Greetings, welcome to the MaxLinear 2019 first quarter conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Nugent, Head of Investor Relations. Thank you, Mr. Nugent. You may begin.
Thank you, operator. Good afternoon, everyone, thank you for joining us on today's conference call to discuss MaxLinear's first quarter 2019 financial results. Today's call is being hosted by Dr. Kishore Seendripu, CEO, and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer. After our prepared comments, we will take questions. Our comments today include forward-looking statements within the meaning of federal applicable securities laws, including statements relating to our second quarter 2019 revenue, gross margin, operating expense, tax expense, tax rate, and interest and other expense guidance, as well as statements relating to trends, opportunities, and uncertainties in various product and geographic markets, including, without limitation, statements concerning growth opportunities for our wireless infrastructure and connectivity markets and improved revenues in our broadband markets.
These forward-looking statements involve substantial risks and uncertainties, including risks arising from competition, our dependence on a limited number of customers, average selling price trends, risks that our markets and growth opportunities may not develop as we currently expect, that our assumptions concerning these opportunities may prove incorrect, numerous other risks outlined in the risk factors section of our recent SEC filings, including our previously filed Form 10-K for the year ended December 31st, 2018, and our Form 10-Q for the quarter ended March 31st, 2019, which was filed today. Any forward-looking statements are made as of today, MaxLinear has no obligation to update or revise any forward-looking statements. The first quarter 2019 earnings release is available in the investor relations section of our website at maxlinear.com.
In addition, we report certain historical financial metrics, including net revenues, gross margins, operating expenses, income or loss from operations, income taxes, net income or loss, and net income or loss per share on both GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations in the press release available on our website. We do not provide a reconciliation of non-GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future charges, including stock-based compensation and its associated tax effects. Non-GAAP financial measures discussed today do not replace the presentation of MaxLinear GAAP financial results. We're providing this information to enable investors to perform more meaningful comparisons of our operating results in a manner similar to management's analysis of our business.
Lastly, this call is also being webcast, and a replay will be available on our website for two weeks. Now, let me turn the call over to Kishore Seendripu, Chief Executive Officer of MaxLinear.
Thank you, Brian. Good afternoon, everyone. Thank you all for joining us today. Our Q1 2019 revenue was $84.6 million, consistent with our guidance and expectations of modest improvement in our Connected Home business, a seasonal slowdown in infrastructure, and a macro-driven overall industry weakness in industrial and multi-market. End market revenue breakout was infrastructure at 26%, industrial and multi-market at 23%, and Connected Home at 51% of overall revenues. We had strong operating cash flows of approximately $16 million, driven primarily by gross margin improvements in our high-performance analog business and lowering of overall operating expenses. More importantly, we continue to execute solidly on our core 5G wireless optical data center interconnect and power management initiatives comprising our high-growth infrastructure revenues.
Weakness in our Connected Home market is owed to technology transition challenges at our end OEM customers, the impact of U.S. government import tariffs on our customer manufacturing supply chains, and general market softness due to cable data operator spend. We are excited about the potential leverage in our business model enabled by the combination of improvements in our operating cost structure and continuing strong execution on our 5G wireless and optical data center network infrastructure growth initiatives. Moving on to some of the more exciting product and technology highlights in the large and attractive networking infrastructure markets. In the 5G wireless market, we have strong network equipment customer design interaction following the launch of our 40-nanometer CMOS wireless massive MIMO RF transceiver system on chip solution at Mobile World Congress in February.
In Q1, we started high volume shipments of our 10 ampere power modules to a tier 1 5G wireless OEM's remote radio unit platform. Our industry-leading 5G radio frequency transceiver product delivers the highest performance and widest bandwidth, along with superior system-level integration and flexibility at 50% lower power consumption than competitor solutions. We are gaining strong customer traction by enabling base station designers to accelerate the development of 5G massive MIMO radios. We're increasingly confident of being a major player in the 5G wireless access infrastructure rollouts slated for 2020. 4G, 5G wireless backhaul, adoption of our wireless backhaul RF transceiver is accelerating across our lead millimeter and microwave modem customers. It will drive new revenue streams in the second half of 2019. Our RF solution uniquely supports channel aggregation, which doubles data capacity in existing wireless transport spectrum.
As a result, we have strong operator and OEM engagements for current 4G and future 5G deployments. With the anticipated seasonal recovery in wireless backhaul modem shipments in Q2, our wireless backhaul business remains on track for strong double-digit growth in 2019. Moving to the fiber data center interconnect market, we have secured multiple customer design wins for our inside the data center 400 Gb PAM4 system on chip system solution. Several of these engagements were on display at the Optical Fiber Communication Conference in March. We also achieved an important milestone in Q1 with the commencement of pilot production shipments of our PAM4 SoC. A strong product portfolio, coupled with the ongoing robust optical module vendor partnerships, enables us to be a major supplier in the 400 Gb hyperscale data center upgrade cycle, starting in the latter half of this year.
In power management, we recently released a dual 13 ampere power module to production, which is our highest power solution thus far. It is currently being designed into multiple tier 1 telecom optical fiber module solutions. We see strong traction for our high-power modules and our high-power roadmap across entire enterprise server, 5G wireless remote radio units, and industrial markets. Overall, we are really excited that our focus and execution is bringing us closer to realizing high-growth production revenues in the large and transforming 5G wireless access and the high-speed optical data center interconnect infrastructure markets. In the Connected Home market, while we wait for return to strength in cable data, we have several large design partnerships in advanced stages of deploying our next generation MoCA and G.hn multi- gigabit wired connectivity technologies into telco operator and industrial IoT applications.
This should lead to improvement in our connectivity business throughout the year. On the G.hn power line connectivity front, our enhanced Wave 2 software rollout is accelerating the displacement of legacy power line HomePlug-based solutions and also enabling new industrial IoT applications. We hope to provide further details on these engagements in the next couple of quarters. With that, let me turn the call over to Mr. Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer, for a review of the Q1 business results and our forward guidance.
Thank you, Kishore. I will first review our Q1 2019 results and then further discuss our outlook for Q2 2019. On revenue of $84.6 million, we saw Connected Home increase 1%, driven by double-digit improvement in both our cable revenues and an uptick in both satellite and G.hn demand, offset by the expected declines in our tuner and MoCA categories. Our infrastructure business was down 3% sequentially due to a pause at one of our large backhaul customers, but our optical interconnect and HPA categories were up solidly quarter-over-quarter. On the industrial multi-market side, sales were down 12% sequentially due to macro pressure across our distributor channel with some influence from continued trade tensions, consistent with the commentary from several of our analog peers in this space. GAAP and non-GAAP gross margins for the fourth quarter were approximately 53.3% and 63.5% of revenue, respectively.
This compares to GAAP gross margin guidance of 52.5%-53.5% and non-GAAP gross margin guidance of 63%-64%. The delta between GAAP and non-GAAP gross margins in the first quarter reflects the amortization of $8.4 million of purchased intangible assets from previous acquisitions and $0.2 million of stock-based compensation and stock-based bonus accruals. First quarter GAAP operating expenses were approximately $52.9 million, which is below our GAAP guidance of $56.0 million-$56.5 million due to lower than expected restructuring costs related to our cost reduction initiatives. GAAP operating expenses included amortization of purchased intangible assets of $5.8 million, stock-based compensation and accruals related to stock-based bonus plan of $7.6 million and $1.9 million, respectively, and $1.9 million in restructuring. Non-GAAP operating expenses were $35.7 million, which was down $1 million sequentially and below our non-GAAP guidance of $36 million-$36.5 million due to disciplined expense management.
We've continued to diligently work on moderating the spend during this transitional period with good success. We achieved a quarter-over-quarter decline despite a seasonal step-up in payroll taxes, and we expect our quarterly spend to continue to come down through this year as we tighten the spend and larger development efforts slow in the second half of the year. Moving to the balance sheet and cash flow statement. Our cash flow generated from operating activities in the first quarter of 2019 was approximately $16 million versus $24.2 million generated in the fourth quarter of 2019. We made $15 million in debt prepayments during the quarter toward our term loan as we continue to focus on debt paydown with our cash generation. In addition, we recently made another $15 million debt prepayment during Q2.
This brings the total debt prepayments to $193 million and our loan balance down to $232 million. Our day sales outstanding for the first quarter was approximately 64 days, which was slightly above the prior quarter day sales outstanding of 62 days. Our inventory turns decreased slightly to 3.7, compared to 4.0 in the fourth quarter. That leads me to our guidance. We currently expect revenue in the second quarter of 2019 to be approximately $83 million-$88 million, up 1% sequentially at the midpoint of the guidance range. We expect Connected Home revenues to be down mid-single digits sequentially, with improvements in connectivity revenues offset by declines in cable data shipments owing to continued end market weakness and choppiness in the DOCSIS 3.0 to 3.1 transition.
Within Industrial and Multi-Market, we have seen improvements in our distributor sell-through patterns and expect sequential improvements from a couple of key accounts, yielding expected double-digit revenue growth. We expect low double-digit infrastructure growth, primarily driven by a resumption in wireless backhaul demand and incremental share gains. We expect second quarter GAAP gross profit margin to be approximately 53%-54% of revenue, and non-GAAP gross profit margin to be approximately 63.5%-64.5% of revenue, up sequentially due to improved mix. As a reminder, our gross profit margin percentage forecast could vary ±2%, depending on product mix and other factors.
Even as we are focused on reducing our run rate spend levels, we continue to fund strategic development programs targeted at delivering strong top-line growth in 2019 and beyond, with particular focus on infrastructure initiatives and our stated goal of increasing the operating leverage in the business. As such, we expect Q2 2019 GAAP operating expenses to decrease approximately $3.7 million quarter-on-quarter to a range of $49 million-$49.5 million, driven by reductions in restructuring, mask, and payroll-related expenses. We expect Q2 2019 non-GAAP operating expenses to be down approximately $2.5 million to a range of $33 million-$33.5 million. We expect GAAP tax expense to be approximately $0.5 million and a non-GAAP tax rate of 7%. We expect interest and other expenses in the quarter to be $3 million-$3.1 million.
In closing, we are pleased to report progress in our infrastructure initiatives, highlighted by our expanding design engagements in 400G data center markets, engineering milestones in our 5G massive MIMO transceiver platform, and expansion of our infrastructure power management portfolio. As we navigate through a transitional period of demand weakness in Connected Home environment, we will continue to maintain strong profitability and cash flow generation while maintaining our pace of strategic investments. These infrastructure investments and strong execution, combined with an upcoming upgrade cycle in the data center and wireless markets, position us well to deliver strong leverage in our business as many of the new product initiatives start to generate revenue in the second half of 2019 and into 2020. With that, I'd like to open up the call for questions. Operator?
Thank you. We will now be conducting a question and answer session. If you'd like to ask your question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Quinn Bolton with Needham & Company. Please proceed with your question.
Hey, guys. A few questions. First, congrats on the nice OpEx reductions. Looking forward to year-end, are you still targeting something in the sort of $32 million-$33 million range, Steve? Or do you think it can get even lower than that?
I guess maybe I don't want to go into that level of specificity. I think, look, we've had some good progress. You can see from our guidance that we're looking forward to a nice decline in Q2. Q3, we've got some one-off things. We've got some legal expenses that may fall into that one, so we don't see an exact linear decline. I think for the year, we're on track to see a nice improvement.
Okay, great. Sort of on the product front, did I hear you guys in the script talk about a PA product for wireless infrastructure?
Hi, Quinn, this is Kishore. That's not a PA product. It's a high-power module. There's a tier 1 OEM customer for wireless, the 5G wireless deployment that are being rolled out right now. We have a design win towards which we are shipping. High volume shipment started for these 10 ampere power modules. They use multiple 10 ampere power modules in each remote radio unit. This sort of validates our thesis that coupling our radio transceivers with the power management devices over the long term is a huge winning proposition for us, that at this point, our shipments in 5G is primarily a power module. Our hope and expectation is that over the course of the roadmap evolution in our 5G product portfolio, we will expand our BOM footprint to include as much of the analog mixed signal content as possible.
Got it. Okay, so that's power module from the sort of Exar acquisition. Moving to the cellular transceiver outlook, can you give us sort of an update on just your transceiver and the design efforts? It looks like at least a couple of your, the big base station OEMs may be undergoing changes in their sort of ASIC design groups or ASIC partnerships. Obviously, your cellular transceiver, I would think, would marry up pretty close with some of those ASICs. To the extent those ASICs are changing. How does that impact the outlook for your business? Do you think you can still ramp that product for second half of 2020?
Quinn, a very good question. The real landscape on 5G, the initial deployments, people you hear in earnings calls and so on for the companies, it's primarily FPGA-based designs. They're very cost ineffective. Many of these cellular operators now are doing their own custom digital ASIC product, and some semi-custom product platform for the real 5G rollout that is expected to happen in 2020, latter part of 2020. And really our chip has been designed to meet these new generation of chips that are coming from the major vendors. We feel we're in a very good position. The timing is excellent, and really having the best product in the market, the smallest technology node in 14 nanometer CMOS compared to anybody out there, and the levels of integration, we are actually feeling very gung ho about our positioning in the 5G wireless space right now.
I think if anything, it really, the momentum comes in our direction with the way our chip has been designed and, to ideally mate with the OEM's own DFE ASICs, if you will.
Got it. Great. Thank you.
Our next question comes from the line of Christopher Rolland with Susquehanna International. Please proceed with your question.
Hey, guys. Thanks for the question. Between call it PAM4, the cable fiber node, some of these 5G products, including power management, the transceiver, the backhaul, which are you most excited about here, and what do you think is going to have the most revenue, call it, three years from now?
Chris, this is Kishore. Obviously, I have to be excited by what's generating revenues today, right? It's growing very strongly with the wireless backhaul nodes, both millimeter wave and microwave, paired with our RF transceiver. That's a full system solution. We are the only vendor in the world that has everything on the platform, right? I'm really excited about that, and I think we are in what I call the pole position to evolve that market in the way it needs to evolve for several years to come. That's a very exciting strategic positioning for us. Of course, we've got to couple now power management onto that platform.
Obviously, I would be disingenuous if I didn't say that 5G is really the most exciting market out there, we look three years out from now, because on the competitive landscape, we are in a very strong position, and it's really a very high performance market where your technology has to be brought in full force. I'm very excited because the TAM is incredibly large, very concentrated OEM customer base, and also the competitive landscape is very thinned down, right? It's very good for us. We are the premier CMOS mixed signal player on the transceiver technology in the competitive landscape. You already heard about our power management on that. There's more power that's going to be on those active antenna systems than ever they evolved, that's a huge multiplier as well.
If you come to the optical data center space, I think the competitive landscape is thinning down, but the deployment rate of takeoff is nowhere going to be as spontaneous as it's going to be in wireless when it happens. I would say the next most exciting market is optical fiber data center interconnect market. Having said that, I do want to point out that we got great design interaction with the various optical module vendors that are all competing for a position at a major hyperscale data center customer who is doing interoperability test and initial interoperability test between the various module vendors in plan for a rollout at the end of this year. I think those tests are going incredibly well. When I spoke of pilot shipments, obviously it's your module vendor.
Until that gets a green signal from the hyperscale data center, we don't expect massive production ramps yet. However, we feel that towards the end of the year, that should start happening. I think they're all exciting. For me, the bigger excitement is that power management coupled with all these platforms is going to be a TAM or SAM expansion that is much bigger than what we had thought originally. Takes time, but it nevertheless panning out pretty nicely.
Great. That's on the power management win, but maybe you can talk about engagements for your transceiver products and some of your other 5G products with the major OEMs. Out of the five large guys, do you have any confirmed wins for products outside of power management? Or how would you say kind of that design process is going with them? Are you close? Do you think you're ultimately going to nail one or two before the end of the year? And how does that ramp? Thanks.
I don't have the five large OEM guys. I would say four would be a generous statement, but let's assume four of the top four players. The fifth one gets a little bit more attention because they're early in a very small geography. I would say there are four top players, and we got strong engagements with all of them. And obviously, MaxLinear's R&D development philosophy is absolutely predicated on never starting something as intensive in technology investments without at least two lead customers signed up to be in a joint development with us. I think that would answer your question, are we going to get nailed two of those, right? But the market is so thinned down in supplier bases who can offer the kind of technology that this one requires. That we're getting natural traction with the remaining two as well.
I feel that the timing of each one is absolutely different based on the platform's timings, but I think we should have all of them. When I say that, it's very rare for me to get ahead of myself, but I think we're feeling very good about where we are.
Thanks so much, Kishore.
Our next question comes from the line of Tore Svanberg from Stifel. Please proceed with your question.
Yeah, thank you. Let me start with Connected Home. It seemed that business was sort of steadily recovering from a low, and now it seems like maybe it's going to revert back a little bit. Can you just update us on what's going on and especially when thinking about some of these supply challenges that some of your customers have?
Tore, that's a very good point. I think right now is sort of a place where there's some fluctuation noise around the lows we talked about in the previous quarter. We are actually waiting for return for strength. The primary source of this weakness is really a reordering of the supply chain manufacturing process within a large end customer of ours. Right? There's also macro weakness because a lot of these operators, whether it's Liberty Global or Comcast, they've acquired new assets, they spent a lot of cash, and at the same time some of them are baking up their assets like Liberty Global. That's also created some weakness and softness in their spend patterns. All in all, I think it's a weak environment in terms of what we are seeing.
We do expect return of strength as we head into the second half of this year. Nothing has changed in the narrative there other than the fact that we thought this quarter would be a little bit stronger than it is. It's exactly the same reasons that we've given before. Nothing has changed on that.
Very good. On infrastructure, I think in the past you talked about growing that segment 20% this year. Given what's happening both on wireless as well as on data center, are you still on track for growing 20%?
I think we are on track, we should pick up more speed, is how I look at it with the factors that you mentioned, right? The wireless and the optical data center. They're yet to happen really on the RF transceiver for 5G wireless access, the designing process and the ramps of optical data center is much closer, the 400 Gb. I think in the next 12 months, that should accelerate in terms of the growth beyond the double-digit, sort of low double-digit rates that we assume right now.
Very good. Just one last question on power. To me, that's kind of the surprise of today's call. How extensive is this attached businesses going to be for you? I mean, is this something that could be quite material already in 2020, or will it kind of start slow and then kind of just grow more steady from there?
Let me explain what's happening. We have launched a lot of power products, which we don't speak about in the earnings call as much, because the categorization of our products is along the end markets, right? Infrastructure, Connected Home, industrial, multi-market. A lot of the story is lost in the way we describe our earnings in our earnings call. Having said that, we launched a number of power products, and there's a major roadmap that has been developed both for the wireless market as well as the server market. Those products will be announced by the end of the year. That will set a new benchmark in integration and telemetry and also efficiency. It's totally radically transforming.
We feel that the attached program for the new products that will happen, that are designing with the main chips, will be a little slow in the beginning, but that they'll pick up speed, steam in the next 18 months or so. Having said that, actually our power products portfolio and revenue has actually been growing quite steadily ever since last 12 months or so. We expect that to accelerate quite a bit on a standalone basis over the next 12 months.
Very good. Thank you very much.
Our next question comes from the line of Bill Peterson with JPMorgan. Please proceed with your question.
Yeah. I want to come back to Connected Home. Thanks for letting me ask a question. I guess with your largest customer now being acquired, and you talked in the prepared remarks in the press release about the tariff related items. When should we think, I guess first of all, the tariff related supply chain issues should be resolved? Is that maybe a second half thing? Your confidence in that, and just wondering, it's early on, do you have any engagements with the customer? Anything changed since the acquisition?
Obviously it's our largest customer, at least looking last trailing 12 months. We are constantly engaged with them. We have two senior sales directors spending full-time job working with them. We get a lot of customer input. The acquisition is now complete. Having said that, they're still resolving their manufacturing supply chain locations. It should recover based on that. The ordering patterns should also return to some more normalcy. There's more dynamics than just the manufacturing related issues, right? The manufacturing issues are a consequence of the tariff uncertainty, right, due to regulations. However, there's also weakness beyond that operators are not ordering as much as well. For us right now, it is this uncertainty in the ordering patterns of our largest customers is where we are seeing weakness. We expect it to return to some strength in the second half of 2019.
Those are two different issues, current issues are related to our biggest customer.
Okay, thanks for that color. Coming to the optical business, you announced a few, I guess, design wins and traction in that space. I wonder if you could speak to the depth and breadth of your design wins and your pipeline as we look to the back of the year. I guess first off, are you still on track for single-digit millions this year? Then, I guess, can you level set us on where you now see the market opportunity this year, but more importantly, the market opportunity for next year?
Obviously, we are on track on our design win and designing activities, but the rollout that will happen with our mass ramp on these hyperscale data center is going slower than what they had earlier anticipated. We think we have forecasted this correctly in the expectation of the timing. We are still not worried about it. Put it differently, our forecasting process and the single-digit millions of revenues you talked to, I think that should happen. It's in the ballpark. Nothing has changed on that story. I would like to answer your depth and breadth of the portfolio. This is our first entry into the data center market. Clearly, on the breadth basis, we won't have the 100G NRZ and the 200G PAM4. We are directly entering the market at the 400G PAM4.
It's our first entry in the market, and our engineering team should feel really proud that they have executed from a zero position into this market to be one of the leading players here, if not the top one, top two for sure. The depth of the portfolio is really indicated with the fact that we are the only one with the full system solution offering of the 400G PAM4 DSP SoC with integrated laser drivers, the only silicon integrated laser drivers with the 400G PAM4 SoC, plus a quad TIA system solution. We're the only one. We also have a 100G PAM4 offering for the breakout version and for other pure 100G PAM4 single lane fiber solution. That completely fulfills the portfolio you need to play in the 400G PAM4 space, 100 Gb single lane fiber space.
Obviously, there's a next generation of product that will be in a newer technology node that is going to support 800G solutions, and we're well positioned to be a significant player in that too. Obviously, we are in this market to win and succeed and be present in the long term in the enterprise space in a larger way. I think those two are very well secure. Regarding the revenues that you talked about for the next year, what does it look like? I think it comes in a layered manner. There's these big hyperscale data center customers. Towards the second half of next year, there'll be one more that'll come online. From then onwards, it spreads to the rest of them.
Obviously, while that happens, then you'll have 800G PAM4 sampling in the marketplace and at the end of next year, and there's going to be more dynamics there. All in all, it's all going very well, a little bit slower than what would constitute an upside. On a baseline basis, we're in good shape.
Okay, thanks for that. Maybe one more. I guess wireless backhaul has been kind of the near-term driver, a lot of this 4G. I guess if we think about 5G when you have the full suite of modems, transceivers, what would you say the like-to-like content uplift is for your backhaul business?
Look, you want to think about the 4G and 5G differences in two ways. One is that 5G is about data capacity increasing multiple-fold, at the same time, the frequency space moving to much higher frequencies, right? We have the millimeter wave modem that will probably the mix will change from microwave to millimeter wave modems. You'll have the enhancement that comes with the radio transceivers. I think that the content itself, the ASP should increase maybe as much as 50%-60% in the content BOM dollars that we can accumulate once the market moves over to 5G. Obviously, we also will have to do new products that enhance the offering that we have. That all goes in play.
In general, I would expect the market, the SAM for us, because of ASP primarily, to approximately double in dollar content for us.
Okay, great. Thanks for that color. Appreciate it.
Our next question comes from the line of Alessandra Vecchi with William Blair. Please proceed with your question.
Hi, guys. Thanks for the question. Just on the gross margin front, obviously Q2 gross margins are coming in a little bit better than I think we analysts had modeled. On the last earnings call, you sort of talked about as some of the higher gross margin infrastructure products start to ramp up, that we should expect sequential increases in the back half. Given sort of the mix on the cable data and infrastructure view today, do you still think margins can go up in the back half? Or how do we think about the long-term gross margin target from here?
Hey, Alex, it's Steve. I think you're right. This is definitely a little bit ahead of our plan for Q2, I think, especially given the mix, right? With Connected Home coming down slightly in Q2, we were able to work pretty hard. A lot of this reflects on the work that we've done on the HPA side, as well as reducing the cost structure. There is some mix even within that HPA business, so comes through strong in Q2. I think we're still ahead of plan for the back half of the year. I think it picks up really heavily in Q4. Q3, I think, hard to tell right now. I still think we've got to work through a couple of quarters of the Connected Home business. That is reflective of the mix.
I think we're very much on track to see this gross margin continue to move higher throughout 2019 and into 2020 as well.
Actually one more. On the debt repayment side, similar, are you targeting $80 million for the year-
So-
on a total basis?
Yeah. We had talked about that $80 million. We said that. It is a little back-end loaded. Just given the revenue fed. We continue to get the leverage down, we've been pleased with the cash performance. Even in Q1, on the lowered revenue number, I think we've done pretty well on the cash side.
Okay. No, that's it for me. Thank you very much.
Okay, thanks.
Our next question comes from the line of Ross Seymore with Deutsche Bank. Please proceed with your question.
Hi, this is Daryl on behalf of Ross. Thanks for letting us ask question. It's nice to see the OpEx guidance continue a downward trajectory. By our math, it's probably almost 15% lower than it was in early 2018, a pretty significant reduction there. I guess my question is, one, where does the OpEx bottom out? Two, I think, at what point do you think that the run rate of OpEx precludes you potentially from making adequate investments to grow the top line?
Obviously, we're not putting anything at risk as far as the upside in revenue, developing new products, that pipeline. It just, to some degree, happened this year. We've got several of the bigger programs that we're rolling off. That'll pick back up in early 2020. In fact, we've got some math. We have some early efforts that are even going on right now where we see Q1 of 2020 that'll go up a bit. I would definitely keep that in mind. In some respects, you'll see that decline to some degree end in Q4. We've been pretty consistent in the messaging around that it comes down throughout this year and then starts to increase in 2020. As you look out into 2020 on a year-over-year basis, I wouldn't expect any huge increases, frankly, because 2019 was very front-end loaded.
I don't think we're giving up anything from a development standpoint. We're investing, very excited about the future. As these revenues ramp, we'll have the ability to invest more going forward.
Awesome. Appreciate that. Just another quick one on 5G. Earlier, it was talked about that maybe there'd be 50% more content ASP. I guess if you're just thinking a few years out as 5G hits its potential peak investment cycle, what could you see your % of revenues hit in terms of 5G content? Is that driven by ASPs, market share gain, et cetera? How would you break that down?
Obviously, if you really look at the amount of revenues we have in 5G right now, defined as 5G, is little or nothing. The only revenues we cover in 5G is the backhaul deployments that use dual purpose, both for both 4G and 5G. I laid out this story before, somewhere between 2022 to 2025, our infrastructure revenues will overtake our non-infrastructure revenues. I said that company's growth profile would be such that we would be somewhere between $600 million-$800 million in that time window in overall revenue, and almost all the growth, really, driver is infrastructure-based products. We expect that 5G and data center interconnect and power management for infrastructure together to constitute somewhere between around $300 million sort of revenues in that timeframe. Substantial growth. Obviously, timing is very hard to bracket.
We see pretty strong revenue growth in 5G, followed by optical data center fiber interconnect, then our power manager being a part of it, and then we're going to see growth in, at that point, connectivity in the Connected Home as well. I think, if you really look at it, why are we in this situation where growth has been hard to come and coming in many different smaller products is because we made a decision, we made a pivot three years ago that we're going to invest in really, really large TAM infrastructure-type products with long and large investment cycles and investments. We're going to enjoy the revenues that are going to last a long term and high-quality revenues. As a result, we just have to get through this to get there, and we're almost there. Things are tailing off.
It's reflected in the OpEx. We should be very well positioned to have a long-term play in those markets.
Thank you so much.
Our next question comes from the line of Gary Mobley with Wells Fargo Securities. Please proceed with your question.
Hey, guys. Thanks for taking the question. Kishore, glad to have you back on the call. I want to start with a question about the industrial multi-market. I guess per your guidance commentary, the industrial multi-market is poised to bounce back to the $19 million revenue mark in the June quarter. Still off the pace from 2018. Do you think you're close to shipping the end market demand with inventories being cleared, or do we still have some tailwind as we still have yet to catch up with the true end market demand?
Gary, I think the way I would describe it, we definitely went through this market adjustment. Q4 was down, Q1 was down. We've seen demand drop. I think that it improves. I think we've got some kind of secular drivers, mentioned a couple of bigger customers. We've definitely seen things pick up there, and we're expecting to see that in Q2. I'm optimistic about the second half of the year with regard to our HPA product line, specifically going into the industrial multi-market. Look, we're a small piece of the overall kind of industrial analog market, so I don't know that this necessarily reflects a huge shift in the market per se, but as far as MaxLinear's business, I think we definitely do see it improving.
Okay. As most people on the call know, your largest customer was recently acquired by CommScope. Have you had any preliminary discussions with CommScope to determine the future, I guess, roadmap of the products you're designing to at Arris, and then as well, what the opportunities may be to penetrate some of CommScope's products that you're not designing to today?
Very good question. CommScope is much broader than just cable data for us. We've had communication with them as we had started investing in infrastructure business several years ago. Obviously, having Arris part of CommScope deepens that relationship. These are very preliminary times and we are obviously communicating with them, but the larger scope of interaction is just being worked out right now. With regard to the engagement within each of the areas, I would like to sort of refrain from comment right now. Obviously they are in wireless infrastructure and such markets, and we've had contacts before with them as well.
All right. Thank you, guys.
There are no further questions in the queue. I'd like to hand the call back to management for closing comments.
Thank you, operator. We'll be participating in the Goldman Sachs Leveraged Finance Conference on May 7th in Rancho Palos Verdes, California, the JP Morgan Global Technology, Media and Communications Conference on May 14th in Boston, the William Blair Growth Stock Conference on June 6th in Chicago, and the Stifel Cross Sector Insight Conference on June 10th in Boston. We look forward to seeing many of you there. It's going to be a very busy investor calendar for us, but nevertheless, we look forward to seeing you. With that said, I want to thank all of you today and hope to see you soon. Bye.