Maxlinear Inc (MXL) 2017 Q2 法說會逐字稿

Greetings, and welcome to the MaxLinear Second Quarter 2017 Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Gideon Massey, Investor Relations for MaxLinear. Thank you. You may begin.

Thank you, operator. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss MaxLinear's Second Quarter 2017 financial results. Today's call is being hosted by Dr. Kishore Seendripu, CEO; and Adam Spice, CFO.

During the course of today's conference call, we will discuss our financial performance and review our business activities for the second quarter, specifically the acquisitions of Marvell's G.hn business as well as that of Exar Corporation, both of which closed in the second quarter. After our prepared comments, we will take questions.

Our comments today will include various forward-looking statements within the meaning of applicable security laws, including, without limitation, statements relating to our current projections, forecasts and expectations with respect to third quarter 2017 revenue and revenue contribution from key product markets as well as gross profit percentage and operating expenses on a GAAP and non-GAAP basis; the potential impact on our business of recently completed acquisitions and any acquisitions we may pursue in the future; and our current views regarding opportunities and trends in our markets, including our current views of the potential for growth at each of our target markets. These projections, expectations and other forward-looking statements involve substantial risks and uncertainties, and our actual results may differ materially from current forecast results. Risk potentially affecting these statements and our business generally include risk related to the recent acquisitions and substantial integration challenges we may face that could affect our ability to realize currently anticipated synergies, substantial competition in our markets, in particular, from increasingly large players as our industry consolidates, potential declines in average selling prices and factors that could adversely affect our operating expenses, such as litigation, asset impairment or restructuring. In addition, our target markets, including target markets we may pursue through recent or future acquisitions, including our recent acquisition of Marvell's G.hn business and the Exar, may not grow in the manner or at the rate we currently expect. We face risks associated with consolidation trends in our operating markets, and we face integration risk connected -- associated with the acquisitions generally.

For a more detailed discussion of the risks and uncertainties potentially affecting the forward-looking statements we make today and our business generally, we encourage investors to review the sections captioned Risk Factors in our quarterly report on Form 10-Q which we expect to file shortly, our quarterly report on Form 10-Q for the quarter ended March 31, 2017, which we filed on May 9, 2017, and our annual report on Form 10-K for the year ended December 31, 2016, which we filed on February 9, 2017. Any forward-looking statements are made as of today, and MaxLinear does not currently intend and has no obligation to update or revise any forward-looking statements. The second quarter 2017 earnings release is available in the Investor Relations section of our website at www.maxlinear.com.

In addition, we report certain historical financial metrics, including gross margins, operating expenses, net income or loss and net income or loss per share on both GAAP and non-GAAP basis. Our non-GAAP presentation includes the gross margin impact of Exar's deferred profit elimination and purchase price accounting and excludes certain expense items as discussed in detail in the press release available on our website. The press release available on our website also includes a reconciliation of our GAAP and non-GAAP presentations, which we encourage investors to review.

It is not our intent that the non-GAAP financial measures discussed today replace the presentation of MaxLinear's GAAP financial results. We are providing this information to enable investors to perform more meaningful comparisons of operating results that more clearly highlight the results of core ongoing operations in a manner similar to management's analysis of our business.

We do not provide a reconciliation for forward-looking, non-GAAP gross margin and operating expense guidance, which excludes estimates for stock-based compensation expense, bonus accruals, acquisition-related expenses and restructuring charges. Each of these expense items is explained in greater detail in the press release. The timing and amounts of these future expenses, which we would need to provide a reconciliation of non-GAAP margin and operating expense guidance, are inherently unpredictable or outside our control to predict. Accordingly, we cannot provide a quantitative reconciliation of forward-looking non-GAAP estimates without unreasonable effort. Material changes to any of these items could have a significant effect on our guidance and future GAAP results.

Lastly, this call is being webcast, and a replay will be available for 2 weeks.

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

Thank you, Gideon. And good afternoon, everyone. Thank you, all, for joining us today. Before delving into the financial details, we are very excited to report Q2 2017 revenue of $104.2 million, which includes the elimination of $5.2 million of Exar-deferred revenue owing to acquisition-related purchase price accounting goals.

Absent this $5.2 million revenue elimination, revenue would have been slightly above the high end of our guidance range of $107 million to $109 million. Additionally, we are big in de-leveraging, having made $30 million in prepayments in July and August towards our $425 million term loan obligation.

With the confirmation of the acquisition of Marvell's G.hn business and Exar Corporation, we have also made noteworthy progress towards our strategic goals of diversifying and expanding our served addressable market. We are rapidly transforming it to one of the broadest and most advanced analog and mixed-signal platform technology companies.

We remain committed to a strategy of diversification of revenues across large, high-value end-markets consisting of the connected home, wireless and wireline network infrastructure and high-performance analog and mixed-signal solutions addressing automotive, industrial and broad multi-markets.

Not only were the second quarter of 2017 eventful with regards to corporate development; we also marked significant business and engineering milestones. To highlight a few of these achievements: We commenced production shipments of our technology-leading 28-nanometer CMOS microwave backhaul RF transceiver solution addressing 5-gigahertz to 45-gigahertz frequencies. This is resulting in significantly expanding engineering engagements with several Tier 1 customers not only in backhaul, but also in the broader 5G wireless infrastructure markets.

We also commenced volume production shipments of our 20-gigabit per second millimeter backhaul modem solutions to a Tier 1 Chinese OEM.

We continue to be at the forefront of what we believe is an exciting long-term growth opportunity for last-mile broadband access in developing markets around the world. We have broadened our operating engagements for last-mile access that have already contributed meaningfully to Q2 revenue.

Within our connected home markets, we have greatly expanded our wireline connectivity presence, having commenced shipments of our technology-leading multi-gigabit MoCA 2.5 and near-gigabit Wave-2 G.hn solutions.

We are not only garnering interest -- increased interest from the traditional coaxial cable satellite and cable operators but also from major telco broadband players in North America, Europe and China. These operators are interested in utilizing MoCA and G.hn as a cost-effective multi-gigabit wired-back phone for providing reliable WiFi coverage throughout the home.

Similarly, within our newly acquired Exar business, we are at the early stages of new platform growth drivers in the form of 4-step solutions to the smartphones and power modules into Tier 1 Intel Burley-based servers.

Moving on to our Q2 2017 results. Our unadjusted revenue of $104.2 million in Q2 of 2017 was up 17% sequentially and up 2% year-over-year, owing to strength in our wireless infrastructure and wireline access products.

Our revenue includes Asia contributions from our recent acquisitions of the Marvell's G.hn business and Exar Corporation. I'm very excited with our return to year-over-year top line growth despite significant headwinds represented by the final declines from legacy entropic products and weakness in the Chinese Metro optical market.

In the second quarter, we witnessed strength across cable data, microwave backhaul and MoCA solutions, addressing in-home and last mile access connectivity. We also saw strength in the demand for satellite digital channel stacking solutions, enabling multiple channels of 4K content.

In 2Q 2017, we achieved a major milestone of having shipped 7 million satellites digital channel stacking units cumulatively. These revenue strengths, which include partial quarter contributions from our G.hn and Exar acquisitions overcame declines in legacy satellite analog channel stacking, a pause in 4K satellite gig shipments, which are prone to lumpiness and weakness in China optical interconnects.

Now moving to the specifics of our business highlights for the second quarter. Within connected home, we anticipate double-digit year-on-year growth in our Cable data business. During the second quarter, we witnessed the initial volume production ramp of DOCSIS 3.1 platforms for a major U.S. Cable operator.

As previously mentioned, we also commenced shipments of our 3-gigabit MoCA 2.5 solution in battle over the continued ramp of 1-gigabit MoCA 2.1 shipments to a Tier 1 U.S. telco operator. While we're excited by the traction for MoCA at major operators, the acquisition of the Marvell G.hn enables a truly global wireline connectivity portfolio. Together, MoCA and G.hn enable us to better address our broadband access customers and ecosystem partners' needs.

Within satellite, we experienced sequential growth in our digital channel-stacking products as new operators continue to ramp. However, we also saw a pause in 4K gateway front-end shipments after a strong first quarter. Further, we witnessed the last meaningful revenue contribution from end-of-life entropic analog channel-stacking shipments, which is approximately $3.5 million in 2Q 2017.

Moving to our infrastructure business. Wireless infrastructure showed strong growth driven by wireless backhaul mode of shipments across microwave and millimeter wave. We are uniquely positioned to capitalize on an emerging industry trend of combining these 2 technologies in a single backhaul solution to achieve an optimal blend of network capacity and availability.

As mentioned earlier, we are excited to have commenced shipments of our organically developed microwave backhaul 28-nanometer CMOS RF transceiver, spanning 5- to 45-gigahertz frequencies. We are increasingly confident that our backhaul RF transceiver will be a growth driver in 2018 and beyond.

Significantly, our backhaul RF transceiver has also served as a critical credibility proof point with target OEM customers for our new innovations in 5G access art solutions and development.

On infrastructure revenue corresponding to wireline last mile access which consists of MoCA-based c.Link and G.hn-based G.Now products has doubled sequentially. We witnessed strong growth in revenues for c.Link and our newly acquired G.Now products. We not only saw the initial ramp of G.Now solutions intermediate Asian telco operator, but also a strong and growing international telco and operator engagements in this business.

Recently, the security design win for G.Now last mile access at a major telco operator in Asia, which will ramp revenues in the second half of 2018.

We continue to see weakness in our high-speed fiber optical infrastructure telco revenues. While we are extremely cautious, we are continuously monitoring the release of the next wave of provincial tenders for Chinese Metro and longhaul deployments. Despite the weak near-term telco macro environment, we remain encouraged by our increasingly diversified long-term position in this market and corresponding strong customer traction for our 2 new TIA and driver devices.

We are confident that once the optical telco market returns to growth, we will be well-positioned to grow our revenues due to a wider range of product offerings and applications, not only in China but on a global basis.

Our 400-gig PAM-4 organic development initiative for inside the data center interconnect applications has gained significant momentum. We have received customer validation of the superiority of the integration level expected performance and time-to-market advantages of a solution related to the competition. We expect to be sampling the product towards the end of 2017.

Also included within our infrastructure revenues are Exar power management solutions into Intel-based server platforms. We are encouraged by the initial ramp of Exar power management solutions Intel-based server platforms. This represents the first step of what we believe is an exciting opportunity to expand into enterprise and data center power management platforms.

We're also extremely pleased with the potential opportunities and the strong design traction for Exar power solutions into existing MaxLinear platforms.

And finally, moving to industrial and multimarket. We are excited to have added this new layer of product in customer diversification and sales channel access into our revenue mix. The bulk of the revenues today are generated from a diverse set of leading interface and power solutions, addressing a wide range of communications, networking, automotive and industrial applications.

In this broad range of solutions, we are particularly excited by the meaningful growth opportunity represented by the early ramp of our innovative posted solutions in smartphones. We believe there are additional long-term platform opportunities for this technology beyond the smartphone and look forward to discussing those in more detail in the future.

Before I turn the call over to the Adam Spice, our Chief Financial Officer, I would like to reiterate how pleased we are with the increasing diversification of revenue streams and cost consumer, broadband, industrial, automotive and wired and wireless network infrastructure.

These markets taken together, we believe, represent a large, high-value expanded served addressable market of approximately $9 billion. MaxLinear is unique in its focus, strategy and capabilities towards becoming a world-class broadband RF analog and mixed-signal 5 SoC platform company. We are emerging as a leader in rapidly transforming communications technology landscape, which is driven by the exploring demand for data, data capacity and data delivery.

As we look forward to the rest of 2017 and through 2018, we're excited about the product expansion, strong customer and end-market diversification potential and the sustainability of our core broadband infrastructure technology platforms. We look forward to future announcements in this regard over the coming months.

Now let me turn the call over to Mr. Adam Spice, our CFO, for a review of the financials and our forward guidance.

Thank you, Kishore. I'll first review our Q2 2017 results and then briefly discuss our outlook for Q3 2017.

As Kishore noted, our Q2 revenue was $104.2 million, up 17% sequentially, net of a $5.2 million revenue elimination of free closing Exar-deferred revenues under acquisition accounting.

Connected-home revenues increased 3% sequentially and accounted for 76% of total revenue in the quarter. Within connected home, we witnessed strength in cable, our DOCSIS 3.0 32-channel RF receiver SoCs and initial meaningful shipments of DOCSIS 3.1 RF receiver SoCs to our North American operator.

Connectivity increased as strong sequential growth from MoCA 2.1 deployment shipping to a North American telco operator was aided by a partial quarter contribution from our acquisition G.hn assets from Marvell. Within satellite, growth in digital channel stacking was more than offset by the continued decline of end-of-life analog channel stacking, which was down roughly $3 million sequentially, while 4K Gateway front ends experienced a step back after a strong first quarter.

Tuners shipping in the trust for OTA and OTT applications and legacy TV receivers were up 13%, driven by previously disclosed high-volume, lower-margin Latin American opportunities.

Legacy video SoC revenues derived from the Entropic acquisition remained flat at $2.3 million or 2% of total revenues at the high-end of our expectations. We continue to expect the legacy video SoC business to be at a negligible 1% of our total revenues in 2017.

Moving to our infrastructure products. Revenues increased approximately 34% and accounted for roughly 15% of total revenue in the quarter. Within this mix, we witnessed strong sequentially growth in wireless infrastructure and c.Link wireline broadband access in China supplemented by initial contributions of G.Now deployments rolled into our Marvell G.hn acquisition and Exar products shipping into enterprise and data center applications. These areas of growth were more than sufficient to offset sequential declines in high-speed fiber interconnect referenced earlier in the call by Kishore and discussed by numerous peers on recent earnings calls.

GAAP and non-GAAP gross margins for the second quarter were approximately 49.1% and 64.4% of revenue, respectively. GAAP gross margin was meaningfully impacted by an Exar purchase accounting deferred revenue and related profit elimination, amortization of purchased intangible assets and amortization of inventory step-up. Non-GAAP margins were 61.3%, in line with guidance, when calculated to adjust for the $5.2 million deferred revenue and COGS elimination under the Exar acquisition accounting.

This compares to GAAP and non-GAAP gross margins of 59.6% and 62.7%, respectively, in the first quarter 2017 and GAAP and non-GAAP gross margins of 61.9% and 63.8%, respectively, in the year-ago quarter.

The delta between GAAP and non-GAAP gross margins in the second quarter was primarily acquisition-related, reflecting the amortization of $6.3 million of purchased intangible assets, $5.6 million of inventory step-up, $3.9 million of deferred profits elimination from the previously mentioned Exar purchase accounting, $100,000 in depreciation of step-up of acquired fixed assets; and $100,000 of stock-based compensation and stock-based bonus accruals.

Q2 GAAP operating expenses were approximately $66.9 million, which was $20 million above the GAAP guidance that excluded the impact of Exar, with the overage primarily related to the higher acquisition and integration costs and amortization of purchased intangibles that could not be estimated at the time of guidance. Partially offset by lower prototyping, outside services and some favorability resulting from the pre-closing timing of Exar's quarterly spend.

GAAP operating expenses included stock-based compensation and accruals related to our stock-based bonus plan of $7 million and $1.5 million, respectively, $8.4 million for the amortization of purchased intangible assets, $6.5 million in restructuring charges, $5.6 million for acquisition integration costs, $800,000 of depreciation related to a step-up in acquired fixed assets, $100,000 for IP litigation costs related to the previously disclosed CrestaTech Technology matter.

Payouts under our 2017 bonus plan, if earned, are expected to be settled primarily in shares of MaxLinear stock, which are expected to be issued in Q1 2018.

Net of these items, non-GAAP OpEx was $36.9 million, which was $2.1 million below our prior guidance of $39 million, which was up approximately $6.8 million from Q1 2017 and up approximately $6.3 million from the year-ago quarter.

Second quarter GAAP OpEx attributable to R&D was approximately $5.1 million quarter-on-quarter. It was up approximately $5.1 million quarter-on-quarter and up approximately $5 million year-on-year to $29 million, which included stock-based compensation of $4 million, $1.1 million related to 2017 stock-based bonus plan accruals, $800,000 of depreciation of fixed assets step-up and $100,000 of amortized purchase intangibles.

Excluding these items, second quarter non-GAAP R&D was up $3.8 million quarter-on-quarter and up approximately $4.3 million year-on-year to $23.1 million.

Within the sequential increase in R&D spend, there was $2.5 million of higher payroll-related expenses largely related to the Exar and Marvell G.hn acquisitions; $400,000 in higher prototyping expenses; $200,000 in higher design tool spending and $100,000 in higher travel expenses; and $600,000 in other miscellaneous spending increases.

Second quarter GAAP OpEx attributable to SG&A was up approximately $12.7 million quarter-on-quarter and up $14.8 million from the year-ago quarter to $31.3 million.

GAAP SG&A expenses included $8.3 million for the amortization of acquired intangible assets, $5.6 million in acquisition and integration costs, $3 million of stock-based compensation, $500,000 in stock-based bonus plan accruals, $100,000 for CrestaTech IP litigation costs and $100,000 in depreciation of acquired fixed asset step-up.

Excluding these items, second quarter non-GAAP SG&A was up $3 million quarter-on-quarter and up $2 million from the year-ago quarter to $13.8 million. The sequential increases were a function of increases in headcount and the expanded scope of activities related to the acquisitions of Marvell's G.hn business and Exar Corporation, with a year-on-year increases also being impacted by the micro-semi wireless access and Broadcom microwave backhaul business acquisitions.

Rounding out our commentary on operating expenses, at the end of the second quarter 2017, our headcount was 797 heads compared to 548 at the end of the first quarter of 2017 and 523 at the end of the second quarter 2016. 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.

GAAP loss from operations in the second quarter was $15.8 million compared to operating income of $10.4 million in the prior quarter and income of $22 million in the second quarter of 2016.

GAAP tax benefit was $29.5 million in the second quarter of 2017, impacted by a $50.1 million of benefit related to the reversal of a valuation allowance against certain of our deferred tax assets.

GAAP earnings per share in the second quarter were $0.16 on fully diluted shares outstanding of 69.6 million. This compares to GAAP EPS of $0.12 in the prior quarter and $0.33 per share in the second quarter 2016.

Non-GAAP income from operations was $30.2 million in the second quarter of 2017 compared to $25.6 million in the prior quarter and $34.4 million in the second quarter of last year.

The non-GAAP effective tax rate was 10.1% of non-GAAP pretax income. This compares with 9.9% in the first quarter of 2017 and 2.2% in the year-ago quarter. Non-GAAP earnings per share in the second quarter were $0.35 on fully diluted shares of 69.6 million compared to $0.33 in the first quarter 2017 and $0.50 per share in the second quarter of 2016.

Moving to the balance sheet and cash flow statement. Our cash, cash equivalents, restricted cash and investments balance decreased $64.8 million sequentially to approximately $90.1 million. It decreased $86.4 million as compared to $176.5 million in the second quarter of last year.

Our ending cash position includes outflows of $452.3 million and $21 million for our Exar and Marvell G.hn acquisitions. Net of cash acquired was refunded by existing cash and the issuance of a $425 million term loan facility.

Our cash flow used in operation activities in the second quarter 2017 was approximately $7.1 million versus $22.7 million generated in the first quarter of 2017 and $32.3 million generated in the year-ago quarter. Our cash flow was negatively impacted by payments of $18 million in Exar pre-closing liabilities and $7.6 million in transaction and restructuring-related costs.

With these expenses factored into our forecast, we exit the second quarter above our targeted cash position of $75 million to $80 million; and considering this, this cash surplus, we paid down $30 million of our term loan b subsequent to the end of quarter.

Our days sales outstanding for the second quarter was approximately 72 days or 13 days more than the prior quarter and 32 days more than the year-ago quarter. The days sales outstanding is distorted by the full quarter impact of AR relative to the partial quarter revenue contribution from Exar. Still our normalize DSO has trended higher, primarily a function of changes in shipping linearity and a general lengthening of payment terms granted to some of our largest credit-worthy customers.

Our inventory turns were 3.6 in the second quarter compared to 4.9 turns in the first quarter, and 5.6 turns in the year-ago quarter. Again, our inventory turns metric is impacted by the Exar acquisition and the legacy distributor and discrete component intensity, which is a focus of ongoing integration efforts to better align with MaxLinear's target model of approximately 6 inventory turns.

That leaves me to our guidance. We expect revenue in the third quarter of 2017 to be in the range of $114 million to $118 million. Built into this range, we expect connected home revenues to account for roughly 60% of overall revenue, contributions from infrastructure to represent 20%, and industrial and multi-market contribute 20%.

More specifically, within connected home, we expect typical seasonal weakness in cable data, a step-down in tuners shipments after a stronger-than-expected first half and 2017, and weakness related to the final meaningful step-down in both legacy analog channel-stacking and video SoC revenues, primarily offset by strength in cable video and satellite 4K front-end products.

Within infrastructure, we expect continued strength in wireline access across both c.Link and G.Now and from the full quarter impact of Exar aided by the continued force-touch and server power management ramps. These areas of growth are expected to be partially offset by a modest step-back in wireless infrastructure after a strong first half and continued softness in optical interconnect.

That leaves me to the remainder of our Q3 2017 guidance. We expect third quarter GAAP profit margin to be approximately 45% of revenue and non-GAAP gross profit margin to be approximately 61% of revenue. The expected sequential decline in GAAP gross margin is primarily due to the full quarter impact of inventory step-up and amortization of purchased intangible assets related to the Exar acquisition.

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 to the second half of 2017 and beyond, with a particular focus on infrastructure initiatives and our goal with increasing the operating leverage in the business.

As such, we expect Q3 2017 GAAP operating expenses to decrease approximately $4.9 million quarter-on-quarter to approximately $62 million, with the largest decreases coming from lower restructuring and transaction costs partially offset by the full quarter impact of Exar purchase price accounting and other expenses.

We expect the Q3 2017 non-GAAP operating expenses will increase approximately $4.1 million sequentially to $41 million, driven by full quarter contribution of Exar driving increases related to the headcount, travel, facilities and outside services costs.

In closing, we are pleased to report a very busy and eventful Q2 2017, one in which we continued our sequential revenue growth while closing 2 strategic acquisitions, leading to a more diverse and stable revenue profile as well as closing on our first debt transaction with a $425 million term loan used to fund the acquisition of Exar Corporation.

As we navigate through the lumpiness inherent in connected-home and optical infrastructure markets, we continue to aggressively manage toward the pull-in of cost synergies from our recent acquisitions as evidenced by the modest increase in our non-GAAP operating expense guidance.

Additionally, we are demonstrating our ability and commitment to aggressively de-leveraging, evidenced by our $30 million prepayment in July and August of 2017. We remain confident that the recent acquisitions, combined with our organic initiatives Kishore highlighted earlier, uniquely position MaxLinear to benefit from with growing demand for bandwidth across consumer, connected home, wired and wireless networks and a diverse and growing demand for high-performance analog and mixed signal solutions into industrial, automotive and multi-market applications.

And with that, I'd like to open the call for questions. Operator?

(Operator Instructions) Our first question comes from the line of Anil Doradla with William Blair.

So kind of when I step back, look at the big picture in the September quarter, Adam and Kishore, what is the biggest delta, I mean, in terms of your outlook? Is it purely the optical stuff? Or is it some of the other moving parts? Can you just kind of scope out what has changed in your outlook from kind of the big picture?

It's -- if you really look at the high level, there primarily 2 events that are having a negative deltas on our forecast here. One is the legacy revenues from satellite analog outdoor units. And the -- and also a pause in the satellite market, on the gateway shipments. If you recall, much of our revenues in the satellite are highly concentrated between 2 or 3 major operators that have been taking all the revenue, thus far, while we dive despite the rest of the world. So satellite is the biggest contributor, along with optical. In fact, we are still not seeing a recovery in the optical market. And so very much, we have dropped a bunch of revenue into our forecast-- from our forecast, as a result of the optical market. If you recall, we started the year projecting that optical would be about $25 million to $35 million of revenue, and a big share of the revenue growth was going to come in the second half of this year. And in the last quarter, as we entered the call, we have already factored -- we have already triggered a developing negative view on the market in China. In Q1 itself, and we had taken out quite a bit a piece of the revenue that was masked by the diversity of our revenue sources. However, as we enter into Q3, the market has not recovered yet, and combined with the lack of bookings, we had no choice but to be extremely cautious about how we are moving forward here.

Yes. Anil, I would add one thing to that, too, which is important is similar to last year, we're seeing the same seasonality play out in our cable business. In fact, last year, we were down about 10% sequentially in our cable business Q -- it feels like Q2 to Q3, and that same dynamic is playing out almost the same percentage, playing out to 2017, has played out 2016. So I think if you take what Kishore mentioned, the well-known issues in optical, combine that with the lumpiness of our satellite business, and then you take our normal seasonality in our Cable, broadband business, and that really kind of tells the story. And I think if you add the -- again, the kind of final piece of that being the legacy roll-off from Entropic is about a $5 million impact sequentially Q2 to Q3. So all those things are basically offsetting a lot of goodness that's happening in other parts of our business, particularly in the wireless infrastructure and also the wireline infrastructure access piece. So that's kind of -- hopefully, that gives you all the moving pieces. There are a lot of balls in the air right now, though, a lot of moving pieces in our model.

That's a good overview. So on the optical side, so the $20 million to $25 million that you kind of talking about recently, are you resetting that? Is that going to be more like $15 million to $20 million or $10 million to $15 million?

So I just would like to go to the progression of that story at the beginning of the year to where we are today. We started the year guiding an expectation that we hope to do something, maybe in $25 million to $30 million. Subsequently, at the end of Q1, we tempered that down to around $20 million. And based on the sentiment right now and the lack of any movement on the bookings or a product take from the customers, it is really pretty halted in the sense that it's come to almost absolute halt in terms of product sell-through. We have no choice but to think that is going to be -- if really Q4 recovers, that's going to mean in that $10 million to $15 million range. Otherwise, $10 million would be the range we would end the year with. But that's where we -- our view is right now.

And if my me squeezing out one final. DOCSIS 3.1 you talked about some pickup in some of the orders. Yesterday, some of your peers recorded, and they're talking about a pause in the -- within North American Cable operator, which is -- which leaves me to believe that it should impact you guys. Now can you reconcile some of the comments for your peers relative to you, if they're seeing some pause? Could you potentially see?

So I -- so actually has been strong. It's going very strongly in Q2. Yes, the shipments of DOCSIS 3.1 has started the major operator. Could there be a pause for 3.1? Usually, we have a lot of experience in this market. The ramps are always -- sputter a bit before they take off. It's possible. But you've got to keep in mind, we actually also shipped DOCSIS 3.0, which, if I think that the years you are referring to are the ones they are, they do not have any current shipments to DOCSIS 3.1. For us, in fact, the revenue uptick even in 3.1 is what they call muted in the next quarter, let us say. Does not mean that the natural patterns of our positive cycle of our DOCSIS deployments are going away. They're well there. In fact, if you look into one of our biggest customer, ARRIS's earnings call, they do refer to a slowdown Q3, but they are very optimistically talking about a Q4 -- typical Q4 pick-up for them, which usually means when do Maxlinear's orders show up, right? So there's not a perfect coloration, but we don't look at the pause in 3.1 as anything negative to our own DOCSIS revenues. However, could there be a pause in 3.1? Maybe, but that is not a bad thing for us at all. I mean, it's really-- just how the ramp sets up. That's all. So our narrative does not change.

Our next question comes from the line of Ross Seymore with Deutsche Bank.

I wonder if I could just step up to the highest level. You guys have a lot of moving parts going on right now, not the least of which is the accounting side. So if we think about the 2 acquisitions and then rebucketing it into different segments, was the percentage of sales, Adam, that you gave that the different 3 segments represented in the second quarter, was that on the $104 million or on the $109 million? And then a follow-up to that is are the percentages that you gave for the third quarter inclusive of any similar impact on revenue from the acquisitions? Or is that all now in the rearview mirror?

So the percentages were based on $104 million. Everything we've done is basically reconciled to our GAAP revenue, and that's the only revenue that we're reporting. We call attention to the $5.2 million impact from the deferred revenue accounting under the Exar purchase accounting, but that's -- yes, all the calculations were based on the $104 million that was reported. And then as far as the Q3, there's a very, I would say, minimal impact in Q3, it's less than $1 million worth of similar deferred revenue elimination. So it's not a needle-moving event in Q3.

Okay. And then, so if I take that then, it looks like you have about a $9 million hit in your connected home business sequentially. Without getting into the exact numbers, unless you want to, of course, the biggest moving parts in that, if you could just roll through what the biggest $9 million creating negative would be?

Sure. I think it's pretty easy to get to, right? I mentioned that we had about a 10% sequential challenge in cable driven by the normal seasonality there. So if you want to think about that as being -- think about it as $3 million or $4 million of the impact. Then if you want to think about the analog channel-stacking and the video SoC from Entropic, that's 5, right? And that's pretty much the bulk of it right there between those 2 pieces.

Got it. And then, as we look forward, a couple more housekeeping items: Interest expense in the third quarter and then as we look into next year, the tax rate was lower in the second quarter, was lower again in the third quarter than what I expected. What do you think now the tax rate for the combined company looks like in 2018?

Yes, so interest expense for the third quarter, it's difficult to put an exact beat on that because of the way we're prepaying and of course, we can't exactly predict what LIBOR's going to be, and we do a 1 month LIBOR rate. But if you want to think of interest expense being roughly about $4 million in the quarter, that's probably about right. And then your second question, sorry, again was on...

Tax rate next year, is it lower now?

Yes, so tax rate, I think you should be assuming about a 10% cash tax rate for the remainder of 2017. So we've -- there's been a lot of activity on that front too in implementing a new tax structure, and so forth, so there's a lot of moving pieces there, of course, with the reversal of the valuation allowance on the deferred tax assets creates, again, another layer of complexity but you want to think about the way we think about it, which is cash tax rate, non-GAAP is probably, again, if you plan a 10% rate, I think that's the right place to be for the remainder of 2017.

How about next year?

For 2018, we've been guiding people towards, call it a 20%-ish non-GAAP cash tax rate in -- as we were kind of in 2018. I don't think there's a lot of reason to change that right now. I think that we're benefiting from things that we've done so far in 2017, plus the benefits that we got from the Exar NOLs and so forth. So without leaning too far forward, I wouldn't be changing your models right now for 2018 for the non-GAAP tax rate. I'd leave it around that 20% range.

Our next question comes from the line of Tore Svanberg with Stifel.

Yes. First question is on the Exar revenues. So hopefully, Adam, maybe you could just explain a little bit the deferred here, how -- where does it eventually show up in the P&L or in the balance sheet? And I know you're now kind of looking at different buckets, but is it safe to say that Exar would still contribute around $30 million for Q3?

Yes, so in the first question, what happens to the revenue elimination. Essentially, if you think about Exar's model was similar in certain respects to -- with dealing with distributor sales. So a portion of their sales were -- where the revenue was recognized on sell-through, another piece is on sell-in, depending on what type of product, what kind of market it was going into. But essentially, this relates to the similar type of way that we recognize -- that MaxLinear's been recognized revenue through distribution is, which is on sell-through. So when there's a deferred revenue balance at close, under purchase accounting that gets basically taken to 0 and eliminated to nothing. So basically, we will never get credit for that revenue, but where it shows up in the financial statements, actually, we collect cash. So it's one of those things where you don't get to recognize the revenue but it doesn't impact reality, which is the cash generation. And that cash for those products that shipped through that we didn't get the revenue recognition for, that cash, if you look at normal collection cycles, some of that's in-house already, the rest will be collected in Q3. So it doesn't impact cash or cash generation, it's just an accounting mechanical issue, if you will.

Got it. And Exar for Q3, should we still assume around $30 million?

Yes, Exar's doing well. I mean they're performing pretty much on line with what we were expecting with the Street models had been forecasting before we did the acquisition. So there's no change in those -- in that outlook.

Okay. And sorry to bring this up right now, Adam, but just given the deferred revenue, there is sort of an accounting standard change coming up for Q1 of '18. So are you going to be kind of reverting back to sell-in with Exar and MaxLinear, or...

Yes, so everyone has to -- not everybody, but as of January 1, we're planning to adopt a new standard of revenue, the 606 pronouncement, so that will involve us doing a very similar thing while you look at that deferred revenue beyond the books as of December 31, and you won't get credit for that revenue when that shifts. And that will impact everybody, that's just not the MaxLinear -- anyone who's currently on the sell-through versus sell-in. And reminder, there's some of the Exar business, for example, was on sell-in, some was sell-through. We are all on a sell-through basis. But we've done the analysis, we're well under our way of looking at the implementation of that. And right now, we don't think it's going to be a very meaningful impact to our 2018, certainly our Q1 outlook. It's going to be fairly small. So I don't think it's worth a lot -- I certainly wouldn't be adjusting any models based on that impact at this point. It's going to be pretty small.

Sounds good. And just a question on Q4. I know you typically don't guide more than a quarter out, but if we just sort of directionally look at that quarter, all your legacy revenue now is basically very small. Obviously, the optical business now has corrected meaningfully. How should we think about some of the moving parts of each business unit now going into the December quarter?

Tore, let me quantitatively take up the question and, Adam, maybe provide a little more specific. The -- our cable business has large volatility. Some -- usually going into Q4, sometimes we see late towards Q4, a pickup in order activity as our customers work down their inventories. So sometimes it happens earlier in Q4 and sometimes it starts happening in Q1. So we expect our Cable to be resurging in a positive way. And the other piece is that we already mentioned the strip that we expect this year, cable to have grown -- cable data to have grown double-digit. The other aspects are, we expect to see our wireless infrastructure to get strong, stronger. It has done wonderfully so far for us with the designs that are in play, and are in traction, that are shipping. We expect our wireless axle business to pick up a little and then at the same time, our access infrastructure, we expect to grow pretty nicely as well. So the infrastructure elements, we expect them to grow nicely and the data stuff to recover. And then the Exar element of the revenues to also grow somewhat. So I think the real dog here is satellite. I hate to use that word. Because the revenue's concentrated toward the major operators and those operators are right now a little bit -- have subscriber challenges. So we're seeing some lumpiness. We are seeing some strength in Europe, some weakness in the U.S., so I think that satellite is the one we want to handicap. And the other thing I still want to say is that there is still no clarity how Q4 plays out in optical, so overall as a company, we expect to see growth with Q4. However, if you just wanted all the elements that go into it, people have talked about the planning commission in China meeting in the September-October time frame and that may relieve some orders sort of thing, but those things take time. So at this point, we are being very, very cautious about Q4 as well and optical. So we've always been cautious as a company, but it is a reality that there is no bookings movement. So I would still hold out caution for Q4 on optical. So in all of these from a secular point of view, the satellite declines would be majority are almost substantially behind us on the legacy revenues and the satellite Gateway would be lumpy, it's hard to predict that right now, but the rest of the business is going to behave very nicely.

Yes, I would -- Tore, I'd put a little bit more of a -- kind of a guard band around it. I would basically say, if you want to look at the big moving pieces, I think our infrastructure, we feel very comfortable about growth going forward in our infrastructure business, both as represented in Q3, but also towards Q4. I think if you look at our connected-home business, that one is more likely to be kind of the muted business in -- as we look at Q3 transitioning to Q4. By muted I mean, if you want to think of that business as being roughly flattish sequentially from Q3, I think that's probably not a bad place to kind of think about it. And then on our industrial multi-market, we're still seeing growth in that. So if you look at 2 of our 3 areas, I would say strong growth in the infrastructure side, reasonable growth on the multimarket side of things and then flatness on the connected home side of things, is probably the best way we'd probably think about it in today's view for Q4.

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

First, a couple of clarifications. Just as you look at the optical business into the fourth quarter, clearly, visibility into China where I think most of your sales historically have been, visibility is pretty low and so I assume you probably don't expect much for recovery in that core China business. But what about the new product ramps? You guys coming into the year, most of the growth would actually come from outside of China. So have those new product design wins just sort of pushed out into the right? Or are you feeling less confident about those wins? Can you just talk about your expansion of the optical business outside of the 2 Chinese customers that accounted for most of the revenue last year?

Yes, let me try to reconcile at a high level and then Kishore can provide more color. But essentially, if you recall, you were talking about that, yes, you're correct. We said that, for 2017, the growth would be outside of the China Metro laser drivers, which was driving pretty much all the revenue in 2016 for MaxLinear. And where the growth was going to come from wasn't necessarily all outside of China, although there were some outside of China, including some data center TIA revenues that would start to layer in the mix, but there's also quite a bit of growth tied to TIAs into those Metro and longhaul deployments that are also in China, very China specific. So while we weren't China laser driver kind of focused in our growth for 2017, there were other elements in that Chinese mix, which included TIAs into those Metro and longhaul deployments. And Kishore...

So Quinn, just to round out what Adam said and, if you will recall, my mentioning about the TIA tractions would be for longhaul and Metro, but though they are not technically in China, these would be the Japanese companies and the U.S. companies that were substantially selling these ICR modules to the Chinese companies. So in a sense, a huge part of our market today, end market is driven by China. So getting back to the question about our traction, yes, we have good traction on these TIA products. We are shipping, actually, into a large 4 markets, which went on to key Tier 1 players for the U.S. markets. And then we've got some TIA design wins for data centers. However, the big expectation on this high performance linear TIAs that would have been headed to China, those design wins and design choices for ramping are delayed consequently because there's customer interest to ship those products and their customers willing to accept changes of this point of lower demand has been quite muted. So yes, we have been impacted of those TIAs that would have been driving a decent amount of revenue to the end markets in China, to module ICR module makers in Japan and the U.S. Though -- however, the design traction interest in the product and the viability of the product is -- remains quite strong, so it's one of those design wins where we're not making progress on the revenue side as far as the end markets in China are concerned. And as I talked about at the second half of this year, we would be sampling our 400-gig product. That will be the first major product into the data center and that, we believe, is a more landscape-shaping event for MaxLinear in the fiber optics because the telco markets are purely TIAs and drivers.

And then, just Adam, on the tax rate. Obviously, we'll model it at roughly 10% through the end of '17. I think, historically, when you're talking about that 20% tax rate or increasing up to that tax rate, there's going to be more of a linear function rather than a step function. Sounds like you're encouraging us to think 20% next year. So you're now kind of thinking that the tax rate's 10% and '17 is a step function up to 20%, or do you see a gradual increase across the quarters for 2018 exiting a 20% rate in the fourth quarter?

Right now, I think it's probably safer to assume more of a step up. So I think, again, I would -- I wouldn't kind of go exit the year at 10% and then go to 12.5% and 15% and 17.5%. I would just assume a relatively constant 20% rate in 2018. And if and when we kind of -- we can improve on that, we've got confidence in that, then we'll let you know. But I think at this point, we don't have any better view right now than about a 20% rate for 2018.

On that topic, is there any reason why you don't think today you'd be able to use the extra NOLs to reduce that tax rate? I mean, I understand the analysis probably is incomplete, you need more time, but is that a possibility to use those NOLs?

Absolutely, it's a possibility. I think it's a likelihood, right? So we're counting on our ability to be able to use those NOLs and that's part of what achieves that 20% rate. So, yes, and after you spend as much time as you want off the mechanics of our structure and so forth, but right now, I think one of the ways that we -- I would say that we didn't need the Exar NOLs to achieve a 20% tax rate on the organic mix in your business. But post transaction right now, kind of when you take the combined profitability of the organizations, we think that the 20% non-GAAP or tax rate is still the right place to be for the -- for a global rate.

Okay. And then just the last question. You guys, it seems like you've seen some variance in the satellite side of the business. If I've got the comments from the script right, you said, digital ODUs were up in Q2 but satellite 4K Gateways were down. You expected the satellite 4K to rebound in Q3, but I thought sort of previously, you seem to be tempering some of the expectations around the digital satellite business in aggregate and then in 2017 that might only be flat from the 2016 levels. So just from a higher level, are there any overriding themes you're seeing in the satellite business? Or is it just sort of becoming a more lumpy business quarter-to-quarter?

I think there are 2 questions. I think lumpiness is definitely there for sure because if you really think of the end operators, there is the major satellite operator, Sky in Europe and the Sky babies and then you have some properties in Latin America that are just barely getting started and then you have in North America, AT&T DIRECTV. So it is very lumpy, and then you also have DISH for digital ODU, so what you're seeing is some of this whatever we call the strong uptick in digital ODU, is still being sort of weighted down by the drop in the analog ODU because you have to recall that ASPs are quite different and you also have to recall that our share in the digital ODU will be saturated at a lower percentage than it was at analog ODU. So you have both the phenomena happening, so I would not expect because of the strong digital ODU, that somehow it's going to work on the analog ODU revenue decline. It is going to be tempered because of the lower ASPs and the lesser share with the same major operator maybe sell analog ODU. Having said that, we will see stabilization in our satellite revenues to where they're starting towards the end of this year. And so we will not -- we expect not to have these declining legacy and then improving digital systems being hampered by the declining legacy revenues.

I think another way to put that, Quinn, is that, I think, going forward, the analog declines were obviously well-known and well-discussed. I think on the satellite -- for working gateway and the digital channel stacking, as Kishore mentioned it, we see growth into Q3 on the gateways. I think as we look longer-term, let's say, through the end of 2018, we actually see very nice growth, nice solid double-digit growth off of our gateway and our digital channel stacking products year-on-year. So I think we feel very good about that. The only weak spot in our satellite business is, really, the analog, which, again, we've talked about many times. The rest of it looks quite good. And I think, again, prone to some lumpiness, but I think we're bearing the brunt of the lumpiness. I think we saw some of that in Q2, but -- so I think 2017 is a little bit more of a lumpy year in our satellite business, but we feel very good about where it's going based on the design wins and the places that we're in right now for products that are in production.

I think, vectorially as a company, actually, strategically, we couldn't have been more pleased because all the strategic initiatives are broadening our portfolio, addressing high-value end markets and including deepening our presence in the platforms. We've added power management and also the connectivity with solutions. I think it's all going totally as we expected. It's very hard for us to predict quarter-over-quarter. We have seen that, and we're quite excited about the future of this broadening of the portfolio and the strategy we have put in place. So -- and satellite is not going to be a detractor, once the stabilization happens at the end of the year. That is the expectation. The optical was a surprise, and that has exacerbated the declining elements of our satellite revenues to look more bad than we actually predicted. They're actually what we anticipated them to be in this particular year. So the optical has been the one that we counted on as the engine that would overcome the decline and now, optical has become the decline as well. So those are the dynamics, otherwise the rest of the portfolio is actually very exciting, and we are very, very thrilled with the kind of mix and good company we are building.

Our next question comes from the line of Chris Rolland with Susquehanna Financial Group.

Related to that last question, so you guys mentioned that legacy entropic satellite business, which I believe is the analog channel stacking, and I was wondering if you guys can talk about how much was specifically analog channel-stacking. I think you said $5 million for that part of your business, but I don't know if it's specifically analog channel-stacking. And how much is actually left there in your 3Q guide? How much is left to actually draw down? Is it 0 or is there a small shoe to drop at some point in the future?

You look at the combined analog channel-stacking and video SoC, those are the 2 entropic lines that are in decline. There was about $6 million of total revenue in Q2 related to those 2 products. Those are going to drop; about $5 million of that $6 million vanishes as we go from Q2 to Q3. So that will not be in the mix in Q3. So if you think about if you want to break it down even more granularly, we lose about $3 million of analog channel-stacking, so call it 3.5 goes to half on analog channel-stacking and on the video SoC, call it 2 to 2.5 goes to $0.5 million. So you've got a total of $1 million between those 2 product lines in Q3, which was $6 million in Q2.

Got it. That is helpful. And then you guys talked about 6 million digital channel stacking units, so you guys shipped in the quarter. I was wondering how that kind of compares to expectations there. And perhaps if you want to talk about Broadcom, what they're doing in the market there, have they been more aggressive with their marketing tactics and your expectations -- or how share's playing out versus your expectations for digital channel stacking products?

Yes, so let me clarify first, I think what Kishore mentioned in the prepared commentary was, we had reached a milestone of having shipped 7 million digital channel stacking units cumulatively. So it wasn't in the quarter, right? So that's a cumulative number. The quarter was actually strong growth, Q1 to Q2, but it wasn't 6 million units, let's put it that way. So we don't break out the dollars of the satellite digital ODU right now, but that's the right way to think about it. I shouldn't want -- wanted to clarify that there wasn't 6 million units shipped in the quarter. It was 7 million shipped cumulatively since we launched the product back in 2015.

Okay, great. And perhaps talk about Broadcom and share and how that's playing out versus your expectations.

Yes, so I guess with regards to the Broadcom dynamics, I don't think anything's really changed there. I think that we continue to believe that we've got a superior solution, but end of the day, they're a large worthy adversary that has a lot of customer relationship leverage, if you will. And so we struggled to counter that with technology the best we can. I think if you look across the global deployments of digital channel-stacking units, we believe that we're going to get our fair share of that market. I think we've talked in earlier calls that we've got -- there was a very concentrated customer for Entropic on the analog channel-stacking side, which was DIRECTV, and in that particular account, that's where we've not been able to basically hold our market share. Obviously, because it was 100% in analog, it declined in digital but we don't have what we consider to be fair share or even an even share of that business. So if you look at other accounts outside of DIRECTV, we've actually done very well and have very good market positions even relative to Broadcom, but it's that one account that's been problematic for us as far as getting, again, what we think is a fair share of that account.

I see. And last quick one, you guys mentioned, millimeterwave backhaul to a Tier 1 OEM. Is this just a trial? Or do you guys have any clues as to how big this deployment could be?

So the numbers for millimeterwave are -- depends on which report you read and how they ramp, it could mean lot or it could mean less. It is always (inaudible) to deceive, right? So I want to be careful about that. However, in the millimeterwave market, this Tier 1 OEM has the strongest track record of shipping millimeterwave backhaul modem chipsets in China and we -- and they need our millimeterwave products and we have -- we have a business agreement with them to be one of the providers for their high-end solutions that support 20-gigabits per second data rates. Having said that, there's traction per millimeterwave with other providers, Internet providers that are not the traditional broadband providers who are trying to look at different ways of deploying millimeterwave to solve a lot of last mile problems, and so on, so forth, and for access into their homes. And, hopefully, in the next few weeks or several weeks, there will be some announcement from us that shows to the -- alludes to the promise of the millimeterwave technologies. So I would like to defer to that announcement to get your sense of what kind of creative uses of millimeterwave there are out there.

Our last question is a follow-up from Tore Svanberg with Stifel.

I have 2 follow-ups. First of all, as we look at the infrastructure business for 2018, you now basically have a lot of hours and irons in the fire, wireless infrastructure. Technically, optical should come back, and then you also have the (inaudible) cycle. Can you just talk a little bit about those 3 as you enter 2018? And are you expecting either one of those to drive revenues more than the other?

We expect strong growth infrastructure. We've always talked about that. It's on track for the growth we've anticipated. The only sub-tune is -- on infrastructure is related to optical exercise side right now, given where things are on the telco side, obviously, we have to temper. Having said that, even with that temper expectation, we expect strong growth in the total infrastructure revenues. The big driver of these revenues we expect it to be -- naturally from a growth point of view, we expect wireless backhaul to be a very strong growth driver. And we have such a unique position both in millimeter and microwave backhaul with such strong design traction. So we expect strong growth there. That will be the #1 growth driver. Obviously, even in the telco market with a modest rate return, we expect the HSI market, which is what we call the optical interconnect market to grow for us and to an equal -- equal to what we expect to grow in wireline access, so infrastructure access, which is the last mile problem on the wireline solution. So I would say the #1 category is wireless backhaul, #2 category is wireline infrastructure access and almost equal to that, we expect the optical infrastructure. Those would be the 3 main growth drivers from a -- from our perspective on the infrastructure side. So very strong growth drivers across the board.

Okay. And when you talk about MoCA and G.hn as a broadband backbone, will that revenue go under infrastructure or connected home?

That goes in the connected home. We have categorized our revenues by EPR, so those MoCA and G.hn connectivity distribution go inside the home, they are under the connected home category. However, the last mile access is in the infrastructure category, and we do refer to them as ceiling MoCA access and G.Now access.

Very good. And just lastly on the MoCA and G.hn as a broadband backbone, I think from a technology perspective, this makes a lot of sense. But what are some of the milestones or what are some of the data points that we should be tracking to see the sort of realization of that market? Because it's still very early days. I mean is it going to be one of the big service providers coming out with an announcement? Or if you just help us understand what are going to be some of the data points to track, that'd be great.

I think just growth in MoCA and the connectivity itself is proof that if you really want to think about it, originally, MoCA started as video distribution inside the home and those revenues actually declined. The fact that we are registering growth in MoCA are all derived from some level of over-the-top content distribution inside the home as a backbone. So that is a factually correct statement. So what we're doing right now is we're trying to add and we have succeeded there, getting design wins and some shipments ramping. We're adding shipments at 1 major telco broadband operator that took a lot of product and there's a little bit slowdown, but that's okay, that's still strong growth, which we refer to. And then there's one more, who has just -- who's another big telco broadband provider in the United States. And they are not using it in their video services, but they're going to use for their over-the-top services as a backbone. They just selected MoCA, MoCA WiFi bridges. So I think that growth in MoCA is predicated and is proof of growth in revenues in the telco markets. So regarding announcements, it's possible there is some announcements maybe at the end of the year, but I need to verify whether that is possible or not yet to confirm whether that's going to happen.

Okay. And just one last and I promise I will go away. So I know you target 10% growth in your connected home business. Do you need MoCA and G.hn as a broadband backbone to materialize next year to get to that 10% rate, or will you still get there with the gateways and DOCSIS 3.1, and so on and so forth?

I think we should be able to get there because there's so many moving parts inside a connected home and MoCA is a part of it, G.hn is a part of it. And I think that all in aggregate together, we should get into that range, so it won't be one contributor. But clearly, the connected pieces will be -- and DOCSIS 3.1 will be growth drivers for MaxLinear. So -- and satellite also, Adam said, is going to grow, right, nicely. So you can see that from a stabilization that happened, satellite, by the end of the year, we are expecting, actually, growth in satellite as that's all the pieces will contribute to the growth. It's hard for me to say at this stage, which one will be a bigger one because there are upsides and downsides in every scenario due to ramp delays and otherwise. And also, please don't go away. Please keep tracking us.

Thank you. There are no further questions. That does conclude our question-and-answer session I will now turn it back to your CEO, Mr. Kishore Seendripu, for closing comments.

Thank you, operator. As a reminder, we'll be participating in the Roth Capital Third Annual Datacenter & Intelligent Infrastructure conference in San Francisco on September 16 (sic) [6], and the Deutsche Bank 2017 Technology Conference in Las Vegas on September 13. We hope to see many of you there.

With that being said, we thank you, all, for joining us today and we look forward to reporting on our progress during the next quarter.

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.