Marvell Technology (NASDAQ: MRVL), a designer of networking chips, reported Q1 FY2024 results that exceeded expectations, with revenue of $1.32 billion, down 8.65% YoY. Despite this decline, next quarter’s revenue is expected to be $1.33 billion at the midpoint, which is 1.53% higher than the analyst consensus. The company made a GAAP loss of $168.9 million, down from $165.7 million in the same quarter last year.
If you want to learn more about Marvell Technology, you can access our free analysis of the earnings results here.
Marvell Technology (MRVL) Q1 FY2024 Highlights:
- Revenue: $1.32 billion vs analyst estimates of $1.3 billion (1.67% beat)
- EPS (non-GAAP): $0.31 vs analyst estimates of $0.29 (5.76% beat)
- Revenue guidance for Q2 2024: $1.33 billion at the midpoint, above analyst estimates of $1.31 billion
- Free cash flow: $108.6 million, down 63.5% from the previous quarter
- Inventory Days Outstanding: 122, down from 133 in the previous quarter
- Gross Margin (GAAP): 42.2%, down from 52.5% in the same quarter last year
“We delivered first quarter fiscal 2024 revenue of $1.322 billion, above the midpoint of guidance, and are forecasting sequential revenue growth in the second quarter. We are expecting revenue growth to accelerate in the second half of this fiscal year, accompanied by gross and operating margin expansion,” said Matt Murphy, Marvell’s President and CEO.
Marvell Technology is a fabless designer of special purpose data processing and networking chips used by data centers, communication carriers, enterprises, and autos. The semiconductor industry is driven by the demand for advanced electronic products like smartphones, PCs, servers, and data storage. Technologies like AI, 5G networks, and smart cars are also creating a new wave of growth for the industry. This growth requires new tools that can design, fabricate and test ever smaller sizes and more complex architectures, driving the demand for semiconductor capital manufacturing equipment.
Marvell Technology’s revenue growth has been strong, averaging 31% annually over the last three years. However, last year’s quarterly revenue declined from $1.45 billion to $1.32 billion. Revenue is continuing to decline, signaling that the current downcycle is deepening.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) are an essential metric for chipmakers because it reflects the capital intensity of the business and the cyclical nature of semiconductor supply and demand. Marvell Technology’s inventory days came in at 122, 29 days above the five-year average, suggesting that despite the recent decrease, inventory levels are still higher than what was previously seen.
Key Takeaways from Marvell Technology’s Q1 Results
With a market capitalization of $39.5 billion, more than $1.03 billion in cash and with free cash flow being positive over the last twelve months, the company is in a strong position for growth. The company’s inventory levels improved, and revenue and earnings outperformed expectations. The outlook and accompanying commentary are positive, with management targeting revenue growth to accelerate in H2 FY2024. Gross and operating margin have deteriorated, which is less good, but overall, it was a mixed quarter. The company’s shares are up 15.8% on the results and currently trade at $57.25 per share.
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The author has no position in any of the stocks mentioned.