Marvell Technology Q2 Earnings Call Highlights

Key Points

• Marvell reported record fiscal Q2 revenue of $2.739 billion, up 37% year over year, and raised its fiscal 2027 revenue outlook to approximately $12 billion. The company also lifted its fiscal 2028 outlook to about $18 billion.
• Data-center demand remains the primary growth driver, with revenue up 46% year over year to $2.17 billion, or 79% of total sales. Strong demand spans AI connectivity, switching, optical interconnects and custom silicon.
• Marvell expects fiscal Q3 revenue of approximately $3.15 billion, representing more than 50% year-over-year growth at the midpoint, while custom silicon is expected to ramp significantly in the second half of fiscal 2027 and more than double in fiscal 2028.

Marvell Technology NASDAQ: MRVL reported record fiscal second-quarter 2027 revenue of $2.739 billion, up 13% sequentially and 37% from a year earlier, as demand for data-center connectivity and custom silicon products continued to rise.

Chairman and Chief Executive Officer Matt Murphy said revenue and non-GAAP earnings per share of $0.94 both exceeded the midpoint of the company’s guidance. The company raised its fiscal 2027 revenue outlook to roughly $12 billion, representing approximately 45% year-over-year growth, from a prior projection of about $11.5 billion.

Marvell also raised its fiscal 2028 revenue outlook to approximately $18 billion, up from its prior forecast of $16.5 billion. The company now expects fiscal 2028 revenue growth of about 50%, with data-center revenue projected to increase by more than 60% year over year.

Data center drives results and outlook

Data-center revenue reached a record $2.17 billion in the fiscal second quarter, accounting for 79% of Marvell’s total revenue. The segment grew 18% sequentially and 46% from the prior-year period. For the fiscal third quarter, Marvell expects data-center revenue to rise more than 20% sequentially and about 75% year over year.

Murphy said the company is seeing broad AI-related demand across interconnect, switching and custom silicon. He said demand remains strong for 800G optical digital signal processors, while the company’s 1.6T business is ramping and is expected to accelerate further in fiscal 2028.

Marvell’s scale-out switching business is on track to more than double during fiscal 2027, driven by the ramp of 51.2T products across a widening group of customers, according to Murphy. Demand for broadband analog transimpedance amplifiers and drivers also continues to exceed the company’s expectations.

The company is additionally investing in scale-up networking technologies, which connect increasingly large AI computing domains. Murphy said customers are initially using copper interconnects in these environments, but limitations in reach and bandwidth are expected to increase adoption of optical interconnects over time.

Marvell said it is pursuing both near-packaged optics, or NPO, and co-packaged optics, or CPO, approaches, supported by silicon photonics, modulation technologies, broadband analog components and switching products. Murphy said the company’s fiscal 2028 revenue outlook for scale-up optics had increased “meaningfully” from prior expectations, with NPO adoption gaining traction at multiple customers.

Custom silicon growth and hyperscaler agreement

Marvell expects its data-center custom business to ramp significantly in the second half of fiscal 2027 and to more than double year over year in fiscal 2028. The company said growth will come from both XPU products and XPU-attached products, including CXL and custom networking-related offerings.

Murphy highlighted an expanded commercial agreement and associated warrant with a key hyperscaler that Marvell disclosed in a recent 8-K filing. During the question-and-answer session, analysts referred to the arrangement as an agreement with Google. Murphy said the arrangement covers programs already in execution, new design wins and potential future programs.

He said the programs span AI inference accelerators, storage controllers, network interface controllers, memory interface controllers and near-memory compute products connected to the TPU ecosystem. Revenue from programs covered by the agreement through fiscal 2028 is already included in Marvell’s existing custom-business targets, Murphy said.

Looking beyond that period, he said the agreement and additional programs increase management’s confidence that custom-silicon revenue can reach a “significantly larger scale” in fiscal 2029 and later years. Marvell plans to provide more detail on its longer-term outlook at its Investor Day in New York on Oct. 6.

Murphy also said CXL memory-expansion technology has become increasingly relevant for AI inference deployments. He said Marvell has secured additional design wins in the area and that customers are adapting their memory architectures amid memory scarcity.

Margins, cash flow and third-quarter outlook

For the second quarter, Marvell reported a GAAP gross margin of 53.1% and a non-GAAP gross margin of 58.9%. GAAP operating margin was 16.8%, while non-GAAP operating margin was 36.6%, up 180 basis points from a year earlier and 160 basis points sequentially.

GAAP diluted earnings per share were $0.33, while non-GAAP diluted earnings per share rose 40% year over year to $0.94. Cash flow from operations totaled $606 million, reflecting higher capacity prepayments to suppliers, according to Chief Financial Officer Dan Durn.

• Marvell repurchased $200 million of common stock during the quarter.
• The company returned $54 million to stockholders through dividends.
• Total debt ended the quarter at $4.96 billion.
• Marvell expects to make about $1 billion in supplier capacity prepayments during fiscal 2027.

For the fiscal third quarter, Marvell forecast revenue of $3.15 billion, plus or minus 5%, implying 15% sequential growth and more than 50% year-over-year growth at the midpoint. The company expects GAAP diluted earnings per share of $0.48 to $0.58 and non-GAAP diluted earnings per share of $1.05 to $1.15.

Durn said custom-product mix is expected to create a sequential gross-margin headwind in the third quarter, with non-GAAP gross margin forecast at 57.5% to 58.5%. However, he said the company expects gross margins to remain in a similar range in the fourth quarter and fiscal 2028, while operating leverage should lift non-GAAP operating margin into Marvell’s 38% to 40% long-term target range by the fourth quarter.

Outside data centers, communications and other end-market revenue totaled $568 million, down 3% sequentially but up 10% year over year. Marvell expects that segment to decline by a low- to mid-teens percentage rate in the fiscal third quarter before recovering sequentially in the fourth quarter.

About Marvell Technology (NASDAQ:MRVL)

Marvell Technology Group is a global semiconductor company that designs and develops integrated circuits and related software for data infrastructure, networking, storage and connectivity markets. The company's product portfolio includes system-on-chip (SoC) solutions, Ethernet physical-layer transceivers (PHYs), switch and switch silicon, optical interconnect components, storage controllers, and security processors. Marvell's technology is used to enable high-performance data centers, carrier networks, enterprise and cloud storage, as well as connectivity in automotive and industrial applications.

Founded in 1995 and headquartered in Santa Clara, California, Marvell has grown through both organic development and strategic acquisitions to broaden its capabilities across networking and data interconnect.

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