Marvell Technology, Inc. Q2 FY2026 earnings call

Key Points

• Marvell delivered record revenue of $2.006 billion in Q2, with 6% sequential growth and 58% year-over-year growth.
• Data center end market grew 69% year-over-year fueled by AI demand; enterprise networking and carrier infrastructure end markets grew 43% year-over-year.
• Non-GAAP operating margin expanded by 870 basis points year-over-year to 34.8%, and non-GAAP earnings per share reached $0.67, up 123% year-over-year.
• Completed divestiture of automotive Ethernet business for $2.5 billion, with proceeds for stock repurchase and R&D.
• Promoted Chris Koopmans to President and COO and Sandeep Bharathi to President, Data Center Group for enhanced leadership in key areas.
• Hosted custom silicon investor event, outlining an expanded $94 billion data center TAM for 2028, new XPU attach product category, and over 50 pipeline opportunities with $75 billion lifetime revenue potential.

In the second quarter of fiscal 2026, Marvell's data center end market was the largest, generating $1.49 billion in revenue, which accounted for 74% of total revenue and grew 69% year-over-year driven by strong AI demand. Enterprise networking revenue was $194 million, carrier infrastructure revenue totaled $130 million, consumer revenue was $116 million (up 84% sequentially and 30% year-over-year driven by gaming), and automotive and industrial end market revenue was $76 million in Q2, with the automotive Ethernet business divested affecting Q3 revenue projections.

Fiscal Q3 Guidance

• Revenue forecasted to be in the range of $2.06 billion, plus or minus 5%, representing 36% year-over-year growth (excluding automotive Ethernet, ~40% YOY).
• Non-GAAP earnings per diluted share expected to grow 10% sequentially at the midpoint of guidance.
• Data center is expected to continue outpacing other end markets in size and growth rate.
• Upcoming revenue classification change to two categories: data center and communications and other, with the new communications and other end market consolidating non-data center segments.

Risks Identified

• Supply chain constraints that could impact production and ramp-up of products.
• Tariff dynamics, though no significant impact has been seen to date but monitored closely.
• Lumpiness in custom business performance between quarters due to timing of hyperscale builds and product ramps.

Q: Dive into the guidance for the custom business, specifically the lumpiness in Q3 and recovery in Q4.

A: Matt Murphy stated that the lumpiness is normal due to hyperscale build timing. Optics is strong in Q3 with double-digit sequential growth, and custom is expected to recover in Q4 with growth in the second half over the first half.

Q: Provide clarity on design wins and their contribution to custom products revenue.

A: Chris Koopmans mentioned significant design wins added, with new wins representing multibillion-dollar lifetime revenue potential, and confidence in achieving market share targets.

Q: Discuss supply chain constraints and tariff impact.

A: Chris Koopmans noted a tight supply chain but strong coordination with customers, and Willem Meintjes stated no significant tariff impact on the business to date though monitored closely.

Q: Comment on the concentration of custom business among lead customers and timing of additional design wins.

A: Matt Murphy said existing programs have timing issues, but growth is expected in the second half, with a journey from initial handful of sockets to 18-plus and beyond.

Q: Talk about the scale-up switch fabric opportunity and timeline.

A: Sandeep Bharathi said Marvell is investing in scale-up switches, with momentum in the next 2 years, leveraging networking and connectivity technology.