Astera Labs, Inc. Common Stock Q3 FY2025 earnings call

• Astera Labs achieved strong Q3 results with revenue and profitability above outlook. Quarterly revenue was $230.6M, up 20% QoQ and 104% YoY.
• Broad-based growth across signal conditioning, smart cable module, and switch fabric products. Scorpio P-Series had initial volume ramp at lead customer with new design wins.
• Aries PCIe 6 solutions contributed over 20% of Q3 revenues. Taurus drove growth with 400-gig scale-out shipments.
• Acquired Xscale Photonics to enable development of photonic scale-up solutions for future Scorpio switches.
• Focus on AI Infrastructure 2.0, leveraging open standards like UALink for AI rack-scale infrastructure.
• Global team grew to over 700 employees by end of 2025, up 60% from the start of the year.

Astera Labs delivered quarterly revenue of $230.6 million in Q3 '25, up 20% from the prior quarter and 104% versus Q3 of last year. Growth was broad-based across product segments. Scorpio P-Series had initial volume ramp at lead customer, with new design wins across AI platforms. Aries PCIe 6 solutions contributed over 20% of Q3 revenues. Taurus drove growth with incremental shipments of 400-gig scale-out connectivity for AI and general purpose systems. Leo CXL memory expansion products saw customers exploring AI inference use cases.

• Q4 2025 revenue expected in the range of $245 million to $253 million, up ~6%-10% from Q3.
• Non-GAAP gross margin expected to be approximately 75% in Q4 due to increased mix of Taurus hardware modules.
• Non-GAAP operating expenses for Q4 expected in the range of $85 million to $90 million, driven by R&D investment and Xscale acquisition.
• Anticipated non-GAAP fully diluted earnings per share for Q4 is approximately $0.51.

• Forward-looking statements are subject to risks and uncertainties, including those discussed in the earnings release and SEC filings.
• Competition with other scale-up architectures could impact market share.
• Execution risks related to product launches, acquisitions, and scaling of team and capabilities.

Q: Post the announcement of UALink 1.0 specification, how has the design win pipeline for scale-up products changed?

A: Sanjay Gajendra stated they continue to see market opportunity grow for scale-up products, with over 10 AI platform providers engaged, and UALink as a meaningfully additive opportunity with revenue expected in 2027.

Q: How is the business diversifying, and what about concentration risk with Scorpio X launch?

A: Sanjay Gajendra mentioned the business is diversifying with product lines and customer base, having over 10 customer platforms engaged with PCIe-based scale-up solutions, and Scorpio X launch expected to further diversify with multi-generation design wins.

Q: What are the material revenue timelines for optical products from the Xscale acquisition?

A: Michael Tate stated the earliest for scale-up optical connections is likely in the 2028-2029 time frame.