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    MRVL
    Earnings call· Jul 2025(Q2 FY26)

    Marvell Technology, Inc. MRVL

    Aug 28, 2025 Source

    Executive summary

    Marvell Q2 FY26 — Record Revenue and Strong AI-Driven Data Center Growth

    Marvell delivered record Q2 FY26 results, fueled by robust AI demand in its data center segment and a strong recovery in enterprise networking and carrier infrastructure. The company strategically divested its automotive ethernet business to sharpen its focus on the massive AI opportunity, which now drives three-quarters of total revenue. Leadership changes aim to further capitalize on AI and cloud markets, with significant design win momentum and an expanding pipeline for custom silicon.

    Highlights

    6

    • Achieved record revenue of $2.006 billion, reflecting a 58% year-over-year and 6% sequential increase.

    • Data center end market revenue grew 69% year-over-year to $1.49 billion, primarily driven by AI demand.

    • Expanded non-GAAP operating margin by 870 basis points year-over-year to 34.8%.

    • Delivered record non-GAAP earnings per share of $0.67, up 123% year-over-year.

    • Generated $462 million in operating cash flow, a significant increase from $333 million in the prior quarter.

    • Successfully completed the divestiture of the automotive ethernet business for $2.5 billion in cash, ahead of schedule.

    Concerns

    1

    • Custom business revenue is expected to be flat sequentially in Q3 FY26, with growth non-linear and Q4 substantially stronger than Q3.

    Guidance & targets

    26
    CategoryTargetConfidence
    Total Revenue
    $2.06 billion, plus or minus 5%
    high materiality
    High
    Total Revenue (excluding Automotive Ethernet)
    Closer to 40% year-over-year growth
    medium materiality
    High
    GAAP Gross Margin
    Between 51.5% and 52%
    medium materiality
    High
    Non-GAAP Gross Margin
    Between 59.5% and 60%
    medium materiality
    High
    GAAP Operating Expenses
    Approximately $719 million
    medium materiality
    High
    Non-GAAP Operating Expenses
    Approximately $485 million
    medium materiality
    High
    GAAP Other Income and Expense
    Income of approximately $1.8 billion
    medium materiality
    High
    Non-GAAP Other Income and Expense
    Expense of approximately $33 million
    medium materiality
    High
    Non-GAAP Tax Rate
    10%
    medium materiality
    High
    Basic Weighted Average Shares Outstanding
    863 million
    low materiality
    High
    Diluted Weighted Average Shares Outstanding
    870 million
    low materiality
    High
    GAAP Earnings Per Diluted Share
    $1.98 to $2.08
    high materiality
    High
    Non-GAAP Earnings Per Diluted Share
    $0.69 to $0.79
    high materiality
    High
    Data Center Revenue
    Flat sequentially
    high materiality
    High
    Data Center Revenue Growth
    Mid-30% range year-over-year
    high materiality
    High
    Electro-optics products revenue growth
    Double digits sequentially on a percentage basis
    medium materiality
    High
    Custom business revenue growth
    On track to grow in the second half of the fiscal year compared to the first
    high materiality
    High
    Custom business revenue growth
    Fourth quarter substantially stronger than the third
    high materiality
    High
    Enterprise Networking and Carrier Infrastructure Revenue (combined)
    Approximately 30% sequential growth
    medium materiality
    High
    Consumer Revenue
    Down sequentially in the low single digits on a percentage basis
    low materiality
    High
    Automotive and Industrial Revenue
    Approximately $35 million
    medium materiality
    High
    Data Center Market Share
    20% of a $94 billion TAM
    high materiality
    High
    Enterprise Networking and Carrier Infrastructure Annual Revenue
    Approximately $2 billion
    medium materiality
    Medium
    Consumer Annual Revenue
    Approximately $300 million
    low materiality
    Medium
    Industrial Annual Revenue
    Approximately $100 million
    low materiality
    Medium
    Scale-up switches product introductions (UALink and Ethernet-based)
    In the next 2 years
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Data Center
    Strong performance led by custom XPU and XPU attached products as well as electro-optics interconnect portfolio. AI and cloud are primary drivers. On-premise revenue expected to remain stable.
    Share of total revenue: 74%Revenue from AI and cloud: >90%On-premise annualized run rate: ~$500 million
    		$1.49 billion69%3%—
    Enterprise Networking
    Combined with Carrier Infrastructure, revenue grew 2% sequentially and 43% year-over-year. Expected to grow sequentially by approximately 30% in Q3 FY26 due to normalizing inventory and refreshed product portfolio.
    		$194 million43% (combined with Carrier Infrastructure)2% (combined with Carrier Infrastructure)—
    Carrier Infrastructure
    Combined with Enterprise Networking, revenue grew 2% sequentially and 43% year-over-year. Expected to grow sequentially by approximately 30% in Q3 FY26 due to normalizing inventory and refreshed product portfolio.
    		$130 million43% (combined with Enterprise Networking)2% (combined with Enterprise Networking)—
    Consumer
    Gaming demand and seasonality continues to be the primary driver. Expected to be down sequentially in the low single digits in Q3 FY26.
    		$116 million30%84%—
    Automotive and Industrial
    Flat both sequentially and year-over-year. Q3 FY26 revenue anticipated to be approximately $35 million reflecting the divestiture of the automotive Ethernet business.
    		$76 millionFlatFlat—

    Operational metrics

    17
    Non-GAAP Operating Margin
    34.8%870 bps YoY expansion
    Q2 FY26
    Non-GAAP Earnings Per Share
    $0.67123% YoY growth
    Q2 FY26

    Record non-GAAP EPS.

    Stock Repurchases
    $200 million
    Q2 FY26

    Part of ongoing stock repurchase program.

    Stock Repurchases (First Half Fiscal Year)
    $540 million
    1H FY26

    Total repurchased through the first half of the fiscal year.

    Remaining Buyback Authorization
    $2 billion
    Current

    Remaining authorization for stock repurchases.

    Cash and Cash Equivalents Balance
    $1.2 billion
    End of Q2 FY26
    Total Debt
    $4.5 billion
    End of Q2 FY26
    Gross Debt-to-EBITDA Ratio
    1.63x
    End of Q2 FY26

    Debt ratios have continued to improve.

    Net Debt-to-EBITDA Ratio
    1.19x
    End of Q2 FY26

    Debt ratios have continued to improve.

    Data Center TAM
    $94 billion26% increase from prior view
    CY28

    Expanded data center TAM outlined at custom silicon investor event.

    Custom Pipeline Opportunities
    >50
    Current

    Expanded design win pipeline.

    R&D Spending in AI and Data Center
    Well north of 80%up from 60% a few years ago
    Current

    Redirecting investments towards AI opportunity.

    Enterprise Networking & Carrier Infrastructure (combined) Annualized Run Rate
    Approximately $1.7 billionup from $900 million (Q1 FY25 low point)
    Q3 FY26 implied

    Strong recovery in these end markets.

    Automotive Ethernet Business Contribution (Q3 FY26 prior to divestiture)
    Mid-single-digit millions of dollars
    Q3 FY26

    Included in Q3 FY26 revenue forecast.

    Automotive Ethernet Business Contribution (Full Q3 FY26 if not divested)
    Approximately $60 million
    Q3 FY26

    Hypothetical contribution if divestiture had not taken place.

    Non-GAAP EPS Sequential Growth
    10%
    Q3 FY26

    At the midpoint of guidance, more than double projected revenue growth rate.

    Non-GAAP EPS Year-over-Year Growth
    70%
    Q3 FY26

    At the midpoint of guidance.

    Industry KPIs

    5
    MetricValueDetails
    Ai data center revenue$1.49 billionUSD
    Design wins socket pipeline18 multigenerational XPU and XPU attach socketssockets
    Inventory channel inventory$1.05 billionUSD
    Node platform ramp schedule5-nanometer process technology leadership
    End market segment revenue mixData Center: $1.49B; Enterprise Networking: $194M; Carrier Infrastructure: $130M; Consumer: $116M; Automotive and Industrial: $76MUSD

    Product announcements

    3
    ProductTypeDetails
    1.6T PAM DSPs (200-gig per lane)launch
    400-gig per lane PAM technologymilestone
    51.2T switcheslaunch

    Deals & partnerships

    1
    InfineonSale of automotive ethernet business$2.5 billion all-cash transaction

    Divestiture aligns with strategy to focus on the AI opportunity. Closed ahead of schedule in early August.

    Risks & headwinds

    3
    Lumpiness in custom business revenueQ3 FY26

    Q3 FY26 custom revenue expected to be flat sequentially, with Q4 substantially stronger.

    Mitigation: This is normal for large hyperscale builds, and optics strength is offsetting in Q3. Diversity is expected as more programs ramp over time.

    Supply chain tightnessCurrent

    Very tight

    Mitigation: Requires very tight coordination with customers and strong execution by the team. Deep partnerships are in place to manage through issues.

    TariffsCurrent

    No significant impact on business to date.

    Mitigation: The company is tracking the dynamic environment very closely.

    What to watch in Q3 FY26

    5

    Custom business revenue growth

    Q4 FY26
    CurrentExpected flat sequentially in Q3 FY26
    TargetSubstantially stronger growth in Q4 FY26

    Why it matters

    Custom silicon is a key driver of Marvell's AI strategy and long-term growth targets.

    However, we expect growth to be nonlinear in the custom business with the fourth quarter substantially stronger than the third.

    Q&A highlights

    7

    Can you provide more color on the headwinds for the custom business in Q3 and the magnitude of the expected increase in Q4?

    The lumpiness in the custom business is normal for large hyperscale builds and is primarily a timing issue. Q3 is a 'one-quarter digestion' period where optics strength offsets custom. Q4 is expected to be substantially stronger, with custom revenue up in the second half of FY26 compared to the first half.

    “Yes. No, at a high level, these are existing programs, and it's really just a timing issue in terms of how we deliver the product and when the customers' builds are occurring and when they want the product from us.”

    asked by Ross Seymore · answered by Matthew Murphy

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Realignment and Leadership Changes

    Marvell completed the divestiture of its automotive ethernet business for $2.5 billion, aligning with a strategy to focus on the AI opportunity, which now drives three-quarters of total revenue. This led to a new segment classification for Q3 FY26, consolidating non-data center markets into 'communications and other'. The company also promoted Chris Koopmans to President and COO and Sandeep Bharathi to President, Data Center Group, to accelerate growth in AI and cloud markets, unifying full ownership of the largest business under a single leader.

    02

    Data Center Momentum and Custom Silicon

    The data center end market achieved record revenue of $1.49 billion, growing 69% year-over-year, primarily driven by custom XPU/XPU attach products and electro-optics. AI and cloud account for over 90% of data center revenue. Marvell updated its custom design win board to 18 multigenerational sockets and highlighted over 50 new pipeline opportunities with an estimated $75 billion lifetime revenue potential, reinforcing confidence in achieving a 20% share of a $94 billion data center TAM by CY28.

    03

    Electro-Optics Leadership and Next-Gen Connectivity

    Marvell's PAM and DCI franchises continue to lead in AI and cloud infrastructure build-out. Demand for 800-gig PAM DSPs remains strong, with volume shipments of next-generation 1.6T PAM DSPs accelerating to multiple customers. The company also demonstrated 400-gig per lane PAM technology, a critical innovation and step towards enabling 3.2T optical interconnects, underscoring its leadership in pushing the boundaries of next-generation optical connectivity.

    04

    Emerging Scale-Up Networking Opportunity

    As AI data centers evolve, scale-up networks are becoming essential for tightly interconnecting XPUs. Marvell is investing in developing scale-up switches supporting both open standard Ethernet and UALink fabrics, leveraging its proprietary high-speed, low-power, low-latency SerDes IP. This, combined with its full suite of interconnect products (DSPs for AEC/AOC, retimers, silicon photonics), represents a massive scale-up opportunity for the company over time⏳, with product introductions expected in the next two years.

    05

    Recovery in Core Markets

    Enterprise networking and carrier infrastructure showed strong recovery, with combined revenue growing 2% sequentially and 43% year-over-year. The annualized run rate for these two end markets is expected to reach approximately $1.7 billion in Q3 FY26, up significantly from a low point of $900 million in Q1 FY25. This recovery is driven by normalizing customer inventory levels and strong adoption of Marvell's refreshed product portfolio, with expectations to collectively generate $2 billion in annual revenue over time⏳.

    06

    Capital Allocation and Financial Strength

    The $2.5 billion proceeds from the automotive ethernet divestiture provide significant flexibility for ongoing stock repurchases and strategic investments in technology. Marvell repurchased $540 million of stock through the first half of the fiscal year, with approximately $2 billion remaining in authorization. Cash flow from operations increased to $462 million, and debt ratios improved, with gross debt-to-EBITDA at 1.63x and net debt-to-EBITDA at 1.19x, strengthening the balance sheet to support growth opportunities.

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