Marvell Technology, Inc. (MRVL) Earnings

Management highlights

- Strategic Partnership with NVIDIA • Expanded collaboration across three core pillars to build scalable AI infrastructure: silicon photonics optics development, NVLink Fusion integration to enable seamless interfacing between Marvell custom silicon and NVIDIA infrastructure, and AI RAN integration of Marvell Octeon baseband processors with NVIDIA GPUs for 5G/6G networks • Development work is already underway following the announcement - Product and Technology Initiatives • Acquired Polariton to add plasmonics-based silicon photonics technology, which delivers up to 10x higher modulator bandwidth than existing solutions, enabling 3.2T and faster optical transmission speeds • Acquired Celestial AI to add photonic fabric technology, which has already been selected by a Tier 1 hyperscaler for next-generation XPU scale-up networks; acquired XCOM to expand scale-up switching capabilities and add PCIe/CXL switch solutions • Maintains first-to-market leadership in high-speed PAM interconnect: 1.6T 200G-per-lane solutions are ramping in FY2027 after launching in H2 FY2026, and 400G-per-lane next-generation technology has already been demonstrated • Has already shipped over 1 million silicon photonics-powered DCI modules, accumulated 15 billion hours of field reliability data, and holds design wins for Golden Cable solutions with three major US hyperscalers • 1.6T secure coherent DCI modules are on track to sample in 2025, positioning Marvell to capture emerging scale-out DCI demand driven by multi-site AI clusters - Market Demand Drivers • Growing AI cluster size and the emergence of agentic AI are dramatically increasing data traffic volume and low-latency bandwidth requirements, driving higher demand for Marvell's interconnect, switching, and XPU-attached products • Inventory corrections in the communications end market are now largely complete, with revenue expected to follow underlying end-market trends going forward

Guidance

- Q2 FY2027: Total revenue is projected in the range of $2.7 billion (plus/minus 5%), representing 12% sequential growth and 35% year-over-year growth at the midpoint. Non-GAAP diluted EPS is expected between $0.88 and $0.98. - FY2027: Total annual revenue is now projected to grow ~40% year-over-year to nearly $11.5 billion, an increase of more than $0.5 billion from prior guidance. Data center revenue is expected to grow ~50% year-over-year (up from prior outlooks), with interconnect revenue growing more than 70% year-over-year (up from the prior 50% expectation). Communications revenue is expected to grow ~10% year-over-year, unchanged from prior guidance. Quarterly revenue is now projected to reach $3 billion in Q3 FY2027, one quarter ahead of the prior outlook, with at least 10% sequential growth in both Q3 and Q4. Full-year non-GAAP operating expense is projected to be ~$2.45 billion. - FY2028: Total annual revenue is now projected to grow ~45% year-over-year to ~$16.5 billion, a $1.5 billion upward revision from prior guidance. Data center revenue is expected to grow ~55% year-over-year (accelerating from FY2027's growth), with custom silicon revenue more than doubling year-over-year (up from prior expectations). Interconnect business is projected to reach $1 billion annualized DCI module revenue, and scale-up optics revenue is projected to double the prior forecast of $150 million. Data center switching is projected to hit a $1 billion annualized run rate. Non-GAAP operating expense is expected to grow mid-to-high teens year-over-year, well below revenue growth, pushing operating margins to the upper end of the 38%-40% target range. Communications revenue is expected to grow low single-digits year-over-year, unchanged from prior guidance.

Segment performance

1. Data Center Segment: Reported Q1 FY2027 revenue of $1.83 billion, growing 11% sequentially and 27% year-over-year. This segment contributed 76% of Marvell's total Q1 revenue. Within the segment: Interconnect is the largest sub-segment, with accelerated demand driving a projected >70% year-over-year revenue growth for FY2027; Data center switching is on track to exceed $600 million in FY2027 revenue (doubling FY2026 levels); Custom silicon is projected to grow >20% year-over-year in FY2027. 2. Communications and Other Segment: Reported Q1 FY2027 revenue of $585 million, growing 3% sequentially and 29% year-over-year, representing 24% of total Q1 revenue. Total company Q1 FY2027 revenue was $2.418 billion, growing 9% sequentially and 28% year-over-year.

Risks & headwinds

• All forward-looking results are subject to significant risks and uncertainties that could cause actual outcomes to differ materially from current projections, including supply chain constraints, changes in customer capital expenditure plans, and technology adoption trajectories for emerging interconnect and switching architectures. • Aggressive capacity locking requires approximately $1 billion in supplier prepayments in FY2027, funded via operating cash flow and balance sheet capacity, which creates near-term cash outlay obligations tied to future demand growth. • The scale-up interconnect and switching markets are still emerging with unproven adoption rates for multiple competing technologies, creating uncertainty around the timing and magnitude of revenue contributions from these new segments.

Analyst Q&A

• Q: The analyst asks to confirm the custom business target of >$10 billion in fiscal 2029, and asks when Marvell will provide more details on the large new tier 1 XPU program, including whether it will be exclusive and when investors can recognize its potential. /

  A: Management confirms the $10 billion+ target is correct, and notes the target has grown from an original $8 billion due to a larger-than-expected total addressable market for custom AI silicon. Marvell remains on track to hit this target, driven by existing programs, the new tier 1 ramp, and growing XPU-attached demand. The new tier 1 program remains on schedule for volume production in FY2028, and represents about a third of total projected custom business growth for FY2028, with additional details expected to become available as development progresses. (309 characters)

• Q: The analyst asks why interconnect growth is only projected to outpace hyperscaler CapEx growth in FY2027 rather than FY2028, given the strong multiple tailwinds across all interconnect sub-segments. /

  A: Management confirms the current FY2028 guidance has inherent upward bias, as all interconnect initiatives are tracking ahead of earlier projections. The 70% FY2027 growth rate has already been revised up multiple times as demand and attach rates have increased. The current guidance includes $300 million in projected FY2028 scale-up optics revenue, which is just the start of a major new growth cycle, with significant upside optionality if adoption accelerates faster than expected. (297 characters)

• Q: The analyst asks for the relative contribution of the three drivers of custom silicon revenue doubling in FY2028: existing program expansion, XPU-attached growth, and the new tier 1 program. /

  A: Management states the relative split is still roughly one-third for each of the three buckets, the same breakdown provided last quarter. All three segments have increased in size since the last guidance, with every existing program seeing higher customer demand than originally forecast for FY2028. The overall business remains on track to more than double year-over-year, with the same proportional contribution from each growth driver as previously expected. (261 characters)

• Q: The analyst asks how Marvell is securing additional capacity to support raised guidance, and whether the guidance increase comes from higher supply availability or stronger customer demand visibility. /

  A: Management explains Marvell has operated in a supply-constrained environment for AI-related products since 2020, and secures capacity by maintaining long-term close relationships with key suppliers, providing multi-year demand forecasts, and making strategic prepayments to back up forecasts. The guidance increase reflects both stronger confirmed customer demand and successful capacity locking with suppliers, allowing Marvell to meet higher than expected customer requirements. (280 characters)