Marvell Technology Group Ltd. (NASDAQ:MRVL) Q4 2018 Earnings Conference Call - Preliminary Transcript

Mar 08, 2018 • 04:45 pm ET

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Marvell Technology Group Ltd. (NASDAQ:MRVL) Q4 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good day, Ladies and Gentlemen. Welcome to the Q4 2018 Marvell Technology Group Ltd. Earnings conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. [Operator instructions]. As a reminder, this conference is being recorded.

I would now like to introduce one of your hosts for today's conference, Peter Andrew. Mr. Andrew, you may begin.

Executive
Peter Andrew

Thank you. Good afternoon, everyone. Welcome to Marvell's fourth quarter and fiscal year 2018 earnings call. Joining me on the call today is Marvell's President and CEO Matt Murphy, and CFO Jean Hu. Before I turn the call over to Matt, I wanted to remind everyone that certain comments today may include forward-looking statements which are subject to significant risk and uncertainties and 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 press 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 or reconciliation between our GAAP and non-GAAP financial measures as 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.

Executive
Matt Murphy

Thank you, Peter. Good afternoon to everyone on the call. The completion of Fiscal 2018 marks my first full fiscal year as the CEO of Marvell. Our performance over this period demonstrates that Marvell is successfully transforming itself into a much more capable and competitive company, one that delivers much greater value to customers, employees, and shareholders.

Since I joined Marvell 19 months ago, we have increased our focus on our 3 core markets: storage, networking, and connectivity. We've also added greater discipline into our product development process, retooled, and reinvested in our sales force and go-to-market strategies, and continue to drive efficiencies in our new business model. Our Fiscal 2018 results clearly show that these actions are paying off.

Fiscal 2018 year-over-year revenue from our core businesses grew 7%. You may recall from our investor day a year ago, that our stated goal was to grow faster than our core-end markets, which at that time were estimated to grow 6%. I'm proud to report that we exceeded that goal. I'm also pleased that this growth was broad-based, with storage growing 8%, networking growing 1%, and connectivity growing 14%.

It is worth noting that our networking business excluding legacy grew 7%, and I'll talk about that in a minute. For Fiscal 2018, non-GAAP gross margins increased over 5 percentage points from a year ago to 61.4%, exceeding our target of 60%. Non-GAAP operating margin increased to 25.9%, up over 11 percentage points from a year ago and we're making steady progress toward our long-term target of 30%.

Finally, in the 10 months leading