MRVL Marvell Technology, Inc.

Operator (Operator): Good afternoon, and welcome to Marvell Technology, Inc. First Quarter of Fiscal Year 2026 Earnings Conference Call. Note that all participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Please go ahead, sir. Ashish Saran (Senior Vice President of Investor Relations): Thank you, and good afternoon, everyone. Welcome to Marvell's first quarter fiscal year 2026 earnings call. Joining me today are Matt Murphy, Marvell's Chairman and CEO, and Willem Meintjes, our CFO. Let me remind everyone that certain comments made today include forward-looking statements that are subject to significant risks and uncertainties that could cause our actual results to differ materially from management's current expectations. Please review the cautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website, as well as our most recent 10-K and 10-Q filings. We do not intend to update our forward-looking statements. During our call today, we will refer to certain non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is also available in our earnings press release. Let me now turn the call over to Matt for his comments on the quarter. Matt? Matt Murphy (CEO): Thanks, Ashish, and good afternoon, everyone. For the first quarter of fiscal 2026, Marvell delivered record revenue of $1.895 billion, above the midpoint of guidance, reflecting a 4% sequential increase and strong 63% year-over-year growth. The data center end market continued to deliver strong growth, driven by robust AI demand. In addition, we were pleased to see ongoing revenue recovery in our carrier infrastructure and enterprise networking end markets. Higher revenue versus our forecast also resulted in record non-GAAP earnings per share, which came in above the midpoint of guidance. In addition, we significantly increased our stock repurchases in the first quarter, buying back $340 million, a substantial step up from the $200 million repurchased in the prior quarter. During the first quarter, we announced the sale of our automotive Ethernet business to Infineon in an all-cash transaction valued at $2.5 billion. We are extremely proud of the progress we have made in organically building and expanding this business, which we expect will deliver a compelling financial outcome for Marvell's stockholders. The closing of this transaction, which we expect within calendar 2025, will provide us with additional flexibility in our capital allocation strategy. We started our new fiscal year on a strong note with Q1 results ahead of plan and are forecasting second-quarter revenue of $2 billion at the midpoint of guidance. This represents 57% year-over-year growth and would set another record revenue level for Marvell. Let me now discuss our results and expectations for each of our end markets. In our data center end market, we achieved revenue of $1.44 billion in the first quarter, growing 5% sequentially and 76% year-over-year. Looking ahead to the second quarter, we expect this momentum to continue with data center revenue projected to grow sequentially in the mid-single-digit range on a percentage basis while maintaining strong year-over-year growth. These strong results, along with our second-quarter guidance, are being driven by the rapid scaling of our custom AI silicon programs to high-volume production, along with robust shipments of our electro-optics products for AI and cloud applications. We continue to expand the capabilities of our advanced technology to enable our customers to build full rack-level custom infrastructure, including innovative technologies such as custom high-bandwidth memory and co-package optics. Marvell's custom HBM compute architecture enhances XPUs by optimizing the IO interfaces between accelerator silicon and the memory embedded in the package. This enables AI custom compute accelerators with much more efficient integration of main memory, which can increase performance and reduce run times, resulting in increased utilization. We continue to see strong interest from multiple customers who are targeting the highest performance and optimized total cost of ownership for their upcoming AI solutions that leverage the most advanced HBMs. Marvell's breakthrough co-package optics platform enables customers to integrate our silicon photonics light engine into future custom AI accelerators. Co-package optics can drive a transition from copper interconnects to optical fiber for scale-up AI clusters. This technology will enable larger AI servers with significantly total system memory capacity and proce ... [transcript truncated at 5,000 chars — full text available via API]

Operator (Operator): Good afternoon, and welcome to the Marvell Technology Inc. Second Quarter of Fiscal Year 2026 Earnings Conference Call. Please note this event is being recorded. I will now turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Thank you. You may begin. Ashish Saran (Senior Vice President of Investor Relations): Thank you, and good afternoon, everyone. Welcome to Marvell's Second Quarter Fiscal Year 2026 Earnings Call. Joining me today are Matt Murphy, Marvell's Chairman and CEO; Willem Meintjes, CFO; Chris Koopmans, President and COO; and Sandeep Bharathi, President, Data Center Group. Let me remind everyone that certain comments made today include forward-looking statements, which are subject to significant risks and uncertainties and that could cause our actual results to differ materially from management's current expectations. Please review the cautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website, as well as our most recent 10-K and 10-Q filings. We do not intend to update our forward-looking statements. During our call today, we will refer to certain non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is available in our earnings press release. Let me now turn the call over to Matt for his comments on the quarter. Matt? Matthew J. Murphy (Chairman and CEO): Thanks, Ashish, and good afternoon, everyone. For the second quarter of fiscal 2026, Marvell delivered record revenue of $2.006 billion, reflecting a 6% sequential increase and strong 58% year-over-year growth. Our data center end market continued its strong momentum, growing 69% year-over-year, fueled by robust AI demand. We also saw a solid recovery in our enterprise networking and carrier infrastructure end markets, which collectively grew 43% year-over-year. We expanded our non-GAAP operating margin by 870 basis points year-over-year to 34.8% and delivered record non-GAAP earnings per share of $0.67, up 123% year-over-year. We also delivered $462 million in operating cash flow, up significantly from the $333 million in the first quarter. Robust cash flow generation is enabling us to continue to return significant capital to our stockholders. We have repurchased $540 million of stock through the first half of the fiscal year with approximately $2 billion remaining in our authorization. At the beginning of the third quarter, we completed the divestiture of our automotive ethernet business in a $2.5 billion all-cash transaction at a very compelling valuation. I'm pleased with our team's execution in closing this transaction ahead of schedule. The proceeds from this transaction provide us flexibility to continue to drive our ongoing stock repurchase program and deploy capital to further bolster our technology platform. The auto divestiture aligns with our strategy to focus the company on what we expect to continue to be a massive AI opportunity in front of us by purposely redirecting our investments towards data center relative to our other end markets. That strategy has been very successful with data center alone now driving three-quarters of our total revenue. The auto divestiture further reduces the relative proportion of revenue from our non-data center end markets. As a result, starting in the third quarter, we will consolidate our non-data center end markets into a new single communications and other end markets. Willem will cover this in more detail in his prepared remarks. During the quarter, we hosted a highly successful custom silicon investor event in June, where we outlined an expanded $94 billion data center Total Addressable Market for calendar 2028, a 26% increase from our prior view. We also unveiled a new fast-growing custom silicon product category of XPU attach, updated our custom design win board to 18 multigenerational XPU and XP attached sockets, and highlighted over 50 new pipeline opportunities with an estimated $75 billion of lifetime revenue potential. Based on the sockets we have already won, we concluded with our plan to grow our data center market share from 13% of a $33 billion Total Addressable Market in calendar '24 to 20% of a $94 billion Total Addressable Market in calendar '28. Let me now take a moment to share how we are enhancing our leadership structure to further capitalize on significant opportunities in the large and fast-moving AI and cloud markets. We have promoted two exceptional leaders: Chris Koopmans to President and COO; and Sandeep Bharathi to President, Data Center Group, and consolidated substantial parts of the organization under their leadership. Their proven track record of innovation, execution, and results positions them to accelerate Marvell's growth. Chris joined Marvell nine years ago, and he has been a key enabler of our transformation to a leader in the data center market. He successfully led sales, our ... [transcript truncated at 5,000 chars — full text available via API]

Operator (Operator): Good afternoon and welcome to Marvell Technology, Inc.'s Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Please go ahead. Ashish Saran (Senior Vice President of Investor Relations): Thank you, and good afternoon, everyone. Welcome to Marvell's fourth quarter and fiscal year 2025 earnings call. Joining me today are Matt Murphy, Marvell's Chairman and CEO; and Willem Meintjes, our CFO. Let me remind everyone that certain comments made today include forward-looking statements, which are subject to significant risks and uncertainties that could cause our actual results to differ materially from management's current expectations. Please review the cautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website, as well as our most recent 10-K and 10-Q filings. We do not intend to update our forward-looking statements. During our call today, we will refer to certain non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is also available in our earnings press release. Let me now turn the call over to Matt for his comments on the quarter. Matt? Matt Murphy (Chairman and CEO): Thanks, Ashish, and good afternoon, everyone. For the fourth quarter of fiscal 2025, Marvell delivered record revenue of $1.817 billion, above the midpoint of guidance, growing 20% sequentially and 27% year-over-year. Our data center end market was the primary growth driver, fueled by strong AI demand and execution. In addition, we saw continued demand recovery across our multi-market businesses, including carrier, enterprise, networking, and automotive and industrial. I am pleased to report that we achieved GAAP profitability in the fourth quarter and expect this to continue in fiscal 2026. Our record non-GAAP earnings per share of $0.60 exceeded the midpoint of guidance growing 40% sequentially. This earnings growth rate double our top line growth rate underscores the substantial operating leverage in our business model. For the full fiscal year 2025, we delivered $5.77 billion in aggregate revenue, with our data center revenue growing 88% year-over-year. We ended the year with our AI revenue substantially above our $1.5 billion target from April 2024's AI Day and we also expect to very significantly exceed our $2.5 billion target in fiscal 2026. Our overall revenue growth accelerated in the second half of the year, driven by our custom silicon program ramps along with continued strong growth in Electro-Optics. In fiscal 2025, we also drove a record $1.68 billion in operating cash flow and significantly increased capital returns to our stockholders through stock repurchases and dividends totaling $933 million in aggregate. I'm extremely pleased with our fiscal 2025 results and even more excited about our outlook for robust year-over-year revenue growth in fiscal 2026. We are poised for a strong start to the New Year, forecasting revenue growth of over 60% year-over-year in the first quarter at the midpoint of guidance. Let me now discuss our results and expectations for each of our end markets. In our data center end market for the fourth quarter, we achieved record revenue of $1.37 billion, growing 78% year-over-year and 24% sequentially. These strong results were driven by our custom AI silicon programs ramping to high volume production. Additionally, we benefited from strong shipments of our Electro-Optics products and Teralynx Ethernet switches with revenue from both product lines growing double-digits sequentially on a percentage basis. Within our Electro-Optics franchises, we continued to see strong demand for our market-leading 800-gig PAM products and our 400ZR DCI products. We also began shipments of the industry's first 1.6T PAM DSP and 5-nanometer process technology. To further optimize AI interconnect performance, we accelerated the cadence of next-generation products by introducing the industry's first 3-nanometer 1.6T DSP featuring 200-gig per lane electrical and optical interfaces. This new Marvell DSP enables customers to reduce 1.6T optical module power consumption by more than 20% compared to its predecessor. And we expect to go into production in the second half of this year as 1.6T adoption accelerates. While tremendous focus remains on GPUs and XPUs, the distributed nature of computing AI makes connectivity just as critical as the individual processors. As a result, the design of the next generation of accelerated infrastructure is inexorably tied to how efficiently data can be moved on and off the accelerators and throughout the cluster. This increase in the role of high-speed networking and AI da ... [transcript truncated at 5,000 chars — full text available via API]

Operator (Operator): Good afternoon, and welcome to Marvell Technology, Inc. Third Quarter of Fiscal Year 2025 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Please go ahead. Ashish Saran (Senior Vice President of Investor Relations): Thank you, and good afternoon, everyone. Welcome to Marvell's third fiscal quarter 2025 earnings call. Joining me today are Matt Murphy, Marvell's Chairman and CEO; and Willem Meintjes, our CFO. Let me remind everyone that certain comments made today include forward-looking statements, which are subject to significant risks and uncertainties that could cause our actual results to differ materially from management's current expectations. Please review the cautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website, as well as our most recent 10-K and 10-Q filings. We do not intend to update our forward-looking statements. During our call today, we will refer to certain non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is also available in our earnings press release. I am pleased to announce that our next Investor Day will be held in New York City on June 10, 2025. More details will be shared in an upcoming press release. Let me now turn the call over to Matt for his comments on the quarter. Matt? Matt Murphy (Chairman and CEO): Thanks, Ashish, and good afternoon, everyone. For the third quarter of fiscal 2025, Marvell delivered revenue of $1.516 billion, $66 million above the midpoint of guidance, growing 19% sequentially with the outperformance driven by strong AI demand and execution. As a result, our non-GAAP earnings per share of $0.43 was also well above the midpoint of guidance, growing by 43% sequentially. This earnings growth rate, which was more than double our top-line growth rate, highlights the substantial operating leverage in our business model. Stronger-than-forecasted ramp in custom silicon was a key contributor to this performance. We believe that continued success in custom silicon will help accelerate our timeline to achieve our long-term target operating margin model. On a year-over-year basis, third quarter revenue grew by 7%, marking a return to year-over-year growth for Marvell. I'm very pleased with our results and even more excited about our outlook for the fourth quarter, where we project revenue growth to accelerate to 26% year-over-year growth at the midpoint of guidance. Marvell is entering a new era of growth, driven by the substantial volume production ramp of our custom silicon programs, along with continued strong growth in optics. Yesterday, we announced the expansion of our strategic relationship with Amazon Web Services through a comprehensive multi-generational five-year agreement. This multi-generational agreement encompasses a broad range of Marvell's data center semiconductors, including custom AI products, optical DSPs, active electrical cable DSPs, PCIe retimers, data center interconnect optical modules and Ethernet switching silicon solutions. Additionally, Marvell will collaborate with AWS for EDA in the cloud, leveraging the advanced and scalable compute capabilities of AWS to accelerate silicon design. This agreement represents a significant step up in the expected volume of business between the two companies in the coming years and we look forward to working with AWS on custom AI and networking semiconductors that meet the demanding needs of accelerated infrastructure. Let me now discuss our results and expectations for each of our end markets. In our data center end market for the third quarter, we achieved record revenue of $1.1 billion, growing 98% year-over-year and 25% sequentially. These strong results were driven by a significant step-up in our custom AI silicon ramp as our customers saw increasing demand for the differentiated capabilities offered by these new custom AI chips. We are seeing strong custom AI demand continue into the fourth quarter and have secured supply chain capacity to support our customers' growth forecasts. Our success in ramping these highly complex 100 billion-plus transistor chips from initial samples to high-volume production on first-pass silicon without any discernible issues is a testament to Marvell's robust design methodology and world-class engineering team. Our seasoned operations team and deep partner relationships were key enablers of the rapid ramp we were able to drive in a constrained supply environment. The superb execution is a significant time-to-market advantage for our customers and has given them even more confidence to expand their collaboration with Marvell on their critical silicon projects. In the third ... [transcript truncated at 5,000 chars — full text available via API]

Operator (Operator): Good afternoon and welcome to Marvell Technology, Inc.'s Second Quarter of Fiscal Year 2025 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Please go ahead. Ashish Saran (Senior Vice President of Investor Relations): Thank you and good afternoon, everyone. Welcome to Marvell's second fiscal quarter 2025 earnings call. Joining me today are Matt Murphy, Marvell's Chairman and CEO; and Willem Meintjes, our CFO. Let me remind everyone that certain comments made today include forward-looking statements, which are subject to significant risks and uncertainties that could cause our actual results to differ materially from management's current expectations. Please review precautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website, as well as our most recent 10-Q and 10-K filings. We do not intend to update our forward-looking statements. During our call today, we will refer to certain non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is also available in our earnings press release. Let me now turn the call over to Matt for his comments on the quarter. Matt? Matt Murphy (Chairman and CEO): Thanks, Ashish, and good afternoon everyone. For the second quarter of fiscal 2025, Marvell delivered revenue of $1.27 billion, above the midpoint of guidance driven primarily by strong demand from our data center end market. Higher revenue combined with disciplined expense control drove non-GAAP earnings per share of $0.30, also above the midpoint of guidance. Revenue in the second quarter grew by 10% sequentially, and we are projecting significantly higher sequential growth for the third quarter, with all our end markets expected to grow. Achieving the midpoint of our third quarter guidance would also result in a return to year-over-year revenue growth for Marvell. Let me now discuss our results and expectations for each of our end markets. In our data center end market for the second quarter, we drove record revenue of $881 million, growing 92% year-over-year and 8% sequentially. These above-guidance results were driven by strong demand for our electro-optics products, custom silicon beginning its anticipated ramp, as well as growth in our storage and switch revenue. Strong bookings continue for our market-leading 800 gig PAM products and 400ZR data center interconnect, or DCI, products, and we are looking forward to starting shipments of our next-generation 200 gig per lane, 1.6 terabit DSPs in the third quarter. As a result, we expect our electro-optics revenue will continue to grow every quarter this fiscal year on a sequential basis. We are also looking forward to addressing a number of new opportunities within the data center. We've begun initial shipments of our 100 gig per lane, 800 gig DSPs for active electrical cables for AECs. And we are anticipating the production ramp to accelerate in the second half. In addition, we recently started sampling the industry's first 200 gig per lane 1.6 terabyte AEC DSPs to address upcoming higher speed, short reach, copper interconnect applications. Accelerated servers are turning to PCIe Gen6 technology, which needs higher order PAM4 modulation. Given our leadership position in PAM technology, customers are turning to Marvell to enable this transition, and we are now sampling our new PAM4-based PCIe Gen6 retimers. As you can see, we are continuing to broaden our end-to-end product portfolio to address all the critical interconnect needs of our data center customers, positioning us to take full advantage of an interconnect TAM expected to grow at a 27% CAGR to $14 billion by calendar 2028. We are confident in our ability to continue to lead the industry in power and performance with our current optical DSP and DCI franchises, while we expand into new opportunities, including AEC DSPs, PCIe retimers, silicon photonics, and longer distance 1,000 kilometer-reach DCI modules. As a result, we expect to maintain a leadership position in this large and fast-growing interconnect market. We are making significant progress in bringing Compute Express Link or CXL technology to the market, having recently introduced two new families of CXL devices to address memory bandwidth and memory capacity challenges in next-generation servers. In our cloud security business, we were pleased that Microsoft will begin integrating Marvell's FIPS 140 Level-3 compliant liquid security hardware modules in their Azure Key Vault offerings. These products offer Azure's customers the most secure encryption and key management services in a cloud platform. Let me now turn to our custom silicon business. As investment in AI ... [transcript truncated at 5,000 chars — full text available via API]