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

Dec 04, 2018 • 04:45 pm ET

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

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2019 Marvell Technology Group Ltd. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, today's program may be recorded.

And now, I would like to introduce your host for today's program Ashish Saran, VP of IR. Please go ahead.

Executive
Ashish Saran

Thank you, and good afternoon, everyone. Welcome to Marvell's third quarter fiscal year 2019 earnings call. Joining me today are Marvell President and CEO, Matt Murphy; and Marvell CFO, Jean Hu.

(Forward-Looking Cautionary Statements)

During our call today, we will refer to certain non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is available on our website in the IR section.

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

Executive
Matt Murphy

Great. Thank you, Ashish, and good afternoon to everyone joining us on the call. The third quarter of fiscal 2019 was the first full quarter that Marvell and Cavium operated as a combined company and we delivered solid results. Working together, we completed several key integration milestones ahead of schedule, including establishing common operating practices, converging our technology, and integrating product roadmaps.

During the quarter, we also hosted our Investor Day in New York City, which many of you attended on the call, where we shared our strategy and growth plans for the combined company as we continue our expansion into the infrastructure market. The breadth and depth of our combined portfolios will drive long term growth in a broad number of areas, including 5G, Ethernet networking, enterprise and data center storage, ARM servers, cloud security, AI, and automotive. During this call, we will provide you with an update on the progress we are making on a number of these growth initiatives and on our continued drive toward operational excellence.

Now, I'd like to cover the results of our third fiscal quarter. Our GAAP revenue was $851 million, GAAP gross margin was 45.1%, and GAAP loss per diluted share was $0.08. Now, switching to our non-GAAP results, Marvell's revenue for the third quarter came in above the midpoint of our guidance at $851 million, driven by strong performance from our networking business and solid performance from our storage business, which met our expectations.

As you may recall, during last quarter's earnings call, we had identified approximately $20 million of excess inventory being held at Cavium customers, which was impacting our revenue expectations for the third quarter. This excess inventory was depleted during the third quarter and revenue from Cavium products came in slightly above our prior estimate of approximately $210 million. In the third quarter, we continued to improve our non-GAAP gross margin, reaching 64.6%, 10 basis points above the midpoint of our guidance. And we continue to expand gross margin over the coming quarters. Marvell's non-GAAP operating margin for the third quarter was 29.7%. Non-GAAP earnings per