Networking chips designer Marvell Technology (NASDAQ: MRVL) met Wall Streets revenue expectations in Q3 CY2025, with sales up 36.8% year on year to $2.07 billion. The company expects next quarter’s revenue to be around $2.2 billion, coming in 1% above analysts’ estimates. Its non-GAAP profit of $0.76 per share was 3% above analysts’ consensus estimates.
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Marvell Technology (MRVL) Q3 CY2025 Highlights:
- Revenue: $2.07 billion vs analyst estimates of $2.07 billion (36.8% year-on-year growth, in line)
- Adjusted EPS: $0.76 vs analyst estimates of $0.74 (3% beat)
- Adjusted EBITDA: $596.8 million vs analyst estimates of $834 million (28.8% margin, 28.4% miss)
- Revenue Guidance for Q4 CY2025 is $2.2 billion at the midpoint, above analyst estimates of $2.18 billion
- Adjusted EPS guidance for Q4 CY2025 is $0.79 at the midpoint, above analyst estimates of $0.77
- Operating Margin: 17.2%, up from -46.4% in the same quarter last year
- Free Cash Flow Margin: 24.5%, down from 30.4% in the same quarter last year
- Inventory Days Outstanding: 92, down from 96 in the previous quarter
- Market Capitalization: $78.54 billion
“Marvell delivered record third-quarter revenue of $2.075 billion, exceeding the midpoint of guidance, driven by strong demand for our data center products. We are guiding for robust growth in the fourth quarter and are on track for a strong finish to the fiscal year, with full-year revenue growth forecasted to exceed 40%. Looking ahead, we see demand for our products continuing to accelerate, and as a result, our data center revenue growth forecast for next year is now higher than prior expectations,” said Matt Murphy, Marvell’s Chairman and CEO.
Company Overview
Moving away from a low margin storage device management chips in one of the biggest semiconductor business model pivots of the past decade, Marvell Technology (NASDAQ: MRVL) is a fabless designer of special purpose data processing and networking chips used by data centers, communications carriers, enterprises, and autos.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Marvell Technology’s 22% annualized revenue growth over the last five years was exceptional. Its growth beat the average semiconductor company and shows its offerings resonate with customers, a helpful starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Marvell Technology’s annualized revenue growth of 19% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Marvell Technology’s year-on-year revenue growth of 36.8% was wonderful, and its $2.07 billion of revenue was in line with Wall Street’s estimates. Beyond meeting estimates, this marks 5 straight quarters of growth, implying that Marvell Technology is in the middle of its cycle - a typical upcycle generally lasts 8-10 quarters. Company management is currently guiding for a 21.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 17% over the next 12 months, a slight deceleration versus the last two years. Still, this projection is healthy and indicates the market is forecasting success for its products and services.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Marvell Technology’s DIO came in at 92, which is 11 days below its five-year average. At the moment, these numbers show no indication of an excessive inventory buildup.
Key Takeaways from Marvell Technology’s Q3 Results
A highlight during the quarter was Marvell Technology’s improvement in inventory levels. We were also glad its EPS outperformed Wall Street’s estimates. Overall, this print had some key positives. Investors were likely hoping for more, and shares traded down 5.2% to $87.83 immediately after reporting.
Should you buy the stock or not? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.