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The company reported adjusted earnings (including stock-based compensation but excluding all one-time items) of 20 cents per share, outpacing the Zacks Consensus Estimate of 16 cents. Reported earnings were far better than the year-ago loss of 4 cents.
In the last one year, the stock has surged roughly 71.7% and has outshone the Zacks categorized Semiconductor-Communications industry’s gain of 47.5%.
Quarter Details
Marvell’s revenues grew 11.5% year over year to $579.2 million. The reported figure beat the Zacks Consensus Estimate of $570 million. The year-over-year increase was mainly due to growth in storage, networking and connectivity business.
At the end markets, storage revenues increased 25% year over year on better-than-expected demand at the HDD (Hard-Disk Drive) and SSD (Solid-State Drive) segments along with increased demand from enterprise and data center market.
The networking business increased 5% year over year due to demand in the enterprise networking business.
Revenues from connectivity increased 3% year over year, primarily driven by wins in gaming and home media streaming applications. Other product revenues during the quarter declined 16% year over year.
Marvell’s adjusted gross profit came in at $348.6 million, up 26.8% on a year-over-year basis. Gross margin also increased from 52.9% to 60.2% on a year-over-year basis, primarily buoyed by a favorable product mix and higher revenue base.
Adjusted operating expenses decreased 14.7% year over year to $244.9 million. Marvell’s adjusted operating income came in at $103.8 million compared with a loss of $12.1 million reported in the year-ago period. The results were positively impacted by lower operating expenses as a percentage of revenues.
The company reported adjusted net income (including stock-based compensation but excluding all one-time items) of approximately $101.9 million during the quarter.
GAAP net income for the quarter came in at $96.9 million against net loss of $13.3 million reported in the year-ago quarter.
Marvell exited the quarter with cash, cash equivalents and short-term investments of $1.649 billion as compared to $1.668 billion in the previous quarter. Cash from operating activities during the quarter amounted to $135.1 million. The company carries no long-term debt.
During the quarter, Marvell paid $30 million as dividend to its shareholders and repurchased $166 million worth of shares.
Outlook
Marvell expects second-quarter fiscal 2018 revenues in the range of $585 to $615 million. The Zacks Consensus Estimate is pegged at $589 million.
Management expects non-GAAP gross margin at around 61%, while non-GAAP operating expenses are expected to be roughly between $215 million to $220 million. The company expects non-GAAP earnings per share in the band of 26 cents to 30 cents while the Zacks Consensus Estimate is pegged at 20 cents.
Our Take
Marvell reported stellar first-quarter fiscal 2018 results, wherein the bottom and top line surpassed the Zacks Consensus Estimate. Revenues improved on a year-over-year basis mainly due to increased demand from its storage, networking and connectivity business. Moreover, the company provided an encouraging second-quarter guidance.
Though the macro headwinds and stringent regulations might put the company's financials under pressure in the near term, we believe that the strong demand for Marvell’s 4G LTE products could be a growth driver. This will be supported by growth from the company’s wide range of newly-launched Internet of Things (IoT) solutions.
Going forward, the company’s current restructuring initiative will help Marvell improve cloud infrastructure and applications, which are expected to drive the company’s top line. The latest buyback scheme also reflects the company’s sound financial position and favorable prospects.
However, competition in the semiconductor market from major players such as Intel Corp. (INTC - Free Report) and Texas Instruments Inc. (TXN - Free Report) is a headwind.
DXC has long-term expected earnings per share growth rate of 8%.
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Marvell Technology (MRVL) Beats on Q1 Earnings and Revenues
Marvell Technology Group Ltd. (MRVL - Free Report) reported better-than-expected first-quarter fiscal 2018 (ended Apr 29, 2017) results.
The company reported adjusted earnings (including stock-based compensation but excluding all one-time items) of 20 cents per share, outpacing the Zacks Consensus Estimate of 16 cents. Reported earnings were far better than the year-ago loss of 4 cents.
In the last one year, the stock has surged roughly 71.7% and has outshone the Zacks categorized Semiconductor-Communications industry’s gain of 47.5%.
Quarter Details
Marvell’s revenues grew 11.5% year over year to $579.2 million. The reported figure beat the Zacks Consensus Estimate of $570 million. The year-over-year increase was mainly due to growth in storage, networking and connectivity business.
At the end markets, storage revenues increased 25% year over year on better-than-expected demand at the HDD (Hard-Disk Drive) and SSD (Solid-State Drive) segments along with increased demand from enterprise and data center market.
The networking business increased 5% year over year due to demand in the enterprise networking business.
Revenues from connectivity increased 3% year over year, primarily driven by wins in gaming and home media streaming applications. Other product revenues during the quarter declined 16% year over year.
Marvell’s adjusted gross profit came in at $348.6 million, up 26.8% on a year-over-year basis. Gross margin also increased from 52.9% to 60.2% on a year-over-year basis, primarily buoyed by a favorable product mix and higher revenue base.
Adjusted operating expenses decreased 14.7% year over year to $244.9 million. Marvell’s adjusted operating income came in at $103.8 million compared with a loss of $12.1 million reported in the year-ago period. The results were positively impacted by lower operating expenses as a percentage of revenues.
The company reported adjusted net income (including stock-based compensation but excluding all one-time items) of approximately $101.9 million during the quarter.
GAAP net income for the quarter came in at $96.9 million against net loss of $13.3 million reported in the year-ago quarter.
Marvell exited the quarter with cash, cash equivalents and short-term investments of $1.649 billion as compared to $1.668 billion in the previous quarter. Cash from operating activities during the quarter amounted to $135.1 million. The company carries no long-term debt.
During the quarter, Marvell paid $30 million as dividend to its shareholders and repurchased $166 million worth of shares.
Outlook
Marvell expects second-quarter fiscal 2018 revenues in the range of $585 to $615 million. The Zacks Consensus Estimate is pegged at $589 million.
Management expects non-GAAP gross margin at around 61%, while non-GAAP operating expenses are expected to be roughly between $215 million to $220 million. The company expects non-GAAP earnings per share in the band of 26 cents to 30 cents while the Zacks Consensus Estimate is pegged at 20 cents.
Our Take
Marvell reported stellar first-quarter fiscal 2018 results, wherein the bottom and top line surpassed the Zacks Consensus Estimate. Revenues improved on a year-over-year basis mainly due to increased demand from its storage, networking and connectivity business. Moreover, the company provided an encouraging second-quarter guidance.
Though the macro headwinds and stringent regulations might put the company's financials under pressure in the near term, we believe that the strong demand for Marvell’s 4G LTE products could be a growth driver. This will be supported by growth from the company’s wide range of newly-launched Internet of Things (IoT) solutions.
Going forward, the company’s current restructuring initiative will help Marvell improve cloud infrastructure and applications, which are expected to drive the company’s top line. The latest buyback scheme also reflects the company’s sound financial position and favorable prospects.
However, competition in the semiconductor market from major players such as Intel Corp. (INTC - Free Report) and Texas Instruments Inc. (TXN - Free Report) is a headwind.
Currently, Marvell has a Zacks Rank #2 (Buy).
Another better-ranked stock in the technology space is DXC Technology Company (DXC - Free Report) , sporting a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
DXC has long-term expected earnings per share growth rate of 8%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>