Astera Labs Q4 2025 Astera Labs Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Astera Labs Inc Earnings Call
Speaker #2: All lines have been placed on mute to prevent any background noise. After management's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad.
Speaker #2: If you would like to withdraw your question, press star 1 again. Thank you. I will now turn the call over to Leslie Green, Investor Relations, for Astera Labs.
Speaker #2: Leslie, you may begin. Thank you, Carly. Good afternoon, everyone, and welcome to the Astera Labs fourth quarter 2025 earnings conference call. Joining us on the call today are Jitendra Mohan, Chief Executive Officer and Co-founder; Sanjay Gajendra, President and Chief Operating Officer and Co-founder; and Mike Tate, Chief Financial Officer.
Leslie Green: Thank you, Carly. Good afternoon, everyone, and welcome to the Astera Labs Q4 2025 Earnings Conference Call. Joining us on the call today are Jitendra Mohan, Chief Executive Officer and Co-founder; Sanjay Gajendra, President and Chief Operating Officer and Co-founder; and Mike Tate, Chief Financial Officer. Before we get started, I would like to remind everyone that certain comments made in this call today may include forward-looking statements regarding, among other things, expected future financial results, strategies and plans, future operations, and the markets in which we operate....
Leslie Green: Thank you, Carly. Good afternoon, everyone, and welcome to the Astera Labs Q4 2025 Earnings Conference Call. Joining us on the call today are Jitendra Mohan, Chief Executive Officer and Co-founder; Sanjay Gajendra, President and Chief Operating Officer and Co-founder; and Mike Tate, Chief Financial Officer. Before we get started, I would like to remind everyone that certain comments made in this call today may include forward-looking statements regarding, among other things, expected future financial results, strategies and plans, future operations, and the markets in which we operate....
Speaker #2: Before we get started, I would like to remind everyone that certain comments made in this call today may include forward-looking statements regarding, among other things, expected future financial results, strategies and plans, future operations, and the markets in which we operate.
Speaker #2: These forward-looking statements reflect management's current beliefs, expectations, and assumptions about future events, which are inherently subject to risks and uncertainties that are discussed in detail in periodic reports and filings we file from time to time with the SEC, including the risks set forth in our most recent annual report on Form 10-K.
These forward-looking statements reflect management's current beliefs, expectations, and assumptions about future events, which are inherently subject to risks and uncertainties that are discussed in detail in today's earnings release and in the periodic reports and filings we file from time to time with the SEC, including the risks set forth in our most recent annual report on Form 10-K. It is not possible for the company's management to predict all risks and uncertainties that could have an impact on these forward-looking statements, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement. In light of these risks, uncertainties, and assumptions, the results, events, or circumstances reflected in the forward-looking statements discussed during this call may not occur, and actual results could differ materially from those anticipated or implied.
Leslie Green: These forward-looking statements reflect management's current beliefs, expectations, and assumptions about future events, which are inherently subject to risks and uncertainties that are discussed in detail in today's earnings release and in the periodic reports and filings we file from time to time with the SEC, including the risks set forth in our most recent annual report on Form 10-K. It is not possible for the company's management to predict all risks and uncertainties that could have an impact on these forward-looking statements, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement. In light of these risks, uncertainties, and assumptions, the results, events, or circumstances reflected in the forward-looking statements discussed during this call may not occur, and actual results could differ materially from those anticipated or implied.
Speaker #2: It is not possible for the company's management to predict all risks and uncertainties that could have an impact on these forward-looking statements or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement.
Speaker #2: In light of these risks, uncertainties, and assumptions, the results, events, or circumstances reflected in the forward-looking statements discussed during this call may not occur, and actual results could differ materially from those anticipated or implied.
Speaker #2: All of our statements are made based on information available to management as of today and the company undertakes no obligation to update such statements after the date of this call, except as required by law.
Leslie Green: All of our statements are made based on information available to management as of today, and the company undertakes no obligation to update such statements after the date of this call, except as required by law. Also, during this call, we will refer to certain non-GAAP financial measures, which we consider to be an important measure of the company's performance. These non-GAAP financial measures are provided in addition to, and not as a substitute for, financial results prepared in accordance with US GAAP. A discussion of why we use non-GAAP financial measures and reconciliations between our GAAP and non-GAAP financial measures is available in the earnings release we issued today, which can be accessed through the investor relations portion of our website. With that, I would like to turn the call over to Jitendra Mohan, CEO of Astera Labs. Jitendra?
Leslie Green: All of our statements are made based on information available to management as of today, and the company undertakes no obligation to update such statements after the date of this call, except as required by law. Also, during this call, we will refer to certain non-GAAP financial measures, which we consider to be an important measure of the company's performance. These non-GAAP financial measures are provided in addition to, and not as a substitute for, financial results prepared in accordance with US GAAP. A discussion of why we use non-GAAP financial measures and reconciliations between our GAAP and non-GAAP financial measures is available in the earnings release we issued today, which can be accessed through the investor relations portion of our website. With that, I would like to turn the call over to Jitendra Mohan, CEO of Astera Labs. Jitendra?
Speaker #2: Also, during this call, we will refer to we consider to be an important measure certain non-GAAP financial measures which of the company's performance. These non-GAAP financial measures are provided in addition to and not as a substitute for financial results prepared in accordance with US GAAP.
Speaker #2: A discussion of why we use non-GAAP financial measures and reconciliations between our GAAP and non-GAAP financial measures is available in the earnings release we issue today, which can be accessed through the Investor Relations portion of our website.
Speaker #2: With that, I would like to turn the call over to Jitendra Mohan, CEO of Astera Labs.
Speaker #3: Thank you, Leslie. Good afternoon, everyone, and thanks for joining our fourth quarter conference call for fiscal year 2025. Today, I'll provide an overview of our Q4 and full year 2025 results, followed by a discussion around the current trends within the AI infrastructure market.
Jitendra Mohan: Thank you, Leslie. Good afternoon, everyone, and thanks for joining our Q4 conference call for fiscal year 2025. Today, I'll provide an overview of our Q4 and full year 2025 results, followed by a discussion around the current trends within the AI infrastructure market. I will then turn the call over to Sanjay to walk through Astera Labs' near and long-term growth profile. Finally, Mike will give an overview of our Q4 2025 financial results and provide details regarding our financial guidance for Q1 2026. Astera Labs delivered strong results in Q4, with revenue at $270.6 million, up 17% from the prior quarter and up 92% versus Q4 of last year. For full year 2025, revenue was $852.5 million, up 115% versus the prior year.
Jitendra Mohan: Thank you, Leslie. Good afternoon, everyone, and thanks for joining our Q4 conference call for fiscal year 2025. Today, I'll provide an overview of our Q4 and full year 2025 results, followed by a discussion around the current trends within the AI infrastructure market. I will then turn the call over to Sanjay to walk through Astera Labs' near and long-term growth profile. Finally, Mike will give an overview of our Q4 2025 financial results and provide details regarding our financial guidance for Q1 2026. Astera Labs delivered strong results in Q4, with revenue at $270.6 million, up 17% from the prior quarter and up 92% versus Q4 of last year. For full year 2025, revenue was $852.5 million, up 115% versus the prior year.
Speaker #3: I will then turn the call over to Sanjay to walk through Astera Labs' near and long-term growth profile. Finally, Mike will give an overview of our Q4 2025 financial results, and provide details regarding our financial guidance for Q1 2026.
Speaker #3: Astera Labs delivers strong results in Q4, with revenue at $270.6 million—up 17% from the prior quarter and up 92% versus Q4 of last year.
Speaker #3: For full year 2025, revenue was $852.5 million, up 115% versus the prior year. Growth within the quarter and for the year was broad-based, spanning across our signal conditioning, smart cable module, and switch fabric product portfolios, as we continue to diversify our business profile with several new design wins, across multiple customers.
Jitendra Mohan: Growth within the quarter and for the year was broad-based, spanning across our signal conditioning, smart cable module, and switch fabric product portfolios as we continue to diversify our business profile with several new design wins across multiple customers. Secular trends remain robust within the AI and cloud infrastructure space, supported by exceptionally strong spending commentary coming from the top US hyperscalers, with Google and AWS alone guiding nearly $400 billion in total CapEx spending for 2026. We are benefiting from this increased spending both in the near term and long term. Furthermore, the market opportunity for our intelligent connectivity platform is substantially larger than we initially anticipated, encompassing multiple product lines, physical media types, form factors, and protocols for both standard and custom applications.
Jitendra Mohan: Growth within the quarter and for the year was broad-based, spanning across our signal conditioning, smart cable module, and switch fabric product portfolios as we continue to diversify our business profile with several new design wins across multiple customers. Secular trends remain robust within the AI and cloud infrastructure space, supported by exceptionally strong spending commentary coming from the top US hyperscalers, with Google and AWS alone guiding nearly $400 billion in total CapEx spending for 2026. We are benefiting from this increased spending both in the near term and long term. Furthermore, the market opportunity for our intelligent connectivity platform is substantially larger than we initially anticipated, encompassing multiple product lines, physical media types, form factors, and protocols for both standard and custom applications.
Speaker #3: Circular trends remain robust within the AI and cloud infrastructure space, supported by exceptionally strong spending commentary coming from the top U.S. hyperscalers. With Google and AWS alone guiding nearly $400 billion in total CapEx spending for 2026, we are benefiting from this increased spending both in the near term and long term.
Speaker #3: Furthermore, the market opportunity for our intelligent connectivity platform is substantially larger than we initially anticipated, encompassing multiple product lines, physical media types, form factors, and protocols, for both standard and custom applications.
Speaker #3: Starting with Scorpio, our P-series family continued its volume ramp at our lead customer with growth coming from both existing and incremental platform designs. For the full year, Scorpio P-series exceeded our target of 10% of revenue and remains the only PCIe 6 fabric shipping in volume in the market.
Jitendra Mohan: Starting with Scorpio, our P-Series family continued its volume ramp at our lead customer, with growth coming from both existing and incremental platform designs. For the full year, Scorpio P-Series exceeded our target of 10% of revenue and remains the only PCIe 6.0 fabric shipping in volume in the market. Looking into 2026, we anticipate continued growth for Scorpio P-Series at our lead customer, as well as commencing shipments into at least two additional major hyperscalers on their next-generation AI platforms. Moving to Scorpio X-Series, we expect to incrementally grow revenue in the first half of 2026, followed by a transition to high-volume production in the second half of 2026. We continue to make excellent progress with additional engagements looking to leverage PCIe for scale-up networking.
Jitendra Mohan: Starting with Scorpio, our P-Series family continued its volume ramp at our lead customer, with growth coming from both existing and incremental platform designs. For the full year, Scorpio P-Series exceeded our target of 10% of revenue and remains the only PCIe 6.0 fabric shipping in volume in the market. Looking into 2026, we anticipate continued growth for Scorpio P-Series at our lead customer, as well as commencing shipments into at least two additional major hyperscalers on their next-generation AI platforms. Moving to Scorpio X-Series, we expect to incrementally grow revenue in the first half of 2026, followed by a transition to high-volume production in the second half of 2026. We continue to make excellent progress with additional engagements looking to leverage PCIe for scale-up networking.
Speaker #3: Looking into 2026, we anticipate continued growth for Scorpio P-series at our lead customer, as well as commencing shipments into at least two additional major hyperscalers on their next-generation AI platforms.
Speaker #3: Moving to Scorpio X-series, we expect to incrementally grow revenue in the first half of 2026, followed by a transition to high-volume production in the second half of 2026.
Speaker #3: We continue to make excellent progress, with additional engagements looking to leverage PCIe for scale-up networking. As previously communicated, we are engaged with 10-plus customers for the Scorpio X family, and our current expectation is that we will ship initial quantities of Scorpio X-series to support new customer platforms in the second half of 2026, with volume ramps set for 2027.
Jitendra Mohan: As previously communicated, we are engaged with 10-plus customers for Scorpio X-Series family, and our current expectation is that we will ship initial quantities of Scorpio X-Series to support new customer platforms in the second half of 2026, with volume ramps set for 2027. Solid traction continues to develop with respect to UALink, with a vibrant ecosystem, including product announcements, broad IP availability, and compliance methodologies being finalized. Recent public roadmap announcements from AWS and AMD, along with other ongoing engagements, indicate a broad adoption. UALink remains the highest performance, lowest latency, fully open solution for AI scale-up connectivity, and we will be ready to intercept the initial customer platform ramps in 2027. Our Aries portfolio continues to perform well, with PCIe 6.0 solutions contributing robust growth during the quarter and the overall portfolio growing nearly 70% year-over-year in 2025.
Jitendra Mohan: As previously communicated, we are engaged with 10-plus customers for Scorpio X-Series family, and our current expectation is that we will ship initial quantities of Scorpio X-Series to support new customer platforms in the second half of 2026, with volume ramps set for 2027. Solid traction continues to develop with respect to UALink, with a vibrant ecosystem, including product announcements, broad IP availability, and compliance methodologies being finalized. Recent public roadmap announcements from AWS and AMD, along with other ongoing engagements, indicate a broad adoption. UALink remains the highest performance, lowest latency, fully open solution for AI scale-up connectivity, and we will be ready to intercept the initial customer platform ramps in 2027. Our Aries portfolio continues to perform well, with PCIe 6.0 solutions contributing robust growth during the quarter and the overall portfolio growing nearly 70% year-over-year in 2025.
Speaker #3: Solid traction continues to develop with respect to Ewelink, with a vibrant ecosystem including product announcements, broad IP availability, and compliance methodologies being finalized. Recent public roadmap announcements from AWS, NAMD, along with other ongoing engagements, indicate a broad adoption.
Speaker #3: Ewelink remains the highest performance, lowest latency, fully open solution for AI scale-up connectivity, and we will be ready to intercept the initial customer platform ramps in 2027.
Speaker #3: Our ARES portfolio continues to perform well, with PCIe 6 solutions contributing robust growth during the quarter, and the overall portfolio growing nearly 70% year over year in 2025.
Speaker #3: The demand for ARES is driven by increasing deployments of custom AI accelerators at large hyperscalers. Our ARES Gen6 products are the industry's only PCIe 6 DSP retimer solutions, shipping to customers in high volume today, and we are well positioned to maintain our leadership role in the market.
Jitendra Mohan: The demand for Aries is driven by increasing deployments of custom AI accelerators at large hyperscalers. Our Aries Gen 6 products are the industry's only PCIe 6.0 DSP retimer solutions, shipping to customers in high volume today, and we are well positioned to maintain our leadership role in the market. We remain very early in the PCIe 6.0 transition cycle and anticipate additional customers will launch PCIe 6.0-capable AI accelerators and systems throughout 2026 and into 2027. As a result, we expect our Aries product line to continue growing in 2026 and beyond. Taurus was our strongest performing product family during Q4, as new programs began shipping in volume to support designs across both AI and general purpose systems.
Jitendra Mohan: The demand for Aries is driven by increasing deployments of custom AI accelerators at large hyperscalers. Our Aries Gen 6 products are the industry's only PCIe 6.0 DSP retimer solutions, shipping to customers in high volume today, and we are well positioned to maintain our leadership role in the market. We remain very early in the PCIe 6.0 transition cycle and anticipate additional customers will launch PCIe 6.0-capable AI accelerators and systems throughout 2026 and into 2027. As a result, we expect our Aries product line to continue growing in 2026 and beyond. Taurus was our strongest performing product family during Q4, as new programs began shipping in volume to support designs across both AI and general purpose systems.
Speaker #3: We remain very early in the PCIe 6 transition cycle, and anticipate additional customers will launch PCIe 6-capable AI accelerators and systems throughout 2026 and into 2027.
Speaker #3: As a result, we expect our ARES product line to continue growing in 2026 and beyond. Taurus was our strongest-performing product family during Q4, as new programs began shipping in volume to support designs across both AI and general-purpose systems.
Speaker #3: In 2025, we saw Taurus revenue grow by more than 4X year over year, driven by a breadth of 400 gig designs that will serve as a baseline for continued growth in 2026.
Jitendra Mohan: In 2025, we saw Taurus revenue grow by more than 4x year-over-year, driven by a breadth of 400 gig designs that will serve as a baseline for continued growth in 2026. We look for the transition to 800 gig switching platforms to be the next catalyst for market expansion, driving further growth opportunities for Taurus. Finally, we made good progress with our Leo CXL memory expansion products in 2025, and look to build upon that in 2026. We are excited to announce our partnership with Microsoft, Intel, and SAP to enable customers to evaluate CXL memory expansion capabilities for their specific workloads within Microsoft Azure M-series virtual machines. This program represents the industry's first publicly announced deployment of CXL-attached memory, and we expect initial production volumes to commence in the second half of 2026.
Jitendra Mohan: In 2025, we saw Taurus revenue grow by more than 4x year-over-year, driven by a breadth of 400 gig designs that will serve as a baseline for continued growth in 2026. We look for the transition to 800 gig switching platforms to be the next catalyst for market expansion, driving further growth opportunities for Taurus. Finally, we made good progress with our Leo CXL memory expansion products in 2025, and look to build upon that in 2026. We are excited to announce our partnership with Microsoft, Intel, and SAP to enable customers to evaluate CXL memory expansion capabilities for their specific workloads within Microsoft Azure M-series virtual machines. This program represents the industry's first publicly announced deployment of CXL-attached memory, and we expect initial production volumes to commence in the second half of 2026.
Speaker #3: We look for the transition to 800 gig switching platforms to be the next catalyst for market expansion, driving further growth opportunities for
Speaker #1: For Taurus . Finally , we made good progress with our Leo memory CXL expansion products in 2025 and look to build upon that in 2026 .
Speaker #1: We are excited to announce our partnership with Microsoft, Intel, and Essex in 2025 and look to build upon that. We are partnering with Intel and are excited to enable our efforts in 2026.
Speaker #1: CXL customers to to memory evaluate announce expansion for their capabilities specific workloads within Microsoft Azure virtual . M-series machines . This program represents the industry's first publicly announced deployment of CXL attached memory , and we expect initial production volumes to commence in the second half of 2026 .
Jitendra Mohan: Overall, we are proud of the progress we have made in 2025. We added new product lines to service more sockets and address custom applications, increased the dollar content per accelerator, diversified our customer base with new design-ins, and scaled our operations. This progress and a strong track record of technology and operational execution has helped us forge tight relationships with key AI and cloud infrastructure providers. As an example, an update on our relationship with Amazon can be found in our 8-K filed today. Looking ahead, the combination of growing AI infrastructure deployments and the increasing complexity of high-speed interconnect architectures is poised to drive significant growth for the AI connectivity space. We estimate our served addressable market opportunity will expand by more than 10x over the next five years to reach $25 billion.
Jitendra Mohan: Overall, we are proud of the progress we have made in 2025. We added new product lines to service more sockets and address custom applications, increased the dollar content per accelerator, diversified our customer base with new design-ins, and scaled our operations. This progress and a strong track record of technology and operational execution has helped us forge tight relationships with key AI and cloud infrastructure providers. As an example, an update on our relationship with Amazon can be found in our 8-K filed today. Looking ahead, the combination of growing AI infrastructure deployments and the increasing complexity of high-speed interconnect architectures is poised to drive significant growth for the AI connectivity space. We estimate our served addressable market opportunity will expand by more than 10x over the next five years to reach $25 billion.
Speaker #1: Overall , we are proud of the progress we have made in 2025 . added We new product lines to service more sockets and address custom applications .
Speaker #1: Increased the dollar content per accelerator our customer , diversified new base with designs and scaled our operations . This progress . engineering global operations Her through advanced establishment of an the design center in Israel this investment in .
Jitendra Mohan: This market opportunity spans our existing and announced copper-based product families, including Aries and Taurus signal conditioning solutions, Scorpio AI fabric switches, Leo CXL memory controllers, and our recently announced custom solutions for scale-up connectivity. While these numbers and opportunities are substantial and exciting, there is a significant amount of work that needs to be done. Astera Labs is deeply committed to building an A-plus team with an execution mindset and capabilities essential to support our customers' technology roadmap and maximize our share of the large market opportunity ahead of us. Therefore, we are strategically investing in the expansion of our team and capabilities to execute against a broadening set of revenue opportunities generated by our customers. We took an exciting step in this direction this week with the announcement of a significant expansion in our global engineering operations through the establishment of an advanced design center in Israel.
Jitendra Mohan: This market opportunity spans our existing and announced copper-based product families, including Aries and Taurus signal conditioning solutions, Scorpio AI fabric switches, Leo CXL memory controllers, and our recently announced custom solutions for scale-up connectivity. While these numbers and opportunities are substantial and exciting, there is a significant amount of work that needs to be done. Astera Labs is deeply committed to building an A-plus team with an execution mindset and capabilities essential to support our customers' technology roadmap and maximize our share of the large market opportunity ahead of us. Therefore, we are strategically investing in the expansion of our team and capabilities to execute against a broadening set of revenue opportunities generated by our customers. We took an exciting step in this direction this week with the announcement of a significant expansion in our global engineering operations through the establishment of an advanced design center in Israel.
Jitendra Mohan: Our investment in this talented ASIC engineering team substantially increases our resource pool, and will help accelerate development of cutting-edge, high bandwidth, and custom AI fabrics and emerging AI inference technologies. I would like to take a moment to thank our global team of Asterans, our partners, and our vendors who worked tirelessly in 2025 to deliver world-class AI connectivity solutions to the market. Their steadfast focus and effort have placed Astera Labs in a position of strength heading into 2026, as we continue solving next-generation AI connectivity challenges. Finally, we announced today that Mike Tate will transition from the CFO role into a full-time role as a strategic advisor reporting to me. Mike has been instrumental in Astera Labs' growth and development since inception, and we are very grateful for his many contributions.
Jitendra Mohan: Our investment in this talented ASIC engineering team substantially increases our resource pool, and will help accelerate development of cutting-edge, high bandwidth, and custom AI fabrics and emerging AI inference technologies. I would like to take a moment to thank our global team of Asterans, our partners, and our vendors who worked tirelessly in 2025 to deliver world-class AI connectivity solutions to the market. Their steadfast focus and effort have placed Astera Labs in a position of strength heading into 2026, as we continue solving next-generation AI connectivity challenges. Finally, we announced today that Mike Tate will transition from the CFO role into a full-time role as a strategic advisor reporting to me. Mike has been instrumental in Astera Labs' growth and development since inception, and we are very grateful for his many contributions.
Speaker #1: Our talented engineering team substantially increases our resource pool and will help accelerate development of cutting edge , high bandwidth and custom AI fabrics and emerging AI inference technologies .
Speaker #1: I would like to take a moment to thank our global team of our partners and vendors who our work tirelessly in deliver 2025 to world class AI connectivity solutions to the market .
Speaker #1: steadfast focus Their and effort have placed Astera Labs, Inc. a position of strength heading into 2026 . As we continue solving next generation AI connectivity challenges .
Speaker #1: Finally, we announced today that Michael Tate will transition from the CFO role into a full-time role as a strategic advisor, reporting to me.
Jitendra Mohan: We are also very excited to announce Desmond Lynch will join Astera Labs as our new CFO, effective March 2. Desmond brings great semiconductor financial experience to the company, and we look forward to drawing on his expertise as we enter our next phase of growth. We are also thankful that Mike will continue to work full-time in his new role to support the company and ensure a smooth transition to Desmond. With that, let me turn the call over to our President and COO, Sanjay Gajendra, to outline our vision for growth over the next several years.
Jitendra Mohan: We are also very excited to announce Desmond Lynch will join Astera Labs as our new CFO, effective March 2. Desmond brings great semiconductor financial experience to the company, and we look forward to drawing on his expertise as we enter our next phase of growth. We are also thankful that Mike will continue to work full-time in his new role to support the company and ensure a smooth transition to Desmond. With that, let me turn the call over to our President and COO, Sanjay Gajendra, to outline our vision for growth over the next several years.
Speaker #1: Mike has been instrumental in Astera Labs' growth and development since inception, and we are very grateful for his many contributions. We are also very excited to announce Desmond Lynch will join Astera Labs as our new CFO, effective March 2.
Speaker #1: Desmond brings great semiconductor financial experience to the company, and we look forward to drawing on his expertise as we enter our next phase of growth.
Speaker #1: We are also thankful that Mike will continue to work full-time in his role to support the company and ensure a new role transition to Desmond is smooth.
Speaker #1: With that, let me turn it to our President and COO, Sanjay Gajendra, to outline our vision for growth over the next several years.
Sanjay Gajendra: Thanks, Jitendra, and good afternoon, everyone. Today, I want to provide an update on our recent execution, followed by an overview of the meaningful market opportunities that will fuel our growth over the next several years. Astera Labs' mission is to deliver a purpose-built, intelligent connectivity platform with a portfolio of solutions, including silicon, hardware, and software for rack-scale AI deployments. Over the past several years, we have been building our portfolio, expanding our capabilities with foundational IP, growing our talent pool, and demonstrating the technical and operational execution, which has helped us to establish multi-generational partnerships with leading AI platform and cloud service providers.
Sanjay Gajendra: Thanks, Jitendra, and good afternoon, everyone. Today, I want to provide an update on our recent execution, followed by an overview of the meaningful market opportunities that will fuel our growth over the next several years. Astera Labs' mission is to deliver a purpose-built, intelligent connectivity platform with a portfolio of solutions, including silicon, hardware, and software for rack-scale AI deployments. Over the past several years, we have been building our portfolio, expanding our capabilities with foundational IP, growing our talent pool, and demonstrating the technical and operational execution, which has helped us to establish multi-generational partnerships with leading AI platform and cloud service providers.
Speaker #2: Thanks Jithendra , and good afternoon , everyone . Today I want to provide an update on our recent execution , followed by an overview of the meaningful market opportunities that will growth over fuel our the next several years .
Speaker #2: Ester labs mission is to deliver a purpose built intelligent connectivity platform with a portfolio of solutions , including silicon , hardware and software for rack scale AI deployments .
Speaker #2: Over the past several years , we have been building our portfolio our capabilities , expanding with foundational IP , growing our talent pool , and demonstrating the technical and operational execution which has helped us to establish multi generational partnerships with leading AI platform and cloud service providers .
Sanjay Gajendra: Looking ahead, we plan to deliver technology enhancements to our core portfolio of AI fabric, signal conditioners, and memory controllers, while also expanding our breadth of capabilities to new categories, including custom connectivity solutions, products to address memory bottlenecks in inference applications, optical engines, and other optical solutions for scale-up and scale-out networks. Let me now provide an update on our future product strategy. Starting with AI fabrics, we have been thrilled with the initial traction of Scorpio P-Series and X-Series over the last 18 months.... Looking into 2026, we are poised to see diversification with our P-Series solutions for head node connectivity at new hyperscaler customers, in addition to the volume ramp of our X-Series solutions for scale-up networking.
Sanjay Gajendra: Looking ahead, we plan to deliver technology enhancements to our core portfolio of AI fabric, signal conditioners, and memory controllers, while also expanding our breadth of capabilities to new categories, including custom connectivity solutions, products to address memory bottlenecks in inference applications, optical engines, and other optical solutions for scale-up and scale-out networks. Let me now provide an update on our future product strategy. Starting with AI fabrics, we have been thrilled with the initial traction of Scorpio P-Series and X-Series over the last 18 months.... Looking into 2026, we are poised to see diversification with our P-Series solutions for head node connectivity at new hyperscaler customers, in addition to the volume ramp of our X-Series solutions for scale-up networking.
Speaker #2: Looking ahead , we plan to deliver technology enhancements to our core portfolio of AI fabric signal conditioners and memory controllers , while also expanding our breadth of capabilities to new categories custom including connectivity solutions , products to address memory bottlenecks in inference applications , optical and engines other optical solutions for scale up and scale out networks .
Speaker #2: Let me now provide update an on our future product strategy , starting with AI fabrics . We have been thrilled with the initial traction of Scorpio , P-series and X series over the last 18 months .
Speaker #2: Looking into 2026 , we are poised to see diversification with our P-series solutions for head node connectivity at New customers . Hyperscaler In addition to the volume ramp of our X-series solutions for scale up networking exiting 2026 , we expect Esther Labs to continue being the market leading provider of PCI six switching solutions and will become a leading provider of merchant scale up AI fabrics .
Sanjay Gajendra: Exiting 2026, we expect Astera Labs to continue being the market's leading provider of PCIe 6.0 switching solutions, and will become a leading provider of merchant scale-up AI fabrics. Our early engagements have been crucial to our understanding of the nuances of deploying complex AI fabrics at scale, while also identifying new and innovative approaches to expand our roadmap. Furthermore, hyperscalers are demanding flexible connectivity solutions optimized for their unique architectural approaches and application needs, i.e., one size does not fit all. These requirements lend themselves to our software-defined architecture for silicon products, which will now extend to wider radix configuration, multi-protocol support, in-network computing, and ultimately, the incorporation of photonic switch to accelerator links. These new requirements, coupled with larger XPU cluster sizes, are expanding the merchant scale-up switching market opportunity, which we believe will grow to roughly $20 billion annually by 2030.
Sanjay Gajendra: Exiting 2026, we expect Astera Labs to continue being the market's leading provider of PCIe 6.0 switching solutions, and will become a leading provider of merchant scale-up AI fabrics. Our early engagements have been crucial to our understanding of the nuances of deploying complex AI fabrics at scale, while also identifying new and innovative approaches to expand our roadmap. Furthermore, hyperscalers are demanding flexible connectivity solutions optimized for their unique architectural approaches and application needs, i.e., one size does not fit all. These requirements lend themselves to our software-defined architecture for silicon products, which will now extend to wider radix configuration, multi-protocol support, in-network computing, and ultimately, the incorporation of photonic switch to accelerator links. These new requirements, coupled with larger XPU cluster sizes, are expanding the merchant scale-up switching market opportunity, which we believe will grow to roughly $20 billion annually by 2030.
Speaker #2: Our early engagements have been crucial in understanding the nuances of deploying complex AI fabrics at scale, while also identifying new and innovative approaches to expand our roadmap.
Speaker #2: Furthermore , hyperscalers are demanding flexible connectivity solutions optimized for their unique approaches and architectural application needs , i.e. , one size does not fit all these requirements lend our themselves to software defined architecture for silicon products , which will now extend to wider radius configuration .
Speaker #2: Multi-protocol support in network computing and ultimately the incorporation of photonic switch to accelerator links . These new requirements , coupled with export larger cluster sizes , are expanding the merchant scale up , switching market opportunity , which we believe will grow to roughly 20 billion annually by 2030 .
Sanjay Gajendra: Our current roadmap across PCIe, UALink, and platform-specific scale-up topologies put us in pole position to service at least half of this scale-up merchant silicon opportunity in the near to medium term, with aspirations to address the entire scale-up opportunity over the next several years. Moving to our signal conditioning portfolio, we saw tremendous growth in 2025 with both Aries and Taurus. Looking into 2026, we anticipate strong additional growth, fueled by robust secular trends and technology evolution. Across the portfolio, we are well positioned to benefit from forthcoming protocol specification upgrades for PCIe and Ethernet that will double bandwidth capabilities, and therefore drive additional reach extension content. Given the market size and growth rate, we'll continue to heavily invest in these portfolios with current developments stretching out to PCIe Gen 7, UALink 200G, and 1.6T Ethernet applications.
Sanjay Gajendra: Our current roadmap across PCIe, UALink, and platform-specific scale-up topologies put us in pole position to service at least half of this scale-up merchant silicon opportunity in the near to medium term, with aspirations to address the entire scale-up opportunity over the next several years. Moving to our signal conditioning portfolio, we saw tremendous growth in 2025 with both Aries and Taurus. Looking into 2026, we anticipate strong additional growth, fueled by robust secular trends and technology evolution. Across the portfolio, we are well positioned to benefit from forthcoming protocol specification upgrades for PCIe and Ethernet that will double bandwidth capabilities, and therefore drive additional reach extension content. Given the market size and growth rate, we'll continue to heavily invest in these portfolios with current developments stretching out to PCIe Gen 7, UALink 200G, and 1.6T Ethernet applications.
Speaker #2: Our current roadmap across PCIe, UVA link, and platform-specific scale-up topologies put us in pole position to service at half of at least this market.
Speaker #2: Merchant silicon opportunity in the near to medium term , with aspirations to address the entire market opportunity over the next several years . Moving to our signal conditioning portfolio , we tremendous saw growth in 2025 , with both Aries and Taurus .
Speaker #2: Looking into 2026 , we anticipate strong additional growth fueled by robust secular trends and technology evolution across the portfolio . We are well positioned to benefit from forthcoming protocols , specification upgrades for PCI and Ethernet that will double bandwidth capabilities and therefore drive additional reach extension content .
Speaker #2: Given the market size and growth rate, we will continue to heavily invest in these portfolios, with current developments stretching out to PCIe Gen 7 unveiling 200-gig and 1.6-terabit Ethernet applications. We remain well positioned as market leaders in both arenas and will look to leverage our AI fabric engagements to drive additional opportunities within these categories.
Sanjay Gajendra: We remain well-positioned as market leaders in both arenas, and we look to leverage our AI fabric engagements to drive additional opportunities within these categories. During Q4, we announced an expansion of our product portfolio to include custom connectivity solutions to address next-generation AI infrastructure, featuring heterogeneous compute resources. Our initial prospects in the custom solution space will help to enable NVIDIA's NVLink Fusion scale-up architecture for hybrid racks. We are seeing opportunities to support additional hyperscalers to provide interconnect flexibility and optionality. Through close collaboration with hyperscaler customers and leveraging a broad range of foundational technologies and operational expertise, Astera Labs is well positioned to provide a broad set of solutions tailored to custom applications. Next, we are working closely with key customers to define, develop, and build optical connectivity engines for scale-up networking.
Sanjay Gajendra: We remain well-positioned as market leaders in both arenas, and we look to leverage our AI fabric engagements to drive additional opportunities within these categories. During Q4, we announced an expansion of our product portfolio to include custom connectivity solutions to address next-generation AI infrastructure, featuring heterogeneous compute resources. Our initial prospects in the custom solution space will help to enable NVIDIA's NVLink Fusion scale-up architecture for hybrid racks. We are seeing opportunities to support additional hyperscalers to provide interconnect flexibility and optionality. Through close collaboration with hyperscaler customers and leveraging a broad range of foundational technologies and operational expertise, Astera Labs is well positioned to provide a broad set of solutions tailored to custom applications. Next, we are working closely with key customers to define, develop, and build optical connectivity engines for scale-up networking.
Speaker #2: During Q4, we announced an expansion of our product portfolio to include custom connectivity solutions to address next-generation AI infrastructure featuring heterogeneous compute resources.
Speaker #2: Our initial prospects in the custom solution space will help to enable Nvidia's NVLink fusion scale up architecture for hybrid racks , and we are seeing opportunities to support additional hyperscalers to provide interconnect flexibility and optionality through close collaboration with Hyperscaler customers and leveraging a broad range of foundational technologies and operational expertise .
Speaker #2: Esther Labs is well positioned to provide a broad set of solutions tailored to custom applications . Next , we working are closely with key customers to define , develop and build optical connectivity engines for scale up networking .
Sanjay Gajendra: These silicon photonic solutions will ultimately help to enhance both our AI fabric and signal conditioning portfolios as XPU cluster density scales. We believe that transition to optical connectivity for scale-up applications will be additive to the overall AI networking market size, with copper and optical link coexisting from a system standpoint. This could more than double the merchant scale-up switching opportunity. Additionally, the discrete high-density connectors added through our XScale acquisition are seeing strong interest and are being qualified for scale-up applications. Along with our expanding portfolio of AI platform solutions, we continue to make meaningful progress towards further diversifying our cloud infrastructure customer base. In 2025, we have seen customer activity and engagements accelerate across all product categories as AI and cloud providers look to Astera Labs to help solve their next-generation infrastructure challenges.
Sanjay Gajendra: These silicon photonic solutions will ultimately help to enhance both our AI fabric and signal conditioning portfolios as XPU cluster density scales. We believe that transition to optical connectivity for scale-up applications will be additive to the overall AI networking market size, with copper and optical link coexisting from a system standpoint. This could more than double the merchant scale-up switching opportunity. Additionally, the discrete high-density connectors added through our XScale acquisition are seeing strong interest and are being qualified for scale-up applications. Along with our expanding portfolio of AI platform solutions, we continue to make meaningful progress towards further diversifying our cloud infrastructure customer base. In 2025, we have seen customer activity and engagements accelerate across all product categories as AI and cloud providers look to Astera Labs to help solve their next-generation infrastructure challenges.
Speaker #2: These silicon photonics solutions will ultimately help to enhance both our AI fabric and signal conditioning portfolios . As SP cluster density scales , we believe that transition to optical connectivity for scale up applications will be additive to the overall AI networking market size , with copper and optical link coexisting from a system standpoint , this could more than double the merchant scale up switching opportunity .
Speaker #2: Additionally, the high discrete density connectors added through our XKL acquisition are seeing strong interest and are being qualified for scale-up applications.
Speaker #2: Along with our expanding portfolio of AI platform solutions, we continue to make meaningful progress towards further diversifying our cloud infrastructure and customer base.
Speaker #2: In 2025 , we have seen customer activity and engagements accelerate across all product categories as AI and cloud providers look to Astera Labs, Inc. to help solve their next generation infrastructure challenges .
Sanjay Gajendra: Many of these engagements have converted to design wins, and will meaningfully broaden revenue across multiple hyperscalers as we exit 2026. In conclusion, Astera Labs has arrived at a critical inflection point. Strong fundamental momentum has been generated over the past several years, with solid execution helping to build mature multi-generation customer relationships. Robust secular trends within rack scale AI infrastructure and criticality of intelligent connectivity solutions are catalysts for a material expansion of our market opportunity. These factors give us the confidence to reinvest in ourselves, our customers, and our partners to drive the deployment of AI infrastructure. We look forward to scaling our team with a continued strong emphasis on execution and invest to deliver on our rack scale vision throughout 2026.
Sanjay Gajendra: Many of these engagements have converted to design wins, and will meaningfully broaden revenue across multiple hyperscalers as we exit 2026. In conclusion, Astera Labs has arrived at a critical inflection point. Strong fundamental momentum has been generated over the past several years, with solid execution helping to build mature multi-generation customer relationships. Robust secular trends within rack scale AI infrastructure and criticality of intelligent connectivity solutions are catalysts for a material expansion of our market opportunity. These factors give us the confidence to reinvest in ourselves, our customers, and our partners to drive the deployment of AI infrastructure. We look forward to scaling our team with a continued strong emphasis on execution and invest to deliver on our rack scale vision throughout 2026.
Speaker #2: of these Many engagements have converted to design wins and will meaningfully broaden revenue across multiple hyperscalers . As we exit 2026 . In conclusion , Aster Labs has arrived at a critical inflection point strong fundamental momentum has been generated over the past several years , with solid execution helping to build mature , multi-generational customer relationships .
Speaker #2: Robust secular trends in rack-scale AI within infrastructure, and the criticality of intelligent connectivity solutions, are catalysts for a material expansion of our market opportunity.
Speaker #2: These factors give us the confidence to reinvest in ourselves, our customers, and our partners to drive the deployment of AI infrastructure.
Speaker #2: look We forward to scaling our team with a continued strong emphasis on execution and invest to deliver on our rack scale vision throughout 2026 .
Sanjay Gajendra: With that, I will turn the call over to our CFO, Mike Tate, who will discuss our Q4 financial results and our Q1 outlook.
Sanjay Gajendra: With that, I will turn the call over to our CFO, Mike Tate, who will discuss our Q4 financial results and our Q1 outlook.
Speaker #2: With that, I will turn the call over to our CFO, Mike Tate, who will discuss our Q4 financial results and our Q1 outlook.
Mike Tate: Thanks, Sanjay, and thanks to everyone for joining the call. This overview of our Q4 financial results and Q1 guidance will be on a non-GAAP basis. The primary difference in Astera Labs' non-GAAP metrics is stock-based compensation, acquisition-related costs, and its related income tax effects. Please refer to today's press release, available on the investor relations section of our website, for more details on both our GAAP and non-GAAP Q1 financial outlook, as well as a reconciliation of our GAAP to non-GAAP financial measures presented on this call. For Q4 of 2025, Astera Labs delivered quarterly revenue of $270.6 million, which was up 17% versus the previous quarter and 92% higher than the revenue of Q4 of 2024.
Michael Tate: Thanks, Sanjay, and thanks to everyone for joining the call. This overview of our Q4 financial results and Q1 guidance will be on a non-GAAP basis. The primary difference in Astera Labs' non-GAAP metrics is stock-based compensation, acquisition-related costs, and its related income tax effects. Please refer to today's press release, available on the investor relations section of our website, for more details on both our GAAP and non-GAAP Q1 financial outlook, as well as a reconciliation of our GAAP to non-GAAP financial measures presented on this call. For Q4 of 2025, Astera Labs delivered quarterly revenue of $270.6 million, which was up 17% versus the previous quarter and 92% higher than the revenue of Q4 of 2024.
Speaker #3: Thanks , Sanjay , and thanks to everyone for joining the call . This overview of our Q4 financial results in Q1 guidance will be on a non-GAAP basis .
Speaker #3: The primary difference in a sterile non-GAAP based metrics is stock compensation . Acquisition related costs , and related effects income its tax . Please refer today's to press release available on the Investor Relations section of our website .
Speaker #3: For more details on both our GAAP and non-GAAP Q1 financial outlook, as well as a reconciliation of our GAAP to non-GAAP financial measures presented on this call for Q4 2025.
Speaker #3: Astera Labs delivered quarterly revenue of $270.6 million, which was up 17% versus the previous quarter, and 92% higher than the revenue of Q4 2020.
Mike Tate: During the quarter, we enjoyed revenue growth from our Scorpio, Aries, and Taurus product lines, supporting both scale-up and scale-out PCIe and Ethernet connectivity for a wide range of AI rack-level configurations. Scorpio P-Series demand for PCIe Gen 6 switching applications was robust during Q4. Scorpio X-Series shipped pre-production quantities during the quarter. Aries demonstrated growth during the quarter, with Aries 6 revenue growing strongly as we began shipping PCIe Gen 6 SEMs for scale-up topologies in high volume. Taurus displayed strong growth during the quarter, driven by the ramp of new 400 gig PL programs for scale-out connectivity for both AI systems and general-purpose platforms. Q4 non-GAAP gross margin was 75.7%. It was down 70 basis points from the September quarter levels, primarily due to a higher mix of hardware sales. Non-GAAP operating expenses for Q4 was $96 million.
Michael Tate: During the quarter, we enjoyed revenue growth from our Scorpio, Aries, and Taurus product lines, supporting both scale-up and scale-out PCIe and Ethernet connectivity for a wide range of AI rack-level configurations. Scorpio P-Series demand for PCIe Gen 6 switching applications was robust during Q4. Scorpio X-Series shipped pre-production quantities during the quarter. Aries demonstrated growth during the quarter, with Aries 6 revenue growing strongly as we began shipping PCIe Gen 6 SEMs for scale-up topologies in high volume. Taurus displayed strong growth during the quarter, driven by the ramp of new 400 gig PL programs for scale-out connectivity for both AI systems and general-purpose platforms. Q4 non-GAAP gross margin was 75.7%. It was down 70 basis points from the September quarter levels, primarily due to a higher mix of hardware sales. Non-GAAP operating expenses for Q4 was $96 million.
Speaker #3: For during the quarter , we enjoyed revenue from our growth Scorpio , Aries and Taurus product lines , supporting both scale up and scale out .
Speaker #3: PCIe and Ethernet connectivity for a wide range of AI rack level configurations. Scorpio P Series demand for PCIe Gen 6 switching applications was robust during Q4 X Series.
Speaker #3: We shipped Scorpio pre-production quantities during the quarter. Aries demonstrated growth with the quarter, with Aries revenue growing strongly as we began shipping PCIe Gen 6 SCMs for scale-up topologies in high volume.
Speaker #3: Taurus displayed strong growth during the quarter, driven by the ramp of new 400-gig programs for scale-out connectivity for both AI systems and general platforms.
Speaker #3: Q4 gross non-GAAP margin was 75.7% and was down 70 basis points from the September quarter levels , primarily due to a higher mix of hardware sales .
Mike Tate: We're up $16 million from the previous quarter due to the continued expansion of our R&D organization, including the XScale acquisition that closed during the quarter. Within Q4 non-GAAP operating expenses, R&D expenses were $70.7 million, sales and marketing expenses were $11.1 million, and general and administrative expenses were $14.2 million. Non-GAAP operating margins for Q4 was 40.2%, down 150 basis points from the previous quarter. Interest income in Q4 was $12 million. Our non-GAAP tax rate for Q4 was 13%. Non-GAAP fully diluted share count for Q4 was 181.2 million shares, and our non-GAAP diluted earnings per share for the quarter was $0.58.
Michael Tate: We're up $16 million from the previous quarter due to the continued expansion of our R&D organization, including the XScale acquisition that closed during the quarter. Within Q4 non-GAAP operating expenses, R&D expenses were $70.7 million, sales and marketing expenses were $11.1 million, and general and administrative expenses were $14.2 million. Non-GAAP operating margins for Q4 was 40.2%, down 150 basis points from the previous quarter. Interest income in Q4 was $12 million. Our non-GAAP tax rate for Q4 was 13%. Non-GAAP fully diluted share count for Q4 was 181.2 million shares, and our non-GAAP diluted earnings per share for the quarter was $0.58.
Speaker #3: non-GAAP operating expenses for Q4 was $96 million , were up $16 million from the previous quarter due to the continued expansion of R&D our organization , including the Xscale acquisition that closed during the quarter .
Speaker #3: Within Q4, non-GAAP operating expenses were as follows: R&D expenses were $70.7 million, sales and marketing expenses were $11.1 million, and general and administrative expenses were $14.2 million.
Speaker #3: Non-GAAP operating margins for Q4 were 40.2%, down 150 basis points from the previous quarter. Interest income in Q4 was $12 million.
Speaker #3: Our non-GAAP tax rate for Q4 was 13%. Fully diluted share count for Q4 was 181.2 million shares, and our non-GAAP diluted earnings per share for the quarter was $0.58.
Mike Tate: Cash flow from operating activities for Q4 was $95.3 million, and we ended the quarter with cash, cash equivalents, and marketable securities of $1.19 billion. Now, turning to our guidance for Q1 of fiscal 2026. We expect Q1 revenues to increase to within a range of $286 million to 297 million, up roughly 6% to 10% from the Q4 levels. For Q1, we expect Aries growth to be driven by a variety of AI platforms across both scale-up and scale-out connectivity. Taurus growth is expected to be driven by increased volumes of 400 gig designs for AI scale-out connectivity. Scorpio growth will be primarily driven by the continued deployment of our P-Series solutions for scale-out applications, and initial volumes of our Scorpio X-Series for scale-up switching.
Michael Tate: Cash flow from operating activities for Q4 was $95.3 million, and we ended the quarter with cash, cash equivalents, and marketable securities of $1.19 billion. Now, turning to our guidance for Q1 of fiscal 2026. We expect Q1 revenues to increase to within a range of $286 million to 297 million, up roughly 6% to 10% from the Q4 levels. For Q1, we expect Aries growth to be driven by a variety of AI platforms across both scale-up and scale-out connectivity. Taurus growth is expected to be driven by increased volumes of 400 gig designs for AI scale-out connectivity. Scorpio growth will be primarily driven by the continued deployment of our P-Series solutions for scale-out applications, and initial volumes of our Scorpio X-Series for scale-up switching.
Speaker #3: Cash flow from operating activities for Q4 was $95.3 million, and we ended the quarter with cash, cash equivalents, and marketable securities of $1.19 billion.
Speaker #3: Now, turning to our guidance for Q1 of fiscal 2026, we expect Q1 revenues to increase to within a range of $286 million and up to $297 million for the fourth quarter, for levels from roughly 6% to 10%. In Q1, we expect Aries growth to be driven by a variety of AI platforms across both scale-up and scale-out.
Speaker #3: Connectivity Taurus growth is expected to be driven by an volumes of 400 gig designs for AI . Scale out connectivity . Scorpio growth will be primarily driven by the continued deployment of our P-series solutions for scale out applications and initial volumes of Scorpio Ex series for scale up switching , we expect Q1 non-GAAP gross margins to be approximately 74% .
Mike Tate: We expect Q1 non-GAAP gross margins to be approximately 74%, with the increased mix of our hardware-based solutions in the quarter. We expect first quarter non-GAAP operating expenses to be in the range of approximately $112 million to $118 million. As previously outlined, our customers continue to present us with numerous large revenue opportunities for AI connectivity solutions. The planned increase in operating expenses will enable us to capitalize on these opportunities. This guidance includes expenses related to an acqui-hire transaction we closed this quarter, which helped us rapidly scale our recently announced Israel Design Center. Interest income is expected to be approximately $11 million. Our non-GAAP tax rate should be approximately 12%. Our non-GAAP fully diluted share count is expected to be approximately 184 million shares.
Michael Tate: We expect Q1 non-GAAP gross margins to be approximately 74%, with the increased mix of our hardware-based solutions in the quarter. We expect first quarter non-GAAP operating expenses to be in the range of approximately $112 million to $118 million. As previously outlined, our customers continue to present us with numerous large revenue opportunities for AI connectivity solutions. The planned increase in operating expenses will enable us to capitalize on these opportunities. This guidance includes expenses related to an acqui-hire transaction we closed this quarter, which helped us rapidly scale our recently announced Israel Design Center. Interest income is expected to be approximately $11 million. Our non-GAAP tax rate should be approximately 12%. Our non-GAAP fully diluted share count is expected to be approximately 184 million shares.
Speaker #3: With the increased mix of our hardware based solutions in the quarter , we expect first quarter non-GAAP operating expenses to be in the range of approximately 112 million to 118 million , as previously outlined , our customers continue to present us with numerous large revenue opportunities for AI connectivity solutions .
Speaker #3: The planned increase in operating expenses will enable us to capitalize on these opportunities. This guidance includes expenses related to an acqui-hire transaction.
Speaker #3: We closed this quarter , which helped us rapidly scale our recently announced Israel Design Center is . Interest income be expected to approximately $11 million .
Speaker #3: Our non-GAAP tax rate should be approximately 12% . Our non-GAAP fully diluted share count is expected to be approximately 184 million shares , adding this all up , we are expecting non-GAAP fully diluted earnings per share to be approximately $0.53 to $0.54 .
Mike Tate: Adding this all up, we are expecting non-GAAP fully diluted earnings per share to be approximately $0.53 to $0.54. Lastly, I would like to welcome Desmond as our new incoming CFO, and I believe he's a perfect fit for the company at this exciting stage of the company's growth trajectory. I look forward to continuing to support the company in my new role, while also ensuring a smooth CFO transition. This concludes our prepared remarks, and once again, we appreciate everyone joining the call, and now we will open the line for questions. Operator?
Michael Tate: Adding this all up, we are expecting non-GAAP fully diluted earnings per share to be approximately $0.53 to $0.54. Lastly, I would like to welcome Desmond as our new incoming CFO, and I believe he's a perfect fit for the company at this exciting stage of the company's growth trajectory. I look forward to continuing to support the company in my new role, while also ensuring a smooth CFO transition. This concludes our prepared remarks, and once again, we appreciate everyone joining the call, and now we will open the line for questions. Operator?
Speaker #3: Lastly, I would like to welcome Desmond as our new incoming CFO, and I believe he is a perfect fit for this exciting stage of the company's growth trajectory.
Speaker #3: I look forward to continue to support the company in my new role , while also ensuring a smooth CFO transition . This concludes our prepared remarks , and once again , we appreciate everyone joining the call .
Operator: ...At this time, I would like to remind everyone, in order to ask a question, press Star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Blaine Curtis with Jefferies.
Operator: ...At this time, I would like to remind everyone, in order to ask a question, press Star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Blayne Curtis with Jefferies.
Speaker #3: And we will now open the line for questions. Operator?
Speaker #3: .
Speaker #4: time , I would like to At this remind everyone , in order to ask a question , press star . Then the number one on your telephone keypad .
Speaker #4: We'll pause for just a moment to compile the Q&A roster . Your first question comes from Blayne Curtis with Jefferies .
Blayne Curtis: Hey, guys. Good afternoon. Thanks for taking my question. Congrats on the results, and congrats, Mike, on the new role. I just want to ask you, obviously, this warrant, $6.5 billion is a huge number, so I might already know the answer. But I wanted to ask you about. Seems like one of the biggest debates is still the acceptance of UALink for these next-gen designs. You mentioned two lead customers mentioning it. I'm just kind of curious, as people think about, you know, your UALink switch opportunity, particularly at your largest customer, versus, you know, the custom connectivity and maybe them using NVLink.
Blayne Curtis: Hey, guys. Good afternoon. Thanks for taking my question. Congrats on the results, and congrats, Mike, on the new role. I just want to ask you, obviously, this warrant, $6.5 billion is a huge number, so I might already know the answer. But I wanted to ask you about. Seems like one of the biggest debates is still the acceptance of UALink for these next-gen designs. You mentioned two lead customers mentioning it. I'm just kind of curious, as people think about, you know, your UALink switch opportunity, particularly at your largest customer, versus, you know, the custom connectivity and maybe them using NVLink.
Speaker #5: Hey , guys . Good afternoon . Thanks to my question . Congrats on the results and congrats , Mike , on the new role .
Speaker #5: I just want to ask you , obviously this this this warrant , 6.5 billion is a huge number . So I already know the answer .
Speaker #5: But I wanted to ask you about—seems like one of the biggest debates is still the acceptance of UA link for these next-gen designs.
Speaker #5: You mentioned two lead customers mentioning it . I'm just kind of curious as people think about , you know , your UA link switch opportunity , particularly at your largest customer versus , you know , the custom connectivity and maybe them using NVLink .
Blayne Curtis: Just kind of curious, with this deal, is there any better visibility, if you can kind of think about, you know, that mix between hybrid boxes and native UALink, for these, at your lead customer?
Blayne Curtis: Just kind of curious, with this deal, is there any better visibility, if you can kind of think about, you know, that mix between hybrid boxes and native UALink, for these, at your lead customer?
Speaker #5: It’s just kind of this deal; is there any better curiosity with visibility, if you can kind of think about that mix between hybrid boxes and native UA link for these at your lead customer.
Jitendra Mohan: Thanks, Blaine. Maybe let me start, and then Mike can chime in on the warrant itself. So yes, clearly, AWS announced at re:Invent that the Trainium4, which is slated to ramp in 2027, will support UALink, which was a very positive endorsement of UALink, as well as support for NVLink Fusion. Subsequently, AMD has also announced that their MI500 series will also support UALink, again, in 2027. So these are two very good public announcements in support of UALink, and there are several other discussions that are ongoing. UALink ecosystem is humming. We've got, you know, great availability of IP, lot of vendor announcements and so on. And so we will be ready with our UALink solution to intercept the ramp that happens in 2027.
Jitendra Mohan: Thanks, Blayne. Maybe let me start, and then Mike can chime in on the warrant itself. So yes, clearly, AWS announced at re:Invent that the Trainium4, which is slated to ramp in 2027, will support UALink, which was a very positive endorsement of UALink, as well as support for NVLink Fusion. Subsequently, AMD has also announced that their MI500 series will also support UALink, again, in 2027. So these are two very good public announcements in support of UALink, and there are several other discussions that are ongoing. UALink ecosystem is humming. We've got, you know, great availability of IP, lot of vendor announcements and so on. And so we will be ready with our UALink solution to intercept the ramp that happens in 2027.
Speaker #1: Thanks , Blaine . Maybe let me start and then Mike can chime in on the warrant itself . So yes , clearly AWS announced at Reinvent that the the trainium for which is slated to ramp in 2027 , will support you link , very which was a positive endorsement of your link as well as support for unveiling fusion .
Speaker #1: Subsequently , AMD has also announced that their 500 series will also support link again in 2027 . So these are two very good public announcements in support of link , and there are several other discussions that are ongoing .
Speaker #1: Link ecosystem is humming . We've got , you know , great availability of IP . A lot of vendor announcements and so on .
Jitendra Mohan: Now, for NVLink Fusion, this also represents a meaningful opportunity for us. Then before we jump into what the opportunity is, I do want to call out the fact that both Amazon, the hyperscaler, as well as NVIDIA, have chosen Astera as a partner. And that's a very important, you know, statement in terms of the trust that they place in Astera Labs. So the opportunity itself is to take the native protocol that the XPU or the ASIC speaks, and translate that into NVLink. This is a sophisticated function, and we have a solution that we will deploy to address this.
Jitendra Mohan: Now, for NVLink Fusion, this also represents a meaningful opportunity for us. Then before we jump into what the opportunity is, I do want to call out the fact that both Amazon, the hyperscaler, as well as NVIDIA, have chosen Astera as a partner. And that's a very important, you know, statement in terms of the trust that they place in Astera Labs. So the opportunity itself is to take the native protocol that the XPU or the ASIC speaks, and translate that into NVLink. This is a sophisticated function, and we have a solution that we will deploy to address this.
Speaker #1: And so we will be ready with our link solution to intercept the ramp that happens in 2027 . Now for NVLink fusion . There's also opportunity for meaningful us .
Speaker #1: then before represents a And we what the jump into opportunities I call do want to out fact the that both Amazon , the Hyperscaler as well as Nvidia have chosen Astera as a partner .
Speaker #1: And that's a very important, you know, statement in terms of the trust that they place in Astera Labs, Inc. So the opportunity itself is to take the native protocol that the XPU or the ASIC speaks and translate that into NVLink.
Jitendra Mohan: Given the fact that the solution attaches to the XPU on a one-to-one basis, we anticipate the overall revenues to be in line with a switched opportunity, where we might be selling a UALink switch. So all in all, exact mix of, you know, how much NVLink Fusion would be deployed versus a native solution would be deployed remains to be seen, but for us, the opportunity is roughly the same for both.
Jitendra Mohan: Given the fact that the solution attaches to the XPU on a one-to-one basis, we anticipate the overall revenues to be in line with a switched opportunity, where we might be selling a UALink switch. So all in all, exact mix of, you know, how much NVLink Fusion would be deployed versus a native solution would be deployed remains to be seen, but for us, the opportunity is roughly the same for both.
Speaker #1: This is a sophisticated function , and we have a solution that we will deploy to address this . And given the fact that the solution attaches to the expo on a 1 to 1 basis , we anticipate the overall revenues to be in line with the switched opportunity where we might be selling a link switch .
Speaker #1: So all in all , exact mix of how much link fusion would be deployed versus a native solution would be deployed . There needs to be to be seen .
Mike Tate: Yeah, and just to point out, we did file under 8-K our warrant agreement with Amazon today. So it demonstrates our strong relationship with Amazon. Under the terms of the warrant agreement, we're issuing 3.3 million warrant shares that vest upon the achievement of performance conditions, comprises specified tranches of payments to purchase up to $6.5 billion of our smart fabric switches, signal conditioning products, and also our optical engine solutions.
Michael Tate: Yeah, and just to point out, we did file under 8-K our warrant agreement with Amazon today. So it demonstrates our strong relationship with Amazon. Under the terms of the warrant agreement, we're issuing 3.3 million warrant shares that vest upon the achievement of performance conditions, comprises specified tranches of payments to purchase up to $6.5 billion of our smart fabric switches, signal conditioning products, and also our optical engine solutions.
Speaker #1: But the for us , opportunity is roughly the same for both .
Speaker #3: And just just to out , we point did file Yeah . under AK , our with agreement warrant today . It demonstrates our strong relationship with Amazon under the terms of the warrant agreement , we're issuing 3.3 million warrant shares that vest upon the achievement of performance conditions comprised of specified tranches of payments to purchase up to $6.5 billion of our smart fabric signal conditioning products , and also our optical engine solutions .
Blayne Curtis: Thanks. I actually wanted to ask you on that last part. I thought it was interesting you've been talking more about optical. You know, it's part of that warrant agreement. Can you maybe just talk about... You talked about it doubling your TAM, maybe timing on that?
Blayne Curtis: Thanks. I actually wanted to ask you on that last part. I thought it was interesting you've been talking more about optical. You know, it's part of that warrant agreement. Can you maybe just talk about... You talked about it doubling your TAM, maybe timing on that?
Speaker #5: Thanks . I actually wanted to ask you on that last part . I thought it was been interesting . You've talking more about optical .
Speaker #5: You know, it's part of that warrant agreement. Can you maybe just talk about—you talked about it doubling your TAM. Maybe talk about the timing on that?
Jitendra Mohan: So we think that, when we think that the optical for scale-up, the timing should be somewhere in 2028. We do believe that the initial deployment for optical technology, CPO in particular, might happen with scale-out, and that might precede the deployment of scale-up.
Jitendra Mohan: So we think that, when we think that the optical for scale-up, the timing should be somewhere in 2028. We do believe that the initial deployment for optical technology, CPO in particular, might happen with scale-out, and that might precede the deployment of scale-up.
Speaker #1: So we think that we think that the optical for scale up the timing should be somewhere in 2028 . We do believe that the initial deployment for optical technology , CPO in particular , might happen with scale out might of of deployment , and that precede the up
Blayne Curtis: Thanks, guys. Great.
Blayne Curtis: Thanks, guys. Great.
Operator: Your next question comes from Joe Moore with Morgan Stanley.
Operator: Your next question comes from Joe Moore with Morgan Stanley.
Speaker #5: guys . . Thanks , .
Speaker #5: Great
Joe Moore: Great, thank you. You talked a little bit about the OpEx increase. I guess it's a pretty big step function up. You know, can you talk about, was the acquisition a part of that? I know it was small. And then, you know, as you look out to these optical scale-up aspirations, I assume that's expensive. Just kind of any incremental sense of, you know, why the OpEx is coming up so much so quickly?
Joseph Moore: Great, thank you. You talked a little bit about the OpEx increase. I guess it's a pretty big step function up. You know, can you talk about, was the acquisition a part of that? I know it was small. And then, you know, as you look out to these optical scale-up aspirations, I assume that's expensive. Just kind of any incremental sense of, you know, why the OpEx is coming up so much so quickly?
Speaker #4: Your next question comes from Joe Moore with Morgan Stanley .
Speaker #6: Great, thank you. You talked a little bit about the opex increase. I guess it's a pretty big step function up.
Speaker #6: You know , can you talk was the about acquisition a part of that . And it was small . And then , you know , as you look out to these optical scale up aspirations , I assume that's expensive .
Mike Tate: Yeah, Joe, over the last couple of quarters, we've been having a lot of advanced dialogue with our customers, and they're presenting us significant revenue opportunities that, you know, we really feel as now is the time to really invest in. You know, as we spoke on the call, the TAM is much bigger than we originally expected, just, you know, when we measured it just 12, 18 months ago. So, we are increasing our investments to pursue these opportunities. Last quarter, in Q4, we did close the XScale acquisition, so now we have a full quarter in Q1.
Michael Tate: Yeah, Joe, over the last couple of quarters, we've been having a lot of advanced dialogue with our customers, and they're presenting us significant revenue opportunities that, you know, we really feel as now is the time to really invest in. You know, as we spoke on the call, the TAM is much bigger than we originally expected, just, you know, when we measured it just 12, 18 months ago. So, we are increasing our investments to pursue these opportunities. Last quarter, in Q4, we did close the XScale acquisition, so now we have a full quarter in Q1.
Speaker #6: Just kind of any , any incremental sense of , you know , why the opex is coming up so much so quickly .
Speaker #3: Yeah . Joe , over the last couple of quarters , we've been coming having a lot of dialogue with our customers and they're presenting us as significant revenue opportunities that , you know , we really feel now is the time to really invest in , you know , as we spoke on the call , the Tam is is much bigger than we originally expected .
Speaker #3: Just , you know , when we measured it just 12 , 18 months ago we are . So are increasing our investments these to to pursue opportunities .
Mike Tate: And then, just recently in this quarter, we closed another acqui-hire, where we got a very sizable, capable team to help us scale up our new Israel design center, where we just also brought in very, like, exciting, capable leadership as well. So this is all to pursue these opportunities our customers are pushing us to develop for them.
Michael Tate: And then, just recently in this quarter, we closed another acqui-hire, where we got a very sizable, capable team to help us scale up our new Israel design center, where we just also brought in very, like, exciting, capable leadership as well. So this is all to pursue these opportunities our customers are pushing us to develop for them.
Speaker #3: last Last , quarter in Q4 , we did close the exascale acquisition . So now we have a full quarter in Q1 . And then just recently in this quarter , we closed another Aqua hire where we got a very sizable capable team to help us scale up our new Israel Design Center , where we just also brought in very exciting , capable leadership as well .
Speaker #3: So this is all to these opportunities that our customers are pushing us to , to , to develop for them .
Joe Moore: Okay, thank you. And then you talked about UA Link. I know there was also a fair amount of noise over the course of the quarter about ESUN, Ethernet scale-up. Can you just kind of talk about the handicapping those two technologies and how you see those technologies coexisting going forward?
Joseph Moore: Okay, thank you. And then you talked about UA Link. I know there was also a fair amount of noise over the course of the quarter about ESUN, Ethernet scale-up. Can you just kind of talk about the handicapping those two technologies and how you see those technologies coexisting going forward?
Speaker #6: Okay . Thank you . And then you talked about UA link . I know there was also a fair amount of noise over the course of the quarter about ESN Ethernet scale up .
Speaker #6: Can you just kind of talk about the handicapping those two technologies and how you see those technologies coexisting going ?
Jitendra Mohan: Yeah, so the scale-up networking, Joe, that remains a very large market, and it'll include proprietary approaches such as NVLink or Google's ICI, and will also include the merchant and standard approaches such as PCIe, UALink, Ethernet, and ESUN.
Jitendra Mohan: Yeah, so the scale-up networking, Joe, that remains a very large market, and it'll include proprietary approaches such as NVLink or Google's ICI, and will also include the merchant and standard approaches such as PCIe, UALink, Ethernet, and ESUN.
Speaker #1: Yeah , the scale up networking that remains a large very market and it'll include proprietary approaches as such NVLink or Google's HCI , and will also include the merchant and standard approaches such as PCI express , link , Ethernet and SM .
Sanjay Gajendra: ... What we are seeing is that hyperscalers are going to leverage the type of solutions that their software stack is designed for. So, for example, if a customer is using a memory-centric protocol like NVLink or like PCI Express, they are likely to continue to use that and transition to UALink as those solutions become available. At the same time, the customers that are using Ethernet are likely to stay with Ethernet, and then maybe move to ESUN when ESUN becomes available. This is overall a very big market, and there is a lot of room for different solutions to coexist, and we do indeed think that these solutions will coexist. We are primarily developing solutions where our customers are asking us to, which happens to be PCI Express, UALink, and now increasingly on NVLink Fusion.
Jitendra Mohan: ... What we are seeing is that hyperscalers are going to leverage the type of solutions that their software stack is designed for. So, for example, if a customer is using a memory-centric protocol like NVLink or like PCI Express, they are likely to continue to use that and transition to UALink as those solutions become available. At the same time, the customers that are using Ethernet are likely to stay with Ethernet, and then maybe move to ESUN when ESUN becomes available. This is overall a very big market, and there is a lot of room for different solutions to coexist, and we do indeed think that these solutions will coexist. We are primarily developing solutions where our customers are asking us to, which happens to be PCI Express, UALink, and now increasingly on NVLink Fusion.
Speaker #1: What we are seeing is that hyperscalers are going to leverage the type of solutions that their software stack is designed for . So example , , for if a customer is using a memory centric protocol like NVLink or like PCI express , they are likely to continue to use that and transition to unlink as those solutions become available .
Speaker #1: At the same time , the customers that are using Ethernet are likely to stay with Ethernet , and then maybe move to Ethan when Ethan becomes available .
Speaker #1: This is overall a very big market , and there is a lot of room for for different solutions to coexist . And we do indeed think that these solutions will coexist .
Speaker #1: We are primarily developing solutions where our customers are asking us to , which happens to be express , PCI unlink , and now increasingly on NVLink fusion .
Carly: Great. Thank you.
Operator: Great. Thank you.
Operator: Your next question comes from Vivek Arya with Bank of America.
Operator: Your next question comes from Vivek Arya with Bank of America.
Speaker #6: Great . Thank you .
Vivek Arya: Thanks for taking my question. On Scorpio, I'm curious if it achieved that 20% of sales, I think, milestone that you had set in Q4. And if it did, is this kind of $200-ish million, you know, with this $200-ish million run rate, where do you see the outlook for Scorpio, you know, at a high level for 2026?
Vivek Arya: Thanks for taking my question. On Scorpio, I'm curious if it achieved that 20% of sales, I think, milestone that you had set in Q4. And if it did, is this kind of $200-ish million, you know, with this $200-ish million run rate, where do you see the outlook for Scorpio, you know, at a high level for 2026?
Speaker #4: Your next question from Vivek comes Arya with Bank of America .
Speaker #7: Thanks for taking my question on Scorpio . I'm curious if it achieved that 20% of sales . I think milestone that you had set in Q4 , and if it did , is this kind of 200 ish million , you know , with this 200 ish million run rate , where do you see the outlook for Scorpio ?
Mike Tate: Yeah, yeah. Scorpio continues to perform very well. You know, it just launched for the first time in Q2 of this year, and it did break above our 15% for the year, and it grew very nicely in Q4. This is all on the Scorpio P primarily, which is scale-out switching. We did say we just started to ship initial volumes here in Scorpio X. Now, that will have increasing volumes as we enter into 2026, with a much more material ramp in the back half of the year. So, you know, Scorpio by far is our biggest TAM right now, so it's growing at a very fast clip as a result of that.
Michael Tate: Yeah, yeah. Scorpio continues to perform very well. You know, it just launched for the first time in Q2 of this year, and it did break above our 15% for the year, and it grew very nicely in Q4. This is all on the Scorpio P primarily, which is scale-out switching. We did say we just started to ship initial volumes here in Scorpio X. Now, that will have increasing volumes as we enter into 2026, with a much more material ramp in the back half of the year. So, you know, Scorpio by far is our biggest TAM right now, so it's growing at a very fast clip as a result of that.
Speaker #7: You know , at a high level for 2026 ?
Speaker #3: Yeah . Scorpio continues to perform very well . You know , it just launched for the first time in this year . Q2 of And it it did break above our 15% for the year .
Speaker #3: And it grew very nicely in Q4 . This is all on the Scorpio P primarily , which is scale out switching . We did say we just started ship initial volumes here in Scorpio , and that will have increasing volumes as we as we enter into a much 2026 with more material ramp in the back half , half of the year .
Speaker #3: So , you know , Scorpio by far is our biggest Tam right now . So it it's , you know , it's growing at a very fast clip as a result of that .
Vivek Arya: Okay. And for my follow-up, Jitendra, how do you see your content as NVIDIA moves to the Vera Rubin generation versus the Blackwell generation, right? And how do you see, wherever the NVIDIA racks are deployed in the Vera Rubin, do you think, you know, they let them capture more of their proprietary content, or do you still see enough opportunity for Astera wherever Vera Rubin is installed? Thank you.
Vivek Arya: Okay. And for my follow-up, Jitendra, how do you see your content as NVIDIA moves to the Vera Rubin generation versus the Blackwell generation, right? And how do you see, wherever the NVIDIA racks are deployed in the Vera Rubin, do you think, you know, they let them capture more of their proprietary content, or do you still see enough opportunity for Astera wherever Vera Rubin is installed? Thank you.
Speaker #7: Okay. And for my follow up, Jitendra, how do you see your content as Nvidia moves to the Vera Rubin generation versus the Blackwell generation?
Speaker #7: And how do you see whatever the Nvidia racks are deployed in the Vera Rubin , do you think , you know they let them capture more of their proprietary ?
Sanjay Gajendra: Yeah, Vivek, a great question. So as we have established now that the opportunity for Astera arises when our customers do custom deployments of the Grace Blackwell or in the future, Vera Rubin reference designs. We have very minimal opportunity with the reference design itself. The initial ramps that Mike just referred to were happening as part of these customized deployment of Grace Blackwell platform by our lead hyperscaler customer. And as a hyperscaler customer announced at the public event, they want to continue to deploy Vera Rubin also as a custom deployment. So we will certainly do our best to make sure that we are part of that solution as well as the designs transition from Grace Blackwell to Vera Rubin.
Jitendra Mohan: Yeah, Vivek, a great question. So as we have established now that the opportunity for Astera arises when our customers do custom deployments of the Grace Blackwell or in the future, Vera Rubin reference designs. We have very minimal opportunity with the reference design itself. The initial ramps that Mike just referred to were happening as part of these customized deployment of Grace Blackwell platform by our lead hyperscaler customer. And as a hyperscaler customer announced at the public event, they want to continue to deploy Vera Rubin also as a custom deployment. So we will certainly do our best to make sure that we are part of that solution as well as the designs transition from Grace Blackwell to Vera Rubin.
Speaker #7: Or content, do you still see enough opportunity for Astera wherever Vera Rubin is installed? Thank you.
Speaker #1: Yeah , a great question . So as we have established now that the opportunity for for Astra arises when our customers do custom deployments of the the base Blackwell or in the future , Vera Rubin reference designs .
Speaker #1: very minimal opportunity with the reference design . itself The initial ramps that Mike just to were referred happening as part of these customized deployment of Grace Blackwell platform by our lead Hyperscaler customer .
Speaker #1: And as a Hyperscaler customer announced at their public event , they want to continue to deploy Vera Rubin . Also as a as a custom deployment .
Speaker #1: So we will certainly our best to make sure that we are part of that solution as well as the designs transition from Grace Blackwell to Vera Rubin .
Vivek Arya: Thank you.
Vivek Arya: Thank you.
Operator: Your next question comes from Tore Svanberg with Stifel.
Operator: Your next question comes from Tore Svanberg with Stifel.
Tore Svanberg: Yes, thank you. Congratulations on the results, and Mike, congratulations on your new role. I had a follow-up question for Sanjay. Sanjay, when you talked about the SAM, by 2030, $20 billion, you know, you'll be able to address half of that today. But you said, you know, PCIe, UALink, and then platform-specific scale-up topologies. And I'm just curious, is the world changing a little bit where, you know, there's less reliance on standards and there's more platform-specific scale-up initiatives? And is that also why you are stepping up your OpEx as much as you are this quarter?
Tore Svanberg: Yes, thank you. Congratulations on the results, and Mike, congratulations on your new role. I had a follow-up question for Sanjay. Sanjay, when you talked about the SAM, by 2030, $20 billion, you know, you'll be able to address half of that today. But you said, you know, PCIe, UALink, and then platform-specific scale-up topologies. And I'm just curious, is the world changing a little bit where, you know, there's less reliance on standards and there's more platform-specific scale-up initiatives? And is that also why you are stepping up your OpEx as much as you are this quarter?
Speaker #8: Thank you .
Speaker #4: Your next question comes from Tori Swanberg with Stifel.
Speaker #9: Yes . Thank you . Congratulations on the results . And Mike , on your new role , I had a follow up question for Sanjay .
Speaker #9: Sanjay , when you talked about the Sam by 2030 , 20 billion , you you'll be able to address half of that today .
Speaker #9: But said , you you know , PCIe link and then platform specific scale of topologies . And and I'm just curious is the world changing a little bit where , you know , there's less reliance on standards and there's more platform specific scale up initiatives ?
Sanjay Gajendra: Yeah. So if you think of a scale-up topology, you're interconnecting accelerators. And to that standpoint, these accelerators could be a merchant silicon or could be an internal custom ASIC. And because these are homogeneous links, and everyone is trying to eke out the maximum amount of bandwidth and performance on the connectivity side. So in general, what you will expect is there is quite a bit of customization that will be needed. Now, with Astera, we are unique in the sense that our fabrics are designed to be software-defined, in the sense that they can be updated to do certain things that are custom and optimized for the specific scale-up topology.
Sanjay Gajendra: Yeah. So if you think of a scale-up topology, you're interconnecting accelerators. And to that standpoint, these accelerators could be a merchant silicon or could be an internal custom ASIC. And because these are homogeneous links, and everyone is trying to eke out the maximum amount of bandwidth and performance on the connectivity side. So in general, what you will expect is there is quite a bit of customization that will be needed. Now, with Astera, we are unique in the sense that our fabrics are designed to be software-defined, in the sense that they can be updated to do certain things that are custom and optimized for the specific scale-up topology.
Speaker #9: And is that also why you are stepping up your opex as much as you are this quarter?
Speaker #2: Yeah . So see , if you think of a scale up topology , you're interconnecting accelerators . And to that standpoint , you know , the accelerators could be a merchant silicon or could be an internal customer .
Speaker #2: And , and because these are homogeneous links and everyone is trying to eke out the maximum amount of , of bandwidth and performance on the connectivity side .
Speaker #2: So in general , what you will expect is there is quite a bit of a customization that will be needed . Now with Astera , we are unique in the sense that our fabrics are designed to be software defined , in the sense that they can be updated to to do certain things that are custom and optimized for the specific scale up topology .
Sanjay Gajendra: So what we have tried to do is not do one silicon for every opportunity, but to be able to leverage the same piece of silicon, but to be able to customize that in many different ways. So in some ways, we are making sure that the investment that we do is managed, and the differentiation comes from software rather than keep doing a unique silicon for everyone. Now, having said that, the thing that we are seeing is a tremendous influx of opportunities, and that's largely coming from the fact that you know, we have spent about 12 to 15 months sort of being in the scale-up domain, and we have learned a lot. There's a lot of unique things that become critical when you're designing scale-up fabrics.
Sanjay Gajendra: So what we have tried to do is not do one silicon for every opportunity, but to be able to leverage the same piece of silicon, but to be able to customize that in many different ways. So in some ways, we are making sure that the investment that we do is managed, and the differentiation comes from software rather than keep doing a unique silicon for everyone. Now, having said that, the thing that we are seeing is a tremendous influx of opportunities, and that's largely coming from the fact that you know, we have spent about 12 to 15 months sort of being in the scale-up domain, and we have learned a lot. There's a lot of unique things that become critical when you're designing scale-up fabrics.
Speaker #2: So what we have tried to do is not do one silicon for every opportunity , be able but to to leverage the same piece of silicon .
Speaker #2: But to be able to customize that in many different ways . So in some ways , we are making sure that the investment that we do is , is , is managed and the differentiation comes from software rather than keep doing a unique silicon for everyone .
Speaker #2: Now , having said that , the thing that we are seeing is a tremendous influx of opportunities , and that's largely coming from the fact that , you know , we spent about 12 to 15 months sort of being in this up domain , and we have learned a lot .
Sanjay Gajendra: And that learning has enabled us to, you know, better present our solution, as well as the feature set that we're incorporating in our new product lines. And those are gaining, you know, interest and support from several new customers. And to support that is where we see a need to step up our R&D, meaning the time to invest is now.
Sanjay Gajendra: And that learning has enabled us to, you know, better present our solution, as well as the feature set that we're incorporating in our new product lines. And those are gaining, you know, interest and support from several new customers. And to support that is where we see a need to step up our R&D, meaning the time to invest is now.
Speaker #2: There's a lot of unique things that become critical when you're designing scale up fabrics and that learning has enabled us to better our solution as well as the feature set that we're incorporating in our new product lines .
Speaker #2: And those are gaining interest and support from from several new customers . And to support that is where we see a need to to step up R&D , meaning time to invest is now and this will help us as we think about the longer term growth of the company , as well as our position in the scale up market .
Sebastien Naji: ... and this will help us as we think about the longer-term growth of the company, as well as our position in the scale-up market.
Sanjay Gajendra: ... and this will help us as we think about the longer-term growth of the company, as well as our position in the scale-up market.
Tore Svanberg: That's great, Paler. Thank you. Also a follow-up for you, Jitendra. Just to clarify, I think you said Scorpio X, so pre-production still first half of this year, then you start the ramp with your lead customer second half. But I think you also said that you expect to have some pre-production with additional customers beyond your lead customer in the second half with ramps in 2027. Just wanna make sure that I got that right.
Tore Svanberg: That's great, Paler. Thank you. Also a follow-up for you, Jitendra. Just to clarify, I think you said Scorpio X, so pre-production still first half of this year, then you start the ramp with your lead customer second half. But I think you also said that you expect to have some pre-production with additional customers beyond your lead customer in the second half with ramps in 2027. Just wanna make sure that I got that right.
Speaker #9: That's great . Thank you . And my follow that's up for you . Jitendra Mohan . Just to to clarify , I think you said Scorpio X , so pre-production still first half of this year .
Speaker #9: Then you start the ramp with your lead customer . Second half . But I think you also said that you expect to have some pre-production with additional customers beyond your lead customer .
Sanjay Gajendra: Yep, that's correct. Yeah, there is a lot of traction for the Scorpio X family, for customers who are trying to use PCI Express and the memory-centric protocol, for their scale-up. We are fielding so many different calls, and we expect some of those to get qualified towards the end of this year and then ramp in 2027.
Jitendra Mohan: Yep, that's correct. Yeah, there is a lot of traction for the Scorpio X family, for customers who are trying to use PCI Express and the memory-centric protocol, for their scale-up. We are fielding so many different calls, and we expect some of those to get qualified towards the end of this year and then ramp in 2027.
Speaker #9: In the second half, with ramps in '27. I just want to make sure that I got that right.
Speaker #1: Yeah , that's correct . Yeah , there is a lot of for the traction Scorpio X family for for customers who are trying to use PCI express in the memory centric protocol for their scale up .
Speaker #1: We are fielding so many different calls and we expect some of those to get qualified towards the end of this year . And then ramp in 27 .
Tore Svanberg: Very helpful. Thank you.
Tore Svanberg: Very helpful. Thank you.
Operator: Your next question comes from Ross Seymour with Deutsche Bank.
Operator: Your next question comes from Ross Seymour with Deutsche Bank.
Speaker #9: Very helpful . Thank you .
Ross Seymore: Hi, guys. Thanks for letting me ask the question, and Mike, congrats on the new role, you'll be missed. I guess my first question is on the OpEx side of things. You're basically spending about $100 million run rate, more than you were prior. I get that the revenue opportunity is larger, but can you give us a little bit of idea on what the time to revenue would be in this? When you say now is the time to invest, I know the 2030 numbers are big, but is that when today's investment pays off, or should we expect things sooner than that? Just any more color on the OpEx would be helpful.
Ross Seymore: Hi, guys. Thanks for letting me ask the question, and Mike, congrats on the new role, you'll be missed. I guess my first question is on the OpEx side of things. You're basically spending about $100 million run rate, more than you were prior. I get that the revenue opportunity is larger, but can you give us a little bit of idea on what the time to revenue would be in this? When you say now is the time to invest, I know the 2030 numbers are big, but is that when today's investment pays off, or should we expect things sooner than that? Just any more color on the OpEx would be helpful.
Speaker #4: Your next question comes from Ross Seymour with Deutsche Bank .
Speaker #10: Hi , guys . Thanks for ask a question . And Mike , congrats on the new role . You'll be missed . I guess my first question is on the OpEx side of things , you're basically spending about $100 million run rate , more than than you were prior .
Speaker #10: I get that the revenue opportunity is larger , but can you give us a little bit of idea on what the time to revenue would be in this ?
Speaker #10: When you say now is the time to invest ? I know the 2030 numbers are big , but is that when today's investment pays off , or should we expect things sooner than that ?
Mike Tate: Yeah, there's a range, but, you know, the technology that we're developing does have a longer lead time there. But there are, you know, new opportunities that can be turned into silicon in relatively shorter, and then you have the qualification process with the customers. But you could see, you know, from start to revenues in 18 to 24 months on the earlier side. But also keep in mind, you know, we've been looking at optical, you know, from the inception of the company, knowing that, you know, at some point it was gonna be very important as a connectivity supplier. So we've been putting the pieces together internally and including the new acquisition that we had last year.
Michael Tate: Yeah, there's a range, but, you know, the technology that we're developing does have a longer lead time there. But there are, you know, new opportunities that can be turned into silicon in relatively shorter, and then you have the qualification process with the customers. But you could see, you know, from start to revenues in 18 to 24 months on the earlier side. But also keep in mind, you know, we've been looking at optical, you know, from the inception of the company, knowing that, you know, at some point it was gonna be very important as a connectivity supplier. So we've been putting the pieces together internally and including the new acquisition that we had last year.
Speaker #10: Just any more color on the OpEx would be helpful.
Speaker #3: Yeah , there's a range , but you know , the technology developing does that we're have a longer lead time . But are are , there there you know , new opportunities that can be turned into silicon in relatively short order .
Speaker #3: And then you have the qualification process with the customers . But you you could see , you know , from start to revenues in 18 , 24 months on the earlier side , but also keep in mind , you know , we've been looking at optical , you know , from the exception of the company knowing that , you know , at some point it was going to be very important as a connectivity supplier .
Mike Tate: But, you know, we're building something internal that, you know, other companies, you know, are paying billions of dollars for, you know, to get externally. So, by doing this, we're doing it the right way, and we're building it this steering way, along with input from our customers. So, our development is closely aligned with input from our customers as well.
Michael Tate: But, you know, we're building something internal that, you know, other companies, you know, are paying billions of dollars for, you know, to get externally. So, by doing this, we're doing it the right way, and we're building it this steering way, along with input from our customers. So, our development is closely aligned with input from our customers as well.
Speaker #3: So we've been putting the pieces together internally and including the the new acquisition that we had last year . But , you know , we're building something internal that , you know , other companies , you know , are paying billions of dollars for , you know , to get externally .
Speaker #3: So and by doing this we're doing it the right way . And we're and we're , we're building it the way along with the input from our customers .
Ross Seymore: Thanks for that, Mike. I guess as my follow-up on to the Scorpio family, I believe you said it crossed 15% of sales in 2025. So I just wanted to clarify if that was true, but perhaps more importantly, any sort of bogeys as far as the growth rate this year. I believe in the past you talked about it would cross over and become your biggest product line at some point this year. Is that still the case? Any updates on, on those sorts of timing and magnitude?
Ross Seymore: Thanks for that, Mike. I guess as my follow-up on to the Scorpio family, I believe you said it crossed 15% of sales in 2025. So I just wanted to clarify if that was true, but perhaps more importantly, any sort of bogeys as far as the growth rate this year. I believe in the past you talked about it would cross over and become your biggest product line at some point this year. Is that still the case? Any updates on, on those sorts of timing and magnitude?
Speaker #3: So we're our development is closely aligned with input from customers our as well .
Speaker #10: Thanks for that , Mike . I guess my follow up on to the Scorpio family , I believe you said it crossed 15% of sales in 2025 , so I just want to clarify if that was true , but perhaps more importantly , any sort of bogeys as far as the growth rate , this year , I believe in the past , you talked about it would cross over and become your biggest product line at some point this year .
Mike Tate: Yeah. So, we originally set out for a 10% bogey. We did cross above 15% for 2025. And again, that's all just P-Series. X-Series is for scale up, is a much bigger, larger TAM for us. And that, you know, we're starting to ship initial volumes in the first half, but the more material step up in the back half. So the combination of those two will put us on a trajectory for it to be as our biggest product line. But, you know, Aries, Taurus, and Leo are all growing as well, so it's hard to know exactly when it'll cross over. But, you know, definitely at some point it will.
Michael Tate: Yeah. So, we originally set out for a 10% bogey. We did cross above 15% for 2025. And again, that's all just P-Series. X-Series is for scale up, is a much bigger, larger TAM for us. And that, you know, we're starting to ship initial volumes in the first half, but the more material step up in the back half. So the combination of those two will put us on a trajectory for it to be as our biggest product line. But, you know, Aries, Taurus, and Leo are all growing as well, so it's hard to know exactly when it'll cross over. But, you know, definitely at some point it will.
Speaker #10: Is that still the case ? Any updates on those sorts of timing and magnitude ?
Speaker #3: So, yeah. Yeah. So we originally set out for a 10% bogey. We did, we did cross above 15% for 2025.
Speaker #3: And again that's all just P series X X is for scale up is a much bigger larger Tam for us . And that you know we're starting to ship initial volumes in the first half .
Speaker #3: But the more material step up in the back half . So the combination of those two will put us on a trajectory for it to be our biggest product line .
Speaker #3: But , you know , Aries and Taurus and Leo are all So well . growing as it's hard exactly when it will cross to know over .
Mike Tate: And it will, you know, it's gonna drive, you know, very good revenue growth for us.
Michael Tate: And it will, you know, it's gonna drive, you know, very good revenue growth for us.
Speaker #3: But you know , it definitely at some point it will it will , it's going you know , to drive , you know , very good revenue growth for us .
Ross Seymore: Thanks, Mike.
Ross Seymore: Thanks, Mike.
Operator: Your next question comes from Sebastien Naji with William Blair.
Operator: Your next question comes from Sebastien Naji with William Blair.
Speaker #10: Thanks , Mike .
Sebastien Naji: Great, thank you for taking the question, and congrats on the results. Just in terms of the more customized solutions that you're building, is it right to think that your average ASP for the solution or the content opportunity should go up meaningfully versus some of your existing products? And is there anything to call out in terms of maybe a different margin or different profitability profile for those solutions?
Sebastien Naji: Great, thank you for taking the question, and congrats on the results. Just in terms of the more customized solutions that you're building, is it right to think that your average ASP for the solution or the content opportunity should go up meaningfully versus some of your existing products? And is there anything to call out in terms of maybe a different margin or different profitability profile for those solutions?
Speaker #4: Your next question comes from Sebastian Nagy with William Blair.
Speaker #11: Great . Thank you for taking the question . And congrats on the results . Just in terms of the more customized solutions that you're building , is it right to think that your average ASP for those solution or the content opportunity should go up meaningfully versus some of your existing products ?
Sanjay Gajendra: To confirm, you, you're referring to the Scorpio X?
Sanjay Gajendra: To confirm, you, you're referring to the Scorpio X?
Speaker #11: And is there anything to call out in terms of maybe a different margin or different profitability profile for those solutions ?
Sebastien Naji: That's right.
Sebastien Naji: That's right.
Sanjay Gajendra: Or, or the custom. Sorry, didn't hear the first part.
Sanjay Gajendra: Or, or the custom. Sorry, didn't hear the first part.
Speaker #2: And to confirm you're referring to the Scorpio X ?
Sebastien Naji: Yes, for the customized solutions that you're building for some of your hyperscaler customers.
Sebastien Naji: Yes, for the customized solutions that you're building for some of your hyperscaler customers.
Speaker #11: That's right .
Speaker #3: That's .
Speaker #2: Or the custom. Sorry, I didn't hear the first part.
Sanjay Gajendra: Yeah. So the custom solutions that we build, like, for example, the NVLink Fusion opportunity that we noted. So the engagement model, of course, tends to be different, but the attach rate will also tend to be higher. So I think from a volume standpoint, it will be, it'll be at a certain rate. But the ASPs, there will be some considerations that have to be applied because there will be blocks that will come from, you know, the partners that we work with.
Sanjay Gajendra: Yeah. So the custom solutions that we build, like, for example, the NVLink Fusion opportunity that we noted. So the engagement model, of course, tends to be different, but the attach rate will also tend to be higher. So I think from a volume standpoint, it will be, it'll be at a certain rate. But the ASPs, there will be some considerations that have to be applied because there will be blocks that will come from, you know, the partners that we work with.
Speaker #11: For for Yes . the customized solutions that you're building for some of your Hyperscaler customers .
Speaker #2: Yeah . So the custom solutions that we build , like for example , the , the NVLink fusion opportunity that we noted . So engagement model of course tends to be different .
Speaker #2: But the attach rate will will also tend to be higher . I think So from a volume standpoint it will be it will be at a certain certain rate .
Speaker #2: But the ASPs, there will be some considerations that have to be applied, because there will be blocks that will come from, you know, the partners that we work with.
Sanjay Gajendra: So end of the day, I think, like Jitendra highlighted, when it comes to our revenue content, both based on a native switch versus a custom solution, you know, things sort of even up, where on the native switches, it tends to be one switch being shared across, you know, a few accelerators. Whereas in the custom solution type of products, you are doing it one per accelerator, which means that you'll have higher attach rate, although the ASP might not be at the same level.
Sanjay Gajendra: So end of the day, I think, like Jitendra highlighted, when it comes to our revenue content, both based on a native switch versus a custom solution, you know, things sort of even up, where on the native switches, it tends to be one switch being shared across, you know, a few accelerators. Whereas in the custom solution type of products, you are doing it one per accelerator, which means that you'll have higher attach rate, although the ASP might not be at the same level.
Speaker #2: So end of the day , I think like highlighted when it comes to our revenue content , both based on a native switch versus a custom solution .
Speaker #2: You know, things sort of even up, where on the native switches it tends to be one switch being shared across, you know, a few accelerators.
Speaker #2: Whereas in the custom solution type products you are doing , it one per accelerator , means which you will have that higher attach rate .
Sebastien Naji: Premier, Sebastien, in general, a helpful thing that we've found is every generation of XPU, our content has grown up so far, and we continue to head in that direction, having more dollar content per XPU generation.
Jitendra Mohan: Premier, Sebastien, in general, a helpful thing that we've found is every generation of XPU, our content has grown up so far, and we continue to head in that direction, having more dollar content per XPU generation.
Speaker #2: Although the ASP might not be at the same level .
Speaker #1: Premier Sebastian in general are helpful thing that we've found is every generation of our content has has grown up so far and we continue to head in that direction .
Sebastien Naji: ... Got it. Okay, that, that's really helpful. And maybe as a quick follow-up, just on the Taurus line, is there a way to think about how much of the strong growth we're seeing there is coming from just strong underlying market growth versus Astera's ability to gain share in that market?
Sebastien Naji: ... Got it. Okay, that, that's really helpful. And maybe as a quick follow-up, just on the Taurus line, is there a way to think about how much of the strong growth we're seeing there is coming from just strong underlying market growth versus Astera's ability to gain share in that market?
Speaker #1: Having more dollar per content xpu generation .
Speaker #11: Got it . Okay , that's really helpful . And maybe as a quick follow up , just on the Taurus line , is there a way to think about how much of the strong growth you're seeing there is coming from strong underlying market growth versus Astaire's ability to gain share in that market ?
Sanjay Gajendra: Yeah, so it's, I wanna say both, but definitely the speeds have gone up from 400 to 800 gig. You know, the need for active components, whether it's on board or within cables, in the form of AEC, is growing. So that fact is not changing. Our business model is slightly different, as probably you're aware; we don't do the whole cable. We do the modules that go inside the cable assemblies and rely on our cable partners to provide the at-scale deployment with multiple vendors supporting the same opportunity. So to that standpoint, what I would say is that, you know, we are seeing that transition happening. You can see that with some of the numbers that we shared today.
Sanjay Gajendra: Yeah, so it's, I wanna say both, but definitely the speeds have gone up from 400 to 800 gig. You know, the need for active components, whether it's on board or within cables, in the form of AEC, is growing. So that fact is not changing. Our business model is slightly different, as probably you're aware; we don't do the whole cable. We do the modules that go inside the cable assemblies and rely on our cable partners to provide the at-scale deployment with multiple vendors supporting the same opportunity. So to that standpoint, what I would say is that, you know, we are seeing that transition happening. You can see that with some of the numbers that we shared today.
Speaker #2: Yeah , so it's I want to say both , but definitely the speeds have gone up gig . from 400 to 800 You know , the the need for active components , whether it's on board or within cables in the form of AEC , is growing .
Speaker #2: So that is not changing. The fact is, our business model is slightly different. Probably you're not aware, as we don't do the whole cable.
Speaker #2: do the modules that go inside the cable assemblies and rely on our cable partners to provide the the at scale deployment with multiple multiple vendors supporting the same opportunity .
Speaker #2: So to that standpoint , what I would say is that , you know , we seeing are that transition happening . You can see that with some of the numbers that that we shared today , our Taurus revenue has gone up Q4 .
Sanjay Gajendra: Our Taurus revenue has gone up, Q4, and generally for the whole year, it's about 4x. So we expect that trend to continue. Again, we won't be called in on, on day one because of the business model that we have. But as volume picks up, even for 800 gig, what we're expecting is that, Astera will come in strong with multiple cable suppliers, using our, our module to support the high volume ramp.
Sanjay Gajendra: Our Taurus revenue has gone up, Q4, and generally for the whole year, it's about 4x. So we expect that trend to continue. Again, we won't be called in on, on day one because of the business model that we have. But as volume picks up, even for 800 gig, what we're expecting is that, Astera will come in strong with multiple cable suppliers, using our, our module to support the high volume ramp.
Speaker #2: And generally for the whole year . It's about four x . So we expect that trend to continue . Again , we won't be called in on on day one because of the business model that we have .
Speaker #2: But as volume goes up, even picks for 800 gig, what we're expecting is that Astera will come in strong with multiple cable suppliers using our module to support the high-volume ramp.
Operator: Your next question is from Sean O'Loughlin with TD Cowen.
Operator: Your next question is from Sean O'Loughlin with TD Cowen.
Speaker #11: Great . That's
Speaker #11: really . helpful . Thank you .
Sean O'Loughlin: Hey, good afternoon, guys, and thanks for letting me take the question—have the question. Congrats, congrats on the nice results. Mike, congrats on your retirement and hopefully a little bit of an easier new role at the company here. I wanted to ask on the warrant agreement and maybe get some background on sort of, one, you know, there's a, there's a period of exercise to 2033, I believe, and then, you know, there's a dollar amount associated with it. To the extent that you're able to talk about sort of what drove the two companies to reach the agreement, and is this—should we think about this as maybe, like, incremental to what you already had expected to be doing with that customer over that time frame?
Sean O'Loughlin: Hey, good afternoon, guys, and thanks for letting me take the question—have the question. Congrats, congrats on the nice results. Mike, congrats on your retirement and hopefully a little bit of an easier new role at the company here. I wanted to ask on the warrant agreement and maybe get some background on sort of, one, you know, there's a, there's a period of exercise to 2033, I believe, and then, you know, there's a dollar amount associated with it. To the extent that you're able to talk about sort of what drove the two companies to reach the agreement, and is this—should we think about this as maybe, like, incremental to what you already had expected to be doing with that customer over that time frame?
Speaker #4: question is from Sean O'Loughlin with TD Cowen .
Speaker #12: Hey , good afternoon , guys , and thanks for letting me take the question . Have a question and a congrats on nice results .
Speaker #12: And Mike, congrats on your retirement. And hopefully a little bit of an easier new role at the company here. I wanted to ask on the warrant agreement and maybe get some background on sort of one.
Speaker #12: You know , there's a there's a period of of exercise to 20 , 33 , I believe . And then , you know , there's a dollar amount associated with it to the extent that you're able to talk about sort of what drove the , you know , the two companies to reach the agreement .
Speaker #12: And is this should we think about this as , as maybe like incremental to what you already had expected to , to be that doing with customer over that time frame ?
Sean O'Loughlin: And then anything you could give on linearity, that'd be, that'd be great. Thanks.
Sean O'Loughlin: And then anything you could give on linearity, that'd be, that'd be great. Thanks.
Mike Tate: Yeah, we, I can't go into much more detail than what we publicly disclosed. You know, in the 8-K, we did file the full warrant agreement, so you can, you know, kind of get some of the more material terms out of that filing. It does demonstrate the strong relationship that we have with Amazon. This is a follow-on warrant. We, we've had a previous warrant agreement in place. You know, and, and what happens is, the warrants are earned as revenue milestones are achieved, which is the $6.5 billion that we, we outlined. This, to account for the warrant, you do take a non-cash charge for the value of what vests, and that goes, directly against revenue and effectively directly against gross margins as well.
Michael Tate: Yeah, we, I can't go into much more detail than what we publicly disclosed. You know, in the 8-K, we did file the full warrant agreement, so you can, you know, kind of get some of the more material terms out of that filing. It does demonstrate the strong relationship that we have with Amazon. This is a follow-on warrant. We, we've had a previous warrant agreement in place. You know, and, and what happens is, the warrants are earned as revenue milestones are achieved, which is the $6.5 billion that we, we outlined. This, to account for the warrant, you do take a non-cash charge for the value of what vests, and that goes, directly against revenue and effectively directly against gross margins as well.
Speaker #12: anything you give could then And on linearity , that'd be that'd be great . Thanks .
Speaker #3: Yeah . I can't go into much more detail than what we publicly disclosed . You know , in the A.K. , we did file the full warrant agreement so you can , you know , kind of get some of the more material terms out of that filing .
Speaker #3: It does demonstrate the strong relationship that we have with Amazon . This is a follow on warrant . We've had a previous agreement in place , you know , and what happens is the warrants are earned as revenue milestones are achieved , which is a $6 billion that we outlined this for to account for the warrant .
Speaker #3: You do take a non-cash charge for the value of what that vests. And it goes directly against revenue. And it effectively, directly against gross margins as well.
Mike Tate: So as the warrants are achieved, we are kind of modeling, you know, a non-cash hit to gross margins of about 2 points a quarter, starting kind of in the Q2 timeframe. But you know, the warrants have a life like you outlined, for 7 years.
Michael Tate: So as the warrants are achieved, we are kind of modeling, you know, a non-cash hit to gross margins of about 2 points a quarter, starting kind of in the Q2 timeframe. But you know, the warrants have a life like you outlined, for 7 years.
Speaker #3: So as as the warrants are achieved , we kind of a are modeling we , you know , a hit to non-cash margins gross of about two points .
Speaker #3: A quarter starting kind of in the Q2 timeframe. But, you know, the warrants have a life like the outline for seven years.
Sean O'Loughlin: Great, thanks. And if I could ask another, unfortunately, financial follow-up. On the NVLink Fusion agreements and whether it's with Amazon or whether it's with, you know, any other hyperscaler that might adopt that topology, what does that financial arrangement look like? Is that a license that the hyperscaler is paying directly to NVIDIA, and they sort of grant you the IP, or is that something that gets incorporated into the ASP and the margin profile of that product?
Sean O'Loughlin: Great, thanks. And if I could ask another, unfortunately, financial follow-up. On the NVLink Fusion agreements and whether it's with Amazon or whether it's with, you know, any other hyperscaler that might adopt that topology, what does that financial arrangement look like? Is that a license that the hyperscaler is paying directly to NVIDIA, and they sort of grant you the IP, or is that something that gets incorporated into the ASP and the margin profile of that product?
Speaker #12: Great . Thanks . And if I could ask another unfortunately , financial follow up on the NVLink fusion agreements and whether it's with Amazon or it's whether with , you know , any other hyperscaler that might adopt that , that topology , what is does that the what financial arrangement look like ?
Speaker #12: Is that a license that the Hyperscaler is paying directly to Nvidia . And they sort of grant you the IP ? Or is that a is that something that gets incorporated into the ASP in the margin profile of that product ?
Sanjay Gajendra: Yeah. Yeah. Obviously, we can't answer that question, just given all the NDAs and other things that we need to be respectful of. In general, what I would say is that it opens up a completely new set of opportunities for us to play in the NVLink ecosystem, which we did not have a place so far. So from that standpoint, this is additive to everything that we're talking about. In terms of the exact business model, I think we'll let the hyperscalers or NVIDIA provide more color.
Sanjay Gajendra: Yeah. Yeah. Obviously, we can't answer that question, just given all the NDAs and other things that we need to be respectful of. In general, what I would say is that it opens up a completely new set of opportunities for us to play in the NVLink ecosystem, which we did not have a place so far. So from that standpoint, this is additive to everything that we're talking about. In terms of the exact business model, I think we'll let the hyperscalers or NVIDIA provide more color.
Speaker #8: Yeah , yeah .
Speaker #2: Obviously we can't answer that question . Just given all the things that other NDAs and we need to be respectful of in general , what I would say is that it opens up a completely new set of opportunities for us to play in the in ecosystem , which we did not have a have a place so far .
Speaker #2: So to that standpoint , this is additive to everything that we are talking about in terms of the exact business model . I think we'll let the hyperscalers or Nvidia provide more color .
Sean O'Loughlin: Okay, great. Thanks again, guys.
Sean O'Loughlin: Okay, great. Thanks again, guys.
Operator: Your next question comes from Karl Ackerman with BNP Paribas.
Operator: Your next question comes from Karl Ackerman with BNP Paribas.
Speaker #12: Okay. Great. Thanks again, guys.
Karl Ackerman: Yes, Mike, you know that some of the increase in OpEx is being driven by your investments in optical and follows your acquisition of aiXscale. Do you anticipate your customer opportunity for integrating your optical IO glass coverage technology is larger for a switch portfolio than your serial conditioning and SCM products? And I have a follow-up.
Karl Ackerman: Yes, Mike, you know that some of the increase in OpEx is being driven by your investments in optical and follows your acquisition of aiXscale. Do you anticipate your customer opportunity for integrating your optical IO glass coverage technology is larger for a switch portfolio than your serial conditioning and SCM products? And I have a follow-up.
Speaker #4: Your next question comes from Karl Ackerman with BNP Paribas.
Speaker #13: Yes, Mike, you know that some of the increase in opex is being driven by your investments in optical, and follows your acquisition of Xscale.
Speaker #13: you anticipate Do your customer opportunity for integrating your optical eyeglass technology ? Is larger for a switch portfolio than your signal conditioning and Cem have a follow products ?
Sanjay Gajendra: Yeah, I mean, I would maybe let me take that, and then Mike can chime in afterwards. I would say that the opportunity for including optical into scale-up is actually a very large opportunity, probably larger than the signal conditioning opportunity that we have of the order of, you know, what we are saying for scale-up fabric connectivity. We have not quite sized it up exactly, but it is a very large opportunity, and we are working very closely with our customers to understand what their requirements are and what their timeframes are, and we'll be ready to intercept those. We believe for scale-up in particular, that's likely to be in 2028.
Sanjay Gajendra: Yeah, I mean, I would maybe let me take that, and then Mike can chime in afterwards. I would say that the opportunity for including optical into scale-up is actually a very large opportunity, probably larger than the signal conditioning opportunity that we have of the order of, you know, what we are saying for scale-up fabric connectivity. We have not quite sized it up exactly, but it is a very large opportunity, and we are working very closely with our customers to understand what their requirements are and what their timeframes are, and we'll be ready to intercept those. We believe for scale-up in particular, that's likely to be in 2028.
Speaker #13: up And I .
Speaker #3: Yeah . I mean .
Speaker #1: I would maybe let me take that and then Mike can chime in afterwards . I would say that the opportunity for including optical into scale up is actually a very large opportunity , probably larger than the signal conditioning opportunity that we have of the order of , you know , what we are saying for scale up fabric connectivity .
Speaker #1: We have not quite sized it up exactly, but it is a very large opportunity, and we are working closely with our customers to understand what their requirements are and what their time frames are, and we'll be ready to intercept those.
Karl Ackerman: Got it. Helpful. Thank you.
Karl Ackerman: Got it. Helpful. Thank you.
Speaker #1: We believe for scale up in particular . That's likely to be in 2028 .
Sanjay Gajendra: Okay.
Sanjay Gajendra: Okay.
Karl Ackerman: Sorry, go ahead.
Karl Ackerman: Sorry, go ahead.
Sanjay Gajendra: Also, just to maybe add to that, right, you know, I know optical is an important area for us to invest, and we are doing that with some unique architecture and capabilities. I'd also say that the increase in investments we're doing, like Mike outlined, these are also servicing opportunities on the fabric side, which are much more based upon existing engagement. And as customers are seeing the value of what we offer, they're coming back with requests for, you know, additional lane count or radix configurations or features and things like that.
Sanjay Gajendra: Also, just to maybe add to that, right, you know, I know optical is an important area for us to invest, and we are doing that with some unique architecture and capabilities. I'd also say that the increase in investments we're doing, like Mike outlined, these are also servicing opportunities on the fabric side, which are much more based upon existing engagement. And as customers are seeing the value of what we offer, they're coming back with requests for, you know, additional lane count or radix configurations or features and things like that.
Speaker #13: Thank you .
Speaker #8: Okay .
Speaker #13: Sorry . Go ahead .
Speaker #2: So just maybe to add to that, right? You know, I know optical is an important area for us to invest in. And we are with architecture.
Speaker #2: some unique And capabilities . I'd also say the increase that in investment we're doing , like Mike outlined , these are also servicing opportunities on the fabric side , which are much more based upon existing engagement .
Speaker #2: And as customers are seeing the value of what we offer, they're coming back with requests for additional count or radix configurations, or features and things like that.
Sanjay Gajendra: So the investment that we're talking about, including the Israel team that we set up, which will focus on AI fabrics, is all, is all, being done in a way that, you know, we get the near-term, midterm, and long-term growth, setting us up nicely for, you know, building on the momentum we have and, getting to a different scale from a revenue standpoint.
Sanjay Gajendra: So the investment that we're talking about, including the Israel team that we set up, which will focus on AI fabrics, is all, is all, being done in a way that, you know, we get the near-term, midterm, and long-term growth, setting us up nicely for, you know, building on the momentum we have and, getting to a different scale from a revenue standpoint.
Speaker #2: So the investment that we're talking about , including the Israel team that we set up , which will focus on AI fabrics , is all is all being done in a way that , you know , we get the near mid-term long term growth setting us up nicely for , you know , building on on the momentum we have .
Karl Ackerman: Got it. Very helpful. You indicated that you have Scorpio P design wins now with three hyperscalers, two of which are new. Are your Scorpio P designs based on custom compute designs, or are they also being designed on custom GPU racks as well? And then, clearly you're having traction here, so you could perhaps address the, you know, the opportunity that you see with Scorpio P, extending into 2026. I know there's a lot of focus on Scorpio X, but, perhaps you could spend some time on the engagements you have, as well as the opportunity that you see on Scorpio P into 2026. Thank you.
Karl Ackerman: Got it. Very helpful. You indicated that you have Scorpio P design wins now with three hyperscalers, two of which are new. Are your Scorpio P designs based on custom compute designs, or are they also being designed on custom GPU racks as well? And then, clearly you're having traction here, so you could perhaps address the, you know, the opportunity that you see with Scorpio P, extending into 2026. I know there's a lot of focus on Scorpio X, but, perhaps you could spend some time on the engagements you have, as well as the opportunity that you see on Scorpio P into 2026. Thank you.
Speaker #2: And getting to a different, from a scale revenue standpoint.
Speaker #13: Got it . Very helpful . You you Scorpio indicated that have design wins now with three new are hyperscalers , , are your Scorpio designs based on custom compute designs , or are they also being designed on custom GPU racks as well ?
Speaker #13: And then clearly you're having traction here . So perhaps address the the opportunity that you see with Scorpio P extending into 2020 . I know there's a lot of focus on Scorpio , but perhaps you could spend some time on the engagements you have as well as the opportunity that you see on Scorpio into you .
Sanjay Gajendra: Yeah, no, Scorpio P has been really, I mean, it's mostly going into scale-out use cases. Now that we have, you know, ramped the chip in reasonable volume over the last 3, 4 quarters, you know, we are seeing additional customers, specifically, like we called out, 2 new hyperscalers that have adopted it. They go into production a little bit later, towards the end of this year. These design wins are supporting platforms that are both merchant GPU-based as well as custom accelerators. And we do expect these to add meaningful revenue for us in 2027. But beyond this, again, these are the ones we called out, just given the significance of these design wins.
Sanjay Gajendra: Yeah, no, Scorpio P has been really, I mean, it's mostly going into scale-out use cases. Now that we have, you know, ramped the chip in reasonable volume over the last 3, 4 quarters, you know, we are seeing additional customers, specifically, like we called out, 2 new hyperscalers that have adopted it. They go into production a little bit later, towards the end of this year. These design wins are supporting platforms that are both merchant GPU-based as well as custom accelerators. And we do expect these to add meaningful revenue for us in 2027. But beyond this, again, these are the ones we called out, just given the significance of these design wins.
Speaker #2: . Scorpio Yeah , no has been really I mean , it's mostly going into scale out use cases now that we , you know , ramped the the chip in reasonable volume over the last three , four quarters .
Speaker #2: You know, we are seeing additional customers; specifically, like we called out, two new hyperscalers that have adopted it. They go into production a little bit later, towards the end of this year.
Speaker #2: These designs are supporting platforms that are both merchant GPU based as well as custom accelerators . And we do expect these to add meaningful revenue for us in 2027 .
Sanjay Gajendra: But in general, I want to say for the P series, you know, ever since we announced, it's been a, it's been attracting a lot of customer interest and traction, and we do have several design wins on that, in different lane count configurations and so on. So that continues to be a device that has been... You know, I want to say at this point, we are probably the still the only one that's in high volume production with our Gen 6 switches. So it is, it's serving many customers and use cases.
Sanjay Gajendra: But in general, I want to say for the P series, you know, ever since we announced, it's been a, it's been attracting a lot of customer interest and traction, and we do have several design wins on that, in different lane count configurations and so on. So that continues to be a device that has been... You know, I want to say at this point, we are probably the still the only one that's in high volume production with our Gen 6 switches. So it is, it's serving many customers and use cases.
Speaker #2: But beyond this , again , these are the ones we called out just given the the significance of this design wins . But in general , I want to say for the P-series , you know , ever since we announced , it's been a it's been attracting a lot of customer interest interactions .
Speaker #2: And we do have several design wins on that in different lane count configurations and so on . So that continues to be a device that has been , you want to say at know , I this probably the still the only one that's in high volume production with our Gen six switches .
Karl Ackerman: Thank you.
Karl Ackerman: Thank you.
Speaker #2: So it is it's serving many customers and use cases .
Operator: Your next question comes from Srini Pajjuri with RBC Capital Markets.
Operator: Your next question comes from Srini Pajjuri with RBC Capital Markets.
Speaker #8: you Thank .
Srini Pajjuri: Thank you. Let me echo my congrats, Mike. I look forward to, I guess, continuing to work with you, but it's been a pleasure over the past 20-plus years. My question, you know, there's been a lot of skepticism about the growth of Aries retimers, and you continue to show that, you know, this obviously, this segment continues to grow, and you're projecting growth for this year as well. If you could talk to us about what's driving that growth, is it primarily the units, or is it PCIe 6 transition, and then or is it new customers? And then as we go into 2027, 2028, how should we think about any potential implications as the market goes from copper to optical?
Srini Pajjuri: Thank you. Let me echo my congrats, Mike. I look forward to, I guess, continuing to work with you, but it's been a pleasure over the past 20-plus years. My question, you know, there's been a lot of skepticism about the growth of Aries retimers, and you continue to show that, you know, this obviously, this segment continues to grow, and you're projecting growth for this year as well. If you could talk to us about what's driving that growth, is it primarily the units, or is it PCIe 6 transition, and then or is it new customers? And then as we go into 2027, 2028, how should we think about any potential implications as the market goes from copper to optical?
Speaker #4: next comes question Your from Pujari with Srini RBC Capital Markets .
Speaker #8: Thank you . And let me call my congrats to Mike . Look forward to I guess , continuing to work with you . But it's pleasure been a over the past 20 plus years .
Speaker #8: My question , you know , there's been a lot of skepticism about the growth of Iris read timers and you continue to show that , you know , this this obviously , this segment continues to grow and you're projecting growth for this year as well .
Speaker #8: If you could talk to us about what's driving that growth, is it primarily the units, or is it the PCIe 6 transition, and, or is it new end customers?
Speaker #8: then as we And go into 2728 , how should we think about any potential implications as the from copper market goes optical ?
Sanjay Gajendra: Yeah. So you know, if you think about PCI Express, PCI Express is really the nervous system inside of a server. All of the significant components, whether it's a GPU or a CPU or a NIC card, they talk to each other over PCI Express. And we established an early lead in PCI Express with PCI Express Gen 4, Gen 5, and now extending that into PCI Express Gen 6. We see not only the continued growth in the, what we call the chip down applications, but we also see more growth of PCI Express in cabled applications, where we sell our smart cable modules. That does give us an uplift in the ASPs. These devices are used in scale-up applications.
Sanjay Gajendra: Yeah. So you know, if you think about PCI Express, PCI Express is really the nervous system inside of a server. All of the significant components, whether it's a GPU or a CPU or a NIC card, they talk to each other over PCI Express. And we established an early lead in PCI Express with PCI Express Gen 4, Gen 5, and now extending that into PCI Express Gen 6. We see not only the continued growth in the, what we call the chip down applications, but we also see more growth of PCI Express in cabled applications, where we sell our smart cable modules. That does give us an uplift in the ASPs. These devices are used in scale-up applications.
Speaker #1: Yeah. So, you know, if you think about Express, it's Express. PCI, PCI is really the nervous system inside of a server.
Speaker #1: All of the significant components , whether it's a GPU or a CPU or a niqab , they talk to each other over , over PCI express .
Speaker #1: And we established an early lead in PCI express with PCI express , Gen four , Gen five , and now extending that into PCI express .
Speaker #1: Gen six . We see not only the continued growth in the what we call the chip down applications , but we also see more growth of PCI express enabled applications where we sell our smart cable modules .
Sanjay Gajendra: Again, as you—as we all understand, scale-up is a very rich opportunity where we have multiple connections, and a lot of them. So we are definitely benefiting from that trend, with PCI Express going from Gen 5 to Gen 6. Now, your question about transition from copper to optical. So most of our customers will continue to stay with copper for as long as they can. That has been their preference all this, all this time. We will reach a stage where, you know, maybe the reach or the bandwidth is just high enough and is not able to be supported by copper. And in those cases, we do expect a transition to optical, but copper and optical will continue to coexist for a long period of time.
Sanjay Gajendra: Again, as you—as we all understand, scale-up is a very rich opportunity where we have multiple connections, and a lot of them. So we are definitely benefiting from that trend, with PCI Express going from Gen 5 to Gen 6. Now, your question about transition from copper to optical. So most of our customers will continue to stay with copper for as long as they can. That has been their preference all this, all this time. We will reach a stage where, you know, maybe the reach or the bandwidth is just high enough and is not able to be supported by copper. And in those cases, we do expect a transition to optical, but copper and optical will continue to coexist for a long period of time.
Speaker #1: That does give us an uplift in the ASPs . These devices are used in scale up applications . And again , as you as we all understand , scale up is a very rich opportunity where we have multiple connections and a lot of them .
Speaker #1: So we are definitely benefiting from that trend with PCI Express going from Gen 5 to Gen 6. Now, your question about the transition from copper to optical.
Speaker #1: So most of our customers will continue to stay with copper for as long as they can . That has been their preference . All this all this time we will reach a maybe the reach or know , where , you the stage bandwidth is just high enough and is not able to be supported by copper .
Sanjay Gajendra: The transition to optical will likely come in the form of first, like, pluggable optics, maybe followed by near package optics, and eventually the holy grail, which is the co-packaged optics, which, you know, all of us are working towards. But we expect to see the first deployments of co-packaged optics for scale-up sometime in the 2028 time frame.
Sanjay Gajendra: The transition to optical will likely come in the form of first, like, pluggable optics, maybe followed by near package optics, and eventually the holy grail, which is the co-packaged optics, which, you know, all of us are working towards. But we expect to see the first deployments of co-packaged optics for scale-up sometime in the 2028 time frame.
Speaker #1: And in cases , we do those expect a transition to optical . But copper and optical will continue to coexist for a long period of time .
Speaker #1: The transition to optical will likely come in the form of first , like pluggable optics , maybe followed by near package optics and eventually the Holy Grail , which is the co-packaged optics , which , you know , all of us are working towards .
Speaker #1: But we expect to see the first deployments of co-packaged optics for scale-up sometime in the 2028 timeframe.
Srini Pajjuri: Okay, got it. And then the other debate, Jitendra, is obviously UALink versus ESUN. I guess hypothetically, if the market, you know, moves more towards ESUN-
Srini Pajjuri: Okay, got it. And then the other debate, Jitendra, is obviously UALink versus ESUN. I guess hypothetically, if the market, you know, moves more towards ESUN-
Speaker #8: Got Okay . it . And then the other debate , Jitendra is obviously uplink versus ESN . I guess hypothetically , if the market moves more toward Eason , I'm just curious .
Thomas O'Malley: ... I'm just curious, I mean, do you have the capability to pivot to ESUN? And if so, how quickly can you do that? And I'm just curious because, again, this is a debate that we can't, you know, answer, you know, sitting here, because it's something that's gonna happen in the future. But just wondering, if the market were to go to ESUN, you know, how do you see your, you know, position? You know, what kind of role do you anticipate playing in that market?
Srini Pajjuri: ... I'm just curious, I mean, do you have the capability to pivot to ESUN? And if so, how quickly can you do that? And I'm just curious because, again, this is a debate that we can't, you know, answer, you know, sitting here, because it's something that's gonna happen in the future. But just wondering, if the market were to go to ESUN, you know, how do you see your, you know, position? You know, what kind of role do you anticipate playing in that market?
Speaker #8: I mean , do you have the capability to pivot to Eason and if so , how quickly can you do that ? And I'm just curious because again , this debate that we is a can't , you know , answer , you it's something that's sitting here because know , going to happen in the future .
Speaker #8: just But wondering if the market were to go to ease and how do you see your , you know , position , you know , what kind of role do you anticipate playing in that market ?
Sanjay Gajendra: Yeah. So I would say that we are much closer to the action, so we understand who's doing what, largely for the initial deployments of the new scale-up protocols, whether it's UALink, Ethernet, or ESUN. From a capability standpoint, it is definitely within reach. We can, we can, if we choose to design an ESUN-based solution, we can. However, as has been the trend with Astera, we listen to our customers very closely, and so far, everybody is telling us to focus on UALink, and that's what we are focusing on. As you say, if things were to shift towards ESUN, we certainly have the capability, and with the addition, of the, of the, you know, additional resources that we are deploying, we can definitely go in the direction of additional solutions.
Sanjay Gajendra: Yeah. So I would say that we are much closer to the action, so we understand who's doing what, largely for the initial deployments of the new scale-up protocols, whether it's UALink, Ethernet, or ESUN. From a capability standpoint, it is definitely within reach. We can, we can, if we choose to design an ESUN-based solution, we can. However, as has been the trend with Astera, we listen to our customers very closely, and so far, everybody is telling us to focus on UALink, and that's what we are focusing on. As you say, if things were to shift towards ESUN, we certainly have the capability, and with the addition, of the, of the, you know, additional resources that we are deploying, we can definitely go in the direction of additional solutions.
Speaker #1: Yeah . So I would say that we are much closer to the action . So we understand who's doing what largely for the initial deployments of the new scale up protocols , whether it's unlink or Ethernet or Eason from a capability standpoint , it is definitely within reach .
Speaker #1: We can we can if we choose to design an eason based solution , we can . However , as has been the trend with Stella , we listen to our customers very closely .
Speaker #1: And so far , everybody is telling us to focus on uplink and we are that's what focusing on . As you say , if things were to shift towards Eason , we certainly have the capability and with the addition of the of the , additional resources that we are deploying , we can definitely go in the direction of additional solutions .
Sanjay Gajendra: As a matter of fact, I would say over time, our aspiration really is to address the full connectivity TAM and not just limit to any one particular protocol.
Sanjay Gajendra: As a matter of fact, I would say over time, our aspiration really is to address the full connectivity TAM and not just limit to any one particular protocol.
Speaker #1: As a matter of fact , I would say over time , our aspiration really is to address the full connectivity Tam and not just limit to any one particular protocol .
Thomas O'Malley: Got it. Thanks, Uttam.
Srini Pajjuri: Got it. Thanks, Uttam.
Operator: Question comes from Quinn Bolton with Needham & Company.
Operator: Question comes from Quinn Bolton with Needham & Company.
Speaker #8: Got it. Thank you.
Quinn Bolton: Hi, this is Robert on for Quinn. Thank you for taking the questions. First wanted just to double-click more onto the Coros AEC product offering. Can you maybe discuss how qualifications for your 800 gig AECs are progressing? And do you expect to be shipping 800 gig AECs to multiple hyperscalers this year?
Quinn Bolton: Hi, this is Robert on for Quinn. Thank you for taking the questions. First wanted just to double-click more onto the Coros AEC product offering. Can you maybe discuss how qualifications for your 800 gig AECs are progressing? And do you expect to be shipping 800 gig AECs to multiple hyperscalers this year?
Speaker #4: The next question comes from Quinn Bolton with Needham Company. Please go ahead.
Speaker #14: Hi , this is Robert On for Quinn . Thank you for taking the questions . First . Wanted just to double click more .
Speaker #14: On to the product offering. Can you maybe discuss how qualifications for your 800 gig AECs are progressing? And do you expect to be shipping 800 gig to multiple hyperscalers this year?
Sanjay Gajendra: Yeah. So 800 gig is obviously starting to ramp up right now. And to that standpoint, what I can say is that we're very closely engaged with that, from a qualification process standpoint. Now, given our business model, which is slightly different, like I highlighted early on, we come in as the volume starts expanding. So to that standpoint, you can expect a similar transition happening to our business as well, with more deployments for 800 gig. And 400 gig, like we highlighted before, is broad-based, meaning there are multiple customers that are using AECs for 800 gigs. And those are opportunities that we expect to gain from, from a revenue standpoint.
Sanjay Gajendra: Yeah. So 800 gig is obviously starting to ramp up right now. And to that standpoint, what I can say is that we're very closely engaged with that, from a qualification process standpoint. Now, given our business model, which is slightly different, like I highlighted early on, we come in as the volume starts expanding. So to that standpoint, you can expect a similar transition happening to our business as well, with more deployments for 800 gig. And 400 gig, like we highlighted before, is broad-based, meaning there are multiple customers that are using AECs for 800 gigs. And those are opportunities that we expect to gain from, from a revenue standpoint.
Speaker #2: Yeah , so 800 gig is obviously starting to ramp up right now . And to that standpoint , what I can say is that we're very closely engaged with that from a qualification process standpoint , given our business model , which is slightly different .
Speaker #2: Like I highlighted early on , we come in as the volume starts expanding . So to that standpoint , you can similar expect a transition happening business as well to our with more deployments for 800 gig , 800 gig , like we've highlighted before , is is broad based , meaning there are multiple customers that are using AEC for 800 gig and and those are opportunities that we expect to gain from from a revenue standpoint .
Quinn Bolton: Thanks for the color there. And then just quickly on Scorpio P, just wanted to double-click a little bit more into that color. Do you expect these additional P-series customers to reach kind of the size and scale, I guess, down the line as volume ramps with them, kind of in the second half of the year and beyond? I guess, can these new customers be as big as your main hyperscaler there?
Quinn Bolton: Thanks for the color there. And then just quickly on Scorpio P, just wanted to double-click a little bit more into that color. Do you expect these additional P-series customers to reach kind of the size and scale, I guess, down the line as volume ramps with them, kind of in the second half of the year and beyond? I guess, can these new customers be as big as your main hyperscaler there?
Speaker #14: Thanks for the color . There . And then just quickly on Scorpio P . Just wanted to double click a little bit more into that color .
Speaker #14: Do you expect these additional P-series customers to kind of the reach size and scale ? I guess down the line as volume ramps with them ?
Speaker #14: Kind of in the second half of the year and beyond . I guess . Can these new customers be as big as your main hyperscaler there ?
Sanjay Gajendra: Yes, there is a potential for that.
Sanjay Gajendra: Yes, there is a potential for that.
Quinn Bolton: Thank you.
Quinn Bolton: Thank you.
Sanjay Gajendra: At least the ones that we called out. Now, there are, like I noted, many P-series opportunities and design wins we have. But specifically to the hyperscaler opportunities that we called out, these are mainstream use cases, so we do expect them to have the revenue impact like what we've had so far.
Sanjay Gajendra: At least the ones that we called out. Now, there are, like I noted, many P-series opportunities and design wins we have. But specifically to the hyperscaler opportunities that we called out, these are mainstream use cases, so we do expect them to have the revenue impact like what we've had so far.
Speaker #2: Yes , there is the potential for that .
Speaker #15: you Thank
Speaker #15: . ones
Speaker #15: . ones
Speaker #2: that we now , called out there are At least the , like you noted , many P series opportunities and design . We have , but specifically to the hyperscaler opportunities that we called out .
Speaker #2: These are mainstream use cases, so we do expect them to have the revenue impact like what we've had so far.
Quinn Bolton: Thank you.
Quinn Bolton: Thank you.
Operator: Your final question comes from Tom O'Malley with Barclays.
Operator: Your final question comes from Tom O'Malley with Barclays.
Speaker #15: Thank you .
Thomas O'Malley: Hey, guys. Thanks for sneaking me in. I just had one quick one and then a longer-term one. So, you announced two new hyperscalers for PCIe late in 2026. You're saying revenue, 2027. Are those US hyperscalers, or are those Chinese hyperscalers?
Thomas O'Malley: Hey, guys. Thanks for sneaking me in. I just had one quick one and then a longer-term one. So, you announced two new hyperscalers for PCIe late in 2026. You're saying revenue, 2027. Are those US hyperscalers, or are those Chinese hyperscalers?
Speaker #4: Your final question comes from Tom O'Malley with Barclays .
Speaker #16: Hey guys . Thanks for sneaking me in . I just had one quick one and then a longer term one . So you announced two new hyperscalers for PCIe late in 26 .
Speaker #16: You're saying revenue 27 ? Are those US hyperscalers ? Are those Chinese hyperscalers ?
Sanjay Gajendra: US.
Sanjay Gajendra: US.
Thomas O'Malley: Thanks. Then on the longer term, I think you mentioned on the call about the MI500 series supporting UAL. Obviously, the 400 series you know supports UAL, but it's over Ethernet. Are you saying that the 500 series will be native UAL, or is it still gonna be Ethernet supporting UAL? Obviously, that's a big difference in what switches you're using. Thank you.
Thomas O'Malley: Thanks. Then on the longer term, I think you mentioned on the call about the MI500 series supporting UAL. Obviously, the 400 series you know supports UAL, but it's over Ethernet. Are you saying that the 500 series will be native UAL, or is it still gonna be Ethernet supporting UAL? Obviously, that's a big difference in what switches you're using. Thank you.
Speaker #2: US ?
Speaker #16: And Thanks . then on the longer term , I think you mentioned on the call about the mi 500 series supporting UAL . Obviously , the 400 series , you know , supports it's over UAL , but Ethernet .
Speaker #16: Are you saying that the 500 series will be native UAL, or is it still going to be UAL? Ethernet-supporting, obviously that's a big difference in what switches you're using.
Sanjay Gajendra: Yeah, Tom, so I don't want to speak for our, you know, AI customer, but if you look at some of the publicly released information, they have said that they will continue to support both. But they've also said that they believe UALink native is the highest performance scale-up protocol.
Sanjay Gajendra: Yeah, Tom, so I don't want to speak for our, you know, AI customer, but if you look at some of the publicly released information, they have said that they will continue to support both. But they've also said that they believe UALink native is the highest performance scale-up protocol.
Speaker #16: Thank you .
Speaker #1: Yeah , I don't want to speak for , you know , AI customer . But if you look at some of the publicly released information , they have said that they will continue to support both , but they've also said that they believe Uplink Native is the highest performance scale protocol .
Operator: There are no further questions at this time. I'll now turn the call back over to the presenters for any closing remarks.
Operator: There are no further questions at this time. I'll now turn the call back over to the presenters for any closing remarks.
Leslie Green: Thank you, Carly, and thank you everyone for your participation and questions. Please refer to our investor relations website for information regarding upcoming financial conferences and events. Thanks so much. Have a great day.
Leslie Green: Thank you, Carly, and thank you everyone for your participation and questions. Please refer to our investor relations website for information regarding upcoming financial conferences and events. Thanks so much. Have a great day.
Speaker #4: There are no further questions at this time. I'll now turn the call back over to the presenters for any closing remarks.
Speaker #17: Thank you, Carly, and thank you everyone for your participation and questions. Please refer to our Investor Relations website for information regarding upcoming financial conferences and events.
Operator: This concludes today's conference call. You may now disconnect.
Operator: This concludes today's conference call. You may now disconnect.
