Marvell (MRVL) gains on Q1 earnings pace, strong guidance

Marvell Technology MRVL stock rebounded 3.6% in Thursday’s extended trading session after the semiconductor company reported better-than-expected results for the first quarter of fiscal 2023 and provided strong guidance for the second trimester.

The company announced splendid first-quarter results, in which earnings and revenue not only exceeded the respective Zacks consensus estimate, but also improved significantly year-over-year. California-based Marvell posted non-GAAP earnings of 52 cents a share, beating the consensus mark by a dime. Net income improved by 79% compared to the prior year quarter.

Marvell reported revenue of $1.45 billion, which beat Zacks’ consensus estimate of $1.43 billion. Revenue increased by 74% compared to the reported figure for the previous quarter. This upsurge can primarily be attributed to substantial growth in all end markets, particularly the data center end market.

Marvell Technology, Inc. Price, Consensus, and EPS Surprise

Marvell Technology, Inc. price-consensus-eps-surprise-chart | Marvell Technology, Inc. Quote

Quarter details

In the first quarter, Marvell delivered year-over-year revenue growth in all of its end markets.

Data center revenue soared 131% year-over-year to $640.5 million. The segment accounted for 44% of total fiscal first quarter revenue, highlighting that it is currently MRVL’s largest end market relative to others.

Carrier infrastructure revenue, which accounted for 18% of total revenue, rose 50% year-over-year to $252 million.

Enterprise networks revenue jumped 64% year-over-year to $286.6 million and accounted for 20% of total revenue.

Consumer revenue, which accounts for 12% of total revenue, increased 7% to $178.5 million.

Automotive and industrial revenue jumped 94% year-over-year to $89.3 million. Segment revenue represented 6% of total revenue.

Marvell’s non-GAAP gross profit rose 77% to $947 million in the first quarter. As a result, the margin increased by 120 basis points (bps) to 65.5%.

Non-GAAP operating expenses increased 42% year over year to $435.3 million. Non-GAAP operating margin increased 790 basis points year over year to 35.4%.

Balance sheet and cash flow

Marvell ended the first quarter with cash and cash equivalents of $465 million, compared to $613.5 million in the prior quarter. The company’s long-term debt was $4.47 billion.

The company generated $194.8 million in cash from operating activities in the first quarter.

Marvell returned $50.9 million to shareholders in dividends and repurchased shares worth $15 million in the first quarter.

Tips

For the second quarter of fiscal 2023, Marvell expects strong revenue growth, driven by the data center end market, accelerating 5G adoption in the U.S. and other regions, and broad-based growth in several products. The company forecasts revenue of $1.515 billion (+/- 3%) for the second fiscal quarter.

Non-GAAP gross margin is expected to be 65-65.5%, while non-GAAP operating expenses are estimated at approximately $435 million.

The company expects non-GAAP earnings per share for the second quarter to be around 56 cents (+/- 3 cents).

Zacks Ranking and Other Stocks to Consider

Marvell currently wears a Zacks Rank #2 (Buy).

Some other top stocks in the broader tech sector are ON Semiconductor ON, Analog devices ADI and MaxLinear MXL. ON currently sports a Zacks Rank #1 (Strong Buy), while Analog Devices and MaxLinear each carry a Zacks Rank #2. You can see the full list of today’s Zacks #1 Rank stocks here.

The Zacks consensus estimate for ON earnings in the second quarter of 2022 has been revised to $1.26 per share from $1.05 over the past 30 days. For 2022, earnings estimates have risen 17.5% to $4.91 per share over the past 30 days.

ON’s earnings have exceeded the Zacks consensus estimate in the previous four quarters, with the average surprise being 2.8%. ON shares are up 47.3% over the past year.

Zacks’ consensus estimate for Analog Devices’ third-quarter fiscal 2022 earnings was revised up 5 cents to $2.42 per share in the past seven days. For fiscal 2022, earnings estimates have moved north 16 cents to $9.24 per share in the past seven days.

Earnings for Analog Devices have exceeded the Zacks consensus estimate in each of the previous four quarters, with the average surprise being 7.7%. ADI shares are up 0.5% over the past year.

Zacks’ consensus estimate for MaxLinear’s second-quarter 2022 earnings was revised up 10 cents to $1.02 per share in the past 30 days. For 2022, the Zacks consensus estimate for MaxLinear earnings has moved north 36 cents to $4.07 per share in the past 30 days.

MaxLinear’s earnings have exceeded the Zacks consensus estimate in each of the previous four quarters, with the average surprise being 7.1%. MXL shares are up 2.9% over the past year.

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