Marvell Technology (MRVL) 24 Aug 232024 Q2 Earnings call transcript

Good afternoon, and welcome to the Marvell Technology Incorporated Second Quarter of Fiscal Year 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] 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 this conference over to Mr.

President Relations. Vice Senior Saran, of Investor Ashish Please go ahead.

everyone. Marvell's second you, and quarter to afternoon, good call. Thank fiscal Welcome XXXX earnings

today Marvell's Murphy, Meintjes, are CEO; me Willem our Chairman and CFO. Joining and Matt

SEC which our statements XX-Q everyone expectations. the remind Please management's and and made risk forward-looking our to which significant certain do in we Let statements. and our factors as to are posted not could differ me to forward-looking cause our that subject that release, website, current cautionary results today review comments include the with statements contained actual uncertainties on press most earnings filed recent filings. from intend today risks well as our XX-K update and We materially

will website. certain A to call During available non-GAAP and financial we our our between reconciliation the measures today, of measures. in section non-GAAP is GAAP our Relations financial Investor refer

the performance, portfolio. his call our for electro-optics over Matt highlight Before announcements, with product me I new let turn starting to our on comments several

supporting we the XXX-gig for in power Orion, to per standards-compliant throughput DSP technology XXX-gigabits shaping enables transmission produced Orion optical second factor SerDes, enabling is and XXX-gig industry's modules. pluggable our DSPs the announced modules. addition incorporating Orion coherent coherent fifth pluggable release constraints our X-nanometer within modes. first and is the of of tight generation First, space of optical form traffic small high-performance in of probabilistic

DCI, data continue optical or in market coherent in carrier technology well-positioned interconnects, expect transport cloud We market. in that as well both is to the drive leadership to Marvell's Orion as the center

industry's COLORZ platform. XXX DCI module, parallel ZR Orion, XXX-gig In first we the with launched our

the year. Marvell's the provide DCI XXXZR incorporates third XXXZR per power which which COLORZ Marvell has in components shipping be new solutions module will single modules in lowering current a at last technology by been bit be COLORZ multiple discrete modules. of ECOC will generation October. our We a volume platform, DSP, of innovative XXX-gig, on XX%. followed twice integrates XXX by technology, our bandwidth our silicon cost by XXXZR Conference Powered XXX demonstrating DCI Orion since pioneered at and while photonics Marvell's die.

deployment Our will cloud massive switches next-generation Generative XX.XT XXXZR modules data in enable centers, operators the routers growth AI. driven of continuing traffic support by by and between increase the to from

X-nanometer Marvell is digital the platform of includes PHY significant that journey performance Moving and represents blocks to our and the an It announced generation will a multi-gigabit enhanced design, based for and connectivity building the and optimized devices on layer platform logic, circuit in copper the technology deliver first DSP previous custom half innovative at architecture PHY become ASICs power market milestone platform. and will today leap multiple in applications. for This SoCs, key portfolio, is standalone on performance integrated leadership. XX-gig products specific markets to a This physical custom algorithms. products, we Marvell's industry's PHY compared to optimized

multi-gig of will grow adoption continue the We PHY to enterprise expect networking. in

for port, to security partners. started encryption. has of and on found include security every MACsec product any also current security features nearly deep These the This link vehicles. end Ethernet commercially switch of architectures family delivers of new addition networking The bandwidth, includes to for This automotive family central leading together automotive advanced Brightlane embedded combination heightened intrusion in hardware automotive inspection to market, solutions. times auto industry's the X per and announced higher sampling packet zonal product. switch switch available detection, our XX-gigabits multiple automotive In a Ethernet we next-generation other of an features second highest not our support capacity module switches than customers

now turn Matt call to the Matt? the me his comments on Let for quarter. over

everyone. Ashish, afternoon, and good Thanks,

the For by forecast. second $X.XX demand billion. applications revenue execute, growing faster from to our the AI continued These of driven quarter results than our delivering XXXX, Marvell midpoint team of prior primarily of fiscal guidance, the were above

non-GAAP operating due outlined cost were acceleration Our guidance quarter. we expenses to better last an plan reduction than the of

per As a result, $X.XX, guidance. midpoint $X.XX our non-GAAP above the earnings was share our of

a the We are performance for pleased environment. our with in quarter challenging macro

to starting me end with on and now move our by market, data results Let center. expectations reviewing

growing guidance second quarter outlook. data the in deployments. flat our sequentially, for revenue products market, of accelerating expansion to our outperform because end were market demand end In million, our optical this X% above cloud for of well was center the meet a continuing We for $XXX guidance able to AI

sequentially. revenue from cloud XX% faster. and over Notably, cloud standard overall growing from AI cloud with grew infrastructure AI revenue grew both sequentially, Our

As center sequential the a in on market expected, revenue on-premise enterprise from basis market. of our enterprise second portion significantly data declined quarter, reflecting weakening end a the

accelerator which centers; centers; AI last Ethernet for with products broad data best a staggering for connectivity, connected inside connectivity low-latency optical connectivity compute available DCI AI custom inside quarter, and detail amount by a include: fabric optically of acceleration. high-bandwidth DSPs for PAMX-based you between and the switches regional centers; data high-capacity AECs clusters an for operating provided of connecting data at AI solutions, Marvell silicon infrastructure in requires enabling As is infrastructure range highest heard speeds.

the of Marvell's few that capitalize on growth scarce breadth We rapid AI. companies in enable technology can the semiconductor confident positions are one us industry as a to that the of

for optical scalable PAMX module upon pluggable that rely Marvell's market-leading their massively are DSPs the build customers cloud optical indispensable ecosystem networks. to

DSPs They and backward diagnostics, and serviceable and to the resilient advanced and extremely PAMX interoperability an volume also high shipping network. quarters have next-generation provide We've industry's X.XT highest-speed in been full several our XXX-gig enable forward begun maintaining critical the telemetry platform. sampling compatibility. for DSPs Our and

regional demand seeing accelerate locations. data between is inference across multiple We're as centers deployed connectivity for

in we our new just DCI announced been October and key modules As our you, DSP. products, application Ashish industry's the told on coherent a demonstrate Marvell this with plan based of to Orion has first XXXZR enabler our

Looking technology. coherent at both a positioned position in optical we connectivity, leadership with are the PAM the future and of uniquely in industry

for excited our also our next XX announced are platform, opportunity Teralynx which about of Ethernet we XX.XT We year. switches, earlier this generation the

sampling We product have and strong from are we interest seeing this customers. begun

customers Marvell's enhancing leading Last how told building offerings larger their their AI is and we custom you a are cloud for to Trend by quarter, accelerators portfolio. faster-growing of opportunity custom compute own.

underway We volume programs of ramping a have and to tied into silicon number well won production start next are these year. AI to custom

we're now me what seeing Let in about in center. talk data storage

second growth low in quarter, modest As first and in we base data in sequential are saw growth expecting quarter, third we quarter. the the we from the storage sequential a center expected, revenue

However, high. storage inventory depressed end market and significantly remains demand remains customer

have As a pushed meaningfully. a result, center storage out data for the recovery industry's expectations

Looking we sequential continued cloud strong growth as with we growth well ahead extraordinary meet standard as are rate at working evolving closely by rapidly AI very expect from cloud the to third quarter, overall accelerate to infrastructure. revenue driven grow our performance, and an Demand to from to AI, above continues needs. for cloud our quarter's the last products customers

to is enterprise down. On continue the trend other to expected on-premise hand,

sequentially projecting a third the overall to center on in quarter we As the are result, a revenue mid-teens in basis. percentage data grow

and second portion was driven X% Revenue entirely ongoing decline for and weakness wired infrastructure X% line end Sequential market. the guidance the wired $XXX carrier of million, were inventory our year-over-year market, with to demand digestion in sequentially. at by Turning our quarter year-over-year our end and carrier reflecting at declining customers.

the In grow in third sequential growth quarter, first quarter. wireless in building are growth XX% we we upon saw contrast, revenue the expecting additional the continued our to quarter, the second and in

share significant grown wireless products cycle, over content of result and with the significantly multiyear period. a for Marvell XG our in conjunction a As we gains upgrade have revenue

taking to XG base infrastructure of world's years, many number balance initial installed environment While the phase the their before challenging upgrade XG and wireless regions macroeconomic will of deployments of a their pause of full a in they take in networks. the are completing a are conversion

sequential in following expecting a we wireless result, in strong quarter. fourth growth, our are a As period extended reduction an significant of the revenue

start to and realize will from healthy have are carrier but production. not share CapEx returns designs which in levels, expect yet overall we growth can more X-nanometer and customer operator gains. in These we we that inventories market come and won, to resume station our base carrier end However, once additional normalize

drive In the launch expect growth addition, from will our market. wired transport we long-term the of optical platform next-generation Orion coherent DSP XXX-gig

driven our by to the wireless. for outlook we basis overall revenue on grow to from our Moving the expect market third carrier percentage a low-single-digit sequentially quarter, in end

market. year-over-year XX% and Turning Revenue declining million, enterprise quarter end X% networking to $XXX for was second our sequentially. the

see have continue we inventory for been we quarters, the end in corrections last few this As market. to impact customer demand signaling

over as time. few a take to sheets re-normalization inventory this get down quarters customer resolve balance expect worked to We

enterprise While market an data in I note we would networking infrastructure. deal been in transformation with near leader successful important to these Marvell's contributor the has to dynamics term, a that

The driven investment refreshing the of Marvell gains, made content doubling few revenue testament extended essentially last enterprise was over period networking has team share we've enabled portfolio. in revenue the This exceptional a growth, our years. a multi-year an product significant by to consistent with enterprise in networking

X-nanometer products As the we industry's to PHY such transceiver. introduce Ashish as multi-gig new continue first told you, Ethernet

market fiscal sequentially Looking the our to dynamics percentage basis the on revenue we teens of ahead earlier. XXXX, a third networking project the low to in decline to quarter enterprise outlined due

million $XXX end guidance, industrial benefit automotive market. to XX% which above of XX% Revenue Year-over-year to continued year-over-year in Turning the the business, sequentially. growing led and in growing adoption growth Ethernet quarter was cars. our and second by our was automotive from

with on quarter. closed a We automotive multiple OEMs also of XX new the wins Ethernet automotive top design number during

and market flattish XX% Looking XXXX, of in continue to our end year-over-year to fiscal from the growing project to auto and the sequentially be third range. revenue we quarter industrial

deliveries end-of-life our were quarter XX% million, on below was was the to third an quarter. consumer year-over-year $XXX rescheduled the for X% Moving to guidance market, second for growing sequentially. as and revenue Revenue end program

low we result, teens on the to grow third consumer the percentage a in forecasting in are basis a revenue quarter. end-market As sequentially

the revenue fiscal In quarter. midpoint second and for above we delivered summary, guidance the of earnings

expansion. expenses by to to operating intend help to forecasting revenue us leverage. on are quarter, gross the third deliver We disciplined We remain operating growth accelerate strong in accompanied margin

in ahead, taking Marvell inventory digestion is while to some from continues to AI trend. that Looking applications and strengthen demand from markets is to longer end benefit well-positioned resolve,

is from revenue in we demand run revenue at rate us we expect over this of perspective, we $XXX put next AI on our last communicated a products, this million outlined had to quarter. year. outlook our all latest now quarterly well would rate annualized. million Put what for at $XXX run year previously Based or the this exit This electro-optics above for had

from continued programs, we from compute ongoing custom of forward strength expecting and Looking the AI. electro-optics are multiple growth expected ramp between the outsized

most the macro is developing outlook continue infrastructure. well, silicon us through and our advanced our strategy cloud results to on with end Our AI validate and environment. serving in from softening growth the markets diversification for to us data focus carrying The strong

to I will on results that, for and turn the call over Willem our more recent With outlook. detail

and good afternoon, Matt, Thanks, everyone.

for XXXX. fiscal Let our me of second a start financial of the with summary quarter results

second billion, Enterprise X%. the at end quarter our market, total at market and end at midpoint declining by auto/industrial Data largest consumer growing our guidance, next with revenue, XX% in total $X.XXX revenue. XX%, X% and the was followed Revenue infrastructure driving of was XX%, carrier year-over-year XX% the networking exceeding was center largest of sequentially. of XX%

weaker Non-GAAP revenue GAAP cost growing margin points was gross by XX.X%. sequentially, driven improvements, a XX.X%, XX margin basis offset partially mix. was by gross

to margins the Looking quarter. quarter to to in then gross and the ahead, fourth we significantly improve expect continue increase third in

you, As out, push to recovery our negatively which Matt continues mix. product the storage impacting in told is

to margin. we improvement lead a However, quarter, significant product in to gross project mix our in stronger fourth the overall

We and basis. this by data continuing wireless be expect consumer will revenue on improvement while a growth carrier in declines our driven center, relative

on costs. In our to reduce the Marvell team addition, well execute to continues efforts

to a we bottom margin quarter. non-GAAP continue returning to to in result, long-term gross end model target of of our the XX% As XX% fourth the

operating Non-GAAP amortization million, operating costs, $XXX compensation, of -- intangible were including acquisition-related $X acquired expenses on were million, operating Moving assets, share-based expenses. to restructuring expenses and acquired guidance. $XXX million below and costs. GAAP

cost to our plan quarter. this We accelerated reduction pleased we remain end on we are that the reduction report to outlined communicated by our year, track execute plan as of last We fiscal last we of the quarter. cost remainder

the income to the operating negative XX.X%. statement. operating was Non-GAAP XX.X%. rest Moving was margin margin GAAP on of

diluted per second $X.XX diluted the GAAP For share was income loss of midpoint per share quarter, guidance. Non-GAAP above $X.XX, was $X.XX. the

turning our flow balance Now, sheet. cash to and

well During as increase the $XXX from quarter, charges. was as flow cash impacted cash million. severance-related flow was restructuring operations Operating DSO cash by in negatively an

days were the time. on (ph) well [XX] within prior worse from Our as we quarter, received to that DSO linearity shipments lead increased primarily due orders ramp

that large was node million, to number which we tape-outs of CapEx included growth. expect leading drive $XXX future our a

our reminder, given can be a any As quarter. lumpy in CapEx

of to CapEx percentage expect average a on We be basis. revenue approximately mid-single-digits on

end billion, Inventory first decreasing quarter $XX was the by the million at of $X.XX sequentially.

cash returned to through shareholders dividends. million We $XX

total debt was Our $X.XX billion.

Our X.XX debt EBITDA gross was times, to debt ratio was ratio times. and EBITDA to net X.XX

quarter, total debt. the of our paid $XXX million During we down

Looking our to debt the refinance capital ahead, debt markets we will opportunistically accessing maturities. explore upcoming

the As of quarter, and were end $XXX equivalents of second our cash the million. fiscal cash

Turning our fiscal of quarter for guidance to the third XXXX.

in are plus We to or the minus range be X%. billion, forecasting $X.X of revenue

million. anticipate will XX%. in range $XXX in of the our be million. of expect the range range non-GAAP be to $XXX gross our We the to million We million gross in $XXX XX.X% We project be will to be margin expenses project operating XX.X% to to in of GAAP GAAP the non-GAAP $XXX our margin expenses range will operating We our XX.X%. of

We expense, debt, interest expect on other our be million. income approximately to including and $XX

For we the third expect a of X%. tax rate non-GAAP quarter,

We shares weighted-average million. to diluted weighted-average outstanding XXX million shares and outstanding to basic expect be our our XXX be

anticipate a in per As per of a range share a $X.XX diluted result, to loss of GAAP we loss share. $X.XX

We expect $X.XX range $X.XX. to diluted share in non-GAAP income the per of

solid earnings summary, additional Marvell leverage expansion for reductions in growth, of positions quarter, guiding margin, strong third all which non-GAAP further OpEx, are non-GAAP for sequential we In in for and the operating growth. gross and revenue

second resumed we in the buybacks $XXX million debt quarter. In in addition, in of third the quarter, paydown the following

please and you. the announce line Operator, instructions. Thank Q&A open

question-and-answer question today with the Svanberg [Operator begin now from is Please go will Our session. We Instructions] first Tore Stifel. ahead.

on elaborate business. a Yes, all just I thank bit the little the you more you. Matt, just there. could dynamics am understand trying storage to

the right? AI. still I I'm a recovery, to sounds But know architectures, in inventories how compute because digestion out storage these the with But also with storage there's the give are benefit some So, us the like on trying growth in AI on it of on understand delay there different if is there. obviously, the associated side? more coupled color could the inventory any could you side, more

will little their how as relative to at question. and of guide are following following inventory to at on drive both flash but down storage, it's end industry, Hey, best level. for year, That eventually, than sometime saying as would sure. to thanks, at see in Yeah, Tore, to that's time bit Yeah, being commentary modeled, said, that is and the eventually, it the but first customers, of what and for the back. customer it's at the longer companies I going hopefully post say extended had look the hard point, well the sort next we'll the we're taking work come back. the and half, goes. It's just market this a But come we beginning our the

interesting. kind of On the question, it's AI

attempts I think make block in think AI model at excellent to that. a this -- level our where Certainly, custom there products, for to at an we the how is in caught a don't that's but at to particularly in CSPs. point. networking, impact, diagrams that. net storage. overall that's about a I storage for being worked silicon, now We've high an to think tailwind all be to positive, sit But great model model should helpful of view, storage have got have the relative is out up we inventory We our our but the continue view the We don't optical

Sounds good. you. Thank

Yeah.

UBS. Timothy ahead. The Please Arcuri go question from next with is

this $XXX at a to think lot. Matt, so to exit year, supposed million Thanks $XXX was million revenue AI quarter. going it's actually be a I

whatever -- is quite would obviously, custom to greater AI of much going like think. talk going Can how million, million $XXX much an going or then ASIC? year, be going you be be than it's that, that give year. the higher million than So, to to bit it's, million. maybe greater I'm that's How $XXX of us year? number And that the that wondering $XXX I number $XXX about for million. you like be and how $XXX be idea Probably than some would to $XXX next will that you can there. it's update to ASIC? I'm of us the something said custom give a Obviously, million be guessing but Can something milepost going you of for much more if Thanks.

thanks, Hey, Yes. Yeah. Tim.

DSPs, rate, AI run mostly the So I electro-optics by the still little $XXX meaningfully trajectory driven is from the fourth There is next probably contribution Exiting XXX-gig. think, year for very at us. up ramps year. more silicon. quarter even upwards encouraged platform, custom million But that a TIAs, drivers the be demand really on the at by and going the segment to that in

this that best fact at look in next very will the the opportunity positive at we rate did our front estimates year's But to made run that is a when of ago year as -- just we our positive. quarter as the very sign a be exiting us,

So silicon. need top again And think ramp custom mostly this grow layer in that's next of obviously. it a going as more then electro-optics, on you meaningful to year year,

an we than on next right, so this said exact than or up is time the obviously you into point, number be last around. us hard at the far to going refined for it's year, a demand to it's give But actually other put number bigger

-- off Thanks. year, trying go or just you year? the the back out does Just next AI shape you I of the if at that. continue sort the piece, of through it flatten surge of through to that of kind rates as linear half so sort does big but during the it year. happening But took -- guess, is this Right. there's obviously

Yeah.

think I think in run throughout way it's -- should think rate $XXX fiscal going about be well, a to at it already quarter. we're million. is, at higher I you each QX, the It's 'XX

So, going keep silicon growing layer on it's custom then you're top. the on to optics to in going and side,

to it's that in chain So, we're doing job capability the not been faster, just better, is saying at -- lot a the going flatline a demand to has a source coming level. team great we're not lot and supply certainly need. that it's We're we components Marvell saying

the setup I AI So, to great a relative year for revenue. think it's next

much. you Matt. so Great, Thank

Tim. Thanks,

next Your with Please go question from ahead. is Blayne Curtis Barclays.

expect thanks question. guess, to ask gross Willem, it's ask, the or headwinds guys, the I you either for Can me what Hey, remind that Matt margin. wanted the are letting I on us just margin you tailwind. gross QX? taking a you to would good, I resolve but I in in guess quite longer, that Because is electro-optics would are the think be storage so think

could through takes just margin gross you that walk on puts the helpful. us So, and would guide, the be

that, to thanks, Yeah, is in a stepping also tailwind. that wireless then the and certainly Blayne. addition signaled down is carrier we've in fourth the really Yes, really And stepping is quarter optics down. consumer

things. So, see we products the overhead then is through on cost our for And in benefit, and improved. structure really the that manufacturing fourth the to in more flow of those significantly addition, And combination really quarter. our starting it's

us recovery certainly So, as is a is pushed headwind storage out. for that

you. Thank Okay.

TD Matt next with Cowen. question The is Please go from Ramsay ahead.

about anything around much, happened sort been custom $XXX at think and in lot of you patterns And guys. I it afternoon. of of some customers. shifts of wanted inference the little to them the large programs Matt, and very where We DPU AI about you the that be million lot compute tumultuous million have -- been CPU could have silicon compute SmartNIC any in it's and engagements with guys. us to if hyperscale. revenue CapEx you spending bit of call ask you're ASIC versus and silicon. your it, compute. don't Good $XXX goalpost smaller environment I you for Because want magnitude? are pushed your at like Generative model observed traditional then numbers CapEx custom for What flight, seen Maybe a I custom we've conversation think addressed some called of of sort around timing, updates seeing such a that or had a the of those that What been of had custom whether got talk are? bit. really thank programs then a them for would or is, and whatever it's AI we've in programs commentary. timing mean any little around you has are a helpful. have Thanks, offload I on -- terms AI out there and And some Yeah,

great. for couple question. a Thanks say Yeah, things, of the I'd Matt.

to you for The about a accelerated first it's question of sort which provide is custom silicon opportunity, your really really as summarize computing, different the you of format pieces companies. various custom of on if these the it right, mentioned, in all

accelerated those revenue think overlapped, that us. CapEx But earlier. of overall it's of benefit obviously -- numbers I the towards AI are including the that gave see I participating quarter in computing is and that decouple and with some clearly shift that's setup. And going a do we some certainly to positive tried But why that last overlaps them to we segment, somewhat.

were talked having We kind that to products ones of that quarter lead last AI. two were tied the about different

and very stage. first in into pass. sample was of likely which That good product production looking is most One go

the determined. The and overall shift also We're be expected second clearly are CapEx working planned on out up still that's of our those. second in the that The But is next and taped those on business. spending we size the ramp year. quarter, a product to customers with to as tailwind in timing

actually and time, say it much be it much business So really to can next it you much and how sort can of updated driven. depends on today we what on the moves -- over, calibrate guys how of it then Matt, year, tracking kind I'd last towards how

going say AI terms calling than to driven is mostly to next it's of be not in us custom other we're So, -- the... that, the year by for stuff

Appreciate Matt. thank No, it. it. you, Got

Yeah.

with Sandler. is Kumar Please The ahead. go Piper next question Harsh from

hey. Yeah,

that talked so, Did might margin mentioned you fourth And as drivers a, Matt, drive recovery? I, correctly? happening could I you revenues might what in significant a fourth recovery that to the talk about quarter, think expecting be quarter if you well. you for in be that when about gross understand

Yeah.

saying You're overall, Harsh?

Yes.

XG quarter Overall, is, several run a to you quarters with which quarter. we've what view? sort last what's Your consistent again we commentary and to you some QX expect which now would in we relative but of of question we QX taking perspective time, obviously, a give because is at quarter's one sort carrier that, Yeah, the including the in guiding actually pause. a of we're growth and saying were revenues been about to takes accelerate. for lots gave puts be fourth up call, outlined We and that wireless,

up. of to but we envelope, of our the -- part we bigger that data And also quarter the into part also of quarter are And you becomes prepared QX did as said and remarks, our a really back But standard AI a quarter. kind means fourth the nicely to the driven becomes then the and only of fourth QX also in revenue QX growing by of of do center -- by QX and Inc. that AI sort is overall if the Marvell, revenue from beyond. revenues bigger QX, growing again kind think in year, also cloud in being of driver. our the So QX. and very like But big not AI, fourth as infrastructure cloud and through

level, I suite kind out strategy just markets with data time a we frame a products. have by to multiple ago So, a of at end did within long diversified high of infrastructure a set it serving

in quarters some data we're are markets blessed enterprise, then at environment, certain and And got even sort others, in better as that right then seen center. to kicked have we've performing than automotive, the time. dynamic So, you've XG, this have of

in commentary now, end throughout to I market, to year a shifting growth then even pieces create give mix QX by right and and sense. makes Marvell through if put will your the we that quarter, first and going you through -- obviously grow the the think enough tough So, But QX. that together. macro we starting model know I our from anticipate continuing is

we Thank appreciate it, Matt. No, so you much.

Yeah.

The question Susquehanna. from Christopher ahead. is with next Please go Rolland

the for for And this Matt. thanks is one question. Hey,

here research an on the electro-optics per it Just inflection, probably you one for could two could revision these Are here, products per depending the kind some rate is seen all on of is about that amazing GPU, layers DSPs? thinking there for as related be three I've about this how it we're one? call attach the XXX-gig done talking are Since more you portion. research that well? it, you've one? some you there that else for one. revenue seen here, Thanks. be suggests how And even in are, many PAMX Is anything thinking

was exact the attach Understanding We direct We're to the of layers give range Yeah. you network, about the way, the the clear a it's you. more, upper Thanks, mentioned. you and I Chris. that number still the is direct size get and is and thinking were I you quarter. Yeah, you're our which range. building one-to-one higher. last attach, there I exact probably to the I think think about fairly view at similar our pretty right it don't there to if know models refining I an there, so have But then starting think as

XXX-gig this it's part second all your point. at of question, AI, the for And

are served lower at a frequencies We on gigabits infrastructure, the The than products our cloud that which year. products recovery are X.XT, is XXX also sometime have typically seeing strong next-generation which for traditional next would at starting be well. traction as

hopefully So, helpful. that's

Fantastic. Thanks, Matt.

go Deutsche with from ahead. Ross is Bank. question next The Please Seymore

gross just the I Willem. like wanted next it I I a seems or specifics. out one Hi, margin, if custom know going guiding guys. gross But to any be have products puts for year's with don't far to you're in know of talk and But not will this up Matt takes the number is that about to you're margin and going enterprise should that about the question margin But range? side, how if and XX% gross historical some the in like custom to tend lower storage storage puts the takes is recover we at XX% cyclically, other center your and some time. come back areas target that and products do general think eventually be data versus in point side to

Yeah, Ross, add. and Matt can start maybe I can

maintain over ASIC early range. last our look year XX% the carrier you sort clearly, we to it's business within to margin we've when this ASIC gross targeting year. to exiting both to years, So, back maintain next able our of of We're And the than the and then back, the of decide that to sort big get rest exactly how were of couple target and faster through certainly is our business. that year. But ramp next grown

we margin, if do know exactly too gross But certainly Ross. very it's outsized to the operating show be helpful, accretive would income our EPS. growth negatively our now that to would and extent view that to of but is Now Hopefully, that. that's that, early impact there, right

Ross, -- it's add. maybe And Matt, just I'll

looking of think for We very don't next that. lower year, I know think But call the early it's the big margin, the that's it, recovery to little about rate storage, been we've of gross to I the -- out equation. carries part business clearly, custom a open a right? a

to the even -- going what's have revenue custom the what's be and like the cloud, within optics AI versus also We stuff.

perform a higher-than-average continuing got category margin automotive gross is which growing, for to us. You've well and

not that in various or different pick to lot a may irons relative fire the up of at times. got may we've So, businesses

longer QX, I'd ability we've period is range As say, manage for to gross going pretty had consistent in we been Willem margin that margins QX, here were mix targeting, a to we it time. QX, mix. relative there the traditional We've understanding issues a unfavorable and period, gross where through our had the all said, a

we a different ball hard sort it's really the kickback markets it's we recovery a profiles. of to it and that nice dynamic But such inventory, when margin environment, call Ross, have operating portfolio all on But like. in, what the burn believe different gross at is products, exactly, them a look to those balanced generate very when through back level, of very look business different models with continue high technologies we behind

an line some average they what example, the operating Willem significantly, earnings are margin like if income to at is is driving just margin, which extremely profits the ramp gross we're laser-focused programs said operating these accretive operating time and driving per at bottom share ultimately than as of corporate they and on for level, And lower are especially because over custom company.

answer, it but of maybe figure up, that in year. out for high-level next looks a to really So, time frames front little what just we more need it like us

Fair enough. you. Thank

from ahead. is Arya question of next go America. Bank Please The Vivek with

it of us can it I for big is low storage you do it can or size is. going right of low you help think in you out you get both QX, levels? I and just levels? data quarter to like whether looking And as center these that's question. sequentially, reported you set of when what how is at of or are to view the whether hold us to be you was storage Thank to baseline mentioned much help in for And that hold data into my there, of forgot inventory could taking you inform kind grow what kind actually Currently, hoping as QX next the kind Matt, you center. outside and these starts year. how So, at excess up/down/flat

a It's question, some Vivek. million-dollar thanks, question. ways great I Sure, think okay, in a it's

at tell where far. we're so me you Let

very, in of consumer the piece we storage, that's what's QX obviously, specific terms some So, low side. about of hung have. moving you in of think center is it. -- The our the applications data But talking center revenues, is there if was the and storage kind particular, needle data because about we're in very really

something coming around recovered, was QX call million, from modest let's had a bottom, $XXX again. that. see said we prepared It see. was which then, to off right recovery nice it it, remarks, QX, like our a In in there, we'd And

the it It's a So more year-end not that still think relative of to this and rate, I end where thought think would of going sloping or I towards quarter be be most a exit the is first commentary suggests two type up. in customer was we is, half and slope will ago that bottom, I QX, and again QX. of grow quite guess not come it's it's grow it at QX, good it's going again off in 'XX good to growth in rate. But that of But the the just recovery. to news

customer of companies we've it's all hard mentioned. exact clear base kind with storage, get of inventory to the in the way the an picture end and the that as When dug is the consume to where I the timing,

understand in TCO activity do qualifying on drives benefit. a there's next-generation technologies. we big a There's lot what However, of is the that

structurally although that. to to continue per able been se, anything study We haven't that's changed we detect

are this reasons should point consumed, all there at it mind, it that in earlier for the back the and was it And was that, of last to been question number there has our shipped some years. about a of the tailwind a to So, exabytes that. come XX terms growing on like in looks where grow probably AI, it's for that's being from or

conclude by far it is, think where it end full read the I level, back. the to when at get saying on how comes on all But we are chain, just remarks my customer on back with very what's supply difficult and I'll just going it's a

can helpful. So, saying sort talking and at about Hopefully, customers their follow and us lead. all our we are do that's of what to is look

Thank Yes. Matt. you,

Yeah.

question next from with Raymond Please Pajjuri ahead. Srini James. The go is

Can Hi, talk sense, I -- silicon to revenue you but get custom you least My opportunity I of that also that some next these you do know could it's forecast pipeline? opportunity some expect could question ramp AI is And you. out you on, -- in the year. that -- called Thank win hear to the I us give -- early, touch if on side, design want predict this think two programs canceled. at we about of do the Matt. programs difficult because of kind programs these what revenue some you

you you programs about want for that next visibility helpful. opportunities will beyond those are that just then, about, And be Thank for sure if year. have you. two other you talk programs make to have what real, these that can that So, that you talked

question. great Yeah,

end with I of pretty a actions and in very high when the, macroeconomy on when you that are back, actions our me down and take part I had headcount, hit saw at level reality that at at of Let on and take expenses, priorities the last two those quarters the QX look of was call think the significantly how changed. because program really investors sort companies advising the infrastructure year the QX big level. And Probably the think of at was Srini, cloud real, that's start even companies question. they

that shift cloud out seen we've year. emerged a What infrastructure from half was AI, first play from traditional the through now the to that of

getting extreme funded not is are them. urgency there So, only there, those around programs

about start products And do have how we're given how what's do we at talking we point three-way when lined at, capacity sure sure so, do make the make we on now are these dialed-in where a all actually up, needed. calls wafers, we're to is

the farther gives So, And provide being a like. us all the good In both of from that programs customers two our pipeline, to ramp through in comfort, of quarters view quarter along where looks now, be from one open feel to relative that were what an further have quite But process, even to we want that that and certainly we more on now, a bit -- visibility along. able about -- for good we going and a that. we go. we'll

combination at open our to become it's portion is, opportunity of surprise it's platform XXX a every there's to portion Ethernet gig you, design products roadmap sense, PAM Not the on center, it the if our out pipeline, going a but biggest that that, significant continues what at it's in beat custom And remarks, AEC of look prepared increase the programs them mentioned funnel. I the And beyond that. those would rate AI and the technologies are we there from just an of only quarter the out has and interest huge from tremendous size, very standpoint. grow and it the the big look it's I say just overall switching On give a faster. the opportunity is Marvell's really it's wouldn't that, all in opportunity offerings, silicon compute segment to X.XXT, Significant XX.XT. total our you urgency the data to get at a you

technologies We new number inside have data a center. exciting too silicon photonics bringing like the of

they and you Marvell on themselves their on architectures, I performance data customers technologies And that out think we're really the a about power, best the work really engaging and suite number with now figure So, think just TCO, having, us technologies the and optimizing on are for center using when to how of of can architecture. get of their overall differentiate within really it's conversations out well together.

of catch-all, are I'd say number pipeline is the big, sockets, that So there's sounds the a great. those all

and can it is I those cloud. the ourselves inside the But cloud to I'd data, in say ecosystem we exciting. one time I'm move at can a And solutions our secure the present and really piece data, sure the big with store data, engage of and where data more it can strategic customers highest partners together your and think interesting that suite spending levels process deeply Marvell all the and very as resources marshal that's even the making is of the of with company the can very it

see, we'll front yes, So, us. lots opportunity of in of

Matt. Thanks,

from Sur question Please with next is ahead. The JPMorgan. go Harlan

Hi, XXX-gig there's is cloud good to center. still But for know the -- to there footprint, yet focus these titan lot you afternoon. think electro-optical AI. that your on entire portion your Thank think a my in on is been business the of think cycles you focused team, of cloud upgrade I across right? I data bigger one taking question. And front the have center are persistent business right? data the upgrade still across is I its to still I more tied tailwinds electro-optical of

remaining I have the think more you cloud on then still titans. still are X.XT two You but XXXZR DCI, the still that have three in the pipeline. you're optical across upgrade And DCI, XXX-gig customers ramping

cloud. But it broad broader your commentary the upgrade to cycles to second cycles. of in on year, trying these these just of line the starting maybe get into next of some upgrade So, are year, to starting profile a this even sense maybe strength in up ties on ramp some fire half

of summarizing great of revenue is sense a meaningful we AI in a has I think the going level obviously become quarter. did it. very to piece you that job The fourth be and what gave

cloud the So your it's as point, connectivity was recovery off a year, that to built that's that a infrastructure grown But tailwind pretty obviously. that's standard nice amazing last having inventory side how burns is down. some becoming of fast now of

their pointed still to a go upgrades. major company through cloud out You that there's

front in also of that's us. So

to As an sort ASP the Xx price, we always sense, for transition each of nice there. the you're probably And bandwidth even speed, with X.XT a while the is of at not it, the technologies, So, overall of we're infrastructure right? a Xx benefits it, after. on AI year trajectory our it's delivering, share lead build part going customer it for be the bump and next makes terms key right because will year in behind there of

back the year. it we doing release, today yesterday think and center was XXXZR, mean bandwidth would frequency a just there'll press to center which there and you due this really I about coming products, bottleneck. Generative then, is But remarks stuff, ago on now if than between we the be data is large And went that. in actually becoming more six months data another put just kicker or that then well And prepared or upsides come regional is also have in probably the was the because said faster ZR nine AI. I extremely to it we out thought

-- across-the-board it second half through the not we're really that's year. of it's in AI, to seeing tremendous just our a cloud are going growth, So lot but and that we're see and opportunities next just that driving

fire both for overall the irons Marvell have in we of those growth. So,

Perfect. Matt. Thank you,

Yes.

Srivastava Ambrish is question from next with BMO. go Please ahead. The

reason was see discernible for much. through how kind rest and walk flow for you pattern us you I to seem you year? be. impacting we flow had question there seasonality, the of very of Hi. cash a of trying on the Willem, think cash to Could just should (ph). a was gave about But side. if Thank doesn't DSOs the I the (CFO] a

QX Yes, back a bounce-back Yeah, Ambrish. We certainly so impacted was do expect DSO nice sure. somewhat by and quarter some -- this linearity. in normalization. Thanks,

continue we're and to we've of consistently of year, through that driving focused days the inventory rest our we've we reduced down and that As driving expect this down this mentioned, really year. on through

should And in improvement good half here. you some so, yes, the expect second

earlier. being of Okay. it of companies certain I And sacrificed CPU a We're addressed manifest business Matt. about ways projects lot in my AI. quick question But the hearing in that you pushouts talking you you, are for general-purpose know CapEx, some are seeing at towards the your are alter? that AI

phrase two Funny I there's it. aspects. way think Yes, to

is, one it is think those two I not there pieces. then project the within of also, business companies. affecting or were kind reprioritization And now, is our right which

that the efficient. realization on. right, productivity almost there do gains what line release of was And get sort of massive and to companies are AI just then this least first the sort potential is, and trying first, then that more year. was a and for was through issue say worked about on can't us, for by I'd big, one, really that the this year, last we people the then through that for at view went comment but kind on, the There our budget Marvell, I early was of re-prioritization everybody, squeeze at to end with driven going of ChatGPT in and the So, of opportunity, race

good and we're on So, feel -- WIP least about working those us, what that made. and at and from re-prioritizations we decisions very were for that standpoint, our

are silicon a We sort ago. we custom this couple of revenue those that on about why quarters of were And year. some our talked lighter of

got programs delayed. those So

So, that moved with we've we stuff. past I to now off some got we've guess and it, AI the on taken the medicine races this

that in -- included in as up to center the the be down, fourth that being and next into continue on saw, QX, said nicely lot, up then, through it's standard business you going And quarter nicely revenues current infrastructure on-prem also AI overall third quarter our a was to we going it's again but up we and cloud year. pretty had and being up data had we

So, as I think we've well. worked through that

reason an networking than there quite and much to selling that don't CPUs example. the connectivity probably hit get more the And we're is as as tied we

they've of right that got ultimately overall level because it, and and for have specialty needs deal in big the so, sitting it but bandwidth storage with things, built work together it and continue get bandwidth to And needs all got to these they've needs servers centers upgraded to are lot compute there, to and power. data of support the all other and kind AI of network a multi-tenant to

are some and those takes. So puts

that near-line be the of I -- for just shows storage piece, that answered already. kind thing which the the -- we've data the really would think us on center I headwind been our would up whole about and questions in

So and nicely but us it's for overall next actually puts for It that's us. will driver growth be growing the year takes, a too. very

Got it. Thank you, Matt.

Yeah.

Caso go with The Chris next Wolfe question from ahead. Please is Research.

a more. Yes, thank you. I guess the question is digging the into enterprise on-premise bit little

starts give detail that bottom that as business does you to channel that's include getting example, probably you still obviously, that If when include, will to some that for that, difficult fiber Yeah, better. mark business? you well? do looking a down, what in figure on this think that out to -- be And

just down. Hey, Chris, question. Yes, I the thanks it's coming -- has enterprise for mean, kept on-premise business

data, if something. look I server look enterprise the for, know, end at that's down shipments eight of you Now quarters don't the probably I you think overall and sort reality at is been or

well. markets some NIC and channel as some that's got because just that need know well. within we're necessarily work to to but It's don't mostly a -- servers the buy through fiber people just it's and to I actually customers not So, at people inventory. end bottom, Ethernet products to need as There's some close also there. doing calling point, need be

So, it's headwind. been a

and we're well. all sort within weakness maybe renormalize And that time, point, it, the obviously will and close needs of at a as maybe to But which step-up some material overall growth I it's obviously end then QX in is and little AI in of on-prem recovery being by just more adjustment no cloud side. another think the market very another QX. that obviously, into center, assuming healthy quarter. data infrastructure inventory the that's And at levels still driving really blown piece, away,

a you over through stable since just do business pretty I and we've time, the been back for of expect step like But fiber us, ever it's at sort Cavium it owned look acquisition. channel, if see when that's to where us. why, just doesn't will was. don't for it reason Hopefully, helpful. it that we any And thing does back positive point, be a come that that, some And at also

you. Thank

next is Company. The question go Needham with from Quinn & Bolton Please ahead.

follow-up. that got in either Hey, your in $XXX share Ethernet in the share InfiniBand. position million is much Matt, within guys Can Ethernet market, or high sense you you about wondering is modules? you of us know I how that see most I to higher revenue. a talked those versus is the give between InfiniBand? versus driving XXX-gig would ask, of wanted some do general of And AI just InfiniBand Ethernet And then I electro-optics if you your very your that difference but in say share any

demand and we that Ethernet. customers high of of very market into those as from those is, we're participate well point as And both the penetration out, And share or independent continue Yeah, to multiple both connectivity have maybe agnostic. it. is I'd say seeing InfiniBand driving applications. the all, broad-based simple We the of as you in answer first it's we're whether broadly

agnostic. helpful, hard super the So, shares it's to don't break it's healthy, that and down I because know still And actually really it kind overall, very of we're exactly.

module be used So, of kind the same can in either one.

it. Got

Okay.

follow-up starting you sample. The mentioned broad-based is just pretty to switch both. terabit across and it's So question XX.X

do that the you as get to calendar Just see to 'XX, U.S. hyperscaler out partners? fiscal 'XX, deployed starting look you at

little team. product think ramp which contribution pleased, with with architecture -- mean area I the happy came company very a I'm technology. the we that pieces right, The we'll in next that key very acquired is year. the initially from XXXX. this the have funnel and of from Yes, further Innovium, I some say, is a bigger open I'd bit that out. But on

did process. on our the flow upfront the thing our it put is Marvell IP product X-nanometer platform, we we using But new that development SerDes, our design

and giving best both chip. teams really got is type in of as for but power them buster on you extremely the very type envelope, very, to low And no volume, confidence including and we So be a the executed latency also the being which reticle customers set, it's kind high of the there small not effectively only manufacture switches feature well result, on task for or able right worlds can these on products.

be how goes, but it are to This I Quinn, cycle we'll industry. for pipeline that the that think people to a be is the upgrade So see it's in going big And for strong. is overall going ecosystem. positive

Thank you.

I do Quinn. one perfect, I we'll Gary, do, think we one more And it. we'll can wrap think question, and then --

go that Mobley Wells with Gary ahead. Fargo And from Securities. question be will Please

don't quarter. of fourth the fourth the Thanks sequential been mention the of in a in Is far your expectation influence Matt, an I think week extra week? taking for growth so I to the the guys. verify extra independent on quarter. that week or Hey, my question. inclusive extra of revenue there's want

the said And of that the fourth OpEx with Willem, target? Is week. think the million target quarter, extra still for you I $XXX the

correct. That's

you Willem, Okay. want I'll Then, go. to go?

just the Yeah, correct, OpEx, sure. that's on Gary. Yeah,

XX said the So million. $XXX weeks for normalized, we

And so, the full guided we million. $XXX XX weeks, for

the number. So you've got correct

for best through, I the having up time XX-week long quarter on found my extra this really revenue the you got then end the And you side, Gary, and think se, to experience been not count is, -- obviously roll revenue it's per practice a but it's the expenses. the famous Yeah. getting doing I

it. So of that's sort think the about to way

hey, we're than going don't growth to have. some weeks, not we because better we saying, QX have XX -- we're would is So,

just is I of that's what think it's -- doing. market the kind

you gave -- So on OpEx. the run of sort Willem rate the then and

If about you have been, which look is netting what $XXX XX at weeks million. it, out would

again, Thanks, guys. it. Got

Yeah.

concludes Thank today's session. you attending our for question-and-answer This presentation.

disconnect. now may You