP loss per share in the second quarter was $0.08 on a fully diluted shares outstanding of $34.5 million. GAAP loss per share includes $2.3 million in stock-based compensation expense, $1.5 million for an accrual related to our performance-based bonus plan for 2012, which, if achieved, will be settled in stock in 2013, and $0.5 million in professional fees and potential penalties attributable to our ongoing export compliance matter and the patent litigation with Silicon Laboratories. Net of these items, our non-GAAP earnings per share was $0.05. Moving to the balance sheet and cash flow statement, our cash, cash equivalents and investment balance was approximately $84.3 million at the end of the second quarter 2012 compared to $83.4 million in the prior quarter and $85.7 million at the end of 2011. Our cash generated in operations in the second quarter of 2012 was $1 million, approximately $2 million better than in the first quarter of 2012, and approximately $1.3 million better than the year-ago quarter. Accounts receivable totaled $15 million at the end of the second quarter compared to $11.1 million in the prior quarter. The day sales outstanding for the first quarter were approximately 56 days or 7 days higher than the previous quarter, and 42 days at the end of the year-ago quarter. The increase in DSOs was a function of customer mix as we move to more direct sales for cable customers, resulting in less favorable payment terms, as well as experiencing some slow paying by our customers in Asia. As a reminder, we only recognize revenue on a sell-through basis, so we are not subject to revenue fluctuations caused by changes in inventory distributor -- sorry, distributor inventory levels. Our in-house inventory at the end of the quarter was $8.5 million, up approximately $1.7 million compared to the $6.8 million in the previous quarter, and up approximately $0.5 million versus the $8.1 million at the end of 2011. Our inventory turns improved to 4.9 in the second quarter compared to 4.5 turns in the first quarter. Our increasing inventory levels, a result of electing to build inventory of new products ramping to support upside opportunities, primarily in cable and hybrid TV. That leads me to our guidance. We expect revenue in the third quarter 2012 to increase 10% to 15% sequentially to $27 million to $28 million. Built into this range, we expect our cable revenues to continue to increase on a quarter-over-quarter basis with the majority of the strength expected in DOCSIS 3.0 data and cable video server gateway applications on both an absolute and percentage of total revenue basis, accompanied by a general flatness across a range of our terrestrial operations. We expect GAAP and non-GAAP gross profit percentage to be approximately flat to down modestly at 61% in the third quarter. And our gross profit percentage forecast could vary somewhat depending on the mix and other factors. We continue to fund strategic development programs targeted to delivering top line growth, 2012 and beyond with a focus on increasing the operating leverage of the business. As such, we anticipate incremental tape-out related expenses and measured net headcount additions in the current quarter. We expect GAAP operating expenses to be flat relative to the prior quarter at $17.5 million, reflective of lower export compliance-related expenses and lower accrued payroll items, offset by higher run rate expenses related to the Silicon Laboratories patent litigation and some tape-out related NRE and peak CAD tools usage in the quarter. We expect Q3 2012 non-GAAP operating expenses will increase to $14 million, again, due to NRE and peak CAD tools usage, modest hiring in the quarter and the full effect of our annual merit increases implemented in the second quarter. In summary, we are pleased to report strong sequential revenue growth along with soft -- strong top line guidance, accompanied by stabilizing gross margins and an OpEx model that's delivering increasing operating leverage and positive cash flow. With that, I'd like to now open the call to questions. Operator?

[Operator Instructions] And our first question comes the line of Tore Svanber with Stifel, Nicolaus.

A few questions here. First of all, Kishore, you mentioned the reference design for your Full-Spectrum Capture product. I was just wondering when we should start to include that in our model. Is this something that could potentially generate revenues next year?

Tore, the Full-Spectrum Capture announcement, the reference designs were made in this quarter. We expect that there'll be some small revenues with initial first-to-market players at the -- in the first half of next year. But really speaking, a big way of the revenue contribution, we don't expect to start till the end of next year. We really look at the normal cycles in the cable market, that's about the kind of the gestation cycle before you start seeing some meaningful -- higher revenue with the launch of new products, about 15 months or so. So at this stage, the other good thing that's happening is that our third generation products have firmly established themselves as the best-in-class products. They have a lot of traction. And there's a lot of demand for them. So I think that, given the run rate we are seeing with the success of our third generation products, we believe that the fourth generation products would be a great successor but it would take a little bit longer to be adopted into the marketplace.

Sounds good. And then you're guiding your terrestrial business to be flat sequential next quarter, can you just talk a bit more about the moving parts there? I mean, I do you expect you -- you probably expect some growth in your TV business which probably offset to something else. So help us just understand the moving parts there for Q3.

So if you really look at terrestrial business, the growth components of the business are -- they originate in 2 pieces. One is the tuner products; the 600 super radio family, including the hybrid TV tuners. And the other one is the tuner demodulator for the ISDB-T market, which the ISDB-T -- digital TV standards is for the South American market and Japan. So on the first one, on the TV markets, the -- we've always talked about the product cycle growth in hybrid televisions really is for the 2013 revenues, so we would start seeing contribution in a more meaningful way in the fourth quarter -- starting in the fourth quarter of this year. I think we are on track to doing that. On the tuner demodulator SoC solution for the South American market and the Japanese market, be it for the satellite set-top boxes where they deploy terrestrial TV or for really multiple channel TV applications in the Japanese television market. Once again, you will start seeing those revenues being generated in the fourth quarter and really in the fully in the 2013 period. So I think they're all on -- right on track, no surprises there other than having some softness in the existing digital television deployments. But I think we feel pretty good where these moving parts are headed and the product cycle growth we hope to generate in 2013.

Very good. And a question for Adam. Adam, your inventories were up. Obviously, you're gearing up for some new product ramps. I'm just wondering what your expectations are for the third quarter? Will inventories be up again by a similar amount?

Well, yes, to your question -- I mean, obviously, we're gearing up to support the continued ramps of our hybrid TV tuner solutions plus our DOCSIS solutions. So we have seen a growth in that, although you probably noticed also in our commentary that our turns actually improved in the quarter. So we're seeing movement in the right direction there. And as far as the total amount of inventory in Q3, and I think it's probably reasonable to expect that you'll see some step up in that inventory level. It's not going to be -- I wouldn't call the kind of the -- actually a real significant move. But it's going to move up a bit. It's consistent with growth in revenue, and again, trying to support these -- get in front of the ramps of these products because the last thing we want to do, obviously, is to constrain our customers on the strategic programs as they ramp in their early phases. I still feel very comfortable, Tore, that we're not in a position to expose ourselves to any inventory risk in any material way because, again, what we're building is stuff that's in the early phases of pretty strong ramps.

And the other minor detail is that we are moving more and more to direct sales, so we have to prepare inventory for that as well.

Our next question comes from the line of Quinn Bolton with Needham & Company.

Just kind of talking about the mix, following on Tore's question. It looks like cable is up to 66% of sales now and probably going higher in the third quarter. Do you see what the strength of the hybrid TV tuners and the ISDB-T starting to kick in, in more meaningful volumes next year? Do you see that mix stabilizing and perhaps coming back a little bit to terrestrial by the end of 2013? Or do you think cable is on such a growth spurt that it's going to stay close to 2/3, 75% of the revenue over the next year or so?

I think you're absolutely right in the sense that we expect the mix to be going back to more towards the terrestrial a little bit and non-cable, all assuring [ph] the 65% that you see today as we look into 2013. Because the -- really the terrestrial growth has been waiting to exhale, so to speak, with the new product cycles in television. And as you know, the TV cycles start in the fourth quarter, and that's a big start of ramps, with the new designs and that will go into 2013. So yes, the mix should start shifting towards terrestrial and not get skewed overly with cable. So we feel pretty good about that.

Okay. Second question just I don't want to slab suit [ph] I don't know if there's much you can say. But to the extent, can you make any comments about, it seems like this is maybe more for single tuner products rather than your third and fourth generation products, so it sounds like it might impact more some of the terrestrial rather than cable applications. But wondering if you can confirm that. And then second, do you anticipate meaningful step up in legal expenses as that suit plays through the process?

Okay. I'll let Adam answer that and -- but let me address the whole -- the IP litigation front with Silicon Labs. First and foremost, MaxLinear is a pioneer in the CMOS tuner world broadband RF receivers. We absolutely are strong believers in protecting our intellectual property and our enormous investments in R&D. So we feel that we have to -- in order to protect these investments, we have to take a position that is reflecting of our belief in strong intellectual property rights. And with regards to which products it affects, I think that I'm not in a position to comment on that. However, our customers, and we feel pretty confident on our own intellectual property position. And you should look forward to press releases from MaxLinear as we move forward as to where MaxLinear's approach to this topic is. With regards to the litigation expenses, I think Adam can provide a little bit more clarity on that.

Yes. So, Quinn, I -- we discussed that there's about $0.5 million in the quarter that was reflective of both the export compliance matter and the Silicon Labs litigation. We're not going to break out within that line item the details there, but I think it's safe to say that the IP litigation-related expense was not a majority of that. Will it be increasing? I think a lot of that -- it depends on how the case progresses. I think that we're very early in the process. If the process continues as these things typically do, it can takes some time, or they can resolve themselves fairly quickly. So I think it's kind of hard to put too much of our forecast out there. But I would say that within the current quarter, I think we're going to have a step up in those expenses. And I think that they won't step up, though, to the extent that I think it'll exceed the bucket that we already had this quarter that -- because I think you'll see an offsetting decline on the export compliance matter. So net-net, the size of that bucket is not going to change, I don't think, in the current quarter. So that's the view as I have it today.

And Adam, it sounds like you're going to pro forma that out of the non-GAAP numbers at least for the near future?

Correct.

Okay. Lastly, you guys talked about the good COGS reduction in this -- the June quarter. Wondering I think sort of earlier this year, you guys saw a pretty heavy mix still on the older 130-nanometer generation, and we're sort of anticipating higher volumes on the 65-nanometer. It looks like maybe you're starting to see that shift over and the positive benefit on margins. But can you let us know where you are in that shift from 130 to 65? And is that potentially a tailwind for margins as you kind of come into the second half?

So, Quinn, I think that the largest benefits we've gotten is just in operations team working the supply chain and focusing on improving test times and things like that. Just a very focused effort on improving the COGS. Obviously, we're also benefiting from transitioning -- from the transition that's going on from .13 to more advanced technology nodes that we have invested in the depreciating periods. With regards to where we are, I think that I don't want to comment about tailwinds and things like that in the gross margin because it's such a huge dependency on competitive factors that -- and also our own intentions of growing revenues and how we want to use our cost excellence to gain greater market share. So I would think that we still stick to our story about this being low 60s sort of gross margin -- gross margin landscape here. And to the extent that we have guided to 61%, we feel -- we'll land about somewhere there if things proceed normally as we see in this quarter.

Yes, and I think, Quinn, just to add a little bit onto that, I think that it's fair to say that when you look at the transition from the 130-nanometer to 65, that the growth areas for the company, which are the DOCSIS 3, 8-channel solutions plus our hybrid TV, those are 65-nanometer solutions, so as that -- those portions of our business continue to gain momentum, that's going to shift the mix towards 65. And then, as Kishore mentioned earlier to one of Tore's questions, you'll start to see a little bit of 40-nanometer volumes kind of work its way to the model next year, which we're actually pretty excited about the cost reductions that are going to come from moving to that technology node. So I think the momentum is on the right direction as far as supply chain and node shifts.

Our next question comes the line of Anil Doradla with William Blair.

A couple of questions. I think I heard you guys saying that media servers are going to be up in Q3. Quick question, is this happening sooner than your expectations? And I have a couple of follow-ups.

I don't think it's happening sooner than we were expecting.

At least from a material point of view.

From a material point of view, we have been talking about video part of our cable revenues. In fact, last quarter, we had video and the DOCSIS being pretty much equal in balance. And this quarter again, we saw a strong growth in our video. It's just that the DOCSIS, voice and data grow even stronger. So I think this is all in the line of the expectation now that the throughput run rate on these cable operator deployments are showing promise on the video side. In fact, if you look at the earnings report from Comcast yesterday or the day before yesterday, they have announced deployments of the media server gateways. There's a big momentum push on their side in the Atlanta area, they did some trial work in New York. So I think it's all in the plan. It's not much earlier. It's on course, I would say.

And the linearity in bookings. I know last quarter, you said you're pretty much fully booked going to the quarter. Clearly, the guidance is pretty solid. But can you talk about a little bit about the linearity and how that trends?

Yes. So we were relatively linear in Q2. And going into Q3, our bookings were -- for Q3, almost exactly where they were for Q2. So we're seeing a lot of stability in kind of the order pattering -- order patterns. I think that's driven quite a bit by the fact that as we skew more to cable, you're dealing with more direct versus just the -- you're dealing with larger customers who are kind of give you a little more lead time, a little more predictability. So we feel very comfortable where we are. We entered the quarter over 80% booked relative to the midpoint of our guidance.

And finally, I mean, the consumer segment tends to be pretty finicky depending upon the macro situation. Do you see any sub portions of your consumer business that maybe -- that don't align well with your long-term strategy? I mean, we see the mobile business actually fall off and you dropped it off. But are there any other parts of your consumer business that, from a strategic point of view, are not as exciting as maybe other parts are?

I think not at this point. If you really look at our full technology, fourth generation broadband receiver technology, the terrestrial part of our business, as it stands today, is a very interesting one. It has some factors that need to play out where higher convergence platforms it needs to evolve into. So right now at this stage, we don't see anything in the subcomponents that we are not interested in, primarily because of the platforms these products go into, they have a larger potential.

Right. And finally, your insider selling, you're -- some of the VCs we've had, some of those headwinds in the past. Any commentary on that front? Is that still going on or do you think some of those pressures are abating?

Well, we've seen, as you mentioned, we've seen quite a bit of VC selling in 2012. I think as you can appreciate, it's very difficult to try to predict what VC's needs and interests are as far as funding under investments and getting liquidity. So it's hard -- it is very hard to say, Anil. I wish I could -- I wish I had a crystal ball, I could read into it, but I really can't. All I can say is, one would expect that we've -- some of that pressure has kind of been vented with sales I would think that have taken place earlier this year. And I hope that's the case going forward because, as you mentioned, it's been a pretty significant overhang.

[Operator Instructions] And our next question comes from the line of Ross Seymore with Deutsche Bank.

This is Bobby Gujavarty for Ross. Hey, guys, just thinking longer term about the gross margins, would -- what would you say the bigger driver longer term would -- in 2013? Would it be the cost reduction side? Or is it more product mix?

I think you asked 2 questions and then one question. One, you referred to .13 cost relations then you talk of product mix. .13 is a trailing node technology node for us. I think .13 will become less of a factor, and you're already seeing the benefits of that. So if you assume that the benefits of that are already baked into the guidance we're giving you, then really what would drive is product mix. And the product mix will, again, be driven by new product cycles and the gross margins associated with them. So to the extent we are investing in more and more complex RF mixed-signal broadband platforms, that will be the major driver for gross margin if you look ahead a few years out. So I don't think the technology node itself per se will be the biggest determining factor for the whole MaxLinear's gross margins will look like. It's the kind of products we're going to be working on, and we are working on today.

Got it. And is there kind of some kind of life cycle in terms of the margin profile? Will the new products tend to start out of high-cost and then there's a sweet spot and then they tail off? Could you talk about maybe the life cycle -- the margin profile life cycle of your products?

Yes, it's kind of hard to talk about, really, because the volume is a big determinant and also which products kind of track leverage off existing diesel prices on different technology nodes. And given the young cycle we are in as a company, it's difficult to talk because of also changing technology nodes pretty rapidly right now. So, but -- it safe to say one thing, though, like you're seeing. The longer you stay in a particular technology node, let's assume, you have already deployed the first product inside that and if you start measuring it for the second product, you will see that maybe the first 6 to 9 months, where the volumes are little bit more anemic, you don't get the margin benefits of test cost production and such because you don't focus on that immediately. Then we get the bigger benefits in the -- after the 9 month after the product is launched. And then it stays pretty stable for 12 to 18 months of the product and the margin profile for that particular product. So you can think of 9 months where the margins are lower, then another 12 to 18 months where the margins are -- where we expect them to be. And then hopefully we already replaced that product complete with a new product, right? And you've not been, as a company, in that particular cycle yet as the talebearer of it because we can add 9 months plus 18, 27 months. And if you look at the post IPO and even a little bit present IPO, we are still younger than that. So I would say that the 9 months, 18 months and maybe after that, things get bad like to they did with 0.13.

Thank you. And I'm showing no further questions in the queue at this time. I'd like to turn the conference back to management for any final remarks.

Well, thank you very much, everyone. As we have just talked about, we delivered our record third consecutive quarter. And we are guiding to enter the record quarter. Looking forward, I'm very pleased with the progress we're making, both on our company -- revenues and the disciplined investments we're making on the future roadmap. So before signing off, as a reminder, I would also like to say that we'll be participating in the Morgan Stanley Semiconductor & Semi-Cap Equipment Corporate Access Day in Chicago on August 22, as well as the Deutsche Bank Access 2012 Technology Conference in Las Vegas on September 11. And we hope to see many of you there. Thank you very much.

Thank you. Ladies and gentlemen, this concludes the MaxLinear Q2 Earnings Conference Call. Thank you for your participation. You may now disconnect.