Executive Summary

Record Q3 revenue of $230.6M, +20% q/q and +104% y/y, with non-GAAP EPS of $0.49; strength was broad-based across Scorpio (fabric switches), Aries (PCIe 6 retimers/gearboxes) and Taurus (Ethernet SCMs), with PCIe Gen6 contributing >20% of revenue .
Q3 results beat S&P Global consensus: revenue $230.6M vs $206.4M*, and non-GAAP EPS $0.49 vs $0.39*; management cited upside from new program ramps and on-time customer deployments .
Q4 guide: revenue $245–$253M and non-GAAP EPS ≈$0.51; guide is roughly in line with consensus revenue $249.3M* and EPS $0.513*, with gross margin guided to ~75% on higher Taurus (hardware module) mix .
Strategic catalysts: expanding Scorpio P design-wins across multiple hyperscalers, initial Scorpio X production shipments in Q4 with a substantial 2026 ramp, and the aiXscale Photonics acquisition to add optical scale-up capability in the 2028–2029 timeframe .

What Went Well and What Went Wrong

What Went Well

Broad-based beat and record profitability: revenue +20% q/q to $230.6M and non-GAAP operating margin reached a record 41.7% .
PCIe Gen6 leadership and mix: Gen6 products (Scorpio and Aries) exceeded 20% of Q3 revenue, underscoring strong adoption as AI racks move to PCIe 6 .
Fabric switch momentum: “Scorpio P Series continued its initial volume ramp at our lead customer,” with new design wins across hyperscalers; management reiterated Scorpio X is the “anchor socket” for next-gen AI racks and begins initial production shipments in Q4 with broader ramp in 2026 .

What Went Wrong

Near-term gross margin headwind: Q4 non-GAAP GM guided to ~75% (vs 76.4% in Q3) due to increased Taurus hardware module mix; longer term, management continues to point to a 70% gross margin model as mix broadens .
GAAP/non-GAAP tax dynamics: Q3 GAAP tax was a benefit (driving GAAP net income above non-GAAP), but Q4 GAAP tax rate is guided to ~~45%, creating GAAP EPS (~~$0.20) well below non-GAAP EPS (~$0.51) .
Hyperscaler concentration and standards competition remain watch items; management emphasized diversification across >10 AI platforms and expects multi-standard coexistence (PCIe-based scale-up now; UALink additive 2027+) .

Financial Results

Results vs prior periods (GAAP and non-GAAP):

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Millions)	$113.086	$191.925	$230.575
GAAP Diluted EPS ($)	-$0.05	$0.29	$0.50
Non-GAAP Diluted EPS ($)	$0.23	$0.44	$0.49
GAAP Gross Margin %	77.7%	75.8%	76.2%
GAAP Operating Margin %	-7.9%	20.7%	24.0%
Non-GAAP Gross Margin %	77.8%	76.0%	76.4%
Non-GAAP Operating Margin %	32.4%	39.2%	41.7%

Q3 actuals vs S&P Global consensus:

Metric	Consensus	Actual
Revenue ($USD Millions)	$206.4*	$230.6
Primary EPS ($)	$0.390*	$0.49

Values marked with * are from S&P Global consensus (Primary EPS Consensus Mean, Revenue Consensus Mean). Values retrieved from S&P Global.

Additional KPIs and cash:

Operating cash flow: $78.2M in Q3; cash, cash equivalents, and marketable securities of $1.13B at quarter-end .
Balance sheet (Q3-end): Cash & cash equivalents $140.4M; marketable securities $994.0M .
Product commentary: Aries (Gen5/Gen6) and Taurus (400G) grew; Gen6 revenues exceeded 20% of Q3 revenue .

Note: Segment/product revenue not disclosed.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q3 2025	$203–$210	n/a	n/a
GAAP Gross Margin %	Q3 2025	~75%	n/a	n/a
GAAP OpEx ($M)	Q3 2025	$116–$120	n/a	n/a
GAAP Tax Rate %	Q3 2025	~10%	n/a	n/a
GAAP Diluted EPS ($)	Q3 2025	$0.23–$0.24	n/a	n/a
Non-GAAP Gross Margin %	Q3 2025	~75%	n/a	n/a
Non-GAAP OpEx ($M)	Q3 2025	$76–$80	n/a	n/a
Non-GAAP Tax Rate %	Q3 2025	~20%	n/a	n/a
Non-GAAP Diluted EPS ($)	Q3 2025	$0.38–$0.39	n/a	n/a
Revenue ($M)	Q4 2025	n/a	$245–$253	New
GAAP Gross Margin %	Q4 2025	n/a	~75%	New
GAAP OpEx ($M)	Q4 2025	n/a	~$129–$134	New
GAAP Tax Rate %	Q4 2025	n/a	~45%	New
GAAP Diluted EPS ($)	Q4 2025	n/a	~0.20	New
Non-GAAP Gross Margin %	Q4 2025	n/a	~75%	New
Non-GAAP OpEx ($M)	Q4 2025	n/a	~$85–$90	New
Non-GAAP Tax Rate %	Q4 2025	n/a	~15%	New
Non-GAAP Diluted EPS ($)	Q4 2025	n/a	~0.51	New

Company guidance vs S&P Global consensus (Q4 2025):

Metric	Consensus	Company Guidance
Revenue ($USD Millions)	$249.3*	$245–$253
Primary EPS ($)	$0.513*	~0.51 (non-GAAP)

Values marked with * are from S&P Global consensus (Primary EPS Consensus Mean, Revenue Consensus Mean). Values retrieved from S&P Global.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Scale-up fabric (Scorpio X) as “anchor socket”	Q1: X-Series is central to next-gen AI racks; pre-production shipments late Q1; multi-hundred $ per accelerator content . Q2: New Scorpio design-wins; NVLink Fusion ecosystem; UALink education .	Initial X shipments begin Q4; volume ramp in 2026; engaged with >10 AI platform providers .	Accelerating
PCIe Gen6 adoption	Q1: Aries 6 ramp; gearbox added to bridge Gen5/Gen6 . Q2: PCIe 6 portfolio ramping in volume; first-to-market .	Gen6 revenues >20% of Q3 revenue (Scorpio + Aries) .	Stronger mix
UALink roadmap	Q1: UALink 1.0 released; sampling 2026, revenue 2027 . Q2: UALink evangelism; promoter member; ecosystem messaging .	UALink remains additive to PCIe-based scale-up; product portfolio targeted for 2H26 availability, early revenue 2027 .	On track
Taurus Ethernet SCMs (400G→800G)	Q1: 400G growth; 800G to drive next leg . Q2: 400G growth backdrop .	400G strong in Q4; 800G qualifications point to early 2026 impact .	400G strong; 800G incoming
China exposure	Q1: China <10% of revenue; export restrictions moderate headwind .	Demand for PCIe-based scale-up higher in China; larger GPU counts (16–24) can increase Astera content .	Mixed but constructive
Optical scale-up	Q1: PCIe-over-optics demos; copper-first strategy .	aiXscale Photonics acquisition to build optical capability; earliest material optical scale-up revenue 2028–2029 .	Long-term option

Management Commentary

“Astera Labs delivered strong financial results in Q3 with revenue growing by 20% sequentially to a new record level of $230.6 million…demand and upside across our signal conditioning, smart cable module (SCM), and switch fabric portfolios” .
“Overall, our PCIe 6 solutions contributed in excess of 20% of our Q3 revenues, illustrating our market-leading position” .
“We expect Q4 non-GAAP gross margins to be approximately 75% with the increased mix of our Taurus hardware modules in the quarter” .
“Scorpio X Series…we expect initial volumes [in Q4]…with a volume ramp expected throughout 2026” .
“We…entered into a definitive agreement to acquire [ai]Xscale Photonics…to develop photonic scale-up solutions…[earliest] scale-up optical connections would be in the 2028–2029 timeframe” .

Q&A Highlights

Scale-up pipeline health and durability: engaged with >10 AI platform providers; design wins are multi-generation with potential through 2029; UALink revenue contribution expected from 2027 .
Margin framework: Q4 GM ~75% on Taurus mix; over time, broader portfolio mix implies trending toward 70% long-term GM, though operating leverage persists .
Scorpio revenue mix: ~10% for FY25; Q4 exit rate closer to ~20% as P-Series grows and X-Series begins initial volumes .
China: PCIe-based scale-up demand supports larger GPU clusters (16–24 GPUs), increasing Astera content across switching and retimers .
Ethernet SCMs: 400G drives near-term growth; 800G revenue impact expected to start in early 2026 as qualifications complete .

Estimates Context

Q3 beats vs S&P Global consensus: revenue $230.6M vs $206.4M*; non-GAAP EPS $0.49 vs $0.39*; breadth across three product lines and successful customer deployments drove upside .
Q4 guide vs S&P Global consensus: revenue $245–$253M vs $249.3M*; non-GAAP EPS ≈$0.51 vs $0.513*; largely in line. GM guided lower (~75%) on mix to Taurus; consensus may modestly adjust mix/GM assumptions but topline and EPS appear aligned .
Values marked with * are from S&P Global consensus (Primary EPS Consensus Mean, Revenue Consensus Mean). Values retrieved from S&P Global.

Key Takeaways for Investors

Beat-and-raise narrative: strong Q3 beat on revenue and EPS with record non-GAAP operating margin (41.7%); Q4 revenue/EPS guide in line while gross margin normalizes on product mix .
Structural PCIe Gen6 tailwind: Gen6 already >20% of revenue; Aries + Scorpio content per accelerator rises as AI racks standardize on PCIe 6 .
Fabric switch optionality: Scorpio P ramps now; Scorpio X initial production shipments start Q4 with a 2026 ramp—positioning switches as an “anchor socket” that pulls through broader Astera content (retimers, SCMs, software) .
Standards strategy: PCIe now, UALink additive from 2027; multi-standard coexistence expands TAM and reduces ecosystem risk .
Optical as long-dated call option: aiXscale adds critical photonics packaging; earliest optical scale-up revenue expected 2028–2029 .
Watch list: near-term GM mix headwinds (higher Taurus); hyperscaler concentration; geopolitical/export dynamics (China) offset by higher PCIe-based scale-up demand and larger cluster sizes .
Execution bar: Continued on-time customer deployments and successful new program ramps are key to sustaining outperformance into 2026 .

Supporting Data Details

Q3 selected P&L (GAAP and non-GAAP):

Revenue $230.575M; GAAP GM 76.2%; GAAP OP $55.4M; GAAP diluted EPS $0.50 .
Non-GAAP GM 76.4%; non-GAAP OP $96.1M; non-GAAP diluted EPS $0.49; non-GAAP tax rate ~18% .
Stock-based compensation in Q3: $40.739M (COGS $0.379M; R&D $21.711M; S&M $9.361M; G&A $9.288M) .

Q4 guidance reconciliation (illustrative):

Non-GAAP EPS ≈$0.51 with non-GAAP GM ~75%, non-GAAP OpEx $85–$90M, non-GAAP tax ~15%; GAAP EPS ≈$0.20 with GAAP tax ~45% .

Other Q3-relevant releases:

aiXscale Photonics acquisition: adds fiber-chip coupling tech to enable future photonic scale-up solutions .
Arm Total Design: collaboration to accelerate custom SoC development using Astera’s multi-protocol chiplet connectivity .
Leo CXL controllers on Azure M-series VMs (private preview): enables CXL-attached memory evaluation, addressing memory wall for in-memory DBs and AI inference workloads .

Astera Labs, Inc. (ALAB)·Q3 2025 Earnings Summary