Marvell Technology, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Revenue Growth: Fourth quarter revenue was $1.817 billion, up 20% sequentially and 27% year-over-year. Full fiscal 2025 revenue was $5.77 billion.
• Profitability: Achieved GAAP profitability in the fourth quarter and expects to continue in fiscal 2026. Non-GAAP earnings per share of $0.60 exceeded the midpoint of guidance, growing 40% sequentially.
• Custom Silicon Programs: Successfully ramped highly complex 100 billion plus transistor XPUs and CPUs from initial samples to high volume production on first pass silicon, with multiple custom programs in production and upcoming ramps.
• Electro-Optics: Strong demand for 800-gig PAM, 400ZR DCI products, and began shipments of 1.6T PAM DSP and 5-nanometer technology. Announced 2-nanometer silicon IP for next-gen AI and cloud infrastructure.
• Technology Investments: Invested in advanced process nodes, electrical and optical SerDes, high speed die-to-die interconnects, embedded memory, custom HBM, 2.5D and 3D packaging, and silicon photonics.
• Organizational Changes: Restructured to focus on data center with a cloud data center group led by Raghib Hussain and a multi-market business group led by Chris Koopmans.

Segment Performance

• Data Center: Fourth quarter revenue was $1.37 billion, growing 78% year-over-year and 24% sequentially, contributing 75% of consolidated revenue. Full fiscal year 2025 data center revenue grew 88% year-over-year.
• Enterprise Networking: Fourth quarter revenue was $171 million.
• Carrier Infrastructure: Fourth quarter revenue was $106 million.
• Consumer: Fourth quarter revenue was $89 million, declining 8% sequentially.
• Automotive and Industrial: Fourth quarter revenue was $86 million, growing 3% sequentially.

Guidance

• Fiscal 2026 Q1: Forecast revenue to be in the range of $1.875 billion plus or minus 5%. GAAP gross margin expected to be approximately 50.5%, non-GAAP gross margin approximately 60%. GAAP earnings per diluted share in the range of $0.14 to $0.24, non-GAAP earnings per diluted share in the range of $0.56 to $0.66.
• Fiscal 2026 Outlook: Anticipates strong year-over-year revenue growth, with data center as the primary growth driver, supported by ongoing recovery in multi-market businesses.

Risks

• Technology Adoption: Co-Packaged Optics and other advanced technologies face challenges in adoption, manufacturing, and yield issues.
• Competition and Confidentiality: Uncertainty around customer program details and competition for market share due to customer confidentiality constraints.
• Inventory and Supply Chain: Inventory levels and supply chain management could impact growth if not managed properly.

Question and Answer

• Q: How to reconcile confidence in growing with lead XPU customer with competitor concerns? A: Matt Murphy stated confidence in current XPU program ramp, with next-gen program in development, but couldn't comment on competitor activities, noting visibility for products Marvell will build for the customer extends to next-gen of current AI XPU program.
• Q: Quantify the mix between AI and non-AI in data center? A: AI is more than half of data center revenue, with Electro-Optics and custom each around 25% of data center revenue.
• Q: Custom ASIC customer stickiness and networking attachment? A: Custom engagements with major hyperscalers看重 technology leadership, manufacturing scale, and flexible business models; networking is sticky and coupled with custom ASICs, providing a more compelling value prop for customers.
• Q: Co-Packaged Optics and optical near-term health? A: Co-Packaged Optics has traction in scale-up and rack connectivity, but adoption takes time; Electro-Optics demand strong, with 800-gig healthy and 1.6T PAM DSP shipments ongoing.
• Q: Inventory and long-term data center goals? A: Inventory growth supports custom programs and optics, and Marvell is tracking well to 20% market share goal for data center, with strong progression in market share and TAM development.