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    MRVL
    Earnings call· Apr 2025(Q1 FY26)

    Marvell Technology Q1 FY26 earnings call MRVL

    May 29, 2025 Source

    Executive summary

    Marvell Q1 FY26 — Record Revenue and Strong AI-Driven Data Center Growth

    Marvell commenced its fiscal year with strong Q1 results, exceeding guidance driven by robust AI demand in the data center segment and ongoing recovery in carrier infrastructure and enterprise networking. The company is strategically expanding its custom silicon platform with advanced packaging and NVLink Fusion, securing 3nm wafer capacity for future AI XPU programs. Management anticipates continued growth across segments, with AI revenue projected to become the majority of total company revenue in the near future.

    Highlights

    5

    • Record revenue of $1.895 billion, reflecting 63% year-over-year growth.

    • Record non-GAAP earnings per share of $0.62, growing 158% year-over-year.

    • Data center revenue reached a record $1.44 billion, growing 76% year-over-year.

    • Significantly increased stock repurchases to $340 million, up from $200 million in the prior quarter.

    • Announced the sale of automotive Ethernet business for $2.5 billion in an all-cash transaction.

    Concerns

    3

    • Consumer revenue declined 29% sequentially to $63 million.

    • Industrial end market declined sequentially, offsetting growth in automotive.

    • Custom business runs at a fundamentally lower gross margin, which can modulate overall gross margins.

    Guidance & targets

    18
    CategoryTargetConfidence
    Revenue
    $2 billion, plus or minus 5%
    high materiality
    High
    Revenue Year-over-Year Growth
    57%
    high materiality
    High
    Data Center Revenue Sequential Growth
    mid-single-digit range on a percentage basis
    medium materiality
    High
    Enterprise Networking and Carrier Infrastructure Aggregate Revenue Sequential Growth
    mid-single-digit range on a percentage basis
    medium materiality
    High
    Consumer Revenue Sequential Growth
    approximately 50% sequentially
    low materiality
    High
    Automotive and Industrial Revenue Sequential Growth
    flat on a sequential basis
    low materiality
    High
    GAAP Gross Margin
    between 50% and 51%
    medium materiality
    High
    Non-GAAP Gross Margin
    between 59% and 60%
    high materiality
    High
    GAAP Operating Expenses
    approximately $735 million
    medium materiality
    High
    Non-GAAP Operating Expenses
    approximately $495 million
    high materiality
    High
    Other Income and Expense
    approximately $49 million
    low materiality
    High
    Non-GAAP Tax Rate
    10%
    low materiality
    High
    Basic Weighted Average Shares Outstanding
    864 million
    low materiality
    High
    Diluted Weighted Average Shares Outstanding
    874 million
    low materiality
    High
    GAAP Earnings Per Diluted Share
    $0.16 to $0.26
    medium materiality
    High
    Non-GAAP Earnings Per Diluted Share
    $0.62 to $0.72
    high materiality
    High
    Custom AI XPU Production Start
    start production
    high materiality
    High
    Custom AI XPU Revenue Growth
    continue to grow
    high materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Data Center
    Achieved record revenue, driven by custom AI silicon programs and robust shipments of electro-optics products. Expected mid-single-digit sequential growth in Q2 FY26.
    Contribution to total revenue: 76%
    		$1.44 billion76%5%—
    Enterprise Networking
    Revenue exceeded midpoint of forecast, reflecting ongoing recovery. Expected mid-single-digit sequential growth in Q2 FY26 (combined with Carrier Infrastructure).
    		$178 million—14% (combined with Carrier Infrastructure)—
    Carrier Infrastructure
    Revenue exceeded midpoint of forecast, reflecting ongoing recovery. Expected mid-single-digit sequential growth in Q2 FY26 (combined with Enterprise Networking).
    		$138 million—14% (combined with Enterprise Networking)—
    Consumer
    Sequential decline largely driven by seasonality in gaming demand. Expected approximately 50% sequential growth in Q2 FY26.
    		$63 million—-29%—
    Automotive and Industrial
    Sequential growth in automotive was offset by a decline in the industrial end market. Anticipated to be flat sequentially in Q2 FY26.
    		$76 million—-12%—

    Operational metrics

    18
    Revenue
    $1.895 billion63% YoY, 4% sequentially
    Q1 FY26

    Record revenue for the quarter, above the midpoint of guidance.

    Non-GAAP EPS
    $0.62158% YoY
    Q1 FY26

    Record non-GAAP EPS, above the midpoint of guidance and more than double the pace of revenue growth.

    GAAP Gross Margin
    50.3%
    Q1 FY26

    Reported GAAP gross margin for the quarter.

    Non-GAAP Gross Margin
    59.8%
    Q1 FY26

    Reported non-GAAP gross margin for the quarter.

    GAAP Operating Expenses
    $682 million
    Q1 FY26

    Includes stock-based compensation, amortization of acquired intangible assets, restructuring costs, and acquisition-related costs.

    Non-GAAP Operating Expenses
    $486 millionslightly below guidance
    Q1 FY26

    Reported non-GAAP operating expenses for the quarter.

    GAAP Operating Margin
    14.3%
    Q1 FY26

    Reported GAAP operating margin for the quarter.

    Non-GAAP Operating Margin
    34.2%
    Q1 FY26

    Reported non-GAAP operating margin for the quarter.

    Inventory
    $1.07 billionincrease of $42 million from prior quarter
    end of Q1 FY26

    Inventory level at the end of the first quarter, supporting business growth.

    Cash Dividends
    $52 million
    Q1 FY26

    Amount returned to shareholders through cash dividends.

    Stock Repurchases
    $340 millionup from $200 million in prior quarter
    Q1 FY26

    Significant increase in repurchases, reflecting confidence in future prospects.

    Total Debt
    $4.2 billion
    end of Q1 FY26

    Total debt balance at the end of the first fiscal quarter.

    Gross Debt-to-EBITDA Ratio
    1.8x
    end of Q1 FY26

    Debt ratio that has continued to improve with increased EBITDA.

    Net Debt-to-EBITDA Ratio
    1.42x
    end of Q1 FY26

    Debt ratio that has continued to improve with increased EBITDA.

    Cash and Cash Equivalents
    $886 million
    end of Q1 FY26

    Cash balance at the end of the first fiscal quarter.

    AI as % of Data Center Revenue
    majorityabout 55% last quarter
    Q1 FY26

    AI now represents the majority of data center revenue, and is expected to grow further.

    AI as % of Total Company Revenue
    will become the majority of Holdco
    future

    Projected trajectory for AI revenue contribution to the entire company.

    EPS Growth vs Revenue Growth
    more than double
    Q1 FY26

    Demonstrates significant operating leverage in the model.

    Industry KPIs

    5
    MetricValueDetails
    Ai data center revenuemajority%
    Design wins socket pipelineLead XPU program: volume production; Another U.S. hyperscaler XPU: significant design win
    Inventory channel inventory$1.07 billionUSD
    Node platform ramp schedule3-nanometer wafer and advanced packaging capacity secured
    End market segment revenue mixData Center: $1.44 billion; Enterprise Networking: $178 million; Carrier Infrastructure: $138 million; Consumer: $63 million; Automotive and Industrial: $76 millionUSD

    Product announcements

    10
    ProductTypeDetails
    Custom HBM Compute Architectureexpansion
    Co-packaged Optics Platformexpansion
    NVLink Fusion Technology Integrationlaunch
    Multi-die Packaging Platformlaunch
    400-gig per lane PAM technologymilestone
    3-nanometer 1.6T PAM4 DSPlaunch
    Next-generation 800-gig DCI moduleslaunch
    1.6T AEC DSPslaunch
    Coherent light DSPslaunch
    PCIe Gen 6 and Gen 7 SerDesroadmap

    Deals & partnerships

    2
    InfineonSale of automotive Ethernet business$2.5 billion

    Marvell announced the sale of its automotive Ethernet business to Infineon in an all-cash transaction.

    NVIDIAIntegration of NVLink Fusion technology into Marvell's custom platform

    Marvell announced a partnership with NVIDIA to add their NVLink Fusion technology to its expanding custom platform.

    Risks & headwinds

    3
    Macroeconomic Uncertainties

    unquantified

    Mitigation: Closely monitoring the broader environment to assess potential long-term impacts.

    Custom Business Gross Margin Impactongoing

    fundamentally lower gross margin

    Mitigation: Managing the overall custom business to drive accretive operating margin and strong EPS growth, despite lower gross margins on high-volume programs.

    Industrial End Market LumpinessQ1 FY26

    unquantified sequential decline

    Mitigation: Acknowledged as lumpy, but overall Automotive and Industrial segment expected to be flat sequentially in Q2 FY26.

    What to watch in Q2 FY26

    5

    Data Center Revenue Growth

    Q2 FY26
    Current5% sequential growth
    TargetMid-single-digit sequential growth

    Why it matters

    Continued growth in the data center segment, driven by AI, is critical for overall company performance and validates the AI thesis.

    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.

    Q&A highlights

    5

    Clarify the status of the 3-nanometer program with the large XPU customer, content direction for next-gen programs, and exclusivity given supply chain noise.

    Matt Murphy confirmed Marvell is the incumbent shipping the current AI XPU generation and has secured 3-nanometer wafer and advanced packaging capacity for production starting in 2026. He stated that supply chain sources have an incomplete view and that while customers may pursue multiple paths, Marvell expects its custom silicon revenue to continue to grow multi-year with this customer.

    “We're the incumbent shipping the current generation of this AI XPU. And as I detailed, we've had a very successful and rapid ramp on this program from A0, which is first-time success to high-volume production. ... This next-generation program has continued to move forward. And this quarter, we have secured 3-nanometer wafer and advanced packaging capacity, and that's for 2026, where we expect to start production.”

    asked by Vivek Arya · answered by Matthew Murphy

    2 min read5 chapters

    Detailed Narrative

    01

    AI Custom Silicon Platform Expansion

    Marvell is expanding its custom platform with innovative technologies such as custom high-bandwidth memory (HBM) compute architecture and co-packaged optics. The custom HBM compute architecture optimizes I/O interfaces for AI accelerators, increasing performance and reducing run times. Co-packaged optics enable a transition from copper to optical fiber for scale-up AI clusters, significantly expanding Marvell's interconnect revenue and market opportunities by enabling larger AI servers with higher memory capacity and processing capability.

    02

    Strategic Partnerships and Advanced Packaging

    The company announced a partnership with NVIDIA to integrate NVLink Fusion technology into its custom platform, providing customers with an accelerated path to custom scale-up solutions. Marvell also introduced a new multi-die packaging platform, which is already qualified and in production for a customer-specific XPU program. This platform offers more efficient die-to-die interconnect, lower power consumption, increased yields, and lower product costs, presenting an alternative to traditional silicon interposers for custom cloud applications.

    03

    Custom AI XPU Program Momentum

    Marvell's lead XPU program for a large U.S. hyperscale data center customer is a key revenue driver, having achieved volume production with A0 silicon. The company has secured 3-nanometer wafer and advanced packaging capacity for this program, with production expected to start in calendar 2026. Engagement on follow-on generations is progressing for this customer and another U.S. hyperscaler, reinforcing confidence in achieving long-term custom revenue goals.

    04

    Interconnect Portfolio Leadership

    Marvell's PAM and DCI franchises continue to lead in enabling AI and cloud infrastructure build-out. Recent showcases at OFC 2025 included the industry's first 400-gig per lane PAM technology, a critical step towards 3.2T optical interconnects. Other innovations include 3-nanometer 1.6T PAM4 DSPs, next-generation 800-gig DCI modules, production-ready 1.6T AEC DSPs, Coherent light DSPs, and PCIe Gen 6 and Gen 7 SerDes, all designed to power next-generation AI deployments.

    05

    End-Market Recovery and AI Tailwinds

    Marvell is observing an encouraging recovery in its carrier infrastructure and enterprise networking end markets, with the Q2 FY26 forecast marking the fifth consecutive quarter of sequential revenue growth for these combined segments. The company continues to benefit from strong AI tailwinds, including robust capital expenditure plans from hyperscalers, increasing sovereign data center announcements, and the emergence of new hyperscalers, all contributing to long-term confidence in the data center business.

    AI-generated summary of the company’s earnings call. Not investment advice.