Marvell Technology (MRVL Quick QuoteMRVL - Free Report) reported better-than-expected results for the second quarter of fiscal 2025. The chipmaker’s revenues and earnings were above the midpoint of its guidance.

The Wilmington, DE-based company reported non-GAAP earnings of 30 cents per share, which surpassed the Zacks Consensus Estimate by a penny. Quarterly earnings also came ahead of the midpoint of the company’s guidance of 29 cents (+/- 5 cents). The bottom line decreased 9.1% on a year-over-year basis, mainly due to higher-than-expected operating expenses.

The semiconductor company’s fiscal second-quarter revenues increased 12.8% year over year to $1.27 billion, which beat the Zacks Consensus Estimate of $1.25 billion due to lower revenues across all end markets, excluding data center. The top line was also above the midpoint of management’s guidance of $1.25 billion (+/- 5%).

Considering better-than-expected second-quarter performance, Marvell initiated a strong fiscal third-quarter guidance for both revenues and earnings. The stock has gained 15.8% in the year-to-date period. We expect its share price to improve, given the strong guidance for the fiscal third quarter.

MRVL’s End Market Performance

Data center revenues of $881 million increased 92% year over year and 8% sequentially. The robust year-over-year and sequential increase was primarily driven by strong traction in electro-optics products, custom silicon, storage and switch divisions.

The segment accounted for 69.2% of the quarter’s total revenues, highlighting that it is currently MRVL’s largest end market. Our estimate for Data Center’s fiscal second-quarter revenues was pegged at $863.5 million.

Revenues from enterprise networking plunged 54% year over year and 1% sequentially to $151 million and accounted for 12% of the total revenues. The year-over-year decline was primarily due to the weak demand environment and ongoing inventory correction in this end market. Our estimate for enterprise networking’s fiscal second-quarter revenues was pegged at $153 million.

Carrier infrastructure revenues, which constituted 6% of the total revenues, plunged 72% year over year and rose 6% sequentially to $76 million due to a soft demand environment and ongoing inventory correction. Our estimate for the division’s fiscal second-quarter revenues was pegged at $71.7 million.

Automotive/Industrial revenues declined 31% year over year and 2% sequentially to $76.2 million due to inventory correction measures adopted by customers of this end market. Revenues from this segment constituted 6% of the total revenues. Our estimate for the Automotive/Industrial’s fiscal second-quarter revenues was pegged at $77.7 million.

Consumer revenues, representing 7% of the total revenues, decreased 47% year over year while growing 112% sequentially to $89 million. Our estimate for Consumer’s fiscal second-quarter revenues was pegged at $83.9 million.

Operating Details of MRVL

Marvell’s non-GAAP gross profit of $787.5 million reflected a decrease of 2.5% on a year-over-year basis while increasing 8.8% sequentially. The non-GAAP gross margin of 61.9% expanded 160 basis points (bps) on a year-over-year basis but contracted 50 bps sequentially.

Non-GAAP operating expenses totaled $455.8 million compared with $448 million in the year-ago quarter and $453.8 million in the previous quarter.

Marvell’s non-GAAP operating margin of 26.1% contracted 80 bps year over year and expanded 280 bps sequentially.

Balance Sheet and Cash Flow

Marvell exited the fiscal second quarter with cash and cash equivalents of $808.7 million compared with $847.7 million in the previous quarter. The company’s long-term debt totaled $3.99 billion, which was lower than the previous quarter’s $4.03 billion.

The company generated cash worth $306.4 million through operational activities in the fiscal second quarter. MRVL returned $227 million to shareholders by repurchasing $175 million worth of common stock and making $52 million in dividend payments in the quarter under review.

Guidance

For the third quarter of fiscal 2025, Marvell expects revenues of $1.45 billion (+/- 5%). The Zacks Consensus Estimate for revenues is pegged at $1.40 billion. The non-GAAP gross margin is projected to be 61%, while non-GAAP operating expenses are estimated to be $465 million.

The company projects non-GAAP earnings per share for the fiscal third quarter to be 40 cents (+/- $0.05), and the consensus mark for the same is currently pegged at 38 cents.

Zacks Rank & Stocks to Consider

MRVL currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector are Aspen Technology (AZPN Quick QuoteAZPN - Free Report) , Celestica (CLS Quick QuoteCLS - Free Report) and Arista Networks (ANET Quick QuoteANET - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus mark for Aspen’s 2025 earnings has been revised upward by 70 cents to $7.43 per share over the past 30 days, indicating a 12.8% year-over-year increase. It has a long-term earnings growth expectation of 13.1%. The stock has lost 2.7% year to date.

The Zacks Consensus Estimate for Celestica’s 2024 earnings has been revised upward by 33 cents to $3.65 per share in the past 60 days suggesting year-over-year growth of 50.2%. Shares of Celestica have surged 72% year to date.

The Zacks Consensus Estimate for Arista’s 2024 earnings has been revised upward by 30 cents to $8.24 per share in the past 30 days, indicating an increase of 18.73% on a year-over-year basis. Shares of ANET have jumped 46.7% year to date. It has a long-term earnings growth expectation of 17.2%.