Marvell Technology(MRVL) - 2025 Q2 - Quarterly Report

Revenue Performance - Net revenue for Q2 fiscal 2025 was $1.3 billion, a decrease of 5% compared to$ 1.34 billion in Q2 fiscal 2024, primarily due to declines in multiple end markets[96]. - Net revenue for the six months ended August 3, 2024, decreased by $228.8 million, a decline of approximately 5% compared to the same period in 2023, primarily due to significant decreases in sales across most end markets[107]. Sales by End Market - Sales from the carrier infrastructure end market decreased by 72%, enterprise networking by 54%, consumer by 47%, and automotive/industrial by 31%, while data center sales increased by 92%[96][106]. - Sales from the carrier infrastructure end market decreased by 74%, enterprise networking by 56%, consumer by 58%, and automotive/industrial by 23%, while data center sales increased by 90%[107]. Shareholder Returns - The company returned$ 428.7 million to shareholders in the first half of fiscal 2024, including $325.0 million in stock repurchases and$ 103.7 million in cash dividends[101]. - The company repurchased $325.0 million of common stock during the six months ended August 3, 2024, as part of its financing activities[131]. Financial Position - Cash and cash equivalents were$ 808.7 million as of August 3, 2024, down $142.1 million from$ 950.8 million on February 3, 2024[101]. - The company had approximately $808.7 million in cash and cash equivalents as of August 3, 2024, with$ 580.5 million held by subsidiaries outside the United States[122]. - Total borrowings outstanding as of August 3, 2024, were $4.2 billion, including$ 3.5 billion of senior notes and $656.2 million under the 2026 Term Loan[122]. Operating Performance - Operating loss for Q2 fiscal 2025 was 7.9% of net revenue, an improvement from a 15.3% loss in Q2 fiscal 2024[105]. - Net cash provided by operating activities for the six months ended August 3, 2024, was$ 630.9 million, compared to $320.9 million for the same period in 2023, reflecting a significant increase of 96.7%[128][129]. - The company reported a net loss of$ 408.9 million for the six months ended August 3, 2024, adjusted for non-cash items, compared to a net loss of $376.4 million for the same period in 2023[128][129]. Research and Development - Research and development expenses were 38.2% of net revenue in Q2 fiscal 2025, compared to 35.4% in Q2 fiscal 2024[105]. - Research and development expenses for the six months ended August 3, 2024, were$ 962.8 million, a slight increase of 0.8% from $955.5 million in the same period in 2023, representing 39.6% of net revenue[108]. Tax and Income - Provision for income taxes for the six months ended August 3, 2024, was$ 64.9 million, compared to a tax benefit of $107.5 million in the same period in 2023[117]. - The company had a deferred income tax benefit of$ 58.3 million for the six months ended August 3, 2024, compared to $226.7 million for the same period in 2023, indicating a decrease of 74.3%[128][129]. Cash Flow and Investments - Cash outflow from working capital for the six months ended August 3, 2024, was$ 81.8 million, primarily driven by decreases in accounts receivable and inventories, while cash outflow for the same period in 2023 was $120.8 million[128][129]. - Net cash used in investing activities for the six months ended August 3, 2024, was$ 154.9 million, down from $219.7 million in the same period in 2023, indicating a reduction of 29.5%[130]. Interest Rate and Currency Risks - A hypothetical 1 percentage point increase in interest rates could result in an increase in annual interest expense by approximately$ 5.8 million, highlighting the company's exposure to interest rate risk[135]. - If the U.S. dollar weakened by 10%, operating expenses could increase by approximately 2%, indicating potential foreign currency exchange risk[138]. - The company maintains an investment policy that limits long-term interest rate risk by requiring effective maturities of generally less than five years[136]. Customer Concentration - Accounts receivable was concentrated with four customers, representing 70% of gross accounts receivable as of August 3, 2024[102]. - Approximately 77% of net revenue in Q2 fiscal 2025 came from customers with operations in Asia, compared to 68% in Q2 fiscal 2024[103]. Capacity and Future Outlook - The company has entered into capacity reservation arrangements with foundries and partners to secure long-term capacity[97]. - The company anticipates continued impact on revenue from U.S. government export restrictions on certain Chinese customers[98].