Astera Labs Q1 FY26 earnings call ALAB

Astera delivered Q1 FY26 revenue of $308.4M, up 14% sequentially and 93% year-over-year, with both revenue and non-GAAP EPS above outlook. Growth was broad-based across signal conditioning and fabric switch portfolios. Non-GAAP gross margin was 76.4% (up 70 bps QoQ) helped by a lower mix of hardware sales, non-GAAP operating margin was 36.2%, and non-GAAP EPS was $0.61 on 181.2M diluted shares. The company generated $74.6M of cash from operations and ended the quarter with $1.18B in cash and marketable securities, flat versus Q4 after cash paid for acquisitions.

PCIe Gen 6 revenue across AI fabric and signal conditioning exceeded one-third of total company revenue, and the company has now shipped millions of PCIe Gen 6 ports to date. Initial Scorpio X-Series design wins in smaller-radix configurations moved from preproduction to initial volume ramp in Q1. The company expanded the portfolio with a new Scorpio X-Series 320-lane high-radix switch (with in-network compute and hypercast boosting collective operations up to 2x) and extended Scorpio P-Series to span 32 to 320 lanes. Management expects Scorpio to become its largest product line by year-end—up from ~15% of revenue last year—with X-Series revenue exceeding P-Series through 2026.

Custom silicon is emerging as a multibillion-dollar opportunity. Astera is deep in engagement on an initial NVLink Fusion design win in collaboration with NVIDIA and a hyperscaler for hybrid-rack architectures, expected to contribute meaningful revenue in 2027. In memory, it won a second custom CXL design leveraging a customized Leo controller for KV Cache offload in AI inference, with shipments to a new hyperscaler expected in 2027. Management stressed it will be systematic and selective on custom work given the customer-concentration, margin and risk profile, while continuing to lean on standard products.

Astera is extending its copper value-chain approach into optics, building analog/mixed-signal, DSP, EIC, PIC and optical-packaging capabilities, augmented by the aiXscale Photonics acquisition (pluggable connector and PIC technology). The roadmap targets high-density detachable fiber-attached connectors shipping in volume from 2027, NPO chipsets enabling multi-rack clusters from 2027, and eventually fully optically enabled Scorpio X switches with CPO. NPO ramps first in 2027, with mainstream CPO deployments in 2028. The ultra-high-precision fiber coupler is in qualification at a large AI platform provider.

The UALink consortium published its 2.0 specification in early April, defining in-network compute chiplets, manageability and 200-gig performance via an open, vendor-neutral approach. Astera plans UALink-based scale-up products in 2027 to intercept Amazon ASIC and AMD GPU launches. Management noted next-generation devices command substantially higher value than PCIe switches given higher complexity, speed, lane count/radix, and a shifting media attach from majority copper toward a copper/NPO blend, culminating in a large CPO TAM. Aries will extend to PCIe 7 and Taurus to 1.6T Ethernet.

The company is strategically stepping up investment: non-GAAP opex rose to $123.9M in Q1 (R&D $96.2M, S&M $12M, G&A $15.7M), reflecting a full quarter of aiXscale and a partial quarter of the newly formed Israel Design Center, and is guided to $128M–$131M in Q2. Desmond Lynch joined as CFO, his first earnings call. On supply, inventory stood at ~75 days; management said supply is in place through end of year and it has diversified its back-end supply chain to meet revenue commitments despite industry-wide pockets of supply challenges, and is working with partners for 2027.