Good afternoon. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Astera Labs, Inc. Common Stock Q4 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After management's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn the call over to Leslie Green, Investor Relations for Astera Labs, Inc. Common Stock. Leslie, you may begin.

Thank you, Carly. Good afternoon, everyone, and welcome to the Astera Labs, Inc. Common Stock fourth quarter 2025 earnings conference call. Joining us on the call today are Jitendra Mohan, Chief Executive Officer and Co-Founder; Sanjay Gajendra, President and Chief Operating Officer and Co-Founder; and Mike Tate, Chief Financial Officer. Before we get started, I would like to remind everyone that certain comments made in this call today may include forward-looking statements regarding, among other things, expected future financial results, strategies and plans, future operations, and the markets in which we operate. These forward-looking statements reflect management's current beliefs, expectations, and assumptions about future events, which are inherently subject to risks and uncertainties that are discussed in detail in today's earnings release and in the periodic reports and filings we file from time to time with the SEC, including the risks set forth in our most recent annual report on Form 10-K. It is not possible for the company's management to predict all risks and uncertainties that could have an impact on these forward-looking statements or the extent to which any factor or combination of them may cause actual results to differ materially from those contained in any forward-looking statement. In light of these risks, uncertainties, and assumptions, the results, events, or circumstances reflected in the forward-looking statements discussed during this call may not occur, and actual results could differ materially from those anticipated or implied. All of our statements are made based on information available to management as of today, and the company undertakes no obligation to update such statements after the date of this call except as required by law. Also, during this call, we will refer to certain non-GAAP financial measures, which we consider to be an important measure of the company's performance. These non-GAAP financial measures are provided in addition to and not as a substitute for financial results prepared in accordance with US GAAP. A discussion of why we use non-GAAP financial measures and reconciliations between our GAAP and non-GAAP financial measures is available in the earnings release we issued today, which can be accessed through the Investor Relations portion of our website. With that, I would like to turn the call over to Jitendra Mohan, CEO of Astera Labs, Inc. Common Stock. Jitendra?

Thank you, Leslie. Good afternoon, everyone, and thanks for joining our fourth quarter conference call for fiscal year 2025. Today, I'll provide an overview of our Q4 and full year 2025 results followed by a discussion around the current trends within the AI infrastructure market. I will then turn the call over to Sanjay to walk through Astera Labs, Inc. Common Stock's near and long-term growth profile. Finally, Mike will give an overview of our Q4 2025 financial results and provide details regarding our financial guidance for Q1 2026. Astera Labs, Inc. Common Stock delivered strong results in Q4 with revenue at $270.6 million, up 17% from the prior quarter and up 92% versus Q4 of last year. For full year 2025, revenue was $852.5 million, up 115% versus the prior year. Growth within the quarter and for the year was broad-based, across our signal conditioning, smart cable module, and switch fabric product portfolios as we continue to diversify our business profile with several new design wins across multiple customers. Secular trends remain robust within the AI and cloud infrastructure space, supported by exceptionally strong spending commentary coming from the top US hyperscalers, with Google and AWS alone guiding nearly $400 billion in total CapEx spending for 2026. We are benefiting from this increased spending both in the near term and long term. Furthermore, the market opportunity for our intelligent connectivity platform is substantially larger than we initially anticipated, encompassing multiple product lines, physical media types, form factors, and protocols for both standard and custom applications. Starting with Scorpio, our PCD family continued its volume ramp at our lead customer, with growth coming from both existing and incremental platform designs. For the full year, Scorpio P Series exceeded our target of 10% of revenue and remains the only PCIe six fabric shipping in volume in the market. Looking into 2026, we anticipate continued growth for Scorpio P Series at our lead customer, as well as commencing shipments into at least two additional major hyperscalers on the next generation AI platforms. Moving to Scorpio X Series, we expect to incrementally grow revenue in 2026 followed by a transition to high volume production in 2026. We continue to make excellent progress with additional engagements looking to leverage PCIe for scale-up networking. As previously communicated, we are engaged with 10 plus customers for Scorpio X family, and our current expectation is that we will ship initial quantities of Scorpio X Series to support new customer platforms in 2026 with volume ramps set for 2027. Solid traction continues to develop with respect to UE Link, with a vibrant ecosystem including product announcements, broad IP availability, and compliance methodologies being finalized. Recent public roadmap announcements from AWS and AMD along with other ongoing engagements indicate a broad adoption. UA Link remains the highest performance, lowest latency, fully open solution for AI scale-up connectivity, and we will be ready to intercept the initial customer platform ramp in 2027. Our Ares portfolio continues to perform well, with PCIe six solutions contributing robust growth during the quarter, and the overall portfolio growing nearly 70% year over year in 2025. The demand for Ares is driven by increasing deployments of custom AI accelerators at large hyperscalers. Our Ares Gen six products are the industry's only PCIe six DSP retimer solution shipping to customers in high volume today, and we are well positioned to maintain our leadership role in the market. We remain very early in the PCIe six transition cycle and anticipate additional customers will launch PCIe six capable AI accelerators and systems throughout 2026 and into 2027. As a result, we expect our Ares product line to continue growing in 2026 and beyond. Taurus was our strongest performing product family during 2025 as new programs began shipping in volume to support Q4 designs across both AI and general-purpose systems. In 2025, we saw Taurus revenue grow by more than four times year over year, driven by a breadth of 400 gig designs that will serve as a baseline for continued growth in 2026. We look for the transition to 800 gig switching platforms to be the next catalyst for market expansion, driving further growth opportunities for Taurus. Finally, we made good progress with our Leo CXL memory expansion products in 2025 and look to build upon that in 2026. We are excited to announce our partnership with Microsoft, Intel, and SAP to enable customers to evaluate CXL memory expansion capabilities for their specific workloads within Microsoft Azure M Series virtual machines. This program represents the industry's first publicly announced deployment of CXL attached memory, and we expect initial production volumes to commence in 2026. Overall, we are proud of the progress we have made in 2025. We added new product lines to service more sockets and address custom applications, increased the dollar content per accelerator, diversified our customer base with new design wins, and scaled our operations. This progress and a strong track record of technology and operational execution has helped us forge tight relationships with key AI and cloud infrastructure providers. As an example, an update on our relationship with Amazon can be found in our 8-K filing today. Looking ahead, the combination of growing AI infrastructure deployments and the increasing complexity of high-speed interconnect architectures is poised to drive significant growth for the AI connectivity space. We estimate our served addressable market opportunity will expand by more than 10 times over the next five years to reach $25 billion. This market opportunity spans our existing and announced copper-based product families, including Ares and Taurus signal conditioning solutions, Scorpio AI fabric switches, USCXL memory controllers, and our recently announced custom solution for scale-up connectivity. While these numbers and opportunities are substantial and exciting, there is a significant amount of work that needs to be done. Astera Labs, Inc. Common Stock is deeply committed to building an A-plus team with an execution mindset and capabilities essential to support our customers' technology roadmap and maximize our share of the large market opportunity ahead of us. Therefore, we are strategically investing in the expansion of our team and capability to execute against a broadening set of revenue opportunities generated by our customers. We took an exciting step in this direction this week with the announcement of a significant expansion in our global engineering operations through the establishment of an advanced design center in Israel. Our investment in this talented ASIC engineering team substantially increases our resource pool and will help accelerate the development of cutting-edge high bandwidth and custom AI fabric and emerging AI inference technology. I would like to take a moment to thank our global team of Astera Labs, Inc. Common Stock employees, our partners, and our vendors who worked tirelessly in 2025 to deliver world-class AI connectivity solutions to the market. Their steadfast focus and effort have placed Astera Labs, Inc. Common Stock in a position of strength heading into 2026 as we continue solving next-generation AI connectivity challenges. Finally, we announced today that Mike Tate will transition from the CFO role into a full-time role as a strategic adviser reporting to me. Mike has been instrumental in Astera Labs, Inc. Common Stock's growth and development since inception, and we are very grateful for his many contributions. We are also very excited to announce Desmond Lynch will join Astera Labs, Inc. Common Stock as our new CFO effective March 2. Desmond brings great semiconductor financial experience to the company, and we look forward to drawing on his expertise as we enter our next phase of growth. We are also thankful that Mike will continue to work full-time in his new role to support the company and ensure a smooth transition to Desmond. With that, let me turn the call over to our President and COO, Sanjay Gajendra, to outline our vision for growth over the next several years.

Thanks, Jitendra, and good afternoon, everyone. Today, I want to provide an update on our recent execution followed by an overview of the meaningful market opportunities that will fuel our growth over the next several years. Astera Labs, Inc. Common Stock's mission is to deliver a purpose-built intelligent connectivity platform with a portfolio of solutions including silicon, hardware, and software for rack-scale AI deployments. Over the past several years, we have been building our portfolio, expanding our capabilities with foundational IP, growing our talent pool, and demonstrating the technical and operational execution which has helped us to establish multigenerational partnerships with leading AI platform and cloud service providers. Looking ahead, we plan to deliver technology enhancements to our core portfolio of AI fabric, signal conditioners, and memory controllers while also expanding our breadth of capabilities to new categories including custom connectivity solutions, products to address memory bottlenecks in inference applications, optical engines, and other optical solutions for scale-up and scale-out networks. Let me now provide an update on our future product strategy. Starting with AI fabrics, we have been thrilled with the initial traction of Scorpio P Series and X Series for the last eighteen months. Looking into 2026, we are poised to see diversification with our P Series solutions for head node connectivity at new hyperscaler customers in addition to the volume ramp of our X Series solutions for scale-up networking. Exiting 2026, we expect Astera Labs, Inc. Common Stock to continue being the market-leading provider of PCIe six switching solutions and will become a leading provider of merchant, scale-up AI fabrics. Our early engagements have been crucial to our understanding of the nuances of deploying complex AI fabrics at scale while also identifying new and innovative approaches to expand our roadmap. Furthermore, hyperscalers are demanding flexible connectivity solutions optimized for their unique architectural approaches and application needs. In other words, one size does not fit all. These requirements lend themselves to our software-defined architecture for silicon products which will now extend to wider Redis configuration, multi-protocol support, in-network computing, and ultimately, incorporation of photonic switch to axle return links. These new requirements coupled with larger XPU cluster sizes are expanding the merchant scale-up switching market opportunity, which we believe will grow to roughly $20 billion annually by 2030. Our current roadmap across PCIe, UA Link, and platform-specific scale-up topologies put us in full position to service at least half of this market merchant silicon opportunity in the near to medium term with aspirations to address the entire market opportunity for the next several years. Going to our signal conditioning portfolio, we saw tremendous growth in 2025 with both Ares and Taurus. Looking into 2026, we anticipate strong additional growth fueled by robust secular trends and technology evolution. Across the portfolio, we are well positioned to benefit from forthcoming protocol specification upgrades for PCIe and Ethernet that will double bandwidth capabilities and therefore drive additional reach extension content. Given the market size and growth rate, we'll continue to heavily invest in these portfolios with current development stretching out to PCIe Gen seven, UV link 200 gig, and 1.6 Ethernet applications. We remain well positioned as market leaders in both arenas and we look to leverage our AI fabric engagements to drive additional opportunities within these categories. During Q4, we announced an expansion of our product portfolio to include custom connectivity solutions to address next-generation AI infrastructure featuring heterogeneous compute resources. Our initial prospects in the custom solution space will help to enable NVIDIA's NVLink fusion scale-up architecture for hybrid racks, and we are seeing opportunities to support additional hyperscalers to provide interconnect flexibility and optionality. Through close collaboration with hyperscaler customers and leveraging a broad range of foundational technologies and operational expertise, Astera Labs, Inc. Common Stock is well positioned to provide a broad set of solutions tailored to custom applications. Next, we are working closely with key customers to define, develop, and build optical connectivity engines for scale-up networking. These silicon photonics solutions will ultimately help to enhance both our AI fabric and signal conditioning portfolios as XPU cluster density scales. We believe that transition to optical connectivity for scale-up applications will be additive to the overall AI networking market size, with copper and optical links coexisting from a system standpoint. This could more than double the merchant scale-up switching opportunity. Additionally, the discrete high-density connectors added through our XScale acquisition are seeing strong interest and are being qualified for scale-up applications. Along with our expanding portfolio of AI solutions, we continue to make meaningful progress towards further diversifying our cloud infrastructure customer base. In 2025, we are seeing customer activity and engagement accelerate across all product categories as AI and cloud providers look to Astera Labs, Inc. Common Stock to help solve their next-generation infrastructure challenges. Many of these engagements have converted to design wins and will meaningfully broaden revenue across multiple hyperscalers as we exit 2026. In conclusion, Astera Labs, Inc. Common Stock has arrived at a critical inflection point. Strong fundamental momentum has been generated over the past several years with solid execution helping to build mature, multigeneration customer relationships. Robust secular trends within large-scale AI infrastructure and the criticality of intelligent connectivity solutions are catalysts for a material expansion of our market opportunity. These factors give us the confidence to reinvest in ourselves, our customers, and our partners to drive the deployment of AI infrastructure. We look forward to scaling our team with the continued strong emphasis on execution and investment to deliver on our rack-scale vision throughout 2026. With that, I will turn the call over to our CFO, Mike Tate, who will discuss our Q4 financial results and our Q1 outlook.

Thanks, Sanjay. Thanks to everyone for joining the call. This overview of our Q4 financial results and Q1 guidance will be on a non-GAAP basis. The primary difference in Astera Labs, Inc. Common Stock's non-GAAP metrics is stock-based compensation, acquisition-related costs, and its related income tax effects. Please refer to today's press release available on the Investor Relations section of our website for more details on both our GAAP and non-GAAP Q1 financial outlook as well as a reconciliation of our GAAP to non-GAAP financial measures presented on this call. For 2025, Astera Labs, Inc. Common Stock delivered quarterly revenue of $270.6 million, which was up 17% versus the previous quarter and 92% higher than the revenue of 2024. During the quarter, we enjoyed revenue growth from our Scorpio, Ares, and Taurus product lines supporting both scale-up and scale-out PCIe and Ethernet connectivity for a wide range of AI rack-level configurations. Scorpio P Series demand for PCIe Gen six switching applications was robust during Q4. Scorpio X Series shipped preproduction quantities during the quarter. Ares demonstrated growth during the quarter with Ares six revenue growing strongly as we began shipping PCIe Gen six SEMs for scale-up topologies in high volume. Taurus displayed strong growth during the quarter driven by the ramp of new 400 gig programs for scale-out connectivity for both AI systems and general-purpose platforms. Q4 non-GAAP gross margin was 75.7%, down 70 basis points from the September levels primarily due to a higher mix of hardware sales. Non-GAAP operating expenses for Q4 were $96 million, up $16 million from the previous quarter due to the continued expansion of our R&D organization including the XScale acquisition that closed during the quarter. Within Q4 non-GAAP operating expenses, R&D expenses were $70.7 million, sales and marketing expenses were $11.1 million, and general and administrative expenses were $14.2 million. Non-GAAP operating margins for Q4 were 40.2%, down 150 basis points from the previous quarter. Interest income in Q4 was $12 million. Our non-GAAP tax rate for Q4 was 13%. Non-GAAP fully diluted share count for Q4 was 181.2 million shares and our non-GAAP diluted earnings per share for the quarter was $0.58. Cash flow from operating activities for Q4 was $95.3 million and we ended the quarter with cash, cash equivalents, and marketable securities of $1.19 billion. Now turning to our guidance for 2026. We expect Q1 revenues to increase to within a range of $286 million to $297 million, up roughly 6% to 10% from the fourth quarter levels. For Q1, we expect Ares growth to be driven by a variety of AI platforms across both scale-up and scale-out connectivity. Taurus growth is expected to be driven by an increase in volumes of 400 gig designs for AI scale-up connectivity. Scorpio growth will be primarily driven by the continued deployment of our P Series solutions for scale-out applications and initial volumes of our Scorpio X Series for scale-up switching. We expect Q1 non-GAAP gross margins to be approximately 74%, with the increased mix of our hardware-based solutions in the quarter. We expect first-quarter non-GAAP operating expenses to be in the range of approximately $112 million to $118 million. As previously outlined, our customers continue to present us numerous large revenue opportunities for AI connectivity solutions. The planned increase in operating expenses will enable us to capitalize on these opportunities. This guidance includes expenses related to an AQUI hire transaction we closed this quarter, which helped us rapidly scale our recently announced Israel design center. Interest income is expected to be approximately $11 million. Our non-GAAP tax rate should be approximately 12%. Our non-GAAP fully diluted share count is expected to be approximately 184 million shares. Adding this all up, we are expecting non-GAAP fully diluted earnings per share to be approximately $0.53 to $0.54. Lastly, I would like to welcome Desmond as our new incoming CFO. I believe he's a perfect fit for the company at this exciting stage of the company's growth trajectory. I look forward to continuing to support the company in my new role while also ensuring a smooth CFO transition. This concludes our prepared remarks. And once again, we appreciate everyone joining the call. And now we will open the line for questions.

Your first question comes from Blayne Curtis with Jefferies.

Congrats on the results and congrats, Mike, on the new role. I just want to ask you, obviously, this $6.5 billion is a huge number. I might already know the answer, but I wanted to ask you about what seems like one of the biggest debates still is the acceptance of UA Link for these next-gen designs. You mentioned two lead customers mentioning it. I'm just kind of curious as people think about your UA Link switch opportunity, particularly at your largest customer versus the custom connectivity and then maybe them using NVLink? I'm kind of curious with this deal, is there any better visibility you can kind of think about, you know, that mix between hybrid boxes and native UA Link for these Azure lead customers?

Thanks, Blayne. Maybe let me start and then Mike can chime in on the warrant itself. So, yes, clearly, AWS announced at re:Invent that the Phranyon four, which is slated to ramp in 2027, will support UA Link, which was a very positive endorsement of UA Link, as well as support for NVLink fusion. Subsequently, AMD has also announced that their MI 500 series will also support UA Link, again in 2027. So these are two very good public announcements in support of UA Link, and there are several other discussions that are ongoing. The UA Link ecosystem is coming. We've got great availability of IP, a lot of vendor announcements, and so on. And so we will be ready with our UA Link solution to intercept the ramp that happens in 2027. Now for NVLink fusion, this also represents a meaningful opportunity for us. And before we jump into what the opportunities are, I do want to call out the fact that both Amazon, the hyperscaler, as well as NVIDIA have chosen Astera Labs, Inc. Common Stock as a partner. And that's a very important statement in terms of the trust that they place in Astera Labs, Inc. Common Stock. So the opportunity itself is to take the native protocol that the XPU or the ASIC speaks and translate that into NVLink. This is a sophisticated function, and we have a solution that we will deploy to address this. And given the fact that the solution attaches to the XPU on a one-to-one basis, we anticipate the overall revenues to be in line with the switch opportunity where we might be selling a UA Link switch. So all in all, the exact mix of how much NVLink fusion would be deployed versus a native solution would be deployed remains to be seen. But for us, the opportunity is roughly the same for both.

And just to point out, we did file under an 8-K a warrant agreement with Amazon today. So it demonstrates our strong relationship with Amazon. Under the terms of the warrant agreement, we're issuing 3.3 million warrant shares that are based upon the achievement of performance conditions comprising specified tranches of payments to purchase up to $6.5 billion of our smart fabric switches, signal conditioning products, and also our optical engine solutions.

I actually wanted to ask you on that last part. I thought it was interesting you've been talking more about optical. You know, it's part of that warrant agreement. Can you maybe just talk about you talked about it doubling your TAM, maybe timing on that?

So we think that when we that the optical for scale-up, the timing should be somewhere in 2028. We do believe that the initial deployment for optical technology CPO might happen with scale-out, and that might precede the deployment of scale-up.

Great. Thank you. You talked a little bit about the OpEx increase. I guess it's a pretty big step function up. Can you talk about was the acquisition a part of that? I know it's small. And then, you know, as you look out to these optical scale-up aspirations, I assume that's expensive. Just kind of any incremental sense of why the OpEx is coming up so much so quickly?

Yeah. Joe, over the last couple of quarters, we've been having a lot of advanced dialogue with our customers, and they're presenting us with significant revenue opportunities that, you know, we really feel now is the time to really invest in. You know, as we spoke on the call, the TAM is much bigger than we originally expected just, you know, when we measured it, just twelve, eighteen months ago. So we are increasing our investments to pursue these opportunities. Last quarter in Q4, we did close the XScale acquisition, so now we have a full quarter in Q1. And then just recently in this quarter, we closed another AQUI hire. We got a very sizable capable team to help us scale up our new Israel design center where we just also brought in very exciting, capable leadership as well. So this is all to pursue these opportunities that our customers are pushing us to develop for them.

Okay. Thank you. And then you talked about UA Link. I know there's also a fair amount of noise over the course of the quarter about ESON, Ethernet scale-up. Can you just kind of talk about the handicapping of those two technologies and how you see those technologies coexisting going forward?

Yeah. So the scale-up networking, Joe, that remains a very large market, and it'll include proprietary approaches such as NVLink or Google's API. And we'll also include the merchant and standard approaches such as PCIe, UA Link, Ethernet, and ESON. What we are seeing is that hyperscalers are going to leverage the type of solutions that their software stack is designed for. So, for example, if a customer is using a memory-centric protocol, like NVLink or like PCI Express, they are likely to continue to use that and transition to UA Link as those solutions become available. At the same time, the customers that are using Ethernet are likely to stay with Ethernet and then maybe move to Ethernet when Ethernet becomes available. This is overall a very big market, and there is a lot of room for different solutions to coexist. And we do indeed think that these solutions will coexist. We are primarily developing solutions where our customers are asking us to, which happens to be PCI Express, UA Link, and now increasingly on NVLink fusion.

Thanks for taking my question. On Scorpio, I'm curious if it achieved that 20% of sales. I think, Mike, that you had set in Q4. And if it did, is this kind of $200-ish million run rate, where do you see the outlook for Scorpio, you know, at a high level for 2026?

Yeah. Yeah. Scorpio continues to perform very well. You know, it just launched for the first time in Q2 of this year, and it did break above our 15% for the year. And it grew very nicely in Q4. This is all on the Scorpio P primarily, which is scale-out switching. We did say we just started to ship initial volumes here in this Scorpio X, and then that will have increasing volumes as we enter into 2026, with a much more material ramp in the back half of the year. So, you know, Scorpio, like, is our biggest TAM right now, so it's growing at a very fast clip as a result of that.

Okay. And for my follow-up, Jitendra, how do you see your content as NVIDIA moves to the Vera Rubin generation versus the Blackwell generation? Right? And how do you see whatever the NVIDIA racks are deployed in the Vera Rubin, do you think, you know, they let them capture more of their proprietary content, or do you still see enough opportunity for Astera wherever Vera Rubin is installed? Thank you.

Yeah. It's a great question. So as we have now, the opportunity for Astera arises when our customers do custom deployments of the Grace Blackwell or in the future, Vera Rubin reference design. We have very minimal opportunity with the reference design itself. The initial ramps that Mike has referred to were happening in part of these customized deployments of the Grace platform by our lead hyperscaler customer. And as the hyperscaler customer announced at the public event, they want to continue to deploy Vera Rubin also as a custom deployment. So we will certainly do our best to make sure that we are part of that solution as well as the design transition from Grace Blackwell to Vera Rubin.

Yes. Congratulations on the results and, Mike, congratulations on your new role. I had a follow-up question for Sanjay. Sanjay, when you talked about the SAM by 2030, $20 billion, you know, you'll be able to get half of that today. But you said, you know, PCIe, UA Link, and then platform-specific scale-up topologies. And I'm just curious, is the world changing a little bit where, you know, there's less reliance on standards and there's more platform-specific scale-up initiatives? And is that also why you are stepping up your OpEx as much as you are this quarter?

Yeah. So if you think of a scale-up topology, you're interconnecting accelerators. And to that standpoint, you know, the accelerators could be a merchant silicon or could be an internal custom ASIC. And because these are homogeneous planes, and everyone is trying to eke out the maximum amount of bandwidth and performance on the connectivity side. So in general, what you will expect is quite a bit of customization that will be needed. Now with Astera, we are unique in the sense that our fabrics are designed to be software-defined. In the sense that they can be updated to do certain things that are custom and optimized for specific scale-up topology. So what we have tried to do is not do one silicon for every opportunity, but to be able to leverage the same piece of silicon but to be able to customize that in many different ways. In some ways, we are making sure that the investment that we do is managed, and the differentiation comes from software rather than keep doing a unique silicon for everyone. Now having said that, the thing that we are seeing is a tremendous influx of opportunities. And that's largely coming from the fact that, you know, we spent about twelve to fifteen months sort of being in the scale-up domain, and we have learned a lot. There's a lot of unique things that become critical when you're designing scale-up fabrics. And that learning has enabled us to better present our solution as well as the feature set that we're incorporating in our new product line. And those are gaining, you know, interest and support from several new customers. And to support that is where we see a need to step up our R&D. Meaning the time to invest is now. And this will help us as we think about the longer-term growth of the company as well as our position in the scale-up market.

That's great color. Thank you. And as my follow-up for you, Jitendra, just to clarify, I think you said Scorpio X. So pre-production still first half of this year, then you start the ramp with your lead customer second half. But I think you also said that you expect to have some pre-production with additional customers beyond your lead customer in the second half with ramps in '27. Just want to make sure that I got that right.

Yep. That's correct. Yeah. There is a lot of traction for the Scorpio X family. For customers who are trying to use PCI Express memory-centric protocol for their scale-up. We are filling so many different calls, we expect some of those to get qualified towards the end of this year and then ramp in 2027.

Hi, guys. Thanks for asking the question. And Mike, congrats on the new role. You'll be missed. I guess my first question is on the OpEx side of things. Basically spending about $100 million run rate more than you were prior. I get that the revenue opportunity is larger, but can you give us a little bit idea on what the time to revenue would be in this when you say now is the time to invest? I know the 2030 numbers are big, but is that when today's investment pays off? Or should we expect things sooner than that? Just any more color on the OpEx would be helpful.

Yeah. There's a range, but, you know, the technology that we're developing does have a longer lead time there, but there are new opportunities that could be turned into silicon in relatively short order, and then you have the qualification process with the customers. But you could see, you know, from start to revenues in eighteen, twenty-four months on the earlier side. But also keep in mind, you know, we've been looking at optical, you know, from the inception of the company knowing that, you know, at some point, it was going to be very important as a connectivity supplier. So we've been putting the pieces together internally and then including the new acquisition that we had last year. But, you know, we're building something internally that, you know, other companies, you know, are paying billions of dollars for, you know, to get externally. So and by doing this, we're doing it the right way, and we're building it the Astera way along with the input from our customers. So our development is closely aligned with input from our customers as well.

Great. Thank you for taking the question and congrats on the results. Just in terms of the more customized solution that you're building, is it right to think that your average ASP for the solution or the content opportunity should go up meaningfully versus some of your existing products? And is there anything to call out in terms of maybe a different margin or different profitability profile for those solutions?

And to confirm, you're referring to the Scorpio X?

That's right. That's right.

Yes. For the customized solutions that you're building, like, for example, the NVLink fusion that we noted. So the engagement model, of course, tends to be different. But the attach rate will also tend to be higher. So I think from a volume standpoint, it will be at a certain rate. But the ASPs there will be some considerations that have to be applied because there will be blocks that come from, you know, the partners that we work with. So at the end of the day, I think, like, it's not a highlight that when it comes to our revenue content, both based on a native switch versus a custom solution, the things sort of even up. Where on the native switches, it tends to be one switch being shared across, you know, a few accelerators. Whereas in the custom solution type of products, you're doing it one per accelerator. Which means that you'll have a higher attach rate although the ASP might not be at the same level. And, yeah, Sebastien, in general, a helpful thing that we found is every generation of XPU, our content has grown up so far. And we continue to head in that direction by having more dollar content for XPU generation.

Yes. Mike, you know that some of the increase in OpEx is being driven by your investments in optical and followed through acquisition of AIX Scale. Do you anticipate your customer opportunity for integrating your optical eyeglass cover technology is larger for a switch portfolio than your serial conditioning and SEM products? And I have a follow-up.

Yeah. I mean, I would maybe let me take that and then Mike can chime in afterwards. I would say that the opportunity for including optical into scale-up is actually a very large opportunity. Probably larger than the signal conditioning opportunity that we have. Of the order of, you know, what we are saying for scale-up connectivity. We have not quite sized it up exactly, but it is a very large opportunity. And we are working very closely with our customers to understand what their requirements are and what their time frames are, and we'll be ready for those. We believe for scale-up in particular, that's likely to be in 2028.

Got it. Okay. Sorry. Go ahead.

Also, just to maybe add to that. Right? Now I know optical is an important area for us to invest, and we are doing that with some unique architecture and capabilities. I'd also say that the increase in investments we're doing, like Mike outlined, these are also servicing opportunities on the fabric side, which are much more based upon existing engagement and as customers are seeing the value of what we offer, they're coming back with requests for, you know, additional lane count or Vedic configurations or features and things like that. So the investment that we're talking about, including the Israel team that we set up, which will focus on AI fabrics, it's all being done in a way that, you know, we get the near term, midterm, and long-term growth setting us up nicely for, you know, building on the momentum we have and getting to a different scale from a revenue standpoint. Thank you, Carly, and thank you, everyone, for your participation in questions. Please refer to our Investor Relations website for information regarding upcoming financial conferences and events. Thanks so much. Have a great day.

This concludes today's conference call. You may now disconnect.