Marvell Technology Group Ltd. (NASDAQ: MRVL) stock rose over 4.8% on December 4th, 2018 after-hours session (Source: Google finance) after the company posted better than expected results for the third quarter of FY 19. MRVL has had identified approximately $20 million of excess inventory being held at Cavium customers, which was impacting the revenue expectations for the third quarter. This excess inventory was depleted during the third quarter and revenue from Cavium products came in slightly above the prior estimate of approximately $210 million. In the third quarter, the company continued to improve the non-GAAP gross margin reaching 64.6%, 10 basis points above the midpoint of the guidance and the company continued to expand gross margin over the coming quarters. Marvell’s non-GAAP operating margin for the third quarter was 29.7%, non-GAAP earnings per share was $0.33 just above the midpoint of guidance.
MRVL in the third quarter of FY 19 has reported the adjusted earnings per share of 33 cents, beating the analysts’ estimates for the adjusted earnings per share of 32 cents, as per Analysts polled by FactSet. The company had reported the adjusted revenue growth of 35.9 percent to $851 million in the third quarter of FY 19, beating the analysts’ estimates for revenue of $844 million. The revenue is driven by strong performance from the networking business and solid performance from the storage business. The storage business which includes fiber channel products and Marvell’s HDD and flash storage controller products performed well, meeting the expectations with revenue of $407 million. Storage controller revenue increased sequentially quarter-to-quarter with a seasonal increase from all storage markets. On a year-over-year basis, revenue from storage controller shipping into the enterprise and datacenter market grew by approximately 30% year-over-year, which more than offset the year-over-year decline from the PC market. The fiber channel business slightly exceeded the expectations. Marvell’s Ethernet switch and PHY business delivered another strong performance as new products continue to ramp in the enterprise market. Revenue grew by approximately 30% year-on –year.
The company expects revenue between $790 million and $830 million for fiscal fourth quarter, and non-GAAP income per share from continuing operations between 30 cents and 34 cents a share. Non-GAAP gross margin is expected to be approximately 65% and Non-GAAP operating expenses are expected to be $285 million to $290 million for the fourth quarter.