Good afternoon and welcome to Marvell Technology, Inc.'s Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to Marvell's fourth quarter and fiscal year 2025 earnings call. Joining me today are Matt Murphy, Marvell's Chairman and CEO; and Willem Meintjes, our CFO. Let me remind everyone that certain comments made today include forward-looking statements, which are subject to significant risks and uncertainties that could cause our actual results to differ materially from management's current expectations. Please review the cautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website, as well as our most recent 10-K and 10-Q filings. We do not intend to update our forward-looking statements. During our call today, we will refer to certain non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is also available in our earnings press release. Let me now turn the call over to Matt for his comments on the quarter. Matt?

Thanks, Ashish, and good afternoon, everyone. For the fourth quarter of fiscal 2025, Marvell delivered record revenue of $1.817 billion, above the midpoint of guidance, growing 20% sequentially and 27% year-over-year. Our data center end market was the primary growth driver, fueled by strong AI demand and execution. In addition, we saw continued demand recovery across our multi-market businesses, including carrier, enterprise, networking, and automotive and industrial. I am pleased to report that we achieved GAAP profitability in the fourth quarter and expect this to continue in fiscal 2026. Our record non-GAAP earnings per share of $0.60 exceeded the midpoint of guidance growing 40% sequentially. This earnings growth rate double our top line growth rate underscores the substantial operating leverage in our business model. For the full fiscal year 2025, we delivered $5.77 billion in aggregate revenue, with our data center revenue growing 88% year-over-year. We ended the year with our AI revenue substantially above our $1.5 billion target from April 2024's AI Day and we also expect to very significantly exceed our $2.5 billion target in fiscal 2026. Our overall revenue growth accelerated in the second half of the year, driven by our custom silicon program ramps along with continued strong growth in Electro-Optics. In fiscal 2025, we also drove a record $1.68 billion in operating cash flow and significantly increased capital returns to our stockholders through stock repurchases and dividends totaling $933 million in aggregate. I'm extremely pleased with our fiscal 2025 results and even more excited about our outlook for robust year-over-year revenue growth in fiscal 2026. We are poised for a strong start to the New Year, forecasting revenue growth of over 60% year-over-year in the first quarter at the midpoint of guidance. Let me now discuss our results and expectations for each of our end markets. In our data center end market for the fourth quarter, we achieved record revenue of $1.37 billion, growing 78% year-over-year and 24% sequentially. These strong results were driven by our custom AI silicon programs ramping to high volume production. Additionally, we benefited from strong shipments of our Electro-Optics products and Teralynx Ethernet switches with revenue from both product lines growing double-digits sequentially on a percentage basis. Within our Electro-Optics franchises, we continued to see strong demand for our market-leading 800-gig PAM products and our 400ZR DCI products. We also began shipments of the industry's first 1.6T PAM DSP and 5-nanometer process technology. To further optimize AI interconnect performance, we accelerated the cadence of next-generation products by introducing the industry's first 3-nanometer 1.6T DSP featuring 200-gig per lane electrical and optical interfaces. This new Marvell DSP enables customers to reduce 1.6T optical module power consumption by more than 20% compared to its predecessor. And we expect to go into production in the second half of this year as 1.6T adoption accelerates. While tremendous focus remains on GPUs and XPUs, the distributed nature of computing AI makes connectivity just as critical as the individual processors. As a result, the design of the next generation of accelerated infrastructure is inexorably tied to how efficiently data can be moved on and off the accelerators and throughout the cluster. This increase in the role of high-speed networking and AI data centers is perfectly aligned to our strength as an industry leader. And just like compute, hyperscalers are also customizing networking, and we are seeing similar momentum for flash-based storage, HBM, and CXL-based DRAM pooling. We'd announced the design win at Meta for a custom NIC at OCP last October, and we are seeing hyperscalers more broadly adopting similar strategies. This is evident in our recent design wins, which now include multiple custom NICs as well as a follow-on custom CXL memory solution. We are also enabling new interconnect technologies such as CPO and LPO for scale-up fabrics and coherent-lite DSPs for emerging campus-wide large-scale AI data centers. Earlier this year, we announced Marvell's Breakthrough Co-Packaged Optics architecture for custom XPUs, enabling customers to integrate optics into future custom accelerators. First demonstrated at OFC 2024, the heart of Marvell's CPO platform is our 6.4T 3D silicon photonics engine. It integrates hundreds of active and passive components in a single unified device and builds on multiple generations of silicon photonics innovations that we have been shipping in high volume in our DCI modules for several years. Co-Packaged Optics can enable an increase in the size and scale of AI servers, which currently rely on passive copper interconnects. We expect this transition from copper to optical interconnects will significantly expand Marvell's interconnect revenue and market opportunities. We are engaged with customers to evaluate this advanced technology, and we anticipate a multi-year period of trial system development ahead of wide-scale industry adoption for CPO. Let me now turn to our current custom silicon programs. Marvell has successfully ramped highly complex 100 billion plus transistor XPUs and CPUs from initial samples to high volume production on first-pass silicon. Our custom business continues to gain momentum as customers increasingly rely on Marvell to help them achieve their custom silicon ambitions. As I mentioned, our two leading AI custom programs are in high volume production, and we expect growth to continue. One of these is a custom ARM CPU, which we expect we'll see expanding adoption in our customers' data centers. The second program is for a custom AI XPU, which is also performing extremely well with significant volume production ahead. In parallel, we are fully engaged with this customer on the follow-on generation of this XPU and planning for a production ramp once it completes its sampling and qualification cycles. As a result, we expect our revenue from custom XPUs for this customer to not only grow this year, fiscal 2026, but continue to grow next year fiscal 2027 and beyond. Additionally, we are making tremendous progress with the new design win announced at our AI Day in April 2024 for a custom AI XPU with an additional US hyperscaler. Marvell's engineering team, in close partnership with the customer, has successfully completed a number of key technical milestones during the joint development process. As a result, we believe we are well on track to meet our customers' desired schedule to start production in calendar 2026. Engagement is also multigenerational, and we expect it to result in a very significant amount of incremental revenue for Marvell over the next several years. I'm very pleased with our custom revenue achievement for fiscal 2025, driven by multiple program reps. This success coupled with strong progress on upcoming custom programs gives us even greater confidence in our ability to achieve our long-term market share targets for custom revenue. We are continuing to invest in all aspects of our technology platform, including advanced process nodes, electrical and optical SerDes, high-speed die-to-die interconnects, embedded memory, custom HBM, 2.5D and 3D packaging, and silicon photonics. This week, we announced the demonstration of the industry's first 2-nanometer silicon IP for next generation AI and cloud infrastructure. Produced on TSMC's 2-nanometer process, this working silicon is a critical part of the Marvell platform for developing custom XPUs, CPUs, switches, and other technology critical for next generation accelerated workloads. Now let me turn to our outlook for our data center end market for the first quarter of fiscal 2026. We forecast that the cloud and AI portion of this end market will continue to drive sequential double-digit revenue growth. For the on-premise portion of our data center end market, we expect the seasonal sequential decline in revenue to partially offset growth from cloud and AI. As a result, we expect our overall data center revenue to grow sequentially in the mid-single digits on a percentage basis. Now let me turn to Marvell's enterprise networking and carrier infrastructure end markets. In the fourth quarter, enterprise networking revenue was $171 million and carrier infrastructure revenue totaled $106 million. In the fourth quarter, we saw continued recovery in both of these end markets, with revenue collectively growing 18% sequentially. Looking ahead to the first quarter of fiscal 2026, we expect aggregate revenue from enterprise networking and carrier infrastructure to grow sequentially by approximately 10%. We are pleased with the continued recovery in these two end markets, although this forecast still anticipates Marvell products shipping below end market consumption. In the consumer end market, revenue in the fourth quarter was $89 million, declining 8% sequentially. For the first quarter of fiscal 2026, consistent with our prior comments, we expect seasonality in gaming demand to drive a sequential decline in revenue from our consumer end market of approximately 35%. Over the next several years, we continue to anticipate our revenue from the consumer end market to be approximately $300 million on an annual basis. Turning to our automotive and industrial end market, fourth quarter revenue was $86 million, growing 3% sequentially as we continue to see a modest recovery in this end market. Looking ahead to the first quarter of fiscal 2026, we anticipate continued sequential growth in the automotive end market. However, we expect this to be more than offset by a decline in revenue from our industrial end market, where order patterns can be lumpy in any given quarter. As a result, we project our overall revenue from the auto and industrial end market to decline sequentially in the high-single digits on a percentage basis. In summary, we drove tremendous revenue growth throughout fiscal 2025, significantly scaling the company from an annualized revenue run rate of $4.6 million in the first quarter to over $7.2 billion by the fourth quarter. Building on this expanded base, we anticipate strong year-over-year revenue growth in fiscal 2026. Our AI-driven data center end market is expected to remain a key contributor, further supported by the ongoing recovery in our multi-market businesses. Marvell's data center end market accounted for 75% of consolidated revenue in the fourth quarter. Reflecting this rapid transformation during fiscal 2025, we purposely redirected our investments towards data center relative to our other end markets to fully capitalize on the massive opportunity created by AI. We recently evolved our organizational structure to fully enable this strategic transformation. All products focused on hyperscale customers are now managed by a single cloud data center group led by Raghib Hussain, our President of Products and Technologies. We have merged the rest of our end markets into a single multi-market business group led by Chris Koopmans, our Chief Operating Officer. Marvell has solidified its position as a leading provider of data infrastructure semiconductors with the unique business model spanning full custom to full merchant solutions. We are seeing strong investment and accelerated infrastructure from both established hyperscalers and the number of well-funded new market entrants as they race to build million XPU training clusters. These customers are highly incentivized to increasingly use custom infrastructure to augment their merchant solutions. Recent developments in the AI market, such as the advent of reasoning models, are also expected to continue driving strong demand for compute, networking, and storage semiconductors. As a result, we remain very optimistic about both our short-term and long-term growth prospects and our role in enabling accelerated infrastructure. We look forward to updating investors on our business model and the significant opportunities ahead of us at our Investor Day on June 10th in New York. With that, I'll turn the call over to Willem for more detail on our recent results and outlook.

Thanks, Matt, and good afternoon, everyone. Let me start by summarizing our full fiscal year results. In fiscal 2025, Marvell delivered $5.767 billion in revenue with strong 37% growth in second half revenue compared to the first half. This growth was primarily driven by our AI programs in the data center end market, as well as continuing recovery in our other end markets. For the full year on a GAAP basis, our gross margin was 41.3%. Operating margin was negative 12.5% and loss per diluted share was $1.02. On a non-GAAP basis, our gross margin was 61%, operating margin was 28.9%, and earnings per diluted share was $1.57. We delivered over 1,000 basis point improvement in our non-GAAP operating margin through fiscal 2025 from 23.3% in the first quarter to 33.7% in the fourth quarter. We also drove a record $1.68 billion in operating cash flow and significantly increased capital returns to our stockholders, returning $933 million through dividends and buybacks. Moving on to our financial results for the fourth quarter of fiscal 2025. Revenue in the fourth quarter was $1.817 billion, exceeding the midpoint of our guidance, growing 27% year-over-year and 20% sequentially. Data center was our largest end market, contributing 75% of total revenue. GAAP gross margin was 50.5%. Non-GAAP gross margin was 60.1%. Moving on to operating expenses. GAAP operating expenses were $682 million including stock-based compensation, amortization of acquired intangible assets, restructuring costs, and acquisition-related costs. Non-GAAP operating expenses came in at $479 million in line with our guidance. Our GAAP operating margin was 12.9%, while non-GAAP operating margin was 33.7%. For the fourth quarter, GAAP earnings per diluted share was $0.23. Non-GAAP income per diluted share was $0.60, reflecting sequential growth of 40%, which is double the pace of revenue growth demonstrating the significant operating leverage in our model. Now turning to our cash flow and balance sheet. Cash flow from operations in the fourth quarter was $514 million. Our inventory at the end of the fourth quarter was $1.03 billion, an increase of $170 million from the prior quarter to support the strong growth we are experiencing in our business. Our DSO was 51 days, decreasing by nine days from the prior quarter. We returned $52 million to shareholders through cash dividends. In addition, we repurchased $200 million of our stock during the fourth quarter. Our total debt was $4.06 billion with a gross debt to EBITDA ratio of 2.06 times and a net debt to EBITDA ratio of 1.58 times. We have seen continuous improvement in our debt ratios as we have driven an increase in our EBITDA through fiscal 2025. We were pleased to receive an upgrade to our investment grade credit rating from Fitch in January, citing their positive outlook on Marvell's strong operating momentum from robust data center demand, structurally improved leverage metrics, strong market position, and strengthened cash flow profile. As of the end of the fourth fiscal quarter, our cash and cash equivalents were $948 million, increasing by $80 million from the prior quarter. Turning to our guidance for the first quarter of fiscal 2026. We are forecasting revenue to be in the range of $1.875 billion plus or minus 5%. We expect our GAAP gross margin to be approximately 50.5%. We expect our non-GAAP gross margin to be approximately 60%. Looking forward, we anticipate that the overall level of revenue and product mix will remain key determinants of our gross margin in any given quarter. For the first quarter, we project our GAAP operating expenses to be approximately $712 million. We anticipate our non-GAAP operating expenses to be approximately $490 million, a modest increase of approximately 2% from the prior quarter. It is worth noting that this step up in OpEx is lower than what we would normally expect due to the typical seasonality in payroll taxes and employee salary merit increases in the first quarter. This is because we expect more leverage from our custom model and expect higher NRE in the first quarter on a sequential basis. As a reminder, NRE is treated as contra OpEx. For the first quarter, we expect other income and expense, including interest on our debt, to be approximately $43 million. We expect a non-GAAP tax rate of 10% for the first quarter. We expect our basic weighted average shares outstanding to be $867 million and our diluted weighted average shares outstanding to be $818 million. We anticipate GAAP earnings per diluted share in the range of $0.14 to $0.24. We expect non-GAAP earnings per diluted share in the range of $0.56 to $0.66. I am very pleased with Marvell's execution on all our key financial metrics throughout fiscal 2025. As we enter fiscal 2026, we intend to continue driving strong operating leverage and expect to make significant progress towards our long-term non-GAAP operating margin target of 38% to 40%. We will also remain focused on generating strong cash flow and returning capital to our stockholders. I'm very excited about our future prospects and look forward to strong year-over-year revenue growth in fiscal 2026. With that, we are ready to start our Q&A session. Operator, please open the line and announce Q&A instructions. Thank you.

We will now begin the question-and-answer session. Your first question comes from Ross Seymore with Deutsche Bank. Your line is now open.

Hi, everyone. Thank you for allowing me to ask a question. Matt, I want to revisit your remarks about being confident in growth with your lead XPU customer, both this year and next. As you might understand, there is a lot of discussion about a competitor gaining market share. How would you recommend we address both your confidence and that of your competitor at the same time? It seems challenging for both perspectives to align.

Yes, Ross, thanks for the question. And I very much understand the debate that's out there, and I appreciate a lot the significant interest from the analyst community and our investors on this topic. So let me try to be as helpful as I can given the constraints we've got around customer confidentiality and their concerns about their own programs and their confidentiality. Okay. So we're very pleased with the ramp of our current lead XPU program. We delivered this with first-pass silicon success. We see significant volume production on the current generation in front of us, and you can already see the ramp in our numbers starting in Q4. In parallel, we have been deeply engaged on the next generation of this AI XPU with this customer. I said this in my prepared remarks, but I'll just go over it again. And we're planning for a production ramp once it completes its sampling and qualification cycles. So to be crystal clear, we do expect revenue from these custom XPUs with this customer not only to grow in fiscal '26, which is the year we're in, but to grow in fiscal '27 and beyond. And I just want to also note that I'm not including revenue here that would be from other products such as networking or connectivity that would be incremental to custom. And certainly, we've got a great setup, I think, overall with this account relative to the opportunity set, but it's really on both. And then with respect to the question that our customer may be working with someone other than Marvell on a next-generation XPU, it's just something we can't comment on. What I can comment on is visibility for the products that we will be building for the customer, and as I said, this extends to the next generation of our current AI XPU program.

Thank you.

Your next question comes from Vivek Arya with Bank of America. Your line is now open.

Thank you for taking my question. Matt, just one clarification. If you could help quantify the mix between AI and non-AI in your data center for Q4 and Q1? Is it like two-thirds, one-third? So any quantification there would be helpful. And then a little more generic question, which is that when we look at Q4 and Q1 data center and AI, they are very strong on a year-on-year basis, but the extent of the beats is somewhat modest when we contrast that with very strong spending at your largest customer. So any commentary there would be very helpful? Is it a supply issue? Is it just early days of the ramp? So any commentary there would be helpful. Thank you.

Yes. Thanks, Vivek. Maybe I'll answer the second part first, just on the overall setup. If you look at it, we've seen very strong growth the last few quarters. I think really, really actually above overall market. I think we were up data center revenues, 25% sequentially Q2 to Q3, 25% Q3 to Q4. As I said in the prepared remarks, our AI and cloud revenue, as that portion of the data center business is up double-digits from Q4 to Q1. So these are all sequential numbers, by the way. And of course, on the year-on-year, if you look at Q4, we're like up 77% or something in data center and I think Q1 were pretty similar. So we're very pleased with the trajectory of this business in terms of just the sequential and year-over-year growth rates. I think that's tracking really well. On the AI side and how we think about it is, and I'll just give you kind of maybe a flash point just as we sort of exit the year, but a good overall proxy. So today AI is more than half the revenue. So it's now the majority. It's crossed over. And I think as we go forward, that's going to just continue to increase. And so because overall Marvell is now 75% of our revenue kind of plus going forward in data center, that's going to end up being a really good proxy. Underneath that, about half of that is if you just look at overall data center now, just to provide a little more color. About half of that is in Electro-Optics and custom now has grown to about 25%. And about a quarter, a little bit more of the data center revenue and then the balance is made up of everything else. So again, it's a nice trajectory here. We've got AI that's sort of outgrown the total. It's the majority driving the business. Data center is now a significant total portion of overall Marvell. And then the mix continues to grow nicely with custom really ramping. So hopefully some of those data points are helpful, but we're very pleased overall with the trajectory of the business.

Thanks, Matt.

Can we get the next question please?

Operator?

I'm checking. Folks, please hold while we get the operator back online.

Your next question comes from the line of Timothy Arcuri from UBS. Your line is now open.

Thanks a lot. Matt, I wanted to clarify the answer you just gave on the breakdown of AI revenue. You said more than half is AI, which I get of data center. And then you said half a data center is optics. Did you mean half of AI's optics so that the AI breakdown is basically roughly half is optics and then half is custom ASIC? Is that what you meant?

Yes, sorry. Yes, Tim, thanks for the clarification to be precise. It's overall data center of those numbers I gave you.

Okay. And then you had guided AI to $2.5 billion this year. I think you said you used the word very significantly. You're going to exceed that in fiscal '26. What does that mean? I guess most of the sell side is thinking like $3.5 billion. So that certainly would qualify as very significantly. But is that what you mean when you say very significantly by like $1 billion? Is that the type of thing that would qualify as that? Thanks.

Yes, Tim. Thank you for the question. We're keeping this year open-ended regarding what we can achieve. Last year, we discussed reaching $1.5 billion, and we exceeded that. This year, we expect to be well above that again, but I’m not putting a specific number on it yet. There’s a lot of momentum and opportunities ahead. Currently, we're focusing on our last update from AI Day last year and will determine the right time to provide additional guidance later. Right now, things are trending exceptionally well, and you can see it reflected in the numbers. As I mentioned before, data center revenue now represents 75% of Marvell, which you can use as a solid indicator of our progress.

Okay, Matt. Thanks.

Your next question comes from the line of Harsh Kumar from Piper Sandler. Your line is now open.

Yes, hi. Thanks for letting me ask a question. Matt, I think you mentioned that you have three kind of custom ASIC customers for you. I wanted to talk about, I wanted some color on the stickiness of these customers. Kind of what are some of the triggers that might cause some of these customers to go look for another design partner? Is it price, or is it just 100% performance if you can't produce, and start looking? And what is the second part of the question is, what is the possibility of you being able to attach your networking products to some of these custom ASIC players or if you do, could you just help us understand what's being attached today?

Thank you for the question. First, we have custom engagements with all four major hyperscalers and two of them are focused on compute, with a third one on the way. These chips are quite complex. Our perspective aligns with our previous statements; we sized the total addressable market for Marvell at around $75 billion for data centers back in April of last year, and this figure has likely grown, especially the portion coming from custom solutions. Customers are seeking partners with certain key attributes: technology leadership and investment in intellectual property. Recently, we announced our working 2-nanometer platform and a strong offering in custom HBM, die-to-die, and advanced packaging. Additionally, they're looking for manufacturing scale to drive effective design methodologies for first-pass silicon success and to ramp up these intricate chips with over $100 billion transistors. Relationships with suppliers are crucial, and at Marvell, we have invested significantly in our supply chain. Finally, partners must be flexible in their business models, accommodating various approaches from traditional ASIC services to comprehensive build-to-spec solutions. We excel in all these areas. Ultimately, we believe that only we and one other large competitor can adequately serve this market. The sockets are quite sticky, and while we must compete for each generation, we have successfully secured substantial custom silicon programs since 2021, bringing them into production while also planning for the next generation. We are confident in our position, as there are high barriers to entry and a strong stickiness factor, though we recognize the need to win each time. Finally, from a design opportunity perspective, our pipeline continuously expands, and we have recently closed significant designs, even in the fourth quarter. These dynamics indicate that while competition is fierce, we are in an exceptionally strong position regarding our technology, platform, and focused execution during what we consider the most significant opportunity in the semiconductor industry: the upcoming AI super cycle.

Thanks, Matt. And then for my follow-up, I was curious if you could expand on your comment around, you said, I think, growth in data center, cloud, plus AI will be double-digit, on-prem will be down. Can you help us think about what you mean by that? What is double-digits? Is it teens or higher than that? Just because investors are super sensitive to the growth rate in your cloud and AI business?

Yes, we are being more specific. This is our guidance, and while double-digits means growth above 10%, it's not necessarily 20%. We’ll see how the quarter ends, but that's our current perspective. Regarding networking, it has consistently shown to be very effective and is closely linked to our custom designs. I mentioned this in my earlier comments, but the value of our solutions has evolved beyond just having the best individual silicon for computing. It's important to achieve the right performance and leverage Moore's Law, but to achieve exceptional performance, we need to combine that with networking and connectivity. The I/O capabilities from scale-up to scale-out among the various interconnect options we offer are becoming a strong reason for customers to choose us, as we can architect those solutions together along with compute opportunities in custom silicon. When we engage with projects like accelerators or CPUs, we gain early insights into customer architectures, not only regarding the computing aspects but also the necessary I/O, allowing us to tailor our offerings. This approach is fundamentally designed to enhance our technology platform, making our value proposition significantly more appealing to our customers compared to competitors who may only focus on one part of this equation.

Very helpful, Matt. Thank you.

Your next question comes from the line of Aaron Rakers from Wells Fargo. Your line is now open.

Yes. Thanks for taking the question. I'm going to stick with the AI question as well. Matt, you had mentioned that you had four customers in the hyperscalers that you engaged, and you mentioned two in compute and the third one coming. The fourth, I just want to be clear, is that also a compute opportunity, or is that referring to the NIC custom NIC opportunity that you're currently engaged in? And then also on that same narrative, how do you think about the custom logic opportunity around HBM 4 and the timing of when that might be impactful for Marvell? Thank you.

Yes. Thanks, Aaron, and great two questions. So, yes, on the first one, I think you got it right. You actually nailed it. The fourth customer, we're in production, and we publicly announced with custom NIC in that area. And then on custom HBM, yes, that continues to be actually a critical IP for us and I think a critical part of what we see the customer roadmaps aligning around. We're very engaged right now both with the key memory partners of ours who we work with jointly with our hyperscale customers. The benefits are quite significant that we're able to propose in terms of each front area reduction on the logic die, the ability for our customers to get significantly more compute packed into that die and then also improving the throughput between the HBM and the compute and then actually being able to have a higher density memory solution wrapped around our customers' compute die. So all those are still very valid, and I think that's going to be a significant sort of industry trend that we're going to see in the next generation of these high-end accelerator products. Thanks.

Thanks.

Your next question comes from the line of Tom O'Malley from Barclays. Your line is now open.

Hey, guys. Thanks for taking the question. Appreciate it. So I kind of wanted to pivot a little bit to the technology side. So Matt, in the script, you talked about increasingly optical connections taking over areas where electrical connections were today. I kind of wanted to get your opinion like when you look at the world of just optics in general and particularly Co-Packaged Optics, do you see that at first happening kind of inside of the rack or do you see that kind of happening in the aggregation layer? And what does that mean for your DSP business? Like obviously your share of the optical world is a little bit different than your share of the switching world. I just would love your commentary on where you see kind of Co-Packaged optics coming first. And then kind of as it relates to your product set, where do you feel like you have some strength.

Yes. Great. Thanks, Tom. So, yes, maybe some perspective. The first is in the history of CPO, I think, prior to this shift in the last few years of the growth in accelerated computing. The holy grail that's been out there for a decade plus, close to 20 years, is that the aggregation layer or the scale-out could go to CPO. There have been a lot of POCs in this area, and that's kind of where a lot of the air really did come out of the balloon. Not just from us, but our big cloud customers sort of have said that's a very long-term type of opportunity. That's been our view too, by the way, that it's something that we're paying attention to, we've got some investment there. But what's really happened is that in the scale-up and the connectivity in the rack, in between accelerators and inside the cluster. That's where there's a lot of opportunity to go active and accelerated in terms of the connectivity and to go optical from passive. That could be accomplished in a couple of different ways, and Co-Packaged Optics is a very interesting and compelling way to do that. We demoed our 6.4T product a year ago at OFC, and we will continue to invest in this area and have a lot of traction regarding our solutions as part of our ASIC platform. LPO is similar; I think that may find a home in some of these connection points again within the rack. But these will be important applications, especially in closed systems. There's a lot of technology that needs to get developed and a lot of work to do. We're very much investing here and will be in this business to compete with best-in-class technology. The question is, when does it get adopted? What is the qualification process, and what are all the manufacturing and yield issues we're going to have to deal with? So it's complex, Tom. But we think it's a critical part of our long-term technology investment. We just have to balance those off with the reality that this is very complex new and not traditional basic CMOS technologies. These are more complex. You'll see more from us at OFC on this. We think it's going to take some time for it to finally work its way through industry-wide into real high-volume production. Thanks.

Super helpful. And then just on the near-term, obviously, on the optical side, it sounds like things are better there. But there's been noise as there is about many things these days in relation to AI about potentially some headwinds in terms of inventory at 800-gig or the pricing dynamic as you move to 1.6T. Could you maybe comment on the health of both of those nodes and kind of what you're seeing in terms of the growth trajectory for the 800-gig world this year and just the health of pricing, et cetera? Thank you, Matt.

Yes, yes. No, we feel really good. Optics has been very, very strong for us. We saw a big uptick in the second half of last year in terms of orders. We've been fulfilling those. We see demand very strong this year, particularly in 800-gig very healthy demand. We do see a 1.6T transition happening, but quite frankly, 800-gig continues to be the workhorse. We'll be ready to support both our 5-nanometer 1.6T device, but we're very excited about our 3-nanometer product. It's getting a lot of great traction because of the power savings. It's 20% per link. It really adds up when you talk about the massive scale and the number of interconnect points in these massive clusters that are being built, so all that looks very positive, Tom. Of course, there's always noise in the system. This is a hot area. From a Marvell perspective, sharing what we see, we see very healthy strong demand continuing.

Your next question comes from the line of Harlan Sur from JPMorgan. Your line is now open.

Hey, good afternoon, guys. Thanks for taking my question. Great to see that you captured the follow-on AI XPU program after your current XPU program, which is ramping now with your major cloud and hyperscale customer. Matt, just to clarify. So is the new follow-on XPU program a training XPU as well? Is that a calendar '26 ramp? And is that at 5-nanometer or 3-nanometer? Any more color there would be helpful. And then for Willem, your inventories were up 20% sequentially, which in a strong demand and product cycle environment like typically implies strong future growth, but you compare that to the 3% sequential total revenue guide for April. There seems to be some disconnect. So the way to interpret this is that the 20% sequential growth in inventories is more reflective of the AI strong growth profile ahead for the team?

Yes, I'll start off, Harlan. So, yes, a couple of things. Given the confidentiality wrapper we've got, I can say the first is you should assume this is a very high volume program, and it's a continuation of what we're doing. On the timing perspective, all I can say there is we'll be ready to ramp when it’s time, and we’ll manage that transition. We're very confident in our ability to manage that transition successfully with our customer, but that timing is something we’re just going to have to see when that’s ready, and I can’t really comment on my customer plans in this kind of detail, they just don’t like it, and I don’t blame them. I’ll let Willem take the inventory question. Thanks.

Thank you.

Hey, Harlan. On Inventory, that's really in support of continuing growth in our custom programs that we see over this year as well as very strong growth on the optics side. There's really those two dynamics driving inventory. But if you look at it on a day, it's actually flat quarter-over-quarter.

Got it. Thanks for the inputs, guys.

Your next question comes from the line of Mark Lipacis from Evercore ISI. Your line is now open.

Great. Thanks for taking the question. Matt, I think there's always a concern in the market around this risk of a deceleration in spending or maybe even a digestion period. You seem to express confidence in the visibility as you go through this year. I wonder if you can help us understand the markers that you look for on your dashboard that tells you there's a risk of a digestion period. I think maybe as part of that, I guess, I've always thought of Marvell as like a COM IC company. Now you just have this processor business that's really ramping. I wonder if you kind of deconstruct that risk assessment. Do you think about those two businesses differently?

Yes. Okay. Yes, I'll break it into the two pieces. We do a lot of triangulation, Mark, as a company relative to how we forecast our data center business in particular. We take a lot of top-down data into account in terms of CapEx trends and things like that. But ultimately, we're so joined at the hip because of the key nature of these programs and ultimately our products. Especially where they’re completely sole source being a potential gate for our customers. We’ve been planning our supply chains very carefully together. I think you can see the evidence of that over the last two years as we ramp with kind of the advent of AI. It’s amazing to think of where we were if I actually go back to this call two years ago, and the big breakthrough was we were saying we were going to do $200 million in AI revenue in calendar '23 and $400 million in '24. Now we just finished '24 and we're talking about blowing through $1.5 billion and doing over $2.5 billion. We scaled, right, along with our customers and generally continue to exceed expectations and ramp with what they need. So when we look to the rest of the year, and even, quite frankly, on a multiyear view, it's a very strong outlook. Some of that is our own specific things because we have new programs, let’s say in the custom area, ramping that are incremental. We also have customers transitioning from a technology perspective, say, an interconnect. So we have a lot of positive tailwinds. The supply chain needs constant review. However, at the moment, we see a very strong setup for growth in our fiscal '26 and our fiscal '27 driven by both the custom programs ramping as well as continued strength in connectivity and in higher layer networking and in things like storage coming back. All these look like a positive setup at the moment.

Great. Thank you. Very helpful.

Your next question comes from the line of Ben Reitzes from Melius Research. Your line is now open.

Thank you for the question and for the break. My question is about sequential growth and a long-term perspective. Can you confirm that AI revenue is expected to grow sequentially throughout the year? Also, what is your level of confidence in that? Additionally, I want to address the ongoing speculation about a customer and content. With your goal of reaching $15 billion for the data center by 2028, are you seeing progress in your custom business to achieve that target, considering that the market estimates are far from this figure? Thank you.

Yes, Ben, thanks for the questions. So, yes, on the assumptions through the year, yes, I didn't, I think what I said was in Q1 our data center business, ex the on-prem stuff was going to be up double-digits, coming off of overall data center like 25% a quarter sequentially. I didn’t comment throughout the whole year, but you should just assume. It’s not a bad assumption or would be a fair assumption to think that it’s going to continue given the strength in the business and the momentum that we’re seeing. For the long-term, I think we're tracking extremely well to our 20% market share number. When we look back to kind of calendar '23 and then '24 and '25 and you start bouncing it up against what we said at the AI Day, it looks very favorable. We're definitely gaining share from '23 to '24 and we'll definitely gain more share from '24 to '25. To get that revenue target, you got to get there from both sides. You got to grow the share from kind of 10% to 20% and the market's got to develop. You got to get to the sort of 75 billion TAM, but both those are trending in a very positive direction, and, if anything, the TAM and the opportunity for Marvell, way larger than it was when we looked at it almost a year ago. So all those make me feel very good about the market size developing and our progression on the market share. Absolutely, that would be an absolute home run to get there. And that's what me and my team are absolutely driving in this company every day to drive the market share, help create the market, help make the TAM happen, and execute like crazy in a very focused manner. This is why we reorganized the company with a dedicated data center engineering and business group to drive it. I think the setup is really good. Thanks.

Thanks, Matt.

Your last question comes from the line of Christopher Rolland from Susquehanna. Your line is now open.

Hey, thanks for squeezing me in. Some of this was addressed, but scale-up, you guys have a lot of opportunities here. Some of this could be optical, some of it could be Co-Packaged, some of it could be active copper. I think you might even have some like UAL or NVLink alternatives, DSP throughout the system. I guess as we see changes in architecture, either GPU or XPU, where do you think your biggest opportunities are? And when might we see some of these wins? Thanks, Matt.

Yes. Excellent, Chris, and a great question to end the session. First of all, you've done your homework. The key message is we are planning on participating and enabling all of the things you mentioned, we have programs underway and developments in all those different areas. The key thing I want to stress is this is incremental TAM; the scale-up opportunity looks like that's what's going to play out. That is all incremental. That's not, hey, if that happens, Marvell's DSP revenue goes down. The scale-up and this type of connectivity is all revenue upside, market upside type of opportunities. We’re very excited about that, and I think you’re going to hear a lot more about that from us, certainly at things like OFC and our Investor Day and so forth. Big opportunity there, no question.

Thanks, guys.

Thanks, Chris.

Let me now turn the call over to Mr. Murphy for closing comments.

Yes. Thank you, operator. First of all, I appreciate everybody joining the call. I apologize for the gap there. I hope everybody enjoyed a quick coffee break and we'll certainly figure out what happened. I appreciate the interest in the company. I want to thank everybody for their interest and just to reflect on a few things. The first is we had really strong progress in fiscal '25. We started off at a $4 billion-ish, $4.2 billion type of run rate in the first half. We're now at the $1.875 kind of guide, well above a $7.5 billion kind of run rate. That's a really strong trajectory for the company heading into the year and a big change. We’re also getting leverage in the model. The operating leverage, cash flow generation, operating margin expansion; you can even see it in things like our Q4 to Q1 OpEx, which normally would go up, as Willem said, more than we're forecasting, but we're starting to see the benefit of these custom silicon programs kicking in. We were GAAP profitable as well in Q4, which was great. We’re going to keep driving that. It wasn't just AI. Our standard cloud infrastructure side of things and data center also had a very strong year. The programs that there were some concerns about going back a year ago can you ramp? These products are going to get qualified; what's going to happen? I think our team did an excellent job of ramping these very complex devices into full volume production, supporting our customers. We had a banner year for our Electro-Optics business and it looks very strong heading into next year. Also, the multi-market businesses that were a source of concern over the past year. You’re seeing very strong sequential growth now out of those businesses as they recover. We had a beat and raise. We're guiding revenue and earnings growth to continue in the first quarter. Customer engagement is strong. As I mentioned, we had very strong design wins in the last year, great execution by our sales team to win those key designs that are going to drive our future growth. I look forward to seeing all of you in various investor meetings coming up to continue the discussion. Thanks, everybody. I appreciate it.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.