Marvell Technology(MRVL) - 2026 Q2 - Quarterly Results

Second Quarter Fiscal Year 2026 Financial Results Marvell achieved record Q2 FY26 net revenue of $2.006 billion, driven by strong AI demand and market recovery Q2 FY26 Financial Highlights Marvell reported record Q2 FY26 net revenue of $2.006 billion, with GAAP net income of $194.8 million and non-GAAP net income of $585.5 million Q2 FY26 Key Financial Highlights | Metric | Value | | :--------------------------------- | :-------------------- | | Net Revenue | $2.006 billion | | GAAP Net Income | $194.8 million | | GAAP Diluted EPS | $0.22 | | Non-GAAP Net Income | $585.5 million | | Non-GAAP Diluted EPS | $0.67 | | Cash Flow from Operations | $461.6 million | | GAAP Gross Margin | 50.4% | | Non-GAAP Gross Margin | 59.4% | - Net revenue grew by 58% year-on-year, reaching a new record[4][7] CEO Commentary on Performance and Growth Drivers CEO Matt Murphy attributed record revenue to strong AI demand for custom silicon and electro-optics, alongside market recovery - Growth drivers include strong AI demand for custom silicon and electro-optics products[4] - Significant increase in recovery pace for enterprise networking and carrier infrastructure end markets[4] - Custom AI design activity is at an all-time high, with over 50 new opportunities across more than 10 customers[4] Third Quarter Fiscal Year 2026 Financial Outlook Marvell projects Q3 FY26 net revenue of $2.060 billion +/- 5%, with non-GAAP diluted EPS of $0.74 +/- $0.05 Q3 FY26 GAAP and Non-GAAP Guidance Marvell forecasts Q3 FY26 net revenue of $2.060 billion +/- 5%, non-GAAP diluted EPS of $0.74 +/- $0.05, and non-GAAP gross margin between 59.5% and 60.0% - The Q3 FY26 financial outlook reflects the divestiture of Marvell's Automotive Ethernet business on August 14, 2025[7] Q3 FY26 Financial Outlook | Metric | Guidance | | :--------------------------------- | :-------------------- | | Net Revenue | $2.060 billion +/- 5% | | GAAP Gross Margin | 51.5% to 52.0% | | Non-GAAP Gross Margin | 59.5% to 60.0% | | GAAP Operating Expenses | ~$719 million | | Non-GAAP Operating Expenses | ~$485 million | | Basic Weighted-Average Shares | 863 million | | Diluted Weighted-Average Shares | 870 million | | GAAP Diluted Net Income Per Share | $2.03 +/- $0.05 per share | | Non-GAAP Diluted Net Income Per Share | $0.74 +/- $0.05 per share | Discussion of Non-GAAP Financial Measures Marvell uses non-GAAP measures, excluding specific non-core items, to provide supplemental financial insights despite inherent limitations Non-GAAP Definition and Exclusions Non-GAAP measures exclude specific items like stock-based compensation and amortization, applying a 10.0% non-GAAP tax rate for Q2 FY26 - Non-GAAP measures exclude stock-based compensation, amortization of acquired intangible assets, acquisition and divestiture related costs, restructuring charges, resolution of legal matters, and certain discrete expenses/benefits[10] - A non-GAAP tax rate of 10.0% was applied for the second quarter of fiscal 2026, based on estimated annual GAAP income tax forecast adjusted for non-GAAP income items and significant non-recurring tax items[11] Management's Rationale and Limitations of Non-GAAP Measures Marvell uses non-GAAP measures for supplemental insights and internal evaluation, acknowledging their limitations compared to GAAP results - Non-GAAP measures provide supplemental information on financial and business trends, enhancing understanding of financial performance and offering greater transparency[12] - Internal uses include management's evaluation of operating performance, establishment of internal operating budgets, performance comparisons, and determination of certain compensation[14] - Limitations: Non-GAAP measures do not reflect all costs associated with operations as determined by GAAP and should not be considered in isolation or as a substitute for GAAP results[13] Company Overview and Legal Disclosures This section details Marvell's Q2 FY26 conference call, forward-looking statement risks, and company overview Conference Call Details Marvell held a conference call on August 28, 2025, to discuss Q2 FY26 results, accessible via webcast and telephone - Conference call held on Thursday, August 28, 2025, at 1:45 p.m. Pacific Time[9] - Access available via webcast on Marvell Investor Relations website or telephone[9] Forward-Looking Statements Forward-looking statements are subject to various risks, including market demand and supply chain disruptions, cautioning against undue reliance - Statements are predictions about future events based on current expectations and assumptions, subject to risks and uncertainties[15] - Risks include ability to estimate customer demand, develop products for AI/Cloud/5G markets, dependence on a few customers, data center market concentration, customer vertical integration, international conflict, macroeconomic conditions, higher inventory levels, customer order cancellations, supply chain disruptions, and regulatory changes[15] - Readers are cautioned not to place undue reliance on forward-looking statements, and the company assumes no obligation to update or revise them[15] About Marvell Technology, Inc. Marvell is a leader in data infrastructure semiconductor solutions, connecting the world by moving, storing, processing, and securing data - Marvell is a leader in data infrastructure semiconductor solutions[2][16] - The company's mission is to deliver technology that connects the world by moving, storing, processing, and securing data[16] - Marvell emphasizes deep collaboration with customers to transform enterprise, cloud, automotive, and carrier architectures[16] Condensed Consolidated Financial Statements (Unaudited) This section presents Marvell's unaudited condensed consolidated statements of operations, balance sheets, and cash flows Condensed Consolidated Statements of Operations For Q2 FY26, Marvell reported net revenue of $2,006.1 million, gross profit of $1,010.6 million, and net income of $194.8 million Condensed Consolidated Statements of Operations (Three Months Ended) | Metric (in millions, except per share) | August 2, 2025 | August 3, 2024 | YoY Change | | :----------------------------------- | :------------- | :------------- | :--------- | | Net Revenue | $2,006.1 | $1,272.9 | +57.6% | | Cost of Goods Sold | $995.5 | $685.3 | +45.3% | | Gross Profit | $1,010.6 | $587.6 | +71.9% | | Total Operating Expenses | $720.5 | $688.0 | +4.7% | | Operating Income (Loss) | $290.1 | $(100.4) | N/A (swing to profit) | | Net Income (Loss) | $194.8 | $(193.3) | N/A (swing to profit) | | Diluted Net Income (Loss) per share | $0.22 | $(0.22) | N/A (swing to profit) | Condensed Consolidated Balance Sheets As of August 2, 2025, Marvell's total assets increased to $20,586.3 million, driven by current assets including $595.5 million in assets held for sale Condensed Consolidated Balance Sheets (as of) | Metric (in millions) | August 2, 2025 | February 1, 2025 | Change | | :--------------------------------- | :------------- | :--------------- | :----- | | Total Assets | $20,586.3 | $20,204.5 | +$381.8 | | Cash and Cash Equivalents | $1,224.4 | $948.3 | +$276.1 | | Accounts Receivable, net | $1,451.7 | $1,028.4 | +$423.3 | | Inventories | $1,051.6 | $1,029.7 | +$21.9 | | Assets Held for Sale | $595.5 | — | +$595.5 | | Total Current Assets | $4,512.9 | $3,120.3 | +$1,392.6 | | Goodwill | $11,062.2 | $11,586.9 | -$524.7 | | Total Liabilities | $7,164.6 | $6,777.5 | +$387.1 | | Total Stockholders' Equity | $13,421.7 | $13,427.0 | -$5.3 | Condensed Consolidated Statements of Cash Flows Net cash from operations increased to $461.6 million for Q2 FY26, resulting in a net increase in cash and cash equivalents of $338.5 million Condensed Consolidated Statements of Cash Flows (Three Months Ended) | Metric (in millions) | August 2, 2025 | August 3, 2024 | Change | | :-------------------------------- | :------------- | :------------- | :----- | | Net Cash Provided by Operating Activities | $461.6 | $306.4 | +$155.2 | | Net Cash Used in Investing Activities | $(77.2) | $(53.0) | -$24.2 | | Net Cash Used in Financing Activities | $(45.9) | $(292.4) | +$246.5 | | Net Increase (Decrease) in Cash | $338.5 | $(39.0) | +$377.5 | | Cash and Cash Equivalents at End of Period | $1,224.4 | $808.7 | +$415.7 | Reconciliations from GAAP to Non-GAAP This section provides detailed GAAP to non-GAAP reconciliations for Q2 FY26 results and Q3 FY26 outlook, highlighting excluded items Q2 FY26 GAAP to Non-GAAP Reconciliations Marvell's Q2 FY26 non-GAAP reconciliation resulted in a non-GAAP gross profit of $1,191.4 million (59.4% margin) and non-GAAP net income of $585.5 million Q2 FY26 GAAP to Non-GAAP Reconciliation (Three Months Ended August 2, 2025) | Metric (in millions, except %) | GAAP | Special Items | Non-GAAP | | :----------------------------- | :----- | :------------ | :------- | | Gross Profit | $1,010.6 | $180.8 | $1,191.4 | | Gross Margin | 50.4% | 9.0% | 59.4% | | Total Operating Expenses | $720.5 | $(227.9) | $492.6 | | Operating Margin | 14.5% | 20.3% | 34.8% | | Net Income | $194.8 | $390.7 | $585.5 | | Diluted Net Income Per Share | $0.22 | $0.45 | $0.67 | - Special items excluded from GAAP to non-GAAP include stock-based compensation, amortization of acquired intangible assets, restructuring charges, and other costs[25][27][28] Q3 FY26 Outlook GAAP to Non-GAAP Reconciliations Marvell's Q3 FY26 outlook reconciliation adjusts GAAP to non-GAAP, with key diluted EPS adjustments resulting in a non-GAAP diluted EPS of $0.74 +/- $0.05 Q3 FY26 Outlook GAAP to Non-GAAP Reconciliation | Metric | GAAP Outlook | Special Items | Non-GAAP Outlook | | :--------------------------------- | :------------- | :------------ | :--------------- | | Net Revenue | $2,060 +/- 5% | — | $2,060 +/- 5% | | Gross Margin | 51.5% - 52.0% | 8.0% | 59.5% - 60.0% | | Total Operating Expenses | ~$719 | $(234) | ~$485 | | Diluted Net Income Per Share | $2.03 +/- $0.05 | $(1.29) | $0.74 +/- $0.05 | - Special items for diluted EPS include $0.18 for stock-based compensation, $0.26 for amortization of acquired intangible assets, $0.02 for restructuring charges, $(2.10) for gain on sale of business, and $0.35 for other income tax effects and adjustments[30] Quarterly Revenue Trend by End Market This section defines Marvell's five primary end markets and analyzes their revenue performance, with Data Center as the largest contributor End Market Definitions and Applications Marvell serves five primary end markets: data center, enterprise networking, carrier infrastructure, consumer, and automotive/industrial, covering diverse applications - Marvell serves five large end markets: data center, enterprise networking, carrier infrastructure, consumer, and automotive/industrial[32] - Customer products and applications include Cloud and on-premise AI systems, ethernet switching, and storage for Data Center; Campus and small medium enterprise routers and WAPs for Enterprise Networking; Broadband access systems and optical transport for Carrier Infrastructure; Broadband gateways and gaming consoles for Consumer; and ADAS, autonomous vehicles, and in-vehicle networking for Automotive/industrial[32] Revenue Performance by End Market In Q2 FY26, Data Center led revenue at $1,490.5 million (74% of total), with 69% YoY growth, while Consumer revenue saw 84% QoQ growth Revenue by End Market (Three Months Ended August 2, 2025) | End Market | Revenue (in millions) | % of Total | YoY Change | QoQ Change | | :-------------------- | :-------------------- | :--------- | :--------- | :--------- | | Data center | $1,490.5 | 74 % | 69 % | 3 % | | Enterprise networking | $193.6 | 10 % | 28 % | 9 % | | Carrier infrastructure | $130.1 | 6 % | 71 % | (6)% | | Consumer | $115.9 | 6 % | 30 % | 84 % | | Automotive/industrial | $76.0 | 4 % | — % | — % | | Total Net Revenue | $2,006.1 | 100 % | 58 % | 6 % |