Marvell Technology, Inc.

First Quarter of Fiscal Year 2023

May 26, 2022

Discussion of Non-GAAP Financial Measures

Non-GAAP financial measures exclude the effect of stock-based compensation expense, amortization of the inventory fair value adjustment associated with acquisitions, amortization of acquired intangible assets, acquisition and divestiture-related costs, restructuring and other related charges (including, but not limited to, asset impairment charges, employee severance costs, and facilities related charges), resolution of legal matters, 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 business.

Marvell uses 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 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, and excludes tax deductions and benefits from acquired tax loss and credit carryforwards and changes in valuation allowance on acquired deferred tax assets. 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; acquisitions; significant changes in Marvell's geographic mix of revenue and expenses; or changes to Marvell's corporate structure. For the first quarter of fiscal 2023, a non-GAAP tax rate of 6.0% has been applied to the non-GAAP financial results.

Marvell believes that the presentation of non-GAAP financial measures provides 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.

© 2021 Marvell confidential. All rights reserved.

2

Discussion of Non-GAAP Financial Measures (continued)

Externally, management believes that investors may find Marvell's non-GAAP financial measures useful in their assessment of Marvell's operating performance and the valuation of Marvell. Internally, Marvell's non-GAAP financial measures are used in the following areas:

  • Management's evaluation of Marvell's operating performance;
  • Management's establishment of internal operating budgets;
  • Management's performance comparisons with internal forecasts and targeted business models; and
  • Management's determination of the achievement and measurement of certain performance-based equity awards (adjustments may vary from award to award).

Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of Marvell's business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of Marvell's results as reported under GAAP. The exclusion of the above items from our GAAP financial metrics does not necessarily mean that these costs are unusual or infrequent.

© 2021 Marvell confidential. All rights reserved.

3

Marvell Technology, Inc.

Unaudited Condensed Consolidated Balance Sheets

(In millions)

August 1,

October 31,

January 30,

May 1,

July 31,

October 30,

January 29,

April 30,

2020

2020

2021

2021

2021

2021

2022

2022

Assets

Current assets:

Cash and cash equivalents

$

831.5

$

832.0

$

748.5

$

522.5

$

559.6

$

523.5

$

613.5

$

465.0

Accounts receivable, net

483.5

490.3

536.7

694.4

785.6

978.3

1,048.6

1,191.1

Inventories

262.9

268.4

268.2

538.1

459.5

628.6

720.3

835.5

Prepaid expenses and other current assets

54.1

68.6

63.7

132.8

103.8

114.4

111.0

107.3

Total current assets

1,632.0

1,659.3

1,617.1

1,887.8

1,908.5

2,244.8

2,493.4

2,598.9

Property and equipment, net

335.0

331.8

326.1

424.7

433.1

444.0

462.8

502.2

Goodwill

5,337.4

5,336.4

5,337.0

10,965.7

10,976.4

11,446.4

11,511.1

11,539.0

Acquired intangible assets, net

2,489.8

2,380.4

2,270.7

6,562.1

6,285.4

6,439.1

6,153.4

5,888.1

Deferred tax assets

645.6

646.8

672.4

725.6

517.1

529.0

493.5

331.8

Other non-current assets

486.5

470.1

541.6

664.0

718.1

915.5

994.4

1,178.7

Total assets

$

10,926.3

$

10,824.8

$

10,764.9

$

21,229.9

$

20,838.6

$

22,018.8

$

22,108.6

$

22,038.7

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

238.5

$

224.1

$

252.4

$

304.4

$

370.5

$

440.6

$

461.5

$

553.1

Accrued liabilities

406.8

407.0

435.6

478.2

519.2

521.9

622.6

735.0

Accrued employee compensation

131.2

188.0

189.4

153.9

153.3

222.8

241.3

191.9

Short-term convertible debt

-

-

-

193.3

0.1

-

-

-

Short-term debt

448.2

349.0

199.6

30.3

41.3

52.2

63.2

74.1

Total current liabilities

1,224.7

1,168.1

1,077.0

1,160.1

1,084.4

1,237.5

1,388.6

1,554.1

Long-term convertible debt

-

-

-

1.1

0.3

-

-

-

Long-term debt

992.4

992.8

993.2

4,673.7

4,662.6

4,504.3

4,484.8

4,465.3

Other non-current liabilities

291.7

274.3

258.9

539.6

350.1

590.7

533.1

554.3

Total liabilities

2,508.8

2,435.2

2,329.1

6,374.5

6,097.4

6,332.5

6,406.5

6,573.7

Stockholders' equity:

Common stock

1.3

1.3

1.4

1.6

1.6

1.7

1.7

1.7

Additional paid-in-capital

6,225.2

6,260.9

6,331.0

12,879.1

13,090.7

14,148.7

14,209.0

14,188.5

Accumulated other comprehensive income

0.5

-

-

-

-

-

-

-

Retained earnings

2,190.5

2,127.4

2,103.4

1,974.7

1,648.9

1,535.9

1,491.4

1,274.8

Total stockholders' equity

8,417.5

8,389.6

8,435.8

14,855.4

14,741.2

15,686.3

15,702.1

15,465.0

Total liabilities and stockholders' equity

$

10,926.3

$

10,824.8

$

10,764.9

$

21,229.9

$

20,838.6

$

22,018.8

$

22,108.6

$

22,038.7

GAAP inventory turns

5.6

5.5

5.6

3.1

6.1

4.0

3.6

3.3

GAAP days in inventory

65

66

65

117

60

91

101

110

Marvell Technology, Inc.

Unaudited Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

August 1,

October 31,

January 30,

May 1,

July 31,

October 30,

January 29,

April 30,

2020

2020

2021

2021

2021

2021

2022

2022

Net revenue

$

727.3

$

750.2

$

797.8

$

832.3

$

1,075.9

$

1,211.2

$

1,343.0

$

1,446.9

Cost of goods sold

368.0

369.1

376.7

414.1

704.1

623.4

656.6

696.0

Gross profit

359.3

381.1

421.1

418.2

371.8

587.8

686.4

750.9

Operating expenses:

Research and development

277.2

255.7

260.3

286.1

367.0

371.9

399.2

444.1

Selling, general and administrative

112.8

115.5

116.9

201.5

259.2

243.4

251.2

235.7

Legal settlement

-

-

36.0

-

-

-

-

-

Restructuring related charges

120.6

19.3

9.6

12.9

12.3

5.9

1.3

1.3

Total operating expenses

510.6

390.5

422.8

500.5

638.5

621.2

651.7

681.1

Operating income (loss)

(151.3)

(9.4)

(1.7)

(82.3)

(266.7)

(33.4)

34.7

69.8

Interest income

0.6

0.6

0.4

0.2

0.2

0.2

0.2

0.5

Interest expense

(15.6)

(16.1)

(20.8)

(35.1)

(33.8)

(35.4)

(35.0)

(36.3)

Other income (loss), net

(0.5)

0.3

(0.7)

1.2

(1.7)

1.0

2.2

5.2

Interest and other income (loss), net

(15.5)

(15.2)

(21.1)

(33.7)

(35.3)

(34.2)

(32.6)

(30.6)

Income (loss) before income taxes

(166.8)

(24.6)

(22.8)

(116.0)

(302.0)

(67.6)

2.1

39.2

Provision (benefit) for income taxes

(8.9)

(1.6)

(39.4)

(27.8)

(25.6)

(5.0)

(4.1)

204.9

Net income (loss)

$

(157.9)

$

(23.0)

$

16.6

$

(88.2)

$

(276.4)

$

(62.6)

$

6.2

$

(165.7)

Net income (loss) per share - basic

$

(0.24)

$

(0.03)

$

0.02

$

(0.13)

$

(0.34)

$

(0.08)

$

0.01

$

(0.20)

Net income (loss) per share - diluted

$

(0.24)

$

(0.03)

$

0.02

$

(0.13)

$

(0.34)

$

(0.08)

$

0.01

$

(0.20)

Weighted average shares - basic

667.6

670.5

673.5

693.4

821.1

828.6

844.4

848.0

Weighted average shares - diluted

667.6

670.5

688.0

693.4

821.1

828.6

862.1

848.0

The following table presents details of total share-based compensation expense included in each functional line item in the unaudited condensed consolidated statements of income above:

Cost of goods sold

$

4.1

$

4.4

$

4.3

$

9.8

$

2.7

$

9.4

$

9.2

$

12.4

Research and development

39.7

36.9

36.5

38.4

70.6

75.5

88.7

86.5

Selling, general and administrative

18.8

18.5

18.7

61.4

40.8

34.2

36.9

32.2

Total stock-based compensation

$

62.6

$

59.8

$

59.5

$

109.6

$

114.1

$

119.1

$

134.8

$

131.1

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Marvell Technology Inc. published this content on 27 May 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 May 2022 07:07:27 UTC.