The News: Marvell Technology, Inc., a provider of data infrastructure semiconductor solutions, reported financial results for the third quarter (Q3) of fiscal year 2024. Read the full press release on Marvell’s website.
Marvell Q3 Fiscal 2024: Datacenter Business Shines
Analyst Take: In fiscal Q3 2024, Marvell generated net revenue of $1.419 billion, which was $19 million above the midpoint of the company’s guidance provided on August 24, 2023. Generally accepted accounting principles (GAAP) net loss for fiscal Q3 2024 was $164.3 million, or $0.19 per diluted share. Non-GAAP net income was $354.1 million, or $0.41 per diluted share. Cash flow from operations for Q3 was $503.0 million.
Marvell Chairman and CEO Matt Murphy highlighted that the company delivered Q3 fiscal 2024 revenue above the midpoint of guidance with Q3 revenue of $1.419 billion growing 6% sequentially. Marvell’s revenue for its datacenter end market grew over 20% sequentially in Q3, and the company expects growth of over 30% sequentially in the fourth quarter (Q4) fiscal 2024. Marvell’s performance links to its portfolio diversification strategy with strong growth from AI and cloud carrying the company through a softening demand environment in other end markets. As such, Marvell is forecasting that its overall revenue will be flat sequentially in Q4 at the midpoint of guidance.
The key highlights of Marvell’s fiscal Q4 2024 financial outlook include:
- Net revenue is expected to be $1.420 billion +/- 5%
- GAAP gross margin is expected to be 48.2%-50.7%
- Non-GAAP gross margin is expected to be 63.5%-64.5%
- GAAP operating expenses are expected to be $680 million
- Non-GAAP operating expenses are expected to be $430 million
- Basic weighted average shares outstanding are expected to be 865 million
- Diluted weighted average shares outstanding are expected to be 874 million
- GAAP diluted loss per share is expected to be $(0.03) +/- $0.05 per shareNon-GAAP diluted income per share is expected to be $0.46 +/- $0.05 per share
From our perspective, Marvell is solidly aligned to meet its fiscal Q4 2024 guidance. For example, in November 2023, Marvell joined the Ultra Ethernet Consortium (UEC), part of the Linux Foundation’s Joint Development Foundation. Marvell’s accelerating computing portfolio encompasses optical PAM4 DSPs, TIAs, and drivers for mid- to long-reach optical connections inside datacenters, active electrical cable (AEC) PAM4 digital signal processors (DSPs) for short-reach connections within compute racks, COLORZ datacenter interconnect (DCI) pluggable modules for long-distance connections between datacenters, and Teralynx Ethernet switches for low-latency fabrics between compute nodes.
Further augmenting its UEC participation is Marvell’s ongoing collaboration with cloud providers to deliver cloud-optimized, custom compute solutions that address their unique infrastructure and services on a more efficient basis. As a result, Marvell can play an integral role in advancing Ethernet technology to directly address the specific demands of AI and high-performance computing (HPC) workloads such as ease of configuration and multi-pathing. Today’s protocols are limited in meeting such demands requiring UEC to develop solutions across hardware and software products to use a complete communications stack that spans multiple protocol layers and streamlines configuration and management.
We anticipate that Marvell’s alliance with Arm and F5 Networks can broaden data infrastructure ecosystem support for using the Open Programmable Infrastructure (OPI) framework to offload key infrastructure management services such as load balancing, security, and API gateways from the host CPU to the DPU. This collaborative initiative can lower cloud and datacenter operator’s TCO and boost their general compute capacity by liberating CPU cores for more user applications.
Moreover, we see Marvell earning mind share and making marketing strides through innovations across key portfolio areas including connectivity and networking. This includes Nova, Marvell’s 1.6T PAM4 DSP featuring a breakthrough 200 Gbps per lambda optical bandwidth; and Orion, its 800 Gbps coherent digital DSP for pluggable modules that is capable of powering connections up to 2,000 km in length.
We find that Orion is ready to transform the economics and performance of the transport networks connecting carrier and cloud assets over extended geographic areas. As noted, COLORZ 800 is the company’s family of 800 Gbps ZR/ZR+ pluggable modules for increasing both the bandwidth and distance of DCIs. Teralynx 10 is Marvell’s ultra-low latency, programmable 51.2 Tbps switch chip optimized for swiftly expanding high-bandwidth workloads for AI and machine learning (ML).
NVIDIA Alliance: Expanding Collaboration to Accelerate Computing for the AI Era
Further strengthening its competitive prospects and ecosystem influence, Marvell is expanding its long-standing relationship with NVIDIA by playing an integral role in NVIDIA’s Israel-1 hyperscale generative AI supercomputer system powered by the NVIDIA HGX H100 eight-GPU platform with Bluefield-3 DPUs and Spectrum-X networking by Marvell-enabled optical interconnects. Isreal-1 is purpose-designed to reduce run times of massive transformer-based generative AI models and is expected to be partly operational by the end of 2023 as NVIDIA is working with 800 startups in Israel and tens of thousands of software engineers to advance its capabilities.
Specifically, NVIDIA pluggable optical modules use Marvell Spica optical DSPs to move data at up to 800 Gbps on the server side, then plug into NVIDIA Bluefield-3 SuperNICs. At the other end of the fiber, the same modules connect to NVIDIA Spectrum-4 switches. As a result, Israel-1 is expected to deliver performance of up to eight exaflops of AI computing to make it one of planet’s fastest AI supercomputers, key to meeting the staggering scaling challenges of AI.
Marvell Fiscal Q3 Fiscal Year 2024: Key Takeaways
Overall, we believe that Marvell’s portfolio is in fundamental accord with the topmost data infrastructure priorities, particularly as AI and cloud workloads expand rapidly throughout datacenter environments. As such, we are certainly looking forward to gaining new insight into Marvell’s portfolio development priorities, sales and marketing focus, and strategic vision at the Marvell Industry Analyst Day on December 5 in Santa Clara, California. Marvell is now solidly positioned to drive innovation, boost partnerships, and fulfill swiftly evolving customer demands throughout data infrastructure environments.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
DSPs Go the Distance: Marvell’s Strategy for Connecting Carriers, Clouds – Futurum Tech Webcast
Marvell Launches COLORZ 800: ZR/ZR+ for Spanning the Cloud
Marvell Q2 Fiscal 2024: AI and Cloud Are Top Growth Drivers
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