Q2 2027 Marvell Technology Inc Earnings Call Transcript
Key Points
- Record Q2 FY2027 revenue of $2.739 billion, up 37% year-over-year, with EPS of $0.94 beating guidance.
- Raised FY2027 revenue outlook to ~$12 billion (45% growth) and FY2028 to ~$18 billion (50% growth), driven by strong Data Center demand.
- Data Center revenue expected to grow ~60% in FY2027 and >60% in FY2028, with broad-based strength across interconnect, switching, and custom silicon.
- Expanded commercial agreement with a key hyperscaler (Google) covering custom programs, including XPU attach products, with potential for significant revenue in FY2029 and beyond.
- Strong momentum in scale-up optics (NPO and CPO) and switching, with fiscal 2028 revenue outlook for scale-up optics increased meaningfully.
- Non-GAAP operating margin expanded 180 basis points year-over-year to 36.6%, with expectations to enter the 38%-40% target range in Q4 FY2027.
- New CFO Dan Durn brings extensive experience and plans to focus on operating leverage, cash flow, and stockholder returns.
- Non-GAAP gross margin expected to decline to 57.5%-58.5% in Q3 FY2027 due to product mix, particularly the ramp of Custom business.
- Communications and Other end markets revenue expected to decline low-to-mid teens sequentially and year-over-year in Q3 FY2027, with lumpiness persisting.
- Cash flow from operations decreased slightly quarter-over-quarter due to higher capacity prepayments to suppliers, with ~$1 billion in prepayments planned for FY2027.
- Management transitions (CFO and IR leadership) could pose execution risks during a critical growth period.
- Custom business growth is back-end loaded, with significant revenue contribution expected only in FY2029 and beyond, creating near-term uncertainty.
- Gross margin is expected to remain in a similar range in FY2028, limiting near-term margin expansion despite revenue growth.
Good afternoon, and welcome to Marvell Technology Inc. second quarter of fiscal year 2027 earnings conference call. (Operator Instructions) Please note, this event is being recorded.
I will now turn the conference over to Mr. Ross Seymore, Senior Vice President of Investor Relations. Thank you. You may begin.
Thank you, and good afternoon, everyone. Welcome to Marvell's second fiscal quarter 2027 earnings call. Joining me today are Matt Murphy, Marvell's Chairman and CEO; Dan Durn, CFO; Chris Koopmans, President and COO; and Sandeep Bharathi, President of our Data Center Group.
Let me remind everyone that certain comments today -- made today include forward-looking statements, which are subject to significant risks and uncertainties that could cause our actual results to differ materially from management's current expectations. Please review the cautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and
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