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Marvell Technology, Inc. (MRVL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25 revenue $1.516B (+19% q/q, +7% y/y) with non-GAAP EPS $0.43; outperformance vs company midpoint driven by stronger custom AI silicon ramp and robust electro‑optics demand .
  • Guidance implies another strong step-up: Q4 FY25 revenue $1.800B ±5% (+19% q/q), non-GAAP GM ~60%, non-GAAP EPS $0.59 ±$0.05; GAAP EPS turning positive ($0.16 ±$0.05) .
  • Strategic catalysts: five-year, multi-generational AWS agreement spanning custom AI and networking silicon, and launch of Ara, the industry’s first 3nm 1.6Tbps PAM4 interconnect platform (power −20% vs prior gen), reinforcing AI-led data center positioning .
  • Mix shift toward custom AI silicon modestly diluted non-GAAP GM vs guidance, but operating leverage expanded (non-GAAP OM 29.7% in Q3), with strong FCF ($536M) and increased buybacks ($200M) .

What Went Well and What Went Wrong

What Went Well

  • Record data center revenue $1.1B (+98% y/y, +25% q/q) driven by custom AI silicon volume production and strong optics bookings; management frames a “new era of growth” .
  • AWS five-year, multi-generational collaboration expands custom AI and networking silicon footprint; cloud-first EDA adoption accelerates time-to-market .
  • Operating leverage: non-GAAP EPS +43% q/q (to $0.43) vs +19% revenue; Q4 guide implies continued leverage and return to GAAP profitability .

What Went Wrong

  • Non-GAAP GM 60.5% came in slightly below guidance due to higher mix of custom silicon; GAAP GM compressed to 23% on large restructuring/impairment charges in Q3 .
  • Enterprise networking and carrier remain below end-market consumption despite sequential recovery; management expects continued but paced normalization .
  • Significant restructuring charge (~$750M aggregate; ~3/4 non-cash) to reallocate investment toward data center, weighing GAAP results in Q3 .

Financial Results

MetricQ3 FY24Q1 FY25Q2 FY25Q3 FY25
Revenue ($USD Billions)$1.419 $1.161 $1.273 $1.516
GAAP Gross Margin (%)38.9% 45.5% 46.2% 23.0%
Non-GAAP Gross Margin (%)60.6% 62.4% 61.9% 60.5%
GAAP Diluted EPS ($)-0.19 -0.25 -0.22 -0.78
Non-GAAP Diluted EPS ($)0.41 0.24 0.30 0.43
Non-GAAP Operating Margin (%)29.8% 23.3% 26.1% 29.7%
Cash from Operations ($USD Millions)$503.0 $324.5 $306.4 $536.3

Segment revenue breakdown and mix:

End Market Revenue ($USD Millions)Q3 FY24Q2 FY25Q3 FY25
Data Center$555.8 $880.9 $1,101.1
Enterprise Networking$271.1 $151.0 $150.9
Carrier Infrastructure$316.5 $75.9 $84.7
Consumer$168.7 $88.9 $96.5
Automotive/Industrial$106.5 $76.2 $82.9
Total$1,418.6 $1,272.9 $1,516.1
Mix (% of Total)Q3 FY24Q2 FY25Q3 FY25
Data Center39% 69% 73%
Enterprise19% 12% 10%
Carrier22% 6% 6%
Consumer12% 7% 6%
Auto/Industrial8% 6% 5%

Selected KPIs:

KPIQ3 FY24Q2 FY25Q3 FY25
Cash & Cash Equivalents ($USD Millions)$725.6 $808.7 $868.1
Stock Repurchases ($USD Millions)$50.0 $175.0 $200.0
Dividends Paid ($USD Millions)$51.8 $51.9 $52.0
Inventory ($USD Millions)n/a$817.8 $859.4
Gross Debt-to-EBITDA (x)n/an/a2.23x
Net Debt-to-EBITDA (x)n/an/a1.76x

Narrative drivers:

  • Outperformance vs guidance midpoint (+$66M) on custom AI ramp and double-digit sequential growth in electro‑optics; record data center revenue .
  • Non-GAAP GM modestly below guidance given higher custom silicon mix; operating margin expanded with tight OpEx control .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated RevenueQ3 FY25$1.450B ±5% ——
Consolidated RevenueQ4 FY25—$1.800B ±5% Raised q/q
GAAP Gross MarginQ3 FY25~47.2% ——
GAAP Gross MarginQ4 FY25—~50% Raised vs Q3 guide
Non-GAAP Gross MarginQ3 FY25~61% ——
Non-GAAP Gross MarginQ4 FY25—~60% Slightly Lower vs Q3 guide
GAAP OpEx ($M)Q3 FY25~$693 ——
GAAP OpEx ($M)Q4 FY25—~$710 Raised vs Q3
Non-GAAP OpEx ($M)Q3 FY25~$465 ——
Non-GAAP OpEx ($M)Q4 FY25—~$480 Raised vs Q3
GAAP Diluted EPSQ3 FY25$(0.09) ±$0.05 ——
GAAP Diluted EPSQ4 FY25—$0.16 ±$0.05 Raised (return to GAAP profit)
Non-GAAP Diluted EPSQ3 FY25$0.40 ±$0.05 ——
Non-GAAP Diluted EPSQ4 FY25—$0.59 ±$0.05 Raised vs Q3
Basic/Diluted Shares (M)Q3 FY25867 / 875 ——
Basic/Diluted Shares (M)Q4 FY25—867 / 877 Maintained
OI&E ($M)Q4 FY25—~46 New
Non-GAAP Tax RateQ4 FY25—~7% Maintained
AI Revenue Target (FY25)FY25~$1.5B target (Apr AI day) “Significantly exceed” Raised (qualitative)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 FY25)Current Period (Q3 FY25)Trend
Custom AI silicon rampQ1: “start of ramp” complementing optics; guide +8% q/q on AI . Q2: began ramp; expect all end-markets to grow q/q with AI drivers .Volume production; stronger-than-forecast ramp; drives record DC revenue and Q4 step-up .Accelerating
Electro‑optics (800G→1.6T)Ongoing leadership; 800G strong; 1.6T 5nm platform highlighted (external PRs) .Double-digit sequential growth; shipping 1.6T 5nm; launched 3nm Ara (−20% power) .Advancing node/mix
Enterprise & Carrier recoveryQ1: anticipated beginning of recovery in H2 . Q2: guide return to growth in Q3 .Q3 up 4% combined q/q; Q4 guide mid-teens q/q; still below consumption .Gradual normalization
AWS/Cloud partnershipsNot highlighted in Q1/Q2 earnings PRs.5-year, multi‑generational AWS agreement; EDA-in-cloud to accelerate design .Strategic deepening
Margin/LeverageQ1/Q2 non-GAAP GM ~62% and OM improving .Non-GAAP GM 60.5% (mix impact); OM 29.7%; Q4 OM guide up despite slight GM compression .Leverage up
Capital returns & SBCQ1/Q2: increased buybacks; SBC decline targeted .Q3 repurchase $200M; focus on reducing SBC as % revenue .Sustained returns

Management Commentary

  • “Marvell is entering a new era of growth driven by the substantial volume production ramp of our custom AI silicon programs, along with continued strong growth in optics.” — Matt Murphy, CEO .
  • “This agreement represents a significant step-up in the expected volume of business between [AWS and Marvell]... multi‑generational in nature.” — Matt Murphy on AWS .
  • “Non-GAAP gross margin was 60.5%, slightly below our guidance as we saw higher than forecasted revenue from custom silicon... Non-GAAP operating margin was 29.7%.” — Willem Meintjes, CFO .
  • “We made additional decisions to further redirect investments towards the data center... resulting in an aggregate restructuring charge of $750 million... ~3/4 non‑cash.” — CFO .

Q&A Highlights

  • AI revenue trajectory: Management expects FY25 AI revenue to “significantly exceed” the prior $1.5B target; FY26 tracking ahead of prior $2.5B framework, driven by demand, not supply constraints .
  • Customer diversification: Multiple large volume opportunities across accelerator and compute; third large customer ramp expected in future; CEO reiterates personal commitment to Marvell .
  • Optics inventory and 1.6T transition: Demand/bookings remain strong; 1.6T contributes next year while 800G cycle persists through FY26 .
  • Enterprise/carrier path back to $2B run rate: Recovery accelerating; carrier driven by new Layer‑2 processor socket ramp; still shipping below consumption .
  • Custom TAM and competition: $40B custom AI TAM; barriers to entry (IP, first‑pass silicon at advanced nodes, scale, manufacturing); coexistence with merchant offerings on TCO .
  • Margins/leverage outlook: Path to maintain ~60% non‑GAAP GM through next year, with operating margin rising toward long‑term range as revenue outgrows OpEx .

Estimates Context

  • S&P Global Wall Street consensus estimates were unavailable due to data access limits at the time of retrieval. As a result, estimate comparisons are anchored to company guidance and reported actuals; S&P Global consensus comparisons are not included in the tables above.

Key Takeaways for Investors

  • AI-led data center transformation is delivering: record DC revenue ($1.1B; 73% of mix) and a Q4 guide for +19% q/q revenue growth, underscoring sustained demand for custom AI silicon and optics .
  • Mix shift to custom AI dilutes GM modestly but expands operating leverage; non‑GAAP OM reached 29.7% in Q3, with Q4 OM expected to rise despite ~60% GM guide .
  • Strategic AWS agreement and 3nm Ara launch strengthen medium‑term moat across compute and interconnect; expect incremental bookings and content growth in 800G/1.6T cycles .
  • Multimarket businesses (enterprise/carrier) are recovering; Q4 guide mid‑teens sequential growth suggests margin tailwind as shipments re‑align with consumption .
  • Capital allocation remains supportive: $536M operating cash flow, $200M buybacks, dividends maintained; debt metrics improving with EBITDA growth (gross/net debt-to-EBITDA 2.23x/1.76x) .
  • FY25 AI revenue expected to exceed $1.5B target; FY26 outlook tracking ahead as multi‑customer ramps progress, supporting estimate revisions higher when Street data is accessible .
  • Near-term trading implications: Q4 acceleration and AWS partnership are positive catalysts; watch GM trajectory vs custom mix and pace of enterprise/carrier normalization for margin sensitivity .