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    MRVL
    Earnings call· Oct 2025(Q3 FY26)

    Marvell Technology, Inc. MRVL

    Dec 2, 2025 Source

    Executive summary

    Marvell Q3 FY26 — Record Revenue & Strategic AI Interconnect Acquisition

    Marvell delivered a strong Q3 FY26 with record revenue and EPS, driven by robust AI demand in its Data Center segment and recovery in Communications. The company announced the strategic acquisition of Celestial AI, a photonic fabric platform, to capitalize on the massive scale-up interconnect opportunity in AI. Management provided an optimistic multi-year outlook, projecting significant growth inflections in Data Center revenue for FY27 and FY28, supported by strong demand signals and new product cycles.

    Highlights

    5

    • Record revenue of $2.075 billion, reflecting 37% year-over-year growth and exceeding guidance midpoint.

    • Non-GAAP EPS of $0.76, exceeding guidance midpoint by $0.02 and growing 77% year-over-year.

    • Data Center revenue grew 38% year-over-year to $1.52 billion, fueled by robust AI demand.

    • Communications and Other end market revenue grew 34% year-over-year (50% excluding divested business).

    • Strong Q4 FY26 revenue forecast of $2.2 billion at midpoint, representing 21% YoY growth (24% excluding divested business).

    Concerns

    3

    • Sequential decline in custom revenue in Q3 FY26 due to lumpiness in demand.

    • Non-GAAP tax rate expected to increase to approximately 12% in FY27 from 10% in Q4 FY26.

    • Non-GAAP operating expenses expected to increase at roughly half the rate of revenue growth next fiscal year, with a mid-single-digit sequential increase in Q1 FY27.

    Guidance & targets

    33
    CategoryTargetConfidence
    Total company revenue
    $2.2 billion, plus or minus 5%
    high materiality
    High
    Total company revenue (excluding Automotive Ethernet)
    approximately 24% year-over-year growth
    medium materiality
    High
    GAAP gross margin
    between 51.1% and 52.1%
    medium materiality
    High
    Non-GAAP gross margin
    between 58.5% and 59.5%
    high materiality
    High
    GAAP operating expenses
    approximately $741 million
    medium materiality
    High
    Non-GAAP operating expenses
    approximately $515 million
    high materiality
    High
    GAAP and non-GAAP other income and expense (including interest)
    approximately $30 million
    low materiality
    High
    Non-GAAP tax rate
    10%
    medium materiality
    High
    GAAP earnings per diluted share
    $0.31 to $0.41
    high materiality
    High
    Non-GAAP earnings per diluted share
    $0.74 to $0.84
    high materiality
    High
    Total company revenue
    around $10 billion
    high materiality
    High
    Data Center revenue growth
    more than 25% year-over-year
    high materiality
    High
    Data Center Interconnect business revenue growth
    growing faster than cloud CapEx
    medium materiality
    High
    Data Center Custom business revenue growth
    at least 20%
    high materiality
    High
    Data Center Storage, Switching, and Other products revenue growth
    at least 15%
    medium materiality
    High
    Communications and Other end market revenue growth
    10%
    medium materiality
    High
    Non-GAAP operating expenses growth rate
    roughly half the rate of the revenue growth
    high materiality
    High
    Non-GAAP tax rate
    approximately 12%
    medium materiality
    High
    Celestial AI annual operating expenses
    approximately $50 million
    medium materiality
    High
    Celestial AI meaningful revenue contribution
    start generating meaningful revenue
    medium materiality
    High
    Celestial AI annualized revenue run rate
    $500 million
    high materiality
    High
    Celestial AI annualized revenue run rate
    $1 billion
    high materiality
    High
    Data Center revenue growth
    40%
    high materiality
    High
    Custom business revenue growth
    doubling
    high materiality
    High
    Interconnect business revenue growth
    above 20%
    medium materiality
    High
    Storage, Switching, and Other products revenue growth
    10%
    medium materiality
    High
    Total company revenue growth
    30%
    high materiality
    High
    XPU attached market revenue
    exceeding $2 billion
    high materiality
    High
    Data Center revenue growth acceleration
    accelerate meaningfully above the 25% growth we expect in fiscal 2027
    high materiality
    High
    Enterprise Networking annualized revenue run rate
    approximately $1 billion
    medium materiality
    High
    Enterprise Networking growth
    in line with enterprise IT spending
    low materiality
    Medium
    Carrier business growth
    in line with carrier CapEx
    low materiality
    Medium
    Non-GAAP operating expenses sequential increase
    mid-single-digit sequential increase
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Data Center
    Record revenue, exceeded guidance for flat sequential performance driven by increased demand across networking portfolio. Strength partially offset by sequential decline in custom revenue due to lumpiness in demand. Expected to grow sequentially in high single digits and approximately 20% YoY in Q4 FY26.
    Contribution to total revenue: 73%
    		$1.52 billion38%2%—
    Communications and Other
    Strong results driven by normalizing customer inventory levels and strong adoption of refreshed product portfolio. Expected to grow sequentially in low single digits and approximately 25% YoY (40% excluding Automotive Ethernet) in Q4 FY26.
    Contribution to total revenue: 27%YoY growth excluding Automotive Ethernet: 50%Sequential growth excluding Automotive Ethernet: 20%
    		$557 million34%8%—
    Enterprise Networking (within Communications and Other)
    Expected to reach annualized revenue run rate of approximately $1 billion in Q4 FY26, reflecting complete normalization of customer inventory levels. Expected to grow in line with enterprise IT spending thereafter.
    Annualized revenue run rate (Q4 FY26): ~$1 billion
    		————
    Carrier Business (within Communications and Other)
    Recovering, with Q4 FY26 guidance implying almost double from the year ago quarter. Expected to settle into long-term growth trajectory in line with carrier CapEx.
    		—almost double——

    Operational metrics

    47
    Total company revenue
    $2.075 billion3% sequential increase, 37% year-over-year growth
    Q3 FY26

    Above the midpoint of guidance.

    Non-GAAP EPS
    $0.76exceeded midpoint of guidance by $0.02, 77% year-over-year growth, 13% sequential increase
    Q3 FY26

    More than double the pace of revenue growth, demonstrating significant operating leverage.

    Non-GAAP gross margin
    59.7%30 basis points sequential increase
    Q3 FY26

    Reported for Q3 FY26.

    Non-GAAP operating expenses
    $485 millionin line with guidance
    Q3 FY26

    Reported for Q3 FY26.

    Non-GAAP operating margin
    36.3%150 basis point sequential increase
    Q3 FY26

    Reported for Q3 FY26.

    Inventory
    $1.01 billion$37 million decrease from prior quarter
    Q3 FY26

    At the end of Q3 FY26.

    Total capital returned
    $1.35 billion
    Q3 FY26

    Between stock repurchases and dividends.

    Total debt
    $4.5 billion
    Q3 FY26

    As of the end of Q3 FY26.

    Gross debt-to-EBITDA ratio
    1.47x
    Q3 FY26

    Continued to improve as EBITDA increased.

    Net debt-to-EBITDA ratio
    0.58x
    Q3 FY26

    Continued to improve as EBITDA increased.

    Cash and investments balance
    $2.7 billion$1.5 billion increase from last quarter
    Q3 FY26

    Reflects proceeds from Automotive Ethernet divestiture and ongoing cash generation, offset by capital return.

    Basic weighted average shares outstanding
    850 million
    Q4 FY26

    Expected for Q4 FY26 guidance.

    Diluted weighted average shares outstanding
    857 million
    Q4 FY26

    Expected for Q4 FY26 guidance.

    Cloud CapEx growth expectations
    over 30%increased from 18%
    Next year

    Increased since September, impacting Marvell's outlook.

    Data Center Interconnect business share of Data Center revenue
    roughly half
    FY27

    Expected for FY27.

    Data Center Custom business share of Data Center revenue
    roughly 1/4
    FY27

    Expected for FY27.

    Data Center Storage, Switching, Other Products share of Data Center revenue
    remaining quarter
    FY27

    Expected for FY27.

    Optical interconnect businesses sequential growth
    double digitssequentially
    Q3 FY26

    Fueled by strong demand for PAM DSPs, TIAs, and drivers.

    Data Center storage and switch businesses sequential growth
    double digitssequentially
    Q3 FY26

    Reported for Q3 FY26.

    1.6T products shipping start
    second half
    FY26

    Seeing exceptionally strong demand heading into next year.

    3.2T technology demonstration
    —
    April

    To drive the next industry transition to 3.2T.

    3.2T production deployments process node
    2-nanometer
    CY28

    Expected to optimize module power.

    1.6T Coherent lite solution shipping start
    next year
    FY27

    To support campus-wide data centers in the era of million GPU AI clusters.

    3.2T Coherent lite solution delivery
    the year after
    FY28

    On track to deliver.

    AEC and retimer revenue growth
    more than doublefrom this year
    FY27

    In aggregate, driven by product ramps and design wins at hyperscalers.

    PCIe Gen6 retimers customer engagement
    more than 30
    Current

    Including hyperscalers, cable partners, system OEMs and ODMs.

    PCIe Gen6 retimers design wins
    more than 10
    Current

    Already designed in.

    PCIe Gen6 retimers production start
    second half
    Next year

    With full revenue contribution in FY28.

    Data Center switching business revenue
    exceed $300 million
    FY26

    Continues to gain momentum.

    Data Center switching business revenue
    surpass $500 millionfaster than prior indication
    FY27

    Driven by strong sustained demand for 12.8T products and ramp of 51.2T products.

    51.2T products shipping start
    begun shipping
    Current

    With a strong ramp expected next year.

    100T products introduction
    introduce
    Next year

    As part of long-term roadmap.

    UALink 115T and 57T solutions sampling
    sample
    H2 FY27

    With volume production expected in FY28.

    Custom business XPU and XPO attach socket design wins
    18
    June

    Disclosed at custom event in June. Several already in volume production, remainder on track to ramp over next couple of years.

    Custom business new design wins
    more than 10%
    Since June

    Includes multiple XPU attached sockets, XPU at an emerging hyperscaler, and an electrical I/O chiplet inside an XPU.

    XPU attach wins
    more than 15
    Current

    Reported for current period.

    CXL design wins
    5
    Current

    Deeply engaged with a third hyperscaler.

    First custom CXL design win production start
    entering volume production nowstarted shipping in Q1 FY26
    Q3 FY26

    Reported for Q3 FY26.

    Second custom CXL design win production start
    expected to enter production
    A year from now

    Expected for Q3 FY27.

    Remaining CXL design wins production start
    slated for production
    CY27

    Slated for CY27.

    Custom business growth
    quadrupled
    CY23 to CY24

    Reported for CY23 to CY24.

    Custom business growth
    doubled
    CY24 to CY25

    Reported for CY24 to CY25.

    Data Center business growth
    45%
    FY26

    Growth this fiscal year.

    Total company revenue growth
    more than 40%
    FY26

    Projected for this fiscal year.

    Accelerated stock repurchase program
    $1 billionexecuted
    Q3 FY26

    Executed during Q3 FY26.

    Ongoing buyback program
    $300 millionrepurchased
    Q3 FY26

    Repurchased through ongoing capital return program, funded by growing operating cash flow.

    Cash dividends
    $51 millionreturned to shareholders
    Q3 FY26

    Returned to shareholders in Q3 FY26.

    Industry KPIs

    3
    MetricValueDetails
    Design wins socket pipeline18design wins
    Inventory channel inventory$1.01 billionUSD
    Node platform ramp schedule3-nanometerprocess node

    Deals & partnerships

    2
    Celestial AIAcquisition of a photonic fabric platform purpose-built for next-generation scale-up interconnect.

    Celestial AI brings strong photonic interconnect engineering groups. CEO, founders, and key executives will assume leadership roles at Marvell. Funding through a combination of stock and cash on hand, no additional debt intended. Marvell plans to continue capital returns in parallel.

    Amazon (AWS)Extension of warrant agreement to include photonic fabric products.

    Adds photonic fabric products as a new swim lane to the existing warrant and strategic arrangement, which previously covered AI custom products and networking products. AWS is a lead Tier 1 hyperscaler partner for Celestial AI's PF chiplets.

    Risks & headwinds

    3
    Lumpiness in custom revenueQ3 FY26

    Sequential decline in Q3 FY26

    Mitigation: Expected rebound in custom revenue in Q4 FY26; FY27 forecast comprehends transition to next-gen XPU with purchase orders for the entirety of the year.

    Increase in non-GAAP tax rateFY27

    Expected to move to approximately 12%

    Increase in non-GAAP operating expensesFY27, Q1 FY27

    Expected to increase at roughly half the rate of revenue growth in FY27; mid-single-digit sequential increase in Q1 FY27

    Mitigation: Driven by continued investment in the business and higher employee bonus payouts, reflecting strong expected finish to FY26. Celestial AI acquisition adds $50 million annually.

    What to watch in Q4 FY26

    5

    Celestial AI Acquisition Closing

    Q1 FY27
    CurrentAnnounced
    TargetClosed

    Why it matters

    The acquisition of Celestial AI is strategic for Marvell's data center portfolio and AI interconnect opportunity, with significant revenue contributions expected from FY28.

    The acquisition is expected to close in the first quarter of next year, subject to customary closing conditions, including regulatory reviews in the United States and will remain a separate independent company through the regulatory process.

    Q&A highlights

    7

    Confirming an implied FY27 revenue of ~$10 billion and how this aligns with the previously stated FY29 targets, especially for AI.

    CEO Matt Murphy confirmed the $10 billion FY27 revenue estimate is in the right ballpark for the organic business and provided a detailed breakdown for FY28, projecting 40% data center growth and 30% total company growth, building on FY27's strong exit rate. He emphasized increased customer visibility driving confidence in these multi-year forecasts.

    “I think you're absolutely in the ballpark when you add up the numbers I gave you on $10 billion for next year. And I think that's a great target, actually, by the way, that -- motivational for us as a team to go drive.”

    asked by Ross Seymore · answered by Matthew Murphy

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Acquisition of Celestial AI

    Marvell announced the acquisition of Celestial AI, a photonic fabric platform purpose-built for next-generation scale-up interconnect. This acquisition, expected to close in Q1 FY27, aims to strengthen Marvell's data center portfolio and capitalize on the massive opportunity in accelerated infrastructure. Industry analysts forecast the merchant portion of the scale-up switch market to approach $6 billion in revenue by 2030, with optical interconnects adding over $10 billion.

    02

    Photonic Fabric Technology and First Design Win

    Celestial AI's technology enables large AI clusters to scale within and across racks using high-bandwidth, low-latency, low-power, and cost-effective optical fabric, offering over 2x power efficiency compared to copper. Its first product, a photonic fabric chiplet (PF chiplet), delivers 16 terabits per second of bandwidth. Celestial AI has secured a major design win with a Tier 1 hyperscaler, who plans to use PF chiplets co-packaged into custom XPUs and scale-up switches for the industry's first large-scale commercial deployment of optical interconnects.

    03

    Multi-Year Growth Drivers and Outlook

    Marvell anticipates strong multi-year growth, with data center revenue expected to grow over 25% in FY27 and accelerate to 40% in FY28. This growth is fueled by the interconnect business outgrowing cloud CapEx, the custom business doubling in FY28, and strong demand for switching products. The company has secured purchase orders for its next-generation XPU program for the entirety of FY27, providing strong visibility.

    04

    XPU Attach Market Expansion

    The XPU attach market, including custom foundational and Smart NICs, and CXL-based memory expansion products, is a significant growth driver. Marvell has secured over 15 XPU attach wins, with line of sight to revenue exceeding $2 billion by FY29 from NIC and CXL use cases alone. The first custom CXL design win is entering volume production, with others slated for production in CY27, positioning Marvell to lead next-generation memory architectures.

    05

    Communications End Market Recovery

    The Communications and Other end market showed strong recovery, growing 34% YoY (50% excluding divested business) in Q3 FY26. Enterprise networking is expected to reach an annualized revenue run rate of $1 billion in Q4 FY26, reflecting inventory normalization. The carrier business is also recovering, with Q4 FY26 guidance implying a near doubling from the prior year quarter, and is expected to settle into long-term growth in line with carrier CapEx.

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