Marvell Technology, Inc.

Good afternoon and welcome to Marvel Technology's first quarter fiscal year 2027 earnings conference call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. Please note this event is being recorded. I would now like to turn the conference over to Mr. Asif Suran, Senior Vice President of Investor Relations. Thank you. You may begin.

Thank you and good afternoon, everyone. Welcome to Marvell's first fiscal quarter 2027 earnings call. Joining me today are Matt Murphy, Marvell's Chairman and CEO, Willem Minkies, CFO, Chris Koopmans, President and COO, and Sandeep Bharti, President, Data Center Group. 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 8K, 10K, 10Q, and other documents filed by us from time to time with the SEC. We do not intend to update our forward-looking statements. During our call today, we will refer to certain non-GAAP financial measures A reconciliation between our GAAP and non-GAAP financial measures is available in our earnings press release. Let me now turn the call over to Matt for his comments on the quarter. Matt?

Yeah, thanks, Ashish, and good afternoon, everyone. For the first quarter of fiscal 2027, Marvell delivered record revenue of $2.418 billion, reflecting 9% sequential and 28% year-over-year growth. Revenue exceeded the midpoint of guidance, and as a result, non-GAAP earnings per share of $0.80 exceeded the midpoint of guidance by $0.01. We are seeing strong demand and exceptional bookings across our entire data center portfolio. This robust demand is reflected in our guidance for the second quarter of fiscal 2027, where we expect total company revenue to grow 12% sequentially and 35% year-over-year at the midpoint to $2.7 billion. On our earnings call last quarter, we indicated that beginning in Q2, we expected quarterly revenue growth throughout fiscal 2027 to trend in the high single-digit range sequentially on a percentage basis, Q4 revenue exiting the fiscal year at approximately $3 billion. We are now guiding Q2 revenue to grow double digits sequentially, and we expect Q3 and Q4 revenue to also grow by at least 10% sequentially. As a result, we now expect $3 billion in quarterly revenue in Q3, one full quarter ahead of our prior outlook. We also continue to expect year-over-year revenue growth rate to accelerate each quarter throughout fiscal 2027, reaching approximately 50% by Q4. As a result, we now expect overall Marvell revenue in fiscal 2027 to grow approximately 40% year-over-year to nearly $11.5 billion. The increase in our revenue outlook continues to be driven by our data center business, which we now expect to grow approximately 50% this fiscal year. Notably, we expect our interconnect business to grow more than 70% year over year, well above our prior expectation of 50% growth. I will provide additional color on our interconnect business later in today's call. For our communications and other end market, we continue to expect revenue growth of approximately 10% in fiscal 2027. Now looking ahead to fiscal 2028, while we are planning for the rate of Cloud CapEx growth to moderate into the 30% plus range, we expect strong data center revenue growth for Marvell to continue. We expect our interconnect business to continue to outpace Cloud CapEx growth, reflecting strong 1.6T demand from scale-out networking and more meaningful contributions from scale-up and scale-across networking. We now expect our custom business to more than double year-over-year in fiscal 2028, higher than our prior outlook, and expect our Ethernet switching business to continue ramping. As a result, we expect data center revenue in fiscal 2028 to grow approximately 55% year-over-year, accelerating from fiscal 2027's projected growth rate. For our communications end market, we continue to expect low single-digit percentage revenue growth in fiscal 2028, consistent with our prior view. In aggregate, we now expect overall company revenue to grow approximately 45% in fiscal 2028 off a higher fiscal 2027 base. As a result, we now expect Marvell's fiscal 2028 revenue to reach approximately $16.5 billion, roughly $1.5 billion higher than the outlook we provided on our earnings call last quarter. This outlook is supported by demand trends we are seeing today and by programs already in execution. Our investments in securing supply are paying off, enabling us to scale the business every quarter. As we move through the fiscal year, we expect to remain closely aligned with our customers as they continue investing aggressively in AI infrastructure. Now let me turn to the expanded partnership we announced with NVIDIA, which reflects the growing importance of high-speed connectivity, optical interconnect, and accelerated infrastructure in scaling AI. The collaboration connects Marvell's custom silicon and optical networking capabilities directly into the massive NVIDIA ecosystem to help build scalable, highly efficient AI data centers and telecommunications networks. There are three core pillars of this exciting announcement. First is our optics partnership. Marvell has long been a key supplier of DSPs, TIAs, and drivers, and we are now extending this relationship to collaborate on silicon photonics technology, which is expected to be a key enabler of scale-up networking. Second, NVLink Fusion integration. This allows Marvell to build custom chips and networking semiconductors that can seamlessly interface with NVIDIA infrastructure. It increases choice for hyperscalers who will now have complete flexibility to mix and match custom and merchant capabilities across their platforms, with Marvell uniquely providing the bridge between these two architectures. We expect this to create new market opportunities for both Marvell and NVIDIA going forward. Third is AI RAN. Marvell will enhance its existing Octeon base station processors to work directly with NVIDIA GPUs, integrating AI with wireless infrastructure on a single, software-defined computing platform. This will enable telecommunications operators to run both 5G and 6G radio workloads and high-performance AI applications concurrently on the same hardware. Since the announcement, both teams are off to the races, and we are working closely together to realize the benefits of this collaboration. We deeply appreciate the partnership and the investment from NVIDIA. Okay, let me provide more color on our current business, beginning with data center. In our data center end market, we delivered record first quarter revenue of $1.83 billion, representing 11% sequential growth and 27% year-over-year growth. We achieved sequential and year-over-year growth across multiple product lines, including optical interconnect, custom silicon, and switching. Looking ahead to the second quarter, we expect data center revenue growth to accelerate into the mid to high teens sequentially on a percentage basis and into the mid 40% range year-over-year. Our networking products, including interconnect and switching, are driving strong revenue growth as networking becomes increasingly critical with each new generation of AI infrastructure. Now in the early stages of generative AI, the primary focus was on addressing compute and memory bottlenecks. As more complex architectures such as reasoning models and mixture of experts have begun to deploy, the role of networking has become significantly more important. And as the key driver of the increased demand we are seeing today, for our scale-out networking products. Now, what is completely in front of us is the massive expansion expected in scale-up networks as these domains become significantly larger, requiring high radix, low latency switches, as well as high bandwidth optical interconnects. In addition, these new AI models are also driving innovation in memory architecture, which we expect will benefit our XPU attached business. We expect the emergence of agentic AI to further supercharge demand for our scale-out, scale-up, and XPU-attached businesses. In agentic AI, a single user request may require agents to query AI models many times rather than just once, as in traditional one-shot inferencing. These queries may also be routed to different parts of the AI cluster to complete a single task. This substantially increases the volume of data traffic that must be transmitted and switched with very low latency across longer reaches, as well as the amount of memory required. Gentic AI is also expected to drive a significant increase in the number of CPUs deployed in AI infrastructure. More CPUs require more NICs, PCIe switches, and retimers, as well as greater bandwidth and CPU-centric front-end networks. As a result, we believe that GenTech AI can provide another significant tailwind for our interconnect, switching, and XPU-attached franchises. It's increasingly clear that optics is the future of data center connectivity, and we continue to invest aggressively in our technology platform to extend our leadership in this rapidly expanding market. Our latest addition is the acquisition of Polariton, a developer of high-speed, low-power plasmonics-based silicon photonics devices. Plasmonics offer meaningful advantages over traditional silicon photonics by enabling substantially higher modulator bandwidth, which is critical for support for faster optical transmission speeds. Polariton has already demonstrated plasmonic modulator bandwidth exceeding 1 terahertz, up to 10 times higher than current silicon photonics and thin-film lithium niobate-based solutions. We are excited to incorporate this breakthrough technology into our DCI and coherent light roadmaps extending our technology platform to 3.2T and beyond. Let me now pivot back to the near term and discuss trends we are seeing across both our established data center businesses and our newer growth initiatives. I'll organize the discussion into three categories, interconnect, switching, and custom. I'll start with interconnect, which represents the largest portion of our data center business. Demand for our interconnect products continues to accelerate, and as a result, we have increased our fiscal 2027 revenue growth expectations for this business to more than 70% year over year. Interconnect is also a major driver of the higher fiscal 2028 company revenue outlook we provided today. We are benefiting from our leadership position across the industry's broadest portfolio of high-speed connectivity solutions spanning scale out, scale across, and scale up networking. Within our scale-out PAM franchise, demand continues to strengthen for our 800-gig products, while our 200-gig-per-lane 1.6T solutions are ramping quickly this fiscal year following their production launch in the second half of fiscal 2026. We expect 1.6T revenue to take another substantial step up in fiscal 2028. We continue to benefit from the first-to-market cadence we have maintained across successive PAM four generations. We also expect to maintain leadership into the next PIM for generation with 400 gig per lane technology, which we demonstrated first at the Optical Fiber Conference in April 2025. In addition to our DSP franchise, we have also built a formidable position in broadband, analog, TIAs, and drivers. This business is scaling rapidly, and we expect quarterly revenue from TIAs and drivers to exceed a $1 billion annualized run rate in the next few quarters. To support campus-wide data center architectures requiring longer reach than traditional PAM solutions, we were the first to introduce coherent light products to the market. These solutions are optimized for applications spanning two to 20 kilometers within an extremely low power envelope as compared to traditional coherent DSPs. Over time, as speeds continue to rise, we expect coherent light to penetrate deeper inside data centers, complementing PAM-based solutions for shorter reach applications. We've already begun shipping the first generation of our coherent light 200 gig per lane 1.6T products. We are now introducing next generation coherent light products featuring integrated MACsec security as well as higher speed capabilities. Turning to DCI, this market is undergoing a major architectural transition driven by the emergence of scale across networks, which we believe will significantly expand the opportunity for pluggable DCI modules over the next several years. Marvell pioneered the pluggable DCI market, where the original use case was driven by hyperscalers replacing public WAN connections for inter-site connectivity using pluggable modules, with traffic between data centers originating primarily from traditional front-end networks. This has become a highly successful business for Marvell, and today we ship DCI solutions to all five major US hyperscalers. What is now changing is the push to build significantly larger AI clusters, which increasingly must span multiple data centers due to power and space constraints. In these architectures, the backend AI network must also extend between the data centers, creating the scale across use case, where massive amounts of data move continuously between XPUs during AI workload processing. Aggregate bandwidth requirements for scale across networks are projected to be more than 10 times higher than those of current front end DCI networks. As a result, industry forecasts project a pluggable DCI TAM to grow significantly by rapidly increasing speeds and rising feature complexity, including integrated MACSEC security. While traditional DCI networks today primarily deploy 400 gig solutions and are now transitioning to 800 gig, scale across architectures are expected to rapidly adopt 1.6 D connectivity. Marvell is exceptionally well positioned to lead this transition with the industry's first secure 1.6 TZR and ZR plus DCI modules, powered by our new two nanometer coherent DSP announced earlier this year. These modules are expected to begin sampling this year. This positions Marvell to extend our technology leadership into the emerging scale across market, supported by our proven expertise in high volume manufacturing of these highly specialized and complex modules. Our leadership position here is translating into strong revenue momentum for our DCI module business, giving us line of sight to a $1 billion annualized revenue during fiscal 2028. This would represent approximately double the revenue we achieved in fiscal 2026 when the business generated roughly $500 million in revenue. As scale-up cross deployments become a larger portion of the market, we expect growth in our DCI business to accelerate further. Let me now transition to scale-up optics. Gallup Interconnect represents one of the newest and most strategically important opportunities emerging in AI infrastructure. Marvell is uniquely positioned to enable both NPO and CPO implementations with a broad silicon photonics platform spanning all three mainstream modulator technologies, including MZM, EAM, and MRM, fully supported by our market-leading broadband analog TIAs and drivers. We are also investing in emerging approaches such as microLED and microvixel-based solutions. Marvell has already shipped more than 1 million DCI modules powered by our silicon photonics over the past decade. Across four generations of silicon photonics deployments, we have accumulated more than 15 billion hours of field data with demonstrated world-class reliability. We have leveraged this experience in developing our silicon photonics-based light engines, and we are deeply engaged with multiple Tier 1 customers with our third generation 6.4T light engine for NPO and CPO implementations. Our acquisition of Celestial AI added photonic fabric technology, including EAM modulators in the industry's leading low-power analog certies. The solution has already been selected by a Tier 1 hyperscaler for its next generation of XPU scale-up networks. The full strength of Marvell's engineering and operations organization is focused on bringing Celestial's first-generation chiplet into high-volume manufacturing. We are also making significant progress with MRM-based scale-up interconnect solutions. We completed our MRM device demonstrations last year and continue to collaborate closely with TSMC on its Coop platform. We believe ScaleUp Interconnect represents a massive new TAM that will likely be served by multiple photonic technologies and architectures, and we are investing aggressively to establish leadership across all of them. We are seeing market adoption accelerate from multiple CPO and NPO engagements, And as a result, we expect our scale-up optics business to ramp significantly next fiscal year, with revenue forecasted to more than double our prior outlook of approximately $150 million, which was based at that time solely on Celestial AI. Turning to data center switching, we continue to benefit from sustained demand for our 12.8T and strong ramp of our next-generation 51.2T switches for scale-out networking. we are seeing strong engagement for both existing and new customers for our 51.2T platform, as well as our new 100T platform, which we believe delivers industry-leading power efficiency and low latency, attributes that are increasingly critical for AI infrastructure. And our engineering teams are already executing the roadmap towards 200T Ethernet switching and beyond. Given this momentum, we expect scale-out switch revenue in fiscal 2027 to exceed $600 million, doubling from fiscal 2026, And we currently see the business tracking to more than $1 billion in annualized revenue in fiscal 2028. Scale-up switching is an emerging market where we have significantly increased our investment, both organically and through the acquisition of XCOM, which substantially expanded our team and capabilities. While some customers are currently deploying PCIe switches for their current generation of scale-up networking, the Radix and bandwidth limitations of PCIe are expected to drive a rapid transition towards purpose-built, large Radix, high bandwidth UA-Link, eSun, and NVLink solutions. Marvell is uniquely positioned to support all of these scale-up protocols through our internally developed UAL and eSun switches, as well as our expanded partnership with NVIDIA around NVLink Fusion. We currently have multiple engagements with Tier 1 customers for our scale-up switch portfolio. Given the size of the scale-up TAM, each of these engagements represents a multi-billion dollar lifetime revenue opportunity. We believe we are exceptionally well-positioned in this market, leveraging decades of extensive experience developing large, reticle-sized switched silicon, as well as our in-house, best-in-class, high-performance Syrtis technology. Now, let me touch on a few additional growth opportunities in data center. In the AEC market, we are seeing strong interest in our Golden Cable program. We have already secured design wins with three Tier 1 US hyperscalers, along with several other customers. We are also seeing strong traction for our retimer products. Both ACs and retimers are now ramping, and we expect combined revenue to more than double year-over-year in fiscal 2027 and continue growing rapidly in fiscal 2028. The acquisition of XCOM also advanced PCIe and CXL switch solutions to our portfolio, and we are seeing strong interest in our PCIe Gen 6 and CXL 3.1 solutions. Marvell is well positioned in both of these markets to provide customers with complete end-to-end solutions and reference designs consisting of our PCIe switches paired with retimers, as well as our CXL switches paired with our memory expanders. Okay, turning now to our custom business. Custom revenue remains on track to grow more than 20% year-over-year in fiscal 2027, led by our flagship XPU program, which we expect to drive multiple years of growth across multiple generations. Several XPU attached programs are also ramping in fiscal 2027, including our CXL and NIC products. Looking ahead to fiscal 2028, we now expect custom revenue to more than double year over year, which is higher than our prior outlook. The growth is expected to be driven by three primary factors, including first, continued growth from our existing custom programs, including our flagship XPU. Second, over 10 XPU attached programs, reaching higher production volumes with demand continuing to exceed prior forecasts, particularly in NIC and CXL memory-attached use cases driven by increasing inference KV caching requirements. And third, the ramp of our new Tier 1 XPU program into volume production. This program continues to progress very well through development, and we already have firm requirements in place for all of next fiscal year. Since last quarter, we have won several new designs as customers continue to expand their adoption of custom silicon. We expect these new sockets to begin contributing incremental revenue following their typical development cycle of approximately two years. The level of custom engagement with key customers remains unprecedented, and we continue to be deeply involved in a broad set of significant additional opportunities. We remain confident in achieving our target model for our custom business to deliver on over $10 billion in revenue in fiscal 2029. Turning to our communications and other end markets. We delivered first quarter revenue of $585 million, up 3% sequentially, and 29% year-over-year. For the second quarter, we expect revenue to decline in the mid-single-digit range sequentially on a percentage basis, while growing in the high single-digit range year-over-year on a percentage basis. The communications and other end market has now largely recovered from inventory corrections at our customers, and going forward, we expect revenue in this end market to broadly reflect the underlying trends in our enterprise networking carrier and consumer businesses. In summary, our business continues to accelerate and we have increased our revenue outlook multiple times over the past several quarters. Today, we are again raising our outlook, increasing our fiscal 2027 revenue forecast by more than a half a billion dollars and our fiscal 2028 outlook by approximately $1.5 billion versus the projections we provided last quarter. Our data center revenue grew 46% year-over-year in fiscal 2026, and we are now projecting growth to accelerate to approximately 50% in fiscal 2027 and accelerate again to 55% in fiscal 2028. Our customers continue to signal robust demand, not only for this year, but for the next several years. Our results and outlook reinforce our confidence that Marvell is in a strong multi-year growth cycle with substantial runway ahead. Now today we sit here in a unique position to simultaneously, one, drive incredibly strong top line growth. Two, increase R&D investment strategically in the highest growth AI opportunities while continuing to drive operating leverage. Three, make necessary capacity investments to fuel the next wave of growth. And four, continue strong capital returns to shareholders. The Marvell team is firing on all cylinders with strong momentum expected to continue across the business. We have built a well-diversified company anchored by multiple large existing franchises and complemented by several emerging growth engines. I look forward to updating you on our progress as we continue this exciting journey as a key enabler of next generation AI infrastructure. With that, I'll turn the call over to Willem for more details on our recent results and outlook.