Marvell Technology, Inc.

Good afternoon and welcome to Marvell Technology Inc. third quarter of fiscal year 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to Marvell's third fiscal quarter 2025 earnings poll. Joining me today are Matt Murphy, Marvell's chairman and CEO, and Willem Minkus, our CFO. Let me remind everyone that certain comments made today include forward-looking statements, which are subject to significant risks and uncertainties that could cause our actual results to differ materially from management's current expectations. Please review the cautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website, as well as our most recent 10-K and 10-Q filings. We do not intend to update our forward-looking statements. During our call today, we will refer to certain non-GAAP financial measures. Reconciliation between our GAAP and non-GAAP financial measures is also available in our earnings press release. I am pleased to announce that our next Investor Day will be held in New York City on June 10, 2025. More details will be shared in an upcoming press release. Let me now turn the call over to Matt for his comments on the quarter. Matt?

Thanks, Ashish, and good afternoon, everyone. For the third quarter of fiscal 2025, Marvell delivered revenue of $1.516 billion, $66 million above the midpoint of guidance, growing 19% sequentially with the outperformance driven by strong AI demand and execution. As a result, our non-gap earnings per share of 43 cents was also well above the midpoint of guidance, growing by 43% sequentially. This earnings growth rate, which was more than double our top line growth rate, highlights the substantial operating leverage in our business model. Stronger than forecast ramp in custom silicon was a key contributor to this performance. We believe that continued success in custom silicon will help accelerate our timeline to achieve our long-term target operating margin model. On a year-over-year basis, third quarter revenue grew by 7%, marking a return to year-over-year growth for Marvell. I'm very pleased with our results and even more excited about our outlook for the fourth quarter, where we project revenue growth to accelerate to 26% year-over-year growth at the midpoint of guidance. Marvell is entering a new era of growth through the substantial volume production ramp of our custom silicon programs, along with continued strong growth in optics. Yesterday, we announced the expansion of our strategic relationship with Amazon Web Services through a comprehensive multi-generational five-year agreement. This multi-generational agreement encompasses a broad range of Marvell's data center semiconductors, including custom AI products, optical DSPs, active electrical cable DSPs, PCIe retimers, data center interconnect optical modules, and Ethernet switching silicon solutions. Additionally, Marvell will collaborate with AWS for EDA in the cloud, leveraging the advanced and scalable compute capabilities of AWS to accelerate silicon design. This agreement represents a significant step up in the expected volume of business between the two companies in the coming years, and we look forward to working with AWS on custom AI and networking semiconductors that meet the demanding needs of accelerated infrastructure. Let me now discuss our results and expectations for each of our end markets. In our data center end market for the third quarter, we achieved record revenue of $1.1 billion, growing 98% year over year and 25% sequentially. These strong results were driven by a significant step up in our custom AI silicon ramp, as our customers saw increasing demand for the differentiated capabilities offered by these new custom AI chips. We are seeing strong custom AI demand continue into the fourth quarter and have secured supply chain capacity to support our customers' growth forecasts. Our success in ramping these highly complex 100 billion plus transistor chips from initial samples to high volume production on first pass silicon without any re-spins is a testament to Marvell's robust design methodology and world-class engineering team. Our seasoned operations team and deep partner relationships were key enablers of the rapid ramp we were able to drive in a constrained supply environment. The superb execution is a significant time-to-market advantage for our customers and has given them even more confidence to expand their collaboration with Marvell on their critical silicon projects. In the third quarter, we benefited from higher-than-forecasted revenue from our electro-optics products, which grew double digits sequentially on a percentage basis. We continue to see strong bookings for our market-leading 800-gig PAM products, and we also began shipments of the industry's first 1.6T PAM DSP and 5-nanometer process technology. We continue to see a strong design wind momentum with leading customers for this product and expect the production ramp to accelerate next year. To meet AI's insatiable need for the highest bandwidth at the lowest power, Marvell is accelerating the cadence of next-generation products. Today, we announce the industry's first 3 nanometer 1.60 DSP, featuring 200 gig per lane electrical and optical interfaces. By leveraging 3 nanometer process technology and advances in electrical and optical SERDES, this next generation platform is designed to reduce 1.60 optical module power consumption by more than 20% compared to its predecessor, marking a significant improvement in energy efficiency. Marvell's DSP team remains laser-focused on driving best-in-class performance, schedule, and time to market to continue to remain the leader in this large and fast-growing electro-optics market. In the active electrical cable market, we are starting to see an acceleration in the production ramp of our 100 gig per lane, 800 gig DSPs with multiple module partners. We have also started sampling the industry's first 200 gig per lane, 1.6 TAEC DSPs, to address upcoming higher speed short reach copper interconnect applications. Looking ahead to the fourth quarter of fiscal 2025 for our data center and markets, we are forecasting strong sequential growth in the low to mid 20% range. We expect this growth to be driven by another significant step up in our custom AI revenue as these programs continue to ramp into high volume production. This will be further augmented by strong growth from both our Ethernet switch products as well as our interconnect portfolio, which include optical DSPs, TIAs, drivers, AECs, and DCI products. Now let me turn to Marvell's enterprise networking and carrier end markets. In the third quarter, enterprise networking revenue was $151 million, while carrier revenue was $85 million. We began to see a recovery in both of these end markets, with revenue collectively growing 4% sequentially. We expect the pace of recovery to accelerate in the fourth quarter, with aggregate revenue from enterprise networking and carrier infrastructure forecasted to grow sequentially in the mid-teens on a percentage basis. We are pleased to see our revenue growth and order momentum continue to improve in these two end markets, although this forecast still anticipates Marvell products shipping below end market consumption. Turning to the consumer end market, revenue in the third quarter was $97 million, growing 9% sequentially. Looking ahead to the fourth quarter, we expect revenue from the consumer end market to decline sequentially in the mid-teens on a percentage basis. This is due to seasonality and gaming demand, which typically weakens in our fourth quarter, bottoms out in our first fiscal quarter, and then begins to rebound in the second quarter. Turning to our automotive and industrial end market, revenue in the third quarter was $83 million, growing 9% sequentially as we started to see a recovery in this end market. Looking ahead to the fourth fiscal quarter, we are projecting revenue from the auto and industrial end market to grow sequentially in the low to mid single digits on a percentage basis. In summary, the Marvell team delivered excellent results in the third fiscal quarter, achieving 19% sequential top line growth and delivering both revenue and non-gap earnings per share well above the midpoint of guidance. For the fourth quarter, we are forecasting consolidated revenue to again grow 19% sequentially at the midpoint of guidance. AI continues to lead the way, enabling our data center revenue to almost double year over year in the third quarter, and we expect it to continue driving strong growth in the fourth quarter. With three quarters of strong AI results under our belt for this fiscal year, and an even stronger fourth quarter forecast, we are clearly set to significantly exceed the full-year AI revenue target of $1.5 billion outlined earlier this year at our AI event. Over the past several years, Marvell has strategically invested in technology, both organically and through acquisitions, to become a critical enabler of accelerated infrastructure. We have in place a full suite of solutions across data center interconnect, switching, and compute, and the ability to uniquely stitch these together into a unified platform. Marvell's data center and market has grown to account for 73% of our consolidated revenue in the third quarter, driven by AI, and we expect this percentage to increase again in the fourth quarter. Marvell has rapidly transformed into an AI-first data center semiconductor company, and we are completely focused on taking full advantage of our strong position in the AI super cycle. In the third quarter, we made decisions to further solidify and purposefully redirect our investments towards data center relative to our other end markets. These actions resulted in a restructuring charge in the third quarter, which Willem will discuss in his section. The goal of these actions is to increase our R&D intensity towards the data center, our largest and fastest growing opportunity, while continuing to drive significant operating leverage going forward. AI technology is advancing at a tremendous pace, and the opportunity is expanding rapidly. we are continuing to enhance all aspects of our comprehensive technology platform, including electrical and optical certies, high-speed energy-efficient 2D and 3D die-to-die interconnects, advanced packaging, and silicon photonics. In addition, we are optimizing interfaces for high-bandwidth memory, SOCs, and compute fabrics. Our two-nanometer platform is also progressing very well as we continue to lead the industry in cutting-edge process technology. Arbel's two-nanometer platform includes our broad suite of internally developed best-in-class IP to enhance performance, energy efficiency, density, and design flexibility. We are seeing tremendous interest from customers for next-generation two-nanometer designs. Turning to our non-data center, multi-market businesses, which include carrier and enterprise networking, we are encouraged to see the recovery starting to gain momentum. As you may remember, we had invested heavily in these end markets over a long period to successfully gain share and have built an industry-leading portfolio of products. We plan to continue investing in a targeted manner to grow revenue in these multi-market businesses. The Marvell team is firing on all cylinders and we see a very favorable setup to significantly scale up the company. In addition to strong revenue attainment, the Marvell team is also driving outstanding financial results. This fiscal year, our revenue has grown by 31% from the first quarter to the third quarter. Over that same time period, we have demonstrated tremendous operating leverage, growing our non-GAAP EPS by 79%, which is 2.5 times our top-line growth rate. We have driven strong operating cash flows, enabling us to step up our stock repurchases throughout the year. This fiscal year, we have cumulatively bought back $525 million through the third quarter, and have plenty of remaining authorization. As you may recall, earlier this year, our board authorized a $3 billion addition to our existing stock repurchase program. We are also focused on reducing our stock-based compensation expense as a percent of revenue, and we expect significant improvement in this metric going forward. Given the strong revenue outlook for this fourth quarter and our expectations for robust growth in fiscal 2026, We believe we are well positioned to deliver outstanding financial returns to our stockholders. Before I turn the call over to Willem, I would like to express my heartfelt thanks to Loy, a key member of my team and co-founder of InFi. After a long and distinguished career in the semiconductor industry, Loy has announced his decision to retire in April of next year. Loy has made incredible contributions to Marvell over the past few years, including building a world-class team and deep bench of leadership talent. He was instrumental in the successful integration of InFi into Marvell in 2021. With his characteristic integrity and thoughtfulness, Loy is already engaged in succession planning and ensuring a smooth transition. We are also looking forward to Loy staying connected with Marvell after he retires, so we can continue to benefit from his insights and expertise. We wish him the very best in his well-deserved retirement, during which he looks forward to spending more quality time with his family. With that, I'll turn the call over to Willem for more detail on our recent results and outlook.