Astera Labs, Inc.

Hello, good afternoon. My name is Jeremy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Astera Labs Q3 2024 Earnings Conference Call. 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 one on your telephone keypad. If you would like to withdraw your question, simply press the pound key. We do ask if you're asking a question to limit yourself to one question plus one follow-up. Thank you. I will now turn the call over to Leslie Green, Investor Relations for Astera Labs. Leslie, you may begin.

Thank you, Jeremy, and good afternoon, everyone, and welcome to the Astera Labs Third Quarter 2024 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. 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 today's earnings release and the periodic reports we file from time to time with the SEC, including risks set forth in the final perspectives relating to our IPO. 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 and uncertainties and assumptions, the results, events, or circumstances related and reflected in the forward-looking statements discussed during this call may not occur, and actual results could differ materially from those anticipated or implied. 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 to conform to these as a result of new information, future events, or changes in our expectations, except as required by law. Also during this call, we will refer to certain non-GAAP financial measures, which we consider to be important measure of the company's performance. These non-GAAP financial measures are provided in addition to and not as a substitute for or superior to financial results prepared in accordance with U.S. 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 and will also be included in our filings with the SEC which will also be accessible through the investor relations portion of our website. With that, I would like to turn the call over to Jitendra Mohan, CEO of Acera Labs.

Thank you, Leslie. Good afternoon, everyone, and thanks for joining our third quarter conference call for fiscal year 2024. Today, I will provide a quick Q3 financial overview, discuss several of our recent company-specific product and strategic announcements, followed by a discussion around the key secular trends driving our market opportunity. I will then turn the call over to Sanjay to delve deeper into our growth strategy. Finally, Michael provides additional details on our Q3 results and our Q4 financial guidance. Acera Labs delivered strong Q3 results, setting our fifth consecutive record for quarterly revenue at $113 million, which was up 47% from the last quarter and up 206% versus the prior year. Our business has entered a new growth phase with multiple product families ramping across AI platforms, featuring both third-party GPUs and internally developed AI accelerators, which drove the Q3 sales upside versus our guidance. We also demonstrated strong operating leverage during Q3 with non-GAAP operating margin expanding to over 32% and delivered non-GAAP EPS of 23 cents. Looking into Q4, we expect our revenue momentum to continue, largely driven by the Aries PCIe and Taurus Ethernet product lines, with Scorpio Fabrics, which is continuing to ship in pre-production volumes. The criticality of connectivity in modern AI clusters continues to grow with trillion parameter model sizes, multi-step reasoning models, and faster, more complex AI accelerators. These developments present a tremendous opportunity for Astera Labs' intelligent connectivity platform to enhance AI server performance and productivity with our differentiated hardware and software solutions. At the start of Q4, we announced our fourth product line, the Scorpio Smart Fabric Switch family, which expands our mission of solving the increasingly complex connectivity challenges within AI infrastructure, both for scale-out and for scale-up networks. Extending beyond our current market footprint of PCI Express and Ethernet Retimer-class products, and controller-class devices for CXL memory, our Scorpio Smart Fabric Switch family delivers meaningfully higher functionality and value to our AI and cloud infrastructure customers. We estimate that Scorpio will expand our total market opportunity for our four product families to more than $12 billion by 2028. Scorpio family unlocks a large and growing opportunity across AI server head node scale-out applications with the P-series, and AI accelerators scale up clustering use cases with the X-Series. The P-Series devices directly address the challenge of keeping modern GPUs fed with data at ever-increasing speeds, while the X-Series devices improve the efficiency and size of AI clusters. The Scorpio family was purpose-built from the ground up for these AI-specific workloads with close alignment with our hyperscaler and AI platform partners. At the recent 2024 OCP Global Summit, we demonstrated the industry's first PCIe Gen 6 Fabric Switch, which is currently shipping in pre-production volumes for AI platforms. We are happy to report that we already have design wins for both Scorpio P Series and X Series, and that our recent product launches further accelerated strong customer and ecosystem interest. Over the coming quarters, we expect to further expand our business opportunities for the Scorpio product family across PCIe Gen 5, PCIe Gen 6, and platform-specific customized connectivity platforms. Further expanding our market opportunity, Astera Labs has joined the Ultra Accelerator Link UA-Link Consortium as a promoting member on the board of directors, along with industry-leading hyperscalers and AI platform providers. This important industry initiative places us at the forefront of developing and advancing an open, high-speed, low-latency interconnect for scale-up connectivity between accelerators. SR Labs' deep expertise in developing advanced silicon-based connectivity solutions, along with a strong track record of technology execution, makes us uniquely suited to contribute to this compelling and necessary industry initiative. With a shift towards shorter AI platform refresh cycles, hyperscalers are increasingly relying on their trusted partners as they deploy new hardware in their data center infrastructure at an unprecedented pace and scale. To date, we have demonstrated strong execution with our Aries, Taurus, Leo, and now Scorpio product family. Our products increase data, networking, memory bandwidth, and capacity, and our Cosmos software provides our hyperscaler customers with the tools necessary to monitor and observe the health of their expensive infrastructure to ensure maximum system utilization. To conclude, Estera Labs' expanding product portfolio, including the new Scorpio Smart Fabric switches, is cementing our position as a critical part of AI connectivity infrastructure, delivering increased value to our hyperscaler customers and unlocking additional multi-year growth trajectories for Estera Labs. With that, let me turn the call over to our President and COO, Sanjay Gajendra, to discuss some of our recent product announcements and our long-term growth strategy. Thanks, Jitendra, and good afternoon, everyone.