Marvell Technology Group Ltd. (NASDAQ:MRVL) Q1 2019 Earnings Conference Call - Preliminary Transcript

May 31, 2018 • 04:45 pm ET

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Marvell Technology Group Ltd. (NASDAQ:MRVL) Q1 2019 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Q1 2019 Marvell Technology Group Ltd. Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will host a question-and-answer session and our instructions will be given at that time.As a reminder, this conference call is being recorded for replay purposes.

It is now my pleasure to turn the conference over to Mr. Peter Andrew, Vice President of Treasury and Investor Relations. Sir, you may begin.

Executive
Peter Andrew

Thank you, and good afternoon, everyone. Welcome to Marvell's first quarter and fiscal year 2019 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 risks and uncertainties and which could cause our actual results to differ materially from management's current quotations. 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 Web site, 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 Web site in the Investor Relations section.

With that, let me turn the call over to Marvell's President and CEO, Matt Murphy.

Executive
Matthew Murphy

Great. Thank you, Peter, and good afternoon to everyone joining us on the call. We are here today to talk about Marvell and our strong Q1 performance and Q2 outlook. And although I will touch on the status of the Cavium acquisition, a reminder as Cavium is an independent publicly-traded company, and we will not be able to comment on their financial results.

Marvell delivered a strong first fiscal quarter for 2019, driven by the growth of our core businesses and continued improvement in operational efficiency. Total revenue for Q1 came in above the midpoint of our guidance at $605 million, up 6% from a year-ago.

Our non-GAAP gross margin continued its positive momentum and reached a record high of 62.5%. As a comparison, our revenue has grown 18% compared to Q1 2017 two years ago, while growing gross margin dollars by more than twice that rate.

Looking ahead, we expect to continue expanding our gross margin in Q2 to 63% to 64% as we capture more value from an improving product mix and other margin expansion initiatives. Gross margin is the key indicator of the innovation and quality of engineering in the company, and Marvell has quickly moved into an elite level of companies within the semiconductor industry.

Our non-GAAP operating margin for Q1 was 27.4%, up over 5 percentage points from a year ago. You may recall at our Investor Day in March of 2017, we set a non-GAAP operating