Marvell Technology (MRVL) Q2 FY2027 Earnings Call: Q&A Summary

Q: Tom O'Malley from Barclays asked about the revenue drivers for the Google commercial agreement and the specific XPU attach products Marvell is excited about.

A: CEO Matt Murphy stated the engagement is broad-based, covering inference accelerators, storage controllers, NICs, memory interface controllers, and near-memory compute. He noted that the XPU attach category is massive and represents a game-changing opportunity.

Q: Harlan Sur from JPMorgan asked about the timing of the $120 billion Google commercial agreement and how it impacts fiscal 2029 custom revenue targets.

A: Matt Murphy explained that some programs are already in flight, with significant contributions expected in fiscal 2029. He reiterated that custom revenue is expected to more than double next year and that the long-term custom revenue target has upside bias.

Q: Vivek Arya from Bank of America asked for an update on the other large XPU program planned for next year.

A: Matt Murphy said the company is encouraged by the progress on this program, noting it is tracking well and remains one of Marvell's largest revenue opportunities.

Q: Aaron Rakers from Wells Fargo asked about the evolution of CXL and the progress of scale-up optics relative to previous targets.

A: Matt Murphy described CXL as a home run for memory expansion and inferencing, with strong adoption at multiple hyperscalers. He added that scale-up optics, including NPO and CPO, are accelerating and are a significant driver of the $1.5 billion revenue raise for next year.

Q: Joe Miller from Morgan Stanley asked about progress in copper scale-up and whether the transition to optical is a separate decision.

A: Matt Murphy stated that Ethernet switching is seeing great traction and that customers are increasingly looking for end-to-end solutions that combine switching and optics, which Marvell is uniquely positioned to provide.

Q: Ben Reitzes from Melius Research asked about the scale of the Google deal and its impact on fiscal 2029 and 2030 revenue and margins.

A: Matt Murphy confirmed that the deal represents a significant step-up for fiscal 2029 and beyond. He noted that custom margins are in line with the company's financial model.

Q: CJ Muse from Cantor Fitzgerald asked how the fungibility of compute, networking, and memory supports new design wins.

A: Matt Murphy stated that the company's ability to execute custom and semi-custom designs quickly is a key capability. He noted that CXL, memory expansion, and inference accelerators are critical trends where Marvell is seeing increased activity.

Q: Jim Schneider from Goldman Sachs asked for an update on the growth rates for connectivity.

A: Matt Murphy explained that connectivity is a major driver of the $1.5 billion revenue raise, specifically highlighting scale-up optics, transceivers, and switching as areas of broad-based strength.

Q: Quinn Bolton from Needham asked about the Q3 guidance and the factors driving the 90 basis point margin compression.

A: CFO Dan Durn explained that the ramp in custom business is the primary driver of the margin mix in Q3. He expects Q4 gross margins to remain in the same range as Q3 and anticipates fiscal 2028 margins to be in a similar range.