• Q1 Revenue: $579 million
• Q1 Gross Margin: 60.2% GAAP gross margin; 60.4% non-GAAP gross margin
• Q1 Diluted earnings per share: $0.19 GAAP diluted earnings per share from continuing operations; $0.24 non-GAAP diluted earnings per share from continuing operations
• Cash and short-term investments: $1.65 billion

Marvell Technology Group Ltd. (NASDAQ: MRVL), a leader in storage, networking and connectivity semiconductor solutions, today reported financial results for the first fiscal quarter of fiscal year 2018. Revenue for the first quarter of fiscal 2018 was $579 million, which exceeded the midpoint of the Company's guidance provided on March 2, 2017.

GAAP net income from continuing operations for the first quarter of fiscal 2018 was $97 million, or $0.19 per share. Non-GAAP net income from continuing operations for the first quarter of fiscal 2018 was $124 million, or $0.24 per diluted share. Cash flow from operations for the quarter was $135 million.

Subsequent to the close of Marvell's first quarter of fiscal 2018, the Company sold its LTE thin-modem business to ASR Microelectronics for a purchase price of $45 million. ASR is a provider of cellular platform SoCs and software for the cellular end market. This product line was classified as part of the Company's other product category. In the second quarter of fiscal 2018, this product line will be reclassified and added to discontinued operations. The Company's revenue guidance provided for the fiscal second quarter of 2018 excludes revenue associated with this sale, which has been approximately $5 million per quarter.

"Marvell executed well in the first quarter of fiscal year 2018 as a renewed focus on its core businesses of storage, networking and connectivity were able to generate revenue growth of 12% year-over-year, driven by the long-term secular growth trends in the amount of data being created, stored and transmitted both wired and wirelessly," said Marvell's President and CEO, Matt Murphy. "We are pleased to see that this growth was accompanied by a significant expansion in gross and operating margin, demonstrating the strength in our business model and the value Marvell's solutions are bringing to our customers."

Second Quarter of Fiscal 2018 Financial Outlook

• Revenue is expected to be $585 to $615 million. This range excludes approximately $5 million in revenue associated with sale of LTE thin-modem business.
• GAAP and non-GAAP gross margins are expected to be approximately 61%.
• GAAP operating expenses are expected to be $237 million to $247 million.
• Non-GAAP operating expenses are expected to be $215 million to $220 million.
• GAAP diluted EPS from continuing operations is expected to be in the range of $0.21 to $0.27.
• Non-GAAP diluted EPS from continuing operations is expected to be in the range of $0.26 to $0.30.

Discontinued Operations

The Company's financial results for prior periods presented herein have been recast to reflect certain businesses that were classified as discontinued operations during the fourth quarter of fiscal year 2017.

Conference Call

Marvell will conduct a conference call on Thursday, May 25, 2017 at 1:45 p.m. Pacific Time to discuss results for the first quarter of fiscal 2018. Interested parties may join the conference call by dialing 1-844-647-5488 or 1-615-247-0258, pass-code 17273674. The call will be webcast by Thomson Reuters and can be accessed at the Marvell Investor Relations website at http://investor.marvell.com/ with a replay available following the call until June 2, 2017.

Discussion of Non-GAAP Financial Measures

Non-GAAP financial measures exclude the effect of share-based compensation expense, amortization and write-off of acquired intangible assets, acquisition-related costs, restructuring and other related charges, litigation settlement, and certain expenses and benefits that are driven primarily by discrete events that management does not consider to be directly related to Marvell's core operating performance.

In fiscal 2018, Marvell began using a non-GAAP tax rate to compute the non-GAAP tax provision. This non-GAAP tax rate is based on Marvell's estimated annual GAAP income tax forecast, adjusted to account for items excluded from GAAP income in calculating Marvell's non-GAAP income, as well as the effects of significant non-recurring and period specific tax items which vary in size and frequency. Marvell's non-GAAP tax rate is determined on an annual basis and may be adjusted during the year to take into account events that may materially affect the non-GAAP tax rate such as tax law changes; significant changes in Marvell's geographic mix of revenue and expenses; or changes to Marvell's corporate structure. For the first quarter of fiscal 2018, a non-GAAP tax rate of 4% has been applied to the non-GAAP financial results.

Non-GAAP diluted net income per share from continuing operations is calculated by dividing non-GAAP net income from continuing operations by non-GAAP weighted average shares outstanding (diluted). For purposes of calculating non-GAAP diluted net income per share, the GAAP weighted average shares outstanding (diluted) is adjusted to exclude the potential benefits of share-based compensation expected to be incurred in future periods but not yet recognized in the financial statements. The expected compensation costs are treated as additional proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.

Marvell believes that the presentation of non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to Marvell's financial condition and results of operations. While Marvell uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Marvell does not consider these measures to be a substitute for, or superior to, financial measures calculated in accordance with GAAP. Consistent with this approach, Marvell believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance.