Core Insights - Astera Labs (NASDAQ: ALAB) stock surged 20.18% in premarket trading, reaching $162.89 after reporting strong Q2 earnings that exceeded market expectations [1][3]. Financial Performance - The company reported record quarterly revenue of $191.9 million for Q2 2025, reflecting a 150% year-over-year increase and a 20% quarter-over-quarter rise [3]. - Non-GAAP diluted earnings per share were $0.44, significantly above the forecasted $0.11, with net income of $51.2 million compared to a net loss of $7.5 million in the same period last year [3][4]. Growth Drivers - CEO Jitendra Mohan attributed the strong performance to the ramping of the PCIe 6 product portfolio for customized AI systems, new design wins for Scorpio Fabric Switches, and robust demand for the signal conditioning portfolio [4]. - Evercore ISI highlighted three key growth drivers: the Scorpio P Series ramp exceeding expectations, the potential increase in content per accelerator with the X Series addition, and strong customer interest across various production stages [5][6]. Market Outlook - Evercore ISI raised its price target for Astera Labs to $215 from $104, indicating confidence in the company's performance within the AI product cycle [5]. - The firm projects a 72% growth in cloud capital expenditure in 2025, positioning Astera Labs to exceed expectations over the next one to two years [7]. - Analyst data from TipRanks shows Astera Labs as a Strong Buy with 12 Buy ratings, 2 Hold ratings, and no Sell ratings [7]. Price Targets - The average 12-month price target for Astera Labs is $116.58, indicating a -28.44% downside from the current price, with targets ranging from $75.00 to $200.00 [8].

Core Insights - Astera Labs reported record GAAP revenue of $191.9 million for Q2 FY2025, exceeding analyst expectations of $172.49 million, with non-GAAP EPS at $0.44, surpassing estimates of $0.32, indicating strong sales and profitability growth driven by demand for its PCIe 6 portfolio and Scorpio fabric switches [1][2][5] Financial Performance - Non-GAAP EPS reached $0.44, a 238.5% increase from $0.13 in Q2 2024 [2] - GAAP revenue of $191.9 million represented a 149.6% year-over-year increase from $76.9 million [2] - Operating income improved to $39.8 million from a loss of $24.3 million in the previous year [2] - Non-GAAP operating margin increased by 14.8 percentage points to 39.2% compared to 24.4% in Q2 2024 [2] - Operating cash flow was reported at $135 million, the highest ever for the company [2][8] Company Overview and Strategic Focus - Astera Labs specializes in high-speed connectivity semiconductors and system solutions for data centers and cloud infrastructure, centered around its Intelligent Connectivity Platform [3] - The company emphasizes technological innovation, strategic partnerships, and expanding its product offerings across leading AI platforms [4] Growth Drivers and Key Developments - The surge in demand for the PCIe 6 connectivity portfolio and the Scorpio fabric switch family were key growth drivers, with new design wins and production ramping up [5][6] - Collaborations with major industry players like NVIDIA and AMD enhance product interoperability and position the company as a contributor to next-generation open standards [7] Product Portfolio and Segment Performance - The Aries product family includes PCIe/CXL retimers and gearbox products, ensuring signal integrity and compatibility across different generations of technology [10] - The Taurus product line features Ethernet smart cable modules, with momentum expected to grow as the market shifts towards 100G-capable AI infrastructure [11] - The Scorpio product line focuses on smart fabric switches for AI accelerators, with the P-Series and X-Series designed for modular rack applications [11][12] Outlook - Management projects GAAP revenue between $203 million and $210 million for Q3 FY2025, with gross margins expected to remain near 75% [13] - Non-GAAP diluted EPS is guided between $0.38 and $0.39, with operating expenses anticipated to rise as the company invests in product development [13]

Core Viewpoint - Astera Labs, Inc. reported quarterly earnings of $0.44 per share, exceeding the Zacks Consensus Estimate of $0.33 per share, and showing significant growth from $0.13 per share a year ago, indicating a strong performance in the recent quarter [1][2]. Financial Performance - The company achieved revenues of $191.93 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 11.12%, and showing a substantial increase from $76.85 million in the same quarter last year [2]. - Over the last four quarters, Astera Labs has consistently exceeded consensus EPS estimates [2]. Stock Performance - Since the beginning of the year, Astera Labs shares have increased by approximately 4.1%, while the S&P 500 has gained 7.6%, indicating underperformance relative to the broader market [3]. - The current Zacks Rank for Astera Labs is 3 (Hold), suggesting that the stock is expected to perform in line with the market in the near future [6]. Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.34 on revenues of $181.02 million, and for the current fiscal year, it is $1.35 on revenues of $702.43 million [7]. - The outlook for the Internet - Software industry, where Astera Labs operates, is currently in the top 32% of over 250 Zacks industries, which may positively influence the stock's performance [8].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __ to __ Commission file number 001-41979 Astera Labs, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdicti ...

Financial Data and Key Metrics Changes - Astera Labs reported quarterly revenue of $191.9 million, representing a 20% increase from the previous quarter and a 150% increase compared to Q2 of the previous year [7][19] - Non-GAAP gross margin for Q2 was 76%, up 110 basis points from the previous quarter [20] - Non-GAAP operating margin for Q2 was 39.2%, an increase of 550 basis points from the previous quarter [21] - Cash flow from operating activities for Q2 was $135.4 million, with cash, cash equivalents, and marketable securities totaling $1.07 billion at the end of the quarter [21] Business Line Data and Key Metrics Changes - The Scorpio product line exceeded 10% of total revenue, marking it as the fastest ramping product line in the company's history [8] - The Taurus product family showed strong growth driven by demand for AEC supporting the latest merchant GPUs and general-purpose compute platforms [9] - The ADX product family continued to diversify across GPU and custom ASIC-based systems for various applications [8] Market Data and Key Metrics Changes - Astera Labs is engaged with over 10 unique AI platform and cloud infrastructure providers for their scale-up networking requirements [15] - The transition to AI infrastructure 2.0 is expected to create a market opportunity of nearly $5 billion by 2030 for Astera Labs [12] Company Strategy and Development Direction - The company aims to deliver a purpose-built connectivity platform that includes silicon, hardware, and software solutions for rack-scale AI deployments [13] - Astera Labs is focusing on increasing its addressable dollar content in AI servers by expanding its product lines [13] - The company is strategically crafting its roadmaps to lead the transition to AI infrastructure 2.0, which emphasizes open, standard-based, AI rack-scale platforms [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong momentum of the business and the prospects for continued diversification and scale [12] - The company anticipates that the Scorpio X Series will begin shipping for customized scale-up architectures in late 2025, with high-volume production expected in 2026 [15] - Management highlighted the importance of partnerships and collaborations with major players like NVIDIA and AMD to support the evolving AI infrastructure [9][10] Other Important Information - The company is committed to supporting its customers as they choose architectures and technologies that best suit their AI performance goals [12] - Astera Labs is actively involved in the UA Link consortium, promoting an open ecosystem for scale-up networking [63] Q&A Session Summary Question: What has been the biggest differentiator for the Scorpio family of switching products? - Management highlighted three key factors: closeness to customers, execution track record, and the use of the Cosmos software suite to optimize product performance [28][30] Question: What is the reception and interest level on UA Link? - Management noted tremendous interest in UA Link due to its technical advantages and the open ecosystem it supports, with over 10 customers exploring its use [34][37] Question: Can you discuss the profile of customers using Scorpio products? - Management indicated a broad base of customers leveraging Scorpio P Series for scale-out connectivity and Scorpio X Series for scale-up networking, with significant interest in additional products [41][43] Question: What is the expected tax rate for the upcoming quarters? - The tax rate for Q3 is expected to be around 20% due to recent tax law changes, normalizing to approximately 15% in Q4 and around 13% long-term [46] Question: How does Astera Labs view the competition from Ethernet in scale-up networking? - Management emphasized that while Ethernet is effective for scale-out, it was not designed for scale-up, and Astera Labs' solutions like UA Link offer significant advantages in terms of performance and ecosystem openness [95][96]

Financial Data and Key Metrics Changes - Astera Labs reported quarterly revenue of $191.9 million, representing a 20% increase from the previous quarter and a 150% increase compared to Q2 of the previous year [6][20]. - Non-GAAP gross margin for Q2 was 76%, up 110 basis points from the previous quarter [22]. - Non-GAAP operating margin for Q2 was 39.2%, an increase of 550 basis points from the previous quarter [22]. - Cash flow from operating activities for Q2 was $135.4 million, with cash, cash equivalents, and marketable securities totaling $1.07 billion at the end of the quarter [23]. Business Line Data and Key Metrics Changes - The Scorpio product line, particularly the Scorpio PCD switches, exceeded 10% of total revenue, marking it as the fastest ramping product line in the company's history [6][7]. - The Taurus product family showed strong growth driven by AEC demand, supporting the latest merchant GPUs and general-purpose compute platforms [9]. - The ADX product family continued to diversify across GPU and custom ASIC-based systems, contributing to overall revenue growth [8]. Market Data and Key Metrics Changes - Astera Labs is engaged with over 10 unique AI platform and cloud infrastructure providers for their scale-up networking requirements [16]. - The company anticipates that the transition to AI infrastructure 2.0 will create a market opportunity of nearly $5 billion by 2030 [12]. - The company is strategically positioned to support the AI infrastructure transformation, which is still in its early stages [12]. Company Strategy and Development Direction - Astera Labs aims to deliver a comprehensive connectivity platform that includes silicon, hardware, and software solutions for rack-scale AI deployments [13]. - The company is focused on increasing its addressable dollar content in AI servers by expanding its product lines [14]. - Astera Labs is committed to developing and commercializing a broad portfolio of UA Link connectivity solutions, which is expected to be a long-term growth vector [18]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong momentum of the business and the prospects for continued diversification and scale [12]. - The transition to AI infrastructure 2.0 is seen as a significant opportunity for revenue growth, with expectations for Scorpio X Series revenue to outgrow Scorpio P Series revenue [16][17]. - The company is optimistic about the adoption of UA Link, with multiple hyperscalers showing strong interest [38]. Other Important Information - Non-GAAP operating expenses for Q2 were $17.7 million, up approximately $5 million from the previous quarter, reflecting continued investment in R&D [22]. - The company expects Q3 revenues to range between $200 million and $210 million, representing a 6% to 9% increase from Q2 [24]. Q&A Session Summary Question: What has been the biggest differentiator for the Scorpio family of switching products? - Management highlighted three key factors: closeness to customers, execution track record, and the use of the Cosmos software suite to optimize product performance [29][30]. Question: What is the reception and interest level on UA Link? - Management noted tremendous interest in UA Link due to its technical advantages and the open ecosystem it supports, with over 10 customers looking to leverage these open standards [36][38]. Question: Can you discuss the profile of the types of customers using Scorpio? - Management indicated a broad base of customers leveraging Scorpio P Series for scale-out connectivity and Scorpio X Series for scale-up networking, with significant interest in surrounding products [44][45]. Question: What is the expected tax rate for the upcoming quarters? - The tax rate for Q3 is expected to be around 20% due to recent tax law changes, with a normalization to approximately 15% in Q4 and a long-term expectation of around 13% [48]. Question: How does the latency of Broadcom's Tomahawk Ultra switch compare to Astera's products? - Management stated that Astera's products achieve lower latencies than Broadcom's offerings, emphasizing the importance of end-to-end latency in AI applications [106].

[Astera Labs Q2 FY2025 Financial Results Overview](index=1&type=section&id=Astera%20Labs%20Q2%20FY2025%20Financial%20Results%20Overview) [Executive Summary & CEO Commentary](index=1&type=section&id=Executive%20Summary%20%26%20CEO%20Commentary) Astera Labs announced strong preliminary Q2 FY2025 financial results, driven by 20% sequential revenue growth and significant upside to earnings and cash flow - Astera Labs delivered strong financial results in Q2 with sequential revenue growth of **20 percent**, driving meaningful upside to earnings and cash flow from operations[3](index=3&type=chunk) - Successfully executed the next step in growth journey by ramping PCIe 6 product portfolio into volume production for customized rack-scale AI systems[3](index=3&type=chunk) - Added multiple new design wins for Scorpio Fabric Switches and saw strong demand for signal conditioning portfolio driven by PCIe scale-up and Ethernet scale-out connectivity applications in custom ASIC platforms[3](index=3&type=chunk) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Astera Labs achieved record quarterly revenue of $191.9 million, a 20% sequential and 150% year-over-year increase, alongside record operating cash flow generation of $135 million Q2 2025 Financial Performance | Metric | Q2 2025 (GAAP) | Q2 2025 (Non-GAAP) | | :-------------------------- | :--------------- | :------------------- | | Revenue | $191.9 million | $191.9 million | | Gross Margin | 75.8% | 76.0% | | Operating Income | $39.8 million | $75.2 million | | Operating Margin | 20.7% | 39.2% | | Net Income | $51.2 million | $78.0 million | | Diluted EPS | $0.29 | $0.44 | - Record quarterly revenue of **$191.9 million**, up **20% QoQ** and **150% YoY**[4](index=4&type=chunk)[5](index=5&type=chunk) - Record operating cash flow generation of **$135 million**[4](index=4&type=chunk) [Q2 2025 and Recent Business Highlights](index=3&type=section&id=Q2%202025%20and%20Recent%20Business%20Highlights) Astera Labs expanded strategic collaborations with NVIDIA and AMD for AI infrastructure, hosted a UALink webinar, and partnered with Alchip Technologies for compute and connectivity solutions - Expanded collaboration with NVIDIA to advance the NVLink Fusion ecosystem and expand options for hyperscalers to deploy high-performance, scale-up networks based on NVIDIA NVLink technology[7](index=7&type=chunk) - Hosted comprehensive Ultra Accelerator Link ("UALink") public webinar to discuss fundamentals, market opportunity, and Astera Labs' unique positioning as a Promoter Member of the UALink Consortium[7](index=7&type=chunk) - Joined AMD on stage for their Advancing AI 2025 keynote presentation as a trusted partner to highlight UALink connectivity solutions for innovative scale-up architectures[7](index=7&type=chunk) - Announced partnership with high-performance ASIC leader, Alchip Technologies, to advance the silicon ecosystem for AI rack-scale infrastructure through seamless integration of compute and connectivity solutions[7](index=7&type=chunk) [Third Quarter of Fiscal 2025 Financial Outlook](index=3&type=section&id=Third%20Quarter%20of%20Fiscal%202025%20Financial%20Outlook) [GAAP Financial Outlook](index=3&type=section&id=GAAP%20Financial%20Outlook) For Q3 FY2025, Astera Labs projects GAAP revenue between $203 million and $210 million, with a gross margin of approximately 75%, and diluted EPS in the range of $0.23 to $0.24 Q3 2025 GAAP Financial Outlook | Metric | Q3 2025 Outlook (GAAP) | | :-------------------------- | :--------------------- | | Revenue | $203 million - $210 million | | Gross Margin | ~75% | | Operating Expenses | $116 million - $120 million | | Tax Rate | ~10% | | Diluted EPS | $0.23 - $0.24 | | Weighted-average diluted shares | ~180 million | [Non-GAAP Financial Outlook](index=3&type=section&id=Non-GAAP%20Financial%20Outlook) The Non-GAAP outlook for Q3 FY2025 forecasts revenue between $203 million and $210 million, with a gross margin of approximately 75%, and diluted EPS expected to be between $0.38 and $0.39 Q3 2025 Non-GAAP Financial Outlook | Metric | Q3 2025 Outlook (Non-GAAP) | | :-------------------------- | :--------------------- | | Revenue | $203 million - $210 million | | Gross Margin | ~75% | | Operating Expenses | $76 million - $80 million | | Tax Rate | ~20% | | Diluted EPS | $0.38 - $0.39 | | Non-GAAP weighted-average diluted shares | ~180 million | [About Astera Labs](index=6&type=section&id=About%20Astera%20Labs) Astera Labs is a leader in providing rack-scale AI infrastructure through purpose-built connectivity solutions based on open standards, integrating CXL®, Ethernet, PCIe®, and UALink™ technologies with its COSMOS software suite - Astera Labs provides rack-scale AI infrastructure through purpose-built connectivity solutions grounded in open standards[16](index=16&type=chunk) - The Intelligent Connectivity Platform integrates CXL®, Ethernet, PCIe®, and UALink™ semiconductor-based technologies with the COSMOS software suite[16](index=16&type=chunk) - The platform unifies diverse components into cohesive, flexible systems that deliver end-to-end scale-up and scale-out connectivity, enabling organizations to unlock the full potential of modern AI[16](index=16&type=chunk) [Discussion of Non-GAAP Financial Measures](index=4&type=section&id=Discussion%20of%20Non-GAAP%20Financial%20Measures) [Purpose and Rationale](index=4&type=section&id=Purpose%20and%20Rationale) Astera Labs uses non-GAAP financial measures to supplement GAAP results, aiding financial and operational decision-making and period-to-period comparisons by excluding items not indicative of recurring core operating results - Non-GAAP measures are used for financial and operational decision-making and to evaluate period-to-period comparisons[9](index=9&type=chunk) - Excluding certain items not indicative of recurring core operating results provides meaningful supplemental information regarding performance[9](index=9&type=chunk) - Non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, GAAP financial results[9](index=9&type=chunk) [Specific Non-GAAP Adjustments](index=4&type=section&id=Specific%20Non-GAAP%20Adjustments) Astera Labs adjusts GAAP figures for non-GAAP measures by excluding stock-based compensation expense, related employer payroll taxes from the IPO, the income tax effect of these adjustments, and using non-GAAP pro forma weighted-average shares for EPS calculations - Stock-based compensation expense is excluded as it is a non-cash expense that can vary significantly and is unrelated to core operating performance[10](index=10&type=chunk) - Employer payroll taxes related to stock-based compensation from the IPO are excluded as they do not correlate to the operation of the business[11](index=11&type=chunk) - Income tax effect represents the impact of non-GAAP adjustments on an after-tax basis and one-off discrete tax adjustments unrelated to core operating performance[12](index=12&type=chunk) - Non-GAAP pro forma weighted-average shares assume redeemable convertible preferred stock conversion from the beginning of each period to provide consistent EPS trend information[13](index=13&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Astera Labs reported total assets of $1,271.4 million, an increase from $1,054.5 million at December 31, 2024, driven by growth in cash, marketable securities, and property and equipment Condensed Consolidated Balance Sheets (In thousands) | (In thousands) | As of June 30, 2025 | As of December 31, 2024 | | :---------------------------------- | :------------------ | :---------------------- | | **Assets** | | | | Cash and cash equivalents | $162,328 | $79,551 | | Marketable securities | $902,758 | $834,750 | | Total current assets | $1,180,748 | $1,012,979 | | Total assets | $1,271,405 | $1,054,508 | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $106,383 | $86,542 | | Total liabilities | $135,691 | $89,709 | | Total stockholders' equity | $1,135,714 | $964,799 | | Total liabilities and stockholders' equity | $1,271,405 | $1,054,508 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, Astera Labs reported revenue of $191.9 million, a significant increase from $76.9 million in the prior year, resulting in a net income of $51.2 million and diluted EPS of $0.29 Condensed Consolidated Statements of Operations (Three Months Ended June 30) | (In thousands, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Revenue | $191,925 | $76,850 | | Cost of revenue | $46,362 | $16,996 | | Gross profit | $145,563 | $59,854 | | Total operating expenses | $105,789 | $84,201 | | Operating income (loss) | $39,774 | $(24,347) | | Net income (loss) | $51,219 | $(7,546) | | Diluted EPS | $0.29 | $(0.05) | Condensed Consolidated Statements of Operations (Six Months Ended June 30) | (In thousands, except per share amounts) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $351,367 | $142,108 | | Gross profit | $264,974 | $110,374 | | Operating income (loss) | $51,059 | $(107,314) | | Net income (loss) | $83,038 | $(100,541) | | Diluted EPS | $0.47 | $(0.97) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, Astera Labs generated $145.9 million in net cash from operating activities, a substantial increase from the prior year, with net cash used in investing activities significantly lower at $67.6 million Condensed Consolidated Statements of Cash Flows (In thousands) | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $145,870 | $33,465 | | Net cash used in investing activities | $(67,633) | $(306,722) | | Net cash provided by financing activities | $5,123 | $649,235 | | Net increase in cash, cash equivalents, and restricted cash | $83,360 | $375,978 | | Cash, cash equivalents, and restricted cash, end of period | $163,404 | $421,076 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) [Q2 2025 GAAP to Non-GAAP Reconciliation](index=10&type=section&id=Q2%202025%20GAAP%20to%20Non-GAAP%20Reconciliation) For Q2 2025, Astera Labs reconciled GAAP results to Non-GAAP by adjusting for stock-based compensation and its income tax effect, resulting in Non-GAAP net income of $78.0 million and diluted EPS of $0.44 Q2 2025 GAAP to Non-GAAP Reconciliation (Three Months Ended June 30, 2025) | (In thousands, except percentages and per share amounts) | Three Months Ended June 30, 2025 | | :------------------------------------------------------- | :------------------------------- | | GAAP gross profit | $145,563 | | Stock-based compensation expense | $353 | | Non-GAAP gross profit | $145,916 | | GAAP gross margin | 75.8% | | Non-GAAP gross margin | 76.0% | | GAAP operating income | $39,774 | | Stock-based compensation expense | $35,474 | | Non-GAAP operating income | $75,248 | | GAAP operating margin | 20.7% | | Non-GAAP operating margin | 39.2% | | GAAP net income | $51,219 | | Stock-based compensation expense | $35,474 | | Income tax effect | $(8,670) | | Non-GAAP net income | $78,023 | | GAAP diluted EPS | $0.29 | | Non-GAAP pro forma diluted EPS | $0.44 | Q2 2025 GAAP to Non-GAAP Reconciliation (Six Months Ended June 30, 2025) | (In thousands, except percentages and per share amounts) | Six Months Ended June 30, 2025 | | :------------------------------------------------------- | :----------------------------- | | GAAP gross profit | $264,974 | | Non-GAAP gross profit | $265,289 | | GAAP gross margin | 75.4% | | Non-GAAP gross margin | 75.5% | | GAAP operating income | $51,059 | | Non-GAAP operating income | $128,979 | | GAAP operating margin | 14.5% | | Non-GAAP operating margin | 36.7% | | GAAP net income | $83,038 | | Non-GAAP net income | $137,650 | | GAAP diluted EPS | $0.47 | | Non-GAAP pro forma diluted EPS | $0.77 | [Q3 2025 Outlook GAAP to Non-GAAP Reconciliation](index=12&type=section&id=Q3%202025%20Outlook%20GAAP%20to%20Non-GAAP%20Reconciliation) For the Q3 2025 outlook, Astera Labs projects Non-GAAP gross margin at 75.0%, Non-GAAP operating expenses between $76 million and $80 million, and Non-GAAP diluted EPS of $0.38 to $0.39 Q3 2025 Outlook GAAP to Non-GAAP Reconciliation (In millions, except percentages and per share amounts) | (In millions, except percentages and per share amounts) | Outlook for Three Months Ending September 30, 2025 (Low) | Outlook for Three Months Ending September 30, 2025 (High) | | :------------------------------------------------------- | :------------------------------------------------------- | :-------------------------------------------------------- | | GAAP gross margin | 75.0% | 75.0% | | Non-GAAP gross margin | 75.0% | 75.0% | | GAAP operating expense | $116 | $120 | | Stock-based compensation expense | $40 | $40 | | Non-GAAP operating expense | $76 | $80 | | GAAP tax rate | 10% | 10% | | Income tax effect | $10 | $10 | | Non-GAAP tax rate | 20% | 20% | | GAAP EPS - diluted | $0.23 | $0.24 | | Stock-based compensation expense and income tax effect | $0.15 | $0.15 | | Non-GAAP EPS - diluted | $0.38 | $0.39 | [Supplemental Stock-Based Compensation Expense](index=12&type=section&id=Supplemental%20Stock-Based%20Compensation%20Expense) Total stock-based compensation expense for Q2 2025 was $35.5 million, primarily allocated to R&D, sales and marketing, and G&A, with the six-month total significantly lower than the prior year due to IPO-related RSU vesting Stock-Based Compensation Expense (Three Months Ended) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :-------------------------------- | :------------------------------- | | Cost of revenue | $353 | $(38) | $84 | | Research and development | $17,852 | $19,186 | $12,971 | | Sales and marketing | $9,194 | $12,319 | $15,758 | | General and administrative | $8,075 | $10,979 | $14,254 | | Total stock-based compensation expense | $35,474 | $42,446 | $43,067 | Stock-Based Compensation Expense (Six Months Ended June 30) | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $315 | $612 | | Research and development | $37,038 | $42,978 | | Sales and marketing | $21,513 | $65,016 | | General and administrative | $19,054 | $32,229 | | Total stock-based compensation expense | $77,920 | $140,835 | - Stock-based compensation expense recognized during the six months ended June 30, 2024, included **$88.9 million** of cumulative expense related to IPO-related RSU vesting[32](index=32&type=chunk) [Additional Information](index=4&type=section&id=Additional%20Information) [Earnings Webcast and Conference Call](index=4&type=section&id=Earnings%20Webcast%20and%20Conference%20Call) Astera Labs hosted a conference call and webcast on August 5, 2025, to discuss Q2 FY2025 financial results and Q3 FY2025 financial outlook, with a replay available on the company's investor relations website - Astera Labs hosted a conference call and webcast on August 5, 2025, at 1:30 p.m. Pacific Time to review Q2 FY2025 financial results and discuss Q3 FY2025 financial outlook[8](index=8&type=chunk) - The webcast will be recorded and available for replay on the company's website for the next six months[8](index=8&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This press release contains forward-looking statements based on current expectations, subject to various risks and uncertainties that could cause actual results to differ materially, and Astera Labs disclaims any obligation to update them except as required by law - The press release contains forward-looking statements based on current expectations, subject to various assumptions, beliefs, risks, and uncertainties[14](index=14&type=chunk) - These statements include future business, operating results, cash flow, financial position and guidance, business strategy, product offerings, market opportunities, and collaborations[14](index=14&type=chunk) - Readers should not unduly rely on forward-looking statements, and Astera Labs disclaims any obligation to update or revise them, except as required by law[15](index=15&type=chunk)

Core Insights - Astera Labs reported strong financial results for Q2 2025, with a sequential revenue growth of 20% and a year-over-year increase of 150% [2][4][5] - The company is focusing on ramping its PCIe 6 product portfolio for customized rack-scale AI systems and has secured multiple new design wins for its Scorpio Fabric Switches [2][4] - Astera Labs is positioned as a leader in the AI infrastructure transformation, emphasizing investments in next-generation connectivity solutions [2][4] Financial Highlights - Record quarterly revenue of $191.9 million, up 20% quarter-over-quarter and 150% year-over-year [4][5] - GAAP gross margin of 75.8% and GAAP operating income of $39.8 million, resulting in a GAAP operating margin of 20.7% [5][21] - Non-GAAP net income of $78.0 million, with a non-GAAP diluted earnings per share of $0.44 [5][26] Business Developments - Expanded collaboration with NVIDIA to enhance the NVLink Fusion ecosystem, providing high-performance connectivity solutions for hyperscalers [5][6] - Partnership with Alchip Technologies to integrate custom ASIC development with Astera Labs' connectivity solutions for AI infrastructure [6] - Hosted a public webinar on Ultra Accelerator Link (UALink) technology, showcasing its market potential and Astera Labs' role in advancing open connectivity standards [5][6] Future Outlook - For Q3 2025, Astera Labs estimates revenue between $203 million and $210 million, with a GAAP gross margin of approximately 75% [9][33] - The company anticipates continued strong demand for its products, driven by the growth in AI and custom ASIC platforms [2][4]

Summary of Astera Labs (ALAB US) Conference Call Company Overview - **Astera Labs** is a U.S.-listed company specializing in PCIe retimer and switch chips, with a focus on the upcoming custom Scorpio-X switch chip [1] Key Industry Insights - **Growth Drivers**: Astera Labs' growth is driven by two main products: - Custom **NeuronLink** switch chip for AWS's Trainium series, launching in the second half of the year - Custom **UALink** switch chip for AMD's MI400 series, expected in the second half of next year [2] Technical Comparisons - **UALink vs. NVLink**: - UALink uses SerDes with differential signaling, allowing longer-distance data transmission compared to NVLink's single-ended signaling, which saves chip area but limits distance [3][4] - UALink can connect up to 1,024 nodes, while NVLink is limited to 576 nodes [5] - **UALink Protocol Versions**: - UALink has two versions: 128 Gbps and 200 Gbps, with the latter being suitable for GPU-to-GPU connections only [6][9] - UALink 128G supports mixed connections and is compatible with PCIe Gen7, making it suitable for model inferencing [9] - **Broadcom's SUE**: - SUE is a point-to-point protocol that draws from NVLink's logic but has limitations in heterogeneous expansion compared to UALink [10] Product Development - **AMD's Helios AI Rack**: - The upcoming Helios AI rack will adopt the UALink 200G protocol, with Astera Labs developing a switch chip expected to tape out in Q1 2026 [11][31] - **AWS Trainium Series**: - Astera Labs is developing the Scorpio-X switch chip for AWS's Trainium rack, which will be software-programmable and meet high-performance transmission requirements [13] Financial Projections - **Revenue Estimates**: - For every one million Trainium 2.5 chips deployed, Astera Labs could generate a content dollar value of approximately **$1.75 billion** from both large and small switch chips [22] - For Trainium 3 chips, the estimated content dollar value could reach **$3.3 billion** per million chips [26] - Additional revenue of **$150 million** is projected for every million Trainium 4 chips due to collaboration with Alchip [28] - **AMD's MI400 Series**: - Astera Labs' content dollar value for every one million MI400 GPUs used in the Helios rack is estimated at **$576 million** [32] Conclusion - Astera Labs is positioned to capitalize on the growing demand for advanced interconnect solutions in high-performance computing environments, particularly through its partnerships with AWS and AMD, with significant revenue potential from its innovative switch chip technologies [1][2][22][26][32]

Core Insights - Astera Labs (ALAB) is expected to report Q2 2025 results on August 5, with projected revenues between $170 million and $175 million, indicating a year-over-year increase of 7% to 10% [1][9] - Earnings per share are anticipated to be between 32 cents and 33 cents, reflecting a significant growth of 153.85% compared to the previous year [2][20] - The Zacks Consensus Estimate for Q2 revenues stands at $172.7 million, representing a 124.7% increase from the same quarter last year [1] Revenue and Earnings Expectations - ALAB's revenue growth is driven by strong demand for Scorpio P-Series switches and Aries 6 retimers, particularly in AI applications [4][5] - The company has consistently beaten earnings estimates in the past four quarters, with an average earnings surprise of 28.41% [3] Product Demand and Market Position - Astera Labs is experiencing robust demand for its Aries and Taurus product families, which are expected to grow sequentially in Q2 2025 [5][9] - The company is diversifying its offerings across GPU and custom ASIC-based systems, which is a key growth catalyst [5] Competitive Landscape - ALAB faces challenges from tariff uncertainties and competition from companies like Broadcom and Credo Technology [6][19] - The company is investing heavily in R&D, with expenses rising 20% year-over-year to $64.6 million in Q1 2025 [6] Stock Performance - Astera Labs shares have underperformed, dropping 1% year-to-date, compared to a 9.1% return for the broader Zacks Computer and Technology sector [7][20] - The stock is currently trading at a high valuation, with a forward Price/Sales ratio of 26.26X, significantly above the industry average of 5.65X [14] Strategic Developments - Astera Labs is advancing its product portfolio with next-gen data center connectivity solutions, including PCIe 6.0 and UA Link technologies [16][17] - The company has established partnerships with key players like NVIDIA, enhancing its market position in AI and cloud infrastructure [18] Conclusion - Despite a strong product portfolio and partner base, Astera Labs faces rising competition and valuation concerns ahead of its Q2 2025 results [20]