Q2 2025 Marvell Technology Inc Earnings Call

August 29, 2024

Speaker Change: Good afternoon and welcome to Marvel technology in 2nd quarter of fiscal year 2020, 5 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal us conference specialist by pressing the star key followed by zero.

Operator: 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 the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Please go ahead.

Speaker Change: After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would not like to turn the conference over to Mr. Ashish Saran. Seeing your Vice President of Investor Relations, please go ahead.

Ashish Saran: I would now like to turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Please go ahead. Thank you and good afternoon everyone.

Matt Murphy: Welcome to Marvell's second fiscal quarter 2025 earnings call. Joining me today are Matt Murphy, Marvell's Chairman and CEO, and Willem Meintjes, RCFO. Let me remind everyone that certain comments made today include forward-looking statements, which are subject to significant risks and uncertainties, that could cause an actual result to differ materially from management's current expectations. Please review the course of these statements and rest factors contained in our earnings press release, which we file with the SEC today and post it on our website, as well as our most recent 10th year and 10th year filings. We do not intend to update a forward-looking statements. During our call today we will refer to certain non-gap financial measures. A legal solution between a gap and non-gap financial measures is also available in our earnings press release. Let me now send the call over to Matt for this comments on the quarter. Matt?

Ashish Saran: Thank you and good afternoon everyone. Welcome to Marvel's second sister reporter 2025 running school. Joining me today are Matt Murphy, Marvel's chairman and CEO and Willem Meintjes RCFO. Let me remind everyone that certain comments made today include forward-looking statements, which are subject to significant risks and uncertainties.

Speaker Change: That could cause an act that results to differ materially from management's current expectations.

Speaker Change: This is of you the costly statements on Westfight as contained in our earnings press release, which we five with the FEC today and posted on our website as well as our most recent and tantey and tantey filings. We do not intend to update our forward looking state.

Matt Murphy: We do not intend to update a forward-looking statements. During our call today we will refer to certain non-gap financial measures. A legal solution between a gap and non-gap financial measures is also available in our earnings press release. Let me now send the call over to Matt for this comments on the quarter. Matt?

Speaker Change: During a call today, we will refer to certain non-gap financial measures.

Speaker Change: A recalculation between a gap and non-gap financial measures is also available in our earnings facilities.

Matt Murphy: Let me now send the call over to Matt for this comments on the quarter. Matt? Thanks Ashish and good afternoon everyone. The second quarter of fiscal 2025, Marvell delivered revenue at 1.27 billion above the midpoint of guidance, primarily by strong demand from our data center and market. Higher revenue combined with discipline expense control, growth non-gap earnings per share of 30 cents, also above the midpoint of guidance.

Speaker Change: Let me know in the comment section below.

Speaker Change: Thanks, Ashish, and good afternoon, everyone. For the second quarter of fiscal 2025, Marvel delivered revenue at 1.27 billion, above the midpoint of guidance driven primarily by strong demand from our data center and market.

Speaker Change: Higher revenue combined with discipline, expense control, drove non-gap earnings per share of 30 cents, also above the midpoint guidance.

Matt Murphy: Revenue on the second quarter grew by 10% sequentially and we are projecting significantly higher sequential growth for the third quarter, with all our end markets expected to grow. Achieving the midpoint of our third quarter guidance would also result in a return to year-over-year revenue growth for Marvell. Let me now discuss our results and expectations for each of our end markets. In our data center and market for the second quarter we drove record revenue of 881 million, growing 92% year-over-year in 8% sequentially. These above guidance results were driven by strong demand for our electro optics products, custom silicon beginning, its anticipated ramp, as well as growth and our storage and switch revenue. Strong bookings continue for our market leading 800 gig palm products and 400 ZR data center interconnect or DCI products, and we are looking forward to starting shipments of our next generation 200 gig per lane, 1.6 terabyte DSPs in the third quarter. As a result, we expect our electro optics revenue will continue to grow every quarter this fiscal year on a sequential basis.

Speaker Change: Revenue on the second quarter grew by 10% sequentially and we are projecting significantly higher sequential growth for the third quarter, with all our end markets expected to grow.

Speaker Change: and the midpoint of our third quarter guidance would also result in a return to year over year revenue growth for Marvel.

Matt Murphy: Let me now discuss our results and expectations for each of our end markets. In our data center and market for the second quarter we drove record revenue of 881 million, growing 92% year-over-year in 8% sequentially. These above guidance results were driven by strong demand for our electro optics products, custom silicon beginning, its anticipated ramp, as well as growth and our storage and switch revenue. Strong bookings continue for our market leading 800 gig palm products and 400 ZR data center interconnect or DCI products, and we are looking forward to starting shipments of our next generation 200 gig per lane, 1.6 terabyte DSPs in the third quarter. As a result, we expect our electro optics revenue will continue to grow every quarter this fiscal year on a sequential basis.

Speaker Change: Let me now discuss our results and expectations for each of our end markets.

Speaker Change: In our data center and market for the second quarter, we drove record revenue of 881 million, growing 92% year over year and 8% sequentially.

Speaker Change: These above guidance results were driven by strong demand for our electro-optics products, custom-silicon beginning, and anticipated ramp, as well as growth in our storage and switch revenue.

Speaker Change: Strong Bookings continue for our market leading 800 gig pan products and 400 ZR data center interconnect or DCI products. We are looking forward to starting shipments of our next generation 200 gig per lane, 1.6 pair of DSP's.

Matt Murphy: As a result, we expect our electro optics revenue will continue to grow every quarter this fiscal year on a sequential basis. We are also looking forward to addressing a number of new opportunities within the data center. We have begun initial shipments of our 100 gig per lane 800 gig DSPs for active electrical cables for AECs, and we are anticipating the production ramp to accelerate in the second half. In addition, we recently started sampling the industry's first 200 gig per lane, 1.6 terabyte AEC DSPs to address upcoming higher speed, short reach, copper interconnect application.

Speaker Change: In the third quarter. As a result, we expect our electoral optics revenue will continue to grow every quarter this fiscal year on a sequential basis.

Speaker Change: We are also looking forward to addressing a number of new opportunities within the data center.

Speaker Change: We've begun initial shipments of our 100 gig per lane, 800 gig DSPs for active electrical cables for AECs and we are anticipating the production ramp to accelerate in the second half.

Speaker Change: In addition, we recently started sampling the industry's first 200 gig per lane, 1.6 terabyte AEC DSP's to address upcoming higher speed, short-reach, copper, interconnect applications.

Matt Murphy: Accelerated servers are turning to PCIe Gen6 technology, which needs higher order PAM4 modulation. Given our leadership position in PAM technology, customers are turning to Marvell to enable this transition, and we are now sampling our new PAM4-based PCIe Gen6 retimers. As you can see, we are continuing to broaden our end-to-end product portfolio to address all the critical interconnect needs of our data center customers, positioning us to take full advantage of an interconnect TAM expected to grow at a 27% CAGR to $14 billion by calendar 2028. We are confident in our ability to continue to lead the industry in power and performance with our current optical DSP and DCI franchises, while we expand into new opportunities, including AEC DSPs, PCIe retimers, silicon photonics, and longer distance 1,000 kilometer-reach DCI modules. As a result, we expect to maintain a leadership position in this large and fast-growing interconnect market. We are making significant progress in bringing Compute Express Link or CXL technology to the market, having recently introduced two new families of CXL devices to address memory bandwidth and memory capacity challenges in next-generation servers. In our cloud security business, we were pleased that Microsoft will begin integrating Marvell's FIPS 140 Level-3 compliant liquid security hardware modules in their Azure Key Vault offerings. These products offer Azure's customers the most secure encryption and key management services in a cloud platform.

Speaker Change: Soaring servers are turning to PCIE Gen 6 technology, which needs higher order Pam for modulation. Given our leadership position in Pam's technology, customers are turning to Marvel to enable this transition and we are now sampling our new Pam 4 based PCIE Gen 6 retimes.

Speaker Change: As you can see, we are continuing to broaden our end-to-end product portfolio to address all the critical interconnect needs of our data center customers, positioning that to take full advantage of an interconnect tam expected to grow at a 27% tagger to 14 billion by calendar 2028.

Matt Murphy: We are confident in our ability to continue to lead the industry in power and performance with our current optical DSP and DCI franchises while we expand in the new opportunities, including AEC DSPs, PCIe retiners, silicon photonics, and longer-distance thousand-kilometer-reached DCI modules. As a result, we expect to maintain a leadership position in this large and fast-growing interconnect market. We are making significant progress in bringing compute, express-link, or CXL technology to the market, having recently introduced two new families of CXL devices to address memory bandwidth, memory capacity challenges, and next generation servers. In our cloud security business, we were pleased that Microsoft will begin integrating Marvell's 5-140-level 3-compliant liquid security hardware modules in their Azure Key Vault offerings. These products offer users, customers, the most secure encryption, and key management services in a cloud platform.

Speaker Change: We are confident in our ability to continue to lead the industry and power and performance.

Speaker Change: With our current optical DSB and DCI franchises.

Speaker Change: While we expand in the new opportunities including AEC DSPs

Speaker Change: PCI e-re-timers, Silicon Photonics, and longer distance thousand kilometer reach DCI modules.

Speaker Change: As a result, we expect to maintain a leadership position in this large and fast growing interconnect market.

Matt Murphy: We are making significant progress in bringing compute, express-link, or CXL technology to the market, having recently introduced two new families of CXL devices to address memory bandwidth, memory capacity challenges, and next generation servers. In our cloud security business, we were pleased that Microsoft will begin integrating Marvell's 5-140-level 3-compliant liquid security hardware modules in their Azure Key Vault offerings. These products offer users, customers, the most secure encryption, and key management services in a cloud platform.

Speaker Change: We are making significant progress in bringing compute express link or CXL technology to the market. Having recently introduced two new families of CXL devices to address memory bandwidth and memory capacity challenges and next generation servers.

Speaker Change: And our cloud security business, we were pleased that Microsoft will begin integrating Martell's fifths 140, Level 3 compliant liquid security hardware modules in their Azure key vault offerings. These products offer Azure customers the most secure encryption and key management services in a cloud platform.

Matt Murphy: I mean, now turned to our custom silicon business. As investment in AI and accelerated computing continues to surge, tier 1 cloud providers are increasingly focused on using custom silicon to improve their data center TCO and drive differentiation. AI is accelerating the cadence of new chip releases, resulting in shorter design windows and faster time to production, company by significant increases in complexity with each new generation. The trend is driving cloud customers to partner with companies like Marvell, who have extensive experience in delivering multiple generations of high volume, high complexity, leading-edge chips developed using robust design methodologies. Additionally, cloud customers are seeking access to our differentiated and field-proven technology platform, which include ultra-high-speed surrides, arm compute, optimized HPM interfaces, security, storage, guided-eye interconnects, silicon photonics, and advanced packaging.

Speaker Change: I mean, I'll turn to our custom silicon business.

Speaker Change: As investment in AI and accelerated computing continues to surge, Tier 1 cloud providers are increasingly focused on using custom silicon to improve their data center TCO and drive differentiation.

Speaker Change: A.I. is accelerating the cadence of new chip releases, resulting in shorter design windows and faster time to production. Company by significant increases in complexity with each new generation.

Marbel: The Strand is driving cloud customers to partner with companies like Marbel who have extensive experience in delivering multiple generations of high volume, high complexity, leading edge chips, developing robust design methodologies.

Matt Murphy: Additionally, cloud customers are seeking access to our differentiated and field-proven technology platform, which include ultra-high-speed surrides, arm compute, optimized HPM interfaces, security, storage, guided-eye interconnects, silicon photonics, and advanced packaging. Customers are also adopting concurrent product development with staggered platform launches to produce silicon on an annual cadence. The approach reinforces the value of a trusted silicon partner like Marvell, who has decades of processor expertise and can take on greater design responsibilities. As a result, the nature of our customer engagement is shifting from point design wins to multi-generational relationships.

Speaker Change: Additionally, Cloud Customers are seeking access to our differentiated and field-proven technology platform, which include ultrasound-high speed surveys, arm-compute, optimized HPM interfaces, security, storage, die-to-die interconnects, silicon photonics, and advanced packaging.

Speaker Change: Customers are also adopting concurrent product development with staggered platform launches to produce silicon on an annual cadence.

Speaker Change: Supprochery enforces the value of a trusted silicon partner like Marvel who has decades of process or expertise and can take on greater design responsibilities.

Speaker Change: As a result, the nature of our customer engagements is shifting from point design wins to multi-generational relationships.

Matt Murphy: Our AI custom silicon programs are progressing very well with our first two chips now ramping into volume production. Development for new custom programs we have already won, including projects within new tier 1 AI customer ran outs earlier this year, are also tracking well the key milestones. Looking ahead to the third quarter of fiscal 2025 for our data center end market, we are forecasting revenue growth to accelerate into the height team sequentially on a percentage. Basis. We expect the largest contributor to this growth will be our AI custom silicon programs as they begin to ramp meaningfully in the third quarter further augmented by ongoing growth from our optics portfolio.

Speaker Change: Our AI custom silicon programs are progressing very well with our first two chips now ramping into volume production. Development for new custom programs we have already won, including projects with a new tier 1 AI customer ran out earlier this year, are also tracking well the key milestones.

Speaker Change: Looking ahead to the third quarter of fiscal 2025 for our Davis Center and Market, we are forecasting revenue growth to accelerate into the high teams sequentially on a percentage basis.

Matt Murphy: Basis. We expect the largest contributor to this growth will be our AI custom silicon programs as they begin to ramp meaningfully in the third quarter further augmented by ongoing growth from our optics portfolio. Now let me turn to Marvell's enterprise networking and carrier and markets in the second quarter enterprise networking revenue was 150 million will carry a revenue was 76 million as expected these end markets reached the bottom in the first half of this fiscal year and revenue from both end markets collectively was flat sequentially in the second quarter.

Speaker Change: We expect the largest contributor to this growth will be our AI test and silicon programs as they begin to ramp meaningfully in the third quarter, further augmented by ongoing growth from our optics portfolio.

Speaker Change: Now let me turn to Marvel's Enterprise Networking in Carrier and Marcus.

Speaker Change: In the second quarter, Enterprise Networking Revenue was 150-1 million. Will carrier revenue was 76 million.

Speaker Change: As expected, these end markets reached a bottom in the first half of this fiscal year and revenue from both end markets collectively was flat sequentially in the second court.

Matt Murphy: Looking ahead after multiple quarters of inventory digestion we are starting to see signs of growth for our revenue in both end markets and the carrier and market we've begun receiving orders for our next generation five nanometer based Octiaxion 10 DP use from multiple customers. An enterprise networking our customers are starting to see growth in their orders we have seen increased bookings for our enterprise products. As a result to the third quarter we project our aggregate revenue from enterprise networking and carrier infrastructure to grow sequentially in the mid single digits on a percentage basis. Well this forecast still anticipates Marvell products shipping below and market consumption our order momentum is picked up now to combine basis we expect sequential revenue bills from carrier and enterprise networking to further improve in the fourth quarter.

Speaker Change: Looking ahead, after multiple quarters of inventory digestion, we are starting to see signs of growth for our revenue in both and markets.

Speaker Change: In the carrier and market, we have begun receiving orders for our next generation 5 nanometer base, Octi on 10 DPUs from multiple customers.

Speaker Change: An Enterprise Networking, our customers are starting to see growth in their orders. We have seen increased bookings for our Enterprise Products.

Speaker Change: As a result for the third quarter, we project our aggregate revenue from enterprise networking and carrier infrastructure to grow sequentially in the mid-single digits on a percentage basis.

Matt Murphy: Well this forecast still anticipates Marvell products shipping below and market consumption our order momentum is picked up now to combine basis we expect sequential revenue bills from carrier and enterprise networking to further improve in the fourth quarter. Turn into the consumer and market revenue in the second quarter was 89 million growing 112 percent sequentially follow in the gaming inventory correction we expected in the prior quarter. Looking ahead to the third quarter we are expecting revenue from the consumer and market to grow slightly on a sequential basis.

Speaker Change: Well, this forecast to anticipate Marvel products should be below and market consumption. Our order momentum is picked up. Now, to combine bases, we expect sequential revenue drills from carrier and enterprise networking to further improve in the fourth quarter.

Speaker Change: Turn into the consumer and market, really known the second quarter was 89 million, growing 112% sequentially, following the gaming inventory correction we expected in the prior quarter.

Speaker Change: Looking ahead is the third quarter, we're expecting revenue from the consumer and market to grow slightly on this sequential basis.

Matt Murphy: Over the next couple of years we anticipate our revenue from the consumer and market to normalize at approximately 300 million dollars annually with the majority coming from our custom SSD controller for a leading game console platform. As a result seasonality of gaming demand will be the primary factor driving our quarterly revenue profile for the consumer and market. Turning to our automotive and industrial and market revenue in the second quarter was 76 million to climb 31 percent year over year and 2 percent sequentially these results reflect broad inventory correction taking place across the automotive and market. Looking ahead to the third fiscal quarter we expect growth to resume and are projecting revenue from the auto and industrial and market to grow sequentially in the mid single digits on a percentage basis.

Speaker Change: Over the next couple of years, we anticipate our revenue from the consumer and market to normalize at approximately $300,000 annually. It's a majority coming from our custom SSD controller for a leading game console platform.

Speaker Change: As a result, seasonality of gaming demand will be the primary factor driving our quarterly revenue profile for the consumer and market.

Speaker Change: Turning to our automotive and industrial and market, revenue in the second quarter was 76 million, climbing 31% year over year and 2% sequentially. These results reflect the broad inventory correction taking place across the automotive and market.

Speaker Change: Looking ahead to the third fiscal quarter, we expect growth to resume.

Speaker Change: and our projecting revenue from the Ottawa Industrial and Market to grow sequentially in the mid-single digits on a percentage basis.

Matt Murphy: In summary, the Marvell team executed well in the second fiscal quarter, driving 10% sequential top line growth, delivering both revenue and non-gap earnings per share above the midpoint of guidance. AI led the way with data center revenue almost doubling year-over-year. Our consumer revenue recovered, more than doubling sequentially, and we believe that our enterprise networking, carrier, and auto and industrial end markets found their bottom in the second quarter. As you may recall, at the beginning of fiscal 2024, we outlined the large opportunity developing an AI and accelerated infrastructure, even as we saw a slowdown in our storage, enterprise networking, interior, and markets. We outlined our plan to aggressively reprioritize our investments toward the highest ROI opportunities, including strategic roadmap adjustments and combining some of our businesses to reflect changes in the market. This strategy has led to an expansion in our data center TAM and increased phase of new product releases targeted at this market. As we outlined at our AI day, we plan to continue pivoting our resources towards what we believe to be a once-in-a-generation opportunity.

Speaker Change: In summary, the Marvel team executed well in the second fiscal quarter, driving 10% sequential top-line growth, delivering both revenue and non-gap earnings per share above the midpoint of guidance.

Speaker Change: A.I. led the way with data center revenue almost doubling year over year. Our consumer revenue recovered more than doubling sequentially, and we believe that our enterprise networking carrier and auto-industrial and markets found their bottom in the second quarter.

Matt Murphy: As you may recall at the beginning of fiscal 2024 we outlined the large opportunity developing an AI and accelerated infrastructure even as we saw slow down in our storage enterprise networking carrier and markets. We outlined our plan to aggressively reprioritize our investments toward the highest ROI opportunities including strategic road map adjustments and combining some of our businesses to reflect changes in the market. The strategy is led to an expansion in our data center. Tam can increase taste of new product for loses target of this market as we outlined our AI day we plan to continue pivoting our resources towards what we believe to be a once in a generation up. Opportunity.

Speaker Change: As you may recall at the beginning of fiscal 2024, we outlined the large opportunity developing an AI and accelerated infrastructure. Even as we saw slow down in our storage and our price networking and care and markets.

Speaker Change: We outlined our plan to aggressively reprioritize our investments toward the highest ROI opportunities, including strategic roadmap adjustments and combining some of our businesses to reflect changes in the market.

Matt Murphy: Tam can increase taste of new product for loses target of this market as we outlined our AI day we plan to continue pivoting our resources towards what we believe to be a once in a generation up. Opportunity. Within Data Center, we expect Custom Silicon to be the largest revenue growth driver, given the size of the opportunity in our expanding design portfolio. We believe continued success in Custom Silicon will accelerate our timeline to achieve our target operating margin model.

Speaker Change: This strategy is led to an expansion in our data center, Cam, can increase face of new product releases target as the market. As we outland at our AI Day, we plan to continue pivoting our resources towards what we believe, to be at once in a generation opportunity.

Speaker Change: Within Data Center, we expect Custom Silicon to be the largest revenue growth driver, given the size of the opportunity in our expanding design when portfolio. We believe continued success in Custom Silicon will accelerate our timeline to achieve our target operating margin model.

Matt Murphy: Although Custom has a lower gross margin than our merchant products, it benefits from inherently lower operating expense levels, given NRE offsets from customers and the sharing of IP with our merchant business. As a result, as Custom Silicon becomes a larger part of our overall revenue, we see a path for operating expenses that the percentage of revenue decreasing below our current target operating model. For the third quarter, we are forecasting consolidated revenue to grow 14% sequentially at the midpoint of guidance. We expect this growth to be primarily driven by Data Center AI, and further augmented by the start of a recovery in our enterprise networking and carrier and markets. Given the strong start in the first half of the fiscal year from AI and our expectations for accelerated growth in the second half, we remain confident in our ability to significantly exceed the full year AI revenue target discussed earlier this year at our AI event. The Marvel team is executing on all fronts. We expect our AI custom programs to continue ramping up. Our bookings continue to strengthen and we believe that we have secured capacity instead of our supply chain to drive strong relative growth in the fourth quarter and the next fiscal year. We are also excited to see our hard work showing up in our financials, strong cash flow generation, which is funding increased capital returns to our stock loads. With that, I'll turn the call over to Willem for more detail on our recent results and outlook.

Speaker Change: Although custom has a lower gross margin than our merchant products, it benefits from inherently lower operating expense levels given NRE offset from customers and the sharing of IP with our merchant business.

Speaker Change: As a result, as Custom Silicon becomes a larger part of our overall revenue, we see a path for operating expenses that's a percentage of revenue decreasing below our current target operating model.

Speaker Change: For the third quarter, we are forecasting consolidated revenue to grow 14% sequentially at the midpoint of guidance. We expect this growth to be primarily driven by data center AI, and further augmented by the start of a recovery in our enterprise networking and carrier and markets.

Matt Murphy: We expect this growth to be primarily driven by Data Center AI, and further augmented by the start of a recovery in our enterprise networking and carrier and markets. Given the strong start in the first half of the fiscal year from AI and our expectations for accelerated growth in the second half, we remain confident in our ability to significantly exceed the full year AI revenue target discussed earlier this year at our AI event. The Marvel team is executing on all fronts. We expect our AI custom programs to continue ramping up. Our bookings continue to strengthen and we believe that we have secured capacity instead of our supply chain to drive strong relative growth in the fourth quarter and the next fiscal year. We are also excited to see our hard work showing up in our financials, strong cash flow generation, which is funding increased capital returns to our stock loads. With that, I'll turn the call over to Willem for more detail on our recent results and outlook.

Speaker Change: Given the strong start in the first half of the fiscal year from AI and our expectations for accelerated growth in the second half, we remain confident in our ability to significantly exceed the full year AI revenue target discussed earlier this year at our AI event.

Matt Murphy: The Marvel team is executing on all fronts. We expect our AI custom programs to continue ramping up. Our bookings continue to strengthen and we believe that we have secured capacity instead of our supply chain to drive strong relative growth in the fourth quarter and the next fiscal year. We are also excited to see our hard work showing up in our financials, strong cash flow generation, which is funding increased capital returns to our stock loads. With that, I'll turn the call over to Willem for more detail on our recent results and outlook.

Speaker Change: The Marvel team is executing on all fronts.

Speaker Change: We expect our AI custom programs to continue ramping up our bookings continue to strengthen and we believe that we have secured capacity instead of our supply chain to drive strong relative growth in the fourth quarter and the next fiscal year.

Operator: Order of Fiscal Year 2025 Earnings Conference Call. All participants will be in listen only mode. Should you need assistance, please signal us conference specialists by pressing the star key followed by zero.

Speaker Change: We are also excited to see our hard work showing up in our financials, strong cash flow generation, which is funding increased capital returns to our stock looks.

Operator: After today's presentation there will be an opportunity to ask questions. Please note this event is being recorded.

Willem Meintjes: With that, I'll turn the call over to Willem for more detail on our recent results and outlook. Thanks, Matt, and good afternoon, everyone.

Speaker Change: With that, I'll turn the call over to Willem for more detail on our recent results and outlook.

Ashish Saran: I would now like to turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Please go ahead. Thank you and good afternoon everyone.

I would now like to turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Please go ahead.

Willem Meintjes: Let me start with a summary of Marvel's financial results for the second quarter of fiscal 2025. Revenue in the second quarter was 1.273 billion exceeding the midpoint of our guidance, defining 5% year over year and growing 10% sequentially. Data Center was our largest end market driving 69% of total revenue. The next largest was enterprise networking with 12%. Followed by consumer at 7%, carrier infrastructure at 6% and auto industrial at 6%. Gap gross margin was 46.2%. Non-Gap gross margin was 61.9%. Moving on to operating expenses. Gap operating expenses were 688 million, including stock base compensation, amortization of acquired intangible assets, restructuring costs and acquisition related costs. Non-Gap operating expenses were 456 million in line with our guidance. Gap operating margin was negative 7.9%, while non-Gap operating margin was 26.1%. For the second quarter, Gap lost Pradelli to chair was 22 cents. Non-Gap income Pradelli to chair was 30 cents, 1 cent above the midpoint of guidance. Non-Gap EPS grew by 25% sequentially.

Willem: Thanks, Matt, and good afternoon everyone. Let me start with a summary of Marvals Financial results for the second quarter of fiscal 2025.

Ashish Saran: Thank you and good afternoon, everyone. Welcome to Marvell's second fiscal quarter 2025 earnings call. Joining me today are Matt Murphy, Marvell's Chairman and CEO; and Willem Meintjes, our CFO. Let me remind everyone that certain comments made today 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 precautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website, as well as our most recent 10-Q and 10-K filings. We do not intend to update our 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 also available in our earnings press release. Let me now turn the call over to Matt for his comments on the quarter. Matt?

Willem: Revenue in the second quarter was $1.273 billion, exceeding the midpoint of our guidance, defying 5% year over year and growing 10% sequentially.

Willem: Data Center was a law just in market driving 69% of total revenue.

Willem: The next law just was enterprise networking with 12% followed by consumer at 7% carrier infrastructure at 6% and ultra-industrial at 6%.

Ashish Saran: Please review precautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website, as well as our most recent 10-Q and 10-K filings. We do not intend to update our forward-looking statements.

Willem: Gapgro's margin was 46.2%.

Willem: Non-Gap Gross Margin was 61.9%.

Willem Meintjes: Moving on to operating expenses. Gap operating expenses were 688 million, including stock base compensation, amortization of acquired intangible assets, restructuring costs and acquisition related costs. Non-Gap operating expenses were 456 million in line with our guidance. Gap operating margin was negative 7.9%, while non-Gap operating margin was 26.1%. For the second quarter, Gap lost Pradelli to chair was 22 cents. Non-Gap income Pradelli to chair was 30 cents, 1 cent above the midpoint of guidance. Non-Gap EPS grew by 25% sequentially.

Ashish Saran: During our call today, we will refer to certain non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is also available in our earnings press release. Let me now turn the call over to Matt for his comments on the quarter. Matt?

Willem: Moving on to operating expenses.

Willem: Gap operating expenses were 688 million, including stock-based compensation, and what aization of acquired intangible assets for structure and costs and acquisition-related costs.

Let me now send the call over to Matt for this comments on the quarter. Matt?

Matt Murphy: Thanks, Ashish, and good afternoon everyone. For the second quarter of fiscal 2025, Marvell delivered revenue of $1.27 billion, above the midpoint of guidance driven primarily by strong demand from our data center end market. Higher revenue combined with disciplined expense control drove non-GAAP earnings per share of $0.30, also above the midpoint of guidance. Revenue in the second quarter grew by 10% sequentially, and we are projecting significantly higher sequential growth for the third quarter, with all our end markets expected to grow. Achieving the midpoint of our third quarter guidance would also result in a return to year-over-year revenue growth for Marvell. Let me now discuss our results and expectations for each of our end markets. In our data center end market for the second quarter, we drove record revenue of $881 million, growing 92% year-over-year and 8% sequentially. These above-guidance results were driven by strong demand for our electro-optics products, custom silicon beginning its anticipated ramp, as well as growth in our storage and switch revenue. Strong bookings continue for our market leading 800 gig PAM products and 400ZR data center interconnect, or DCI products, and we are looking forward to starting shipments of our next-generation 200 gig per lane, 1.6 terabit DSPs in the third quarter. As a result, we expect our electro-optics revenue will continue to grow every quarter this fiscal year on a sequential basis.

Willem: Non-Gam property expenses were 456 million in line with our guidance.

Willem: Gap operating margin was negative 7.9% while non-gap operating margin was 26.1%.

Willem: For the second quarter, Gapd lost Perdally to chair was 22 cents.

Willem: Nongap incomparadally to chair with 3 cents, one cent above the midpoint of guidance.

Speaker Change: 9GF EPS grew by 25% of Grenchuvian.

Willem Meintjes: Now, turning to our cash flow and balance. Hanshi, Castro from Operations in the second quarter was 306 million, Inventory at the end of the second quarter was 818 million, decreasing by 8 million from the prior quarter. On a year-over-year basis, we have reduced our inventory by 198 million or almost 20 percent. We return 52 million to Stockholm, there's the cash dividends. 75 million of our stock during the second quarter, an increase of 25 million from the prior quarter. We expect to further increase repurchases in the third quarter of fiscal 2025. Our total debt was 4.13 billion, our gross debt to the bidar ratio was 2.29 times and net debt to the bidar ratio was 1.84 times. As is the end of the second fiscal quarter, our cash and cash equivalents were 809 million, decreasing by 39 million from the prior quarter. Turning to our guidance for Marvell's third quarter of fiscal 2025, we are forecasting revenue to be in the range of 1.45 billion plus or minus 5 percent. We expect our gap gross margin to be approximately 47.2 percent. We expect our non-gap gross margin to be approximately 61 percent. For the third quarter, we project our gap operating expenses to be approximately 693 million. We anticipate our non-gap operating expenses to be approximately 465 million.

Matt Murphy: Achieving the midpoint of our third quarter guidance would also result in a return to year-over-year revenue growth for Marvell. Let me now discuss our results and expectations for each of our end markets. In our data center and market for the second quarter we drove record revenue of 881 million, growing 92% year-over-year in 8% sequentially. These above guidance results were driven by strong demand for our electro optics products, custom silicon beginning, its anticipated ramp, as well as growth and our storage and switch revenue.

Speaker Change: Now, turning to our cash flow in balance sheet.

Speaker Change: Gastro from Operations in the second quarter was 306 million.

Matt Murphy: Let me now discuss our results and expectations for each of our end markets. In our data center end market for the second quarter, we drove record revenue of $881 million, growing 92% year-over-year and 8% sequentially. These above-guidance results were driven by strong demand for our electro-optics products, custom silicon beginning its anticipated ramp, as well as growth in our storage and switch revenue.

Speaker Change: Elementary at the end of the second quarter was 818 million, decreasing by 8,000, from the prior quarter.

Speaker Change: On a year of a year basis, we have reduced our imagery by 198 million or almost 20%.

Speaker Change: We return 52 million to stock all their stochash dividends.

Matt Murphy: Strong bookings continue for our market leading 800 gig palm products and 400 ZR data center interconnect or DCI products, and we are looking forward to starting shipments of our next generation 200 gig per lane, 1.6 terabyte DSPs in the third quarter. As a result, we expect our electro optics revenue will continue to grow every quarter this fiscal year on a sequential basis. We are also looking forward to addressing a number of new opportunities within the data center.

Speaker Change: In addition, we repurchased 175 million of our stock during the second quarter, an increase of 25 million from the prior quarter. We have spent two further increased repurchases in the third quarter of fiscal 2025.

Matt Murphy: Strong bookings continue for our market leading 800 gig PAM products and 400ZR data center interconnect, or DCI products, and we are looking forward to starting shipments of our next-generation 200 gig per lane, 1.6 terabit DSPs in the third quarter. As a result, we expect our electro-optics revenue will continue to grow every quarter this fiscal year on a sequential basis. We are also looking forward to addressing a number of new opportunities within the data center. We've begun initial shipments of our 100 gig per lane, 800 gig DSPs for active electrical cables for AECs. And we are anticipating the production ramp to accelerate in the second half. In addition, we recently started sampling the industry's first 200 gig per lane 1.6 terabyte AEC DSPs to address upcoming higher speed, short reach, copper interconnect applications.

Willem Meintjes: We expect to further increase repurchases in the third quarter of fiscal 2025. Our total debt was 4.13 billion, our gross debt to the bidar ratio was 2.29 times and net debt to the bidar ratio was 1.84 times. As is the end of the second fiscal quarter, our cash and cash equivalents were 809 million, decreasing by 39 million from the prior quarter. Turning to our guidance for Marvell's third quarter of fiscal 2025, we are forecasting revenue to be in the range of 1.45 billion plus or minus 5 percent. We expect our gap gross margin to be approximately 47.2 percent. We expect our non-gap gross margin to be approximately 61 percent. For the third quarter, we project our gap operating expenses to be approximately 693 million. We anticipate our non-gap operating expenses to be approximately 465 million.

As a result, we expect our electro optics revenue will continue to grow every quarter this fiscal year on a sequential basis.

Speaker Change: A total death was 4.1 trillion, a girl's dead to the bitter ratio was 2.29 times and net dead to the bitter ratio was 1.84 times.

We are also looking forward to addressing a number of new opportunities within the data center. We have begun initial shipments of our 100 gig per lane 800 gig DSPs for active electrical cables for AECs, and we are anticipating the production ramp to accelerate in the second half. In addition, we recently started sampling the industry's first 200 gig per lane, 1.6 terabyte AEC DSPs to address upcoming higher speed, short reach, copper interconnect application.

Matt Murphy: We are also looking forward to addressing a number of new opportunities within the data center. We've begun initial shipments of our 100 gig per lane, 800 gig DSPs for active electrical cables for AECs. And we are anticipating the production ramp to accelerate in the second half. In addition, we recently started sampling the industry's first 200 gig per lane 1.6 terabyte AEC DSPs to address upcoming higher speed, short reach, copper interconnect applications.

Matt Murphy: We have begun initial shipments of our 100 gig per lane 800 gig DSPs for active electrical cables for AECs, and we are anticipating the production ramp to accelerate in the second half. In addition, we recently started sampling the industry's first 200 gig per lane, 1.6 terabyte AEC DSPs to address upcoming higher speed, short reach, copper interconnect application. Celerian Servers are turning to PCIe Gen 6 technology, which needs higher order pamphor modulation.

Speaker Change: As of the end of the second fiscal quarter, Ashish equivalent were 809 million. Decreasing by 39 million from the prior quarter.

Willem Meintjes: Turning to our guidance for Marvell's third quarter of fiscal 2025, we are forecasting revenue to be in the range of 1.45 billion plus or minus 5 percent. We expect our gap gross margin to be approximately 47.2 percent. We expect our non-gap gross margin to be approximately 61 percent. For the third quarter, we project our gap operating expenses to be approximately 693 million. We anticipate our non-gap operating expenses to be approximately 465 million.

Speaker Change: Tuning to our guidance for more about the quarter of fiscal 2025.

Speaker Change: We are forecasting revenue to be in the range of 1.45 billion, plus or minus 5%.

Speaker Change: We expect our gap grows margin to be approximately 47.2%.

Speaker Change: We've picked our non-gap grows margin to be approximately 61%.

Matt Murphy: Given our leadership position in pamph technology, customers are turning to Marvell to enable this transition and we are now sampling our new pamphor-based PCIe Gen 6 retiners. As you can see, we are continuing to broaden our end-to-end product portfolio to address all the critical interconnect needs of our data center customers, positioning us to take a full advantage of an interconnect TAM expected to grow at a 27% tagger to 14 billion by calendar 2028.

Speaker Change: For the third quarter, we project our gap operating spaces to be approximately 693 million.

Speaker Change: We anticipate our non-gap operating expenses to be approximately 465 million.

Willem Meintjes: For the third quarter, we expect other income and expense, including interest on our debt to be approximately 46 million. We expect a non-gap tax rate of 7 percent for the third quarter. Please note that we forecast our non-gap tax rate in fiscal 2026 to step up to 9 percent in anticipation of a meaningful year-over-year increase in our operating income. We expect our basic weighted average shares outstanding to be 867 million and our diluted weighted average shares outstanding to be 875 million. This outlook marks an anticipated sequential reduction in our share count, perfecting the positive impact from our ongoing stock repurchases. We anticipate gap income per diluted share in the range of a loss of 9 cents to earnings of 5 cents. We expect non-gap income per diluted share in the range of 35 cents to 45 cents. At the midpoint of guidance, we expect revenue in the third quarter to grow 14 percent sequentially. This is driven in large part from a ramp in our custom AI products. Although this is driving a sequential decline in our non-gap gross margin outlook, we project our non-gap earnings per share to grow by 33 percent sequentially at the midpoint. More than twice the revenue growth rate. As our custom programs expand, we expect to continue to drive substantial operating leverage to the bottom. Lain. We are pleased to focus on sequential growth returning to all our end markets, with our AI data to the revenue continuing to grow rapidly. As we drive revenue growth and operating leverage, we also remain focused on strong cash flow generation and returning increasing amounts of capital to investors through our active stock refuges program. Operator, please open the line and announce Q&A instructions. Thank you.

Speaker Change: For the third quarter we expect other income and expense, including interest in our debt to be approximately 46 million.

Matt Murphy: We are confident in our ability to continue to lead the industry in power and performance with our current optical DSP and DCI franchises, while we expand into new opportunities, including AEC DSPs, PCIe retimers, silicon photonics, and longer distance 1,000 kilometer-reach DCI modules. As a result, we expect to maintain a leadership position in this large and fast-growing interconnect market. We are making significant progress in bringing Compute Express Link or CXL technology to the market, having recently introduced two new families of CXL devices to address memory bandwidth and memory capacity challenges in next-generation servers.

Speaker Change: We expect a non-gap tax rate of 7% for the third quarter. Please note that before costs are non-gap tax rate in fiscal 2026 to step up to 9% in anticipation of a meaningful year-over-year increase in our operating income.

Speaker Change: We expect our basic weighted average shares outstanding to be 867 million and our diluted weighted average shares outstanding to be 875 million.

Willem Meintjes: This outlook marks an anticipated sequential reduction in our share count, perfecting the positive impact from our ongoing stock repurchases. We anticipate gap income per diluted share in the range of a loss of 9 cents to earnings of 5 cents. We expect non-gap income per diluted share in the range of 35 cents to 45 cents. At the midpoint of guidance, we expect revenue in the third quarter to grow 14 percent sequentially. This is driven in large part from a ramp in our custom AI products. Although this is driving a sequential decline in our non-gap gross margin outlook, we project our non-gap earnings per share to grow by 33 percent sequentially at the midpoint. More than twice the revenue growth rate. As our custom programs expand, we expect to continue to drive substantial operating leverage to the bottom. Lain. We are pleased to focus on sequential growth returning to all our end markets, with our AI data to the revenue continuing to grow rapidly. As we drive revenue growth and operating leverage, we also remain focused on strong cash flow generation and returning increasing amounts of capital to investors through our active stock refuges program. Operator, please open the line and announce Q&A instructions. Thank you.

Speaker Change: This outlook marks an anticipated sequential reduction in our share count.

Speaker Change: You're faking the positive impact from our ongoing stalkery purchases.

Matt Murphy: In our cloud security business, we were pleased that Microsoft will begin integrating Marvell's FIPS 140 Level-3 compliant liquid security hardware modules in their Azure Key Vault offerings. These products offer Azure's customers the most secure encryption and key management services in a cloud platform. Let me now turn to our custom silicon business. As investment in AI and accelerated computing continues to surge, Tier 1 cloud providers are increasingly focused on using custom silicon to improve their data center TCO and drive differentiation. AI has accelerated the cadence of new chip releases, resulting in shorter design windows and faster time to production, accompanied by significant increases in complexity with each new generation. This trend is driving cloud customers to partner with companies like Marvell, who have extensive experience in delivering multiple generations of high-volume, high-complexity, leading-edge chips developed using robust design methodologies. Additionally, cloud customers are seeking access to our differentiated and field-proven technology platform, which include ultra-high-speed SerDes, ARM compute, optimized HBM interfaces, security, storage, die-to-die interconnects, silicon photonics, and advanced packaging.

Matt Murphy: In our cloud security business, we were pleased that Microsoft will begin integrating Marvell's 5-140-level 3-compliant liquid security hardware modules in their Azure Key Vault offerings. These products offer users, customers, the most secure encryption, and key management services in a cloud platform.

Speaker Change: We anticipate Gap income for deleted share in the range of a loss of 9 cents to earnings of 5 cents.

Speaker Change: We expect non-gap income per diluted share in the range of 35 cents to 45 cents.

Speaker Change: At the midpoint of guidance we expect revenue in the third quarter to grow 14% sequentially.

Additionally, cloud customers are seeking access to our differentiated and field-proven technology platform, which include ultra-high-speed surrides, arm compute, optimized HPM interfaces, security, storage, guided-eye interconnects, silicon photonics, and advanced packaging.

Speaker Change: This is Driven in large part from Iran, but not custom AI products.

Willem Meintjes: Although this is driving a sequential decline in our non-gap gross margin outlook, we project our non-gap earnings per share to grow by 33 percent sequentially at the midpoint. More than twice the revenue growth rate. As our custom programs expand, we expect to continue to drive substantial operating leverage to the bottom. Lain. We are pleased to focus on sequential growth returning to all our end markets, with our AI data to the revenue continuing to grow rapidly. As we drive revenue growth and operating leverage, we also remain focused on strong cash flow generation and returning increasing amounts of capital to investors through our active stock refuges program. Operator, please open the line and announce Q&A instructions. Thank you.

Speaker Change: Although this is driving a sequential deep climb in our non-gap-growth margin outlook, we project our non-gap earnings per share to grow by 33% sequentially at the midpoint.

Matt Murphy: This trend is driving cloud customers to partner with companies like Marvell, who have extensive experience in delivering multiple generations of high-volume, high-complexity, leading-edge chips developed using robust design methodologies. Additionally, cloud customers are seeking access to our differentiated and field-proven technology platform, which include ultra-high-speed SerDes, ARM compute, optimized HBM interfaces, security, storage, die-to-die interconnects, silicon photonics, and advanced packaging.

Speaker Change: More than twice the revenue growth rate.

Speaker Change: As our custom programs expand, we expect to continue to drive substantial operating leverage to the bottom line.

Matt Murphy: Customers are also adopting concurrent product development with staggered platform launches to produce silicon on an annual cadence. This approach reinforces the value of a trusted silicon partner like Marvell, who has decades of processor expertise and can take on greater design responsibilities. As a result, the nature of our customer engagements is shifting from point design wins to multi-generational relationships. Our AI custom silicon programs are progressing very well, with our first two chips now ramping into volume production. Development for new custom programs we have already won, including projects with a new Tier 1 AI customer we announced earlier this year, are also tracking well to key milestones. Looking ahead to the third quarter of fiscal 2025 for our data center end market, we are forecasting revenue growth to accelerate into the high teens sequentially on a percentage basis. We expect the largest contributor to this growth will be our AI custom silicon programs as they begin to ramp meaningfully in the third quarter, further augmented by ongoing growth from our optics portfolio.

Willem Meintjes: Lain. We are pleased to focus on sequential growth returning to all our end markets, with our AI data to the revenue continuing to grow rapidly. As we drive revenue growth and operating leverage, we also remain focused on strong cash flow generation and returning increasing amounts of capital to investors through our active stock refuges program. Operator, please open the line and announce Q&A instructions. Thank you.

Speaker Change: We are pleased to focus the financial growth returning to all our end markets, but our AI data center revenue continuing to grow rapidly.

Speaker Change: As we drive remedy growth and operating average, we also remain focused on strong cash flow generation and returning increasing amounts of capital to investors through our active stock repurchase program. Operator, please open the line and announce Q&A instructions. Thank you.

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

Speaker Change: We will now begin the question and answer session. If you are using a speaker phone, please pick up your hands before pressing the keys.

Operator: We will now begin the question and answer session. To ask a question you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your hands up before pressing the keys. To withdraw your question, please press star then two. In the interest of time, please restrict yourself to one question only. If you have additional questions, please rejoin the queue. At this time, we will pause momentarily to assemble our roster. Your first question comes from Tore Svanberg with Stifel. Your line is now open.

Unknown Executive: In the interest of time, please restrict yourself to one question only. If you have an assembly or roster, your first question comes from Tor Spanberg with Tiefel. Your line is now open.

Speaker Change: to a dryer question, please press star then too. In the interest of time, please restrict yourself to one question only. If you have additional questions, please rejoin the queue. At this time, we will pause momentarily to assemble our roster.

Tore Svanberg: If you have an assembly or roster, your first question comes from Tor Spanberg with Tiefel. Your line is now open. The strong results.

Matt Murphy: Looking ahead to the third quarter of fiscal 2025 for our data center end market, we are forecasting revenue growth to accelerate into the high teens sequentially on a percentage basis. We expect the largest contributor to this growth will be our AI custom silicon programs as they begin to ramp meaningfully in the third quarter, further augmented by ongoing growth from our optics portfolio.

Speaker Change: Here for this question comes from Tor Spamberg, Willem Meintjes.

Willem Meintjes: Matt, could you just elaborate a little bit more on your comments there at the end about the operating leverage to growth margin? You know, I think we all know that the custom A6 business growth margin is lower, but because of the NRE, it's also very opening margin accretive. So maybe you could just elaborate a little bit and grab give us some some milestones, you know, especially in relation to certain revenue run rates.

Speaker Change: The Strong Results

Speaker Change: And that could you just elaborate a little bit more on your comments there at the end about the opening leverage to go smart.

Speaker Change: I think we all know that the customer's sickness, gross margin is lower, but because of the anorease, it's also very opening margin and creative. So maybe you could just elaborate a little bit and grab, give us some milestones, especially in relation to certain revenue rub rates.

Basis. We expect the largest contributor to this growth will be our AI custom silicon programs as they begin to ramp meaningfully in the third quarter further augmented by ongoing growth from our optics portfolio.

Matt Murphy: Now let me turn to Marvell's enterprise networking and carrier end markets. In the second quarter, enterprise networking revenue was $151 million while carrier revenue was $76 million. As expected, these end markets reached the bottom in the first half of this fiscal year, and revenue from both end markets collectively was flat sequentially in the second quarter. Looking ahead, after multiple quarters of inventory digestion, we are starting to see signs of growth for our revenue in both end markets. In the carrier end market, we have begun receiving orders for our next generation 5 nanometer based OCTEON 10 DPUs from multiple customers. In enterprise networking, our customers have started to see growth in their orders, and we have seen increased bookings for our enterprise products. As a result, for the third quarter, we project our aggregate revenue from enterprise networking and carrier infrastructure to grow sequentially in the mid-single-digits on a percentage basis. While this forecast still anticipates Marvell products shipping below end market consumption, our order momentum is picked up. On a combined basis, we expect sequential revenue growth from carrier and enterprise networking to further improve in the fourth quarter.

Willem Meintjes: Yeah, thanks, Tor. Hey, I'll have Willem lead off on this one and then I can comment at the end. Yeah, Tor, I think, you know, when you look ahead here, beyond the Q3 guide, really see growth margin from the next couple of quarters remaining in a similar zip code. You know, I see when you look, there's a couple of dynamics there. First of all, we expect the custom programs to continue ramping very nicely and that's obviously about lower growth margin.

Speaker Change: Hey, thanks, Dory. I'll have Willem Meintjes off on this one and then I can comment at the end.

Willem Meintjes: Yeah, tour I think you know when you look ahead you're beyond the Q3 guide

Willem Meintjes: Really see Gross Margin from the next couple of quarters remaining in a similar zip code. You know, I see when you look at a couple of dynamics there, first of all, we expect the custom programs to continue ramping very nicely, and that's obviously about lower gross margin.

Matt Murphy: Looking ahead, after multiple quarters of inventory digestion, we are starting to see signs of growth for our revenue in both end markets. In the carrier end market, we have begun receiving orders for our next generation 5 nanometer based OCTEON 10 DPUs from multiple customers. In enterprise networking, our customers have started to see growth in their orders, and we have seen increased bookings for our enterprise products.

Willem Meintjes: But then we see the recovery and the growth in our core merchant products, really mostly offsetting that. And then in addition, we see some really good leverage and additional absorption and our manufacturing over it as the top line is growing. So we think we're we're guided in Q3 as sort of the right zip code for the next couple few quarters here.

Willem Meintjes: But then we see the recovery and the growth in our core merchant products.

Willem Meintjes: Really mostly all sitting that and in addition we see some really good leverage in additional absorption in our manufacturing over it as the top line is growing. So we think we're we guided in Q3 as sort of the right zip code for the next next couple of two quarters here.

Matt Murphy: As a result, for the third quarter, we project our aggregate revenue from enterprise networking and carrier infrastructure to grow sequentially in the mid-single-digits on a percentage basis. While this forecast still anticipates Marvell products shipping below end market consumption, our order momentum is picked up. On a combined basis, we expect sequential revenue growth from carrier and enterprise networking to further improve in the fourth quarter.

Well this forecast still anticipates Marvell products shipping below and market consumption our order momentum is picked up now to combine basis we expect sequential revenue bills from carrier and enterprise networking to further improve in the fourth quarter.

Toshiya Hari: Your next question comes from Toshia Harry with Goldman Sachs. Your line is now open. Hi guys, thank you so much for taking the question. Matt, you talked about, you know, your confidence in exceeding or significantly exceeding the full year AI revenue target. You guys shared a couple of months ago or several months ago. The incremental strength you're seeing in that business, is it between, is it you're seeing it both in and custom compute as well as your optics business or is it more skewed toward the custom compute business?

Willem Meintjes: [inaudible]

Willem Meintjes: Your next question comes from Toshiyahari with Goldman Sachs, your line is now open.

Toshiyahari: Hi, guys. Thank you so much for taking the question. Matt, you talked about, you know, your confidence and exceeding or significantly exceeding the full year AI revenue target, you guys.

Matt Murphy: Turning to the consumer end market, revenue in the second quarter was $89 million, growing 112% sequentially, following the gaming inventory correction we expected in the prior quarter. Looking ahead to the third quarter, we were expecting revenue from the consumer end market to grow slightly on a sequential basis. Over the next couple of years, we anticipate our revenue from the consumer end market to normalize at approximately $300 million annually, with the majority coming from our custom SSD controller for a leading game console platform. As a result, seasonality of gaming demand will be the primary factor driving our quarterly revenue profile for the consumer end market. Turning to our automotive and industrial end market, revenue in the second quarter was $76 million, declining 31% year-over-year and 2% sequentially. These results reflect broad inventory correction taking place across the automotive end market. Looking ahead to the third fiscal quarter, we expect growth to resume and are projecting revenue from the auto and industrial end market to grow sequentially in the mid-single-digits on a percentage basis.

Toshiya Hari: And he can speak to your visibility into next year as well. I think your target was 2.5 billion going into next year. Should we see continued upside to that number as well? Thanks so much. Yeah, great, thank you. Yeah, first of all, the demand has been extremely strong in the AI business as we mentioned, both in custom and in our optics business. And that's the 800 gig products as well as traditional cloud as well as DCI.

Toshiyahari: Share a couple of months ago or several months ago, the incremental strength you're seeing in that business is it between is it you're seeing a both in and custom compute as well as your your optics business or is it more skewed toward the custom compute business and he can speak to your visibility into next year as well. I think your target was 2.5 billion going it's the next year.

Speaker Change: Should we see continued upside to that number as well. Thanks so much.

Toshiya Hari: So that's all going extremely well. And for next year, that should absolutely ripple through. We see continued strength next year. You know, above what we had communicated relative to the target for next year, both in custom and in optics and the broader portfolio. So, very pleased with the progress demand has been strong. Bookings momentum has been extremely strong and we have a great setup here in the second half that's going to lead us to what we think is going to be a very strong fiscal 26 from Marvell in AI.

Speaker Change: Yeah, great. Thank you. Yeah, first of all, the demand has been extremely strong in the AI business as we mentioned.

Matt Murphy: Turning to our automotive and industrial end market, revenue in the second quarter was $76 million, declining 31% year-over-year and 2% sequentially. These results reflect broad inventory correction taking place across the automotive end market. Looking ahead to the third fiscal quarter, we expect growth to resume and are projecting revenue from the auto and industrial end market to grow sequentially in the mid-single-digits on a percentage basis.

Speaker Change: Both in Kastam

Speaker Change: and in our Optics business, and that's the 800 gig products as well as traditional cloud as well as DCI, so that's all going extremely well. And for next year, that should absolutely ripple through. We see continued strengths next year.

Matt Murphy: In summary the Marvel team executed well in the fifth in the second fiscal quarter driving 10 percent sequential top line growth delivering both revenue and non gap earnings per share above the midpoint of guidance. AI led the way with data center revenue almost doubling year over year. Our consumer revenue recovered more than doubling sequentially and we believe that our enterprise networking carrier and auto and industrial and markets found their bottom in the second quarter.

Speaker Change: Of, you know, above what we had communicated relative to the target for next year, both in Custom and in Optics.

Speaker Change: and the broader portfolio. So, very pleased with the progress demand has been strong. Booking's momentum has been extremely strong and we have a great set up here in the second half that's going to lead us to what we think is going to be a very strong fiscal 26 for Marvel in AI.

Matt Murphy: Bookings momentum has been extremely strong and we have a great setup here in the second half that's going to lead us to what we think is going to be a very strong fiscal 26 from Marvell in AI.

Timothy Arcuri: Your next question comes from Timothy Arcuri with UBS, your line is now open. Thanks a lot. Matt, I'm wondering since you're giving us these, you know, AI targets, I'm wondering if you can give us a little more granularity in the actual numbers that you were poor. What was it? Yeah, I remember in July, I'm thinking it was close to probably three hundred million bucks and custom was probably 50 million something like that.

Matt Murphy: As you may recall, at the beginning of fiscal 2024, we outlined the large opportunity developing an AI and accelerated infrastructure, even as we saw a slowdown in our storage, enterprise networking, interior, and markets. We outlined our plan to aggressively reprioritize our investments toward the highest ROI opportunities, including strategic roadmap adjustments and combining some of our businesses to reflect changes in the market. This strategy has led to an expansion in our data center TAM and increased phase of new product releases targeted at this market. As we outlined at our AI day, we plan to continue pivoting our resources towards what we believe to be a once-in-a-generation opportunity.

Speaker Change: Your next question comes from Timothy Archary with UBS, your line is now open.

Timothy Archary: Thanks a lot. I'm wondering, since you're getting this, these AI targets. I'm wondering if you can give us a little more granularity in the actual numbers that you'll pour. What was the AI revenue in July? I'm thinking it was close to probably 300 million bucks.

Timothy Arcuri: I can you just give us some sense of where you think AI will be in October and maybe should be expect custom it sounds like custom is going to tick up maybe a hundred hundred and twenty five million dollars. Q on Q is those are those numbers in the right ballpark.

Speaker Change: Custom was probably 50 million, something like that. I can you just give us some senses. That about right and then...

Tam can increase taste of new product for loses target of this market as we outlined our AI day we plan to continue pivoting our resources towards what we believe to be a once in a generation up. Opportunity.

Speaker Change: Can you give us some sense of where you think AI will be in October and maybe she'll be expect customer. Sounds like customer is going to take up maybe a hundred and twenty-five million dollars. Q1Q is those numbers in the right ballpark?

Matt Murphy: Within data center, we expect custom silicon to be the largest revenue growth driver, given the size of the opportunity in our expanding design win portfolio. We believe continued success in custom silicon will accelerate our timeline to achieve our target operating margin model. Although custom has a lower gross margin than our merchant products, it benefits from inherently lower operating expense levels given NRE offsets from customers and the sharing of IP with our merchant business. As a result, as custom silicon becomes a larger part of our overall revenue, we see a path for operating expenses as a percentage of revenue decreasing below our current target operating model. For the third quarter, we are forecasting consolidated revenue to grow 14% sequentially at the midpoint of guidance. We expect this growth to be primarily driven by data center AI, and further augmented by the start of a recovery in our enterprise networking and carrier end markets. Given the strong start in the first half of the fiscal year from AI, and our expectations for accelerated growth in the second half, we remain confident in our ability to significantly exceed the full year AI revenue target discussed earlier this year at our AI event. The Marvell team is executing on all fronts. We expect our AI custom programs to continue ramping up. Our bookings continue to strengthen and we believe that we have secured capacity and set up our supply chain to drive strong revenue growth in the fourth quarter and the next fiscal year. We are also excited to see our hard work showing up in our financials strong cash flow generation, which is funding increased capital returns to our stockholders. With that, I'll turn the call over to Willem for more detail on our recent results and outlook.

Matt Murphy: Yes. Maybe just to keep it at a higher level for the broader investors on the call here, Tim. We had set targets of $1.5 billion for this year and $2.5 billion for next year. As I said earlier, both custom and electro-optics are contributing. It was--what we said was that the AI day, just what, three, four months ago, about two-thirds of the $1.5 billion was in electro-optics. The other one-third was in custom. And so both of those are doing better. Obviously, the custom is back-end loaded, but we're going through a very strong ramp right now. So we're not calling those numbers out typically by quarter. But all I can tell you is both of them have upsized both in terms of aggregate revenue we're going to achieve next--this year and next year as well as the slope of the ramp in custom continues to be very strong. And I'll leave it at that for now.

Speaker Change: Yeah, maybe just keep it at a higher level for the broader investors on the call here to my, you know, we set targets of a billion and a half for this year and two and a half for next year.

Matt Murphy: The other one third was in custom and so both of those are doing better. Obviously the custom is back and loaded, but we're going through a very strong ramp right now. So, you know, we're not calling those numbers out typically by quarter, but all I can tell you is both of them have upsized both in terms of aggregate revenue. We're going to achieve next this year and next year as well as the slope of the ramp in custom continues to be very strong. And I'll leave it at that for now.

Speaker Change: As I said earlier, both custom and electroptics are contributing, what we said was that the AI day, you know, this three four months ago.

Matt Murphy: And I'll leave it at that for now.

Speaker Change: About two-thirds of the billion-five was an electronics, the other one-third was in custom and so both of those are doing better. Obviously the custom is...

Speaker Change: Back in Loaded, but we're going through a very strong ramp right now. So, you know, we're not calling those numbers out typically by quarter, but all I can tell you is both of them of upsized.

Matt Murphy: For the third quarter, we are forecasting consolidated revenue to grow 14% sequentially at the midpoint of guidance. We expect this growth to be primarily driven by data center AI, and further augmented by the start of a recovery in our enterprise networking and carrier end markets. Given the strong start in the first half of the fiscal year from AI, and our expectations for accelerated growth in the second half, we remain confident in our ability to significantly exceed the full year AI revenue target discussed earlier this year at our AI event.

Speaker Change: Both in terms of aggregate revenue we're going to achieve next this year and next year as well as the slope of the ramp in custom continues to be very strong.

Speaker Change: and I'll leave it at that for now.

Ross Seymore: Your next question comes from Ross Seymour with Deutsche Bank. Your line is now open. Hi, guys, congrats on the strong resulting guide. Willum, one potentially for you and I appreciate the commentary on the gross margins stability at the current level through the end of this year. But could you give us an idea of what the puts and takes would be for next year? I mean, we know the custom stuff carries lower margins and it sounds like the merchant businesses coming back.

Speaker Change: In the next question comes from Ross Seymour with Deutsche Bank, your line is now open.

Speaker Change: [inaudible]

Matt Murphy: The Marvell team is executing on all fronts. We expect our AI custom programs to continue ramping up. Our bookings continue to strengthen and we believe that we have secured capacity and set up our supply chain to drive strong revenue growth in the fourth quarter and the next fiscal year. We are also excited to see our hard work showing up in our financials strong cash flow generation, which is funding increased capital returns to our stockholders. With that, I'll turn the call over to Willem for more detail on our recent results and outlook.

Ross Seymore: But I think a big concern people have is just how should we think about the revenue growth relative to the gross margin next year as a creative as it may be in most of those scenarios in the operating line either way. Yeah, I think the way to think about that is for that train to really continue into next year. And so you're not guiding that the full year next year, but I think it's in that similar zip code where you can easily see good growth from both optics and then the recovery in the next year.

Matt Murphy: We are also excited to see our hard work showing up in our financials, strong cash flow generation, which is funding increased capital returns to our stock loads.

Ross Seymour: But I think a big concern people have is just how should we think about the revenue growth relative to the gross margin next year as a creative as it may be and most of those scenarios on the operating line either way.

Willem Meintjes: With that, I'll turn the call over to Willem for more detail on our recent results and outlook. Thanks, Matt, and good afternoon, everyone.

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

Speaker Change: Yeah, I think the way to think about that is for that train to really continue into next year And so, you're not guiding that the full year next year, but I think it's in that similar zip code where we can see you see good growth from both optics and then the recovery and the merchant product really offsetting

Ross Seymore: The merchant products really offsetting the continue growth in custom. And then in addition, as you see that that top line going nicely, we do continue to get that benefit from better absorption. And then overall when you look at, you know, I'll We're going to continue to be very disciplined looking at next year, and so we do expect to drive a ton of leverage and operating margin down to the bottom line next year.

Willem Meintjes: Thanks, Matt, and good afternoon, everyone. Let me start with a summary of Marvell's financial results for the second quarter of fiscal 2025. Revenue in the second quarter was $1.273 billion, exceeding the midpoint of our guidance, declining 5% year-over-year and growing 10% sequentially. Data center was our largest end market, driving 69% of total revenue. The next largest was enterprise networking with 12%, followed by consumer at 7%, carrier infrastructure at 6%, and auto/industrial at 6%. GAAP gross margin was 46.2%. Non-GAAP gross margin was 61.9%. Moving on to operating expenses. GAAP operating expenses were $688 million, including stock-based compensation, amortization of acquired and tangible assets, restructuring costs and acquisition-related costs. Non-GAAP operating expenses were $456 million, in line with our guidance. GAAP operating margin was negative 7.9%, while non-GAAP operating margin was 26.1%. For the second quarter, GAAP loss per diluted share was $0.22. Non-GAAP income per diluted share was $0.30, $0.01 above the midpoint of guidance. Non-GAAP EPS grew by 25% sequentially.

Speaker Change: The continued growth in custom.

Speaker Change: And then in addition, as you see the top line growing nicely, we do need to get that benefit from better absorption.

Speaker Change: And then overall, when you look at, you know, our optics management, you know, we're going to continue to be very disciplined looking at next year.

Speaker Change: And so, you know, we do expect to drive a ton of leverage and an operating margin down to the bottom line next year.

Matt Murphy: Thank you. Yeah, Ross, if I could just add, you know, as Willem said, I think the GM side needs to play out. We need to see where this non-AI data center demand recovers to. We're very pleased with the third quarter guide of mid-single, and then in enterprise and carrier that growth, improving, you know, from Q3 to Q4, so growing even a little bit faster, you know, bookings have picked back up, we're laying in backlog, so that's all a positive sign, and then of course we've got to get in in next year to see where those traditional core businesses really recover to.

Willem Meintjes: Moving on to operating expenses. GAAP operating expenses were $688 million, including stock-based compensation, amortization of acquired and tangible assets, restructuring costs and acquisition-related costs. Non-GAAP operating expenses were $456 million, in line with our guidance. GAAP operating margin was negative 7.9%, while non-GAAP operating margin was 26.1%. For the second quarter, GAAP loss per diluted share was $0.22. Non-GAAP income per diluted share was $0.30, $0.01 above the midpoint of guidance. Non-GAAP EPS grew by 25% sequentially.

Speaker Change: Thank you. Yeah, hey, Ross, if I could just add.

Ross Seymour: You know, as Willem said, I think the GM side needs to play out. We need to see where this...

Speaker Change: Non-AI data center demand. Recover Stu, we're very pleased with the third quarter guides of mid-Single.

Speaker Change: And then an enterprise and carrier that growth improving from Q3 to Q4, so growing even a little bit faster.

Speaker Change: You know, bookings have picked back up, we're laying in backlog, so that's all a positive sign, and then, of course, we've got to get in an next year to see where those traditional core businesses really recover to, that's going to be one factor, as we said earlier as well.

Matt Murphy: That's going to be one factor as we said earlier as well. We anticipate a lot higher revenue next year, so that's going to help on sort of manufacturing overhead absorption. And then to the extent how much, you know, custom is really going to be, that's going to be a factor as well. So we're looking at all that that does need to play out a bit. But as Willem said, we're very confident. And our off-ex management and our plan on spending there relative to our outlook for next year. And so we're very excited and feel very confident in the path to our operating margin targets that we've set. Kind of independent where that GM lies. So that's where we're headed right now, Ross. We'll be more to come as these markets recover.

Speaker Change: We anticipate a lot higher revenue next year, so that's going to help on sort of manufacturing overhead absorption. And then to the extent how much custom is really going to be that's going to be a factor as well. So we're looking at all that that does need to play out a bit, but as Wellem said we're very confident.

Willem Meintjes: Now, turning to our cash flow and balance sheet. Cash flow from operations in the second quarter was $306 million. Our inventory at the end of the second quarter was $818 million, decreasing by $8 million from the prior quarter. On a year-over-year basis, we have reduced our inventory by $198 million or almost 20%. We returned $52 million to stockholders through cash dividends. In addition, we repurchased $175 million of our stock during the second quarter, an increase of $25 million from the prior quarter. We expect to further increase repurchases in the third quarter of fiscal 2025. Our total debt was $4.13 billion. Our gross debt to EBITDA ratio was 2.29 times and net debt to EBITDA ratio was 1.84 times. As of the end of the second fiscal quarter, our cash and cash equivalents were $809 million, decreasing by $39 million from the prior quarter. Turning to our guidance for Marvell's third quarter of fiscal 2025. We are forecasting revenue to be in the range of $1.45 billion, plus or minus 5%. We expect our GAAP gross margin to be approximately 47.2%. We expect our non-GAAP gross margin to be approximately 61%.

Matt Murphy: And our off-ex management and our plan on spending there relative to our outlook for next year. And so we're very excited and feel very confident in the path to our operating margin targets that we've set. Kind of independent where that GM lies. So that's where we're headed right now, Ross. We'll be more to come as these markets recover.

Wellem: and our OPEX management and our plan on spending their relative to our outlook for next year. And so we're very excited and feel very confident in the path to our operating margin targets that we've set.

Unknown Executive: Thanks.

Speaker Change: Kind of independent of where that GM lies. So that's where we're headed right now. We'll be more to come as these markets recover. Thanks.

Unknown Executive: But your next question comes from if you've got area with Bank of America, your line is now. Thanks for taking my question. Matt, I was hoping to get your views on the competitive landscape in the two parts of your AI business, so both on the DSB side and I'm talking silicon from the DSB side. Do you see any captive or merchant competitors challenge Marvel dominance as the industry. Transitions to 200 day per day in all these 1.60 transceivers and then similarly in custom compute.

Speaker Change: Thanks for watching!

Speaker Change: Your next question comes from Vivek area with Bank of America. Your line is no.

Unknown Executive: Do you see any competitive changes from your Taiwan competitors? I know a little bit out there in 26 when the industry moves to the three nanometer known, but I was just hoping to get your views on the any changes in the competitive landscape in the next one to two years and these two important parts of your AI business. Thank you. Yeah, no problem for that.

Vivek: Thanks for the question. Matt, I was hoping to get your views on the competitive landscape.

Willem Meintjes: Our total debt was $4.13 billion. Our gross debt to EBITDA ratio was 2.29 times and net debt to EBITDA ratio was 1.84 times. As of the end of the second fiscal quarter, our cash and cash equivalents were $809 million, decreasing by $39 million from the prior quarter. Turning to our guidance for Marvell's third quarter of fiscal 2025. We are forecasting revenue to be in the range of $1.45 billion, plus or minus 5%. We expect our GAAP gross margin to be approximately 47.2%. We expect our non-GAAP gross margin to be approximately 61%.

Speaker Change: In the two parts of your AI business, both on the DSP side and in custom silicon. From the DSP side, do you see any captive or merchant competitors, a challenge Marvell dominance as the industry, transitions to 200g per lane, or these 1.60g?

Speaker Change: Transceivers and then similarly in custom compute, do you see any competitive changes from your Taiwan competitors? I know a little bit out there in 26.

Turning to our guidance for Marvell's third quarter of fiscal 2025, we are forecasting revenue to be in the range of 1.45 billion plus or minus 5 percent. We expect our gap gross margin to be approximately 47.2 percent. We expect our non-gap gross margin to be approximately 61 percent. For the third quarter, we project our gap operating expenses to be approximately 693 million. We anticipate our non-gap operating expenses to be approximately 465 million.

Speaker Change: and the industry moves to the three nanometer known, but I'm just hoping to get your views on any changes in the competitive landscape in the next one to two years and these two important parts of your AI business. Thank you.

Matt Murphy: Let me maybe break it into the two pieces you mentioned. So on the DSP and optic side, you know, look, it's been a competitive market. We got into this as you all remember through the acquisition of in five and there's been, you know, there's been these competitive dynamics from the beginning. Now this market has gotten big, right? So there's that it was sort of only intensify, but we've consistently maintained a very high market share in this area. Through the integration of inside of Marvel and now is we're position going forward. Primarily because one we've executed extremely well from an engineering standpoint and also we have the full platform, which includes DSPs, the broadband analog components like drivers and PIAs. You know, we have the complete architecture and solution and also the partnerships with the module vendors as well as hyperscalers directly. And finally, I would say we continue to have a best in class road map as well in terms of the cadence, the power and the performance that we're delivering. So we feel very good on these transitions as an example. We went through the 100 gig transition very successfully, the 200 gig ones in front of us. We're going to start shipping those products this quarter, our 200 gig per lane, 1.6 terabyte DSPs. And we feel very well positioned.

Speaker Change: Yeah, and a problem for that. Let me break it into the two pieces you mentioned. So on the DSP and Optics side, look, it's been a competitive market. We got into this as you all remember through the acquisition of InFi.

For the third quarter, we project our gap operating expenses to be approximately 693 million. We anticipate our non-gap operating expenses to be approximately 465 million.

Willem Meintjes: For the third quarter, we project our GAAP operating expenses to be approximately $693 million. We anticipate our non-GAAP operating expenses to be approximately $465 million. For the third quarter, we expect other income and expense, including interest on our debt to be approximately $46 million. We expect a non-GAAP tax rate of 7% for the third quarter. Please note that we forecast our non-GAAP tax rate in fiscal 2026 to step-up to 9% in anticipation of a meaningful year-over-year increase in our operating income. We expect our basic weighted average shares outstanding to be $867 million and our diluted weighted average shares outstanding to be $875 million. This outlook marks an anticipated sequential reduction in our share count, reflecting the positive impact from our ongoing stock repurchases. We anticipate GAAP income per diluted share in the range of a loss of $0.09 to earnings of $0.05. We expect non-GAAP income per diluted share in the range of $0.35 to $0.45. At the midpoint of guidance, we expect revenue in the third quarter to grow 14% sequentially. This is driven in large part from a ramp in our custom AI products. Although this is driving a sequential decline in our non-GAAP growth margin outlook, we project our non-GAAP earnings per share to grow by 33% sequentially at the midpoint, more than twice the revenue growth rate. As our custom programs expand, we expect to continue to drive substantial operating leverage to the bottom line. We are pleased to forecast sequential growth returning to all our end markets, with our AI data center revenue continuing to grow rapidly. As we drive revenue growth and operating leverage, we also remain focused on strong cash flow generation and returning increasing amounts of capital to investors through our active stock repurchase program. Operator, please open the line and announce Q&A instructions. Thank you.

Speaker Change: and um...

Speaker Change: There's been these competitive dynamics from the beginning. Now this market has gotten big, right? So there's that would sort of only intensify.

Matt Murphy: Through the integration of inside of Marvel and now is we're position going forward. Primarily because one we've executed extremely well from an engineering standpoint and also we have the full platform, which includes DSPs, the broadband analog components like drivers and PIAs. You know, we have the complete architecture and solution and also the partnerships with the module vendors as well as hyperscalers directly. And finally, I would say we continue to have a best in class road map as well in terms of the cadence, the power and the performance that we're delivering. So we feel very good on these transitions as an example. We went through the 100 gig transition very successfully, the 200 gig ones in front of us. We're going to start shipping those products this quarter, our 200 gig per lane, 1.6 terabyte DSPs. And we feel very well positioned.

Speaker Change: But we've consistently maintained a very high market share in this area through the integration of in Pianomarvel and now as we're positioned going forward.

Willem Meintjes: Please note that we forecast our non-GAAP tax rate in fiscal 2026 to step-up to 9% in anticipation of a meaningful year-over-year increase in our operating income. We expect our basic weighted average shares outstanding to be $867 million and our diluted weighted average shares outstanding to be $875 million. This outlook marks an anticipated sequential reduction in our share count, reflecting the positive impact from our ongoing stock repurchases. We anticipate GAAP income per diluted share in the range of a loss of $0.09 to earnings of $0.05. We expect non-GAAP income per diluted share in the range of $0.35 to $0.45.

Speaker Change: Primarily, because one, we've executed extremely well from an engineering standpoint, and also we have the full platform, which includes DSP, the broadband analogue components like drivers and PIAs.

Speaker Change: We have the complete architecture and solution, and also the partnerships with the module vendors as well as the hyperscalers directly. And finally, I would say we continue to have a best-in-class road map as well in terms of the cadence.

Matt Murphy: So we feel very good on these transitions as an example. We went through the 100 gig transition very successfully, the 200 gig ones in front of us. We're going to start shipping those products this quarter, our 200 gig per lane, 1.6 terabyte DSPs. And we feel very well positioned. It's going to be competitive of that, but the team is actually really excited about what we can go off and do with the platform we have.

Speaker Change: the power and the performance that we're delivering.

Speaker Change: So we feel very good on these transitions. As an example, we went through the 100 gig transition very successfully. The 200 gig ones in front of us, we're going to start shipping those products this quarter, our 200 gig per lane, 1.6-tare of a DSP.

Willem Meintjes: At the midpoint of guidance, we expect revenue in the third quarter to grow 14% sequentially. This is driven in large part from a ramp in our custom AI products. Although this is driving a sequential decline in our non-GAAP growth margin outlook, we project our non-GAAP earnings per share to grow by 33% sequentially at the midpoint, more than twice the revenue growth rate. As our custom programs expand, we expect to continue to drive substantial operating leverage to the bottom line. We are pleased to forecast sequential growth returning to all our end markets, with our AI data center revenue continuing to grow rapidly. As we drive revenue growth and operating leverage, we also remain focused on strong cash flow generation and returning increasing amounts of capital to investors through our active stock repurchase program. Operator, please open the line and announce Q&A instructions. Thank you.

Speaker Change: And we feel very well positioned, it's going to be competitive of that, but the team is actually really excited about what we can go off and do with the platform we have. And on Custom Silicon...

Matt Murphy: And on custom silicon. I think our thesis is playing out in that given the tremendous increases in complexity of these chips, it's not about just having one piece of it like a design service piece or manufacturing capability, but it's everything. It's having the best in class technology roadmap in terms of nanometers, advanced packaging, IO, etc. And then the ability to actually go execute these products. These are 100 billion transistor types of chips. And so to package them up, get them to yield, ship them into volume, be ready to work on the next one in parallel, it's a it's a massive sort of effort. And so we think that that still is going to be the winning strategy. And when we look at it from that point of view, we really have one large competitor that's very capable in this area as well. And we do think long term given the amount of activity we see in AI, especially on the custom side, it's going to require really scaled up full solution. And providers and partners like Marvell to compete. So that's the current status of those two from a competitive dynamic. Thanks for that.

Speaker Change: I think our thesis is playing out in that given the tremendous increases in complexity of these chips.

Speaker Change: It's not about just having one piece of it like a design service piece or a manufacturing capability, but it's everything. It's having the best in-class technology roadmap.

Willem Meintjes: As our custom programs expand, we expect to continue to drive substantial operating leverage to the bottom line. We are pleased to forecast sequential growth returning to all our end markets, with our AI data center revenue continuing to grow rapidly. As we drive revenue growth and operating leverage, we also remain focused on strong cash flow generation and returning increasing amounts of capital to investors through our active stock repurchase program. Operator, please open the line and announce Q&A instructions. Thank you.

Speaker Change: in terms of nanometers, advanced packaging.

Speaker Change: I-O I-O-O-O-O-O-O-O-O

Matt Murphy: And so to package them up, get them to yield, ship them into volume, be ready to work on the next one in parallel, it's a it's a massive sort of effort. And so we think that that still is going to be the winning strategy. And when we look at it from that point of view, we really have one large competitor that's very capable in this area as well. And we do think long term given the amount of activity we see in AI, especially on the custom side, it's going to require really scaled up full solution. And providers and partners like Marvell to compete. So that's the current status of those two from a competitive dynamic. Thanks for that.

Speaker Change: etc. and then the ability to actually go execute these products. These are 100 billion transistors type of chips and sort of package them up, get them to yield.

Willem Meintjes: We are pleased to forecast sequential growth returning to all our end markets, with our AI data center revenue continuing to grow rapidly. As we drive revenue growth and operating leverage, we also remain focused on strong cash flow generation and returning increasing amounts of capital to investors through our active stock repurchase program. Operator, please open the line and announce Q&A instructions. Thank you.

Speaker Change: Ship in the New Volume.

Speaker Change: Be ready to work on the next one in parallel. It's a massive sort of effort. And so we think that that still is.

Speaker Change: Going to be the winning strategy, and when we look at it from that point of view.

Speaker Change: We really have one large competitor that's very capable in this area as well.

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

Speaker Change: And we do think long-term, given the amount of activity we see in AI, especially on the custom side, it's going to require really scaled up full solution providers and partners like Marbel to compete. So that's the current status of those two from a competitive dynamic. Thanks for the.

Operator: We will now begin the question and answer session. Ask a question. You may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your hands up before pressing the keys. To a drier question, please press star then two.

Operator: In the interest of time, please restrict yourself to one question only.

Operator: Your next question comes from Matt Ramsay with TD Cowen. Your line is now open.

Speaker Change: Thank you very much.

Speaker Change: Your next question comes from Matt Ravansy, Willem Kiddikawin, your line is now open.

Matthew D. Ramsay: Thank you very much. Good afternoon, everybody. Matt, I wanted to ask a longer-term question on your custom compute business. My antennas went up a little bit. One of the lines in the script, I think, was something to the effect of not just single generation relationships, but multi-generation relationships with some of the customers in the custom business. And so I wanted to explore that a little bit. We do get questions from investors on not the programs that are ramping now, but the subsequent generation and how confident that you are in those. So maybe you could speak to that. And I think the second part of the question, as you're evaluating custom programs and compute, this isn't a question for just your company but for your competitors as well. How much visibility do you guys get and win to the software that will be run on those compute engines as they're deployed? I think that's pretty important in evaluating what volume might end up being or not being versus merchant suppliers? Thanks.

Matt Murphy: So maybe you could speak to that. And I think the second part of the question is you're evaluating custom programs and compute. This isn't a question for just your company, but for your competitor as well, how much visibility do you guys get and when to the software that will be run on those compute engines as they're deployed? I think that that's pretty important in evaluating what volume might end up being or not being versus merchant suppliers.

Speaker Change: Thank you very much, good afternoon, everybody.

Tore Svanberg: If you have an assembly or roster, your first question comes from Tor Spanberg with Tiefel. Your line is now open. The strong results.

If you have an assembly or roster, your first question comes from Tor Spanberg with Tiefel. Your line is now open.

Matt Ravansy: Matt, I wanted to ask a longer term question on your custom compute business. My intended is a little bit of one of the lines in the script I think was...

Tore Egil Svanberg: [inaudible]--the strong results. Matt, could you just elaborate a little bit more on your comments there at the end about the operating leverage to gross margin? I think we all know that the custom ASIC business gross margin is lower, but because of the NREs, it's also very operating margin-accretive. So maybe you could just elaborate a little bit and perhaps give us some milestones, especially in relation to certain revenue run rates.

Speaker Change: Something in the effect of not just single-generation relationships, but multi-generation relationships with some of the customers in the custom business.

Matt Murphy: Matt, could you just elaborate a little bit more on your comments there at the end about the operating leverage to growth margin? You know, I think we all know that the custom A6 business growth margin is lower, but because of the NRE, it's also very opening margin accretive. So maybe you could just elaborate a little bit and grab give us some some milestones, you know, especially in relation to certain revenue run rates. Yeah, thanks, Tor.

Speaker Change: And so I wanted to explore that a little bit as we do get questions from investors on not the programs that are ramping now but the subsequent generation and how confident you are in those. So, maybe you could speak to that and I think the second part of the question is you're evaluating.

Matt Murphy: Thanks, Tore. Hey, I'll have Willem lead off on this one and then I can comment at the end.

Willem Meintjes: Hey, I'll have Willem lead off on this one and then I can comment at the end. Yeah, Tor, I think, you know, when you look ahead here, beyond the Q3 guide, really see growth margin from the next couple of quarters remaining in a similar zip code. You know, I see when you look, there's a couple of dynamics there.

Speaker Change: Custom Programs in Compute.

Speaker Change: This isn't a question for just your company, but for your competitor as well, how much visibility do you guys get and win?

Willem Meintjes: Yeah, Tore, I think when you look ahead here beyond the Q3 guide, really see gross margin for the next couple of quarters remaining in a similar zip code. I see--when you look, there's a couple of dynamics there. First of all, we expect the custom programs to continue ramping very nicely. And that's obviously got lower gross margin. But then we see the recovery and the growth in our core merchant products really, mostly offsetting that. And then in addition, we see some really good leverage and additional absorption in our manufacturing overhead as the top line is growing. So, we think where we're guided in Q3 is the right zip code for the next couple few quarters here.

Speaker Change: to the software.

Speaker Change: That will be Ron on those computer.

Anjans: Anjans as their deployed, I think that's pretty important in evaluating what volume might end up being or not being versus merchant suppliers. Thanks.

Willem Meintjes: First of all, we expect the custom programs to continue ramping very nicely and that's obviously about lower growth margin. But then we see the recovery and the growth in our core merchant products, really mostly offsetting that. And then in addition, we see some really good leverage and additional absorption and our manufacturing over it as the top line is growing. So we think we're we're guided in Q3 as sort of the right zip code for the next couple few quarters here.

Matt Murphy: Yeah. Thanks, Matt. And I think your question is one we get. I mean, I think since we won these designs, there's been a lot of noise in this area in custom in terms of--from some of our international competitors in particular. I mean, look, the reality is, despite wherever has been said so far, we have executed these programs. They have upsided tremendously from when we won them and even as we signaled over the last 1.5 years and now they're ramping into production. In all of our engagements across the board that we see as we get deeper into this, there is absolutely a desire on the part of these customers to have a multi-generational view because the amount of work you put in to do one of these, it's a diminishing return to pivot too quickly, assuming you're doing a great job. So we feel very good about it, Matt, is the bottom line. We have multiple engagements across multiple generations on different types of ICs that we're doing for these customers. We just announced, as an example, at the last AI day, we had won an additional customer for AI silicon. And all of those are tracking well. So that's all I can say at the moment. I think you got to also look at what the results are and what our outlook is, and if you believe the thesis I gave you around what's important relative to being a long-term reliable partner that's going to be there for the long term over multi-generations, we think we're extremely well positioned. Thanks, Matt.

Speaker Change: Yeah, I'll say thanks Matt and I think your question is...

Speaker Change: One week at, I mean...

Speaker Change: I think since we won these designs, there's been a lot of noise in this area, in custom, in terms of from two of our

Speaker Change: International Competitors in particular. I mean, look, the reality is, despite whatever's been said so far, we have executed these programs.

Speaker Change: They've upstitred tremendously from when we won them and even as we signal over the last year and a half another ramping into production.

Operator: Your next question comes from Toshiya Hari with Goldman Sachs. Your line is now open.

Matt Murphy: We in all of our engagements across the board that we see as we get deeper into this, there is absolutely a desire on the part of these customers to have a multi generational view because the amount of work you put in to do one of these. It's a diminishing return to to pivot to quickly assuming you're doing a great job. So we feel very good about it. Matt is the bottom line. We have multiple engagements across multiple generations on different types of ICs that we're doing for these customers. We just announced as an example at the last day, I day, we had one additional customer for AI silicon and all of those are tracking well. So that's all I can say at the moment. I think you've got to also look at what the results are and what our outlook is and if you believe the thesis I gave you around what's important relative to being a long term reliable partner that's going to be there for the long term over multi generations, we think we're extremely well positioned.

Speaker Change: We in all of our engagements across the board that we see as we get deeper into this.

Toshiya Hari: Hi guys, thank you so much for taking the question. Matt, you talked about your confidence in exceeding or significantly exceeding the full year AI revenue target you guys shared a couple months ago or several months ago. The incremental strength you're seeing in that business, is it between--is it, you're seeing it both in custom compute as well as your optics business, or is it more skewed toward the custom compute business? And if you can speak to your visibility into next year as well. I think your target was $2.5 billion going into next year. Should we see continued upside to that number as well? Thanks so much.

Speaker Change: There is absolutely a desire on the part of these customers to have a multi-generational view because the amount of work you put in to do one of these

Speaker Change: It's a diminishing return to pivot too quickly, assuming you're doing a great job.

Matt Murphy: We have multiple engagements across multiple generations on different types of ICs that we're doing for these customers. We just announced as an example at the last day, I day, we had one additional customer for AI silicon and all of those are tracking well. So that's all I can say at the moment. I think you've got to also look at what the results are and what our outlook is and if you believe the thesis I gave you around what's important relative to being a long term reliable partner that's going to be there for the long term over multi generations, we think we're extremely well positioned.

Matt Ravansy: So we feel very good about it. Matt is the bottom line. We have multiple engagements across multiple generations on different types of ICs that we're doing for these customers. We just announced as an example at the last day, we had one additional customer for AI Silicon.

And he can speak to your visibility into next year as well. I think your target was 2.5 billion going into next year. Should we see continued upside to that number as well? Thanks so much.

Matt Murphy: Yeah great, thank you. Yeah, first of all the demand has been extremely strong in the AI business, as we mentioned, both in custom and in our optics business. And that's the 800 gig products, as well as traditional cloud, as well as DCI. So that's all going extremely well. And for next year, that should absolutely ripple through. We see continued strength next year above what we had communicated relative to the target for next year both in custom and in optics and the broader portfolio. So, very pleased with the progress. Demand has been strong. Bookings momentum has been extremely strong and we have a great setup here in the second half that's going to lead us to what we think is going to be a very strong fiscal ‘26 for Marvell and AI.

Matt Ravansy: and all of those are tracking wealth.

Matt Ravansy: So that's all I can say at the moment. I think you got to also look at what the results are and what our outlook is and if you believe the thesis I gave you around what's important relative to being a long-term reliable partner that's going to be there for the long-term over multi-generations, we think we're extremely well positioned.

Matt Murphy: Your next question comes from Christopher Rolland with Seth Kohana. Your line is now open. Hey guys, congrats on the results. I have an in-fi question primarily. And Matt, you talked about 1.60. That's pretty exciting that if I understood that correctly, you're going to be ramping in 3Q. Perhaps you can talk about the profile of this ramp. What is it? It looks like in 3Q for Q and into 25, I think the streets all over the place on this note. But if you could talk about that. And maybe even the economics, what it means for you guys, that would be fantastic. Thank you.

Matt Ravansy: Thanks, Matt.

Speaker Change: Your next question comes from Christopher Roland with South Kohana. Your line is now open.

Christopher Roland: Hey guys, congrats on the results. I have an N-Fi question primarily in Matt. You talked about 1.60. That's pretty exciting that if I understood that correctly, you're going to be ramping in 3Q.

Speaker Change: Perhaps you can talk about the profile of this ramp, what it looks like in 3Q 4Q and into 25 I think.

Speaker Change: The Streets all over the place on this note, but if you could talk about that and maybe even the economics, what it means for you guys, that would be fantastic. Thank you.

Operator: Your next question comes from Timothy Arcuri with UBS. Your line is now open.

Timothy Arcuri: Thanks a lot. Matt, I'm wondering since you're giving us these AI targets, I'm wondering if you can give us a little more granularity in the actual numbers that you report. What was the AI revenue in July? I'm thinking it was close to probably $300 million and custom was probably $50 million, something like that. Can you just give us some sense, is that about right? And then can you give us some sense of where you think AI will be in October? And maybe should we expect custom--it sounds like customer is going to tick up maybe $100 million, $125 million Q-on-Q. Is those--are those numbers in the right ballpark?

Matt Murphy: Yeah. Hey, thanks, Chris. Yeah, it's still early. We were first to market in this area, having introduced these products at OFC a year ago. It's great to see that they're going into production. We'll know a lot more when we start to see how our customers are planning to deploy it, but we are seeing initial shipments now. The way I would think about it, though is 800 gig right now and into--and through next year is still going to be the workhorse high-volume platform and even some of the newer launches that are coming as an example, are going to still support 800 gig as well as 1.6T. So it's really hard to call exactly. It's going to be an important transition. There's no question. The only question is the timing of which--and Chris, I think we'll be in a better comment on that probably as we get closer to the end of the year, we start looking at the step for calendar '25 and what our customers are thinking. But either way, we're going to be well positioned for both of those opportunities for next year.

Matt Murphy: And even some of the newer launches that are coming as an example are going to still support 800 gig as well as 1.60. So it's really hard to call exactly. It's going to be an important transition. There's no question. The only question is the timing of which. And Chris, I think we'll be in a better position to comment on that. Probably as we get closer to the end of the year, we start looking at the setup for calendar 25 and what our customers are thinking. But either way, you know, we're going to be well positioned for both of those opportunities for next year. Thanks, Matt. Yeah.

Speaker Change: Yeah, hey, thanks Chris. Yeah, it's still early, you know, we were first to market in this area, having, you know, introduced these products.

Speaker Change: You know, at OFC a year ago, it's great to see that they're going into production. You know, we'll know a lot more when we start to see how our customers are planning to deploy it, but we are.

Speaker Change: Seeing initial shipments now.

Speaker Change: The way I would think about it though is 800 gig right now and in through next year is still going to be the workhorse

Speaker Change: Hi Volume.

Speaker Change: Plattform and even some of the newer launches that are coming as an example are going to still support 800 gigas, as well as 1.6T, so it's really hard to call exactly. It's going to be an important transition. There's no question.

Matt Murphy: Yeah, maybe just keep it at a higher level for the broader investors on the call here to my, you know, we said targets of a billion and a half for this year and two and a half for next year. As I said earlier, both, both custom and electro optics are contributing. It was what we said was at the AI day, you know, just what three, four months ago. About two thirds of the billion five was in electro optics.

Chris: The only question is the timing of which, and Chris I think will be in a better position to comment on that. Probably as we get closer to the end of the year, we start looking at the setup for...

Chris: Calendar 25 and what our customers are thinking.

Chris: Either way, we're going to be well positioned for both of those opportunities for next year.

Matt Murphy: And I'll leave it at that for now.

Harlan Sur: Your next question comes from Harlan sir with JP Morgan. Your line is now open. Good afternoon. Thanks for taking my question and good to see the strong growth outlook. You know, we've seen multiple quarters now of strong growth in near line HDD to the cloud. And you know, those guys continue to expect anticipated growth sort of going forward. In addition to that, you guys have, I think numerous next generation PCIe Gen 5 enterprise this is the platforms ramping. I know it's been a couple of years, but I think those ramps are finally starting to happen. Is this all kind of contributing to the second half strength in the data center business.

Chris: Thanks, Matt.

Chris: Yeah.

Speaker Change: Your next question comes from Harlan Sir with JP Morgan. Your line is now open.

Harlan Sir: Good afternoon. Thanks for taking my question and I'm good to see the strong girls I'll look. You know, we've seen multiple quarters now, strong growth in near line HDD to the cloud.

Speaker Change: and those guys continue to expect anticipated growth sort of going forward. In addition to that, you guys have, I think, numerous.

Willem Meintjes: Your next question comes from Ross Seymour with Deutsche Bank. Your line is now open. Hi, guys, congrats on the strong resulting guide. Willum, one potentially for you and I appreciate the commentary on the gross margins stability at the current level through the end of this year. But could you give us an idea of what the puts and takes would be for next year? I mean, we know the custom stuff carries lower margins and it sounds like the merchant businesses coming back.

Operator: The next question comes from Ross Seymore with Deutsche Bank. Your line is now open.

Ross C. Seymore: Hi, guys. Congrats on the strong results and guide. Willem, one potentially for you, and I appreciate the commentary on the gross margin stability at the current level through the end of this year. But could you give us an idea of what the puts and takes would be for next year? I mean, we know the custom stuff carries lower margins, and it sounds like the merchant business is coming back. But I think a big concern people have is just how should we think about the revenue growth relative to the gross margin next year as accretive as it may be in most of those scenarios on the operating line either way?

Speaker Change: Next generation TCAE Gen5 Enterprise at the SD platforms.

Speaker Change: I know it's been a couple of years but I think those rounds are finally starting to happen. Is this all kind of contributing to the second half string?

Matt Murphy: And then more on the memory side, you know, customers are thinking about next year and HPM for for e sort of these next generation architectures. There is a potential for customization on the base advanced logic die. It's a fairly complex piece of silicone. You guys have a lot of IP here. I'm wondering if you're winning any custom basic opportunities for some of these upcoming programs. Yeah. Thanks, Harlan. Yeah.

Speaker Change: In the Data Center, there's less.

Speaker Change: and then more on the memory side, you know, it's cut from ours.

Willem Meintjes: But I think a big concern people have is just how should we think about the revenue growth relative to the gross margin next year as a creative as it may be in most of those scenarios in the operating line either way. Yeah, I think the way to think about that is for that train to really continue into next year. And so you're not guiding that the full year next year, but I think it's in that similar zip code where you can easily see good growth from both optics and then the recovery in the next year.

But I think a big concern people have is just how should we think about the revenue growth relative to the gross margin next year as a creative as it may be in most of those scenarios in the operating line either way.

Speaker Change: are thinking about next year in HPM 4.

Speaker Change: For E

Speaker Change: So, these next generation architectures, they're in the potential for customization on the base, advanced logic that it's a fairly complex piece of silicon, you guys have a lot of IP here. I'm wondering if you're winning any custom-asic opportunities for some of these upcoming programs.

Willem Meintjes: Yeah. I think the way to think about that is for that trend to really continue into next year. And so, you're not guiding the full year next year. But I think it's in that similar ZIP code where we continue to see good growth from both OpEx and then the recovery in the merchant products really offsetting the continued growth in custom. And then in addition, as you see the top line growing nicely, we do continue to get that benefit from better absorption. And then overall, when you look at our OpEx management, we're going to continue to be very disciplined looking at next year. And so, we do expect to drive a ton of leverage and operating margin down to the bottom line next year.

Aaron Rakers: Let me, let me take the two pieces on the first one. We're very pleased to see the recovery in data center storage. I think we're on like six to six quarter now of the turn, which is great. You know, we bottomed out last year. It was a pretty severe downturn that we saw. It's been growing basically every quarter and we see this trend back over time. We have called it basically is getting back to like 200 million a quarter. It's not there yet, but it's on its way. And that's had a nice recovery. It hasn't been too spiky. It's just kind of been slow and steady on the way back up as inventories consume that supply chain revitalizes and quite frankly, it's great to see the end market commentary because that just gives us more confidence on that return over time. And then I, you know, even actually, you know, had it in my prepared remarks is one of the key. You know, offerings that we have on our on our ASIC and AI platform is we think as you mentioned that, you know, HBM and how to stitch all that together from memory interconnect standpoint is going to be extremely important and it's complex. And it's going to be I think a key part of the solution just given how much. How memory intensive the current set of accelerators are, but also how they're looking at positioning for the next generation. So that's a key IP that Marvel is developing and that will bring to the table as part of our platform offering for for AI accelerators from a custom standpoint. Thanks.

Speaker Change: [inaudible]

Speaker Change: Yes, thanks, Harlan. Let me take the two pieces. On the first one, we're very pleased to see the recovery in data center storage. I think we're on like six to six quarter now of the turn, which is great. You know, we bought them out last year.

Willem Meintjes: The merchant products really offsetting the continue growth in custom. And then in addition, as you see that that top line going nicely, we do continue to get that benefit from better absorption. And then overall when you look at, you know, I'll We're going to continue to be very disciplined looking at next year, and so we do expect to drive a ton of leverage and operating margin down to the bottom line next year.

Speaker Change: was a priest of your downturn that we saw. It's been growing basically every quarter and we see this trend back over time. We had called it basically as getting back to like 200 million a quarter. It's not there yet, but it's not as way. And that's had a nice recovery. It hasn't been too spiky.

Aaron Rakers: It's not there yet, but it's on its way. And that's had a nice recovery. It hasn't been too spiky. It's just kind of been slow and steady on the way back up as inventories consume that supply chain revitalizes and quite frankly, it's great to see the end market commentary because that just gives us more confidence on that return over time. And then I, you know, even actually, you know, had it in my prepared remarks is one of the key. You know, offerings that we have on our on our ASIC and AI platform is we think as you mentioned that, you know, HBM and how to stitch all that together from memory interconnect standpoint is going to be extremely important and it's complex. And it's going to be I think a key part of the solution just given how much. How memory intensive the current set of accelerators are, but also how they're looking at positioning for the next generation. So that's a key IP that Marvel is developing and that will bring to the table as part of our platform offering for for AI accelerators from a custom standpoint. Thanks.

Speaker Change: It's just kind of been slow and steady on the way back up as inventory is consumed, that supply chain revitalizes and quite frankly it's great to see the end-market commentary because that just gives us more confidence on that return over time.

Ross C. Seymore: Thank you.

Matt Murphy: Hey, Ross, if I could just add. As Willem said, I think the GM side needs to play out. We need to see where this non-AI data center demand recovers to. We're very pleased with the third quarter guide of mid-single. And then in enterprise and carrier, that growth improving from Q3 to Q4, so growing even a little bit faster. Bookings have picked back up, we're laying in backlog. So that's all a positive sign. And then of course, we've got to get into next year to see where those traditional core businesses really recover to. That's going to be one factor. As we said earlier as well, we anticipate a lot higher revenue next year. So that's going to help on sort of manufacturing overhead absorption. And then to the extent how much custom is really going to be, that's going to be a factor as well. So we're looking at all that. That does need to play out a bit. But as Willem said, we're very confident in our OpEx management and our plan on spending there relative to our outlook for next year. And so, we're very excited and feel very confident in the path to our operating margin targets that we've set, kind of independent of where that GM lies. So that's where we're headed right now, Ross. There'll be more to come as these markets recover. Thanks.

Speaker Change: And then, you know, even actually, you know, had it in my prepared remarks as one of the key, you know, offerings that we have on our A sick and AI platform.

Aaron Rakers: You know, offerings that we have on our on our ASIC and AI platform is we think as you mentioned that, you know, HBM and how to stitch all that together from memory interconnect standpoint is going to be extremely important and it's complex. And it's going to be I think a key part of the solution just given how much. How memory intensive the current set of accelerators are, but also how they're looking at positioning for the next generation. So that's a key IP that Marvel is developing and that will bring to the table as part of our platform offering for for AI accelerators from a custom standpoint. Thanks. Great. Thank you.

Speaker Change: is, we think, as you mentioned, that, you know, HBM and how to stitch all that together from a memory interconnect standpoint is going to be extremely important and it's complex and it's going to be, I think, a key part of the solution just given how much.

That's going to be one factor as we said earlier as well. We anticipate a lot higher revenue next year, so that's going to help on sort of manufacturing overhead absorption. And then to the extent how much, you know, custom is really going to be, that's going to be a factor as well. So we're looking at all that that does need to play out a bit. But as Willem said, we're very confident.

Speaker Change: How Memory Intensive, the current set of accelerators are but also how they're looking at positioning for the next generation. So that's a key IP that Marvel is developing and that will bring to the table as part of our platform offering for AI accelerators from a custom standpoint.

Speaker Change: Thanks and great, thank you.

Aaron Rakers: Your next question comes from Aaron Rakers with Wells Fargo. Your line is now open. Yeah, thanks for taking the question.

Matt Murphy: But as Willem said, we're very confident in our OpEx management and our plan on spending there relative to our outlook for next year. And so, we're very excited and feel very confident in the path to our operating margin targets that we've set, kind of independent of where that GM lies. So that's where we're headed right now, Ross. There'll be more to come as these markets recover. Thanks. Thanks, Matt.

Speaker Change: Your next question comes from Aaron Rakers with Wells Fargo. Your line is now open.

Matt Murphy: I wanted to ask about the data center switching opportunity now that the 51.2 T silicon's in the market, just, you know, if you could give us kind of a thought of like how we should expect that to ramp up appreciating that's more in the next fiscal year, but you know any kind of visibility in terms of how we should think about, you know, that opportunity to participate in the in these A.I. Fabric Bill, that's going forward. Thank you.

Aaron Rakers: Yeah, thanks for taking the question. I wanted to ask about the data center switching opportunity, now that the 51.2T silicon's in the market.

Aaron Rakers: If you could give us kind of a thought of like how we should expect that to ramp, appreciating that's more in the next fiscal year, but any kind of disability in terms of how we should think about that opportunity to participate in any AI fabric build that's going forward at More Bell. Thank you.

Ross C. Seymore: Thanks, Matt.

Operator: Your next question comes from Vivek Arya with Bank of America. Your line is now open.

Vivek Arya: Thanks for taking my question. Matt, I was hoping to get your views on the competitive landscape in the two parts of your AI business, so both on the DSP side and custom silicon. On DSP side, do you see any captive or merchant competitors challenge Marvell's dominance as the industry transitions to 200 gig per day in all these 1.60 transceivers? And then similarly, in custom compute, do you see any competitive changes from your Taiwan competitors? I know a little bit out there in ‘26 when the industry moves to the 3-nanometer zone, but I was just hoping to get your views on any changes in the competitive landscape in the next one to two years in these two important parts of your AI business? Thank you.

Matt Murphy: Thank you. Yeah, Aaron, thanks for the question. You know, we we outlined this opportunity at the investor day we did for A.I. And basically on the 51.2 T cycle or in, you know, we think we're well positioned. We had great success from an engineering standpoint to get the product to market pretty quickly relative to after, you know, relative to integrating the anovium asset into Marvell. And then bringing that product out with the full Marvell five nanometer platform.

Speaker Change: Yeah, hey Aaron, thanks for the question, you know, we outlined this opportunity at the investor day we did for AI.

Speaker Change: and basically on the 51.2T cycle, and we think we're well positioned, we had great success from an engineering standpoint to get the product to market.

Speaker Change: Pretty Quickly Relative to Integrating.

Do you see any competitive changes from your Taiwan competitors? I know a little bit out there in 26 when the industry moves to the three nanometer known, but I was just hoping to get your views on the any changes in the competitive landscape in the next one to two years and these two important parts of your AI business. Thank you.

Speaker Change: The Anovium Acet into Marvel and then bringing that product out with the full Marvel 5 nanometer platform.

Matt Murphy: We see strong interest not only on the 51.2 T generation that we're now starting to go into production to this year with a lead customer, but also our road map, we believe, is very compelling as well. And while we're a smaller player here today, we do have tremendous interest in this platform. And we think it's very strategic to Marvell relative to our investments. Incustom silicon in being the leader and interconnect and also even driving future technologies like silicon photonics. So to bring it back around, we're not quite sizing it yet in terms of what it can be. It's still early from the standpoint of when that technology is actually going to go into full board production. But we think we're doing well and we look forward to providing updates on that Aaron as kind of this develops. But we feel good right now. Thanks. Thank you.

Speaker Change: We see strong interest, not only on the 51-2T generation that we're now starting to go into production to this year.

Speaker Change: with a lead customer, but also our roadmap we believe is very compelling as well.

Matt Murphy: Yeah. No problem, Vivek. Let me maybe break it into the two pieces you mentioned. So, on the DSP and optics side, look, it's been a competitive market. We got into this, as you all remember, through the acquisition of Inphi. And there's been these competitive dynamics from the beginning. Now this market has gotten big, right? So there's--it would sort of only intensify. But we've consistently maintained a very high market share in this area through the integration of Inphi and Marvell and now as we're positioned going forward, primarily because, one, we've executed extremely well from an engineering standpoint. And also, we have the full platform includes DSPs, the broadband analog components like drivers and TIAs. We have the complete architecture and solution and also the partnerships with module vendors as well as the hyperscalers directly. And finally, I would say we continue to have a best-in-class roadmap as well in terms of the cadence, the power and the performance that we're delivering. So we feel very good on these transitions. As an example, we went through the 100-gig transition very successfully. The 200 gig ones in front of us, we're going to start shipping those products this quarter. Our 200 gig per lane, 1.6-terabit DSPs, and we feel very well positioned. It's going to be competitive, Vivek, but the team is actually really excited of what we can go off and do with the platform we have. And on custom silicon, I think our thesis is playing out in that--given the tremendous increases in complexity of these chips, it's not about just having one piece of it, like a design service piece or a manufacturing capability, but it's everything. It's having the best-in-class technology road map in terms of nanometers, advanced packaging, I/O, et cetera, and then the ability to actually go execute these products. These are 100 billion transistor type of chips and so to package them up, get them to yield, ship them into volume, be ready to work on the next 1 parallel. It's a massive sort of effort. And so we think that, that still is going to be the winning strategy. And when we look at it from that point of view, we really have one large competitor that's very capable in this area as well. And we do think long term, given the amount of activity we see in AI, especially on the custom side, it's going to require a really scaled up full solution providers and partners like Marvell to compete. So that's the current status of those two from a competitive dynamic. Thanks, Vivek.

Speaker Change: And while we're a smaller player here today, we do have tremendous interests in this platform. And we think it's very strategic to Marvel, relative to our investments.

Speaker Change: In Custom Silicon, in being the leader in Interconnect and also even driving future technologies like silicon photonics. So, to bring it back around, we're not quite sizing it yet in terms of what it can be. It's totally early from the standpoint of when.

Matt Murphy: So to bring it back around, we're not quite sizing it yet in terms of what it can be. It's still early from the standpoint of when that technology is actually going to go into full board production. But we think we're doing well and we look forward to providing updates on that Aaron as kind of this develops. But we feel good right now. Thanks. Thank you.

Speaker Change: That technology is actually going to go into full bore production, but we think we're doing well and we look forward to providing updates on that Aaron as kind of this develops, but we feel good right now. Thanks.

Matt Murphy: Your next question comes from Stremeva. Has Yuri with Raymond James? Your line is now open. Thank you. My question is about the traditional businesses map. It's nice to see both of them recovering. And I think you're guiding for sequential growth into Q4 as well. Given that they're down so much, I think once down 50, the others down almost 70 from its, you know, last year's levels, I'm just wondering how to think about the normal normalized run rate on a quarterly basis.

Aaron Rakers: Thank you.

Shrimiva, Pajuri: Your next question comes from Shrimiva, Pajuri with Raymond James, the line is now open.

Shrimiva Pajuri: Thank you. I question these about the traditional business of SMAP.

Speaker Change: It's nice to see both of them recovering and I think you're guiding for sequential growth into Q4 as well.

Matt Murphy: And when do you think we'll get there? And then once we get there, you know, how do we think about, I guess, longer from growth of these businesses? Thank you. Yeah, great. Thanks for the question. And yeah, you're right. Those businesses have been down significantly from a year over your perspective. Some of that is due to also the overshoot that went on in sort of this post pandemic, you know, fueled build out that occurred and also all the dynamics we've seen across the industry, right relative to people overordering and then having too much inventory and then having to go deal with it.

Shrimiva Pajuri: Given that they're down so much, I think once down 50, the other down almost 70 of from its last year's levels, just wondering how to think about the normalized run rate on a quarterly basis and when do you think we'll get there? And then once we get there, how do we think about it, I guess, long a term growth of this business, thank you.

Matt Murphy: As an example, we went through the 100-gig transition very successfully. The 200 gig ones in front of us, we're going to start shipping those products this quarter. Our 200 gig per lane, 1.6-terabit DSPs, and we feel very well positioned. It's going to be competitive, Vivek, but the team is actually really excited of what we can go off and do with the platform we have. And on custom silicon, I think our thesis is playing out in that--given the tremendous increases in complexity of these chips, it's not about just having one piece of it, like a design service piece or a manufacturing capability, but it's everything. It's having the best-in-class technology road map in terms of nanometers, advanced packaging, I/O, et cetera, and then the ability to actually go execute these products. These are 100 billion transistor type of chips and so to package them up, get them to yield, ship them into volume, be ready to work on the next 1 parallel. It's a massive sort of effort. And so we think that, that still is going to be the winning strategy. And when we look at it from that point of view, we really have one large competitor that's very capable in this area as well. And we do think long term, given the amount of activity we see in AI, especially on the custom side, it's going to require a really scaled up full solution providers and partners like Marvell to compete. So that's the current status of those two from a competitive dynamic. Thanks, Vivek.

So we feel very good on these transitions as an example. We went through the 100 gig transition very successfully, the 200 gig ones in front of us. We're going to start shipping those products this quarter, our 200 gig per lane, 1.6 terabyte DSPs. And we feel very well positioned.

Matt Murphy: It's going to be competitive, Vivek, but the team is actually really excited of what we can go off and do with the platform we have. And on custom silicon, I think our thesis is playing out in that--given the tremendous increases in complexity of these chips, it's not about just having one piece of it, like a design service piece or a manufacturing capability, but it's everything. It's having the best-in-class technology road map in terms of nanometers, advanced packaging, I/O, et cetera, and then the ability to actually go execute these products. These are 100 billion transistor type of chips and so to package them up, get them to yield, ship them into volume, be ready to work on the next 1 parallel. It's a massive sort of effort. And so we think that, that still is going to be the winning strategy. And when we look at it from that point of view, we really have one large competitor that's very capable in this area as well. And we do think long term, given the amount of activity we see in AI, especially on the custom side, it's going to require a really scaled up full solution providers and partners like Marvell to compete. So that's the current status of those two from a competitive dynamic. Thanks, Vivek.

Speaker Change: Yeah, great, thanks for the question and...

Speaker Change: Yeah, you're right, those businesses have been down significantly from a year over your perspective.

Matt Murphy: And on custom silicon, I think our thesis is playing out in that--given the tremendous increases in complexity of these chips, it's not about just having one piece of it, like a design service piece or a manufacturing capability, but it's everything. It's having the best-in-class technology road map in terms of nanometers, advanced packaging, I/O, et cetera, and then the ability to actually go execute these products. These are 100 billion transistor type of chips and so to package them up, get them to yield, ship them into volume, be ready to work on the next 1 parallel. It's a massive sort of effort. And so we think that, that still is going to be the winning strategy. And when we look at it from that point of view, we really have one large competitor that's very capable in this area as well. And we do think long term, given the amount of activity we see in AI, especially on the custom side, it's going to require a really scaled up full solution providers and partners like Marvell to compete. So that's the current status of those two from a competitive dynamic. Thanks, Vivek.

Speaker Change: Some of that is due to also the overshoot that went on in sort of this post-pandemic, you know, fueled.

Speaker Change: Built out that occurred and also all the dynamics we've seen across the industry, relative to people overordering and then having too much inventory and then having to go deal with it.

Matt Murphy: The good news is we've now seen that business after a flat first half pick up, you know, guiding both enterprise and carrier up mid single for the third quarter and then growing faster than that in the fourth quarter and that the bookings have improved as well. So that's all positive. The way to think about it is we're trying to drive both of those businesses back and we believe we have line of sight to drive both of those businesses back to about a billion dollars each, call it two billion and aggregate, maybe 2.2 billion of run rate on an annualized basis. So we hit the bottom in the first half, it's coming up in Q3, coming up in Q4

Speaker Change: The good news is we've now seen that business after a flat first half, pick up, you know, guiding both enterprise and carrier of mid-single for the third quarter and then growing faster than that in the fourth quarter and that the bookings have improved as well. So that's all positive.

Speaker Change: The way to think about it.

Speaker Change: We're trying to drive both of those businesses back and we believe we have line of sight to drive both of those businesses back to about a billion dollars each, call it two billion an aggregate.

Matt Murphy: And when we look at it from that point of view, we really have one large competitor that's very capable in this area as well. And we do think long term, given the amount of activity we see in AI, especially on the custom side, it's going to require a really scaled up full solution providers and partners like Marvell to compete. So that's the current status of those two from a competitive dynamic. Thanks, Vivek.

Speaker Change: Maybe 2.2 billion

Matt Murphy: So we hit the bottom in the first half, it's coming up in Q3, coming up in Q4 and we're monitoring the setup for next year but we do believe that that is very achievable, that's the plan right now. And then long term, if you go back to all of our investor days, probably for the last four or five years, when we've done them, we've always signaled these markets to be kind of low to mid-single growers and then from a market standpoint and then with some content or share gain, you can do a little bit better.

Speaker Change: of Run Rate on an annualized basis.

Speaker Change: So we hit the bottom in the first half, it's coming up in Q3, coming up in Q4, and we're monitoring the setup for next year, but we do believe that that is very achievable, that's the plan right now. And then long term, if you go back to all of our investor days, probably for the last.

Speaker Change: you know, four or five years.

Speaker Change: When we've done them.

Speaker Change: We've always signal these markets to be kind of low to mid-single growers.

Speaker Change: And then with some content or share gain, you can do a little bit better. 5G was a great example with very little content. 4G, we rocketed up in 5G.

Matt Murphy: 5G was a great example, we had very little content in 4G, we rocketed up in 5G, that changed the trajectory but going forward in that kind of a business as well as say enterprise, you should be able to do that. We assume the market grows at a fairly modest rate and I think for investors to think about our growth rates in those areas, being in those types of ranges, maybe whatever mid-single kind of plus, if we can execute, I think that's fairly safe, they're not going to be great enormous growth markets necessarily but they are very accretive and they're very profitable businesses from Marvell and they're important because they're long term and they're part of the portfolio. So that's some additional color on how to think about it.

Speaker Change: That changed the trajectory but going forward in that kind of a business as well as to enterprise you should assume the market grows at a fairly modest rate. And I think for investors to think about our growth rates in those areas.

Speaker Change: and those types of ranges, maybe whatever mid-single kind of plot, if we can get to execute. I think that's fairly safe, they're not going to be great.

Speaker Change: You know, enormous growth markets necessarily, but they are very creative and they're very, um, they're very profitable the businesses from our bell and they're important because they're long-term and they're part of the portfolio. So that's some additional color on how to think about it. We are investing there. We're going to make sure that we continue to grow those businesses.

Matt Murphy: So that's some additional color on how to think about it. We are investing there, we're going to make sure that we continue to grow those businesses but if you just step back, we've got 70% of our revenue today in data center, we've got a great, great opportunity with AI and accelerated infrastructure. We're continuing to pivot our R&D in that area, overweight and we think that from a financial return standpoint, this is the best place to put our precious R&D dollars and so that's the way to think about Marvell going forward, only getting bigger in data center and really maintaining and driving a very healthy enterprise and carrier business long term. Thanks. Thank you.

Speaker Change: But if you just step back, we've got 70% of our revenue today, in data center, we've got a great, great opportunity with AI and accelerated infrastructure. We're continuing to pivot our R&D in that area over weight.

Speaker Change: And we think that from a financial returns standpoint this is the best place to put our precious R&D dollars and so that's the way to think about Marvel going forward only getting bigger in data center and really maintaining and driving a very healthy enterprise and carrier.

Speaker Change: Business Long-term. Thanks. Thank you.

Quinn Bolton: Your next question comes from Quinn Bolton with Needham. Your line is now open. Hey man, I'll ask a question but if you don't answer it maybe I'll follow up. You guys are talking about nice upside to the 1.5 billion and 2.5 billion targets for AI. Is that something you think you're closer to 2 billion than 1.5 when all is said and done this year? I mean can you give us any sort of quantification of the upside in AI revs and if not I'll follow up with a product question.

Speaker Change: Thanks for watching!

Speaker Change: Your next question comes from Quinn Bolton with Needham. Your line is now open.

Quinn Bolton: Hey man, I'll ask questions, but if you don't answer, maybe I'll follow up. You guys are talking about nice upside to the 1.5 billion and 2.5 billion targets.

Quinn Bolton: For AI, is that something you think you're closer to 2 billion than 1.5 when all of a sudden on this year? I mean, can you give us any sort of quantification of the upside in AI Rebs? And if not, I'll follow up with a product question.

Matt Murphy: Yes. I don't think we--we're sort of fresh of $1.5 billion update from a few months back when we had our AI day. But I think if you look at the even like Q3, right, where overall revenue for the whole company is growing in mid-teens and then obviously guiding up data center much higher than that with AI driving it. And then saying also Q4 is going to be extremely strong in data center and AI. You can probably draw a line of sight to it, but we're clearly, clearly exceeding the 1.5. That's for sure. And then again, the setup for next year is really good because from an exit standpoint, we'll be at a very healthy level by the fourth quarter.

Speaker Change #100: Yeah, I don't think we're sort of fresh off the 1.5 update from a few months back when we had our AI day. But I think if you look at the...

Matt Murphy: We just announced, as an example, at the last AI day, we had won an additional customer for AI silicon. And all of those are tracking well. So that's all I can say at the moment. I think you got to also look at what the results are and what our outlook is, and if you believe the thesis I gave you around what's important relative to being a long-term reliable partner that's going to be there for the long term over multi-generations, we think we're extremely well positioned. Thanks, Matt.

Speaker Change #101: Even like Q3 right where we're overall revenue for the whole company is growing in mid teams and then

Speaker Change #101: Obviously guiding up data center much higher than that with AI driving it and then saying also Q4 is going to be extremely strong in data center and AI. You can probably draw a line of sight to it, but we're clearly exceeding the 1.5. That's for sure.

Quinn Bolton: And then again, the benefit next year is really good, because from an exit standpoint, you know, we'll be at a very healthy level by the fourth quarter. The pro question, if you've done my answer, just kind of thoughts on the latest DCI traction, I know 400 gig is ramping now, you've seen demand or starting to ship 800 gigs, you are in, you know, of the total electro optics business is DCI kind of 10 20% of that total product portfolio or is there a is there a different percentage, you might give us.

Speaker Change #101: And then again, the setup right next year is really good because from an exit standpoint, you know, will be at a very healthy level by the fourth quarter.

Operator: Your next question comes from Christopher Rolland with Susquehanna. Your line is now open.

Speaker Change #102: The pro-question if you don't mind answering just kind of thoughts on the latest DCI traction, I know 400 gigas

Christopher Rolland: Hey, guys. Congrats on the results. I have an Inphi question primarily. And Matt, you talked about 1.6T, that's pretty exciting that. If I understood that correctly, you're going to be ramping in 3Q. Perhaps you can talk about the profile of this ramp, what it looks like in 3Q, 4Q and into '25. I think The Street is all over the place on this node. But if you could talk about that and maybe even the economics, what it means for you guys, that would be fantastic. Thank you.

Speaker Change #103: Ramping now, you seem to manned or certain ship 800 gigs he are.

Speaker Change #104: You know, of the total electro-optic business is DCI kind of 10-20% of that total product portfolio or is there a different percentage you might give us?

Matt Murphy: Yeah, I don't think I can give you a percentage and quite frankly, to get out of spreadsheet and calculate it because, as you know, we have many franchises now across this interconnect platform. But I would say it's--that business has just done extremely well, Quinn. I mean if you look at where that business was when we acquired it, they were--Inphi if had basically been 1 customer at 100 gig with--and I think back then, it was about $100 million-ish kind of business. It's just grown dramatically as we've kept the 100 gig and then we've added in 400 gig and we've added additional customers. So it's been a very important and strategic business for Marvell. And then to your point, in front of us, that roadmap is getting invested in very aggressively, both at 800 gig and then longer term, 1.6T for DCI. So each of these different key technologies that we have now at interconnect, they're going gangbusters today, but there's also a generation and the generation after N plus 2 out, that we're investing in very aggressively to maintain market leadership. Yeah, thanks a lot. I think we’ve got two questions left. Operator?

Speaker Change #105: Yeah, I don't think you'd be a percentage in quite frankly, I'd have to get out of spreadsheet and calculate it because as you know, we have many franchises now across this interconnect platform. But I would say that business is just an extremely well-quinned. I mean, if you look at where...

Speaker Change #105: That business was when we acquired it, they were, in fact, had basically been, you know, one customer at a hundred gig.

Speaker Change #105: With, you know, and I think the back then it was about a hundred million dollarish kind of business. You know, it's just grown dramatically as we've kept the hundred gig and then we've added an 400 gig and we've added an additional customers.

Quinn Bolton: And then to your point in front of us, that road map is getting invested in very aggressively, both at 800 gig and then longer term 1.6 T for DCI. So each of these different key technologies that we have now and interconnect, they're going on gang busters today, but there's also a next generation and a generation after, you know, N plus 2 out that we're investing in very aggressively to maintain market leadership. Yeah, thanks a lot.

Speaker Change #105: So it's become a very important and strategic business for Marvel, and then to your point in front of us.

Speaker Change #105: That road map is getting invested in very aggressively, both at 800 gig and then longer term 1.6T for DCI. So each of these different key technologies that we have now an interconnect.

And even some of the newer launches that are coming as an example are going to still support 800 gig as well as 1.60. So it's really hard to call exactly. It's going to be an important transition. There's no question. The only question is the timing of which. And Chris, I think we'll be in a better position to comment on that. Probably as we get closer to the end of the year, we start looking at the setup for calendar 25 and what our customers are thinking. But either way, you know, we're going to be well positioned for both of those opportunities for next year.

Harsh Kumar: I think we got two questions left operator.

Speaker Change #106: Yeah, thanks a lot. I think we got two questions left, operator.

Matt Murphy: Yes, your next question comes from Harish Kumar with Piper Sandler. Your line is now open. Yeah, hey guys, first of all, let me just give my congratulations. I'm very strong guide. The story's coming along all businesses turning mad. I wanted to ask you, you seem extremely enthusiastic about custom asick near term as well as next year.

Speaker Change #107: Yes, your next question comes from Harish Kumar with Piper Sandler. Your line is open.

Harish Kumar: Yeah, hey guys, first of all, let me just give my congratulation on very strong guide, the stories coming along all businesses turning mad. I wanted to ask you, you seem extremely enthusiastic about customer sake near-term as well as next year.

Christopher Rolland: Thanks, Matt.

Operator: Your next question comes from Harlan Sur with JPMorgan. Your line is now open.

Matt Murphy: Could you talk about some of the major drivers or major products, however you want to do it that are hitting that's giving you this, this optimist that this optimist to be the point of the near mid and call it even the next year outlook. Yeah, well, I think as we had outlined in the past, you know, there's been several programs that we won, you know, a broad range of them actually and custom silicon for for data center.

Harlan Sur: Good afternoon. Thanks for taking my question and good to see the strong growth outlook. We've seen multiple quarters now of strong growth in nearline HDD to the cloud. And those guys continue to expect anticipated growth sort of going forward. In addition to that, you guys have, I think, numerous next-generation PCIe Gen5 enterprise SSD platforms ramping. I know it's been a couple of years, but I think those ramps are finally starting to happen. Is this all kind of contributing to the second half strength in the data center business? And then more on the memory side, as customers are thinking about next-gen HPM for sort of these next-generation architectures, there is a potential for customization on the base advanced logic die. It's a fairly complex piece of silicon. You guys have a lot of IP here. I'm wondering if you're winning any custom ASIC opportunities for some of these upcoming programs.

Speaker Change #109: If you talk about some of the major drivers or major products, however you want to do it that are hitting, that's giving you this optimistic point of the near-med and college even the next year outlook.

Speaker Change #110: Yeah, well, I think is as we had outlined in the past, you know, there's been...

Speaker Change #110: Several programs that we won, you know, a broad range of them actually in custom silicon for forget a center and then the ones that were levered to AI, you know, have just just taken off. And you're starting to see that in our financials and so.

Matt Murphy: And then the ones that were levered to AI, you know, have just just taken off and you're starting to see that in our financials. And so I mean, maybe not to make it too simple, but the reason we're excited is we're getting bookings and we have backlog and we're, you know, planning our capacity ramps for next year and we're talking about the next generation. And so I think, you know, this was these went from design wins a few years ago to trying to execute NPI and get the chips taped out to then trying to get them qualified and make sure that they worked, you know, they worked relatively quickly once they came back, which they did and now they're ramping. So it's just part of the evolution, but I mean, it feels really good when you have backlog and you have bookings and you have a strong outlook from your customer and you're planning your future together.

And then more on the memory side, you know, customers are thinking about next year and HPM for for e sort of these next generation architectures. There is a potential for customization on the base advanced logic die. It's a fairly complex piece of silicone. You guys have a lot of IP here. I'm wondering if you're winning any custom basic opportunities for some of these upcoming programs.

Speaker Change #110: I mean, maybe not to make it too simple but the reason we're excited is we're getting bookings and we have backlog and we're planning our capacity ramps for next year and we're talking about the next generation.

Speaker Change #110: I think you know, this was these went from design wins a few years ago to try to execute NPI and get the chips taped out to then try to get them qualified and make sure that they worked.

Speaker Change #110: They worked relatively quickly once they came back, which they did and now they're ramping. So it's just part of the evolution, but I mean...

Matt Murphy: Yeah. Thanks, Harlan. Yeah, let me take the two pieces. On the first one, we're very pleased to see the recovery in data center storage. I think we're on like six quarter now of the turn, which is great. We bottomed out last year, was a pretty severe downturn that we saw. It's been growing basically every quarter, and we see this trend back over time. We had called it basically as getting back to like $200 million a quarter. It's not there yet, but it's on its way. And that's had a nice recovery. It hasn't been too spiky. It's just kind of been low and steady on the way back up as inventories consumed, that supply chain revitalizes. And quite frankly, it's great to see the market commentary because that just gives us more confidence that return over time. And then I even actually had it in my prepared remarks as one of the key offerings that we have on our ASIC and AI platform is, we think, as you mentioned, that HBM and how to stitch all that together from a memory interconnect standpoint is going to be extremely important. And it's complex and it's going to be, I think, a key part of the solution just given how much--how memory intensive the current set of accelerators are, but also how they're looking at positioning for the next generation. So that's a key IP that Marvell is developing and that will bring to the table as part of our platform offering for AI accelerators from a custom standpoint. Thanks.

Speaker Change #110: It feels really good when you have backlog and you have bookings and you have a strong outlook from your customer.

Matt Murphy: So that's that's really it. I mean, I can't go into what they're using it for and their workloads and all that kind of thing, but the conviction from our customers on the programs we have are very strong in terms of their commitment to deploy and to deploy very aggressively using us using their chips plus Marvel is their key partner and we'll go let them get all the glory as they as they deploy and they achieve their silicon ambitions with us kind of in the backdrop to make sure we're there to help them. But let them go do what they need to do. Thanks, Matt. Congratulations. Yeah, thanks. I think we all want more.

Speaker Change #110: and your planning your future together. So that's it.

Speaker Change #110: That's really it. I mean, I can't go into what they're using it for and they're workloads and all that kind of thing, but the conviction from our customers on the programs we have are very strong in terms of their commitment to deploy.

Speaker Change #110: And to deploy very aggressively using us, using their chips, plus Marvel is their key partner. And we'll go let them get all the glory as they deploy and they achieve their so-called ambitions with us kind of in the backdrop to make sure we're there to help them, but let them go do what they need to do.

Speaker Change #110: Got it, thanks, Matthew, Congratulations.

Karl Ackerman: And our last question comes from Karl Ackerman with DNP Parabakh. Your line is now open. Yes, thank you. Good afternoon. Thank you for squeezing me in. Could you talk about the breadth of cloud times you have ramping eight or gig electro optics that anchors review on a second half. And given your industry leading position in electro optics, have you seen growing evidence that U.S, cloud Titans are seeking to diversify the procurement of optical transceivers outside of China?

Matthew: Yeah, I thanks. I think we all will more.

Matthew: and our last question comes from Carl Akerman with BNP Parabah. Your line is now open.

You know, offerings that we have on our on our ASIC and AI platform is we think as you mentioned that, you know, HBM and how to stitch all that together from memory interconnect standpoint is going to be extremely important and it's complex. And it's going to be I think a key part of the solution just given how much. How memory intensive the current set of accelerators are, but also how they're looking at positioning for the next generation. So that's a key IP that Marvel is developing and that will bring to the table as part of our platform offering for for AI accelerators from a custom standpoint. Thanks.

Carl Akerman: Yes, thank you, good afternoon and thank you for swinging me in. Could you talk about the breadth of cloud tines you have ramping 800 gg electro optics that anchors your view on a second half?

Carl Akerman: And given your industry-leading position in electronics, have you seen growing evidence that US cloud titans are seeking to diversify the procurement of optical transubers outside of China. I ask because that would appear to be a share opportunity for you. Thank you.

Matt Murphy: And it's complex and it's going to be, I think, a key part of the solution just given how much--how memory intensive the current set of accelerators are, but also how they're looking at positioning for the next generation. So that's a key IP that Marvell is developing and that will bring to the table as part of our platform offering for AI accelerators from a custom standpoint. Thanks.

Karl Ackerman: I ask because that would appear to be a share opportunity for you. Thank you. Yeah, thanks, Karl. I'd say just broadly, you know, we're, you know, market share and aggregate is pretty high for us in this area. So we tend to be engaged pretty much with everybody. And I think that trend you mentioned about, you know, supply chain diversification and, you know, kind of concerns about you. So political risk across the supply chain, you know, by the hyper scale customers is, is a real thing.

Carl Akerman: Yeah, thanks Carl. I'd say just broadly, you know, we're, you know, market share and aggregates pretty high for us in this area. So we tend to be engaged pretty much with everybody.

Speaker Change #113: And I think that trend you mentioned about supply chain diversification and kind of concerns about geopolitical risk across.

Harlan Sur: Thank you.

Operator: Your xext question comes from Aaron Rakers with Wells Fargo. Your line is now open.

Aaron Rakers: Yeah. Thanks for taking the question. I wanted to ask about the data center switching opportunity now that the 51.2T silicons in the market. If you could give us kind of a thought of like how we should expect that to ramp, appreciating that's more in the next fiscal year. But any kind of visibility in terms of how we should think about that opportunity to participate in these AI fabric build-outs going forward at Marvell? Thank you.

Jane: Supply Jane.

Karl Ackerman: They really care about it. What I would say is there are, there are efforts from both international suppliers into that space of modules as an example to diversify their supply chains and also the U.S, based folks trying to make sure that they have a supply chain as well. That's acceptable. So, you know, look, we're happy to work with everybody. We've driven a very broad ecosystem of partnerships. And I think in any case, you know, we, we should be just fine. I'm not sure there's going to be any major shift. You know, this has kind of been going. It's been underway for many years, quite frankly, relative to just those concerns you mentioned being out there. So we've kind of tracked with those pretty well. We've stayed, I think, very competitive and very neutral relative to how to support everybody and ship as much revenue as we can. So thanks for the question, Karl. And I think that's it. Anything else, Willem or Ashish?

Jane: You know, by the hyper-scale customers is a real thing, they really care about it. What I would say is there are efforts from both international suppliers into that space of modules as an example to diversify their supply chains and also the U.S.-based folks.

Jane: Trying to make sure that they have a supply chain as well that's acceptable. So, you know, look, we're happy to work with everybody. We've driven a very broad ecosystem of partnerships.

Thank you.

Matt Murphy: Yeah. Hey, Aaron, thanks for the question. We outlined this opportunity at the Investor Day we did for AI. And basically, on the 51.2T cycle we're in, we think we're well positioned. We had great success from an engineering standpoint to get the product to market, pretty quickly relative to after--relative to integrating the Innovium asset into Marvell and then bringing that product out with the full Marvell 5-nanometer platform. We see strong interest, not only on the 51.2T generation that we're now starting to go into production to this year with a lead customer, but also our roadmap, we believe, is very compelling as well. And while we're a smaller player here today, we do have tremendous interest in this platform, and we think it's very strategic to Marvell relative to our investments in custom silicon and being the leader in interconnect and also even future technologies like silicon photonics. So to bring it back around, we're not quite sizing it yet in terms of what it can be. It's still early from the standpoint of when that technology is actually going to go into full bore production, but we think we're doing well, and we look forward to providing updates on that, Aaron, as kind of this develops, but we feel good right now. Thanks. Thank you.

Jane: And I think in any case, you know, we should be just fine. I'm not sure there's going to be any major shift. You know, this has kind of been going.

Karl Ackerman: I'm not sure there's going to be any major shift. You know, this has kind of been going. It's been underway for many years, quite frankly, relative to just those concerns you mentioned being out there. So we've kind of tracked with those pretty well. We've stayed, I think, very competitive and very neutral relative to how to support everybody and ship as much revenue as we can. So thanks for the question, Karl. And I think that's it. Anything else, Willem or Ashish?

Jane: This has been underway for many years, quite frankly, relative to just those concerns you mentioned being out there. So we've kind of tracked with those pretty well. We've stayed, I think, very competitive and very neutral, relative to how to support everybody. And ship as much revenues we can.

Speaker Change #115: So thanks for the question, Carl, and I think that's it, anything else Willem or Ashish.

Karl Ackerman: Anything else, Willem or Ashish? Yeah, I think that's it. Thanks, thanks, Matt. Okay, operator. I think we can end the call. Thanks for everybody for joining. Really appreciate it. I look forward to all the catch ups. You know, in the call backs. And then also when we're on the road at the, at the conferences. Thanks everybody. This concludes the question and after session. Thank you for attending today's presentation. We may now disconnect.

Speaker Change #116: Yeah, I think that's the thanks, thanks, Matt.

Speaker Change #117: Okay, operator I think we can end the call. Thanks to everybody for joining. Really appreciate it. I look forward to all the catch ups. You know, in the call backs and then also when we're on the road at the conferences. Thanks everybody.

Unknown Executive: Okay. Thank you.

Speaker Change #118: This concludes our question and after session. Thank you for attending today's presentation. You may now discuss.

Aaron Rakers: Thank you.

Operator: Your next question comes from Srinivas Pajjuri with Raymond James. Your line is now open.

Srinivas Reddy Pajjuri: Thank you. My question is about the traditional businesses, Matt. It's nice to see both of them recovering and I think you're guiding for sequential growth into Q4 as well. Given that they're down so much, I think one is down 50%, the other is down almost 70% from its last year's levels. I'm just wondering how to think about the normalized run rate on a quarterly basis? And when do you think we’ll get there? And then once we get there, how do we think about, I guess, longer-term growth of these businesses? Thank you.

Unknown Executive: Thank you.

And when do you think we'll get there? And then once we get there, you know, how do we think about, I guess, longer from growth of these businesses? Thank you.

Matt Murphy: Yeah. Great. Thanks for the question. And you're right, those businesses have been down significantly from a year-over-year perspective. Some of that is due to also the overshoot that went on in sort of this post-pandemic fueled build-out that occurred and also all the dynamics we've seen across the industry, right, relative to people over ordering and then having too much inventory and then having to go deal with it. The good news is we've now seen that business after a flat first half pickup guiding both enterprise and carrier up mid-single for the third quarter and then growing faster than that in the fourth quarter and that the bookings have improved as well. So that's all positive. The way to think about it is we're trying to drive both of those businesses back, and we believe we have line of sight to provide both of those businesses back to about $1 billion each, call it $2 billion in aggregate, maybe $2.2 billion of run rate on an annualized basis. So we hit the bottom in the first half. It's coming up in Q3, coming up in Q4.

So we hit the bottom in the first half, it's coming up in Q3, coming up in Q4

Matt Murphy: And we're monitoring the setup for next year, but we believe that, that is very achievable, that's planned right now. And then long term, if you go back to all of our Investor Days, probably for the last 4, 5 years, when we've done them, we've always signaled these markets to be kind of low to mid-single growers, and then--from a market standpoint. And then with some content or share gain, you can do a little bit better. 5G was a great example. We had very little content in 4G. We rocketed up in 5G and that changed the trajectory. But going forward, in that kind of a business as well as, say, enterprise, you should assume the market grows at a fairly modest rate. And I think for investors to think about our growth rates in those areas, being in those types of ranges, maybe whatever, mid-single kind of plus--if we can continue to execute. I think that's fairly safe. They're not going to be great enormous growth markets necessarily, but they are very accretive and they're very profitable businesses for Marvell, and they're important because they're long term and they're part of the portfolio. So that's some additional color on how to think about it.

So that's some additional color on how to think about it.

Matt Murphy: So that's some additional color on how to think about it. We are investing there. We're going to make sure that we continue to grow those businesses. But if you just step back we've got 70% of our revenue today in data center. We've got a great, great opportunity with AI and accelerated infrastructure. We're continuing to pivot our R&D in that area overweight. And we think that from a financial return standpoint, this is the best place to put our precious R&D dollars. And so that's the way to think about Marvell going forward, only getting bigger in data center and really maintaining and driving a very healthy enterprise and carrier business long term. Thanks.

We are investing there, we're going to make sure that we continue to grow those businesses but if you just step back, we've got 70% of our revenue today in data center, we've got a great, great opportunity with AI and accelerated infrastructure. We're continuing to pivot our R&D in that area, overweight and we think that from a financial return standpoint, this is the best place to put our precious R&D dollars and so that's the way to think about Marvell going forward, only getting bigger in data center and really maintaining and driving a very healthy enterprise and carrier business long term. Thanks. Thank you.

Srinivas Reddy Pajjuri: Thank you.

Operator: Your next question comes from Quinn Bolton with Needham. Your line is now open.

Quinn Bolton: Hey, Matt. I'll ask a question, but if you don't answer it, maybe I'll follow up. You guys are talking about a nice upside to the $1.5 billion and $2.5 billion target for AI. Is that something you think you're closer to $2 billion than $1.5 billion when all said and done this year. I mean can you give us any sort of quantification of the upside in AI revs? And if not, I'll follow up with a product question.

And then again, the benefit next year is really good, because from an exit standpoint, you know, we'll be at a very healthy level by the fourth quarter.

Quinn Bolton: The prior question, if you don't mind answering just kind of thoughts on the latest DCI traction. I know 400 gig is ramping now, you see demand or starting to ship 800 gig ER. Of the total Electro-Optics business, is DCI kind of 10%, 20% of that total product portfolio? Or is there a different percentage you might give us?

And then to your point in front of us, that road map is getting invested in very aggressively, both at 800 gig and then longer term 1.6 T for DCI. So each of these different key technologies that we have now and interconnect, they're going on gang busters today, but there's also a next generation and a generation after, you know, N plus 2 out that we're investing in very aggressively to maintain market leadership. Yeah, thanks a lot. I think we got two questions left operator.

Yeah, thanks a lot. I think we got two questions left operator.

Operator: Yes. Your next question comes from Harsh Kumar with Piper Sandler. Your line is now open.

Harsh V. Kumar: Hey, guys. First of all, let me just give my congratulations on very strong guide. Stories coming along, all businesses turning. Matt, I wanted to ask you, you seem extremely enthusiastic about custom ASIC, near term as well as next year. Could you talk about some of the major drivers of major products, however you want to do it that are hitting that's giving you this optimistic viewpoint of the near, mid and call it, even the next year outlook?

Could you talk about some of the major drivers or major products, however you want to do it that are hitting that's giving you this, this optimist that this optimist to be the point of the near mid and call it even the next year outlook.

Matt Murphy: Yeah. Well, I think as we had outlined in the past, there's been several programs that we won, a broad range of them actually in custom silicon for data center. And then the ones that were levered to AI have just taken off, and you're starting to see that in our financials. And so I mean maybe not to make it too simple, but the reason we're excited is we're getting bookings and we have backlog and we're planning our capacity ramps for next year, and we're talking about the next generation. And so, I think this was--these went from design wins a few years ago to trying to execute NPI and get the chips taped out to then trying to get them qualified and make sure that they worked relatively quickly once they came back, which they did. And now they're ramping.

And then the ones that were levered to AI, you know, have just just taken off and you're starting to see that in our financials. And so I mean, maybe not to make it too simple, but the reason we're excited is we're getting bookings and we have backlog and we're, you know, planning our capacity ramps for next year and we're talking about the next generation. And so I think, you know, this was these went from design wins a few years ago to trying to execute NPI and get the chips taped out to then trying to get them qualified and make sure that they worked, you know, they worked relatively quickly once they came back, which they did and now they're ramping.

Matt Murphy: So it's just part of the evolution, but I mean, it feels really good when you have backlog and you have bookings and you have a strong outlook from your customer and you're planning your future together. So that's really it. I mean, I can't go into what they're using it for and their workloads and all that kind of thing. But the conviction from our customers on the programs we have are very strong in terms of their commitment to deploy and to deploy very aggressively using us--using their chips plus Marvell is there key partner, and we'll go let them get all the glory as they deploy and they achieve their silicon ambitions with us kind of in the backdrop to make sure we're there to help them, but let them go do what they need to do.

So that's that's really it. I mean, I can't go into what they're using it for and their workloads and all that kind of thing, but the conviction from our customers on the programs we have are very strong in terms of their commitment to deploy and to deploy very aggressively using us using their chips plus Marvel is their key partner and we'll go let them get all the glory as they as they deploy and they achieve their silicon ambitions with us kind of in the backdrop to make sure we're there to help them. But let them go do what they need to do.

Thanks, Matt. Congratulations. Yeah, thanks. I think we all want more.

Harsh V. Kumar: Got it. Thanks, Matt. Congratulations.

Matt Murphy: Yeah, thanks. I think we have one more.

Operator: And our last question comes from Karl Ackerman with BNP Paribas. Your line is now open.

Karl Ackerman: Yes, thank you good afternoon and thank you for fitting me in. Could you talk about the breadth of cloud titans you have ramping 800-gig electro optics that anchors your view on the second half? And given your industry-leading position in electro-optics, have you seen growing evidence that U.S. cloud titans are seeking to diversify the procurement of optical transceivers outside of China? I ask because that would appear to be a share opportunity for you. Thank you.

I ask because that would appear to be a share opportunity for you. Thank you.

Matt Murphy: Yeah. Thanks, Karl. I'd say just broadly we're--market share in aggregate is pretty high for us in this area. So we tend to be engaged pretty much with everybody. And I think that trend you mentioned about supply chain diversification and kind of concerns about geopolitical risk across the supply chain, by the hyperscale customers is a real thing. They really care about it. What I would say is there are efforts from both international suppliers into that space of modules, as an example, to diversify their supply chains and also the U.S.-based folks trying to make sure that they have a supply chain as well that's acceptable. So look, we're happy to work with everybody. We've driven a very broad ecosystem of partnerships and I think in any case, we should be just fine. I'm not sure there's going to be any major shift. This has kind of been going--this has been underway for many years, quite frankly, relative to just those concerns you mentioned being out there. So, we've kind of tracked with those pretty well, and we've stayed, I think, very competitive and very neutral relative to how to support everybody and ship as much revenue as we can. So thanks for the question, Karl. And I think that's it. Anything else, Willem or Ashish?

Matt Murphy: So, we've kind of tracked with those pretty well, and we've stayed, I think, very competitive and very neutral relative to how to support everybody and ship as much revenue as we can. So thanks for the question, Karl. And I think that's it. Anything else, Willem or Ashish?

Anything else, Willem or Ashish?

Yeah, I think that's it. Thanks, thanks, Matt. Okay, operator. I think we can end the call. Thanks for everybody for joining. Really appreciate it. I look forward to all the catch ups. You know, in the call backs. And then also when we're on the road at the, at the conferences. Thanks everybody. This concludes the question and after session. Thank you for attending today's presentation. We may now disconnect.

Willem Meintjes: Yeah, I think that's it. Thanks, Matt.

Okay, operator. I think we can end the call. Thanks for everybody for joining. Really appreciate it. I look forward to all the catch ups. You know, in the call backs. And then also when we're on the road at the, at the conferences. Thanks everybody. This concludes the question and after session. Thank you for attending today's presentation. We may now disconnect.

Matt Murphy: Okay. Operator, I think we can end the call. Thanks for everybody for joining. Really appreciate it, and I look forward to all the catch-ups in the callbacks and then also when we're on the road at the conferences. Thanks, everybody.

Operator: This concludes the question and answer session. Thank you for attending today's presentation, you may now disconnect.

Q2 2025 Marvell Technology Inc Earnings Call

Request a DemoDemo

MRVL

Marvell

Earnings