Marvell Technology(MRVL) - 2026 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 fiscal 2026, Marvell reported record revenue of $2.219 billion, reflecting a 7% sequential growth and exceeding guidance [4][32] - Full year revenue for fiscal 2026 grew 42% year-over-year to approximately $8.2 billion, with non-GAAP earnings per share of $0.80, up 33% year-over-year [5][32] - The company expects fiscal 2027 revenue to grow more than 30% year-over-year, approaching $11 billion, significantly higher than previous forecasts [6][10] Business Line Data and Key Metrics Changes - Data Center revenue surpassed $6 billion in fiscal 2026, growing 46% year-over-year, driven by strong demand for interconnect, switching, and storage products [5][11] - The interconnect business is expected to grow more than 50% year-over-year in fiscal 2027, while communications and other markets are projected to grow by 10% [8][10] - Custom business revenue reached $1.5 billion in fiscal 2026, with expectations to grow more than 20% year-over-year in fiscal 2027 [23][24] Market Data and Key Metrics Changes - The Data Center end market accounted for 74% of total revenue in Q4 fiscal 2026, with communications and other markets contributing 26% [32] - The company anticipates strong demand across its entire Data Center portfolio, with bookings accelerating at a record pace [5][28] - The global data center footprint is expected to expand, with significant long-term growth projected in the DCI pluggable market [14] Company Strategy and Development Direction - Marvell's recent acquisitions of Celestial AI and Xconn are aimed at strengthening its position in the AI scale-up networking market [4][28] - The company plans to maintain close alignment with customers as they continue to invest in AI infrastructure [11][30] - Marvell is focused on driving new revenue streams from the rapidly emerging AI scale-up market while continuing to invest in existing franchises [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a robust multiyear growth cycle, with strong bookings indicating sustained demand for the next several years [28][29] - The company expects to see revenue growth accelerate each quarter throughout fiscal 2027, with Q4 revenue projected to exceed $3 billion [6][29] - Management highlighted the importance of maintaining operational leverage and aligning with customer needs in the evolving market landscape [30][37] Other Important Information - Marvell returned $2.245 billion to shareholders through share repurchases and dividends in fiscal 2026, an increase of approximately $1.3 billion from the prior year [32][34] - The company has improved its debt ratios, with a gross debt to EBITDA ratio of 1.38 times and a net debt to EBITDA ratio of 0.57 times [34] Q&A Session Summary Question: Customer base diversification in custom business - Management confirmed strong engagement across the ecosystem, particularly with the top four U.S. hyperscalers, and emphasized diversification within each customer [40][42] Question: Demand for AI compute and XPU programs - Management noted strong validation for AI compute demand and confirmed expectations for a stronger second half in XPU programs, with an upward bias in revenue growth [46][48] Question: Growth in electro-optics business - Management indicated that the electro-optics business is expected to grow at a rate of 50% or more, driven by new XPU and GPU generations [54][56] Question: Custom business growth expectations - Management stated that the custom business is expected to grow north of 20% in fiscal 2027, with confidence in the timing of new XPU programs [60][70] Question: Factors contributing to fiscal 2028 revenue outlook - Management highlighted strong bookings and improved visibility in the interconnect business as key factors for the increased fiscal 2028 revenue outlook [74][78] Question: AEC and retimers growth perspective - Management indicated that AEC and retimer revenue is expected to double, with a base around $200 million, and emphasized the potential for continued growth [84][86]