ALAB - Earnings call transcript Q1 2024 | Astera Labs, Inc. Common Stock

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Operator

Thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Astera Labs First Quarter 2024 Earnings Conference Call. [Operator Instructions] I will now turn the call over to Leslie Green, Investor Relations for Astera Labs. Leslie, you may begin.

Leslie Green

Regina. you, Thank and XXXX everyone, the Labs Astera Good Call. welcome Quarter Earnings First afternoon, to

Joining the Chief today Officer. and Co-Founder; us on Mike Co-Founder; Executive Mohan, and Sanjay Officer Chief Gajendra, Chief President, Tate, Operating and call Officer Financial are Jitendra

not call our cause the in uncertainties we regarding, like from those which contained remind materially those have not in current forth differ differ materially set this forward-looking among may inherently strategies statement. expected that financial all certain SEC I impact the factor implied. risks the extent of and other which everyone today In management's in in occur, light risks, could or any that may to expectations on from and or assumptions factors risks results to from uncertainties and events time would this statements. that any These is circumstances beliefs may final in statements the reflected during in forward-looking operate. results, forward-looking the discussed of forward-looking operations combination including we markets or these actual and could made file things, to which these reports results, in discussed results assumptions, and anticipated relating call to started, to in about and today's company's uncertainties management plans, the to predict include Or get future actual IPO. It and time possible periodic perspective that for Before the events, reflect release and filings the to are comments forward-looking the with future statements risks earnings future detail subject and statements are we

to superior earnings today, non-GAAP GAAP measures accordance financial financial undertakes conform our the with discussion which GAAP. these issued required to of on after why result between and which are this by as of call is important portion based be over as non-GAAP through in results prepared of to of of new to our be release Mohan, update a U.S. obligation our and of as today, events not addition available statements to financial our company's or financial the this our call our also like refer statements with be the the of we All website A to date law. Also in provided accessed management Relations website. With information, no can and and expectations, future measures, to would company of we substitute to will use the Astera we reconciliations accessible are for the in turn information call, and made such will through a measures measures of to the in non-GAAP filings the Investor These during SEC, Jitendra? performance. Labs. measure Relations will available except in as or to financial non-GAAP which I we Investor an also portion consider included that, certain CEO be changes Jitendra

Jitendra Mohan

execution big momentum Thank along public seeing in Leslie. a is the March. company. as of This thanks afternoon, conference earnings Labs IPO for to call off and continued you, joining strong our our everyone, first Good a year with and with start successful Astera

customers, to years. their I investors, foremost, and for the over would and our partners, thank past First employees support like steadfast X suppliers

deliver been solutions is AI hyperscalers address the worldwide. ground cloud. the beginning. the built innovative to providers and company leading scale able your with up the it technology potential to Astera Labs connectivity from full and But unlock With bottlenecks the we've of platform AI have We in only help, the just to

leading developing with deployments infrastructure new also AI new categories of while product pace accelerated hyperscalers exploring segments. the by supporting are market We

early past is of Against a industry believe we balance cloud continued generation the Astera reports quarterly the an innovators their is this several CapEx market, our of clear the in through earnings reports, during CapEx and $XX quarter commentary positioned Astera for is remain U.S. while maps. results recent at AI on largest QX road flows, also that the build positive to needed over the infrastructure year-on-year transformative hyperscalers to it is well of benefit products. in by that new spend According trends. group customers we This investment implies growing these two support investment Labs industry time a next truly backdrop, strong strong to exciting to record margin, growth revenue, for within non-GAAP to basis, the grew XX% cash and stages AI weeks, roughly introducing X out for operating Looking cycle first consolidated with a the billion. Qualitative strong from year. technology the nearly Labs delivered infrastructure operating by

revenue in operating pro same will previous per I now delivered to Sanjay Non-GAAP strategy. growth new evolving turn discuss products in the from $X.XX forma market. rapidly diluted around non-GAAP margin earnings $XX.X our our XX% AI share. the period in Then XXXX. will position commentary to call up the some provide was this XX.X%, Our was and million, up I XXX% of and QX from we quarter and over

good on for been equally are QX months, sizes models architectures guidance. Complex at trillion innovation and Finally, about in and model number Mike AI X the highly AI the without the has within doubling results our at Technology moving cloud. continues fast variety every infrastructure an financial market utilization. AI AI platforms accelerator demand forward GPUs our compute, will the but to expand continue AI provide of pace while running QX Modern curing high-performance underutilized. accelerators and handle additional incredible phenomenally improving they details to remain connectivity, and parameter

merchant infrastructure. scale and latest utilize hyperscaler continue proprietary the AI unique center compose customers to GPUs We to AI accelerators our data see

the from to cooling systems major architecting on their connectivity. The cloud However, based are hyperscalers are deliver and no same. clouds AI power maximum to infrastructure performance the specific two requirements

customers are to alongside to complex performance even and continue and rates achieve maximum operate different We architectures reliably our these double. as working data ensure

continue expect see the faster As to we platform our dollar move even systems to with per new products average have AI content development. complexity, in the so growing data and and more increase we

core Express, is these technology customers' product also of but our and in conviction re-shaping generating solution. cycles foundation our standards, space deep of our partnerships. Platform integrated Link, portfolio, strengthening connectivity deep ever-quickening customers in semiconductor families, performance PCI Our of provide Labs boards, Intelligent which maintaining software-defined and Express position within deliver and base support The product three optimization protocols. it Not supporting Connectivity stack the seamless our our customers. software only with various our Chips, adoption all does suit. We flexibility without delivers different product software, introduction market three platform rooted entire Compute management maximizes capabilities with leadership focused and all hardware connectivity customer Astera revenue COSMO customization, and and the and in ICs, and our modules is fleet our is penalties, and to separate Ethernet software comprehensive stages which in COSMOS deployment complete on on operating run a monitoring. Today, of customizable and matches consists

standards how solutions. each support our with upon center touch me of these critical data and we them connectivity Let differentiated

servers. PCI inside interface Faster PCIe at AI and Today, speeds getting solve servers. and CPUs GPUs, complex signal deployed complex. latency PCI server the in all AI bandwidth increasingly integrity combination with low Gen topologies we driving X civil protocol are challenges. We a for are accelerators, help widely PCIe becoming data significant is First, most Express. native problems. in high these servers and see on prevalent it's moving

and PCIe components to the hyperscalers Smart customers our utilize within a Our architecture. PCIe compute various DSP accelerator Gen heterogeneous of X AI reach extend Retimers between

product the family and standard market gold solution in in represents the performance, flexibility Aries the the widely today. robustness industry is for deployed most and Our

our through position do managers Become something and to and links our which us connectivity millions customers' peak fleets of deployed eyes us. in utilization. more. software, have our are our management features differentiator critical COSMOS become a leadership their in the operating diagnostics enables COSMOS and AI to capabilities monitor Deep data infrastructure in at extensive Aries together fleet help is for Retimers peak and with Our monitoring software and infrastructure running chips ensure the our ears material

workloads COSMOS per Our to We XX next running provides driving Gen X gigabits running second fastest the GPUs at PCIe to lane deploy gigabit Gen lane. second path newer generation software and our X the the transition XX per PCIe of AI from see at per per easiest devices. and

decisions design next in evaluating to now, are and to solutions customers them our X Our expect make we X X Gen months. the

for Aries devices being and in we Aries play our today while our see accelerators interconnecting networking, other AI to CPUs addition, interconnecting with AI devices In AI divided in expect we clusters. accelerators role each also heavily back-end increasing fabrics, an to

tremendous a connectivity cables customers. offer largely and for overcoming on active large-scale XXX-gig allows easy per years, and Taurus bottlenecks field is based Taurus and to which technology insatiable the of customization, gig per and lane take ethernet common to majority about software data cable at modules on by of centers. portfolio rate, of portfolio partners. This XXX format, The Today, these place copper. upgrades in approach vast by we is cable our this the Ethernet robust to form are same within is our roughly sold lane deployed time, to by Ethernet portfolio, Aries relieve build Ethernet that enabling Next, up transition feed need our rates model we us the helps into enables networks Unlike are let's our bandwidth to best focus talk passive our placing the servers XXX our and makes electrical to in our assembled fully Ethernet largely issues our solutions. Like COSMOS reach, telemetry pressure workloads Retimers on gigabits cabling Ethernet. the speed, X partners between data PCIe cabling conventional over integrity protocol Driven XXXX. Ethernet qualification, Ethernet AI bringing suite extensively our later customers. to cable top-of-rack gig from XXX-gig which end leverage every strength signaling signal excel continue second At our smart doubling in to connections is expect XXX switches. per by sell chip Retimers, connectivity to

portfolio Taurus our to the to We demand both from expect open deployments of our CXL in CXL. Modules better over for Module growth resulting low Compute infrastructure XXXX, scale XXX balance Cable begin XXXX. We CXL to based ramp Smart the is broad requirements PCIe protocol, cache compute bandwidth or provides gig Link, in years. Last which a AECs half of compute. AI transition starting standard Ethernet in for to back from latency and memory scale out disaggregating top see an memory runs strong is up on independently capacity Express protocol. to Ethernet compute Cable coming allows for the resulting the on requirements, and happen utilization XXX gig CXL you Smart to coherent Taurus infrastructure. of in and

Over the technology are capability years, by data exploring that bandwidth CXL CPUs actively in exacerbated Major GPUs. plan increase CXL platform next different expansion. memory to solve bottlenecks application memory architects compute to several of the hyperscalers are exponential and and of being utilize capacity center

its of centers infancy, CXL to of adoption in as do CXL next-generation server others. currently Granite data increased the such see capable the Rapids, CPUs, and technology Turin While introduction we with is deployments expect

customers and memory bottlenecks very our overcome first-to-market controllers CXL to is Our enable customers. connectivity deliver memory well to their positioned end of Leo significant portfolio benefits to

have that months and will to software We COSMOS We learnings volume wins We and the XXXX most in have design potential support the of we case into growth expansion differing be that hyperscaler. memory deliver the expansion have to production will XX our will anticipate application-level had frame. software to strategy. customers solution drive in very use from CPUs believe customize Leo over our high-volume solution hyperscaler with CXL first to Gajendra CPU to we to of call data requirements new that, announcements these benefits, worked and and deploy CXL CXL. With each excited will President used optimize last hyperscalers remain long-term and memory our center turn COO, about the time without our solutions product our based the closely Sanjay me any include seamlessly significant our increasingly on let partners changes. Furthermore, and some recent to over discuss innovative applications our

Sanjay Gajendra

and good afternoon, Jitendra, everyone. Thanks,

two, a well increased factors: and within one, generation to have lines. AI through combination product strong of tailwinds Astera traction; existing Labs three introduction are next the positioned of infrastructure we is investment; lines product long-term growth secular demonstrate gaining products with a of new the third,

X months, new next-generation enabling and products incremental in half past the role the early and we Over X provide important significant revenue opportunities that as announced AI an play XXXX. as of platforms second

past and deploy at Gen PCIe demonstrated rigorously configuration portfolio next-generation X and based cloud. even deployed gigabit gigabit own X memory expanded per of X X the enabling seamless with our the the platforms reduce enables customers. tribal and being Aries portfolio and Gen market. Aries provides acquired field-proven is hyperscalers and is our Aries industry's of Smart between and to at of X infrastructure by support with upgrade maximizing cost and significantly at system generation the connectivity Aries lower to Intel full XX in was platforms power while X to required lowest that we have at knowledge XX PCIe COSMOS and at our risk, Lab week per in DSP PCI accelerators, for ramps watts introduction Aries low-power lower X per our Aries Astera's X infrastructure Arm, robust, public we field and years next-generation in volume GPUs such Aries we leading minimize Aries X our workloads incorporates X GPUs, AI AI our platforms Cloud-Scale collaboration Through in NVIDIA, and during competitors interoperation than XX XXXX. tested running March event lane widely second First, the Interop with to CXL begin second currently software X controllers. deployed CPUs, at Gen a X lane Retimer providers, XX. development based expect current to AI suite time Aries NICs GTC GPUs of AI to data-intensive demonstrated for bandwidth cloud With compatible Retimer Retimer. we operating and partnering as PCIe also X lane. Fully third Gen our the lower of PCIe path X next-generation CPUs per AMD, X to CXL from utilization Smart Retimer delivered Gen the demonstration providers XX and sampling Aries NVIDIA's is leading initial than customers'

Modules the defined AECs, introduction Cable of PCIe/CXL active sampling We reach or copper also is and robust announced PCIe our meters Xx Aries spec. standard to in connectivity. This X support cable cables Smart long the reach up to electrical for and the

rack our back-end Solution is to the AEC Aries applications PCIe new within fabric racks. racks. to This across deployments multiple extending designed GPU PCIe category for new product expands Our clustering opportunity by from market

deliver with tools, record software to we an of leveraged of array example Labs suite. modules for As in in this and hardware new customizable hardware deliver that with We monitoring, represents and PCIe management to powerful shipments product complete support silicon with ecosystem RAS for fleet Smart solution COSMOS driving time, software which intelligent a another initial technology COSMOS begin leadership Modules announcement needs expertise Aries diverse PCIe the Astera year platform concrete believe are to customers. We chips, expect linked suite our and the entire this connectivity later of our includes portfolio, Aries hyperscaler and Cable AECs. our product a silicon, our familiar software yet

and to product utilize a from fully product the the AI. In over technology that delivering introduction ongoing productivity AI scale. infrastructure generational the team deploying and past summary, the years, at upgrades to generative categories new capabilities of of built foundational up great that Over to anticipate coming ground existing we performance is lines few developed product we quarters, is have

delivering executing, unfolds, Astera. tight enhanced to AI collaboration We base developments for will to results our turn Tate, and in that, QX a road innovating product have by as by and We the financial to Mike our map These relationships I look with our and are new discuss technology support applications. With who trust gained of era our customer and world-class resulting forward over our call commitments. new outlook. CFO, the driven partners continued will QX

Michael Tate

to related Sanjay, This primary metrics results everyone Astera joining. Please compensation will tax thanks non-GAAP for be the Labs and to Thanks, non-GAAP QX of overview and stock-based on financial effects. QX in guidance a income The QX our difference non-GAAP well our and reconciliation to to on refer of release on as financial call. GAAP measures GAAP Investor as outlook presented details today's this both for non-GAAP available more Relations press our and financial of the section on our a basis. website

Astera in versus and of For QX record than Labs XXX% was XXXX, up QX million, XX% revenue XXXX. $XX.X which the of previous higher delivered quarter quarterly revenue the of

margins quarter was QX non-GAAP administration QX, as continue expenses Non-GAAP $XX.X this Non-GAAP shipped XXXX. platforms due compute and ramp and the up was expense to Ethernet-based of to their The marketing our XX.X% performance industry's ship QX largely and largest quarter, unit to was pre-product by gross general we investment were with their next in platforms R&D the QX systems. QX growth AI. Also, for late margin the product momentum $XX purchasing make was a during introduce the Leo costs the quarter and sequentially major X positive continue overall XX in the next-generation generative to normal we operating revenues product expenses of expenses were of growing million, the quarter. With Aries product Sales extent, QX and from $XX.X we with revenues Interest points Leo During and combination during phases QX a compared three volumes being in strong $X.X up refresh The of contributor. AI expense We products manufacturers. revenue proportion from Gen payroll to shipping and Taurus non-GAAP and and systems as taxes a increased with previous operating QX the higher good along capable solid largest cycle. was operating are Taurus PCIe headcount during scaled for healthy families million. into XXX-gig expect XXXX AI million. expense. Non-GAAP our all track mix. and server to for public Taurus of recognize largely XX.X% basis also company. expected XXX-gig with primarily GAAP with $X.X our in revenues gross which and into across early $X in accelerator to were driven connection million, incremental products enjoyed IPO as CPU and million hyperscalers customers million. all with non-GAAP in expenses associated Aries to process on employer with increased was AI-based margins its expenses, stock-based we we contribution. compensation our lines, with systems, with recognized the QX through lesser as recent our customers capable stock-based in XX.X% associated delta a operating compensation operating expenses were in year sequential in revenues revenues between began In launch Ethernet-based quarterly the progress CXL income was basis. development was being operating

the million share for shares. which $X.X represents on was tax rate quarter, diluted XXX.X count was for million Pro a provision QX tax basis. a fully non-GAAP of non-GAAP non-GAAP XX% forma Our

stock our quarter, GAAP The includes was non-GAAP forma forma shares our share pro the the for stock the diluted step entire assumed the following IPO. non-GAAP the March includes our per of of conversion while only conversion for for share preferred quarter period count diluted our Our preferred earnings $X.XX. pro

quarter included securities given the common ended be operating preferred that with million. converted both million, all $XXX from equivalents IPO, was for cash the in of Cash cash, over stock forward, activities the will GAAP count those to $X.X preferred our share QX now for Going and shares we flow upon and just non-GAAP. marketable fully has been and stock

turning Now for to XXXX. of fiscal guidance QX our

QX. revenues product levels will of will XX% within be the be our We expect continue from Aries of revenue sequentially. QX largest QX believe sequential range to increase primary the family and driver We XX% a component growth to of to in

by Within driven the family, the we Aries be new unit servers designs for well demand product as expect ramp as product our with to growth AI the of increased customers.

to of trend in long-term margins quarters, percentage revenue modest a We We XX%, will as margin model over relative ICs. our towards solutions believe of shipments our expect coming hardware gross stand-alone as grow the be to gross hardware to a our given non-GAAP approximately gross margins begin increase XX%.

operating is intellectual to in office million We our expanding $XX to our also be while be functions. head pool resource expect aggressive R&D we expected and non-GAAP scaling Interest count across expenses property, approximately as income back million. remain $X

we Our call. Operator? for should expected share per approximately rate again, prepared diluted fully questions. our shares. up, the this much is everyone open our expecting the share now diluted appreciate remarks. Once This are be we non-GAAP XX% fully $X.XX. joining all of we million earnings concludes approximately count tax and to non-GAAP And very line XXX approximately Adding non-GAAP be

Operator

the of first line come from question Our JPMorgan. Harlan with Sur Instructions] will [Operator

Harlan Sur

results public the guidance on strong company. Congratulations as first a and post quarter your

to XPU many programs you programs, AI new AI ASIC the market, As chip GPU, guys mentioned, accelerators. coming

going total year, of XPU I this terms shipments half be based. In only to NVIDIA is think

good seem Astera XPU over obviously, is, has exposure programs. out. The deploying that accelerated few the news even of broaden these of to starting the months. pace XPU is it to past has platforms So does chip all these the It

half in broadening continuing much more then of deployments? second guys and the of So of Retimers momentum to you strong versus just is prior is do the the And higher content How your kind due acceleration, expectations? results how see much this customer into strong guidance of this year?

Michael Tate

innings. so the their shipping our have fully early customers started really it's lot AI not into QX of just AI Harlan. Mike. deployed system. A last This is year, We servers of Thanks, in in

the we're there's on in. a in in different from on growth investment well. have it's that adding just growing -- seeing we platforms a So design as But clearly a incremental AI wins backdrop where

So overall also out. is growth playing the unit

As lot a ramped that we still balance look yet. have of of at this year, to not programs the there's

has So lot it, ahead we sorry, that platform the -- growth confidence Aries of have of and into XXXX a higher that continues Gen well. X XXXX I'm as

Harlan Sur

viewed I NVIDIA's as is been there's of with PCIe have you Gen platforms, of design on as some right, to Blackwell-based you appreciate We of going Gen competitors. team. And by fast-growing, of obviously, the that. are most by seen And a platform. rollout mentioned, competitors, focus lot Astera announcement obviously, wins been attract next-gen X the we with locked already that know any market X the have up

with X? time X Gen do Gen now. Gen you been X with on as were compare some you versus when the for customer how on engagement You've working working momentum same mentioned on Maybe customers period you customers, back the

Sanjay Gajendra

is Good This question, here. Sanjay Harlan,

that. take me Let

lot like So it. of a Gen correctly on X legs said, you has -- is still

Let's clear do we be still and that Mike are come. to noted, very still have ramping platforms on that. Like

the standpoint, to expect as again, for in that the GPUs know, probably terms innovation the X are with is, not Gen do driven by AI fully There time. utilized. pace side. X, that's it's to of some you happening on we us And Gen So of be

reports around XX%. at Some it put

to links. faster it holding still and a right? there's in a is back. there's lot need and speeds of pace So a of Meaning which adopt terms essentially connectivity, growth

those have Blackwell their X NVIDIA on the set announcing Gen So that are platform, of that. first with GPUs

standpoint, happen far do upon So public some to XXXX. But in are we of out behind based in information those not that's deployments to general, that there. expect others

adoption adoption. bit be shorter application X when than AI the PCIe going a little to than X, expect which compute, still Gen do be cycle general-purpose it we lagging time so the is comes X So Gen server to for to on especially perhaps more the Gen

Operator

question Joe next from will come Stanley. the line Your Morgan with Moore of

Joseph Moore

Great.

I like CPU servers. Gen still can purpose It Do X on purpose growth you are of if talk about Gen in early applications Following what PCI seems a general the look that? from at from at the that, X, you driving pretty and penetration general see we're stage.

Sanjay Gajendra

the have the mean general-purpose primarily connectivity main where on the Absolutely. that the storage you SSDs compute, the used back be server. the on of to PCI Retimer I tends where gets are places on

-- just most holding back or So is server there general to it's the that have compared it standpoint, AI. are perhaps. of three focus mean One to to are on application dollars things that the the two things I again, AI compute. been going

The ecosystem with the evolve on X primarily up or players thing based is drives. which side, the many SSD second readiness for NVMe is to SSD on the major Gen starting Gen of just NVMe X, providing ramping

CPU The third one platforms. really has been the

all for If it from the from they're Intel Rapids both is Granite you Intel introducing or Turin AMD, cusp and think AMD. about significant on of their next platform, whether it

into drive can SSDs being would for to the back And as side. new compute compute dollars the -- with expect X side general design and Gen start you expected flowing you the the that if combine purpose have, of already platform. factor introduction contributing that we things wins So ready on that that a is be those based

Joseph Moore

the my the for do first that the are will how in and of you mentioned out, kind And be supporting out but technology you hearing just initial Turin, think terms XXXX? roll will follow-up, Rapids which Great. CXL you of And volume CPUs what in adoption? Granite can are be too. platform What quickly

Sanjay Gajendra

Yes.

and form the with is in start me shape hyperscaler saying off every technology. evaluating or CXL, some Let working by

and alive. it's So well

I more the more type applications. adding of of large bandwidth, second and memory more use CPUs expansion case, been like case, specifically are HPC think where has really for And use memory. for the could focus for capacity expansion is course, CXL be terms in for the is for memory on of memory the database which reasons applications,

the So available. the of holding Turin that Rapids thing production availability Granite back that's being CPUs at CXL is a that and level support with been change quality will

and activities preproduction for been this that evaluation our is at POC point, of time, we in type can some say customers. with supported providing So the have happened we've quite been hyperscaler that various different checks what we've

we So to start expect in, revenue coming standpoint, memory use from do that expansion case to for 'XX CXL. in

Operator

will Tore Stifel. the question of Svanberg next with come line from Your

Tore Svanberg

Let me add my congratulations. My first Gen question is X on PCI.

than just be Sanjay, X. that you design-in cycle going the to So mentioned Gen shorter is

Now and new retain your assume of X for should had then in the especially Gen you sockets we ones since for COSMOS well platform, some Gen already backwards that compatible and as X those basically that obviously it's you software will given Gen most X?

Sanjay Gajendra

So the that's the for company. goal

millions are make that something you understand within what at our I to around protocols, ramp-up And system PCI captured as handholding. a up software. meaning do to a on for customers' It's the highest that the but works, it's nuances, is messy, the us which running as a us, devices be technology, long Ethernet for we've customers' a also well COSMOS that's bringing knowledge the of platforms. how tends work, we And of one something what of unlike tribal is both COSMOS is it has what perform like being in Express that that software requires rate? So what has to doesn't allowed time. happened the platforms, little noted, great lot been the have We built, link a those chips

Gen learnings as those that over. to expect be of a do we starts materialize, So X carried lot will

as competition, essential they product has matter there's no type come comes You're believe But SOP we lot well. it that to chips. connectivity there when a in like have a could of when that similar us. what, to a is it comes of competition right that's But been time that

reason failing defined. getting on, a chip, is is have Express the the for you Just complexity how yet system. The that and have and kinks a PCI given the so standard system the meaning could of and interoperation perfect out

standpoint, added what that to and that X that, So with X, said last the the line build with have position I we years. have or we also features the working in now sense in Gen new our And X the the PCIe the both agree we you over that leading knowledge partners built we've product Aries tribal X by market with for in to PCIe. Retimer expect on the

Tore Svanberg

And follow-up, going this business a I perspective. late great start to year. my It sounds a on that is question like as ramping had That's AEC.

an what all, you today to X at that, only meters? the of multiple related First cable And partners? have then that company is that AEC are

Sanjay Gajendra

you Retimer I don't maybe leading to on do on the I position. on is. where a some only research probably know competition But from goes a request do would have we the customer. it this, about which need standpoint,

that, based we're customer on we traction the based main and that the I on that So here provider would seeing. that are Imagine

an this case. So one use is interesting

where of with and goes is what But that to opening So you this that AECs we new now, would why as about excited back-end far, terms is AECs was server. the Express, for the provide, inside meaning is also PCI play is up front PCIe is Ethernet AECs the happening along in accelerators. That know, Clustering we on already the we're that now interconnecting GPUs, are used that new opportunity and defined a be network. a are interconnecting which GPUs

on and to for are and believe talking do in we we I domain. public start not Ethernet evolving And our expect what to PCIe, again, clarify Solution sure there I some we the yet PCIe these overall, it year. that just are make in know we the the that just for one don't So is if someone AEC I trends of revenue, half only about do we set coming said, initially believe our this of that's later well AEC else solution, combining

Operator

the will of Your Jefferies. from next with question line Curtis come Blayne

Blayne Curtis

the Kind I'm Jitendra. of of kind the the GPU the nature customer just has you a mentioned you But volume. you, talk a curious, just connections. it. back-end of have to curious think just architecture, fabrics Retimers of you the on the widening what bunch. for? the still are curious, who are for I'm curious, lead out that you And Harland applications obviously, maybe for mentioned of asked seeing right design for? That's one market, used just was into lot is a about, first about Maybe being conceptual CPU I I

Jitendra Mohan

question. Great

So there where applications we are Retimers. use many the

connectivity together, There applications Every head is the to for evolving. up. Ethernet. available That come where and GPUs But are we NV these together. And in to solutions GPUs. That have Link, known the to months, are new clusters mentioned, PCI -- new Of and opportunities from deployments of systems to we used a a of products are for platform the GPUs Express used most one are rapidly are cluster those are Ethernet. note. also they main AI just two which that how AI lot addition are the us. whether Express to few course, now opens or course, And PCI speak is additional that the as we see interconnect And for Sanjay is GPU happening. of up

clustering using an PCI Specifically, who Express of offered case are to our to for our do use Express, cable. PCI Retimers, in in the so active Express of now PCI are of want which GPUs together the customers able form electrical some

we business in to to head business addition to is connecting be going have So sustaining in that today GPUs nodes. the this

in Now as grow can connections, so you very dense we are very, they together very And very a connecting cluster. GPUs know, intense, are rapidly. these mesh

So contributions we're And grow. with revenue this very excited will this year. some about later starting where

Blayne Curtis

maybe then Mike. gross margin The a And quite high. question remained for

kind -- rest those gradually the think just how of products just will mix You that of about of maybe know XX% think of products being be curious just that down IPO, kind you're I'm guiding other was the you So to? this you're I headwinds? said as but mean, I kind come do kind ramp, to Should I up with of was come mix. have the year? the just conservative we mostly new in, as the ramp I kind mean with I it's it Retimers. the mix of start

Michael Tate

Yes.

relative our pretty ICs everybody, remind stand-alone to our carry just solutions. high to a So hardware margin

little ICs, QX, So we're when stand-alone XX%. heavily versus to long-term trend were balanced to more gets In we mix hardware ICs. with weighted the a expecting gross margins our to

how of as go into and through a this So strong balance the that's year. we gross mix, year favorable it's we next margins very enjoyed the and

We will see an increasing mix of our modules and also adding cards for CXL as well.

we'll gradual as model changes. a have we mix So over towards a trend down time long-term think that

Operator

will question with from Your the next of Barclays. line O'Malley Thomas come

Thomas O'Malley

giving into revenue gross to a ask, bit. color the fact helpful about could But some be you're segment a just perspective? obviously, non-ICE June, but what segments to on would mix growing, on from talk to, be any the able what's talk that just help start? the are details I given may margins sequential Mike, And contributed Maybe the you specifically, business just you I the wanted is growing could quarter? to what revenue not about then out in looking you know pressured

Michael Tate

Sure.

to we've So server as lot ramp. QX. a in begun the I to still of mode designs even for mentioned, haven't that shipping and past couple AI are lot been we started a volume shipping there's of quarters, in into the ramp customers the extent platforms our And but still of

that in X So AI we're look the -- still as we it in out the well. early as we time, phases into year Gen grow piece continue to of in next see

also there, with for in into the ramps increased as we're servers, both So AI largely by as still well. unit but there's is Aries guiding platforms you the the volumes, deployment look existing QX, that customers driven to begin X Gen new growth

Thomas O'Malley

it architecture of more taking. deployments talking your you one. become among look they're doing to Helpful. see percent the rate current where When at being the hyperscalers And that's the puts a the retiming they're And your architecture Blackwell and referencing you NVIDIA, with different a their GPUs. architecture the In talk Hopper GV-XXX and the XX than their Can Do any mix. the NVLink attach versus are using NV-XX product? of generation? bigger about comes broader then takes platform, that you just when

Jitendra Mohan

question. Let me Great take.

First, phases me just we are say AI. at that let beginning the of

at to up that being of models. And to cloud. rapid AI in growth a innovative very on deploy match We produced top by architectures hyperscalers will just the their we'll will pace platforms new see with these see continue providers that, ways AI in platform

the challenges. architectures these So evolve, connectivity so do

going challenges be going new. and Some to are be to completely are incremental some

increasing with us per our these new We good is see the so what platforms, developments we platform speeds, into do the time. future. dollar tailwinds believe AI content these And going here over expect to complexities we increase providing given increasing

all, here is GV-XXX the clear specifically, that question your about about something speak to well, of we very first now customer cannot architectures. see. is So But to specific

platforms. two has As we platform are to to the choose And connectivity architectures, mentioned, platforms different each these point, deploy unique for new that hyperscaler during new GDC. in unique the strategy, we cloud-type DVI required, no these presents produce clouds way, them very sampling with form providers great the a And of will the hyperscalers are portfolio. And factors them. And AI constraints same. of it working of X PCIe Sanjay all Gen to to announced that combination our enable Retimer as and This deployment. our deployment opportunities deploy

release, And solution. sampling the press that are Gen look support providers. of we one only you best X If day, this will at broad see a AI our you from to to platform still knowledge, the our

going the given on of us customers for to to innovation complexity new problems. pace the increasing, to whole, fact, approaches is that up strengths. these And our in speeds all fact have and we the is So are as play increasing well, coming solve these

business. good to very grow potential feel we about connectivity So the our PCIe

Operator

Needham. of Your from come will with next Bolton the question Quinn line

Quinn Bolton

just and the my I offer the nice Let up results in PCI use outlook. congratulations Express me on networks. on to follow of GPU GPU the to want back-end

Wondering I've AI then a something had the And that's say, as are from an Ethernet? over, follow-up. and of historically, to your it year. choosing excluded but got you half talk ramp the think it about here TAM, just breadth you becoming like second -- in opportunity if starts their the of custom it's I this accelerators looks interconnect could some that PCI Express of

Jitendra Mohan

question. great Again,

NVIDIA to is their known, NVLink, course, three interface. just There protocols uses that it's before. provided and GPUs what that's one most follow response up that of are are to So is we used the dominant The which proprietary together. cluster

very expect is PCI our chooses using center The family it other contributions Ethernet also particular and And the and think make popular. end as be do the to say our is appropriate the components. that's Ethernet see one use two all mentioned, that and into them Retimer Express, we to solutions, It course, of PCIe do year. as year of common is natively a fairly are to data other Retimer CPUs these with PCI well Ethernet GPUs and We Ethernet PCI I protocol. continuing customers starting a would the support who. But found to the to with meaningful on able I are Express Express. We revenue, customer or then, this Aries Taurus extent and family. our both as to not certainly, Express PCI next

Quinn Bolton

out think going with new to introduction ramp second And Perfect. not investors question products my is of introduce these activity. we today. products TAM expansion of new them later that is you've be talked have in about terms products of But timing, just framework about ask I'm introduction of time you to guys should line this And revenue thinking discussed? sort as the new XXXX, the Is general XXXX. year, that new the

Sanjay Gajendra

share can and the relationship seat the we timing company been of think deployment the enjoy about AI the is front row AI and But platform unreleased a great in with hyperscaler to fortunate following: of -- be it. or you I products providers. First, what talk Again, we've the don't I very with

So hear some a to in we a the lot to lot, see of of get get requirements. terms we

on So to side clearly, that the we the are products memory whether is it going side. address side, on or be developing network bottleneck, data the

can new application And certain lot announcement. be the of new on lot working as a announcements, going ground that are There's AI up would developed all AI structure. of that lot will for we products, enable imagine sooner. a So a solutions infrastructure, on, in CPU GPU you connectivity deploy

this the our impact of to this all do that impact meaningful start anticipate will having you given upcoming. are changes We the revenue business. imagine pace and can and So that incremental market

Operator

Your of line Ross Seymore next will question the Deutsche from Bank. come with

Ross Seymore

the I wanted to GPU of things. into go side versus ASIC

how I this biggest TAM market is of penetrate aspiring of degrees, ASIC that to also even one does suppliers the change if dynamic considering that to start competitor would And yours? equation, certain ASIC the any, competitive Retimer have? in guess, that you an As the

Jitendra Mohan

So great again. question

and see will the back refer address just said. to we the come me to Which Let to I market AI more more requirements. evolving what different solutions

like GPUs kind be AI of the others. are Some and to known providers NVIDIA, them AMD of from going

And And that do others. but the others common built for typically are they requirements the ASICs they differ. AWS two by will Google some Microsoft whether are ways, and hyperscalers, systems or in or build some custom are

ins systems For close challenges the providing breadth that and we or we well. where engagement these a we with solutions news whether that exactly current these are of we example, of what Aries to the upcoming the connectivity and address outs type as next of those some using GPU the GPU-based provide A are was very Express of ASICs back-end today are with trusted new good generation, particular that have connecting our enabled are these example their of going network. SCM understand on the And what generation, the very with and into on the back-end solutions. closely the the we they they solution them use way Retimers, PCI on each several is these as we enabled the platforms, ASIC of not providers, providers portfolio well only with chips. The engaged great ASIC-based are for

Sanjay Gajendra

for ASIC done of topology, lot to that a across of different at look are that vendors, where of system engaged today. And options those we're system you we visualize like with silicon of merchant there And is it. investment subsystem nerve that protocols done. base if is -- lot want tested, human it's hyperscalers that that, And off-the-shelf. right? one PCI specifically there AI and we've like And qualification, what or do maybe is will Once especially software the to that reuse the these And application. standard kinds don't have mess space. anatomy, built, just with developed, can built be and there's nervous I they a will want we based. or happening connectivity Express, nervous have Astera to or where Ethernet a whether especially be for plays, we Yes, one market ASIC trend where add see way within to CXL the when customers It's system things

that standpoint, whatever end is postal we used, gain from stand architecture will that believe that. we being to So to

Ross Seymore

one the plans a should quarter? the the with for But being to company, publicly beyond How through I your think rest one full my know there's there second as guess even the of a us I cetera. quick up of Mike. year traded step for OpEx good just follow-up, a about we walk or target. et OpEx quarter

Michael Tate

Ross. thanks, mean -- I Yes.

who headcount, many also we We jump love particularly us products try into There's to get the company. to of That ahead to bring that R&D. invest in market. we to being are pretty the quite and on opportunities selective on a a improve time we're continuing bit those said, in so

that good growth. we will we And to our the of believe So about be model revenue our that's it's X%. increasing, of going probably we'll our meter OpEx, rate not just that near although increase operating margin long-term over term, and why feel

time, investment over can increasing even that with we feel trend So direction confident in we do OpEx.

Operator

Suji Your next MKM. question from line of Desilva come will with the ROTH

Sujeeva De Silva

here. Mike, Sanjay, on quarter the Jitendra, first congrats

there the Ethernet be the PCI that will not addressable of back-end I'm gate that's adoption back a NVLink. or opportunities the opportunity? out whether to would market the similar in On trying understand and PCIe end, at pace if lead non-NVlink adopted the here

Sanjay Gajendra

on rely is there technologies, latency, low because Ethernet. significantly mean latency Ethernet. so the much point, or on advantage whether I development PCI non-NVIDIA just say is compared imagine is Express that ecosystem, of hard PCI right, can they going at it's Express It's will the standard this And it to here. to low of you

that. to top the proprietary add Express to there people some on extensions are And that to benefits comes So implementation. certain consider are of PCI when it there

this we that will from overall, advantage. Express have So see PCI standpoint, a do technology

around. has Now Ethernet also been

So we'll develops X have all to let's XX to over the wait months. and this of say, next, see how

Jitendra Mohan

in to good what to us said have which news we don't decide I for some Sanjay add pick. Just ways don't one. that think the We is to have

and hardware have we We have have chips, software. we

this need us have for that's I what you my say, AI platform. Can build we've been new customers that? doing. and me to we asking And So

Sujeeva De Silva

perhaps The of perhaps larger, those program-based will to question for customers is of other AEC will that Mike. But be And Great. Maybe out be year. Okay. year, initial next maybe ramping. growth? a them steady customers do Or ramps, those Mike? this program kind year, you perceive service few lumpier this build few all a

Michael Tate

product the product to mirror And build hit other, -- revenue -- the steady ramps over gradually think I state. will ramps profile. a other a nice few just growing if of quarters build they'll on layer will you each continues to top

of at look really then half, look back you becomes And be biggest gig if XXX much in as opportunity which set you in the into is very will broader a XXX Taurus we're the we to and start now. XXXX, market XXX customers. XXXX, the gig, large. right ship shipping ultimately So gig. And when

Operator

of from with Your Craig next the Hallum. question will line Shannon come Richard

Richard Shannon

Express this Taurus pre-design win topic of this that couple AECs AEC guess, of on topics And here foreseeable Or opportunity a up design early public hit Congratulations here I Are these kind become wins? been have I future? on coming PCI about as ramps guess year? the as my on here. to here is, I ultimately, about including question the can talking question your follow this these in opportunity. you're Express, want family PCI big are the Suji's

Sanjay Gajendra

Yes.

So wins to these qualify. design are

We demonstrated this this. at We public this, have shipping been we announced forums.

that we later contributing on, early do like year. to standpoint, and we're an half expect it revenue excited about start for So it's that we noted opportunity this to of

Richard Shannon

second the on CXL. question Okay. Perfect. And is

other you you hyperscalers I the Maybe here a mentioned if applications of think can couple kind here. across interest and of breadth of express customers.

testing ones coming ones get to how more in expansive that you those? those required And specking the more is those seeing Are are are time little you're at the for a For also little Or to market? there bit development the bit hoping market for? next a mentioned. of and you the to out

Sanjay Gajendra

Yes.

CXL are side. is two and questions, let first take the me one, which So the there

further memory For as memory to of mind, use pooling trying there changes. main something whereas is and for memory go there, others are drives it out the suitable is type memory first a cases keep time suitable the drives because TCO cloud-scale deployment. in expansion, and to where are belief for tiering, is are We X that again, memory angle, providing. just for believe our And and that's enterprise you're are what called memory is software requires Samsung in customers X CXL, more more pooling

is I at engaged and dollars that ones matter noted short but compute And memory sort on term, on, in more the CXL least tiering. hyperscalers, available expansion term the all the going a a available of both early like memory being medium So U.S., the being and it major all standpoint. be technology are general is of with CPUs to time purpose are from

that that on Okay. your it? for new second -- question the more of And context terms was, Was then in was products?

Richard Shannon

Yes.

Sanjay Gajendra

Yes.

last we can we ago. about year don't talk but a announced frame, product imagine time little So our exact the was again, over you a

not have working been engineers our hard. So they've so been quite

of based working and are working lot that interest very standpoint, that been upon to already and have diligently engagement So hard a from with. we customers we

Operator

to turn questions for the Green time. Leslie remarks. over further no are closing back at call There this I'll

Leslie Green

and of questions. to Thank seeing at conferences earnings summer you various on for you call. financial our our on you. QX conference many you, your everyone, and forward progress Thank participation updating We this look

Operator

This concludes today's call. conference

disconnect. now may You

Astera Labs, Inc. Common Stock (ALAB) 7 May 242024 Q1 Earnings call transcript