UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From              to

Commission file number: 001-34666

MaxLinear, Inc.

(Exact name of registrant as specified in its charter)

Delaware			14-1896129
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
5966 La Place Court, Suite 100,	Carlsbad	California	92008
(Address of principal executive offices)			(Zip Code)

(760) 692-0711

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	MXL	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☑   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐	Emerging growth company	☐
Non-accelerated filer	☐	Smaller reporting company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑ 

As of October 18, 2023, the registrant had 81,560,701 shares of common stock, par value $0.0001, outstanding.

MAXLINEAR, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page
Part I	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (unaudited)	4
	Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	4
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	5
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022	6
	Consolidated Statements of Stockholders’ Equity for the Fiscal Quarters Ended September 30, 2023 and 2022	7
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	9
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44
Item 4.	Controls and Procedures	45
Part II	OTHER INFORMATION	46
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	80
Item 3.	Defaults Upon Senior Securities	80
Item 4.	Mine Safety Disclosures	80
Item 5.	Other Information	80
Item 6.	Exhibits	81
	Signatures	82

2

PART I — FINANCIAL INFORMATION

3

ITEM 1.    FINANCIAL STATEMENTS

MAXLINEAR, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value amounts)

	September 30, 2023		December 31, 2022
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	187,028	$	187,353
Short-term restricted cash	1,105		982
Short-term investments	14,612		18,529
Accounts receivable, net	158,232		170,971
Inventory	114,942		160,544
Prepaid expenses and other current assets	32,688		24,745
Total current assets	508,607		563,124
Long-term restricted cash	19		22
Property and equipment, net	69,484		79,018
Leased right-of-use assets	32,647		28,515
Intangible assets, net	82,643		109,316
Goodwill	318,456		306,739
Deferred tax assets	59,121		66,491
Other long-term assets	32,810		26,800
Total assets	$	1,103,787	$	1,180,025
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	45,203	$	68,576
Accrued price protection liability	71,643		113,274
Accrued expenses and other current liabilities	86,276		100,155
Accrued compensation	29,788		59,081
Total current liabilities	232,910		341,086
Long-term lease liabilities	28,017		23,353
Long-term debt	122,219		121,757
Other long-term liabilities	17,964		17,444
Total liabilities	401,110		503,640
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value; 25,000 shares authorized, no shares issued or outstanding	—		—
Common stock, $0.0001 par value; 550,000 shares authorized; 81,561 shares issued and outstanding at September 30, 2023 and 78,745 shares issued and outstanding December 31, 2022	8		8
Additional paid-in capital	790,634		722,778
Accumulated other comprehensive loss	(7,938)		(1,021)
Accumulated deficit	(80,027)		(45,380)
Total stockholders’ equity	702,677		676,385
Total liabilities and stockholders’ equity	$	1,103,787	$	1,180,025

See accompanying notes.

4

MAXLINEAR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per share data)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net revenue	$	135,530	$	285,730	$	567,910	$	829,666
Cost of net revenue	61,586		118,242		250,786		343,237
Gross profit	73,944		167,488		317,124		486,429
Operating expenses:
Research and development	66,306		76,437		204,254		222,718
Selling, general and administrative	25,402		38,472		97,772		123,536
Impairment losses	—		—		2,438		—
Restructuring charges	54		631		9,138		1,093
Total operating expenses	91,762		115,540		313,602		347,347
Income (loss) from operations	(17,818)		51,948		3,522		139,082
Interest income	1,736		62		4,272		175
Interest expense	(2,715)		(2,711)		(7,793)		(7,476)
Other income (expense), net	(22,721)		(4,705)		(21,180)		1,704
Total other income (expense), net	(23,700)		(7,354)		(24,701)		(5,597)
Income (loss) before income taxes	(41,518)		44,594		(21,179)		133,485
Income tax provision (benefit)	(1,689)		16,186		13,468		39,525
Net income (loss)	$	(39,829)	$	28,408	$	(34,647)	$	93,960
Net income (loss) per share:
Basic	$	(0.49)	$	0.36	$	(0.43)	$	1.21
Diluted	$	(0.49)	$	0.35	$	(0.43)	$	1.17
Shares used to compute net income (loss) per share:
Basic	81,249		78,436		80,395		77,833
Diluted	81,249		80,060		80,395		80,331

See accompanying notes.

5

MAXLINEAR, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited; in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income (loss)	$	(39,829)	$	28,408	$	(34,647)	$	93,960
Other comprehensive loss, net of tax:
Foreign currency translation adjustments, net of tax benefit of $64 and $229 for the three and nine months ended September 30, 2023, respectively, and net of tax benefit of $187 and $184 for the three and nine months ended September 30, 2022, respectively	(1,855)		(2,378)		(3,125)		(7,441)
Reclassification adjustments of unrealized gain (loss) on pension and other defined benefit plans	(3,792)		—		(3,792)		—
Total comprehensive income (loss)	$	(45,476)	$	26,030	$	(41,564)	$	86,519

See accompanying notes.

6

MAXLINEAR, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FISCAL QUARTERS ENDED SEPTEMBER 30, 2023

(unaudited; in thousands)

	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2022	78,745	$	8	$	722,778	$	(1,021)	$	(45,380)	$	676,385
Common stock issued pursuant to equity awards, net	1,236	—		31,926		—		—		31,926
Stock-based compensation	—	—		16,460		—		—		16,460
Other comprehensive loss	—	—		—		(192)		—		(192)
Net income	—	—		—		—		9,533		9,533
Balance at March 31, 2023	79,981	8		771,164		(1,213)		(35,847)		734,112
Common stock issued pursuant to equity awards, net	808	—		(2,752)		—		—		(2,752)
Employee stock purchase plan	141	—		2,989		—		—		2,989
Stock-based compensation	—	—		17,127		—		—		17,127
Other comprehensive loss	—	—		—		(1,078)		—		(1,078)
Net loss	—	—		—		—		(4,351)		(4,351)
Balance at June 30, 2023	80,930	8		788,528		(2,291)		(40,198)		746,047
Common stock issued pursuant to equity awards, net	631	—		(3,017)		—		—		(3,017)
Stock-based compensation	—	—		5,123		—		—		5,123
Other comprehensive loss	—	—		—		(5,647)		—		(5,647)
Net loss	—	—		—		—		(39,829)		(39,829)
Balance at September 30, 2023	81,561	$	8	$	790,634	$	(7,938)	$	(80,027)	$	702,677

7

MAXLINEAR, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FISCAL QUARTERS ENDED SEPTEMBER 30, 2022

(unaudited; in thousands)

	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2021	76,778	$	8	$	657,485	$	2,125	$	(170,420)	$	489,198
Common stock issued pursuant to equity awards, net	1,037			13,835		—		—		13,835
Repurchase of common stock	(440)	—		(26,297)		—		—		(26,297)
Stock-based compensation	—	—		18,599		—		—		18,599
Other comprehensive loss	—	—		—		(1,075)		—		(1,075)
Net income	—	—		—		—		33,586		33,586
Balance at March 31, 2022	77,375	8		663,622		1,050		(136,834)		527,846
Common stock issued pursuant to equity awards, net	999	—		310		—		—		310
Minimum tax withholding on common stock issued	—	—		(3,698)		—		—		(3,698)
Repurchase of common stock	(124)	—		(5,214)		—		—		(5,214)
Employee stock purchase plan	83	—		2,911		—		—		2,911
Stock-based compensation	—	—		19,464		—		—		19,464
Other comprehensive loss	—	—		—		(3,988)		—		(3,988)
Net income	—	—		—		—		31,966		31,966
Balance at June 30, 2022	78,333	8		677,395		(2,938)		(104,868)		569,597
Common stock issued pursuant to equity awards, net	232	—		(56)		—		—		(56)
Stock-based compensation	—	—		20,310		—		—		20,310
Other comprehensive loss	—	—		—		(2,378)		—		(2,378)
Net income	—	—		—		—		28,408		28,408
Balance at September 30, 2022	78,565	$	8	$	697,649	$	(5,316)	$	(76,460)	$	615,881

See accompanying notes.

8

MAXLINEAR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in thousands)

	Nine Months Ended September 30,
	2023		2022
Operating Activities
Net income (loss)	$	(34,647)	$	93,960
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Amortization and depreciation	54,923		61,906
Impairment losses	2,438		—
Amortization of debt issuance costs and accretion of discounts	1,858		1,462
Stock-based compensation	38,763		58,154
Deferred income taxes	6,502		23,321
Loss on disposal of property and equipment	2,057		167
Unrealized holding loss on investments	3,917		1,418
Impairment of leased right-of-use assets	—		462
(Gain) loss on settlement of pension	(1,008)		—
(Gain) loss on foreign currency	140		(3,245)
Excess tax benefits on stock-based awards	(529)		(9,702)
Changes in operating assets and liabilities:
Accounts receivable	13,769		(57,976)
Inventory	45,602		(34,267)
Prepaid expenses and other assets	(10,215)		3,957
Accounts payable, accrued expenses and other current liabilities	(17,917)		82,389
Accrued compensation	8,776		32,187
Accrued price protection liability	(45,036)		76,968
Lease liabilities	(8,891)		(8,485)
Other long-term liabilities	(557)		(3,307)
Net cash provided by operating activities	59,945		319,369
Investing Activities
Purchases of property and equipment	(12,180)		(24,625)
Purchases of intangible assets	(6,198)		(10,440)
Cash used in acquisitions, net of cash acquired	(12,384)		—
Proceeds loaned under notes receivable	—		(10,000)
Purchases of investments	—		(29,325)
Net cash used in investing activities	(30,762)		(74,390)
Financing Activities
Payment of debt commitment fees	(18,325)		—
Repayment of debt	—		(135,000)
Net proceeds from issuance of common stock	3,168		3,214
Minimum tax withholding paid on behalf of employees for restricted stock units	(12,370)		(28,527)
Repurchase of common stock	—		(31,511)
Net cash used in financing activities	(27,527)		(191,824)
Effect of exchange rate changes on cash and cash equivalents	(1,861)		(2,400)
Increase (decrease) in cash, cash equivalents and restricted cash	(205)		50,755
Cash, cash equivalents and restricted cash at beginning of period	188,357		131,738
Cash, cash equivalents and restricted cash at end of period	$	188,152	$	182,493
Supplemental disclosures of cash flow information:
Cash paid for interest	$	6,978	$	6,917
Cash paid for income taxes	$	25,336	$	14,076
Supplemental disclosures of non-cash activities:
Issuance of shares for payment of bonuses	$	38,348	$	38,615

See accompanying notes.

9

Table of Contents MAXLINEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Organization and Summary of Significant Accounting Policies

Description of Business

MaxLinear, Inc. was incorporated in Delaware in September 2003. MaxLinear, Inc., together with its wholly owned subsidiaries, collectively referred to as MaxLinear, or the Company, is a provider of communications systems-on-chip (SoC) solutions used in broadband, mobile and wireline infrastructure, data center, and industrial and multi-market applications. MaxLinear is a fabless integrated circuit design company whose products integrate all or substantial portions of a high-speed communication system, including radio frequency (RF), high-performance analog, mixed-signal, digital signal processing, security engines, data compression and networking layers, and power management. MaxLinear’s customers include electronics distributors, module makers, original equipment manufacturers, or OEMs, and original design manufacturers, or ODMs, who incorporate the Company’s products in a wide range of electronic devices, including cable Data Over Cable Service Interface Specifications (DOCSIS), fiber and DSL broadband modems and gateways; Wi-Fi and wireline routers for home networking; radio transceivers and modems for 4G/5G base-station and backhaul infrastructure; fiber-optic modules for data center, metro, and long-haul transport networks; as well as power management and interface products used in these and many other markets.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements include the accounts of MaxLinear, Inc. and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. All intercompany transactions and investments have been eliminated in consolidation.

In the opinion of management, the Company’s unaudited consolidated interim financial statements contain adjustments, including normal recurring accruals necessary to present fairly the Company’s consolidated financial position, results of operations, comprehensive income, stockholders’ equity, and cash flows.

The consolidated balance sheet as of December 31, 2022 was derived from the Company’s audited consolidated financial statements at that date. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission, or the SEC, on February 1, 2023, or the Annual Report. Interim results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023.

The functional currency of certain foreign subsidiaries is the local currency. Accordingly, assets and liabilities of these foreign subsidiaries are translated at the current exchange rate at the balance sheet date and historical rates for equity. Revenue and expense components are translated at weighted average exchange rates in effect during the period. Gains and losses resulting from foreign currency translation are included as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in the results of operations, and to date, have not been material.

Use of Estimates and Significant Risks and Uncertainties

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes of the consolidated financial statements. Actual results could differ from those estimates.

The Company is not aware of any specific event or circumstance that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of October 25, 2023, the issuance date of this Quarterly Report on Form 10-Q. Actual results could differ from those estimates.

Summary of Significant Accounting Policies

Refer to the Company’s Annual Report for a summary of significant accounting policies. There have been no significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2023.

10

Table of Contents MAXLINEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Recently Issued Accounting Pronouncements

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, to provide specific guidance to eliminate diversity in practice on how to recognize and measure acquired contract assets and contract liabilities from revenue contracts from customers in a business combination consistent with revenue contracts with customers not acquired in an acquisition. The amendments in this update provide that the acquirer should consider the terms of the acquired contracts, such as timing of payment, identify each performance obligation in the contracts, and allocate the total transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception (that is, the date the acquiree entered into the contracts) or contract modification to determine what should be recorded at the acquisition date. These amendments are effective for the Company beginning with fiscal year 2023. The impact of the adoption of the amendments in this update will depend on the magnitude of any customer contracts assumed in a business combination in 2023 and beyond.

2. Net Income Per Share

Basic earnings per share, or EPS, is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted EPS is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the period and the weighted-average number of dilutive common stock equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, common stock options, restricted stock units and restricted stock awards are considered to be common stock equivalents and are only included in the calculation of diluted EPS when their effect is dilutive. In periods in which the Company has a net loss, dilutive common stock equivalents are excluded from the calculation of diluted EPS.

The table below presents the computation of basic and diluted EPS:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands, except per share amounts)
Numerator:
Net income (loss)	$	(39,829)	$	28,408	$	(34,647)	$	93,960
Denominator:
Weighted average common shares outstanding—basic	81,249		78,436		80,395		77,833
Dilutive common stock equivalents	—		1,624		—		2,498
Weighted average common shares outstanding—diluted	81,249		80,060		80,395		80,331
Net income (loss) per share:
Basic	$	(0.49)	$	0.36	$	(0.43)	$	1.21
Diluted	$	(0.49)	$	0.35	$	(0.43)	$	1.17

For the three months ended September 30, 2023 and 2022, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 4.9 million and 2.5 million, respectively, from the calculation of diluted net income (loss) per share due to their anti-dilutive nature.

For the nine months ended September 30, 2023 and 2022, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 4.8 million and 1.5 million, respectively, from the calculation of diluted net income (loss) per share due to their anti-dilutive nature.

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Table of Contents MAXLINEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

3. Business Combinations

Terminated Silicon Motion Merger

On May 5, 2022, MaxLinear entered into an Agreement and Plan of Merger, or the Merger Agreement, with Silicon Motion Technology Corporation, or Silicon Motion, an exempted company with limited liability incorporated under the laws of the Cayman Islands, pursuant to which, among other things and subject to the terms and conditions thereof, MaxLinear agreed to acquire Silicon Motion pursuant to a statutory merger, under the laws of the Cayman Islands, of Shark Merger Sub, a wholly-owned subsidiary of MaxLinear, with and into Silicon Motion, with Silicon Motion surviving the merger as a wholly-owned subsidiary of MaxLinear. Silicon Motion is a provider of NAND flash controllers for solid state drives, or SSDs, and other solid state storage devices.

On July 26, 2023, MaxLinear terminated the Merger Agreement and notified Silicon Motion that MaxLinear was relieved of its obligations to close because, among other reasons, (i) certain conditions to closing set forth in the Merger Agreement were not satisfied and were incapable of being satisfied, (ii) Silicon Motion had suffered a Material Adverse Effect that was continuing, (iii) Silicon Motion was in material breach of representations, warranties, covenants, and agreements in the Merger Agreement that gave rise to the right of the Company to terminate, and (iv) in any event, the First Extended Outside Date had passed and was not automatically extended because certain conditions in Article 6 of the Merger Agreement were not satisfied or waived as of May 5, 2023. For these same reasons, under the terms of the Merger Agreement, MaxLinear was not required to pay a break-up fee or other fee to Silicon Motion as a result of the termination of the Merger Agreement. Undefined capitalized terms in this paragraph have the same meaning as in the Merger Agreement. On August 16, 2023, Silicon Motion delivered to MaxLinear a notice, which Silicon Motion publicly disclosed, that it was purporting to terminate the Merger Agreement and that Silicon Motion would be commencing an arbitration to seek damages from MaxLinear arising from MaxLinear's alleged breaches of the Merger Agreement.

On October 5, 2023, Silicon Motion filed a Notice of Arbitration with the Singapore International Arbitration Centre alleging that MaxLinear breached the Merger Agreement. See Note 15 for more information on legal matters related to the termination of the Merger Agreement.

The second amended and restated commitment letter dated October 24, 2022 with Wells Fargo Bank, N.A., or Wells Fargo Bank, and other lenders, and related financing commitments for the previously pending (now terminated) merger were also terminated upon termination of the Merger Agreement. As a result of the termination of the financing, the Company was required to pay to Wells Fargo Bank a ticking fee of $18.3 million, which is included in other income (expense), net in the three months ended September 30, 2023.

Acquisition of Company Y

On January 17, 2023, the Company completed its acquisition of a business, or Company Y, pursuant to a Purchase and Sale Agreement, or the Purchase Agreement. The transaction consideration included $9.7 million in cash. In addition, Company Y stockholders may receive up to an additional $2.6 million in potential contingent consideration, subject to the acquired business satisfying certain personnel objectives by June 17, 2024.

Company Y is headquartered in Bangalore, India and operates as a provider of engineering design services.

Acquisition Consideration

The following table summarizes the fair value of purchase price consideration to acquire Company Y (in thousands):

Description	Amount
Fair value of purchase consideration:
Cash	$	9,684
Contingent consideration(1)	2,200
Total purchase price	$	11,884

_________________

(1) The fair value of contingent consideration is based on applying the Monte Carlo simulation method to forecast achievement under various contingent consideration events which may result in up to $2.6 million in payments subject to the acquired business’s satisfying certain financial and personnel objectives by June 17, 2024 under the Purchase Agreement. Key inputs in

12

Table of Contents MAXLINEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

the valuation include forecasted revenue, revenue volatility and discount rate. Underlying forecast mathematics were based on Geometric Brownian Motion in a risk-neutral framework and discounted back to the applicable period in which the accumulative thresholds were achieved at discount rates commensurate with the risk and expected payout term of the contingent consideration.

Purchase Price Allocation

An allocation of purchase price as of the January 17, 2023 acquisition closing date based upon an estimate of the fair value of the assets acquired and the liabilities assumed by the Company in the acquisition primarily includes $0.2 million in net operating assets, with $11.7 million in goodwill.

Assumptions in the Allocations of Purchase Price

Management prepared the purchase price allocations for Company Y and in doing so considered or relied in part upon reports of a third party valuation expert to calculate the fair value of certain acquired assets, which primarily included an acquired workforce and contingent consideration. Certain stockholders that are employees of Company Y were not required to remain employed in order to receive the contingent consideration; accordingly, the fair value of the contingent consideration was accounted for as a portion of the purchase consideration.

Estimates of fair value require management to make significant estimates and assumptions. The goodwill recognized is attributable primarily to the acquired workforce. Certain liabilities included in the purchase price allocations are based on management’s best estimates of the amounts to be paid or settled and based on information available at the time the purchase price allocations were prepared.

Goodwill recorded in connection with Company Y was $11.7 million as of September 30, 2023. The Company does not expect to deduct any of the acquired goodwill for tax purposes.

4. Restructuring Activity

During the three months ended March 31, 2023, the Company entered into a plan of restructuring to reduce its workforce as a result of internal resource alignment and cost saving measures. Costs associated with this plan of restructuring for the nine months ended September 30, 2023 are included in the table below.

The following table presents the activity related to restructuring plans, which is included in restructuring charges in the consolidated statements of operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)
Employee separation expenses	$	(13)	$	631	$	8,863	$	631
Lease related charges	—		—		42		462
Other	67		—		233		—
	$	54	$	631	$	9,138	$	1,093

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The following table presents a roll-forward of the Company’s restructuring liability for the nine months ended September 30, 2023. The restructuring liability is included in accrued expenses and other current liabilities and other long-term liabilities in the consolidated balance sheets.

	Employee Separation Expenses		Lease Related Charges		Other		Total
	(in thousands)
Liability as of December 31, 2022	$	971	$	103	$	8	$	1,082
Restructuring charges	8,863		42		233		9,138
Cash payments	(8,100)		(142)		(219)		(8,461)
Non-cash charges and adjustments	(9)		29		(47)		(27)
Liability as of September 30, 2023	1,725		32		(25)		1,732
Less: current portion as of September 30, 2023	(1,725)		(32)		25		(1,732)
Long-term portion as of September 30, 2023	$	—	$	—	$	—	$	—

5. Goodwill and Intangible Assets

Goodwill

Goodwill arises from the acquisition method of accounting for business combinations and represents the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired. The fair values of net tangible assets and intangible assets acquired are based upon preliminary valuations and the Company’s estimates and assumptions are subject to change within the measurement period (potentially up to one year from the acquisition date).

The following table presents the changes in the carrying amount of goodwill for the periods indicated:

	Nine Months Ended September 30,
	2023		2022
	(in thousands)
Beginning balance	$	306,739	$	306,668
Acquisitions (Note 3)	11,717		—
Adjustments	—		71
Ending balance	$	318,456	$	306,739

The Company performs an annual goodwill impairment assessment on October 31st each year, using a quantitative assessment comparing the fair value of each reporting unit, which the Company has determined to be the entity itself, with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recorded.

In addition to its annual review, the Company performs a test of impairment when indicators of impairment are present. During the nine months ended September 30, 2023 and 2022, there were no indications of impairment of the Company’s goodwill balances.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Acquired Intangibles

Finite-lived Intangible Assets

The following table sets forth the Company’s finite-lived intangible assets resulting from business acquisitions and other purchases, which are amortized over their estimated useful lives:

		September 30, 2023						December 31, 2022
	Weighted Average Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Value		Accumulated Amortization		Net Carrying Amount
		(in thousands)
Licensed technology	6.9	$	19,974	$	(1,184)	$	18,790	$	21,764	$	(580)	$	21,184
Developed technology	6.9	311,261		(255,303)		55,958		311,261		(228,532)		82,729
Trademarks and trade names	6.2	14,800		(14,240)		560		14,800		(13,461)		1,339
Customer relationships	5.0	128,800		(125,962)		2,838		128,800		(124,807)		3,993
Backlog	5.3	500		(500)		—		500		(429)		71
Patents	7.0	4,781		(284)		4,497		—		—		—
	6.1	$	480,116	$	(397,473)	$	82,643	$	477,125	$	(367,809)	$	109,316

The following table sets forth amortization expense associated with finite-lived intangible assets, which is included in the consolidated statements of operations as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)				(in thousands)
Cost of net revenue	$	8,581	$	9,480	$	27,372	$	30,192
Research and development	—		1		2		3
Selling, general and administrative	653		1,541		2,290		10,643
	$	9,234	$	11,022	$	29,664	$	40,838

Amortization of finite-lived intangible assets in cost of net revenue in the consolidated statements of operations results primarily from acquired developed technology.

The following table sets forth the activity related to finite-lived intangible assets:

	Nine Months Ended September 30,
	2023		2022
	(in thousands)
Beginning balance	$	109,316	$	149,940
Additions	6,198		10,440
Other disposals	(769)		—
Transfers to developed technology from IPR&D	—		2,600
Amortization	(29,664)		(40,838)
Impairment losses	(2,438)		—
Ending balance	$	82,643	$	122,142

The Company regularly reviews the carrying amount of its long-lived assets subject to depreciation and amortization, as well as the related useful lives, to determine whether indicators of impairment may exist that warrant adjustments to carrying values or estimated useful lives. An impairment loss is recognized when the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset. Should impairment exist, the impairment loss is measured based on the excess of the carrying amount of the asset over the asset’s fair value. During the three months ended September 30, 2023 and 2022, no impairment losses related to finite-lived intangible assets were recognized. During the nine months ended September

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

30, 2023 and 2022, impairment losses related to finite-lived intangible assets of $2.4 million and $0, respectively, were recognized. The impairment loss was attributable to certain purchased licensed technology.

The following table presents future amortization of the Company’s finite-lived intangible assets at September 30, 2023:

	Amount
	(in thousands)
2023 (3 months)	$	9,292
2024	24,524
2025	14,839
2026	13,730
2027	9,882
Thereafter	10,376
Total	$	82,643

6. Financial Instruments

The composition of financial instruments is as follows:

	September 30, 2023
			Net Unrealized
	Cost		Gains		Losses		Fair Value
			(in thousands)
Assets
Marketable equity investments	$	20,005	$	—	$	(5,393)	$	14,612
	December 31, 2022
			Net Unrealized
	Cost		Gains		Losses		Fair Value
Assets			(in thousands)
Marketable equity investments	$	20,005	$	—	$	(1,476)	$	18,529

	September 30, 2023		December 31, 2022
	Fair Value		Fair Value
	(in thousands)
Liabilities
Contingent consideration (Note 3)	$	2,690	2,941

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

At September 30, 2023, the Company held marketable equity investments with an aggregate fair value of $14.6 million that were in an unrealized loss position. The net unrealized loss of $5.4 million as of September 30, 2023 represents stock price fluctuations in the underlying securities held. Unrealized gains and losses on such investments are recorded to other income (expense), net in the consolidated statement of operations.

The Company evaluates securities for other-than-temporary impairment on a quarterly basis. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the issuer; including changes in the financial condition of any underlying collateral of the security; any downgrades of the security by analysts or rating agencies; nonpayment of any scheduled interest, or the reduction or elimination of dividends; as well as our intent and ability to hold the security in order to allow for an anticipated recovery in fair value.

The fair values of the Company’s financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants and is recorded using a hierarchical disclosure framework based upon the level of subjectivity of the inputs used in measuring assets and liabilities. The levels are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available.

The Company classifies its financial instruments that are categorized within Level 1 or Level 2 of the fair value hierarchy on the basis of valuations using quoted market prices or alternate pricing sources and models utilizing market observable inputs, respectively. The marketable equity investments held by the Company have been valued on the basis of quoted market prices and is therefore classified as Level 1.

The contingent consideration liability as of September 30, 2023 is associated with the Company’s acquisitions of Company X in December 2021 and Company Y in January 2023 (Note 3) and the contingent consideration liability as of December 31, 2022 is associated with the Company’s acquisition of Company X. The contingent consideration liability is classified as a Level 3 financial instrument. The contingent consideration as it relates to Company X was subject to the acquired business’s satisfaction of certain financial and personnel objectives by March 31, 2023, while the contingent consideration as it relates to Company Y is subject to the acquired business’s satisfaction of certain personnel objectives by June 17, 2024. The financial and personnel objectives of Company X were achieved by March 31, 2023 and contingent consideration for Company X of $2.7 million was paid in April 2023 with the remaining $0.3 million to be paid in December 2023. The fair value of contingent consideration is based on (1) applying the Monte Carlo simulation method, with underlying forecast mathematics based on Geometric Brownian motion in a risk-neutral framework, to forecast achievement of the acquired business’ financial objectives, if applicable, under various possible contingent consideration events and (2) a probability based methodology using management’s inputs and assumptions to forecast achievement of the acquired business’ personnel objectives which included an assumption of total payments up to $3.0 million to Company X and an assumption of total payments up to $2.6 million to Company Y. Key inputs in the valuation include forecasted revenue, revenue volatility, discount rate and discount term as it relates to the financial objectives and probability of achievement, discount term and discount rate as it relates to the personnel objectives.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

			Fair Value Measurements at September 30, 2023
	Balance at September 30, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Assets
Marketable equity securities	$	14,612	$	14,612	$	—	$	—
Liabilities
Contingent consideration	$	2,690	$	—	$	—	$	2,690

			Fair Value Measurements at December 31, 2022
	Balance at December 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Assets
Marketable equity securities	$	18,529	$	18,529	$	—	$	—
Liabilities
Contingent consideration	$	2,941	$	—	$	—	$	2,941

The following summarizes the activity in Level 3 financial instruments:

	Nine Months Ended September 30,
	2023		2022
Contingent Consideration
Beginning balance	$	2,941	$	2,700
Acquisitions(1)	2,200		—
Payments	(2,700)		—
Accretion of discount(1)	249		182
Ending balance	$	2,690	$	2,882

_____________________

(1) These changes to the balance associated with the estimated fair value of contingent consideration for the nine months ended September 30, 2023 were due to the addition of contingent consideration associated with the acquisition of Company Y and accretion of discounts on contingent consideration.

For the nine months ended September 30, 2023, there were no transfers between Level 1, Level 2, or Level 3 financial instruments.

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

Some of the Company’s financial instruments are recorded at amounts that approximate fair value due to their liquid or short-term nature or by election on investments in privately-held entities as described below. Such financial assets and financial liabilities include: cash and cash equivalents, restricted cash, net receivables, investments in privately-held entities, certain other assets, accounts payable, accrued price protection liability, accrued expenses, accrued compensation costs, and other current liabilities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The Company’s long-term debt is not recorded at fair value on a recurring basis, but is measured at fair value for disclosure purposes (Note 8).

Included in other long-term assets are investments in privately held entities of $11.8 million as of September 30, 2023 and December 31, 2022. The Company does not have the ability to exercise significant influence or control over such entity and has accounted for the investments as financial instruments. Given that fair values for such investments are not readily determinable, the Company is electing to measure these investments at cost, less any impairment, and adjust the carrying value to fair value if any observable price changes for similar investments in the same entity are identified.

7. Balance Sheet Details

Cash, cash equivalents and restricted cash consist of the following:

	September 30, 2023		December 31, 2022
	(in thousands)
Cash and cash equivalents	$	187,028	$	187,353
Short-term restricted cash	1,105		982
Long-term restricted cash	19		22
Total cash, cash equivalents and restricted cash	$	188,152	$	188,357

As of September 30, 2023 and December 31, 2022, cash and cash equivalents included money market funds of approximately $77.1 million and $0.4 million, respectively. As of September 30, 2023 and December 31, 2022, the Company had restricted cash of approximately $1.1 million and $1.0 million, respectively. The cash is restricted in connection with guarantees for certain import duties and office leases.

Inventory consists of the following:

	September 30, 2023		December 31, 2022
	(in thousands)
Work-in-process	$	63,827	$	97,840
Finished goods	51,115		62,704
	$	114,942	$	160,544

Property and equipment, net consists of the following:

	Useful Life (in Years)	September 30, 2023		December 31, 2022
		(in thousands)
Furniture and fixtures	5	$	3,902	$	3,924
Machinery and equipment	3-5	74,126		74,258
Masks and production equipment	2-5	54,240		50,970
Software	3	11,367		10,111
Leasehold improvements	1-5	34,851		34,236
Construction in progress	N/A	1,168		7,602
		179,654		181,101
Less: accumulated depreciation and amortization		(110,170)		(102,083)
		$	69,484	$	79,018

Depreciation expense for the three months ended September 30, 2023 and 2022 was $5.6 million and $5.1 million, respectively. Depreciation expense for the nine months ended September 30, 2023 and 2022 was $18.5 million and $14.7 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

In March 2022, the Company entered into a note receivable with a supplier for $10.0 million which is included in other long-term assets as of September 30, 2023 and December 31, 2022, respectively. In September 2023, the terms of this note receivable were renegotiated, and the first initial repayment of $1.5 million is now due by March 31, 2025, and annual repayments of $1.7 million per year are due annually thereafter by March 31, from 2026 through 2030, provided that certain production utilization targets for the prior year are met. Previously, repayments of $2.0 million were due annually by March 31, 2024 through 2027.

Accrued price protection liability consists of the following activity:

	Nine Months Ended September 30,
	2023		2022
	(in thousands)
Beginning balance	$	113,274	$	40,509
Charged as a reduction of revenue	50,092		142,473
Payments	(91,723)		(66,391)
Ending balance	$	71,643	$	116,591

Accrued expenses and other current liabilities consist of the following:

	September 30, 2023		December 31, 2022
	(in thousands)
Accrued technology license payments	$	4,682	$	7,402
Accrued professional fees	5,366		4,072
Accrued engineering and production costs	6,304		2,560
Accrued restructuring	1,732		1,082
Accrued royalty	620		1,662
Short-term lease liabilities	8,749		10,489
Accrued customer credits	2,059		304
Income tax liability	802		8,895
Customer contract liabilities	1,397		1,072
Accrued obligations to customers for price adjustments	45,303		52,392
Accrued obligations to customers for stock rotation rights	755		605
Contingent consideration - current portion	2,689		2,941
Other	5,818		6,679
	$	86,276	$	100,155

The following table summarizes the change in balances of accumulated other comprehensive income (loss) by component:

	Cumulative Translation Adjustments		Pension and Other Defined Benefit Plan Obligation		Total
	(in thousands)
Balance at December 31, 2022	$	(5,180)	$	4,159	$	(1,021)
Other comprehensive loss before reclassifications, net of tax	(3,125)		(3,792)		(6,917)
Balance at September 30, 2023	$	(8,305)	$	367	$	(7,938)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

8. Debt

Debt

The carrying amount of the Company’s long-term debt consists of the following:

	September 30, 2023		December 31, 2022
	(in thousands)
Principal balance:
Initial term loan under the June 23, 2021 credit agreement	$	125,000	$	125,000
Total principal balance	125,000		125,000
Less:
Unamortized debt discount	(602)		(695)
Unamortized debt issuance costs	(2,179)		(2,548)
Net carrying amount of long-term debt	122,219		121,757
Less: current portion of long-term debt	—		—
Long-term debt, non-current portion	$	122,219	$	121,757

As of September 30, 2023 and December 31, 2022, the weighted average effective interest rate on debt was approximately 7.4% and 3.8%, respectively.

During the three months ended September 30, 2023 and 2022, the Company recognized total amortization of debt discount and debt issuance costs of $0.2 million and $0.2 million, respectively, to interest expense.

During the nine months ended September 30, 2023 and 2022, the Company recognized total amortization of debt discount and debt issuance costs of $0.5 million and $0.4 million

The approximate aggregate fair value of the term loans outstanding as of September 30, 2023 and December 31, 2022 was $136.7 million and $137.4 million, respectively, which was estimated on the basis of inputs that are observable in the market and which is considered a Level 2 measurement method in the fair value hierarchy.

As of September 30, 2023, the outstanding principal balance of $125.0 million is due in full on June 23, 2028, upon maturity of the loan.Initial Term Loan and Revolving Facility under the June 23, 2021 Credit Agreement

On June 23, 2021, the Company entered into a Credit Agreement, or the June 23, 2021 Credit Agreement, by and among the Company, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrative agent and collateral agent, that provides for a senior secured term B loan facility, or the “Initial Term Loan under the June 23, 2021 Credit Agreement,” in an aggregate principal amount of $350.0 million and a senior secured revolving credit facility, or the “Revolving Facility,” in an aggregate principal amount of up to $100.0 million. The proceeds of the Initial Term Loan under the June 23, 2021 Credit Agreement were used (i) to repay in full all outstanding indebtedness under that certain Credit Agreement dated May 12, 2017, by and among the Company, MUFG Bank Ltd., as administrative agent and MUFG Union Bank, N.A., as collateral agent and the lenders from time to time party thereto (as amended by Amendment No. 1, dated July 31, 2020) and (ii) to pay fees and expenses incurred in connection therewith. The remaining proceeds of the Initial Term Loan under the June 23, 2021 Credit Agreement are available for general corporate purposes and the proceeds of the Revolving Facility may be used to finance the working capital needs and other general corporate purposes of the Company and its subsidiaries. As of September 30, 2023, the Revolving Facility was undrawn. Under the terminated amended and restated commitment letter with Wells Fargo Bank and other lenders entered into in connection with the previously pending (now terminated) merger with Silicon Motion (Note 3), the Company had expected to repay the remaining outstanding term loans under this agreement upon closing of the merger.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The June 23, 2021 Credit Agreement permits the Company to request incremental loans in an aggregate principal amount not to exceed the sum of an amount equal to the greater of (x) $175.0 million and (y) 100% of consolidated EBITDA, plus the amount of certain voluntary prepayments, plus an unlimited amount that is subject to pro forma compliance with certain first lien net leverage ratio, secured net leverage ratio and total net leverage ratio tests. Incremental loans are subject to certain additional conditions, including obtaining additional commitments from the lenders then party to the June 23, 2021 Credit Agreement or new lenders.

Under the June 23, 2021 Credit Agreement, the Initial Term Loan bears interest, at the Company’s option, at a per annum rate equal to either (i) a base rate equal to the highest of (x) the federal funds rate, plus 0.50%, (y) the prime rate then in effect and (z) an adjusted Term SOFR rate determined on the basis of a one-month interest period plus 1.00%, in each case, plus an applicable margin of 1.25% or (ii) an adjusted Term SOFR rate, subject to a floor of 0.50%, plus an applicable margin of 2.25%. Loans under the Revolving Facility initially bear interest, at a per annum rate equal to either (i) a base rate (as calculated above) plus an applicable margin of 0.00%, or (ii) an adjusted Term SOFR rate (as calculated above) plus an applicable margin of 1.00%. Following delivery of financial statements for the Company’s fiscal quarter ending June 30, 2021, the applicable margin for loans under the Revolving Facility will range from 0.00% to 0.75% in the case of base rate loans and 1.00% to 1.75% in the case of Term SOFR rate loans, in each case, depending on the Company’s secured net leverage ratio as of the most recently ended fiscal quarter. The Company is required to pay commitment fees ranging from 0.175% to 0.25% per annum on the daily undrawn commitments under the Revolving Facility, depending on the Company’s secured net leverage ratio as of the most recently ended fiscal quarter. Commencing on September 30, 2021, the Initial Term Loan under the June 23, 2021 Credit Agreement will amortize in equal quarterly installments equal to 0.25% of the original principal amount of the Initial Term Loan under the June 23, 2021 Credit Agreement, with the balance payable on the maturity date. The June 23, 2021 Credit Agreement was amended on June 29, 2023 to implement a benchmark replacement.

The Company is required to make mandatory prepayments of the outstanding principal amount of term loans under the June 23, 2021 Credit Agreement with the net cash proceeds from the disposition of certain assets and the receipt of insurance proceeds upon certain casualty and condemnation events, in each case, to the extent not reinvested within a specified time period, from excess cash flow beyond stated threshold amounts, and from the incurrence of certain indebtedness. The Company has the right to prepay its term loans under the June 23, 2021 Credit Agreement, in whole or in part, at any time without premium or penalty, subject to certain limitations and a 1.0% soft call premium applicable during the first six months following the closing date of the June 23, 2021 Credit Agreement. The Initial Term Loan under the June 23, 2021 Credit Agreement will mature on June 23, 2028, at which time all outstanding principal and accrued and unpaid interest on the Initial Term Loan under the June 23, 2021 Credit Agreement must be repaid. The Revolving Facility will mature on June 23, 2026, at which time all outstanding principal and accrued and unpaid interest under the Revolving Facility must be repaid. The Company is also obligated to pay fees customary for a credit facility of this size and type.

The Company’s obligations under the June 23, 2021 Credit Agreement are required to be guaranteed by certain of its domestic subsidiaries meeting materiality thresholds set forth in the June 23, 2021 Credit Agreement. Such obligations, including the guaranties, are secured by substantially all of the assets of the Company and the subsidiary guarantors pursuant to a Security Agreement, dated as of June 23, 2021, by and among the Company, the subsidiary guarantors from time to time party thereto, and Wells Fargo Bank, National Association, as collateral agent.

The June 23, 2021 Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and its restricted subsidiaries to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments, make certain restricted payments, and sell assets, in each case, subject to limitations and exceptions set forth in the June 23, 2021 Credit Agreement. The Revolving Facility also prohibits the Company from having a secured net leverage ratio in excess of 3.50:1.00 (subject to a temporary increase to 3.75:1.00 following the consummation of certain material permitted acquisitions) as of the last day of any fiscal quarter of the Company (commencing with the fiscal quarter ending September 30, 2021) if the aggregate borrowings under the Revolving Facility exceed 1% of the aggregate commitments thereunder (subject to certain exceptions set forth in the June 23, 2021 Credit Agreement) as of such date. As of September 30, 2023, the Company was in compliance with such covenants. The June 23, 2021 Credit Agreement also contains customary events of default that include, among other things, certain payment defaults, cross defaults to other indebtedness, covenant defaults, change in control defaults, judgment defaults, and bankruptcy and insolvency defaults. If an event of default exists, the lenders may require immediate payment of all obligations under the June 23, 2021 Credit Agreement and may exercise certain other rights and remedies provided for under the June 23, 2021 Credit Agreement, the other loan documents and applicable law.

The debt is carried at its principal amount, net of unamortized debt discount and issuance costs, and is not adjusted to fair value each period. The issuance date fair value of the liability component of the debt in the amount of $350.2 million was

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

determined using a discounted cash flow analysis, in which the projected interest and principal payments were discounted back to the issuance date of the term loan at a market interest rate for nonconvertible debt of 3.4%, which represents a Level 2 fair value measurement. The debt discount of $0.9 million and debt issuance costs of $2.9 million associated with the Initial Term Loan under the June 23, 2021 Credit Agreement are being amortized to interest expense using the effective interest method over its seven-year term. Debt issuance costs of $0.4 million associated with the Revolving Facility are being amortized to interest expense over its five-year term.

9. Stock-Based Compensation

Employee Stock-Based Compensation Plans

At September 30, 2023, the Company had stock-based compensation awards outstanding under the following plans: the 2010 Equity Incentive Plan, as amended, or 2010 Plan, and the 2010 Employee Stock Purchase Plan, or ESPP. Refer to the Company’s Annual Report for a summary of its stock-based compensation and equity plans as of December 31, 2022. There have been no material changes to the terms of the Company’s equity incentive plans during the nine months ended September 30, 2023.

As of September 30, 2023, the number of shares of common stock available for future issuance under the 2010 Plan was 15,250,925 shares. As of September 30, 2023, the number of shares of common stock available for future issuance under the ESPP was 5,749,724 shares.

Employee Incentive Bonus

The Company mostly settles bonus awards for its employees, including executives, in shares of common stock under the 2010 Equity Incentive Plan. When bonus awards are settled in common stock issued under the 2010 Equity Incentive Plan, the number of shares issuable to plan participants is determined based on the closing price of the Company’s common stock as determined in trading on the applicable stock exchange, on a date approved by the Board of Directors. In connection with the Company’s bonus programs, in February 2023, the Company issued 0.9 million freely-tradable (subject to certain restrictions for affiliates) shares of the Company’s common stock in settlement of bonus awards to employees, including executives, for the 2022 performance period. At September 30, 2023, the Company has an accrual of $8.4 million for bonus awards for employees for year-to-date achievement in the 2023 performance period. The Company’s compensation committee retains discretion to effect payment in cash, stock, or a combination of cash and stock.

Stock-Based Compensation

The Company recognizes stock-based compensation in the consolidated statements of operations, based on the department to which the related employee reports, as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)				(in thousands)
Cost of net revenue	$	170	$	188	$	626	$	513
Research and development	9,436		10,635		33,128		30,294
Selling, general and administrative	(4,488)		9,308		5,009		27,347
	$	5,118	$	20,131	$	38,763	$	58,154

The total unrecognized compensation cost related to unvested restricted stock units as of September 30, 2023 was $152.4 million, and the weighted average period over which these equity awards are expected to vest is 2.54 years.

The total unrecognized compensation cost related to unvested performance-based restricted stock units as of September 30, 2023 was $0.1 million, and the weighted average period over which these equity awards are expected to vest is 1.39 years.

There was no unrecognized compensation cost related to unvested stock options as of September 30, 2023.

23

Table of Contents MAXLINEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Restricted Stock Units

A summary of the Company’s restricted stock unit activity is as follows:

	Number of Shares (in thousands)	Weighted-Average Grant-Date Fair Value per Share
Outstanding at December 31, 2022	6,080	$	35.01
Granted	3,045	38.51
Vested	(2,779)	34.24
Canceled	(470)	38.44
Outstanding at September 30, 2023	5,876	$	36.91

Performance-Based Restricted Stock Units

Performance-based restricted stock units are eligible to vest at the end of each year-long performance period, as defined in the underlying agreement, in a three-year performance period based on the Company’s annual growth rate in net sales and non-GAAP diluted earnings per share (subject to certain adjustments) over baseline results relative to the growth rates for a peer group of companies for the same metrics and periods.

For the performance-based restricted stock units granted to date, 60% of each performance-based award is subject to the net sales metric for the performance period and 40% is subject to the non-GAAP diluted earnings per share metric for the performance period. The maximum percentage for a particular metric is 250% of the target number of units subject to the award related to that metric, however, vesting of the performance stock units is capped at 30% and 100%, respectively, of the target number of units subject to the award in years one and two, respectively, of the three-year performance period.

As of September 30, 2023, achievement to date under the performance metrics specified in the respective award agreements are based on its expected revenue and non-GAAP diluted EPS results over the performance periods and calculated growth rates relative to its peers’ expected results based on data available, as defined in the respective award agreements. To the extent any prior achievement levels are no longer probable, any compensation expense recorded is adjusted to the revised achievement levels.

A summary of the Company’s performance-based restricted stock unit activity is as follows:

	Number of Shares (in thousands)	Weighted-Average Grant-Date Fair Value per Share
Outstanding at December 31, 2022	1,950