Marvell FY25Q3 corresponds to actual period August/October 2024.
Marvell FY25Q3 Results:
Revenue $1.515B, up 7% year over year and 19% sequentially, second consecutive quarter of sequential growth.
GAAP gross margin 23%, down 15.9 percentage points year over year, mainly due to one-time charges. Non-GAAP gross margin 60.5%, up 8.9 percentage points year over year, down 1.4 percentage points sequentially.
Non-GAAP operating income $450M, up 7% year over year. Non-GAAP operating margin 29.7%.
Non-GAAP net income $373M, up 5% year over year. Non-GAAP net margin 24.6%.
GAAP days in inventory 67 days, down 40 days sequentially, second consecutive quarter of sequential decline.
Mainland China revenue share 43%, US 17%, Taiwan 13%, Thailand 5%, Japan 4%, Singapore 3%, Malaysia 3%, Finland 2%. Top customer 14% of revenue, second customer 13%.
$200M in share repurchases and $52M in dividends this quarter;
Segment Detail, Q3:
Data center revenue $1.001B, up 98% year over year, 73% of total revenue.
Driven by custom silicon ramp and strong optical demand. Optical revenue grew double-digits sequentially. 800G PAM bookings strong. Industry's first 5nm 1.6T PAM DSP shipping. Design win momentum strong, accelerating ramp next year. First 3nm 1.6T PAM DSP launched, 20% power reduction. 800G DSP for AEC market ramping; 1.6T DSP sampling. Strong optical growth to continue next year.
First two custom silicon products ramped this quarter. Strong demand for custom silicon in both AI accelerators and CPUs. 2024/2025 custom silicon incremental revenue mostly from AI. Q3 custom silicon operating margin ~30%.
Recently announced 5-year partnership with AWS covering custom silicon/optical DSP/AEC DSP/PCIe Retimer/DCI optical modules/Ethernet switch.
Enterprise networking revenue $151M, down 44% year over year, 10% of revenue. Carrier revenue $85M, down 73% year over year, 6% of revenue. Enterprise networking and carrier markets beginning to recover; carrier recovery stronger than industry, driven by new product ramps.
Consumer revenue $97M, down 43% year over year, 6% of revenue.
Automotive/industrial revenue $83M, down 22% year over year, 5% of revenue.
Outlook:
Q4 data center revenue guided to grow low-mid 20% sequentially (~$1.4B, ~42% of Intel data center revenue, ~35% of AMD data center revenue), driven primarily by custom silicon; optical continues to grow.
Q4 carrier and enterprise networking combined revenue guided to grow mid-teens% sequentially.
Q4 automotive/industrial revenue guided to grow low-to-mid single digits sequentially.
Q4 consumer revenue guided to decline mid-teens% sequentially.
FY24 AI revenue expected to significantly exceed $1.5B target, with custom silicon >$500M. FY25 AI revenue expected to significantly exceed $2.5B target, with custom silicon >$1B (management implies beating targets by a lot, so why not raise the numbers?).
Third custom silicon customer (Microsoft AI chip) to ship in 2026, scale larger than Amazon Trainium2/Inferentia2 + Google Axion CPU combined.
Despite rapid custom silicon ramp, with sustained strong optical growth and non-data-center recovery, FY25 gross margin still has a chance to hold around 60%.
Overall, Marvell's legacy businesses finally grew sequentially, custom silicon finally ramped, and management hopes for full-throttle execution in 2025.
Current FY24 guidance aligns with prior estimates. For FY25, one can model traditional business recovering to 2023 levels plus >$1B AI revenue growth, optimistically implying ~$8.5B revenue and ~$2.2B Non-GAAP net income. At ~$100B market cap, that's ~47x PE.