Marvell Technology Group Ltd. (NASDAQ:MRVL) Q2 2018 Earnings Conference Call - Preliminary Transcript

Aug 24, 2017 • 04:45 pm ET


Marvell Technology Group Ltd. (NASDAQ:MRVL) Q2 2018 Earnings Conference Call - Preliminary Transcript


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Good day, ladies and gentlemen, and thank you for your patience. You've joined the Q2 2018 Marvell Technology Group Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instruction] As a reminder, this conference may be recorded. I'd now like to turn the call over to your host Vice President of Investor Relations, Mr. Peter Andrew. Sir, you may begin.

Peter Andrew

Thank you and good afternoon everyone. Welcome to Marvell's Second Quarter of Fiscal Year 2018 Earnings Call. Joining me on the call today is Matt Murphy, Marvell's President and CEO, and CFO, Jean Hu. Before I turn the call over to Matt, I wanted to remind everyone that certain comments today will include forward-looking statements, which are subject to significant risks and uncertainties which 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 release which we filed with the SEC today and posted on our website, as well as our most recent 10-K and 10-Q filings. We do not intend to update our forward-looking statements.

During our call today, we will make reference to certain non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is available on our website in the Investor Relations section. With that, let me turn the call over to Marvell's President and CEO, Matt Murphy.

Matt Murphy

Great. Thank you, Peter, and good afternoon to everyone on the call. Today, I'm pleased to report that our second quarter results demonstrate Marvell's continued progress as a company including growth in our core businesses, improved execution and increased profitability. In our second fiscal quarter of 2018, Marvell achieved revenue of $605 million, above the midpoint of our guidance, led by our growth in our core businesses of storage, networking and connectivity. Together, these businesses grew 6% year-over-year. Our non-GAAP gross margin also showed continued improvement, increasing the 61.2%, up over 0.5 percentage point from last quarter and 6 percentage points from a year ago. We're already operating above the target we established at our investor day in March. As we continue to improve the mix of our business by ramping new products with differentiated features and reducing costs through efficiency, we believe we will continue to drive gross margin improvement going forward.

Our non-GAAP operating margin improved from 14.5% a year ago to 25.8% this past quarter, marking significant progress towards our long-term goal of 30%. During the second quarter, we also announced the definitive agreement to sell our multimedia product line to Synaptics with the transaction scheduled to close later this quarter. When completed, it will mark the successful divesture of all operations we identified for sale during last November's restructuring announcement. We remain committed to returning capital to our shareholders. During Q2, we returned $251 million including $221 million in buybacks and $30 million in dividends. We have now repurchased over