Earnings Call: Q1 2018

May 8, 2018

Greetings, and welcome to MaxLinear 2018 Q1 Conference Call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Gideon Massey. Thank you, operator. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss MaxLinear's first quarter 2018 financial results. Today's call is being hosted by Doctor. Kishore Sandruppu, CEO and Adam Spie, CFO. After our prepared comments, we will take questions. Our comments today include forward looking statements within the meaning of applicable security laws, including statements relating to our second quarter 2018 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 assumptions and factors concerning potential, variability, and second quarter 2018 expectations. These forward looking statements involve substantial risk and uncertainty, including risk arising from competition, our dependence on limited number of customers, average selling price trends, the accuracy of our assumptions concerning the reasons for increased variability in our revenue expectations, risks that our market and growth opportunities may not develop as we currently expect and numerous other risks outlined in our SEC filings. Actual results may differ materially from currently forecasted results. For a detailed discussion of the risks and uncertainties potentially affecting these 4 looking statements, we encourage investors to review this section of our SEC filings captured risk factors in our previously filed Form 10 K for the year ended December 31, 2017, and in our upcoming Form 10 Q for the quarter ended March 31, 2018, which we expect to file shortly. Any forward looking statements are made as of today, and Mexcellany has no obligations to update or revise any forward looking statements. The first quarter 2018 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 revenue, gross margins, operating expenses, income or loss from operations, pre tax margin, effective tax rate, net income reconciliation of our GAAP and non GAAP presentations and the press release available on our website. We do not provide a reconciliation of non 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 are providing this information to enable investors to perform more meaningful comparisons Lastly, this call is being broadcast and a replay will be available on our website for 2 weeks. And now, let me turn the call over to Kishore Sindrupo, CEO of MaxLinear. Thank you, Gideon, and good afternoon, everyone. Thank you all for joining us today. Are pleased to report Q1 twenty eighteen revenue of approximately $110,800,000, which is down 3% sequentially, but is up significant by about 25% year on or year. During Q1, we witnessed strength in broadband cable data, G. H. N home connectivity and wireless backhaul infrastructure revenues, which were offset primarily by weakness in China optical, North America satellite, some legacy terrestrial tuner applications. In Q1 2018, we posted strong growth in operating margins, driven by favorable product mix, a one time reversal of a customer rebate accrual and tight operating expense management. As always, we continue to manage our expenses, prudent to preserve operating leverage Before I delve into our Q1 highlights, I would like to step back and provide an overarching view of our product portfolio. As we look at MaxLinia's portfolio, we have both stable and slow growth revenue products as well as high growth revenue components that comprise our connected home, infrastructure, and high performance analog, industrial and multi market revenues. Together, they constitute a scaled and increasingly diverse company with the ability to invest in addressing the high value, large network communications, infrastructure and markets. These products have a unifying underlying theme of technology excellence a platform centric view of the world. Over the last four years, we have embarked on several new growth initiatives, primarily in infrastructure, that we believe are on track to begin yielding hyperscale data center solutions and wireless infrastructure, we see strong evidence of increasing revenue growth with product ramps beginning in the second of 2018. The timing and magnitude of these initial ramps rely on several factors beyond our control and we will provide better resolution on these exciting growth vectors in our upcoming investor interactions throughout 2018. Having said that, in Q1, in terms of technology milestones, there were several exciting highlights of our ongoing strategic revenue diversification initiatives into wireless and wireline communications, network infrastructure markets In March, at the Optical Fiber Communication Conference, we demonstrated the industry's 1st 16 nanometer CMOS 4 100 gigabit PAM4 data center transceiver with integrated laser drivers and a companion TiA family. This family of products provides the low power and high performance required for QSFP DDOSFP and cobo form factors for inside the data center high speed fiber interconnect applications. At OFC, we demonstrated our silicon with 3 of the 4 largest optical system suppliers, supporting our view that we're in a leadership position, entering a crucial stage of the next major inside the data center fiber interconnect upgrade cycle. In Q1, we also system on chip device, which enables 10 gigabit cable data services to subscriber homes. By moving to FDX Remote PHY cable operators and upgrade their existing passive cab cable fiber nodes and newer installations to cap to active fiber nodes to create a distributed cable network in structure. This distributed full duplex based remote phi node infrastructure enables fiber like capacity using existing coax cable network, which connects the nodes to subscriber homes. Type of leveraging investment opportunities that exist in our core broadband markets that we believe in turn will spawn further attractive revenue growth opportunities in next generation connected home and infrastructure platforms. Additionally, we recently announced a new product supporting the deploy costly fiber alternatives. This is particularly important for operators seeking to deliver fiber like performance in densely populated urban settings. In wireless infrastructure, we continue to be encouraged by the strong levels of engagement with Tier 1 network equipment makers across all three of our wireless infrastructure verticals, namely wireless backhaul, 5d wireless access and fixed Broadband Wireless Air Fi solutions. As mentioned in our press release earlier today, we recently entered into a formal partnership agreement with the world's largest wireless networking equipment maker for wireless backhaul products. This is a significant milestone for us and bolster our confidence in our ability to expand our analog mix signal technology platform into the large wireless communication market. Moving on to with strength in G.hn and cable data offset by weakness in North America satellite, bokeh and legacy tuners. Our G. D. Chen PowerLine Home Connectivity business continues to scale with strong telecom and smart utility deployments. In satellite video, while our European revenues remain strong, we are facing macro demand challenges in the U. S. Market owing to the delays in broader market adoption of 4 K content. And subscriber losses. Moving on to infrastructure, while our Q1 infrastructure revenues were down 3% sequentially, They grew approximately 78% on a year over year basis. The modest sequential declines were attributable to expected continued softness in China optical, and a step back in last mile access solutions, which are expected to resume their sequential growth increases as we progress through the year. Our wireless infrastructure business continues to be an encouraging bright spot posting strong sequential increases of more than 40% driven by strength in wireless backhaul across a broad set of Tier 1 OEMs. Relatedly, in Q1, we announced industry 1st and only CMOS radio transceiver enabling channel aggregation functionality for the wireless backhaul market that enables that enables multi gigabit wireless backhaul links over license to microwave spectrum. We also announced a 5 gigabit 2nd 16 k Quam based microwave modem SoC, supporting the highest throughput bit rate from microwave point to point wireless transport, for a 5G wireless world. In optical, the continued slowness in the Chinese metro optical market has had a knock on effect regards to delays in the ramp of our new TiE and driver design wins. Optical remains an exciting future growth opportunity for Max Linea with the previously noted excitement related to our PAM4 DSP cloud data center solution. Lastly, our industrial and multi market revenues decreased 5% sequentially to 22% of overall revenue, driven primarily by ramp down in touch sensor products for the handset market. On recently announced universal payment devices being deployed on low power FPGA and compute for platforms such as the Raspberry Pi Platform. We're excited with the diverse set of opportunities these products serve. We continue to expand our high performance analog roadmap to with large and diverse end markets by entering new platforms as well as increasing the silicon bomb content on our existing platforms. Before turning the call over to Aaron spies, our CFO, I would like to extend my deep and heartfelt gratitude for Adam. He has been an invaluable colleague in partner in our 7 a year plus journey of transforming MaxLinear from a fledgling and nascent IPO company generating less than $100,000,000 in revenues in 10 to 1 with 7 times the revenues in 2017. Even more importantly, he has been integral to evolving our growth map from a consumer and broadband operator markets focused company to one that is well on its way to becoming a broad based, high frequency analog and mixed signal SOC leader, also addressing the extremely large wireless wireline network infrastructure and industrial multi markets. As we make solid progress towards hiring a very capable new CFO to succeed Adam, we are grateful to Adam for helping us in this transition period. We wish him all the best, and we will miss him very dearly. With that, let me turn the call over to Mr. Adam Spies, our Chief Financial Officer, for a review of the financials and our forward guidance. Great. Thank you, Kishore. I will first review our Q1 2018 results and then further discuss our outlook for Q2 2018. On revenue of $110,000,000 $110,800,000, GAAP and non GAAP gross margins for the first quarter were approximately 56.5% and 64.9 percent of revenue, respectively. This compares to GAAP gross margin guidance of 55% and non GAAP gross margins guidance range of 63%. Accrual on a legacy connected home platform. The delta between GAAP and non GAAP gross margins in the first quarter was primarily acquisition related, reflecting the amortization of $9,000,000 of purchased intangible assets and $200,000 of stock based compensation and stock based bonus accruals $100,000 in depreciation of stepped up acquired fixed assets. Q1 GAAP operating expenses were approximately $58,200,000, which was $700,000 above the GAAP guidance with the overage primarily related prototyping expenses for a remote 5 full Duplex cable infrastructure chip previously referenced by Key Shore. GAAP operating expenses included stock based compensation accruals related to our stock based bonus plan of $8,400,000 $2,200,000, respectively. Amortization of purchased intangible assets of $8,000,000 $300,000 in depreciation related to a step up in acquired fixed assets. Payouts under our 2018 performance bonus plan, if earned, are expected to be settled primarily in shares of Maxonier stock, which are expected to be issued in Q1 twenty nineteen. Non GAAP operating expenses was $39,300,000, slightly below our prior guidance of $39,500,000 expenses related to our Remote PHY full Duplex cable infrastructure chip. Rounding out our commentary on operating expenses, At the end of the first quarter 2018, our headcount was 757 compared to 753 at the end of the fourth quarter of 2017. We continue to evaluate our staffing levels globally, particularly following our recent acquisition activity to strike a balance between driving near term operating leverage and staffing key long term growth initiatives. Moving to the balance sheet and cash flow statement. Our cash, cash equivalents and restricted cash balance decreased $17,100,000 to approximately $57,300,000. Our ending reflects the effect of to $95,000,000 through the end of Q1 2018 and our loan balance down to approximately $330,000,000. Our cash flow generated from operating activities in the first quarter 2018 was approximately $12,000,000 versus $21,700,000 generated in the fourth quarter of 20 19. The sequential decline in cash flow generated from operating activities was largely attributable to the revenue linearity in the quarter, and the quarter end falling over a Singapore bank holiday, which stranded cash receipts over the quarter boundary. Relatedly, cash collections have rebounded strongly thus far in Q2, enabling a further $18,000,000 in target of approximately $60,000,000. Our days sales outstanding for the first quarter was approximately 75 days or 22 days more than the prior quarter. Which is a function of the high quarter end AR balance. Our inventory turns decreased to 3.9 turns in the 1st quarter compared to 4.2 turns in the 4th quarter, and are a focus of our ongoing XR integration efforts to better align with MaxLinear's target model of approximately 6 inventory turns. That leads me to our guidance. Currently expect revenue in the second quarter of 2018 to be approximately $100,000,000 to $110,000,000. We expect connected home revenues to decrease approximately 8% to 10% sequentially and account for roughly 57 percent of overall revenue. Infrastructure to decline approximately 7% and represent 18% of overall revenues. And industrial and multi market to increase approximately 5%, contributing approximately 25% of overall revenues. Within Connected Home, we are expecting relative stability in cable data and strength in both cable satellite gateway and G.agen connectivity, offset by weakness in TV tuners and MOCA connectivity. Within infrastructure, we expect double digit growth to continue in wireless infrastructure on the back of a particularly strong Q1, modest sequential increases in last mile access, offset by continued weakness in China optical that's exacerbated by the ZTE shipment band. With the ZTE shipment ban also contributing to weakness in more broadly in power management and interface products within our infrastructure as well as in industrial and multi segment. The overall impact of the ZTE shipment ban to our revenues is estimated to be about $5,000,000 in 20.18. Within industrial and multi market, we expect a modest sequential increase as growth in PMICs for entry level compute platforms and interface solutions offset softness in our touch sensor solutions enhancements and the previously referenced ZTE shipment ban effect. We expect 2nd quarter GAAP gross profit margins to be approximately 54.5 percent of revenue and non GAAP gross profit margins to be approximately 63.5 percent of revenue. As a reminder, our gross profit margin percentage forecast could vary plus or minus 2% depending on product mix and other factors. We continue to fund strategic development programs targeted at delivering attractive top line growth as we look forward into the first half of twenty eighteen and beyond, with a particular focus on infrastructure initiatives and our goal of increasing the operating leverage in the business. As such, we expect q22 2018 GAAP operating expenses to decrease approximately $1,200,000 quarter on quarter to approximately 57,000,000 with largest decrease coming from lower max spending, professional fees, and payroll. We expect Q2 20 18 non GAAP operating expenses to be down $1,300,000 sequentially to $38,000,000, consistent with the GAAP expense trends. We expect GAAP tax expenses to be approximately We expect interest and other expenses in the quarter to be 3.8 results reflect a quarter in which we faced a slight decline in the top line, but managed tight controls and operating expenses and continued to follow through on our commitment to aggressive deleveraging. Despite current choppiness to our near term outlook, we are as encouraged as we've ever been by the growing diversity and depth of our product portfolio, as well as the continued execution that our company has demonstrated. We believe Meximeter shareholders are uniquely positioned to benefit from a diversified set of technologies enabling greater data capacity across consumer, connected home, wired and wireless infrastructure networks and the diverse growing demand for high performance analog and mixed signal solution across industrial, automotive and multi market applications. Lastly, this is my final earnings call with MaxLinear, and I'd like to take this opportunity to express my sincere appreciation and thanks for the constructive relationships developed over the last 7 years with many of those on the call. And I wish MaxLinear and all of you the best and continued success in the future. Session. Our first question is with Tore Svanberg. With Stifel. Please proceed with your question. First question is on the guidance for Q2's specifically and related to Connected Home. I believe you mentioned both MOCA and the tuner business coming down sequentially. What's going on with MOCA there? Is this sort of some last time things? And what are the prospects for MOCA beyond the June quarter? Sorry, this is Kishore. What's going on here is that we are seeing the MoCA transition from being a stand alone product on DOCSIS 3.0 platforms to an integrated version where the you know, we only get, close to about 40, 50% of the overall ASP what used to be our original Mooka product. As a result, on the MoCA revenues. Inside the home, we are seeing a contraction due to ACE reduction. And also with the delay in the roll out of the new platforms, the major telco operators towards the end of the year, you're seeing that the MoCA is showing a decline. My expectation is that the decline in MoCA revenues, you know, in the latter half of 2018 will be stalled and we should start seeing some, pick up inside the home connectivity as the telco operator, you know, hopefully starts ramping the revenues on the new platforms. But I do want to mention that Mock has a very strategically, important net working technology platform for the company. It's today manifesting inside the infrastructure market for lost mile access. And as Adam mentioned in his guidance, we expect the last mile axis revenues for the rest of the year to primarily grow on the back of MoCA based ceiling technologies primarily in Asia. So all in all, MoCA as you look at from a connected home versus a non connected home market, it's actually has got very healthy prospects in front of it. And I also want to mention that there is a telco carrier that is adopted MoCA, and that is going to be ramping revenue, some way to the end of the year, while there is a timing uncertainty on MoCA in terms of the connected home. That's very helpful. And as my follow-up, Adam, could you talk about the ASC 606 what type of an impact it had this last quarter and what you're expecting for next quarter? Just kind of going through the math, so we just get an apples to apples comparison. Yes. No, So 606, the adoption 606 definitely kind of had an impact. If you look at where we were heading kind of into Q1, we took a strategic direction to lean down the inventory in the channel at the end of Q4. So if you look at, and I'll get back to kind of an apples to apples comparison, but we wanted to have as little inventory in the channel as possible ending the year because under the change with any channel, any inventory that was in the distributor channel at the time, we would not be able to recognize revenue for it. So we basically, I want to think this way, we took inventory down below where customers and distributors are, you know, were normally would be sitting. So we leaned it down and then there was some channel refill in the first quarter. Now, if you want to get to and if you want to just the absolute math there between there was approximately an impact about $13,300,000 as a result of adopting 606 to our benefit in Q1. Now, if you think about looking at kind of normal levels, you would say that if we went back and looked at what the, this is the distributor inventory channel was let's say at the end of Q3 of 2017, which was kind of a normal level. And then now compare that to where we ended Q1, And if you go back and look at revenue at the time. And if you do an apples to apples comparison of a recal for what that would be at the end of March, even though no, there's no longer deferred revenue under new 606, it went from about $17,000,000 to about $19,000,000. So the net change is about $2,000,000 in apples to apples comparison Q3 of last year to Q1 of this year, And part of that is just related to the fact that we've got some new platforms that are getting ramp and you naturally would have a little bit more, kind of, of an inventory, a channel build, if you will, as you prepare for some of these new ramps. But that's really kind of the most, I think, cogent way to explain the implications of 606 in Q1. We do think it's a Q1 phenomenon. If you believe as we do that the inventory levels are back to their normal levels now at the end of Q1, then pretty much you've seen the effect of 606. Going forward, it should be pretty much stasis, except for the fact that as you grow and grow your business, then obviously, you know, relatively speaking, your inventory levels and your channel will grow, reflect the growth in your overall magnitude of revenues. That's helpful. I'll stick back. I'll stick back in line. Thank you. Our next question is with Ross Seymore with Deutsche Bank. Please proceed with your question. Hi guys, not to be terribly repetitive after what Tory just asked, but the guidance is definitely weaker than the Street expected. You guys went through some of the moving parts in there, but I guess what's the ASC 606 assumption, if anything, is that negative or positive sequentially into the quarter? And then what was surprising to you? In versus what the Street clearly expected heading into the 2nd quarter? Yes. So to answer the first part of your question, again, I think the you can think of it this way. We essentially, held off. So if you look at the way we were recognizing revenue last year before the we would have recognized revenue on sell through, right? So we actually, again, stopped replenishing the channel in as we kind of got further and further into Q4 And so the benefit of that to us was as kind of a snapback to refill the buffer levels of the distributors in Q1. So, and again, it's a Q1 event. We don't see any lingering, in fact, in Q2. I mean, we're back to kind of normal disty inventory channel levels. So you shouldn't see any more effect of the adoption of 606. In our current view. Now what changed kind of the overall softness right now, again, for Q1. We didn't provide any guidance for Q2. Obviously, the street had a somewhat higher number. And I think if you look at what the what was likely the delta in expectations, that the Street had going into the quarter versus where we ended up with our current guidance that we announced today, it's probably more softness on the MoCA side than we were anticipating in the second quarter. I think we were also we had a couple of $1,000,000 ish of adjustment related to the ZTE effect. So when you take kind of overall China softness in optical continuing, a little bit more exacerbated by ZTE and affects multiple product lines across the company. We had MoCA step back more than we were expecting it to, and a little bit more softness in the guide on the terrestrial side of things, because normally the first half of the year in terrestrial is soft. It's usually a stronger second half business related to Chinese New Year and Christmas TV sales and so forth. But it's just a little bit softer than we would normally have expected it to be in the Q2 period. And that pretty much explains the primary delta. So I think you've got a few $1,000,000 here and there. You've got, again, a $1,000,000 related to the ZTE, probably $2,000,000 in aggregate. You've got perhaps a couple of $1,000,000 of continued optical softness. You probably had a couple of $1,000,000 of MoCA, and those are really the primary, I would say, weak points and tuners, maybe another couple of 1,000,000. So a couple, there's like 4 buckets of roughly $2,000,000, $2,000,000 from ZTE, $2,000,000 from tuners, $2,000,000 from MOCA, and then, $2,000,000 from China optical. Overall. I think that's the rough reconciliation of kind of what has changed over the course of the last few months. Kishore, do you want to, is there anything to add? No, I think that is really correct. It's a it's a little bit of all these pieces and we also saw some softness in some satellite as well for North America. So if you add up those pieces, they are the familiar items, however, if you take them all in aggregate, they've added it to the Delta, I would argue between what the street estimates are and where we are today. Having said that, you know, like, as start of my remarks, we are really in a period with lots of new product design wins in our platforms that are expected to ramp and the timing uncertainties of those also affect how the guidance evolves. And at this stage, while we're pretty excited about the design with all the new platforms. It's because these are infrastructure markets and they have long lead times and generally they're sluggish in the way they start the ramp We are still coming to sort of understanding how these markets work. But we're really excited about how the back call it's finally picking up in a strong way. It's grown extremely strongly, and we've got a number of design wins that are ramping very strongly right now. You can also argue that that's almost like 3 to 4 quarters later than we had expected originally. So it's just getting trained and tuned to the latest markets that we are entering. I guess one last question for Adam. On the gross margin side, you mentioned that there was a one time benefit in the first quarter. Could you size that for us? And I assume that goes away in the second quarter? Roughly, call it, about $2,000,000 was roughly, I mean, you look, about $2,000,000 was the impact in Q1. Of the rebate reversal. And is that the only thing that's leading to gross margin to come down sequentially in the second quarter guide? That's a primary contributor to that. Yeah. I mean, if you really look across the products, we're not seeing a lot of movement in the gross margin. It's really a function of mix, right? So, as long as there's not a significant mix change, then the only thing that really swung it Q1 to Q2 is really that rebate reversal that, that was recognized in Q1. Our next question is with Suji Desilva with Roth Capital. Hi, Kishore. Hi, Adam. Adam, good luck in the new role there. So, the, the OpEx reduction you were able to get in the guidance here, how much more opportunity is there from the integration of acquisitions? So Suji, I could answer that. As you have seen, is one thing that we control is our spending, right? And we have always shown incredible discipline. If you really look at how we have so smoothly managed to keep squeezing the OpEx without hampering our execution, I think we continue to improve on our OpEx tightening through the year and, barring any tape outs in Q4, which we know we have one already. But, I think that if you subtract the tape out of the picture, you will see that the non tape out related expenses are going to be really trending downwards in this year. And, we are very happy because part of that decrease in the OpEx comes from the fact that for the last 3 years, we have been investing in infrastructure markets. And pretty much primarily. And all of those are coming to completion with the exception of one product that will sample at the end of the year. Think the big part of those expenses are getting behind us. So we're getting the benefit of those not as much from an integration process on the operations side, but much more on the just the big R and D items behind us. Okay. And then on the smart home broadband, can you talk about the DOCSIS 31 ramp and your leverage to that? Will that be lumpy or is that something that should be a steady contributor to you guys as, as the year progresses? So actually, one of the items we did not cover in particular because it's kind of a stable, base of revenue. These are really strong presence in cable data markets. But actually, we are seeing a scenario. Normally, if you think about it, the Q2 period is tends to be a peak cable operator window. However, The docs of 3.1, rollouts are delaying and, they are, and it's a very slow ramp that has started. As a result, there is some level of concern and anxiety that operators are switching over to, more DOCSIS 3.1, and therefore, the ordering patterns and docs 3.0 are slowing. So I think, so there could be 2 net benefits out of it, right? One is that they are where we see them they are today in terms of the conversation we are having. The other thing is that because you're switching to a new standard, there could be certainly a snap increase in volume and DOCSIS 3.1 ramp and really sets in strongly towards the end of the year. So I really don't want to get ahead of that, patient because we want to see it to happen and then we will communicate that to you. But there is some upside potential for DOCSIS 3.1 ramp start towards the latter half of twenty eighteen. Okay. That's helpful color. Thanks guys. By the way, before we jump into the next question, I just want to clarify for Ross. So I got a little more data in the background. The effect of the the rebate reversal in Q1 was actually 1,200,000, not 2,000,000. So 1,200,000 is the correct number. Our next question is with Quinn Bolton with Needham And Company. Hey, guys. Just was hoping for a little bit more color or clarification on the infrastructure guidance. I think you said it's going to be down 7% sequentially. The script, I think you said the only part of the business that was going to be weak sequentially was optical. And if I'm correct, I think optical was less than $1,000,000 in So even if we're one away entirely, it doesn't sound like that takes infrastructure down. What else is down sequentially in infrastructure in Q2? So the only real piece that, so yes, optical does go down a bit. So the total optical revenue in Q1 was around $600,000 ish in the quarter. And so that's going down to, it takes about a $500,000 step down. So that's about a the decline. Again, there wasn't much to begin with, but there is some there. The other more meaningful piece was, some of the management interface and video compression chips, from, the XR acquisition that are included in our infrastructure bucket. So, there we have the impact also of ZTE as I mentioned in my prepared comments. So ZTE kind of factors in, in across multiple layers of that infrastructure business. So that's of the declines. And it's kind of mixed across different few different areas. But if you think about, there's a little bit of, video compression weakness, then they're just kind of just miscellaneous pieces across that portfolio that came over. That was, pretty stable Q4 to Q1, but then it's taken a bit of a step back in Q2. Okay. And then just probably the 3rd or 4th quarter to row where the out quarter guide is fallen below the street consensus. You guys seem excited about the second half ramp. I mean, but do you call into question your forecasting or how do we get comfort, about this second half ramp given sort of the recent history with the volatility in actual results, kind of versus consensus estimates? So it's a very good question, Quinn. I do believe that, there has been some disconnect with, estimates on the street versus where we think we'll be. But even within our own estimating process, we have developed some gaps I think largely this is attributable to the fact that we got multiple places in our business. And, so before the XR acquisition are going in, our backlog will be pretty strong and is a transition in the business that's happening from a backlog perspective entering the call. So I think that, as the business has become larger estimating the details, we are still working through it. And, I think that error we are rectifying. However, as long as there are new product ramps that we are dealing with, there is going to be some uncertainty on ramp and timing. So think that at this stage, at this point, we are as cognizant about it as you are. And also we are also very hard on ourselves on why this keeps happening. However, I think that this time, we have a better stock of the situation because we have to learn from the past our thinking is that really looking at it, if you look at Q2 guide and normally we don't guide beyond that, but I just want to give some color I really believe that, Q3 would look similar to Q2 in that range, though I don't know the exact numbers. However we should start picking up revenue growth as we exit the year in a more meaningful way. So I do think that we have had a hard look at it and we are working through it, but it's just that when these revenue ramps are there is uncertainty of the timing and the size of the ramp, And then within our, you know, collectible business and XR business, we are seeing some volatility on certain products. So we definitely have to do a better job of it. Great. And then sorry, not to sound too negative, but just wanted to ask a lot to say about the infrastructure ramp that you guys talked about some of the new product design wins. It seems to me that the full duplex fiber node solution probably doesn't ramp. I think single M to PAM4 platform, again, probably doesn't ramp. So it seems like a lot of that, ramp that you're looking for in infrastructure comes from the wireless infrastructure products Europe 40% sequentially in March and other double digit percentage sequentially in June. So you're already working off a strong base. What is there any more color you can provide on some of those design wins that will keep growing off of a pretty healthy base and wireless access and microwave backhaul? Yes. I think, the on the wireless infrastructure, the wireless backhaul is really beginning to kick some steam now. And I think the big part is that finally the our own organic development on microwave back a lot of transceiver is picking up some momentum. At the same time, a larger OEM who had the who we had the design win in place in Europe, they're beginning to pick up more product right now because they're seeing some business momentum now, looks like there is some level of, froth or froth is the wrong word, some spontaneous growth coming back into the telecom markets in wireless, maybe in preparation for 5G, and we are seeing the benefits of that. So I think there's more growth ahead, primarily of new revenues the backhaul modems and our microwave wireless backhaul or transceivers. So we're feeling very good. And we did announce, as you saw in the press release and in the script about our partnership announcement with a major wireless OEM for our wireless backhaul solution, but it also predicates a strong engagement on the 5G wireless access in the future. So you're right. Really on the infrastructure, we are relying on wireless backhaul is a big driver. But secondly, we are also expecting growth to come up our last mile access in, primarily in the MoCA Technology based ceiling product line in the Asian market. So that's a number of design wins there and they are beginning to generate some money as well. So I think those are the 2 you want to look out for. We wish we optical leg going in on the telecom side, but that's a weakness now that we cannot, we cannot count on And, so if you move from the wireless infrastructure growth as the 1st layer of growth, the last mile access is the next layer of growth, the next timing layer in 2019 would be the PAM4 DSP 4 by 100 gigabit, gigabit to products that we've announced and announced and demonstrated the see, following which you will see, a pickup in 5G wireless access, hopefully the end to the second later half of twenty nineteen, twenty twenty, then cable fiber nodes. So that's the cadence. You really want to look as infrastructure as every 6 months, one new product starts ramping in the categories over the next 18 to 24 month window. So these markets are what they are. And like we said in our script, we've got a strong base of Connected Home revenue that is allowing us to invest while it's extremely profitable. And we are also spawning new growth opportunities in the connected home through infrastructure investments in full duplex infrastructure that will spawn new activity in the platform side. So I think all in all, we feel very excited. It's always is the case, that there's a lag behind the results and where we are in the design win pipeline. Thank you, Keisha, and good luck, Adam. Thank you. Our next question is with Christopher Rolland with Susquehanna International Group. Please proceed with your question. Hey guys, thanks for the question and congrats on them. We'll miss you. So DSOs and accounts receivable I think you mentioned Singapore holiday and then also timing of customer orders. Maybe you could just break out what this Singapore was how much that actually hit receivables? And then so why so backend loaded here? It seems like a really big jump. Thanks. Yes. So the Singapore bank holiday itself was probably around $7,000,000 in the roughly around that $7,000,000 in the quarter. And again, it was just a function of there was a Singapore bank holiday on, at the end of the, at the end of the quarter. We ended up collecting it shortly thereafter. We feel very good about where we're at on our agents. We've really never had a problem with our agents and they still look very, very, very good. And again, like I mentioned on the prepared remarks, we had strong cash collections in April early, and early May, which allowed us to pay down an incremental $18,000,000. So we feel good about where we're at there. It was just kind of unfortunate timing. As far as the back end loaded, I can't really answer that with a lot of great color because it seems like you try to predict what your customer's behavior is. Not to mention the fact that, you know, that they held on to their payments that caused you to kind of crawl over the, the quarterly boundary. I think each of our customers has their own kind of behavioral patterns and their own incentives for either kind of wanting to have more or less product on their balance sheets and also the cash on their balance sheet. So I can't just was just an odd quarter where kind of a couple of things came together and it resulted in a weird spike at the end of the quarter. But again, things normalized as we kind of, as we progress through Q2. Okay. And then as we look at Connected Home year over year, perhaps you can just move us kind of walk us through some of the moving parts here in terms of what the biggest segments were and what the biggest kind of disappointments are, what's causing that drop I mean is it mostly this move to DOCSIS 3.1 that didn't happen as quickly as you thought or is it something related to digital channel stacking? I know that that was an issue as we were moving from analog to digital. Did that happen and did you get the share that you want what are kind of the big chunky things that have created the kind of year over year trial? Yes, if you look at the biggest year over year drops really in the Connected Home piece, the tuner pieces is down pretty substantially, right? So if you want to with the old saying it turn a south ear into a sealed purse. You can kind of look at the areas where we've had challenges in our connected home have been in the areas, which really aren't the long term strategic focus us. So if you're going to have weakness, those are areas to have it in. So tuners, satellite gateway, and then the Discrete MOCA, less of the discrete mode, but more on the tuners than the satellite gateway. So if you look at the amount of year on year decline, it's been about this year, this time last year, tuners were approximately $10,000,000 in the second quarter. And that declined to around $3,000,000 or so in that's built into our current guide. So you had about about a $7,000,000 year on year decline in that tuner business. Again, the tuners end up being our lowest gross margin. So as that drops off and gets replaced the revenue is actually beneficial to our gross margin mix. So again, that's a little bit of a silver lining. And then if you look at the other parts that have kind of fallen a little bit more than, than perhaps we would have liked and kind of influence the year on year compares. Also, the digital channel stacking, as you mentioned before, was running about I'd say about a little over between $5,000,000 $6,000,000 this time last year and now it's running below $2,000,000. And so the question is, what's driving that? The main takeaway from that is, again, as Kishore mentioned, you know, North America satellite is having a hard time, right? They've got subscriber losses there's not been the availability of 4K content to drive the upper end or higher level deployments of these digital to use. But that said, we've done very well in securing design wins and ramps outside of North America. So actually, when we now start to look forward, again, Kishore said, we don't give guidance and we're not going to give guidance for Q3. I will say that right now, the way that we look at our digital channel stacking business, it should be a a very healthy step up Q2 to Q3. So the second half looks much better than the first half in the digital channel stacking, and that's not based on a recovery in North America as much as deployment in the rest of the world where we put our focus. Now also, if you look at the tuner business, that also looks to take a pretty healthy step up in Q3 and even more. And then again, in Q4, again, that's more seasonally driven, right? So we've said before, the second half of our tuner business is the strongest, time of the year for that business. And this year looks to be no exception. We're looking at more than a doubling of Q2 to Q3 on the tuner side and then staying up and increasing even more in Q4. So Generally, what I'm saying is that the year over years have been tough, but right now, the forecast would indicate that some of those tough areas actually have some rebound to them in the second half of the year. Do they get back to where they were last year? No, they don't. But they get, as far as like, if you want to consider in the last year, Q2 was the peak for those businesses I'm referencing. It doesn't get back to peak levels, but it does start to increase sequentially. So that's the way we see the business now. Again, I think there's a little bit of a, there's a little ray of sunshine in there and the fact that these things kind of help our overall gross margin profile as we remix it with higher quality, higher margin kind of infrastructure and other connected home products, but we're going through that transition. Our next question just wanted to thank you, Adam, and good luck in your new venture there. So, Kishore, you talk about, design wins and infrastructure for the second half, but there's uncertainty on timing. Could you at least rank for us, where you feel relatively better as far as timing is on a lot of the new products? So, I feel, actually, I feel good about about the design wins in the wireless backhaul because they are all slated to start in the latter half of of this 2018. The last mile access designs are done. They're primarily in China, Asia. There's always kind of timing uncertainty on those because these are a long time coming, but we do have the design wins. And there are, there are also design wins in, in g. Now, which is basically the last mile access using power lines, technologies. And those are where we in that is where we have more uncertainty given even though overall the G.8ng technology platform is doing fantastic compared to last year. I mean, it's going to be very sporty growth this I mean, we are talking about a business that was in the $5,000,000 range, getting in the range of a $20,000,000, right? So However, in the infrastructure space, there are design wins, but g. Now at Korea Telecom in, in the Thailand operators and so on and so forth, where they've stalled taking product I'm just wondering when those things come back. So I think these operator businesses are fraught with the lumpiness and we're still remain to see how the wireless telecom operators play, but still there is uncertainty on the loss mail access related to G. Now or G. Hn technology, as we call it. And then there is some uncertainty in the China on the last mile access based on MoCA technology. The wireless backhaul ones are in good place and good standing. And there is quite reasonable upside in the wireless infrastructure backhaul. So we are hopeful that that will overcome many uncertainties in the last mail access going into the second half of this year. Okay. And just one last question. Optical now, I guess, is down to $100,000 or so. Do you have any visibility at all on how that business progresses for the second half, obviously excluding ZTE? So, Tore, in my book, as me as an operating manager, I consider that sort of noise on the telecom side right now. All the action is in the new designs and we are trying to secure those new designs and see if he can ramp this. But all in all, telecom market is really going through a stalling process. Whatever shipments people are taking are existing technologies. So therefore, we don't see any big RAM coming whatsoever. And our new designs, they are stalled. Remember, in that market, our design spirit ZTE and fiber home. So ZTE is now out of the picture. So fiber home is all what we're relying on. So I would say that Longwall, Telecom, Metro, right now, I don't even pay any time to sort of gauge the size of those revenues in the second half. I spend more time on the new products on the 45 gigabaud and 64 gigabaud market. And those are definitely a year or 2 a week on the telecom side. So, so I think revenues wise, I wouldn't want you to be overly interested in that related to linear. And, however, on the data center side, I think we are very well positioned, and that's when the old trajectory changes on the opt inside. That's very helpful. Thank you. Ladies and gentlemen, we have reached the end of our question and answer session. I would like to turn the call back over to Kishore Sinduupu for closing remarks. Thank you, operator. As a reminder, I want to let all participants and listeners know that we'll be attending the Stifel 2018 Cross Sector Insight Conference on June 12. And the William Blair 38th Annual Growth Stock Conference on June 13. As always, we hope to see many of you there. However, in closing, I once again want to thank you all for being such a robust participants in investor calls when Adam has been leading those investor calls. And I'm delivery, thankful for Adam, but being such a great steward of MaxLinear's transformation. And, his interactions with the investor base of MaxLinear. Thank you very much. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.