Q1 2026 Marvell Technology Inc Earnings Call

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Unknown Executive: Good afternoon and welcome to Marvell Technology Inc. first quarter of Fiscal Year 2026 Earnings Conference Call. Note that all participants will be in listen-only mode.

Good afternoon, and welcome to Marvell Technology, Inc. First quarter of fiscal year 2026 earnings Conference call.

All participants will be in listen only mode.

Unknown Executive: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded.

Did you need assistance, please signal a conference specialist by pushing the Sparky followed by zero.

After todays presentation, there will be an opportunity to ask questions. Please note that this event is being recorded.

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

Speaker Change: I would now like to turn the conference over to Mr. <unk>.

Speaker Change: Ashish Saran senior Vice President of Investor Relations. Please go ahead Sir.

Speaker Change: Thank you and good afternoon, everyone welcome to <unk> first quarter fiscal year 2026 earnings call. Joining me today are Matt Murphy, Marvel's Chairman and CEO and will <unk>, our CFO, let me remind everyone that certain comments made today include forward looking statements, which are subject to significant risks and uncertainties.

Ashish Saran: Welcome to Marvell's First Quarter Fiscal Year 2026 Earnings 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 the cautionary 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 10-10-10-Q filing. We do not intend to update a forward-looking statement.

That could cause our actual results to differ materially from management's current expectations. Please review the cautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website as well as our most recent 10-K 10-Q filings, we do not intend to update our forward looking statements during our call today, we will refer to certain non-GAAP.

Ashish Saran: During our call today, we will refer to certain non-GAAP financial measures.

Speaker Change: 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.

Ashish Saran: A reconciliation between our GAAP and non-GAAP financial measures is also available in our earnings press.

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

Matt Murphy: Matt. Thanks, Ashish, and good afternoon, everyone. For the first quarter of fiscal 2026, Marvell delivered record revenue of $1.895 billion, above the midpoint of guidance, reflecting a 4% sequential increase and strong 63% year-over-year growth. Data center and market continued to deliver strong growth, driven by robust AI demand. In addition, we were pleased to see ongoing revenue recovery in our carrier infrastructure and enterprise networking and market. Higher revenue versus our forecast also resulted in record non-gap earnings per share, which came in above the midpoint of guidance. In addition, we significantly increased our stock repurchases in the first quarter, buying back $340 million, a substantial step up from the $200 million repurchased in the prior quarter.

Matt Murphy: Thanks, Ashish and good afternoon, everyone.

Matt Murphy: For the first quarter of fiscal 2026, Marvell delivered record revenue of $1 895 billion above the midpoint of guidance, reflecting a 4% sequential increase and strong 63% year over year growth.

Speaker Change: Data center end market continued to deliver strong growth.

Speaker Change: And by robust AI demand. In addition, we were pleased to see ongoing recut revenue recovery and our carrier infrastructure and enterprise networking end markets.

Speaker Change: Higher revenue versus our forecast also resulted in record non-GAAP earnings per share, which came in above the midpoint of guidance. In addition, we significantly increased our stock repurchases in the first quarter buying back $340 million a substantial step up from the 200 million repurchased in the prior quarter.

Matt Murphy: During the first quarter, we announced the sale of our automotive Ethernet business to Infineon in an all-cast transaction valued at $2.5 billion. We are extremely proud of the progress we have made in organically building and expanding this business, which we expect will deliver a compelling financial outcome . for Marvell Stockholders.

Speaker Change: During the first quarter, we announced the sale of our automotive Ethernet business to Infineon in an all cash transaction valued at $2 5 billion.

Speaker Change: We are extremely proud of the progress we have made inorganically building and expanding this business, which we expect will deliver a compelling financial outcome.

Speaker Change: Marvell stockholders.

Matt Murphy: Closing of this transaction. which we expect within calendar 2025 will provide us with additional flexibility in our capital allocation strategy. We started our new fiscal year on a strong note with Q1 results ahead of plan and are forecasting second quarter revenue of $2 billion at the midpoint of guidance. This represents 57% year-over-year growth and would set another record revenue level for Marvell.

Speaker Change: The closing of this transaction.

Speaker Change: Which we expect within calendar 2025 will provide us with additional flexibility in our capital allocation strategy.

Speaker Change: We started our new fiscal year on a strong note with Q1 results ahead of plan and are forecasting second quarter revenue of 2 billion at the midpoint of guidance. This represents 57% year over year growth and would set another record revenue levels for marvell.

Matt Murphy: Let me now discuss our results and expectations for each of our end markets. In our data center and market, we achieved record revenue of 1.44 billion in the first quarter, growing 5% sequentially and 76% year over year. Looking ahead to the second quarter, we expect this momentum to continue with data center revenue projected to grow sequentially in the mid-single-digit range on a percentage basis, while maintaining strong year-over-year growth. These strong results, along with our second-quarter guidance, are being driven by the rapid scaling of our custom AI silicon programs to high-volume production, along with robust shipments of our electro-optics products for AI and cloud applications.

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

Speaker Change: And our data center end market, we achieved record revenue of 1.44 billion in the first quarter growing 5% sequentially and 76% year over year.

Speaker Change: Looking ahead to the second quarter, we expect this momentum to continue with datacenter revenue projected to grow sequentially in the mid single digit range on a percentage basis, while maintaining strong year over year growth.

Speaker Change: These strong results along with our second quarter guidance are being driven by the rapid scaling of our custom AI silicon programs to high volume production, along with robust shipments of our electro optics products for AI and cloud applications.

Matt Murphy: We continue to expand the capabilities of our advanced technology platform to enable our customers to build full rack-level custom infrastructure, including innovative technologies such as custom high-bandwidth memory and co-package options. Marvell's custom HBM compute architecture enhances XPUs by optimizing the I-O interfaces between accelerator silicon and the memory embedded in the package. This enables AI custom compute accelerators with much more efficient integration of main memory, which can increase performance and reduce run times, resulting in increased utilization. We continue to see strong interest from multiple customers who are targeting the highest performance and optimized TCO for their upcoming AI solutions that leverage the most advanced HBM.

Speaker Change: We continue to expand the capabilities of our advanced technology platform to enable our customers to build full rack level custom infrastructure, including innovative technologies, such as custom high bandwidth memory and so package optics.

Speaker Change: Marvell is custom HBM compute architecture enhances X P used by optimizing the Io interfaces between accelerator silicon in the memory embedded in the package.

Speaker Change: Enabled AI custom compute accelerators with much more efficient integration of main memory, which can increase performance and reduced run times, resulting in increased utilization.

Speaker Change: We continue to see strong interest from multiple customers, who are targeting the highest performance and optimized tcl for their upcoming AI solutions that leverage the most advanced HTS.

Matt Murphy: Marvell's Breakthrough Co-Package Optics platform enables customers to integrate our silicon photonics light engine into future custom AI accelerators. Co-Package Optics can drive a transition from copper interconnects to optical fiber for scale-up AI clusters. This technology will enable larger AI servers with significantly higher total system memory capacity and processing capability, which we expect will provide the scaling headroom required for the next wave of AI models. We expect this transition from copper, which does not contain any active silicon, to optical interconnects to significantly expand Marvell's interconnect revenue and market opportunities.

Speaker Change: Marvell is breakthrough co package optics platform enables customers to integrate our silicon photonics light engine into future customer AI accelerators go package optics can drive a transition from copper interconnects to optical fiber for scale up AI clusters. This technology will enable larger AI servers with significantly higher total CIS.

Speaker Change: Memory capacity and processing capability, which we expect will provide the scaling headroom required for the next wave of AI models.

Speaker Change: We expect this transition from copper, which does not contain any active silicon optical interconnects to significantly expand marvell interconnect revenue and market opportunities.

Matt Murphy: Earlier this month, we announced two new additions to our custom platform. First, we announce the partnership with NVIDIA, adding their NVLink Fusion technology to our expanding custom platform. Marvell Custom Silicon with NVLink Fusion provides our customers with an accelerated path to custom scale-up solutions, offering greater flexibility and choice in developing next-generation AI infrastructure. Announcement further validates the proliferation of custom XPUs as a strong complement to merchant In addition, earlier today we announced Marvell's new multi-die packaging platform, the first of many advanced packaging innovations we are bringing to the market. Solutions is already qualified and has entered production in support of a customer-specific XPU program.

Speaker Change: Earlier this month, we announced two new additions to our custom platform.

Speaker Change: First we announced a partnership with Nvidia, adding their envy linked fusion technology to our expanding customer platform.

Speaker Change: Barbell custom silicon with NV linked fusion provides our customers with an accelerated path to custom scaleup solutions offering greater flexibility and choice in developing next generation AI infrastructure.

Speaker Change: As announced that further validates the proliferation of custom next views as a strong complement to merchant solutions.

Speaker Change: In addition earlier today, we announced a marvelous new multi die packaging platform. The first of many advanced packaging innovations, we are bringing to the market.

Speaker Change: The solution is already qualified and has entered production in support of our customer specific SBU program.

Matt Murphy: Platform enables customers to realize multi-dye architectures utilizing differentiated Marvell Design Interposer technology. Marvell's approach can enable more efficient dye-to-dye interconnect, lower power consumption, increased yields, and lower product cost. Marvell's solution offers a compelling alternative to traditional silicon interposers for custom cloud applications. We expect to continue to proliferate this technology more broadly in next generation design.

Speaker Change: This platform enables customers to realize multi die architectures utilizing differentiated marvell designed interpose our technology.

Speaker Change: [noise] approach can enable more efficient died at high interconnect lower power consumption increase yields and lower product cost Marvell solution offers a compelling alternative to traditional silicon. Another interpose is for custom cloud applications. We expect to continue to proliferate. This technology more broadly and next generation designs.

Matt Murphy: Moving on to the progress we are making in our custom business, we are benefiting from revenue contributions across multiple programs, including XPUs and other accelerators. Our lead XPU program for a large US hyperscale data center customer is doing extremely well and has become a key revenue driver for our custom business. I'm incredibly proud of our team and the close collaboration with this customer to drive this program to volume production with A0 Silicon and meet the customer Steve Rant. As I mentioned last quarter, we are fully engaged with this customer on the follow on generation, and I'm pleased to report that we have now secured three nanometer wafer and advanced packaging capacity and expect to start production in calendar 2026.

Speaker Change: Moving on to the progress, we're making in our custom business. We are benefiting from revenue contributions across multiple programs, including <unk> and other accelerators.

Speaker Change: Our lead SBU program for a large U S. Hyperscale datacenter customer is doing extremely well and has become a key revenue driver for our custom business I'm incredibly proud of our team and the close collaboration with this customer to drive this program to volume production with eight zero silicon and meet the customers' steep ramp.

Speaker Change: As I mentioned last quarter, we are fully engaged with this customer on the follow on generation and I'm pleased to report that we have now secured three nanometer wafer and advanced packaging capacity and expect to start production in calendar 2026.

Matt Murphy: At the same time, our architecture team is working with the customer to support the definition of the generation after that. This is all consistent with the multi-generational nature of these engagements, reflecting the benefit of working with Marvell over the long term. As a result, we anticipate that our revenue from custom AI XPUs for this customer will continue to grow next year, fiscal 2027 and beyond.

Speaker Change: At the same time, our architecture team is working with the customer to support the definition of the generation after that.

Speaker Change: This is all consistent with the multi generational nature of these engagements, reflecting the benefit of working with marvell over the long term.

Speaker Change: As a result, we anticipate that our revenue from custom ASB used for this customer will continue to grow next year fiscal 2027 and beyond.

Matt Murphy: At our AI Day last year, we also announced a significant design win for a custom AIX-VU with another U.S. hyperscale. Joint development on this program continues to progress well, and we are already engaged with this same customer on the architecture for the follow-on generation of this AIX-VU program. I'm very pleased with the strong progress we are making across both our current and upcoming custom programs. This momentum reinforces our confidence in achieving our long-term goals for custom revenue.

Speaker Change: At our AI day last year, we also announced a significant design win for a custom AI X deal with another U S. Hyperscale.

Speaker Change: Development on this program continues to progress well and we are already engaged with the same customer on the architecture for the follow on generation of the <unk> program.

Speaker Change: I'm very pleased with the strong progress, we're making across both our current and upcoming customer programs. This momentum reinforces our confidence in achieving our long term goals for customer revenue.

Matt Murphy: We will be highlighting our broad and expanding range of opportunities at our Custom AI Investor event on June 17th. I will share more details about this event in a moment.

Speaker Change: We will be highlighting our broad and expanding range of opportunities that are custom AI investor of that on June 17th I will share more details about this event in a moment.

Matt Murphy: Turning to our InterConnect portfolio, our PAM and DCI franchises continue to lead the industry in enabling the build-out of AI and cloud infrastructure. At this year's Optical Fiber Conference, we showcased a broad range of products, technologies, and ecosystem initiatives designed to power the next generation of scale-up and scale-out AI deployments, including The industry's first 400-gig per lane PAM technology, a critical step towards 3.2T optical interconnects, enabling pluggable transceiver modules to remain the dominant solution for scale-out connectivity for the foreseeable future. Co-packaged optics and co-packaged copper technologies providing greater interconnect densities and longer reach for scale-up networks.

Speaker Change: Turning to our interconnect portfolio, our Pam and Dci franchises continued to lead the industry and enabling the build out of AI and cloud infrastructure at this year's optical fiber conference. We showcased a broad range of products technologies and ecosystem initiatives designed to power. The next generation of scale up and scale out AI deployments, including.

Speaker Change: The industry's first 400 gig per lane, Pam technology, a critical step towards three <unk> optical interconnects, enabling plug a hole transceiver modules to remain the dominant solution for scale out connectivity for the foreseeable future.

Speaker Change: Co package optics, and co package copper technologies, providing greater interconnect densities and longer reach for scale up networking.

Matt Murphy: Silicon Photonics Light Engines, scaling up to 6.4T, consolidating hundreds of components into compact modules optimized for both pluggable and CPO applications. 1.6T Linear Drive Plugable Optical Modules using Marvell Silicon Photonic Lighting. The industry's first 3 nanometer 1.6 T PAM-4 DSP featuring 200 gig per lane electrical and optical interfaces, enabling customers to reduce module power consumption by more than 20% compared to its predecessors. Next Generation 800 Gig DCI Modules, supporting data transmission over distances up to 1,000 kilometers. Production Ready 1.6T AEC DSPs for Emerging 200G Per Lane Accelerated Infrastructure Coherent Light DSPs enabling power and performance optimized solutions for the emerging market of distributed campus data center interconnects, spanning distances up to 20 kilometers.

Speaker Change: Silicon Photonics light engines scaling up to $6 40, consolidated hundreds of components into compact modules optimized for both plausible and CPO applications.

Speaker Change: 116 linear drive plug a hole optical modules using marvell silicon Photonics light engine.

Speaker Change: The industry's first three nanometer 160, Pam four DSP, featuring 200 gig per lane, electrical and optical interfaces, enabling customers to reduce module power consumption by more than 20% compared to its predecessor.

Speaker Change: Next generation 800 gig Dci modules supporting data transmission over distances up to 1000 kilometers.

Speaker Change: Production ready 160, <unk> Dsp's for emerging 200 gig per lane accelerated infrastructure.

Speaker Change: <unk> light dsp's, enabling power and performance optimized solutions for the emerging market of distributed campus data center interconnect spanning distances up to 20 kilometers.

Matt Murphy: And finally, PCIe Gen 6 and Gen 7 SerDes for end-to-end connectivity over We received highly positive feedback from customers, partners, and industry analysts during the event, making OFC 2025 another home run for the Marvell team.

Speaker Change: And finally pcie Gen six and Gen 700, <unk> for end to end connectivity over optics.

Speaker Change: We received highly positive feedback from customers partners and industry analysts during the event, making OFC 2025, another home run for the Marvell team.

Matt Murphy: Now, let me turn to Marvell's Enterprise Networking and Carrier Infrastructure and Markets. In the first quarter, Enterprise Networking revenue was $178 million, while Carrier Infrastructure revenue totaled $138 million. Collectively, revenue grew by 14% sequentially, exceeding the midpoint of our forecast and reflecting the ongoing recovery in both end markets.

Speaker Change: Now, let me turn to Marvell enterprise networking carrier infrastructure end markets in the first quarter enterprise networking revenue was $178 million, while carrier infrastructure revenue totaled $138 million collectively revenue grew by 14% sequentially exceeding the midpoint of our forecast and reflecting the ongoing recut.

Speaker Change: In both end markets.

Matt Murphy: Looking ahead to the second quarter of fiscal 2026, we expect aggregate revenue from enterprise networking and carrier infrastructure to grow sequentially in the mid-single-digit range on a percentage .

Speaker Change: Looking ahead to the second quarter of fiscal 2026th we expect aggregate revenue from enterprise networking and carrier infrastructure to grow sequentially in the mid single digit range on a percentage basis.

Matt Murphy: In the consumer end market, first quarter revenue was $63 million, representing a 29% sequential decline. Looking ahead to the second quarter, we expect consumer revenue to grow by approximately 50% sequentially. These sequential changes are largely driven by seasonality and gaming demand, which continues to be the primary factor driving our consumer growth.

Speaker Change: In the consumer end market first quarter revenue was $63 million, representing a 29% sequential decline looking.

Speaker Change: Looking ahead to the second quarter, we expect consumer revenue to grow by approximately 50% sequentially.

Speaker Change: <unk> changes are largely driven by seasonality in gaming demand, which continues to be the primary factor driving our consumer business.

Matt Murphy: Turning to our automotive and industrial end market, first quarter revenue was $76 million, declining by 12% sequentially. While we saw sequential growth in our automotive end market, this was more than offset by a decline in our industrial end market, where order patterns can be lumpy in any given quarter.

Speaker Change: Turning to our automotive and industrial end market first quarter revenue was $76 million declining by 12% sequentially. While we saw sequential growth in our automotive end market. This was more than offset by a decline in our industrial end market or order patterns can be lumpy in any given quarter.

Matt Murphy: Looking ahead to the second quarter of fiscal 2026. We anticipate overall revenue from the auto and industrial end market to be flat on a sequential basis.

Speaker Change: Looking ahead to the second quarter of fiscal 2026.

Speaker Change: Anticipate overall revenue from the auto and industrial end market to be flat on a sequential basis.

Matt Murphy: In summary, in the first quarter of fiscal 2026, we continue to deliver operating margin expansion, earnings per share growth, and new revenue records. These results reflect strong contributions from our AI-driven data center and market and ongoing recovery in our enterprise networking and carrier infrastructure. While there are ongoing macroeconomic uncertainties, we are guiding for continued growth in the second fiscal quarter.

Speaker Change: In summary in the first quarter of fiscal 2026th we continued to deliver operating margin expansion earnings per share growth and new revenue Records. These results reflect strong contributions from our AI driven data center end market and ongoing recovery in our enterprise networking and carrier infrastructure.

Speaker Change: Yeah.

Speaker Change: While there are ongoing macroeconomic uncertainties, we are guiding for continued growth in the second fiscal quarter. We continue to closely monitor the broader environment to assess potential long term impacts.

Matt Murphy: We continue to closely monitor the broader environment to assess potential long-term impacts. As I mentioned during our March earnings call, AI now represents the majority of our data center revenue, and we expect the relative proportion of AI-related revenue to grow further in the coming years, driven in large part by our custom silicon business. We've made tremendous progress since our AI era event last year, and in light of this momentum, we are hosting a dedicated forum on June 17th for investors to gain deeper insight into Marvell's unique position in the custom silicon market. This event will be broadcast live and provide an ideal setting to showcase our differentiated technology platform and provide an opportunity to hear directly from me and a broad cross-section of Marvell's engineering leadership and members of my direct staff.

Speaker Change: As I mentioned during our March earnings call AI now represents the majority of our data center revenue and we expect the relative proportion of AI related revenue to grow further in the coming years driven in large part by our custom silicon business.

Speaker Change: We've made tremendous progress since our AI era of that last year and in light of this momentum we are hosting a dedicated for them on June 17th for investors to gain deeper insight into Marvell has a unique position in the custom silicon market.

Speaker Change: So that will be broadcast live and provide an ideal setting to showcase our differentiated technology platform and provide an opportunity to hear directly from me and a broad cross section of Marvell Engineering leadership and members of my direct staff press.

Matt Murphy: Presentations will be followed by a Q&A session providing investors and analysts an opportunity to ask questions. During the event, we will highlight our expertise in system and semiconductor design, our advanced process and package roadmap, and our comprehensive portfolio of semiconductor platform solutions and IP. Complimenting this technical deep dive, the agenda will include a market-focused section with updates on the expanding market opportunity for custom silicon, a robust design-win pipeline, and the growing role of custom silicon in AI infrastructure. We will also share our progress towards the market share goals we set at our AI era event last year, along with our vision for significant growth in the years ahead.

Speaker Change: Presentations will be followed by a Q&A session, providing investors and analysts an opportunity to ask questions.

Speaker Change: During the event, we will highlight our expertise in system and semiconductor design, our advanced process and package roadmap and our comprehensive portfolio of semiconductor platform solutions in IP.

Speaker Change: Complementing this technical deep dive. The agenda will include a market focus section with updates on the expanding market opportunity for custom silicon a robust design win pipeline and the growing role of custom silicon and AI infrastructure.

Speaker Change: We will also share our progress towards the market share goals, we set at our AI era that last year, along with our vision for significant growth in the years ahead we.

Matt Murphy: We are excited to share more details about this incredible custom silicon opportunity on June 17th. Looking more broadly, we continue to see strong tailwinds in AI, including robust capital expenditure plans from hyperscalers, an increasing number of sovereign data center announcements, and an emerging group of hyperscalers further expanding the market. These fast-growing markets present us with a diverse set of opportunities, increasing our confidence in the long-term potential of our data center business. In addition, we are seeing an encouraging recovery in carrier infrastructure and enterprise networking, their second quarter forecast representing the fifth straight quarter of sequential revenue growth for these combined end markets.

Speaker Change: We are excited to share more details about this incredible custom silicon opportunity on June 17th.

Speaker Change: Looking more broadly we continue to see strong tailwind in AI, including robust capital expenditure plans for a hyperscale or an increasing number of sovereign data center announcements and an emerging group of Hyperscale is further expanding the market.

Speaker Change: These fast growing markets present us with a diverse set of opportunities increasing our confidence in the long term potential of our datacenter business and.

Speaker Change: In addition, we are seeing an encouraging recovery and carrier infrastructure and enterprise networking, there second quarter forecast, representing the fifth straight quarter of sequential revenue growth for these combined end markets.

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

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

William: Thanks, Matt and good afternoon, everyone. Let me start with the summary of financial results for first quarter of fiscal 2026.

Willem Meintjes: Let me start with a summary of financial results for first quarter of fiscal 2026. Revenue in the first quarter was $1.895 billion, exceeding the midpoint of our guidance, growing 63% year-over-year and 4% sequentially. Data Center was our largest in market contributing 76% of total revenue. gap gross margin was 50.3% non gap gross margin was 59.8% Moving on to Operating Expense. GAAP operating expenses were $682 million, including stock-based compensation, amortization of acquired intangible assets, restructuring costs, and acquisition-related costs. Non-GAAP operating expenses came in at $486 million, slightly below guidance. Our Gap Operating Margin was 14.3% while Non-Gap Operating Margin was 34.2%.

William: Revenue in the first quarter was $1 895 billion exceeding the midpoint of our guidance growing 63% year over year and 4% sequentially.

William: Data center was our largest end market contributing 76% of total revenue.

Speaker Change: Gross margin was 53% non-GAAP gross margin was 59, 8% moving on to operating expenses GAAP.

Speaker Change: GAAP operating expenses were $682 million, including stock based compensation amortization of acquired intangible assets restructuring costs acquisition related costs non-GAAP operating expenses came in at $486 million slightly below guidance.

Speaker Change: GAAP operating margin was 14, 3%, while non-GAAP operating margin was 34, 2%.

Willem Meintjes: For the first quarter, Gap Earnings Per Deleted Share was 26%. Non-GAAP earnings per diluted share was $0.62, reflecting year-over-year growth of 158%, which is more than double the pace of revenue growth, demonstrating the significant operating leverage in our model.

Speaker Change: For the first quarter GAAP earnings per diluted share was <unk> 20.

Speaker Change: non-GAAP earnings per diluted share was <unk> 62, reflecting year over year growth of 158%, which is more than double the pace of revenue growth demonstrating the significant operating leverage in our model.

Willem Meintjes: Now, turning to our cash flow and balance sheet. Cash flow from operations in the first quarter was $333 million. Our inventory at the end of the first quarter was $1.07 billion, an increase of $42 million from the prior quarter to support the growth in our business. We return $52 million to shareholders through cash dividends. In addition, reflecting our strong belief in Marvell's future prospects, we significantly increased repurchases in the first quarter, buying back $340 million of our stock, stepping up from the $200 million we repurchased in the prior quarter. Our total debt was $4.2 billion with a gross debt to EBITDA ratio of 1.8 times and a net debt to EBITDA ratio of 1.42 times.

Speaker Change: Now turning to our cash flow and balance sheet cash flow from operations in the first quarter was $333 million.

Speaker Change: Inventory at the end of the first quarter was one 7 billion an increase of $42 million from the prior quarter to support the growth of our business, we returned $52 million to shareholders through cash dividends. In addition, reflecting our strong belief in <unk> future prospects, we significantly increased.

Speaker Change: Repurchases in the first quarter buying back $340 million of our stock stepping up from the $200 million, we repurchased in the prior quarter.

Speaker Change: Our total debt was $4 2 billion with a gross debt to EBITDA ratio of one eight times and a net debt to EBITDA ratio of 142 times.

Willem Meintjes: Our debt ratios have continued to improve as we have driven an increase in our EBITDA. As of the end of the first fiscal quarter, our cash and cash equivalents were $886 million.

Speaker Change: Data ratios continue to improve as we have driven an increase in our EBITDA.

Speaker Change: At the end of the first fiscal quarter, our cash and cash equivalents were $886 million.

Willem Meintjes: Turning to our guidance for the second quarter of fiscal 2026, we are forecasting revenue to be in the range of $2 billion, plus or minus 5%. We expect our gap gross margin to be between 50% and 51%. We expect our non-gap gross margin to be between 59% and 60%. Looking forward, we anticipate that the overall level of revenue and product mix will remain key determinants of our gross margin in any given quarter. For the second quarter, we project our gap operating expenses to be approximately $735 million. We anticipate our non-GAAP operating expenses to be approximately $495 million.

Speaker Change: Turning to our guidance for the second quarter of fiscal 2026.

Speaker Change: Forecasting revenue to be in the range of 2 billion plus or minus 5%.

Speaker Change: Our GAAP gross margin to be between 50% and 51%.

Speaker Change: Our non-GAAP gross margin to be between 59% and 60% looking forward, we anticipate that the overall level of revenue and product mix will remain key determinants of our gross margin in any given quarter.

Speaker Change: For the second quarter, we project, our GAAP operating expenses to be approximately $735 million.

Speaker Change: We anticipate our non-GAAP operating expenses to be approximately $495 million.

Willem Meintjes: For the second quarter, we expect other income and expense, including interest on our debt, to be approximately $49 million. We expect a non-gap tax rate of 10% for the second quarter. We expect our basic weighted average shares outstanding to be $864 million and our diluted weighted average shares outstanding to be $874 million. We anticipate GAAP earnings per diluted share in the range of 16 cents to 26 cents. We expect non-GAAP earnings for diluted share in the range of $0.62 to $0.72.

Speaker Change: For the second quarter, we expect other income and expense, including interest on our debt to be approximately $49 million.

Speaker Change: We expect our non-GAAP tax rate of 10% for the second quarter.

Speaker Change: We expect a basic weighted average shares outstanding to be 864 million and diluted weighted average shares outstanding to be 874 million.

Speaker Change: Anticipate GAAP earnings per diluted share in the range of 16 to 26.

Speaker Change: Expect non-GAAP earnings per diluted share in the range of <unk> 62 to 72 six.

Willem Meintjes: In summary, we continue to drive strong revenue growth, expand our operating margins, generate strong cash flow and returning increasing amounts of capital to our stockholders.

Speaker Change: In summary, we continue to drive strong revenue growth expand our operating margins and generate strong cash flow and returning increasing amounts of capital to our stockholders.

Willem Meintjes: We are looking forward to completing the sale of our automotive Ethernet business to Infineon, which will provide us with even more flexibility to execute on our capital allocation strategy.

Speaker Change: Looking forward to competing the sale of our automotive Ethernet business to Infineon, which will provide us with even more flexibility to execute on our capital allocation strategy.

Unknown Executive: With that, we are ready to start our Q&A session.

Speaker Change: We are ready to start our Q&A session. 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. Thank you, sir. We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using your speakerphone, please pick up your handset before pressing. And to withdraw your question, please press star then two. And in the interest of time, please restrict yourself to one question only. And if you have additional questions, please rejoin the.

Speaker Change: Thank you Sir.

Speaker Change: We will now begin the question and answer session.

Speaker Change: Ask a question you May press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys and to withdraw. Your question. Please press Star then two and then the interest of time, please restrict yourself to one question only.

Speaker Change: You'll have additional questions. Please rejoin the queue.

Unknown Executive: At this time, we will pause momentarily to assemble our rafts.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Vivek Arya: And our first question comes from Vivek Arya at Bank of America, please go ahead. Thank you and thanks Matt for clarifying that you have that 3nm program at your large XTU customer and have the follow-on program at the other large customer just given all the Asia supply chain noise. I guess I have two related questions. One is, what is the direction of content in these next generation programs, you know, is it up, down, down, flat? And number two, are you exclusive on these 3nm XTUs or do you expect to share that program given that, you know, your competition also seems to be convinced that they have the program?

Vivek Arya: And our first question comes from Vivek Arya of Bank of America. Please go ahead.

Vivek Arya: Thank you and thanks, Matt for clarifying that you have that three nanometer program at your large extra your customer and have the follow on program at the other large customer just given all the Asia supply chain noise I guess I had two related questions. One is what is the direction of content in these next generation programs.

Vivek Arya: As a top down flat and number two are you exclusive on these three nanometer X to use or do you expect to share that program given that you know your your competition also seems to be convinced that they have the program. So just comments on content and exclusivity. Thank you.

Vivek Arya: So just, you know, comments on content and exclusivity.

Matt Murphy: Yeah, hey, Vivek, thanks for the question. So first, yeah, I'm glad you said it. I can certainly appreciate the challenge for investors given the news flow that is coming out on seemingly a weekly basis here. The fact is that these Asia supply chain sources have an incomplete view We run a very tight ship here at Marvell. We don't share customer confidential information. We treat that with the highest priority. So they simply have no idea what we're doing for our customer.

Vivek Arya: Yeah, Hey, Vivek. Thanks for the question.

Vivek Arya: So first yes.

Vivek Arya: I'm glad you said it I can certainly appreciate the challenge.

Vivek Arya: For investors given the news flow that is coming out on siem seemingly a weekly basis here.

Vivek Arya: The fact is that these Asia supply chain sources have an incomplete view.

Vivek Arya: We run a very tight ship here at Marvell.

Vivek Arya: Don't share customer confidential information, we treat that with the highest priority.

Vivek Arya: So they simply have no idea of what we're doing for our customer.

Matt Murphy: So let me state the facts. as they exist today. We're the incumbent shipping the current generation of this AIXPU, and as detailed, we've had a very successful and rapid ramp on this program from A0, which is first-time success, to high-volume production. I've talked about this for a couple of quarters, we've been engaged with this customer on the follow-on generation of this XPU. This next generation program has continued to move forward and this quarter we have secured three nanometer wafer and advanced packaging capacity and that's for 2026 where we expect to start production and that would be subject to the typical completion of our customers qualification cycles which we now have some experience with.

Vivek Arya: So let me state the facts.

Vivek Arya: As they exist today.

Vivek Arya: We're the incumbent shipping the current generation of this AI SBU and detailed we've had a very successful and rapid ramp on this program from a zero, which is first time success to high volume production.

Vivek Arya: I've talked about this for a couple of quarters.

Vivek Arya: <unk> been engaged with this customer on the follow on generation of this SBU.

Vivek Arya: This next generation program has continued to move forward and this quarter, we have secured three nanometer wafer and advanced packaging capacity.

Vivek Arya: And that's for 2026, where we expect to start production.

Vivek Arya: And that would be subject to the typical completion of our customers' qualification cycles, which we now have some experience with <unk>.

Matt Murphy: And so assuming AI CapEx continues to grow, we expect our custom silicon revenue. to continue to grow next year through program transitions at this customer. So look, our customers have relationships with many partners and they do that to build out their whole silicon portfolio. The key point is that irrespective of any of these relationships, we expect our revenue to continue to grow on a multi-year, multi-generational basis. with this customer. And given the volumes that have materialized for XPUs, it's certainly possible and likely that customers and our customer may be pursuing multiple paths to meet their requirements.

Vivek Arya: So assuming AI Capex continues to grow we expect our custom silicon revenue.

Vivek Arya: To continue to grow next year through program transitions at this customer.

Vivek Arya: So look our customers have relationships with many partners.

Vivek Arya: And they do that to build out there.

Vivek Arya: Silicon portfolio.

Vivek Arya: Key point is that irrespective of any of these relationships. We expect our revenue to continue to grow on a multi year multi generational basis.

Vivek Arya: With this customer.

Vivek Arya: And given the volumes that have materialized for XP use its certainly possible and likely.

Vivek Arya: Customers in our customer may be pursuing multiple paths to meet their requirements.

Matt Murphy: So thank you for asking this important question, Vivek. I think my answer is as clear as it could be.

Matt Murphy: So thank you for asking this important question Vivek I think my answer is as clear as it could be.

Vivek Arya: Thanks.

Matt Murphy: Yes.

Matt Murphy: Thank you.

Unknown Executive: Thank you.

Matt Murphy: Thank you.

Ross Seymour: Next question will be from Ross Seymour at Deutsche Bank. Please go ahead. Hi, Matt. Thanks for that color. Following on Vivek's question.

Speaker Change: Next question will be from Ross Seymore Deutsche Bank. Please go ahead.

Ross Seymore: Hi, Matt Thanks for that color of following on <unk> question.

Ross Seymour: One of your primary XPU competitors has talked about engagements at additional customers and not necessarily to front run anything you may or may not say on June 17. But how do you see Marvell's ability to support a broader customer base beyond the initial Slash four that you have depending upon if we're talking FPUs or Yeah, thanks, Ross.

Ross Seymore: One of your primary SBU competitors has talked about engagements at additional customers and not necessarily to front run anything you may or may not say on June 17th, but how do you see marvell ability to support them.

Ross Seymore: <unk> customer base beyond the initial I guess three slash four that you have depending upon if we're talking X P use or connectivity.

Matt Murphy: Yes, Thanks, Ross Yeah, we'll cover this certainly at the at the AI Investor event, we will be holding but just to give you. Some color. We absolutely have the capacity engineering wise to expand our portfolio and expand our engagements.

Matt Murphy: Yeah, we'll cover this, certainly at the at the AI investor event we'll be holding. But just to give you some some color, we absolutely have the capacity engineering wise to expand our portfolio and expand our engagements. If you look at Marvell's R&D spend over the last few years, through cycle, we've made increases there, and then within that, as part of our capital allocation strategy, we've aggressively repurposed and reallocated our talent and our teams to this massive data center and AI opportunity. So, if you look at just the raw R&D spending, the investments we're making in next generation technologies, and again, we're going to cover all this at the AI Day, we are extremely well positioned to support and are supporting multiple increased engagements across a number of programs that we'll detail and we'll talk about and we'll frame at the AI Investor Event, but I think we're very well positioned to support designs that can really grow the company to even a much larger scale.

Speaker Change: If you look at Marvell.

Speaker Change: R&D spend over the last few years through cycle.

Speaker Change: <unk> made increases there and then within that as part of our capital allocation strategy, we've aggressively repurposed and reallocated our talent and our teams to this massive data center and AI opportunity. So if you look at just the raw R&D spending the investments, we're making in next generation technologies and again.

Speaker Change: We're going to cover all of this at the AI day.

Speaker Change: We are extremely well positioned to support and are supporting.

Speaker Change: Multiple increased engagements across a number of programs.

Speaker Change: That will detail and we'll talk about and we will frame at the AI investor event, but I think we're very well positioned to support.

Speaker Change: Designs that can that can really grow the company to even a much larger scale and level.

Tore Svanberg: And I would say also, by the way, Next question will be from Tore Svanberg at Stiefel. Please go ahead. Yes, thank you and congrats on the results. That may be in the spirit of clarifying things. a lot of debates out there about your SIRTIS technology, especially for 200G SIRTIS. So maybe you could talk a little bit about Marvell's positioning there and maybe related to that, how this relationship with NVIDIA is going to work out. I'm sure there's a lot you can't share with us, but I tried anything. Yeah, sure. Yeah.

Speaker Change: And I would say also by the way.

Speaker Change: It's not just the top sort of four <unk>.

Speaker Change: I think theres been a it's been a really interesting emergence over the last year or so of the next wave of Hyperscale kind of class.

Speaker Change: Customers that can benefit from our technology relative to going custom. So we're going to we're going to talk about all of that just a couple of weeks out here look forward to talking to you then.

Speaker Change: Thank you.

Speaker Change: Next question will be from tore Svanberg of Stifel. Please go ahead.

Speaker Change: Yes, Thank you and congrats on the results.

Speaker Change: That may be in the spirit of clarifying things.

Speaker Change: There's a lot of debate out there about your sort of technology, especially for 200 gig <unk>. So maybe you could talk a little bit about <unk> positioning there.

Speaker Change: And maybe related to that how this relationship with Nvidia is going to work out I'm sure. There's a lot you can share with us but.

Speaker Change: I try it anyway.

Speaker Change: Yes sure yes.

Matt Murphy: On the first topic, and we'll actually be showcasing this at our AI event, R30's technology remains best in class, both from a performance standpoint, as well as a time to market standpoint. If you recall, we've had now leadership announcements and production, by the way, on 200 gig. It's performing extremely well. And we just showed off at OFC. the first and only 400 gig per lane demonstrations with a very aggressive road map there. So that is in great shape, our technology across the board, both electrical and optical.

Speaker Change: On the first topic and well actually.

Speaker Change: Showcasing this AI event or.

Speaker Change: Our <unk> technology remains best in class, both from a performance standpoint, as well as the time to market standpoint, if you recall, we've had now leadership announcements and production by the way.

Speaker Change: On 200 gig, it's performing extremely well.

Speaker Change: And we just showed off at OFC.

Speaker Change: The first and only 400 gig per lane.

Speaker Change: Demonstrations with very aggressive roadmap there.

Speaker Change: So that that is in great shape.

Speaker Change: Our technology across the board, both electrical and optical.

Speaker Change: <unk>.

Matt Murphy: And tell me your second question. Yeah, it was the Enviolink fusion and how that's going to work out. Yeah, so that's, we're excited about that partnership. I think we're, I think it's a sign that kind of demonstrates how, well, one, you know, we're deeply engaged in the ecosystem, Tori, with key partners. And the second, I think it's some validation as well, that from a market standpoint, there is a complementary role for custom, even as acknowledged by NVIDIA, who, you know, can leverage sort of the R&D investment they've already put in, and their RackScale solutions, but with people that want to do their own XPUs.

Speaker Change: And tell me your second question.

Speaker Change: Yes, it was.

Speaker Change: Bill link fusion, and how thats going to work out.

Speaker Change: Yeah. So we're.

Speaker Change: We're excited about that partnership I think we're it's I think it's a sign that.

Speaker Change: Kind of demonstrates how.

Speaker Change: Well, one we're deeply engaged in the ecosystem.

Speaker Change: Lori with key partners and the second I think it's some validation as well that from a market standpoint, there is a complementary role for custom even that's acknowledged by Nvidia, who can leverage sort of the R&D investment they've already put in and the rack scale solutions, but with people that wanted to do their own X to use.

Matt Murphy: And so we're part of that discussion, and we're going to help enable that, if that's the direction our customers want to go. And we just view it as another key piece to the whole portfolio that we offer to customers, kind of end-to-end. And I detailed some of those in my prepared remarks as well, around things like custom HBM, co-package optics, advanced packaging, and others. These are really just, it's really a suite of technologies to give the broadest offerings to our customers with the best-in-class technology. Thanks for all that color Matt. Yep.

Speaker Change: And so we're part of that discussion and we're going to help enable that if that's the direction or our customers want to go and we just view it as another key piece to the whole portfolio that we offer to customers kind of end to end and I detailed some of those in my prepared remarks, as well around things like custom <unk> co.

Speaker Change: Co package optics advanced packaging and others. These are really just its really part of a suite of technologies to give the broadest offerings to our customers with the best in class technology.

Vivek Arya: Thanks for all that color Matt.

Vivek Arya: Yes.

Timothy Arcuri: Next question will be from Timothy Arcuri at UBS. Please go ahead. Thanks a lot.

Vivek Arya: Next question will be from Timothy Arcuri.

Vivek Arya: UBS. Please go ahead.

Timothy Arcuri: Thanks, a lot Matt I was wondering if you can break down data center revenue a little bit I think last quarter. You said that AI was about 55% of datacenter I wonder if it wasn't the same range I assume maybe custom silicon grew a little faster because the gross margin was a little bit lower.

Timothy Arcuri: Matt, I was wondering if you can break down data center revenue a little bit. I think last quarter, you said that AI was about 55% of data center. I wonder if it was in the same range. I assume maybe custom silicon grew a little faster because the gross margin was a little bit lower. So I guess that's the first part of the question. And then, and then obviously, you're running way above this two and a half billion dollar number this year for AI revenue. Can you give us just a sense of where it's tracking for the year?

Vivek Arya: So I guess, that's the first part of the question and then.

Vivek Arya: And then obviously youre running way above this $2 $5 billion number this year for AI revenue can you give us just a sense of where it's tracking for the year are we talking like three $5 billion to $4 billion, maybe you'll talk about this at the at the day here in a few weeks, but I'm wondering if you can sort of.

Timothy Arcuri: Are we talking like three, five to four billion? Maybe you'll talk about this at the at the day here in a few weeks, but I'm wondering if you can sort of, you know, add some color to this for us.

Vivek Arya: No.

Vivek Arya: Had some color to this for us. Thanks.

Matt Murphy: Yeah, thanks, Tim. Yeah, we didn't give an exact number when we talked about it in relative to our Q4 was was the data point we gave. But we did say that that at that time, that within data center AI had had crossed and was now the majority of our, of our data center revenue. And I think the way to think about it is, because we're not going to break it out on a sort of quarter by quarter basis.

Speaker Change: Yeah. Thanks, Tim Yeah, we didn't give an exact number when we talked about it in it relative to our Q4 was was the data point, we gave but we did say that at that time.

Speaker Change: Within data center AI had crossed and with now the majority of our of.

Speaker Change: Of our datacenter revenue.

Speaker Change: And I think the way to think about it is because we're not going to break it out on a sort of quarter by quarter basis, but as I've.

Willem Meintjes: But but as I've prepared for the call, and then been looking at the trajectory of the business, and I say this, with with also, you got to factor in that we anticipate the mass market and the core business to continue to recover. You know, we see a path here in the not too distant future, where AI is not only the majority of But I guess then is that why so did the customer think business grow a little faster and that that's why the gross margin was a little Yeah, maybe I can add quickly, you know, when you look at our Q2 guides and the custom, you know, continues to grow really strongly and that's what you're seeing reflected We look forward to the second half, clearly we're optimistic on custom demand, and that interplay between that and the rest of the business is really going to drive what gross margin will be in the second half.

Speaker Change: <unk> for the call and then looking at the trajectory of the business and I say this with with also you've got to factor in that we anticipate the mass market in the core business to continue to recover we see a path here in the not too distant future, where AI is not only the majority of.

Speaker Change: The data center.

Speaker Change: End market, but it becomes the majority of Holdco.

Speaker Change: And so where that line is exactly you know, we're not calling it but that's the trajectory. So so I think the local the mental shift is not sort of figure out within data center, what that exact number is but you can do your own models. You guys are very very capable they're drawing a line between between here and when it can actually cross as.

Speaker Change: 50% contributor to the whole company.

Speaker Change: But that's coming.

Speaker Change: But I guess is that why it's so difficult.

Speaker Change: The customer I think this is grow a little faster than that that's why the gross margin was a little lower.

Speaker Change: Oh, yeah on the on on on that side of things, yes, there there's mix within the quarter and clearly.

Speaker Change: The custom business, we have does run at a fundamentally lower gross margin. So that that is going to modulate our gross margins on a quarterly basis and you've seen the impact but we've also had I think strong recovery in some of the other businesses as well, but thats always been fundamentally the custom business.

Speaker Change: Our lower than company average gross margin.

Speaker Change: Maybe I can add quickly.

Speaker Change: You know when you when you look at our Q2 guide suddenly Custer.

Speaker Change: Custom continues to grow really strongly and thats, what youre seeing reflected in that.

Speaker Change: And when we look forward to the second half kidding, we're optimistic on customer demand.

Speaker Change: And that interplay between that and the rest of the business is really going to drive what gross margin will be in the second half right now probably expect it to be in a similar range as what we guided for Q2.

Willem Meintjes: Right now, probably expect it to be in a similar range. Okay, thank you Willem.

Speaker Change: Okay. Thank you will.

Unknown Executive: Yeah, thanks Tim.

Speaker Change: Yeah. Thanks, Tim.

Chris Caso: Next question will be from Chris Caso at Wolf Research. Please go ahead. Yes, thank you. Good evening. I guess the question is regarding the second half of the year. And I'm sure you're not ready to provide that guidance right now. But could you give us some puts and takes on, you know, what your expectations may be? Do you expect the custom business to continue to grow in the second half of the year? You know, what do you expect with regard to, you know, the carrier enterprise businesses?

Speaker Change: Next question will be from Chris Caso at Wolfe Research. Please go ahead.

Speaker Change: Yes. Thank you good evening I.

Speaker Change: I guess my question is regarding.

Speaker Change: The second half of the year and Im sure Youre not ready to provide that guidance right now, but could you give us some puts and takes on whats your expectations may be do you expect the custom business to continue to grow in the second half of the year.

Speaker Change: What do you expect with regard to the carrier and enterprise businesses is this kind of a kind of slow steady ramp in those businesses in any kind of color on the second half. Please.

Matt Murphy: Is this kind of a, you know, kind of slow, steady ramp in those businesses and any kind of color in the second Yeah, thanks, Chris. Yeah, maybe just at a higher level, you know, and I said this in some of my prepared remarks, but we're, yeah, we are monitoring, you know, the, the macro and the various dynamics going on out there. So that's always a factor. But at the moment, You know, we see a couple of things happening. The first is in. Even recently, as yesterday, you see strong numbers out of NVIDIA and other announcements leading up to that.

Speaker Change: Yeah. Thanks, Chris Yeah, maybe just at a higher level, you know and I've said this in some of my prepared remarks, but work, yes, we are monitoring the.

Speaker Change: The macro and the various dynamics going on out there.

Speaker Change: So that's always a factor but at the moment.

Speaker Change: We see a couple of things happening in the first is in.

Speaker Change: Steven recently as yesterday, you see strong numbers out of Nvidia and other announcements leading up to that but we see the AI demand.

Matt Murphy: But we see the AI demand, you know, continuing, and our data in the data center demand continuing. And then on top of that, we have this nice recovery, strong recovery, actually, we've been driving in our, in our core business, in particular, enterprise networking and carriers. So we expect that to continue to recover and grow We're not calling on a quarter-by-quarter basis but right now we expect growth across the board through the year with what can be a really nice setup for fiscal 27 with some of the growth drivers we've articulated before. So that's where we're at right now, and I feel good about it.

Speaker Change: Continuing at our data in the data center demand continuing and then on top of that we have this nice recovery strong recovery actually we've been driving it.

Speaker Change: In our core business in particular.

Speaker Change: Enterprise networking and carrier so we expect that to continue to recover and grow.

Speaker Change: Throughout the rest of the year as well, so we're not calling on a quarter by quarter basis, but right now we expect growth kind of across the board.

Speaker Change: Through through the year with with I think what can be a really nice set up for fiscal 2007 with some of the growth drivers we've articulated before so.

Speaker Change: That's that's where we're at right now.

Speaker Change: Sure.

Speaker Change: I feel good about it.

Unknown Executive: Thanks.

Speaker Change: Yes.

Unknown Executive: Thank you.

Speaker Change: Got it thank you.

Harsh Kumar: Next question will be from Harsh Kumar at Piper Sandler, please go ahead. Yeah. Hey, Matt. Congratulations on solid results. When we talk to investors, Matt, we find that there's a desire on part of investors for the data center business to grow faster than, let's say, what you've been putting up mid-single in the April quarter and then also the guidance. I know that in the last quarter, Matt, you had some moving parts with on-prem, etc. I was hoping that you could clarify the growth of your AI business versus some of the non-AI pieces like on-prem or some other things that might be moving around and just help us understand how fast maybe your AI business Yeah, thanks, Harsh.

Unidentified Operator: The next question will be from harsh Kumar of Piper Sandler. Please go ahead.

Harsh Kumar: Yeah, Hey, Matt Congratulations on solid results when we talk to investors, Matt we find that there is a desire on the part of investors for the data center business to grow faster than lets say, what you have been putting up mid single in the April quarter, and then also on the guidance I know that in the last quarter, Matt you had some moving parts here.

Harsh Kumar: On Prem et cetera, I was hoping that you could clarify the growth of your business versus some of the non AI pieces like on Prem or some other things that might be moving around and just help us understand how fast maybe your AI business is growing.

Harsh Kumar: Yes, thanks, harsh yet and I think the way to think about it.

Matt Murphy: Yeah, and I think the way to think about it is you... It's not a one quarter snapshot, so if you look at the last few quarters, we had a very dramatic step up from Q3 to Q4, 20% plus in the data center business. It grew four. We're guiding it up mid-single. I just kind of gave some indication that it'll keep growing. And so that's one way to think about it, is we did have a significant step up. And Q2, as signaled, is looking like it's going to grow slightly faster than Q1. So that's a good sign.

Harsh Kumar: Helpful as to contextualize.

Harsh Kumar: It's not a one or one quarter snapshot so.

Harsh Kumar: If you look at the last few quarters we.

Speaker Change: We had a very dramatic step up from Q3 to Q4.

Speaker Change: 20% plus in the data center business. It grew four we're guiding it up mid single, we just kind of gave some indication that they will keep growing and so if you look at the year. So that's one way to think about it is we did have we did have a significant step up in Q2 as signaled is is looking like it's going to grow slightly faster than that.

Speaker Change: Q1, so that's a good sign but also I'd point you to the fact that you know look a year ago. We were in that we were we were in a very strong position relative to our data center and how it was growing so the comparable.

Matt Murphy: But also, I'd point you to the fact that, you know, look, a year ago, we were in a very strong position relative to our data center and how it was growing, so that the comparables are also telling, right, when you're talking about Data Center year over year revenues for a company at our scale growing, you know, 70% plus on a year over year basis, we feel good about that. So I think with that, that setup, if you look at just the last, you know, two, three quarters, and you look at year over year, we feel really good about the trajectory of the business.

Speaker Change: Our are also telling right when youre talking about.

Speaker Change: Data center year over year revenues for a company at our scale growing 70% plus.

Speaker Change: On a year over year basis, we feel good about that so.

Speaker Change: I think with that set up if you look at just the last.

Speaker Change: Two to three quarters and you look at year over year, we feel really good about the trajectory of the business.

Matt Murphy: And, you know, AI continues to be the fastest portion of that in terms of our data center business. And as I said earlier, to answer Tim's question, you know, at some point, that'll just Flipover and become, you know, half of Holko. So I think that's that's. That's the context I can give you at the moment.

Speaker Change: You know AI continues to be the fastest portion of that in terms of our data center business and as I said earlier to answer Tim's question at some point that will just.

Speaker Change: Flip over and become.

Speaker Change: Half of Holdco, so that I think thats.

Speaker Change: That's the context I can give you at the moment. Thanks.

Matt Murphy: Thanks.

Matt Murphy: Mr. Matt, hopefully you can talk about the on-frame piece if possible, or other parts that are moving. Well, yeah, the on premise is pretty small at this point. So it has some effect. And it's, it's, it's, it's, it's always, you know, continue to be a little bit of a drag. But But, you know, the The overall data center revenue is driven primarily by AI and the other stuff's performing pretty much in line. I don't think it's a drag going forward. I think if you're worried about where does it land in the next few quarters, it's not as big a contributor as it used to be, and it's probably where it is.

Speaker Change: Hopefully you can talk about the online piece of possible or other parts of the morning.

Speaker Change: Well yeah. The on premise is pretty small at this point. So it has some effect and it's always.

Speaker Change: To be a little bit of a drag but but.

Speaker Change: It does.

Speaker Change: The overall.

Speaker Change: Data center revenue is.

Speaker Change: Driven primarily by by AI and the other stuff is performing pretty much in line I don't think its a drag going forward I think if you're worried about like where does that land in the next few quarters that it's not as big of a contributor as it used to be and it's probably where it is maybe it comes back a little bit but it's the spending has shifted just so dramatically.

Matt Murphy: Maybe it comes back a little bit, but the spending has shifted just so dramatically right in the data center. The enterprise on-prem piece is just not getting the spend anymore. So I think it was down a little bit in Q1, but it's relatively stable, yeah.

Speaker Change: And the data center.

Speaker Change: The enterprise on Prem pieces, just not not giving the spend anymore.

Speaker Change: So I think it was down a little bit in Q1, but it's relatively stable.

Unknown Executive: Thank you, thank you so much. Yep.

Speaker Change: Thank you. Thank you so much.

Tom O'malley: Next question will be from Tom O'Malley at Barclays. Please go ahead. Hey guys, thanks for taking my questions. I have two quick ones. First one's for Willem. You are guiding data center at mid-single digits into the Alcorter and you're saying custom silicon is growing quite strongly. Is there something going on with optical? Is that flattening out a bit? Can you give us an update on the health of Optical and what you're embedded in your guide? And then the second is Matt, in your announcement with Amazon, you talked about a bunch of other products other than custom silicon that you guys were engaging with over the next couple years, PCIe cables, PCIe re-timers, AEC.

Speaker Change: Our next question will be from Tom O'malley with Barclays. Please go ahead.

Tom O'malley: Hey, guys. Thanks for taking my questions I have two quick ones first one is Brazil, and you are guiding datacenter up mid single digits into the quarter and Youre, saying custom silicon is growing quite strongly is there something going on with optical is that flattening out a bit is there anything going on could you give us an update on the health of optical and what your embedded in your guide and then the second is Matt and your announcement with Amazon.

Speaker Change: You talked about a bunch of other products other than custom silicon that you guys were engaging with over the next couple of years. You said you cables can say re timers ECS could you maybe try to size what that impact is right now some of your competitors in that space are putting up some bigger numbers would love to see how significant that is for you guys. Thank you.

Matt Murphy: Could you maybe try to size what that impact is right now? Some of your competitors in that space are putting up some bigger numbers. We'd love to see how significant that is for you guys. Thank you.

Willem Meintjes: Yeah, thanks, Tom. Maybe I'll take the second part first. Yeah, I think those engagements are going very well. You're right. In our broader agreement, there was actually a lot of different exciting opportunities on the networking connectivity side. Those are progressing, but no major updates there. And then with respect to how the optics business is doing, it's done quite well. And in fact, we see that business growing throughout the year this year. So we see both growth from custom as well as optics. And then again, on the Amazon agreement, progressing well, I would say just at a high level too, we have, you know, in some of these new emerging categories, we do have AECs ramping this year, I wanted to note that, and as well as continued revenue growth and switching.

Speaker Change: Thanks, Tom maybe I'll take the take the second part first.

Speaker Change: Yeah, I think I think those engagements are going very well.

Speaker Change: Right.

Speaker Change: <unk>.

Speaker Change: And our broader agreement. It was it was there was actually a lot of different exciting opportunities on the networking connectivity side those are progressing but no no major updates there and then with respect to how.

Speaker Change: The optics business is.

Speaker Change: Is doing.

Speaker Change: It's done quite well and in fact.

Speaker Change:

Speaker Change: We see that business growing throughout the year this year so.

Speaker Change: Both growth from custom as well as optics and then.

Speaker Change: And then again on the Amazon agreement.

Speaker Change: Progressing well I would say just at a high level too.

Speaker Change: We have.

Speaker Change: No.

Speaker Change: And so these new emerging categories, we do have auc's ramping this year I wanted to note that.

Speaker Change: And as well as continued.

Speaker Change: Revenue growth in switching so a lot of good things happening there Tom.

Willem Meintjes: So a lot of good things happening there, Tom. Yeah, so I'll just add quickly in terms of, you know, the puts and takes on gross margin, you know, the other one to take into account there is the strong snapback That's seasonal and expected. but that's another area that's typically slightly below.

Speaker Change: Yes.

Speaker Change: I'll just add quickly in terms of the puts and takes on gross margin.

Speaker Change: The other one to take into account there is the strong snapback on consumer.

Speaker Change: Seasonal and unexpected but that's another area that is typically a slightly below average.

Speaker Change: When you look at the rules.

Speaker Change: Okay.

Unknown Executive: If you have the next question...

Speaker Change: Could we have the next question please.

Harlan Sur: from Harlan Sur at J.P. Morgan. Hey, good afternoon.

Speaker Change: From Harlan sur of J P. Morgan.

Harlan Sur: Hey, good afternoon, nice job on the quarterly execution guys.

Harlan Sur: Nice job on the quarterly execution guys. The lead AI GPU vendor, I think, is getting ready to come in shipments of the next generation platform. And in parallel, they're rolling out their next gen X800 InfiniBand and Ethernet scale out solutions that support 1.6T optical connectivity. And typically, like the optics start to ship ahead of the GPUs and RAPScale platforms. So you anticipate a strong ramp of your 1.6T solution, starting now. And more importantly, your 5nm solution, I think, is already qualified with this customer.

Speaker Change: Our lead Aig's vendor I think is getting ready to commence shipments of their next generation platform.

Speaker Change: And then parallel they're rolling out their next Gen X 800, Infiniband and Ethernet scale out solutions that support 160 optical connectivity and typically like the uptick start to ship ahead of the Gpus in rack scale platform. So do you anticipate a strong ramp of your $1 60 solution starting now.

Speaker Change: And more importantly, your five nanometer solution I think is already qualified with this with this customer are you guys going to be maintain your three nanometer DSP solution into this next generation.

Matt Murphy: Are you guys going to be ramping your 3nm DSP solution into this next generation networking platform? Yeah, thanks, Harlan. And you're right about the sequencing. And so we have commenced shipments on 1.6 T at five nanometer, we have very strong demand for three. And we've executed very well on that. on that product development so far. And so I think that's from a 1.6 T kind of lifespan perspective, I think that's where the volume is going to be. And I think that's going to be a much stronger ramp next year. And some of that I say too, because the 800 gig has continued to be so strong, kind of across the board, that just as a kind of a percentage of the total, it's still largely dominated this entire year by 800 gig.

Speaker Change: Networking platform.

Speaker Change: Yes, Thanks, Harlan and Youre right about the sequencing and so we have commenced shipments on 160.

Speaker Change: At five nanometer.

Speaker Change: Have a very strong demand for three.

Speaker Change: We've executed very well on that.

Speaker Change: On that product development, so far and so I think thats for from a $1 16 kind of life span perspective, I think that's where the volume is going to be and I think that's going to be a much stronger ramp.

Speaker Change: Next year and some of that I would say to you because the 800 gig has continued to be so strong.

Speaker Change: Across the board that just as a as a kind of a percentage of the total it's still largely dominated this this entire year by 800 gig, but yes, we're shipping now.

Matt Murphy: But yeah, we're shipping now, the part works well. But there's just a lot of demand to, you know, initial ramps and customers will be on five nanometer, but there's a big push in the ecosystem to drive it to three nanometer given the compelling power savings and the performance of our product. So all that's going well, we're well positioned for the 1.6 T ramp and ecosystem expansion.

Speaker Change: Part works, well, but theres, just a lot of demand too.

Speaker Change: The initial initial ramps and customers will be will be on five nanometer, but there's a big push in the ecosystem to drive it to three nanometer given the compelling power savings and the performance of our products. So all of that is going well, we're well positioned for the $1 60.

Speaker Change: Rapid ecosystem.

Speaker Change: Spansion.

Matt Murphy: Thanks for the update, Matt. Yeah, thanks, Harlan.

Speaker Change: Thanks for the update on that yeah. Thanks Dara.

Blayne Curtis: Next question will be from Blayne Curtis at Jefferies. Please go ahead. Hey, good afternoon. Thanks for clarifying all that ASIC stuff. I just kind of wanted to ask, going back to the gross margin, so I think there's been a lot of discussions about, you know, what an ASIC vendor can charge for and not charge, whether they can charge for memory. You know, I think you guys kind of put a line in the sand at a certain gross margin for ASIC. I'm curious if that's still the right level. And when you look at these next generations, I'm glad you're involved with all those.

Speaker Change: Next question will be from Blayne Curtis of Jefferies. Please go ahead.

Blayne Curtis: Hey, good afternoon. Thanks for taking question and thanks for clarifying holiday success I, just kind of wanted to ask going back to the gross margin. So I think theres been a lot of discussions about.

Speaker Change: What an ASIC vendors can can charge for and not charge, where they could charge for memory. I think you guys kind of put a line in the sand at a certain gross margin for ASIC I'm curious.

Speaker Change: That's still the right level and when you look at these next generation Im glad Youre involved with all of those you know how should we think about like sustainable AIA ASIC gross margins is still in the original range Youre looking at.

Matt Murphy: You know, how should we think about, like, sustainable AI ASIC gross margins? Is it still in the original range you're looking at?

Matt Murphy: Yeah, thanks Blayne. Yeah, when we look at our overall you know, custom business as a whole, we've been able to manage the gross margins, you know, even with these ramps in the in the range we've talked about, but within within custom there is a range and, and, and it's like the old, you know, the old adage in semiconductors, you know, the higher the volume, you're going to see you're going to see lower gross margins, but you're going to see a lot more operating income. And so that's what we see. I wouldn't say that the percent change is really any different relative to how it stacks up on the opportunity set, you know, things that are a lot more Marvell contribution, as an example, where we leverage a lot of the IP, and maybe more outside the XPU, those tend to be a little higher.

Speaker Change: Yes, Thanks, Blayne, yeah, when we look at our overall.

Speaker Change: Custom business as a whole we've been able to manage the gross margins even with these ramps and the range, we've talked about but within within custom there is a range and and and it's like the old.

Speaker Change: The old adage in semiconductors, the higher the volume Youre going to see you're going to see lower gross margins, but youre going to see a lot more operating income and so that's what we see I wouldn't say that the percent change is really any different relative to how it stacks up on the opportunity set things that are a lot more marvell.

Speaker Change: <unk> as an example, where we leverage a lot of the IP and maybe more outside the SBU those tend to be.

Speaker Change: A little higher and.

Matt Murphy: And, you know, and of course, they don't grab the limelight, but we're gonna, we're gonna talk about those at the AI day, because they actually, you to a very nice revenue pipeline for us and opportunity set with also that same multi-generational aspect to it. But from a percent standpoint, we're managing the business fine and the AI portion, the XPU is always going to be lower. It's just that as the XPU, depending on the magnitude of that, that may move that mix around. But there's a certain range for these programs and projects and we haven't really seen that change.

Speaker Change: And of course, they don't grab the limelight, but we're going to we're going to talk about those at the AI day, because they actually in aggregate add up to.

Speaker Change: Two a very nice revenue pipeline for us and opportunity set with also that same multi generational aspect to it but from a percent standpoint, we're managing the business fine in the AI portion. The XP is always going to be lower it's just that as the X P U.

Speaker Change: Depending on.

Speaker Change: The magnitude of that that may move that mix around but.

Speaker Change: There is a certain range for these programs and projects and we havent really seen that change.

Willem Meintjes: The magnitude of the volume has changed, but I'd say that's across the board, by the way. Not only have the XPUs that we have going in flight or in production increased a lot from when we won them, but now these other types of accelerators or custom networking or custom NICs or things of that nature, those have also, quite frankly, those are a lot more volume than we had anticipated and those carry a little bit higher margin. I hope that context is helpful, but we're still managing the business in the same way.

Speaker Change: The magnitude of the volume has changed but I'd say that's across the board by the way not only of the XP is that we have going in flight or in production increased a lot from when we won them, but now. These other these other types of accelerators or custom networking or custom next or things of that nature. Those are also quite.

Speaker Change: Frankly.

Speaker Change: Those are a lot more volume than we had anticipated and those carry a little bit higher margin. So I hope that context is helpful. But we're still managing the business in the same way.

Speaker Change: Thanks Scott.

Willem Meintjes: Yeah, maybe one additional add is just on operating margins. So I think the one thing that's consistent across all these programs is that we're driving a creative operating margin to our model. And so, you know, clearly, there is a range. But as you as you scale those, those programs, it's a finite investment, And you've seen that leverage in our model over the last couple of quarters. Yeah, I mean, I think you're seeing it in operating margin dollars flowing in Blayne and also in EPS, right, which still continues to grow like twice the rate of revenue at this point.

Speaker Change: Yeah, Blake maybe one additional add is just on operating margin. So I think the one thing that is consistent across all of these programs is that we are driving accretive operating margin through our model.

Speaker Change: And so clearly there is a range, but as you as you scale those those programs, it's a finite investment.

Speaker Change: And you've seen that leverage in our model over the last couple of quarters here.

Speaker Change: Yeah, I mean, I think you're seeing it in operating margin dollars flowing in Blaine and also an EPS rate, which still continues to grow like twice the rate of revenue at this point so.

Willem Meintjes: And we don't see that changing relative to the leverage we get on these big programs, very operating margin rich in terms of just the dollars.

Speaker Change: And we don't we don't see that changing relative to the leverage we get on.

Speaker Change: These big programs very operating margin.

Speaker Change: Rich in terms of just the dollars.

Speaker Change: Thanks, guys.

Quinn Bolton: Next question will be from Quinn Bolton at Needham & Company. Please go ahead. Yeah, so Quinn, I appreciate the question.

Speaker Change: Next question will be from Quinn Bolton Needham <unk> Company. Please go ahead.

Quinn Bolton: Hey, Thanks for taking my question, Matt I wanted to follow up on the vexed question or maybe just a clarification on whether these asics programs could potentially be dual sourced I think towards the end of your answer you said that there could be multiple paths and I'm not sure if you're sort of suggesting there might be different versions of NXP, you or whether they could actually be dual sourced to the extent that.

Quinn Bolton: Dual source do you spend a couple of years designing these programs do you guys have guarantees that you don't get blinked at the end of the year if they choose.

Quinn Bolton: Take the other path.

Vivek Arya: Yes, so no quint I appreciate the question I was quite lengthy in my prepared remarks, and even my I think vivek answer.

Matt Murphy: I was quite lengthy in my prepared remarks and even my, I think, Vivek answer in terms of what I've, the perspective I can offer you on that. So I think I've said it and if I wasn't clear, you know, I did say that given the volumes, it's certainly possible that there are multiple paths pursued. For us in our business, and what I said in the prepared remarks as well, is we feel very confident and very good about our revenue continuity on the initial program and the revenue ramp on our additional program. We're planning production, we're tracking, we're doing that.

Vivek Arya: What is the perspective I can offer you on that so I think I've said, it and if I wasn't clear I did say that given the given the volumes it's certainly possible.

Vivek Arya: That there are multiple paths pursued.

Vivek Arya: For us in our business and what I said in the prepared remarks as well as we feel we.

Vivek Arya: We feel very confident and very good about our.

Vivek Arya: Revenue continuity on the initial program and the revenue ramp on on our additional program.

Vivek Arya: We're planning production, we're tracking we're we're doing that so.

Matt Murphy: So I see the noise coming in, but I'm also just need to kind of focus on what I'm hearing from my customer and what we need to go do to execute to be a good The second question is just a follow-up on the NVIDIA Fusion. Are you guys, is NVIDIA sort of open up their NVLink and you design your SerDes to be compatible with that and you offer that out as an IP block to your ASIC customers? Or is there an IP transfer from NVIDIA to yourselves involved in that NVLink Fusion offer? Yeah, yeah, the initial intent is it's planned as a as a chiplet solution.

Vivek Arya: I see the noise coming in.

Vivek Arya: But I'm also just need to kind of focus on what I'm hearing from my customer and what we need to do to execute to be okay.

Vivek Arya: Got it.

Vivek Arya: Second question is just a follow up on the Nvidia infusion.

Speaker Change: Are you guys is it and then you have sort of open up there in the link and you design your <unk> to be compatible with that and you offer that out as an IP block your Asia customers are.

Speaker Change: Is there an it transfer from Nvidia to yourselves involved in that NV link fusion offering.

Speaker Change: Yes, yes.

Speaker Change: The initial intent is planned as a chip led solution and so.

Matt Murphy: And so we could, for example, work with the customer do the do the the XPU design with them. And then through IO chiplets, There's probably other models that can exist. I think the higher level notion that Jens and the team are driving is really trying to open up and make sure that customers can take advantage of the investment they've made in their infrastructure, even if they have unique needs down at a more granular level like at the XPU. So we'll see how that all evolves, but we were very happy to be asked to participate and be a partner.

Speaker Change: We can for example work with the customer do the do the DXP design with them and then through Io chip lists.

Speaker Change: Take David I interface between the SBU and <unk>.

Speaker Change: Can be linked chip, let and then that interfaces to the to the scale of network.

Speaker Change: Probably other models that can exist I think the higher level notion that jensen and the team are driving is really <unk>.

Speaker Change: Trying to open up and make sure that they that customers can take advantage of the investment they've made in their infrastructure, even if they have unique needs down at a more granular level like if the SBU. So.

Speaker Change: So we'll see how that all evolves, but were we were very happy to be asked to participate and be a partner and we have already received a whole bunch of interest from customers on on what this this engagement might look like so we'll see where it goes but I think that the high level concept is what is important.

Matt Murphy: And we've already received a whole bunch of interest from customers on what this engagement might look like. So we'll see where it goes.

Unknown Executive: But I think that the high level concept is what is important. Got it. Thank you.

Speaker Change: Got it thank you.

Srinivas Pajjuri: Next question will be from Srini Pajjuri at Freeman James. Please go ahead. Thank you, Matt. My question is on the optical side. I know you said your expectation for this year is for the optical business to grow. Obviously, you know, you have the 1.6T ahead of you, and you also said 800 gig demand is quite strong. But a couple of questions we get from investors. One, can you speak to your market share as we go from 800 to 1.6T? And also, you know, the potential impact from any technology transition such as LPO? And then the second question is, can you speak to, you know, to the extent you have visibility?

Speaker Change: Next question will be from Sweeny per Judy at Raymond James. Please go ahead.

Judy: Thank you Matt My question is on the optical side I know you said your expectation for this year is for the optical business to grow obviously I know you have the one six T ahead, a few and you also said 800 gig.

Speaker Change: Vanda is quite strong, but a couple of questions we get from investors one can.

Speaker Change: Can you speak to your market share as we go from 800 to 160 and also the potential impact from any technology transitions such as MTO and then the second question is can you speak to you know.

Speaker Change: The extent you have visibility what is the current inventory.

Matt Murphy: What is the current inventory that you see at your customers? Because, you know, that question keeps coming up given how strong this cycle has been. Yeah, thanks. So yeah, we see, you know, we've maintained very strong market share in the 800 gig wave, we let it, you know, a few others have come in, but we still have a very, very strong position, commanding position there. We were first to market at 1.6T, 5 nanometer, first to market at 1.63 nanometer, we're driving 400 gig I.O., which is going to enable 3.2T based on PAM. So I don't see any fundamental shift at all in the market share.

Speaker Change: That you see at your customers because that question keeps coming up given how strong this cycle has been so far thank you.

Speaker Change: Yes. Thanks so.

Speaker Change: So yes, we see you know.

Speaker Change: We've maintained very strong market share and the 800 gig.

Speaker Change: Wave, we let it.

Speaker Change: Few others have come in but we still.

Speaker Change: So very very strong position commanding position there we.

Speaker Change: We were first to market.

Speaker Change: At 165 nanometer first to market at $1 63 nanometer.

Speaker Change: We're driving.

Speaker Change: 400 gig Io, which is going to enable three <unk> based on Pam. So I don't see any fundamental shift at all in the.

Matt Murphy: And, and quite frankly, the faster we execute and the faster we ramp, these ramp, the better because of the lead we have. So we feel good about that. Any, any impact, any, any adoption, I should say, not impact of, of new technologies like LPO. I view this as very incremental. Those would be for things like scale up. And we will participate in those. You know, we've, we will, we have solutions based on our broadband analog technology, and we'll participate in an LPO. When it happens, our view still is that's going to be a smaller portion of the market, but we will be there and we're engaged right now.

Speaker Change: Market share in and quite frankly, the faster, we execute and the faster we ramp these ramp.

Speaker Change: The better because of the lead we have so we feel good about that.

Speaker Change: Any any impact any any adoption I should say not impact of new technologies like L. P O.

Speaker Change: I view this as very incremental.

Speaker Change: It would be for things like scale up and we will participate in those.

Speaker Change: We have solutions.

Speaker Change: Based on our broadband analog technology and will participate in <unk> when it happens our view still is thats going to be a smaller portion of the market, but we will be there and we're engaged right now.

Matt Murphy: And then I think your last question was just about the, the broader inventory at our customers. Yeah. So, so that, that, that looks, that looks pretty good. I mean, we, we service this business direct. We serve it, we serve it through a number of channels, but key data points, you know, like distribution, inventory and things like that, that's, that's very low. We had strong sell through last quarter. You know, we're looking at the whole year and it looks like a, still looks like a good year. We've got to wait and see.

Speaker Change: And then I think your last question was just about the the broader inventory at our customers, yes. So.

Speaker Change: So that looks that looks pretty good I mean, we service this business direct we services through a number of channels, but.

Speaker Change: Key data points like distribution inventory and things like that.

Speaker Change: That's very low we had strong sell through last quarter.

Speaker Change: We're looking at the whole year and it looks like AR. So it looks like a good year.

Speaker Change: We got we got to wait and see if we're only doing one quarter at a time here, but.

Matt Murphy: We're only doing one quarter at a time here, but high level this year and next year, especially with the 1.60 transition, we see continued strong growth in our optics business. You got it.

Speaker Change: High level this year and next year, especially with the $1 60 transition we see continued strong growth in our optics business.

Speaker Change: Got it thank you.

Josh Buchalter: Thank you.

Josh Buchalter: We will take our last question from Josh Buchalter at TD Cowan. Please go ahead. Hey guys, thank you for taking my question. I wanted to follow up on... Can you elaborate on what you would expect to see from a potential customer who's exploring multiple tracks? Is that generally a performance skew, an efficiency skew, or could you see instances where your hyperscale customers are engaged on completely different ASIC programs for completely different workloads? Thank you.

Speaker Change: We will take our last question from Josh Burkhalter at TD Cowen. Please go ahead.

Josh Burkhalter: Hey, guys. Thank you for taking my question I wanted to follow up on a couple of previous ones can you maybe elaborate on what you would expect to see from a potential customer who is exploring multiple tracks is that generally a performance SKU and efficient SKU or could you see instances where were your hyperscale customers are.

Josh Burkhalter: Gauged on completely different ASIC programs.

Josh Burkhalter: For different completely different workloads. Thank you.

Josh Burkhalter: Yes. Thanks.

Josh Burkhalter: Nice to meet you.

Josh Burkhalter: I think for the I think I've covered kind of as much as I'm going to on the on the on the topics from today, but I do think there'll be some discussion probably at the AI day around some of the different business models that are out there in different things customers are looking for but at the moment I think I've, given given kind of the Max color.

Josh Burkhalter: We're going to do on that so I appreciate the question. Thank you.

Unidentified Operator: Thank you. This concludes our question and answer session I will now turn the call over to Matt Murphy, Marvel's CEO for closing remark.

Matt Murphy: This concludes our question and answer session.

Matt Murphy: I will now turn the call over to Matt Murphy, Marvell's CEO, for closing remarks. Great, thank you, operator. And look, I'd just like to thank everybody for your interest in Marvell and for joining the call. We're off to a great start. with our first quarter in fiscal 2026. I'm very excited to be guiding a $2 billion quarter for the second quarter and seeing that all the effort that the Marvell team has put in is coming to fruition relative to ramping some of these key programs and executing to meet our customer needs.

Matt Murphy: Great. Thank you operator, and look I'd just like to thank everybody for your interest in Marvell and for joining the call we're off to a great start with our first quarter and fiscal 2026.

Matt Murphy: Very excited to be guiding of $2 billion quarter for the second quarter and seeing that all the effort.

Unidentified Operator: The Marvell team has put in is coming to fruition relative to ramping some of these key programs and executing to meet our customer needs and I'm looking forward to connecting with everybody.

Unknown Executive: And I'm looking forward to connecting with everybody at the custom silicon event for investors in a couple of weeks and giving a deeper dive into this quite large opportunity in front of us. So thanks, everybody, and we'll talk soon. Bye.

Unidentified Operator: At the custom silicon event for investors and a couple of weeks and giving a deeper dive into.

Unidentified Operator: And to this quite quite large opportunity in front of us. So thanks, everybody and we'll talk soon.

Thank you, sir. Ladies and gentlemen, this does indeed conclude our conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your line.

Unidentified Operator: Thank you, Sir ladies and gentlemen, this does indeed conclude our conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.

Unidentified Operator: Okay.

Unidentified Operator: Yeah.

Unidentified Operator: [music].

Unidentified Operator: Okay.

Josh Burkhalter: [music].

Josh Burkhalter: Yeah.

Josh Burkhalter: Okay.

Josh Burkhalter: Okay.

Josh Burkhalter: [music].

Josh Burkhalter: Okay.

Josh Burkhalter: [music].