Maxlinear Inc

NASDAQ:MXL

Earnings Call Transcript 2021-Q1

[Operator]

Greetings, and welcome to MaxLinear Incorporated First Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder this conference is being recorded.

It is now my pleasure to introduce your host Brian Nugent. Thank you, sir. You may begin.

[Brian Nugent, IR]

Thank you, operator. Good afternoon, everyone and thank you for joining us on today’s conference call to discuss MaxLinear's first quarter 2021 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 applicable securities laws, including statements relating to our guidance for second quarter 2021 revenue, revenue growth expectations in our principal target markets, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, tax expenses and effective tax rate and interest and other expense.

In addition, we will make forward-looking statements relating to trends, opportunities and uncertainties in various product and geographic markets, including without limitation, statements concerning opportunities arising from our acquisitions of Intel's Home Gateway business and of NanoSemi, growth opportunities for our wireless infrastructure and connectivity markets and opportunities for improved revenues across our target markets.

These forward-looking statements involve substantial risks and uncertainties, including integration and employee retention risks associated with the acquisitions as well as risks arising more generally in our business from competition, global trade and export restrictions, potential supply constraints, the impact of COVID-19 pandemic, our dependence on a limited number of customers, average selling price trends and risks that our markets and growth opportunities may not develop as we currently expect and that our assumptions concerning these opportunities may prove incorrect. More information on these and other risks is outlined in the Risk Factors section of our recent SEC filings, including our Form 10-K for the year ended December 31, 2020 and our first quarter 2021 Form 10-Q which was filed today.

Any forward-looking statements are made as of today and MaxLinear has no obligation to update or revise any forward-looking statements. The first quarter 2021 earnings release is available in the Investor Relations section of our web site at maxlinear.com. In addition, we report certain historical financial metrics including net revenues, gross margins, operating expenses, income or loss from operations, interest and other expense, incomes taxes, net income or loss and net income or loss per share on both a 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's GAAP financial results. We are 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 web Site for 2 weeks.

And now, let me turn the call over to Kishore Seendripu, CEO of MaxLinear.

[Kishore Seendripu, CEO]

Thank you, Brian, and good afternoon everyone. Our Q1 financial results highlight record quarterly revenue of $209.4 million, up 8% sequentially, cash flow from operations of $40.3 million and non-GAAP gross margin of 58.6%. Our results and outlook are moderated by the industry wide semiconductor manufacturing supply chain constraints, even as we are proactively developing strategies to minimize the impact for our customers. In Q1, our broadband access revenues stood at 59%, infrastructure at 14%, industry and multimarket 14% and connectivity at 13% of overall revenues.

Now turning to some of the Q1 business highlights. In broadband access in market demand remains robust driven by continued strong MSO deployment, sustaining subscriber broadband consumption demand trends and our share gains because of our target markets. Further, breadth of our broadband access and Wi-Fi SOC assets continues to expand customer engagements on next generation broadband access and in-home connectivity architectures.

In our connectivity business, which consists of multi gigabit Wi-Fi, Ethernet, MoCA and G.hn technologies shipments to contemporary paused owing primarily to supply constraints. We expect a strong recovery in Q2 with all four products growing quarter-over-quarter. We are pleased with the strong Wi-Fi design win momentum and product ramp on WAV600 along with the adoption of our WAV600 extended release to silicon, we see multiple tribes and Wi-Fi platforms ramping in 2022, which utilize the 2.54 gigahertz, 5 gigahertz and 6 gigahertz spectrum capabilities offer solutions across North America cable and service providers.

Our Wi-Fi business is on track to double in 2021 and as the momentum to potentially double again in 2022. Additionally, in Q1 our MoCA shipments to our flagship U.S. Telco customer and to an additional new Canadian Telco customer and continue to grow. We also expect our G.hn business to pose double digit growth in 2021.

During Q1, we released the industry's first quad-port PHY optimized for 2.5 Gigabit applications that builds on our earliest access to 1 gigabit and 2.5 gigabit fiber and 1 gigabit switches. We expect the adoption of 2.5G base G to accelerate over the next several years driven by new and growing multi gigabit broadband applications such as 10 gigabit bond, DOCSIS 3.1 modem and Wi-Fi 6 routers as well as its mass market adoption in the enterprise industry laptop markets. We are positioned extremely well at the front end or the 1 gigabit to 2.5 gigabit Ethernet upgrade cycle.

Moving to wireless infrastructure market, our Q1 revenue rebounded strongly nearly doubling quarter-over-quarter owing to a strong recovering wireless backhaul deployments combined with the anticipated initial production revenue shipments from our 5G massive MIMO RF transceiver SOC. Our current wireless infrastructure bookings momentum supports continued growth throughout the year. In 5G access, we also announced a partnership with Facebook on the Evenstar program to develop an integrated OpenRAN SOC which incorporates our state of the art 5G RF transceiver, digital predistortion algorithm and OpenRAN functionality.

In optical data center, we are making progress towards mass production ramp up of 400G PAM4 DSP in the second half of 2021 along with strong adoption of 100G PAM4 offering by tier-1 customers. Additionally, we are on track to sample our industry leading new keystone family of 5 nanometer CMOS, 8G, 800 gigabit PAN4 SOC products in Q2.

Keystone solidifies our ability to capitalize on the PAM4 four optical interconnect market which will dominate cloud and edge data center deployments over the next several years. Our high performance analog business posted strong growth in Q1 across both infrastructure and industrial multi market applications. Despite a challenging supply chain environment and high performance analog, we believe that our leading channel inventory levels rapidly growing design win funnel and exciting new product development positions us very favorably for growth in 2021 and beyond.

We have made significant progress in expanding our portfolio in order in markets and broadening upward penetration and customer traction in new exciting growth markets. We believe this expanded value proposition and our enhanced target addressable market echoes high growth broadband connectivity and adverse infrastructure both together position as well for strong profitable growth in 2021 and beyond.

Now, let me turn the call over to Mr. Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer.

[Steve Litchfield, CFO and Chief Corporate Strategy Officer]

Thanks Kishore. I will first review our Q1, 2021 results and then further discuss our outlook for Q2, 2021. Total revenue for the quarter was $209.4 million up 8% versus Q4. Infrastructure revenue was increased by 61% compared with Q4 above our expectations and driven by a strong recovery in both our wireless backhaul and high performance analog in markets along with growing 5G access market contribution.

Our broadband business demonstrates strong growth during the quarter up 10% sequentially and slightly better than our expectations driven by upside in gateway SOC shipments. Solid demand for our broadband products is being driven by a combination of in market strength and company specific drivers including silicon content increases and share gains.

Our connectivity business was down 20% sequentially as supply constraints and Wi-Fi and Ethernet was only partially offset by growth in G.hn and MoCA. Lastly, our industrial and multi market business was down 1% sequentially and in line with expectations and softness in components was largely offset by strength in the HPA demand.

GAAP and non-GAAP gross margin for the first quarter was approximately 53.4% and 58.6% of revenue of 10.7 percentage points and 80 basis points over last quarter respectfully. The delta between GAAP and non-GAAP gross margin in the first quarter is primarily driven by $10.7 million of acquisition related intangible assets amortization and addition 0.3 million of stock based compensation and performance based equity.

First quarter GAAP and operating expenses were at $101.8 million down sequentially and slightly below the low end of our $103 million to $107 million guidance range. The GAAP operating expenses included stock based compensation and stock based bonus accruals of $19.3 million combined amortization of purchased intangible assets of $6.1 million, restructuring charges of $2.2 million, and acquisition and integration cost of $1.7 million. Non-GAAP operating expenses were $72.6 million down $3.2 million versus Q4 and at the low end of our guidance range of $72 million to $76 million. Non-GAAP operating margin for Q1, 2021 of 24% was the highest level in the past six quarters.

Moving to the balance sheet and cash flow statement. Our cash flow generated from operating activities in the first quarter 2021 was $40.3 million and we ended the period with $149.2 million in cash, cash equivalents, and restricted cash. Our loan balance stood at $350 million exiting Q1 as we made principal payments of $20 million during the quarter and we have subsequently paid down another $15 million. We remain consistent in our intentions around uses of cash with priorities on debt pay down and strategic acquisitions. We also purchased 2.7 million of stock late in the quarter after the board approved the $100 million buyback program.

Our day sales outstanding for the first quarter was approximately 38 days, slightly up from 32 days in the prior quarter due to shipment linearity. Our inventory churns were 4.1 compared to 4.4 in Q4.

That leads me to our guidance. We currently expect revenue in the second quarter of 2021 to be approximately $200 million to $210 million, down 2% sequentially at the midpoint of the guidance range. We expect broadband revenue to be down quarter-over-quarter as semiconductor manufacturing supply chain tightness is expected to constrain shipments below actual end market demand. We expect infrastructure revenue to be up slightly versus Q1 due to modest growth in wireless backhaul and wireless access. We expect our industrial multi-market revenue to be flat to down on a sequential basis.

Lastly, we expect our connectivity to grow double digits quarter-over-quarter, with the rebound being driven by a combination of solid demand and supply improvement. While the theme of product supply constraint continues to be prevalent across the entire industry, we continue to aggressively manage these issues in order to support our customers.

With that said we have seen limitations dating back to the fourth quarter and believe supply will continue to be an issue through the balance of the calendar year and into the first half of 2022. This uncertainty does impact our visibility with respect to product mix. We expect second quarter GAAP gross profit margin to be approximately 52.5% to 54.5% and non-GAAP gross profit margin to be between 58% to 60% of revenue, with the midpoint up from 40 basis points from Q1. As a reminder, our gross profit margin percentage forecast could vary plus or minus 2% depending on the product mix, and other factors.

We continue to fund strategic development programs targeted at delivering strong top line growth in 2021 and beyond with particular focus on infrastructure and connectivity initiatives and our stated goal of increasing the operating leverage in the business. We expect Q2, 2021 GAAP operating expenses to increase approximately $2.7 million quarter-on-quarter to a range of $102.5 million to $106.5 million primarily driven by increased prototyping expenses and payroll related expenses. We expect Q2, 2021 non-GAAP operating expenses to be up approximately $2.4 million versus Q1 to a range of $73 million to $77 million.

We expect GAAP tax expense to be approximately zero, and a non-GAAP tax rate of 6%. We expect GAAP interest and other expense to be $3.9 million to $4.1 million and non-GAAP interest and other expenses to be $3.8 million to $4 million.

In closing, we continue to see sustainable fundamental expansion across all of our addressable markets. This is largely being driven by a combination of companies’ specific catalysts including new product introductions, market share gains and content per platform increases. We believe our end markets are also demonstrating favorable growth profiles due to the proliferation of global networking in addition to the recent trend towards the incremental dependency on reliable and robust connectivity. Our infrastructure efforts in PAM4 and 5G continue to foreshadow meaningful growth coming in 2021 and beyond as production platform ramps commence.

We're also pleased with both the near term customer traction and development milestones in our Wi-Fi business. We remain steadfast and supporting customers through a dynamic market environment, which pairs accelerating demand the tight supply constraints. We remain focused on expanding upon our recent profitability, advancements, and strong cash flow generation while continuing to execute on the integration efforts as well as our organic infrastructure developments. With these profitable growth initiatives, we continue to believe we're uniquely positioned to deliver strong leverage in our business in 2021.

With that, I'd like to open up the call for questions. Operator?

[Operator]

Thank you. We will now be conducting our question and answer session. [Operator Instructions] Our first question comes from Tore Svanberg with Stifel. Please proceed with your question.

[Tore Svanberg, Stifel]

Yes, thank you and congratulations on the record results. First question is on capacity. Can you just add a little bit of color on what's going on there? What some of the puts and takes are especially when I think about your connectivity business being hampered a bit this quarter but release is coming next quarter while broadband is the other way around. So if you could just add a little bit of color there that'd be great.

[Steve Litchfield, CFO and Chief Corporate Strategy Officer]

Yes Tore thanks for joining. So yes look I think supply constraints are definitely across the board in all of our end markets across all of our products. Some are worse than others. I think as I mentioned before I think the MaxLinear case in particular is probably a little more back end constraint than front-end constraint. As far as the mix that we highlighted yes we did see connectivity impacted a little bit more in Q1 no doubt about that. But we're confident that we'll see that pick back up in Q2. So I'm not concerned about the mix quarter-to-quarter between those particular in markets but we are working very hard to make improvements on the supply chain situations as we've kind of highlighted in the call.

[Tore Svanberg, Stifel]

Very good and on your infrastructure business obviously I had a tremendous quarter and I was hoping you could just talk a little bit about the geographical contribution to that growth. I mean it's this kind of like the new run rate and it can grow from here on because obviously it grew significantly better than what you had expected.

[Kishore Seendripu, CEO]

Yes. So you're right it did grow quite a bit and we highlighted that we definitely saw backhaul finally recover. HPA did extremely well. We're starting to see really nice contribution from wireless access which we're excited about and anticipating and then looking forward to see the optical really ramp up in the second half of the year as well. So yes I do think this is I don't know if it's the new normal but it's definitely a higher level that should sustain for a while? We have been kind of pushing that infrastructure business anticipating it getting over 100 and I think you'll see it really easily exceed that $100 million level in 2021.

[Tore Svanberg, Stifel]

Great. Just one last question. Could you just give us a sense for where you expect the inventory days to be longer term for the new business model now? You're obviously slightly below 100 days right now but where are you trying to sort of get the inventory day level too?

[Kishore Seendripu, CEO]

Yes. So that's a tough question to answer right now Tore I mean especially given the environment that we're in. With the increased business that we have along with the supply constraints and just kind of uncertainty in the kind of global world right now we're trying to anticipate that. We're more than likely going to have to we want to build up some more inventory but we're not quite to that stage. So I can't really answer your question quite yet.

[Tore Svanberg, Stifel]

Sounds good and congrats again.

[Kishore Seendripu, CEO]

Thanks Tore.

[Operator]

Thank you. Our next question comes from Ananda Baruah with Loop Capital Markets. Please proceed with your question.

[Ananda Baruah, Loop Capital Markets]

Hi good afternoon guys. Thanks for taking the question and congrats on the strong execution. I guess a couple if I could, Kishore you mentioned when you were talking about and see this is actually you I think you gave the broadband guidance but one of the remarks was supply constraints around broadband demand remain stronger than supply but Kishore just a moment ago I think you also said that that's generally across the business and so really can you just clarify is it across the business that demand is stronger than supply? I guess you said your supply constraint across the business. Is it also the case that demand is meaningfully stronger than supply across the business and then with regards to broadband specifically is there any sense of how much revenue you're sort of, how much demand you're not able to meet right now and then I have a quick follow-up. Thanks.

[Kishore Seendripu, CEO]

Yes. Well so let me address that question in general at this point. We have a very-very strong bookings in place and there are several factors that contribute to it. Obviously the supply constraints drive the exceptional booking. However, beyond that we have new products cycles ramping across connectivity and our new product initiatives in infrastructure. So we have a little bit more what I call real demand that is coming aboard with all the due to the investments we have made in the past and securing capacity for those is our biggest goal right now.

And so to that extent we have constraints across the board. All about that on the broadband side there is a very strong demand that it seems very self-sustaining or sustaining due to I think a secular situation in terms of broadband demand consumption of the subscriber side. So we don't see any let up in the demand for product or the deployment of the end carriers and operators. So I would say we are in a great place, great product cycles, we are building up some momentum here. Infrastructure is beginning to show good sort of spontaneity in the growth here and so we are really constrained by supply and how much we can share and we do not believe our issues are related to overbooking of product from customers. It is real demand that is mostly non-perishable and we will be able to fulfill as the supply chain eases up a bit as we bring more capacity online.

[Ananda Baruah, Loop Capital Markets]

That's fantastic context Kishore. I appreciate it and the quick follow-up to that is you mentioned in the press release I just want to ask you I think this is your comment we feel increasingly confident in the company's outlook for the remainder of this year. So would you mind I mean would you be able to sort of give us some sense of what that outlook is since you mentioned it in press release that you feel confident in it and that's it for me? Thanks.

[Steve Litchfield, CFO and Chief Corporate Strategy Officer]

Yes. Thanks Ananda. So well, I'm not sure we only guide one quarter out. So we're not going to give any guidance beyond that. We do see supply constraints continuing as I mentioned in the prepared remarks in the second half and into the first half of 2022. I'll reiterate what Kishore said the demand is extremely strong across all of our end markets. I would say that we've seen a real fundamental shift in the broadband markets in general. I mean connectivity has been a big play because these are new products for us, their content increases which is very meaningful but I think you're also seeing the operators, telecom and cable really starting to invest. I think as we look out over the next three to five years you're going to see a substantial increase in the markets there and the amount of spend that these guys intend to make.

[Ananda Baruah, Loop Capital Markets]

That's great context Steve. Thanks guys.

[Kishore Seendripu, CEO]

Great. Thank you.

[Operator]

Thank you. Our next question comes from Quinn Bolton with Needham. Please proceed with your question.

[Unidentified Analyst]

Hi guys it's Michelle on for Quinn. Thanks for taking the question and congrats on the solid results. So just two quick ones for me. Can you guys give me an update on the next generation 5G cellular transceiver the 8x8 massive MIMO cellular transceiver and then on the second question just between the supply constraints and elevated shipping costs for COVID due to COVID and so on we're just wondering how you guys feel about the target for the 60% gross margins at the exit of, exiting this calendar year. Do you guys still feel comfortable with that? I know you don't guide more than a quarter out but that I believe that was a target you guys had mentioned after closing the Intel acquisition.

[Kishore Seendripu, CEO]

So Michelle I will answer the first part of question regarding the 5G product. We were the industry leaders in terms of launching our 8x8 RF transceiver and even in our 4x4 massive MIMO first generation product we were the only ones to support 400 megahertz of bandwidth throughput that spans all the way to 6 gigahertz, not just the lower frequency bands. Obviously we are now production ready and we got the garnering design wins for the product and obviously our competition is mimicking what we're doing. So we expect to be gathering some momentum in design wins as we speak. Obviously the slowdown and what happened in China has been a setback for us and however we are gaining meaningful design wins at various OEMs and as we move forward and look in the next 18 months we'll be tallying up those wins that should convert into shipments on the 8x8 product.

Today most the shipments that have begun for our products are primarily in the 4x4 product which we were not in convince. Remember that we were the ones who came from behind to enter this market but we're very pleased that we were the leaders. We launched 8x8 and competition is now playing catch up. Obviously we are strong. We have incumbent positions. However eventually we will win that's our conviction.

[Steve Litchfield, CFO and Chief Corporate Strategy Officer]

Yes, Michelle on your supply constraint question I think tying back to gross margins. Yes I don't think anything's changed as far as our expectation that we hit that 60% point exiting the year. Definitely we're seeing price increases in a number of places and as many of our peers are seeing across the industry. So we're working very hard I mean our real priority right now is just to get supply. Demand has been extremely strong and we're doing our best to get supplies as quick as we can.

[Kishore Seendripu, CEO]

I want to add that mix will have an important contribution and gross margin and so it's going to be a balance between our infrastructure products and non-infrastructure products. So we wait to see how that mix plays out but for now we only are guiding the next quarter out.

[Unidentified Analyst]

Thanks guys. Appreciate it.

[Kishore Seendripu, CEO]

Thanks Michelle.

[Operator]

Thank you. Our next question comes from Suji Desilva with ROTH Capital. Please proceed with your question.

[Suji Desilva, ROTH Capital]

Hi Kishore, hi Steve. Congratulations on the strong quarter. Perhaps first on the infrastructure optical ramp I want to clarify you said 400 gig you expect the second half of this year you'll start to see contribution there and I just want to get a real sick sense of what kind of linearity initial shipment levels we can expect out of the gate or whether it takes several quarters to ramp up?

[Steve Litchfield, CFO and Chief Corporate Strategy Officer]

This is being such a tough one to answer Suji. On 400 gig we were the first ones to enter the market as well and personally I'd be surprised how the market sort of plays out in terms of our own customers and to the end data center player. So at this point we feel we're making good progress towards ramp in the second half but I still do not have a good sense of linearity or otherwise and in this world of trying to secure supply for the new product initiatives how that affects the ordering patterns at the end customer is also not very clear right now. So the good news is we are making progress and are feeling increasingly confident of a ramp in the second half. However, I cannot give you more color on the linearity of those shipments.

[Suji Desilva, ROTH Capital]

Yes. I can also imagine optical being a tricky supply chain as well. So I understand that. And then moving over to the broadband business the Wi-Fi. Can you help us understand if the upgrades to Wi-Fi 6 dry band sweeps in MaxLinear where you weren't before or does it, is an upgrade of your prior content if so what's the content increase? Give a sense of how that up those upgrades will help you guys?

[Kishore Seendripu, CEO]

It's a mix of both going on. We have products that are shipping what we call the WAV500. This is the before the 6 gigahertz band was added to the Wi-Fi product lines. We have WAV600 that's a tri-band solution but it's called release one. It has got it and then there's the Wi-Fi 6e R2 version which is the increased data throughput, better utilization of air capacity, multi-user MIMO that's called the release 2 silicon. So all of those are getting design win or ramping in production while [Indiscernible] is increasing even with the older generation products. The good news is we are gaining market share because we have starter initial boarding to the fiber platforms. I hope to share a lot of good news in the near future because fiber is a huge growth opportunity for us in front of us and that's a full platform ownership. So I think here the goal is to get as much supply as possible so that we can ship as much content as possible the new platforms and expand our market share because we really are in a great place to do that.

[Suji Desilva, ROTH Capital]

Helpful color Kishore. Thanks guys.

[Kishore Seendripu, CEO]

Thanks Suji.

[Operator]

Thank you. Our next question comes from Alessandra Vecchi with William Blair. Please proceed with your question.

[Alessandra Vecchi, William Blair]

Hi guys congrats on the quarter. Just a quick question on the operating expenses I feel like I asked you guys this every quarter but you've done such a tremendous job holding those costs down. I think I remember discussion last quarter about some math costs coming in Q2 or Q3 is sort of the streamlined OpEx and the Q2 guidance a function of the mass cost hitting in Q3 or is there something else going on there?

[Kishore Seendripu, CEO]

Alex, good to chat with you today. So from an OpEx standpoint so we as kind of expected we did anticipate this going up. There were some payroll increases as well as some mass conditions in Q2. So we do see it going up not quite as much as I think what we'd originally expected but some of those costs I suspect will push into the second half of the year. So I mean net I think it's a little bit better than kind of what we went into the year with but there were some of those costs that will push out into Q3.

[Steve Litchfield, CFO and Chief Corporate Strategy Officer]

But to answer your question mass cost related with the 5 nanometer product which we just talked about in my, in the call the Keystone product is part of those increased expenses and some of it may push out into Q3.

[Kishore Seendripu, CEO]

Alex, just to further clarify though the bigger 5 nanometer stuff will hit next year though so that's not anticipated in the first half of this year.

[Alessandra Vecchi, William Blair]

That helps. And then just on the broadband side heading into the quarter there was some, there's been investor concern that at some point because of the work from home trends that the broadband revenue would sort of trend down or moderate in the back half of the year. Obviously we're seeing a little moderation in Q2 because of the constraints but I guess where I'm trying to go with that is if the supply is below the demand and you have all these drivers in terms of increased contacts and the operator is finally starting to spend a little bit more and open up the first strings does that sort of alleviate the original worries in Q1 of maybe a back half tail off or a 2022 tail off?

[Kishore Seendripu, CEO]

So I think the best way to answer that, so first of all I think really I mean what's happened kind of post-COVID I think you've actually you've seen this acceleration of the cycle that we've been through where operators don't spend and we were starting to see the beginning of the cycle where they would start to spend. We saw a lot of that increased demand start because of work from home but I think what you've seen more recently and what you've heard from a lot of our peers, our customers, operators is that you're probably going to see a multi-year cycle. I think going into this even the acquisition of Intel we had highlighted numerous times that this broadband business would probably grow in the kind of low single digits.

I think at this point based on visibility that we have feedback from operators and customers is that that could be admitted to high single digits going forward and then hopefully we'll see some additional content increases and share gains on top of that. So yes I think the world has changed. I think if you've heard a lot of this commentary about the importance that the operators are placing on the home and wanting to really control and derive services and things like that that they're going to continue to invest further and I think that started to really shift in our own business and so that's really driving that outlook. So yes we would agree that I think if things have changed a little bit demand has definitely picked up quite a bit and really on top of that I think as you look out over multiple years you're going to see more of that spending going forward.

[Alessandra Vecchi, William Blair]

Perfect. That was incredibly helpful. Thank you.

[Kishore Seendripu, CEO]

Sure. Thank you.

[Operator]

Thank you. Our next question comes from Christopher Rolland with Susquehanna. Please proceed with your question.

[Christopher Rolland, Susquehanna]

Hi guys thanks for the question. I want to dig into the supply situation a little bit more here. You mentioned it was more back end. Is this the substrate issue that most people are having or is it something else like tests or packaging and what is the path towards kind of equilibrium look like there and is there any way that us, analysts can get a sense of the size of these constraints or how kind of the various pieces are moving? Are we having revenue push from Q1 to Q2 or Q2 to Q3? How should we be thinking about this? Thanks.

[Kishore Seendripu, CEO]

Yes Chris. I wish I could tell you. So we're working very hard. I mean it's all of the above I mean everything substrates, lead frames, wire bonders that you've heard from numerous people. We're seeing a lot of those challenges. We do expect to see them through the rest of this year. Hopefully they ease in each subsequent quarter but there's no guarantee of that and the lead times have stretched tremendously especially on the substrate side. So yes I mean we've got some challenges that we got to work through. Fortunately we've got a lot of demand. We've got a creative team and we've been working closely with our suppliers and we're also coordinating with our customers as well trying to do what we can and cooperate with them to kind of maximize the output.

[Christopher Rolland, Susquehanna]

Thanks. And then maybe we can, you just mentioned lead time so maybe dig in there a little bit more. Maybe talk about where they were even six months or a year ago, where they are now and talk about this and maybe in the context of bookings, and backlog here have you guys seen considerably more bookings and you're able to build right now? Is that backlog building right now? And can you give us any sort of visibility into that backlog? What it might look like now and what this means for billings for you guys in future quarters?

[Kishore Seendripu, CEO]

Yes. I mean, look, I think us I mean, pretty consistent with what we see from others I mean you're seeing lead times, quoting lead times up to a year in advance and so 52 weeks a long time to get product. And so we definitely have seen bookings increase quite dramatically. And so our backlogs increase. We've heard other peers talk about booking out an entire year I mean we're definitely seeing that. And so we're very confident. We've got great visibility. It's important that customers are kind of getting in line and I think they've been reacting to make sure that they're scheduling out their own needs. And so we do have incredible visibility at this point. And so that really helps your own planning perspective and gives us a lot more confidence as we're forecasting the year albeit somewhat tough in the short term with some of the tighter supply constraints.

[Christopher Rolland, Susquehanna]

Thank you.

[Operator]

Thank you. Our next question comes from Bill Peterson with JP Morgan. Please proceed with your question.

[Bill Peterson, JP Morgan]

Hi, good afternoon, and congrats on the results. Trying to ask the sort of supply and demand questions a little bit differently. I know you only got one quarter at a time, and that's fair. But I guess we see here how the impact on broadband is with the sequential decline even amidst strong demand while connectivity obviously is up. But is the demand such that can you drive sequential growth into the third and fourth quarter across your businesses? Is demand supportive of that and you expect the state and supply can be supportive of growth in the back half across your various segments?

[Steve Litchfield, CFO and Chief Corporate Strategy Officer]

Yes Bill. These are all great questions. They're also hard to answer when you don't have that visibility. But I mean look, I guess the best thing that I can say is that I think we absolutely continue to see very tight constraints in Q2 and Q3. I think we're optimistic. Things start to improve in Q4 and into next year but there's no guarantees on these things. And so that's my take on the overall supply chain. I guess I'd add I don't know if this is part of your question or not but on the broadband and connectivity side just to maybe echo what you've heard in our prepared remarks and what Kishore shared already I do feel confident that we're going to continue to see growth there. I mean as I look into next year we're continuing to see really nice growth in that business from a year-over-year perspective and so supply chain constraints are going to push some of that to the back half of the year into 22. But I mean, we're seeing very solid demand in 22 already.

[Bill Peterson, JP Morgan]

That's really good color. Maybe more specifically coming to the infrastructure in particular access. We're hearing more about ORAN coming out. I mentioned the Facebook opportunity. On one hand, it feels like it's still two years away, but I guess what do you really expect some of these ORAN around developments to start and how is next in your position? You talked about 8x8 but obviously, we've seen some analysis from some of your peers that they're working closely with some of the compute companies or other companies that have already sort of started some initial ORAN deployments?

[Kishore Seendripu, CEO]

Bill obviously we are working with all of those. If you're on the Facebook Evenstar program they're all natural allies and partners and co-developers on the full solution. And so being selected at the front end transceiver DAP ORAN single chip or macro base station applications we are a big part of that game plan. Regarding things pushing out two years on shipment my gosh, I mean, they've been investing for three years now in wireless infrastructure and it seems like this is the nature of the beast. So I think that if you're going to be invest infrastructure and this is good in the optical side as well, is that you are in for the long haul, we are committed.

The TAM is wonderful. It's very high quality products that really very complimentary to our great enduring skills. And so we are in this for real and for the long term. So while we live in this quarterly world of earnings, this thing, my focus is long term. And I think we should feel really-really good because we combine the analog RF mixed signal capabilities with really high end at the tip of the spear finance, technology capabilities. I dare say among the players that are present today in this ecosystem maybe they'll be future ones you can't pick anybody who can match us right now. It's a matter of getting to the customer and getting the sales to ramp and that's going to take a dare pace. And that's okay I've been patient now for 15 years in my life. I got 15 more to go.

[Bill Peterson, JP Morgan]

It's good to hear that you're competitive in the space and we look forward to seeing the progress. Thank you.

[Kishore Seendripu, CEO]

Thanks Bill.

[Operator]

Thank you. Our next question comes from Sam Peterman with Craig Hallum Capital Group. Please proceed with your question.

[Sam Peterman, Craig Hallum Capital Group]

Hi, guys, Sam on for Richard here. Thanks for taking my question. I want to ask about MIMO. I'm curious what kind of share you guys think you can get with your associates from MIMO particularly the 8x8 that you're coming to market towards the leading edge with you've named you know, Texas Instruments at is your biggest competitors. I am curious how you expect share to shake out and does Nokia ramping the recharge SSEs in 2021, not at all. Thanks.

[Kishore Seendripu, CEO]

You asked a very-very hard question because nobody shipping 8x8 right now, have some design wins been awarded? Yes. And you really need to keep in mind that the Chinese OEMs are not part of the configuration right now for the most part for anybody there. They are now reverting to the older platforms in shipments given the regulatory restrictions, trade restrictions that both Huawei have been put under. So now the whole dynamic has changed. And 8x8 is going to be driven by the western OEMs and the Japanese and the Korean OEMs and they are really very competitive and actively engaged. We are the ones that have been selected. We have won a couple. And so I think ultimately, this is going to be a two player market on the transceiver space and we hope to be one of the two. And that's where we are focused on closing out on.

[Sam Peterman, Craig Hallum Capital Group]

Okay, great, that's helpful. And then just a quick follow up on broadband especially in Wi-Fi. You've noted that both content and share have been increasing in recent quarters. So I'm curious how you characterize the split between content and share and driving broadband growth this quarter? And if you expect one or the other to be a bigger driver of performance next quarter? And I'd be curious to if that answer would be different absent the supply constraints that you've talked about.

[Kishore Seendripu, CEO]

Let's keep something completely out of the discussion here so that to give you a sense of a flavor. If you think about you rewind back the clock about two years ago and if you look at where the Intel connected home business was in terms of the digital side of the SOC and Max was the front end those platforms and WiFi by some third players. And then you fast forward to now together we have all the Wi-Fi, we have the Ethernet, we have the baseband of the front end, but more importantly, the ESP or WiFi of three years ago to now more than doubled or even closer to triple this thing. So in a way, the Wi-Fi is the single biggest home element on the platform now. So it's really an outside component on the platform and it will continue to be even more so as operators are trying to take control of your home and provide services inside the home and connectivity inside the home. So I would say that really at least a doubling of the home has happened from a time perspective from three years ago.

So yes, we are benefiting I think substantially more on home increase as we move forward. At the same time in a couple of operators, we are gaining more share so if you combine the two, you have a multiplicative effect. So as Steve said we are feeling pretty strong that the operator business is going to be entering a big expense spending cycle investment cycle and we'll be very strong beneficiaries of that over the next few years to come.

[Sam Peterman, Craig Hallum Capital Group]

Okay, great. Thanks guys.

[Kishore Seendripu, CEO]

Thanks Sam.

[Operator]

Thank you. Our next question comes from Tim Savaggeaux with Northland Capital Markets. Please proceed with your question.

[Tim Savaggeaux, Northland Capital Markets]

Hi, good afternoon, and congrats on the results, and then I hopped in a little earlier, because I think you addressed a little bit of this, but maybe we can go into it that really concerns growth in sort of the broadband connected home area and you've already said, you'd see the prospects for mid to high single digit growth instead of low single digit growth. I guess I would try and juxtapose that against your biggest competitor having an event recently and talking about double digit growth potential for that $3 billion piece of their broadband IC business.

I think there are areas in which you do and don't overlap particularly on the broadband infrastructure side but a lot of overlap and CPE and connectivity. So I'd be interested in your thoughts on the potential for double digit growth in that group? Although I know I'm getting ahead of myself because you just raised it from low to high singles. But I appreciate it.

[Steve Litchfield, CFO and Chief Corporate Strategy Officer]

Yes. Well I'll jump in first. There's no hedging going on here. We're both equally in this market. Yes, they have some, I think you're aware they have some infrastructure business that we don't have, but there was no hedging. I think it very well could be double digit growth and the feedback that we're getting, the market traction that we're getting, insights that we're seeing from our customers, it absolutely can be double digit growth.

[Tim Savaggeaux, Northland Capital Markets]

Great, thanks very much. Thanks. Congratulations again.

[Operator]

Thank you. There are no further questions at this time. I'd like to turn the call back to management for any closing remarks.

[Brian Nugent, IR]

Thank you operator. We will be participating at the following upcoming conferences during Q2. We will be at the Needham Technology and Media Conference in May 18 and at the JP Morgan Global Technology Media and Communications Conference on May 24, The Craig Hallum Institute Investor Conference on June 2, at the Cohen Annual TMT Conference on June 3, and at the Stifel Cross Sector Insight on June 8 to June 10. We hope to meet many of you there and we look forward to relating to your further progress on our outlook. Thank you.

[Operator]

Ladies and gentlemen, this concludes today's web conference. You may now disconnect your lines at this time. Thank you for your participation and have a great day.