Marvell Technology, Inc. Q2 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q2 FY2020 revenue: $657M, above midpoint of guidance ($650M).
  • GAAP loss per share: $0.09 (flat vs. Q1). Non-GAAP EPS: $0.16 (slightly above midpoint).
  • GAAP operating expenses: $397M, largely due to acquisition/divestiture-related charges.
  • Non-GAAP operating expenses: $280M, achieving synergy and cost reduction goals two quarters ahead of schedule.
  • Business mix: Networking 50%, Storage 42%, Other 8%.
  • Overall macro softness and U.S. export restrictions on Huawei continued to impact results.

Key Business Trends

Networking
  • Q2 Networking revenue: $330M, down 3% sequentially due to Huawei restrictions and 4G-to-5G transition pauses.
  • First 5G product shipments (Fusion baseband, OCTEON processors, Ethernet switches/PHYs) begin in Q3—one quarter ahead of plan.
  • Full 5G production ramp expected in Q4 with significant revenue scaling into FY2021.
  • Marvell estimates long-term 5G revenue potential exceeding $600M annually based on current design wins across multiple customers.
  • New 12.8 Tb switch platform secured design wins; production ramps late next fiscal year.
  • Enterprise networking showing softness; one major enterprise customer reduced forecasts significantly.
  • China networking demand strong but potentially inflated by inventory build due to supply concerns.
Storage

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Operator: Good day, ladies and gentlemen, and welcome to the Q2 2020 Marvell Technology Group's Earnings Conference Call.At this time all participants are in a listen-only mode. Following Management's prepared remarks we will host a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's conference call is being recorded for replay purposes.It is now my pleasure to turn the conference over to Mr. Ashish Saran, Head of Investor Relations at Marvell. You may begin. Ashish Saran: Thank you and good afternoon everyone. Welcome to Marvell's second 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 and non-GAAP financial measures is available on our website in the Investor Relations section.With that, I’ll turn the call over to Matt

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