Marvell Technology, Inc. Q1 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Strategic Portfolio Updates

  • Announced three major portfolio changes:
    • Acquisition of Aquantia: expands high‑speed Ethernet PHY portfolio; strengthens Enterprise and Automotive Ethernet capabilities.
    • Acquisition of Avera Semiconductor: adds ASIC design capabilities; immediate synergies in 5G and future custom silicon opportunities.
    • Divestiture of Wi-Fi business to NXP: selling ~$300M annual revenue at a higher multiple for stronger economic value; proceeds pay for both acquisitions and add ~$500M net cash to balance sheet.
  • Post-transactions: replacing ~$300M of Wi-Fi revenue with >$400M from Aquantia + Avera on a faster growth trajectory and lower revenue multiple.
  • Positions Marvell more deeply in 5G, Automotive Ethernet, Custom Silicon, and Infrastructure markets.

Q1 FY2020 Financial Highlights

  • Revenue: $662M, slightly above midpoint of guidance.
  • Networking revenue: $341M, down 12% sequentially (Q4 to Q1), consistent with expectations of seasonality and inventory correction.
  • Storage revenue: $279M, down 12% sequentially; slightly better than expected due to temporary customer buffer building.
  • GAAP gross margin: 54.6%. Non-GAAP gross margin: 64.1%.
  • Non-GAAP EPS: $0.16 (top end of guidance).

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Company Representatives: Matt Murphy - President, Chief Executive Officer Jean Hu - Chief Financial Officer Ashish Saran - Vice President of Investor Relations Operator: Good day, ladies and gentlemen, and welcome to the First Quarter 2020 Marvell Technology Group Ltd. Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference Mr. Ashish Saran, Vice President of Investor Relations. Sir, you may begin. Ashish Saran: Thank you and good afternoon everyone. Welcome to Marvell first quarter fiscal year 2020 earnings call. Joining me today are Matt Murphy, Marvell’s President and CEO, and Jean Hu our CFO. I want to remind everyone that certain comments today may include forward-looking statements which are subject to significant risks and uncertainties and which 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. A reconciliation between our GAAP a

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