Marvell: Fiscal 3Q19 Financial Results

(in $ million)	3Q18	3Q19	9 mo. 18	9 mo. 19
Revenue	616.3	851.1	1,794	2,121
*Growth*		38%		*18%*
Net income (loss)	200.2	(53.8)	472.1	81.6

Marvell Technology Group Ltd. reported financial results for 3FQ19.

Revenue for 3FQ19 was $851 million, which exceeded the midpoint of the guidance provided on September 6, 2018.

GAAP net loss from continuing operations for 3FQ19 was $54 million, or $(0.08) per diluted share. Non-GAAP net income from continuing operations for 3FQ19 was $222 million, or $0.33 per diluted share. Cash flow from operations for 3FQ19 was $299 million.

“In the first full quarter operating as a combined Marvell and Cavium team, we completed key integration milestones ahead of schedule, delivered revenue above the midpoint of our guidance, and generated strong free cash flow at 30% of revenue. We also expect renewed revenue growth from the Cavium business in the fourth quarter,” said Matt Murphy, Marvell’s president and CEO. “Looking ahead, we expect the deployment of 5G will accelerate our growth over the next several years as engagements with a growing list of Tier 1 customers continue to build momentum in this major infrastructure transition.“

4FQ19 Financial Outlook
• Revenue to be $790 million to $830 million
• GAAP gross margin to be approximately 46%
• Non-GAAP gross margin to be approximately 65%
• GAAP operating expenses to be $375 million to $385 million
• Non-GAAP operating expenses to be $285 million to $290 million
• GAAP diluted loss per share from continuing operations to be in the range of $(0.05) to $(0.01) per share
• Non-GAAP diluted income per share from continuing operations to be in the range of $0.30 to $0.34 per share

Comments

(in $ million)

3Q18

3Q19

Storage revenue

315.3

406.8

Growth

-4% Y/Y
1% Q/Q

29% Y/Y
21% Q/Q

Storage products are comprised of HDD and SSD controllers, FC adapters and data center storage solutions.

The third quarter of fiscal 2019 was the first full quarter that Marvell and Cavium operated as a combined company.

Solid performance from storage business, up 21% Q/Q and 2,% Y/Y, at $406.8 million, met company's expectations.

Storage represents now 48% of global revenue for the quarter. It was 51% one year ago.

Storage controller revenue increased sequentially Q/Q with a seasonal increase from all storage markets. On a year-over-year basis, revenue from storage controller shipping into the enterprise and datacenter market grew by 30% Y/Y, which more than offset the yearly decline from the PC market.

FC business slightly exceeded expectations.

Marvell expects storage revenue in 4FQ19 to sequentially decline by 10%.

Matt Murphy, president and CEO, comments: "Looking ahead to the fourth quarter and similar to what you have heard from many of our storage customers, we are also forecasting weak demand."