Q1 2022 Marvell Technology Inc Earnings Call
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Good afternoon, and welcome to the Marvell technology is physical first quarter 2022 earnings conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After todays presentation, there will be and opportunity to ask questions. Please note that this event is being recorded I would now like to turn the conference over to Mr. Ashish Saran, Vice President of Investor Relations. Please go ahead Sir.
Thank you and good afternoon, everyone welcome to Marvell first quarter fiscal year 2022 earnings call.
Joining me today on Matt Murphy, <unk>, President and CEO and Jean Hu, our CFO I would like to remind everyone that certain comments made today may include forward looking statements, which are subject to significant risks and uncertainties that could cause our actual results to differ materially from management's current expectations. Please review the cautionary statements and risk factors contained in our own.
Earnings press release, which we filed with the SEC today and posted on our website as well as our most recent 10-K and couponing, we do not intend to update on forward looking statements.
During our call today, we will refer to certain non-GAAP financial measures a reconciliation between our GAAP and non-GAAP financial measures is available on our website in the Investor Relations section.
We closed the acquisition of income April 22021, and therefore it has also been reported today for the first quarter of fiscal 2020 to include the results from the and 5 business for 10 days off the fiscal quarter.
Revenue from the acquired and Phy business as reported within on networking product group.
To provide a direct comparison to the first fiscal quarter business outlook. We provided in our earnings call on March 3rd we have provided a table on our earnings press release, which breaks out Marvell Standalone non-GAAP results for the first quarter, excluding partial quarter results from the acquired and <unk> business.
We are providing marvell standalone non-GAAP results only on a onetime basis.
As a reminder, that our non-GAAP results for Standalone Marvell, Matt.
<unk> first quarter commentary will primarily focus on the non-GAAP results from the Standalone Marvell business as it relates to the guidance we provided on our March 3rd call unless stated otherwise.
Please note that the financial outlook for the second quarter of fiscal year 2022 includes expected results from the acquired and Fi business for the full quarter.
On the subject of revenue reporting as you know we currently report revenue in 3 broad product groups networking storage and other however, as you may recall during our Investor day presentations. We also describe our addressable opportunities by end market.
Market focused you provide more information and transparency about the key growth drivers of our business and was received positively by the investment community we on.
And now taking steps to align on external revenue reporting to our end markets.
We believe this will provide investors with a better and more granular understanding of our business. Accordingly, we will discontinue reporting revenue by product group and instead, we will report revenue from the following 5 and markets datacenter carrier and.
Enterprise and networking auto industrial and consumer please.
Please note we will implement this change starting next quarter. When we report results for our second quarter of fiscal 2022 and.
And back on in relief, we will report revenue by end market total second quarter and provide historical and market revenue data for the preceding 7 quarters, Max discussion of business results and expectations and also transition to this end market view.
And our second quarter earnings results.
On a onetime basis, we will provide revenue results under both the current product group process.
And the new and market process with that I'll turn the call over to Matt for his comments on our performance Matt.
Thanks, Ashish and good afternoon, everyone.
I'll start with the summary of our first quarter GAAP results for the combined company <unk>.
Revenue for the combined company was $832 million GAAP gross margin was 52% and loss per diluted share was <unk> 13.
I'm now going to review Standalone Marvell non-GAAP results, excluding those of <unk>.
We began fiscal 2022 on a strong note delivering solid results and the first quarter driven by the strength of our core businesses and continued operational excellence.
<unk> Standalone revenue for the first quarter was $810 million exceeding the midpoint of our guidance revenue grew 17% year on year, driven by robust growth and both our networking and storage businesses.
Revenue, coupled with stronger gross margin and lower operating expenses drove non-GAAP earnings per share <unk> <unk> above the midpoint of guidance to 2009.
Non-GAAP EPS grew 61% year on year, demonstrating the significant operating leverage and our business model.
I'm pleased that Marvell delivered the fourth straight quarter of double digit year on year on revenue growth. Despite industry wide supply constraints that have tightened considerably over the same time period.
And factor year on year growth rate accelerated and the first quarter on strong and growing demand across all our end markets and I am pleased that our operations team rose to the challenge and a difficult environment.
But we have more work to do majority of our products are proprietary and sole sourced and demand for our solutions continues to grow we need to support our customers with a flexible supply chain capable of delivering to upside demand within a reasonable lead time something that has not been feasible. This year.
To further improve our supply Chris <unk>, who has played an instrumental role and marvell ongoing transformation has been appointed as our Chief operations officer to lead our global operations and supply chain organization. In addition to his current role leading marketing and business operations.
This is leveraging his deep understanding of our markets and customers to prioritize and align supply to our key growth initiatives.
We are extending our planning horizons strengthening strategic supplier partnerships and using our balance sheet, where appropriate to build more flexibility our suppliers value marvell and focus on data infrastructure as a source of sustainable growth driven by favorable secular trends compared to other cyclical end markets and as a result.
They are excited to partner with us.
Looking to the second half of this fiscal year you are confident that we have secured sufficient supply to enable accelerating year on year revenue growth for standalone marvell above that and the first half we.
We expect supply to further improve next fiscal year and.
And a few moments I will discuss in <unk> business, where we also expect strong revenue growth throughout the year.
Moving on to our merger with and buy and related organizational changes.
We've received regulatory approval to merge with and buy and April earlier than anticipated originally anticipated and began integrating the talented and by team. We have emerged from this transaction and the U S Corporation, which we believe better positions. The combined company for long term success.
Reflecting the larger scale and broader scope of marvell, several key and <unk> executives and joined my direct staff.
While I know and and Nariman <unk> Sethi will manage the and <unk> businesses and they have also increased our scope to include additional marvell businesses.
RMC and <unk> Central Engineering leader will manage marvell analog and mixed signal organization.
In addition, Roger Hussein has taken on a broader elevated role as president products and technologies to drive strategy alignment and growth across the company.
Similar to our prior acquisitions, we expect the infusion of insight talent will add scale and further strengthen the capabilities of the combined company. We have built a world class management team with deep technical expertise vast industry experience and a proven track record and driving growth and value creation.
Let me move on now to discussing our 2 businesses and more detail.
Networking.
And for Marvell Standalone networking revenue grew during the first group revenue during the first quarter was $476 million consistent with our outlook for strong growth.
On a sequential basis revenue grew 9% underpinned by growth and all key product lines with the exception of <unk>. However, overall <unk> revenue continued to grow marking our seventh straight consecutive quarter of growth.
Year on year growth with a very robust, 21% and networking with solid contributions from multiple end markets and <unk> growth was driven by standard and semi custom product shipments and Samsung and Nokia, partially offset by a decline in asics as deployments and China past and cloud networking, we continued to benefit from strong.
Customer demand for our smart Nic Gpus.
And automotive we are growing rapidly with our Ethernet products shipping and the multiple model year 2021 and vehicles.
Our enterprise networking business also delivered solid results extending the double digit growth trend established last year, despite a soft end market.
Performance is a result of our expanding market position driven by our refreshed Ethernet switches and multi gigabit fives.
And to the extent the enterprise spending recovers later this year that would be another tailwind to our business.
Not only are we winning and ramping and the access aggregation and core switching markets. We are also making inroads in the data center with our feature rich and scalable multi terabyte family of switches as a reminder, these products leverage on modular architecture to deliver multiple capacity points from 3.2 terabits per second to 12.8 terabits for.
Our broad range of data center applications.
We have been winning new sockets and expect these design wins to start contributing meaningfully higher levels and revenue next fiscal year.
Let me now discuss the outlook for the second quarter of fiscal 2022 for our networking business.
This outlook includes revenue from and vice complete electro optics platform comprised of their industry, leading Pam and coherent DSP.
High performance broadband analog drivers and Tia's.
Highly integrated silicon photonics, and datacenter interconnect modules.
For the second quarter, we anticipate networking revenue to grow just over 70% year on year, Let me walk you through the growth expectations from and the Marvell and and buy businesses implicit and this guidance.
We expect Marvell standalone networking to drive strong year on year revenue growth and the high teens on a percentage basis and be up slightly on a sequential basis.
To the prior quarter, we expect broad growth for multiple products offset by a pause in China for <unk>.
This outlook reflects ongoing supply constraints, which are more and more acute for our networking products. However, as I discussed earlier, we believe we have line of sight to supply improvements later this year and next year to support our growth plans.
As we look forward, we expect a strong second half ramp compared to the first half and Standalone marvell networking business, including and acceleration in our <unk> business from both our own product ramps and an increase and <unk> adoption and the U S and other regions.
From the acquired and by business, we expect approximately $215 million and revenue and our second fiscal quarter.
And I am very pleased that this level of revenue, we expect the and <unk> business will be accretive to our non-GAAP earnings and the first full quarter as a combined company.
We expect this business to drive strong growth above marvell as growth rate benefiting from the demand for high speed connectivity inside and between data centers and and the carrier market.
Let me briefly discuss inside data center growth drivers.
Inside data centers as demand for bandwidth continues to increase a generational shift is underway from traditional NRC signaling to more advanced pulse amplitude modulation or Pam, which enables a significant increase and bandwidth. This is 1 of the biggest changes and datacenter connectivity and <unk> is leading this industry transition.
And <unk> is the largest provider of Pam 4 DSP to the optical connectivity market, having shipped millions of devices.
As the market continues to transition to higher speeds 400 gig adoption has been accelerating and last year. We started sampling. Our next generation 800 gig solution, which is seeing strong traction with customers.
And collaboration with Microsoft and <unk> pioneered plausible transceiver technology to directly interconnect regional cloud data centers at lower cost complexity and power compared to traditional optical transport solutions.
First product colors use Pam 4 technology to enable 100 gig per wavelength, which could be multiplex to support up to 4 terabytes per second of bandwidth over a single fiber for data center interconnect or Dci applications and <unk>.
Alex has been shipping in volume and established and <unk> leadership in this category.
Building on the success of colors, which was deployed primarily by 1 hyper scaler last year and <unk> introduced colors to the industry's first <unk> transceiver compatible with the 400 ZR industry standard, which enables 400 gig per wavelength using coherent technology.
We expect to maintain our leadership position and the Dci market and.
And projected colors to deployments will start this year.
And an industry standard now in place, we see multiple hyperscale and additional customers adopting <unk> ZR technology, which creates a significantly larger revenue opportunity for our Dci platform.
Turning now to our storage business.
Storage revenue for the first quarter was 303 million growing 17% year on year and declining 7% sequentially.
The results were better than our expectations as we benefited from stronger demand for our SSD controllers.
A stellar year on year results were driven by ramps and our custom DIY SSD controller programs and ongoing growth and cloud demand for near line drives which benefited from benefited our HDD controllers and pre amplifiers.
The sequential decline was primarily due to our fiber channel business.
Looking to the second quarter of fiscal 2022, we expect storage to deliver another strong performance driven by the near line HDD and datacenter SSD markets. We are projecting revenue to grow year on year, and the mid teens and and the double digit sequentially on a percentage basis.
Our recent results and expectations for ongoing growth reflect the significant transformation of our storage business.
And our HDD business data center has become the largest revenue contributor relative to other markets. A preamplifier business is now ramped up to an annualized run rate of over $50 million. We believe that we can more than double this run rate.
We are continuing to step up the technology cadence for our SSD controllers, and we recently introduced the industry's first pcie Gen..5 SSD controller family designed to address the data movement and security challenges and cloud infrastructure.
And we're excited to collaborate directly with Hyperscale and <unk> and that vendors to bring this leading solution in the market.
In addition, I am pleased to announce that a key NAND OEM has chosen to partner with Marvell to develop custom pcie Gen 5 and Gen..6 SSD controllers for their enterprise and cloud solutions.
And then 6 product will be built on our 5 nanometer process.
And the storage market. This is a quantum leap and process node cadence and is a testament to Marvell has advanced technology platform.
We expect to leverage the leading edge IP, we are developing to be deployed and additional advanced node storage solutions.
Our strategy to refocus this business on the data center market has been a huge success day.
The center has grown to over 60% of storage revenue from less than 20% and fiscal 2017.
Okay.
In closing we had a great start to fiscal 2022, and I am very excited about the growth prospects in front of us as a combined company when we announced the acquisition of <unk>, We increased our long term target model for revenue growth to 12% to 16% annually on.
And I'm pleased that our recent results and near term expectations are in fact currently trending above the high end of this target range.
And this was primarily due to our own product cycles, combined with sustainable secular growth trends and our data infrastructure markets.
The acquisition of <unk> increased our exposure to the data center, which is our largest end market and within that cloud is the largest growth opportunity across marvell significantly bigger than our <unk> opportunity.
And <unk> has already established a strong position within cloud addressing and opportunity growing at a 60% plus CAGR.
The marvell organic opportunity and cloud is also substantial which we are addressing with our merchant semi custom and flexible ASIC model for compute networking acceleration and security and storage applications.
At our analyst day last year, we discussed this opportunity growing at unexpected and 19% CAGR to over 5 billion by calendar 2023.
The adoption of arm processors, and and servers continues to gain traction and this further increases our cloud opportunity.
We expect cloud revenue for the combined company to grow rapidly.
As Marvell 5 nanometer products come to market, we expect a substantial step up and our cloud revenue and.
We're pleased to report that we have been recently awarded a number of significant design wins, leveraging our advanced technology platform respecting customer confidentiality, we will not be in a position to discuss any specific win.
And they're with multiple customers across a variety of applications and business models.
And these products to start ramping into production and the and the count in calendar 2023, achieving peak revenue and the calendar 2024 to 2025 timeframe.
As I approach my 5 year anniversary at Marvell, I've never felt stronger about our growth prospects and I am grateful to all our employees, who have worked hard to transform the company to position us for what we believe will be a very exciting future.
With that I'll turn the call over to gene for more detail on our recent results and outlook.
Thanks, Matt Good afternoon, everyone I will start and lead to our cash rates out for the first launch and for the combined company funnel, Dubai and mobile Standalone non-GAAP performance, and then conclude and lead to our outlook. Please.
Please note our GAAP financials to include a 10 day sales for the accounts from day in time.
And the impact on full question is price kind of key icons share.
And thank the compensation expenses amortization of acquired intangible assets.
Legal and settlement and acquisition related costs.
Revenue was $832 million.
GAAP gross margin was 62% GAAP.
Operating expenses were $500 million.
GAAP operating now and whats the ATP.
And $2 million.
GAAP loss per diluted share and want to thank you Ken.
Turning to the balance sheet inventory and endless conflict contactless and 500 and HBV and we should include the impact.
And tied to inventory by 187 million and Q2 question its price.
Keith.
And we amortized and flicking meeting and overheads and step up into cost of goods.
<unk>, <unk>, and and we anticipate and the pricing and.
And the menu and balance by the end of day to quality and on H <unk> acid and <unk>.
Joining the quality and we paid and 100% <unk> and cash with PCB and nature of the EPS.
Action.
Excluding the onetime payment our cash flow generation from operations would have been 100 and need.
And then get our cash flow generation and ICP.
And tend to be lower first and physical content due to the payment of annual cash bonuses to employees.
In the flight to quality and <unk> and lean into share oil and gas you again.
We exited the quad channel to 523 million and cash and short term and in management.
Our long term debt.
<unk> 7 billion and the currently carries a blended interest rate of approximately 2.5%.
Our gross debt to EBITDA ratio once a day.
Net and net debt to EBITDA ratio once a day.
Based on and combined pro forma EBITDA.
We continue and have a strong investment grade credit and profile.
Our capital allocation priorities over the next and comment.
We maintain our current dividend level and utilized our free cash flow to pay down debt to use and for the SMB channel for <unk>.
We believe we can try and with strong revenue growth and free cash flow generation to quickly achieve our pathway to the shell and the 2 times gross debt to EBITDA.
I will now move on to Standalone Marvell non-GAAP results.
<unk> had and military there early and we are providing standalone my that range out on a onetime basis and Thats crunch and because of our previously provided financial outlook for the first.
Quanta excluded any impact on the <unk>.
And patients.
Reconciliation of our Standalone and combined performance as well as GAAP to non-GAAP results available on our price.
Standalone mobile revenue in the first quantity and with the 810 million exceeding and immuno pulling your cloud guidance.
Networking that piece and the 60% and they'll buy revenue story contributing 36%.
Revenue from other accounts at the 4%.
Non-GAAP gross margin less and $64, 3% above our guidance and the 150 basis point improvement from a year ago, primarily due to bank and product mix and our team to continue the offering to try and operational excellence.
Non-GAAP operating expenses were 202.7 million as we continue to tightly manage our expenses and while we keep our growth.
Non-GAAP operating margin was 27, and 10% and 810 basis point and increased from a year ago.
And then the strong <unk> business and the hotel.
Okay.
Non-GAAP earnings per diluted share it with 2000, and Ken exceeding the midpoint guidance range by true.
More than 60% year over year.
Let me and I'll comment on our planned operating expenses going forward.
After closing the <unk> acquisition net.
And <unk> pro forma I'll take any strength for the combined company with approximately 375 million per quarter.
We expect operating expenses to grow annually EBITDA range.
And also for 2.5% and we continue to invest to support our long term growth, including incremental R&D spend in plate and facts.
Hi, where we expect some on that offset to this operating expense growth to deal related synergies.
We expect total costs and synergies.
And Keith and 25 million and from the ESI acquisition.
Approximately $100 million coming from operating expenses and.
And me to point to cloud and the quality and Opex guidance for 372 point of finding and includes 10. We may also synergy achievement on Randy and thank you.
We expect to achieve half of our targeted and the Opex and then Chi X.
Net in fiscal 2022, and the full synergy realization by the third of quantity and our fiscal 2023.
We will continue to be disciplined and okay.
Right.
And we expect to drive revenue growth and significantly higher than opex growth to deliver strong earnings expansion.
Moving many many alpha cost synergies that will come from Cascade zone.
We expect to start to take effect in the first quarter on fiscal 2023 and to be fully realized and by this data quad channel over the same year.
Our team has a strong track record of integration and execution from prior acquisition and <unk>.
And I am confident about our synergy achievement and plan.
Yeah.
Now turning to our guidance for the second quarter, our fiscal 2020 true Richie include a full quarter impact.
We are forecasting and revenue to be in the range and over 1 point and Cmos takes a 5 billion plus or -3%.
And that needle point on the outlook, we expect approximately 215 emails and revenue contribution from the net impact.
As Matthew mentioned earlier and this level of revenue, we expect the <unk> business, it will be accretive and that trial and non-GAAP earnings.
We expect our GAAP gross 19, interventional for 34, 8% to $2.37, 5%.
We project, our non-GAAP gross margin to be approximately 64%.
Tight supply environment, and we expect our non-GAAP gross margin in EMEA and future to remain around this level subject to product mix change and he came and content.
We project, our GAAP operating expense, Judy and the range of 633 meeting and 2.623.
Anticipated our non-GAAP operating expenses to be in the range of over 370 media and 370 buying media.
Following the <unk> acquisition, the company domiciled change and found that the delay will be.
Just on Texas, the vaccines and the credits we have we expect our non-GAAP tax rate and the men and 5% for the remainder of fiscal year.
And the current and the tax laws, we expect our non-GAAP tax rate to increase by approximately 100 basis point and each year for the next couple of years.
We expect all day.
And this will be approximately $34.5 million, which included interest expense of $33 million.
We expect our basic weighted average shares outstanding will be 822, EMEA and our diluted weighted average shares outstanding will be 830 <unk>.
And Steve any college, and we anticipate GAAP loss per share to be 37.
Plus or minus.
We expect non-GAAP net income per diluted share to be 31 cents per.
And Mr <unk>.
<unk>.
Okay and are pleased to open the line and announce Q&A instructions.
Thank you.
Thank you everyone I will begin the question and answer session.
To ask a question and you May Press Star then 1 on your Touchtone phone.
And if youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then 2 and.
And the interest of time, please restrict yourself to 1 question only.
If you have additional questions. Please rejoin the queue and.
And at this time, we will pause momentarily to assemble the roster.
And our first question today will come from John Pitzer with Credit Suisse. Please go ahead.
Yes. Good afternoon, guys. Congratulations on the solid results. Thanks for letting me ask the question, but I'm just curious when you look at sort of this quarter and the guide can you help us better understand.
Relative to your ability to capture supply.
The deficiencies growth this quarter, you did a nice job and the core networking business growing almost 9% sequentially, but I'm trying to get a sense as to whether or not demand continues to outstrip supply and if you could help us understand is this a wafer issue or are there other issues and as you think about resolving them and in the back half of the year why so confident.
Yes, great John Thanks for the question.
Yes, we're very happy with the.
The results and networking as you pointed out that was a sequential number. So so clearly business has been very very good for us and networking and certainly year over year.
To do 20% plus is is great. The demand John continues in Q2 and beyond.
We're continuing to work on improving the supply on our networking products.
As it turns out and as you've probably seen the complexity on our networking business and in terms of the manufacturing.
Cycle time supply chain is much more complex and challenging than on the storage side. So we've been able to.
To meet some more of the upsides on storage that we have networking, but no job business continues to be strong. We do we do have line of sight to the supply improving in the second half, which is encouraging and that's why we're continuing to be very bullish about the outlook for our overall networking business because the demand is clearly there.
And we've now got supply coming online.
In the back half as well as and into next year. So so things are improving for share.
Thank you.
And our next question will come from Vivek Arya with Bank of America Securities. Please go ahead.
Hello, and thanks for taking my question I have 1 more and.
And to kind of extend that question and then to the second half visibility from 2 aspects..1 is the supply aspect that is supply coming online and gradually or are you planning to see perhaps a faster improvement on the supply side and the <unk>.
Other perspective on this is how much of your second half growth is clear.
Growth is dependent on enterprise and China, <unk> company, which has tended to be quite done with that.
Sure Vivek, Yeah I think.
Look in this environment and general supply is coming and not not in large chunks, although I would say given the ramp we had been planning for some time and our case.
We do see more significant amount of supply coming in in the second half so that will improve and we have visibility of that both on the wafer side as well as on the.
And the back inside.
And.
At the same time as we as we ramp our supply position.
I mentioned to John that the demand side continues to.
To outstrip, our ability to put the supply at all but we're making good progress there on your second question.
In both cases, both in enterprise as well as China <unk> those are not comprehended to have.
Market related comebacks in that timeframe on.
On enterprise as you have seen I mean, we've been growing that business.
Well above double digit for for some time, including in our Q1, and we do anticipate that to continue on.
Mostly on the back of our own product cycles, Okay, and we've been very successful I think and our enterprise and campus switching also on our <unk> business and so that continues and so that's and by the way and what's been viewed as a very soft market both by the Oems as well as other semiconductor peers. So if that.
And market improves with returned to work and vaccination vaccination is improving.
That would be a pretty significant tailwind on our business.
As it relates to <unk> and China, maybe just to kind of frame it and the bigger picture.
I think first our own team internally I want to give them credit they did a good job for.
And the first half telling us last year.
Mapping out the digestion phase, which is what's happened so that's actually been in line with our plan.
And.
We're not necessarily counting on a big recovery and that and the second half if.
If it does that would be great, but just to frame it vivek and the bigger picture.
Our <unk> business and exposure and China is actually less than 20%.
Of our overall 5 day business, both now and even going forward and in fact it.
Probably.
Slowly becomes a smaller percentage over time, as our new Oems and ramp up and some of these other initiatives kick in.
So again either of those 2 came back very strong that would also be.
And be a tailwind on our on our business.
Okay. Thank you Matthew.
And our next question will come from Timothy Arcuri with UBS. Please go ahead.
Thanks, a lot Matt I know I know, it's probably early to ask this question, but can you give us a sense of sort of what kind of synergies you might see on the.
Revenue side, and then youre not putting any of those into the model, but can you talk about that and then I guess also gene and I was just wondering if you can talk about what the normalized gross margin as I know youre guiding to 64%, but it sounds like thats still being hampered by some by some constraints. So I'm kind of wondering what is the right normalized number if you didn't have those thanks.
Yes, Tim I'll take the first part and then ended the gene.
So yes as you noted historically, we've despite my practice not not tried to articulate our size revenue synergies when we announced the deal its just very hard to do and quite frankly, it's very hard to.
EBIT measure in the rearview mirror, but that being said on on all of these transactions. We've done we can look back and we can actually point to cases, where 1 plus 1 was way over 2 and it kind of comes in 2 pieces. The first is really what I would call the customer revenue synergy, Tim which would be.
We have products that we can sell for example into <unk> or or the cloud and Phi and this case, what is well and and those discussions.
And that we can be a better supplier together really comes together I mean, if you remember back in and the after the caviar transaction I think that was very significant what happened with and <unk> and with Samsung where together we were able to get.
Effectively the whole platform, where apart we had actually very little content.
So I do I'm very encouraged by what we see I think customers really like the combination to a person and those those are those are very strong and I believe we will see cases, we can point to it's already it's already underway. The second part of it is.
Really more of a technical 1 which is how do we actually incorporate the intellectual property of the 2 companies put it together and deliver better solutions. Those discussions are also going well and particular with with the <unk> IP.
As it relates to our ASIC business, and our roadmap and co package optics and.
And our vision of optics everywhere and not just co packaging and with the switch, but also in things like AI and ml Asics and deep use so that's going to be a very critical piece of the puzzle as we enter these complex markets and more and more of the connectivity moves to <unk>.
Electro optic solution. So that I think Tim is we're very very excited about all of that I think it is going to is going to work out very well on both both of those fronts. I mentioned, let me, let me hand, it over to Jim to cover the second question.
And Ken.
Margin question as you remember when we announced that you've ideal we actually guided the combined company gross margin to be in the range of 6 day, 4% to 66%. We are actually very pleased that our Q1 gross margin performance Marvell Standalone actually achieved a 64.
3% and a very tight and supply chain environment.
As we said before <unk> actually is accretive to our gross margin I think the dynamics at.
Also you know.
The pie changed very tight and we are trying to really manage it through the supply chain challenges and we do think the combined the company maybe in price margin and higher than 65% and we're going to trend higher going forward. When we combine the both company drive the top line revenue growth.
Okay.
Thank you both.
And our next question will come from Blayne Curtis with Barclays. Please go ahead.
Hey, good afternoon, and thanks for taking my question just curious on the storage uplift I heard you say near line and SSB is that kind of the seasonal ramp of DIY and any other drivers to point out and I'm just curious on fibre channel its been kind of a yoyo is.
Is that coming back in July as well.
Yes, great Great question Blaine on storage, so couple of things so.
On the on the SSD side.
Yes, that's actually multiple DIY programs now.
And those are kicking in and various end markets and we see that.
That trend being.
Way up year over year, this year, but growing strongly into next year.
That strategy to really work closely with some of these system level Oems, whether it would be and the cloud or or or or other applications.
It's a pretty compelling business model, so that 1 is going well.
On the on the cloud or on the near line side.
Yes, I mean, I think if you just look at the performance of these large cloud properties and how they're performing in terms of.
They are on revenue growth. There is certainly a scaling that goes on with storage. So the need for increased capacity and cold storage continues we are well positioned with that with our controllers and our pre amplifiers actually which is which is a new revenue stream for us as well so that's still continuing.
And that is very strong and then finally.
Fibre channel.
It was 1 of our most stable businesses.
Blaine going back even even when <unk> owned it and even when it was Q logic. It certainly had a lot of choppiness this year with with with manufacturing supply disruptions and southeast Asia.
Yes.
Thats been Thats started to stabilize and actually fiber channel grew quarter over quarter, and we will continue to get better and.
And we hope that that will just by design and that should be a much more stable business. So yeah. Overall, just I think you heard in my remarks, I mean, we're just it's been a journey on the storage side and I've just got to thank our entire team for fundamentally transforming a business, which if you go back 5 years ago and when I showed up.
And it wasn't just me the whole management team. This was a business that was highly concentrated HDD controllers, only selling all under 2 and a half inch notebooks, okay and that was sort of the story and the melting ice cube people were worried about and so I am very proud of the team when I fast forward 5 years, and we've now got greater than <unk>.
60% of our storage business.
And datacenter and these high performance applications, and then really the bulk of the balance being and very sticky stable markets and the <unk>.
Bowyer to things like notebooks being de Minimis I think it's been a great transformation story and the fact that we're having calls talking about our storage business growing double digits and continuing to do that is a great great.
Great effort and by the way, we're not milk and this business either I mean, we've been very aggressive to move our platform to 5 nanometer, which effectively jumped at least the node for most people probably for most people with 2 or 3 nodes.
But for these high performance applications, Blayne, especially and in the data Center you get tremendous power savings by doing this so that's going to be a first step into a broader platform of products.
And storage as well as and our traditional networking businesses like processors and.
And switch chips.
Thanks, Matt.
And.
And our next question will come from Ross Seymore with Deutsche Bank. Please go ahead.
Hey, guys. Thanks for letting me ask a question and looking forward to hear on the end market splits last quarter. So thanks proactively for doing that Matt I want to go to the networking business again, and the last 4 quarters has kind of been up 10% and flat up 10% and now guided flat again overall year over year growth is really really strong so no complaints, but is that lumpiness.
Something that's just inherent to the markets that youre addressing.
Was it supply driven and perhaps more importantly, you talked about and acceleration on the back half of the year can you just talk about a few of the marvell specific drivers that will allow that acceleration and do you expect that lumpiness to go away as the breadth of the business improves internally and with the addition of info on it.
Yeah, Great question. So just quickly on the first 1 actually.
I'm pretty excited about and moving to the end market reporting I think it is going to give.
Investors a much clearer view of our growth drivers. It actually reflects how we think about allocating the capital of the company I've actually manage the company from a market based philosophy.
From the very beginning and.
And so to now be able to show you our datacenter business. Theres also appears that report those numbers. So it will give investors a sense of a relative growth rates.
And then carrier you can capture or 5 day anyway, So I think that'll that'll be a real positive.
And I think for everybody.
On the networking side.
Interesting Ross.
Individually and.
Some of these businesses are inherently lumpy I mean, I think we all know that the carrier telecom type businesses tend to be lumpier than others, but that being said when you blend actually our combined networking businesses across things like enterprise and.
And carrier and even right now automotive is reported and our networking.
And actually from an end demand standpoint, you do get a smoother profile, which has all been up into the right by the way I think and the last year. The dynamic on the quarterly moves has been more supply related than it has been.
Just a networking was up and then everybody kind of slowed down together and everybody is up actually business has been very strong Ross and <unk>.
Last year, if you recall, we started growing the company.
Double digits year over year in Q2 of last year.
So we've been on this double digit growth right now, it's actually accelerating and.
And and during this timeframe.
We could get more supply it would probably look a lot look smoother. If you will but I think youre right to integrated over maybe a few quarter period first half second half or even 1 year periods to get the full view just because of the manufacturing cycle times on some of these products can be.
Be several quarters.
So if you get upside there is there is a time to react but no. If you just sort of blended and demand Ross you would see a very steady increase and the nice thing is we have a very diversified business and networking. So it's spread across all these end markets as I mentioned.
Thank you.
Yes.
And our next question will come from <unk> Srivastava with BMO capital markets. Please go ahead.
Hi, Thank you very much Matt.
Wanted to ask about the comments you made at.
At the top of the call.
You'll see really content and the boat.
Just starting a new phase of our multiyear growth.
Wanted to double click on debt what are the underpinnings of that confidence can you talk a little bit about the design wins you have on the cloud side.
And then and then you also gave a bit of a head when you talked about cloud being a much larger opportunities and <unk> and just kind of frame that discussion and.
With that in mind as well thank you.
Sure and Bruce and I would say, both and the relative near term and over the next separately and you actually break it into 3 phases.
For the second half of this year looking into next year and the year. After and then I would say out out a few years beyond that.
And I didn't quite answer Ross's question, but I'll leave it and here is last quarter was.
What do you see and the second half so on networking for example, I mean, we have the <unk> ramp for us will.
We will pick up will accelerate and that's primarily due to increased adoption and the United States and deployments there plus design wins that we have won several years ago ramping into production.
<unk> got.
Very strong marvell business in the cloud with our smart Nic product line, that's been growing very very nicely and will continue and the second half.
And I'm surprised no one's asked the question about <unk>, yet, but we're very pleased to guide to.
<unk> for <unk>, and Q2, which is I think well above what anybody thought that business is also going to continue to accelerate in the second half both on the intra data center business and Pam 4 as well as.
The the 400, ZR ramp, which we think will be a meaningful.
Next year, but also but starting this year and then finally as I mentioned, the Ethernet switch and Phy business.
Could also throw automotive and there I mean, we've got almost all of these growth drivers. We mentioned continues so that's that's right in front of US I think what I get very excited about as you alluded to is the design win momentum and the company has been extremely strong.
And probably not probably as strong as I've ever seen it in the past 5 years I've been here and any kind of per.
Prior record I could find.
And those are things that as we noted in my remarks would be designs. We went and now that would ramp up starting probably in calendar 'twenty 3 'twenty 4 and then go beyond that and that's also you should kind of tie it together with that was when our 5 nanometer platform will be really in full force.
Production across multiple end customers and markets and applications. So that's the 1 that kind of layers on top of all of this and candidly would extend beyond what we talked about at the last Investor day. So I think if you draw a line between here and there there is all kinds of goodness and in different areas.
And bridge, but I think we're feeling really good about the investments we made I think the acquisitions that we did.
<unk> does really well and they fit together and their own way and.
And finally, I would say that the customer go to market our brand promise to our customers. The way we engage the way we partner resonates really well and this environment and.
And.
We're just.
<unk> is a very credible and reliable partner with scale, now and especially within <unk> to really deliver the most complex critical products that our customers need.
And I'm sorry, just for clarification. This design win momentum does not include and fly so that would be on top of this range. So this is what youre talking about the organic business has been working on it right.
Yes. This is just marvell standalone.
So all of those comments on.
Large largest sort of design win.
Achievement, we've seen plus the final.
That's all from the organic Marvell business, Okay. Starting next quarter, we're going to have the <unk> team and our and our.
In our in our and our results and and our.
Internal results in terms of R. R.
And our design win funnel and momentum, but yes, and they've done a great job too I mean, that's a whole other story, but I'm, just saying Standalone marvell with our with our 5 nanometer platform and our <unk> cloud.
<unk> strategy automotive all of the things we articulated at the Investor day pre and bi that's all tracking.
Obviously in line or better than we thought.
Thank you Matt.
Yes.
And our next question will come from Harlan sur with Jpmorgan. Please go ahead.
Good afternoon, and congratulations on the southern results and outlook on the newly and.
We acquired inside the business and then it looks like.
Inside and cloud data center upgrade to 204 hundred gig Pam for optical connectivity and.
And accelerating as we move into the second half with 2 more cloud Titans just studying the upgrade cycle and then on top of that it looks like the first 1 or 2 cloud Titans are starting to fire on the datacenter to datacenter Dci optical upgrade to the new 400 gig ZR standard.
As you mentioned and the team has a strong leadership position and both of these areas. I guess are you guys already starting to see this ramping of bookings or backlog for the second half or maybe even some of these already starting to fire here and the July quarter and it seems like we're still and a very early innings of both of these upgrade cycles, but just wanted to get your views.
Yeah. Thanks.
No I think we are the start maybe at the end first.
<unk>.
We're in the early innings of both these upgrade cycles I think your commentary overall is right. Both of those are accelerating on the Pam side I would say probably by the end of <unk>.
<unk> certainly between you could draw a line between now and the end of.
And I am sorry calendar 'twenty, 2 our fiscal 'twenty, 3 and Youll see most of this conversion from these legacy NRC solutions.
Move over and Thats still a decent.
A decent amount of the connections today. So there is a big lift between now and then that's pretty exciting and then of course, you've got other other hyperscale is around the world outside the U S. On.
On 400 ZR and.
That is also just at the beginning phases, I think thats going to be much more broad. Obviously, then colors was which was a 100 gig and it was really for 1 customer.
And that is both of those we had strong.
Backlog bookings visibility.
Heads down to play on the supply and to plan and plan to ramp.
And so those are very much intact, which was really part.
Part of our deal thesis for doing it and the first place.
Yes, great insights. Thank you.
Okay.
And our next question will come from Christopher Roland with Susquehanna. Please go ahead.
Thanks for the question.
You did mentioned the pause on spending 5 G spending.
And you also did talk about China as well.
But I was wondering if maybe we could talk about some of the other geographies, how they're ramping and then in terms of your 5 G lead customers. How close do you think we are to a full.
Run rate in terms of their ramp.
Sure Yeah, No I think I think and general Doug.
<unk> momentum is quite strong I think.
Obviously, you saw you saw the impact on people last year with China, which was.
Which was very meaningful and that will by the way over time and we're debating is it second half or when is it but that those deployments will obviously continue theyre not done that then the U S is really I think where we're going to see a lot of traction this year.
India is a little more unclear I think the latest is certainly trials will be.
<unk> at the end of this year candidly I think with the.
The impact of COVID-19, and the country, that's probably delayed things.
We saw that last year. If you remember they were supposed to be a much larger U S build out and COVID-19 delayed that.
And we're watching that but no I think overall.
It's been a very meaningful technology transition and so we are we are.
We think that's going to be very broad.
And we've still got a ways to go to be honest with you. There's a lot in front of us relative to getting to full run rate with.
The full platform and at our 2.
Lead Oems and.
And 1 case, we have the platform, but theyre really ramping their business based on their <unk>.
Geographies that they participate in.
And then with our second customer those chips are still a lot of those are and development. Although our first products are ramping very nicely and we're pleased to see that.
That both those companies are.
We are participating very actively on the global <unk> rollout so that was all positive.
And.
Yeah, and then by the way I mean X, even though with China stays flat as I mentioned, we do see a very strong second half for a 5 day business and and we.
We just came off our seventh quarter in a row of growing that business sequentially. So it's been a real a real tailwind for us.
I did want to just make 1 comment before we move to the next question I actually.
Spoke earlier there was a question about fiber channel.
And I think it was Ross is about it being lumpy, so I might quarters off so it was down.
Its down in Q1 and that.
That was part of the lumpy down it's going to be up and Q2, and then we anticipated unless theres some other disruptions that.
And that should be a generally flat business going forward and and obviously and the scheme of things and the combined company.
And reported by end market I don't anticipate we're going to be having lots of discussions about fibre channel anymore, but if something happens, we'll let you guys know.
And our next question will come from Gary Mobley with Wells Fargo Securities. Please go ahead.
Hey, guys. Thanks for taking my question.
On the topic of Covid, spreading and different geographies, because we get a little tick up in Taiwan and I'm wondering if you can share with us.
Based on your conversations with your supply chain, whether or not you're possibly facing any production interruptions on that region and then Jean.
Given the different moving parts and the Opex and 5% growth as you articulated over the long term and then the.
And of the $125 million and synergies when would you expect the quarterly opex to bottom.
Whether or not pollute terms or relative terms debt 372, and a half million Q2 guide. Thank you.
Yeah, Gary I'll take the first 1.
I think youre, just highlighting a very important reminder, for everybody on this call who I believe probably everybody here is calling in from the United States, where things are opening up and things are feeling like theyre getting back to normal and as you point out we're monitoring very closely the situation and not only and Taiwan, obviously, we.
We don't have production in India, but many chip companies have significant India operations in terms of.
R&D and <unk> got other countries in southeast Asia that are having outbreaks, Malaysia would be 1 so we're watching this very very closely.
It's been just an unprecedented year between weather and the virus on on the supply chain.
But we're watching it and that's we've comprehended as much as we could on any of these things and into our guidance, we do that every quarter.
But certainly it's a dynamic situation I mean, we had a water issue and Taiwan recently I guess.
With the recent improvement there some of that back to us. So yes, it's something we've got to watch and manage very dynamically Gary, but we've comprehended all of that.
And our outlook Jane do you want to answer the second question Yeah.
Okay, Gary on the Opex side, given the opportunity and the revenue momentum and we have been.
<unk> and found a path that we definitely want to continue to invest.
5% and increase for next year.
And comprehensive mobile side, though for regular increase and we typically add debt to 2 main parts and but on the info side that are tremendous opportunity and <unk>.
On the R&D and less mandates higher so we're looking really just next year and on the synergy side, we talk about hunting and media all package and they can achieve men and women.
To think about it.
<unk> fiscal 'twenty true, we shouldnt be able to achieve a 15% off of that behind the meter and run rate and then.
And then.
You know Q1 always and season on the Opex.
Higher because of payroll increase and tier 1 and then Q2 Q3 by the Q3 time, we share the cash opex the total.
Language, which achieved the full synergy and the same time contemplated and increase the offset the increase of the year over year in the longer term you should expect that to continue to focus on to grow revenue significantly faster than opex. So we can expand the earnings quickly.
Thank you.
And our next question will come from Quinn Bolton with Needham and company. Please go ahead.
2 per Matt first sort of <unk>.
Near term debt with supply line of sight to supply increases and the second half of the year have you been able to stabilize lead times to customers and then my second question and kind of a longer term with the ramp of 408 hundred gig modules and the data center debt business potentially being even bigger than that.
G. For you are you starting to get questions from customers about.
Bell developing its own internal switch fabric or our customers happy for you to partner uncertainties and optical co packaging and other opportunities without owning the switch fabric.
Yeah, great. Thanks Quinn.
Yeah on the on the first 1.
Yes, certainly we have we are as I mentioned lines line of sight on our supply through the end of the year and encouraged by what we're seeing also for.
4.
For next year as well.
Look lead times are very extended for everybody at this point.
We've asked our customers for.
Significant backlog and not only the backlog, but really the detailed sort of discussion behind the backlog relative to what are the drivers how much of it is for buffer or how much do you have now what are your plans. So we can get better line of sight to allocate the material and.
And we've also worked with with many of them and are and the process of doing that to really firm up those orders relative to.
Their ability to reschedule and canceled on but we're giving them time to sort of figure that out. So I think thats been a healthy exercise, but lead times are not coming down they are extended not not because we want to keep them extended but the supply chain.
Given the just the volume on it there's just there's just queues and you just have to make sure your plan for that and then on the datacenter side.
And we certainly have many of the key pieces, if not almost all of the key pieces to really be.
Big player on the cloud infrastructure.
Side with our Asics with the Pam products, you mentioned, I mean, Oran and all kinds of things on the switch side, it's an interesting discussion because we're very aggressively.
Promoting and.
And developing a co package optics solution that will be very much.
Open source for the industry. So we want to be and enabler of that we think thats going to be a good thing whether somebody wants to do their own ASIC.
Or or co package, it with a partner and Thats a discussion that we're having I think we're encouraged because when you when you look at our and I noted in my comments, we introduced about 18 months ago, our multi terabyte switched.
Switch family, where they're just as.
A reminder, these are at 3 to 6.4% and 12.8 terabits per second and was a modular modular design architecture and now it's fully featured.
Which has its advantages and many applications because that's really what customers want on the other hand theres a lot of optimization you can do if you really want to do a high and switch for just speeds and feeds.
And I think everything's on the table in terms of looking at all that and the context of inside coming and in particular and those are just some very active discussions we're having.
But the roadmap notwithstanding we're extremely pleased with this this high end <unk>.
Platform that we announced it has done really well on the market.
Revenues ramping.
Significantly and it's going to have a very good year next year and beyond so I think that was a good investment that we made and that really positioned this way and as a full provider from SMB switches to enterprise and campus, which is core and aggregation.
All the way and to the fully featured datacenter type applications. So it would be logical for us to consider broadening the portfolio there.
Great Thanks for that detail on that.
Yes.
And our next question will come from <unk> <unk> with CIBC.
Please go ahead.
That's S ambition and good thank you.
Thanks for taking my questions I have a clarification and a question Matt first on the outlook for the networking segment.
And if my math is correct here I think youre guiding and <unk> to be up at least mid teens sequentially and your core networking business you said its going to be up slightly so and just trying to understand is the difference primarily on the supply side or is it demand. If you can clarify that and then my second question more of a longer term question Jim.
Mentioned arm servers, and obviously you've been the leader in this mark and.
And that market for a long time and.
And there's been a lot of buzz as you mentioned lately and some of your peers are also announcing design win and so my question is when can we expect to hear from Marvell in terms of the design wins and revenue contribution from that market.
Okay, and maybe I'll answer the first question on the inside Guy right and so.
What we guide for Q2 combined the company in fact revenue we said day.
About 215, maybe and so in Q1, and we only had the 'twenty 2 and media business.
Business and so you really cannot compare sequentially year over year. If you look at 250 <unk> Avenue and means.
Most of the 24 percentage year over year increase on the mobile side I will just say, we guided that basically.
And as said earlier slightly up sequentially for the mobile networking.
And marvell networking.
<unk> 200, <unk> and that's what our guide for Q2 and networking business on.
I'll, let Matt answer the second question.
Yes, that's right gene and I mean, I think the bigger picture on the first 1 is just.
The blended these 2 businesses are growing around 20% a year on networking and kind of plus right. So it's.
Very strong performance.
Notice.
The issues earlier on our side on <unk>.
It really is.
A trend thats been happening, we certainly have a lot of capability and this area.
There's a lot of confidentiality around this market.
And I can't really comment on us or the other people because I think it's also a little dangerous at times to talk about things.
Is it a development type of opportunity is it a real production thing.
And so I think we are pivoting our business model.
Last year was really to move this business from being 1 where in a lot of ways, our Thunder product line and really was a.
Prototype type of capability that we enabled the whole industry on but and the and what we found is nobody actually wanted to buy the standard products. So we're very pleased with the pivot we made.
Have.
We believe the best set of Ips.
True ability to stitch together these very large high and complex processors I mean, if you think about the things that we're doing for <unk> or for networking or even what we built on Thunder, we have a second to none capability. There and you should just assume that we are very active and this market, but in a different kind of a business model, where we engage directly with them.
These customers Theres and NRT type of arrangement and we build them exactly what they want.
And.
And.
And the use cases and the benefits of moving to arm are significant.
And I think publicly it's out there the instances that are being moved more and more with the AWS platform to graviton and which is their own and we obviously don't participate on that but it's just a great proof point for the industry.
It's real and it's happening arm and infrastructure and where our view is we would be the leading company for anyone to talk to about not only and be able to design, the chip and product ties it but then to supply it and the kind of volumes thats required.
And it's.
And it's a key part of the equation now.
Okay. Thank you.
And our next question will come from Chris Caso with Raymond James. Please go ahead.
Yes. Thank you good afternoon, just some clarification regarding the additional supply and with the additional supply coming on what point do you expect it to be.
Back at the level, where you are shipping all of your customers orders do you think you'll get there by the end of the second half or is that going to take longer.
And just following on from that.
We've heard from a lot of others, and obviously with the tight supply conditions order visibility stretching out customers are placing orders as far in advance it sounds like from your prior comments that youre not forcing those those customer orders be noncancelable at this point, maybe just clarify that a little more and and talk about 1 additional day.
The ability that gives you going forward.
Sure Yeah, Chris Thanks for the question as I noted earlier, we've been growing this company double digits.
Year ago, and it's only accelerating and as we've done that that's been great, but candidly we haven't we haven't made a real dent in the in the and.
And the delinquency and in fact.
I think our.
Our business momentum is growing but I think the demands on us are growing even faster than our supply. So we're working hard on it but I would say anybody that tells you on this industry that they know when this is going to get better like hey, it's going to happen and a quarter or it's going on.
I don't think that you are probably getting a realistic answer is my view I think it's very dynamic it's unprecedented.
And at this point Theres. So many industries that are up into the right and everybody's clamoring for product.
Debt.
But we're working on it and like I said, we were the type of company, Chris that I think we're more focused on the long term slow and steady keep cranking it out every quarter and keep blocking and tackling through this time period and keep making sure. Our customers are up and then on your second question no. We are ensuring that we have.
Protection and not only protection, but I would say mutual commitment.
With our customers around the supply so we do have.
A large.
A large portion of our backlog, which is only getting more to be honest.
And that is noncancelable, we are.
And <unk> being somewhat flexible around building and some reschedule capability, maybe maybe you can do it once and we're trying to we're trying to work with our customers on this but we're having to make commitments.
Especially with the growth that we see in front of us.
Which I'm very comfortable doing it but I also want to have the backstop for my customers and this environment has created a dynamic where you have pretty much the CEO level and all of our major accounts. They are willing to engage and this type of discussion and activate their materials teams and get everybody together. So that we can we can plan. This thing is.
The combined team and Marvell team and the customer team vs..2 independent entities off doing their own thing and the era of customers being secretive about their volumes are hiding the ball or not want or youre doing just in time and thats kind of all out the window at this point and so the visibility is pretty good that we're getting but we are we are insuring.
And that we.
When we're making commitments we've got some backstop from the customers that want the product.
Thank you.
Yes.
And our next question will come from harsh Kumar with Piper Sandler. Please go ahead, Yeah, Hey, guys first of all congratulations on solid results and also being so clear about all of the numbers really helps us out.
Another question that I was wondering if you could breakdown your networking business, let's say just Steve on 4 core and mobile organically.
On the split on a rough color between 5 and cloud and enterprise and also if Nokia is is it running and ramp as they've got still room to run from here.
Yep, well harsh and all of your wishes are going to come true next quarter, because we're going to break out for you in detail. The data center business of Marvell, which is going to have the cloud and we're going to break out the carrier, which you'll you'll be able to build it and we'll talk to all of these by the way right. So you'll be able to get a sense of the <unk>.
<unk> pieces on <unk>, we're going to have and auto industrial.
Which is obviously the big growth there is going to come from the automotive and then our enterprise.
Networking, which I think is a great proxy as well. So I think we're going to give you what you want and we're going to give you 7 quarters of history, and we're going to guidance.
So youll be youll be like a kid and a candy store.
And then on the second question on our on.
And okay, yes, that's still that's still ramping you've heard their commentary, they're ramping up were kind of replacing their legacy solutions.
Within there and they have their sharp portfolio, where part of that they talk openly about sort of replacing FPGA and with <unk>. So we're just part of that growth and then.
And then of course, we've got future future.
Opportunities, where we're going to intersect intercept with them with new sockets over time, so that's still on a ramp based on.
Early understood. Thank you guys.
Yes.
Ladies and gentlemen, this will conclude the question and answer session also concluding today's call we'd like to thank you for attending today's presentation and at this time you may now disconnect your line.
Okay.
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