“We saw some solid momentum in infrastructure revenue, up 145% year-over-year,” said MaxLinear’s CEO Kishore Seendripu. Yet, the stock still took a nosedive by almost 10% in pre-market trading after hours, sliding to $81.88 despite a solid Q2 report. The chipmaker’s earnings beat both EPS and revenue expectations with revenue hitting $168.8 million, a 55% jump compared to last year, and adjusted EPS of $0.35 beating estimates of $0.33. Still, investors seemed to react negatively, triggering a sell-off that commonly follows positive earnings news when gains are seen as fully priced in.
The quarter’s infrastructure segment was a highlight, driving the surge with the new Keystone PAM4 DSP platform powering 800G optical applications. Infrastructure revenue for Q2 reached $85 million, while broadband and connectivity contributed $45 million and $24 million respectively. Meanwhile, the company’s adjusted gross margin improved to 59.5%, indicating a favorable shift in product mix, with guidance pointing to hitting 60% in Q3. MaxLinear’s forecast for its upcoming quarter projects revenue between $210 million and $220 million, significantly above the $175 million analyst consensus, and the full-year outlook for optical data center revenue also climbed to $210 million $230 million.
Despite these upbeat numbers and raised guidance, the stock’s prior impressive run surging roughly 22.6% within the week leading up to earnings left it vulnerable to profit-taking. The market was already factoring in a strong performance, which dulls the excitement around even better-than-expected results. also MaxLinear reported a GAAP operating loss of $4.2 million and GAAP EPS of only $0.02, which may have discouraged investors focused on profitability metrics. Operating expenses under GAAP stood at $101.8 million versus $62.8 million non-GAAP, partly due to $2.5 million in acquisition-related amortization expenses.
On the cash front, MaxLinear held roughly $93.7 million in cash and equivalents, with net cash from operations at $4.8 million. Inventory days slightly declined from 128 to 123, signaling a modest improvement in working capital management. Before the earnings release, Stifel and Wells Fargo lifted their price targets based on management meetings, but the shares’ remarkable climb from a 52-week low of $12.77 had already set a challenging bar for the report. The broader market, with the S&P 500 up a mere 0.2%, offered little support during the session.
