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Marvell (MRVL) Q2 Earnings & Revenues Top Estimates, Up Y/Y

Marvell Technology Group Ltd. MRVL delivered second-quarter fiscal 2021 non-GAAP earnings of 21 cents, which surpassed the Zacks Consensus Estimate of 10 cents. Moreover, the reported figure  increased three-fold from the year-ago quarter’s earnings of 7 cents.

Marvell’s revenues of $727 million also outpaced the consensus mark of $720.5 million. In addition, the revenue figure increased 10.7% year over year. Strong demand for its networking products from the data-center and 5G infrastructure end markets aided the company’s performance during the reported quarter.

Quarter Details

In the end markets, storage revenues (40% of total revenues) grew 6% year over year to $290 million. This upswing is mainly attributable to the ramp-up of a customized SSD controller for DIY program and easing of the pandemic-related production challenges. The company noted that the supply-chain improvement benefited its fiber channel and storage controller products. Additionally, Marvell’s SSD business continues to grow.

The networking business (56%) revenues rose 23% year over year to $406 million on the ongoing 5G deployments in China.

Other product revenues (4%) during the fiscal second quarter decreased 41% on a year-over-year basis to $30.8 million.

Marvell Technology Group Ltd. Price, Consensus and EPS Surprise

Marvell Technology Group Ltd. Price, Consensus and EPS Surprise

Marvell Technology Group Ltd. price-consensus-eps-surprise-chart | Marvell Technology Group Ltd. Quote

Marvell’s non-GAAP gross margin came in at 63.3%. Non-GAAP operating expenses were $297 million. Non-GAAP operating margin expanded 170 basis points year over year to 22.4%.

Marvell exited the reported quarter with cash and cash equivalents of $831.5 million compared with the previous quarter’s $667.5 million. The company’s long-term debt totaled $992.4 million.

The company generated cash from operating activities of $225.8 million during the fiscal second quarter and $401.5 million in the first half of fiscal 2021. During the quarter, Marvell returned $40.1 million to shareholders through dividend payments. In the first half of the fiscal year, it repurchased shares worth $25.2 million and paid $79.9 million in dividend.

Guidance

Marvell's guidance for the third quarter of fiscal 2021 takes into account the U.S. government's export restriction on certain Chinese customers. The company has temporarily widened the guided range for revenues due to the uncertainties associated with the coronavirus crisis.

The company projects third-quarter fiscal 2021 revenues of $750 million (up or down up to 5%). The Zacks Consensus Estimate for revenues is pegged at $774.2 million, suggesting growth of 16.9% from the year-ago quarter.

Non-GAAP earnings per share are expected between 22 cents and 28 cents. The consensus mark of 16 cents indicates a 123.2% year-over-year slump.

The company projects Networking revenues to increase in the mid-to-high single-digit range in the ongoing quarter mainly driven by significant growth in wireless infrastructure, and the data-center end markets. However, demand in enterprise market is expected to remain soft during the current quarter due to the COVID-19 pandemic.

Zacks Rank and Key Picks

Currently, Marvell carries a Zacks Rank of 4 (Sell).

Better-ranked stocks in the broader technology sector include Apple AAPL, Lam Research Corporation LRCX and Synaptics SYNA, all sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Apple, Lam Research and Synaptics is currently pegged at 10.7%, 15.4%, and 10%, respectively.

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