Astera Labs, Inc.(ALAB) - 2025 Q2 - Quarterly Results

Astera Labs Q2 FY2025 Financial Results Overview Executive Summary & CEO Commentary 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] - Successfully executed the next step in growth journey by ramping PCIe 6 product portfolio into volume production for customized rack-scale AI systems[3] - 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] Second Quarter 2025 Financial Highlights 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][5] - Record operating cash flow generation of $135 million[4] Q2 2025 and Recent Business Highlights 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] - 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] - 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] - 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] Third Quarter of Fiscal 2025 Financial Outlook GAAP Financial Outlook 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 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 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] - The Intelligent Connectivity Platform integrates CXL®, Ethernet, PCIe®, and UALink™ semiconductor-based technologies with the COSMOS software suite[16] - 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] Discussion of Non-GAAP Financial Measures Purpose and Rationale 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] - Excluding certain items not indicative of recurring core operating results provides meaningful supplemental information regarding performance[9] - Non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, GAAP financial results[9] Specific Non-GAAP Adjustments 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] - 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] - 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] - 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] Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Balance Sheets 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 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 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 Q2 2025 GAAP to Non-GAAP Reconciliation 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 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 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] Additional Information Earnings Webcast and Conference Call 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] - The webcast will be recorded and available for replay on the company's website for the next six months[8] Cautionary Note Regarding Forward-Looking Statements 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] - These statements include future business, operating results, cash flow, financial position and guidance, business strategy, product offerings, market opportunities, and collaborations[14] - 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]