Astera Labs Inc Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Harlan Sur - J.P. Morgan Securities LLC - Analyst : Good afternoon, and congratulations on the strong results and guidance post your first quarter as a public company. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2024 / 8:30PM, ALAB.OQ - Q1 2024 Astera Labs Inc Earnings Call As you guys mentioned, many new AI XPU programs coming to the market, GPU, ASIC AI chip programs, accelerators. In terms of total XPU shipments this year, I think only half is going to be NVIDIA based, so it is starting to broaden out. The good news is, obviously, the Astera team has exposure to all of these XPU programs. It does seem that the pace of deploying these XPU platforms has accelerated even over the past few months. So how much of the strong results and guidance is due to this acceleration, broadening in customer deployments? How much is more just kind of higher content of Retimers versus your prior expectations? And then do you guys see the strong momentum continuing to the second half of this year?

Question: Harlan Sur - J.P. Morgan Securities LLC - Analyst : I appreciate that. And as you mentioned, there's been a lot of focus on next gen PCIe Gen 6 platforms well, obviously, with the rollout of NVIDIA's Blackwell based platform? And, obviously, with any market that is viewed of as fast growing, you are going to attract competitors. We have seen some announcing by competitors. We know most of the Gen 5 design wins have already been locked up by the Astera team. You've been working with customers, as you mentioned, on Gen 6, for some time now. Maybe how do you compare the customer engagement momentum on Gen 6 versus the same period back when you were working with customers on Gen 5?

Question: Joe Moore - Morgan Stanley - Analyst : Great, thank you. Following on from that, can you talk about PCI Gen 5 in general purpose servers. It seems like if I look at the CPU penetration of Gen 5, we're still at a pretty early stage. Do you see growth from general purpose and what are the applications driving that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2024 / 8:30PM, ALAB.OQ - Q1 2024 Astera Labs Inc Earnings Call

Question: Joe Moore - Morgan Stanley - Analyst : Great, thank you. And for my follow-up, you just mentioned Grand Rapids and Turin, which are the first and a volume platform supporting CXL 2. What are you hearing in terms of the CPUs will be out, but at what will be the initial adoption and how quickly do you think that technology can roll out 2025?

Question: Tore Svanberg - Stifel Financial Corp - Analyst : Yes, thank you. And let me add my congratulations. My first question is on Gen 6 TCI. So Sanjay, you just mentioned that the design-in cycle is going to be shorter than Gen 5 now since it's backwards compatible for your Gen 5 and especially given the COSMOS software platform, should we assume that you will basically retain most of those sockets that you already had in Gen 5? And then obviously, somebody wants as well for Gen REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2024 / 8:30PM, ALAB.OQ - Q1 2024 Astera Labs Inc Earnings Call

Question: Tore Svanberg - Stifel Financial Corp - Analyst : That's a great perspective. And as my follow-up, I had a question on AEC. It sounds like that business is going to start ramping late this year. First of all, is that with multiple cable partners. And then related to that, are you the only company today that have a AEC at 7 meters?

Question: Blayne Curtis - Jefferies - Analyst : Hey, good afternoon. Thanks for taking my questions. Maybe first one for you, Jitendra. Just curious, you mentioned the right architectures. I think Harlan asked on I was just kind of curious about obviously the lead customer and a lot of CPU, the GPU connections, that's the nature of the market who has the volume. But I'm curious, you mentioned back, the backend fabrics a bunch. Kind of curious, is that still conceptual? Are you seeing designs for it? And maybe just talk about the widening out of just applications for what the retailers are being used for?

Question: Blayne Curtis - Jefferies - Analyst : And then maybe a question for Mike. The gross margin remain quite high you said it was mix. I mean maybe you're just being kind of conservative with the IPO, but I was just kind of curious, did the mix come in? I mean, I think it's mostly retailers, I know, whereas the other products start to ramp that will be the headwinds. I'm just kind of how do you think about the rest of the year should we kind of just have kind of come down with mix gradually as those new products ramp off the [77%] that you're guiding to?

Question: Thomas O'Malley - Barclays Corporate & Investment Bank - Analyst : Hey, guys. Thanks for taking my question. Mike, I just wanted to ask I know you may not be giving segment detail specifically, but could you talk about what you're able to what contributed to the revenue in the quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2024 / 8:30PM, ALAB.OQ - Q1 2024 Astera Labs Inc Earnings Call And then looking out into June, could you talk about from a revenue mix perspective, maybe some sequential help on what's growing? Obviously, the non-ICs business is growing just given the fact that gross margins are pressured a bit. But just any color on the segments would be helpful to start?

Question: Thomas O'Malley - Barclays Corporate & Investment Bank - Analyst : Helpful. And then just a broader one. In talking with NVIDIA there, they're referencing your GP-200 architecture becoming a bigger percent of the mix, NVLink 72 being more of the deployments that hyperscalers are taking. When you look at the Hopper architecture versus the Blackwell architecture and their NV72 platform where they're using NVLink amongst their GPUs. Can you talk about the puts and takes when it comes to your retiming products? Do you see an attach rate that's any different than the current generation?

Question: Quinn Bolton - Needham & Company Inc. - Analyst : Hey. Let me offer my congratulations on the nice results and outlook I just wanted to follow up on the use of PCI Express in the GPU, the GPU back-end networks. I think that's something historically you had excluded from your TAM, but it looks like it's becoming and opportunity here and starts to ramp in the second half of this year. Wondering if you could just talk about the breadth of some of the custom AI accelerators that are choosing PCI Express as their interconnect over, say, Ethernet? And then I've got a follow-up.

Question: Quinn Bolton - Needham & Company Inc. - Analyst : Perfect. And my second question is you guys have talked about introduction of new products, our new TAM expansion activity, and I'm not going to ask you to introduce them today. But just in terms of timing, as we think out of these new products, it time line sort of introduction later this year or 2025 with revenue ramp in 2026, is that the general framework that investors should be thinking about the new products that you've discussed.

Question: Ross Seymore - Deutsche Bank Securities Inc - Analyst : Hi guys. Thanks for [asking] question. I wanted to go into the ASIC versus GPU side of things. As ASIC starts to penetrate this market to certain degrees. How does that change, if any, the Retimer TAM that you would have? And I guess even the competitive dynamic in that equation, considering one of the biggest ASICs suppliers is also an aspiring competitor of yours?

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

Question: Suji Desilva - Roth MKM - Analyst : Hi, Jitendra, Sanjay, Mike. Congrats on the first quarter here. Under the back end, the addressable market here, that's non-NVLink, I'm try to understand if the PCIe and Ethernet opportunities there will be adopted at a similar pace out of the gate or whether PCI would leave that adoption in the non-NVLink backend opportunity.

Question: Suji Desilva - Roth MKM - Analyst : Okay, great. And just a question perhaps for Mike. The initial AEC programs are ramping maybe a few customers this year, fewer customers next year, maybe perhaps all of them this year. But do you perceive that those will be larger lumpier program-based ramps, Mike, or will those be steady kind of build-outs of servers, grow?

Question: Richard Shannon - Craig Hallum - Analyst : Well, hi, guys. Thanks for taking my questions. Congratulations on coming public here. I guess I wanted to follow up on a couple of topics here that have been hit on including Suji's question here about the PCI Express AEC opportunity. Are these design wins or are these kind of pre-design win ramps you're talking about this year? And I guess ultimately my question on this topic here is, is can this opportunity these PCI Express AECs become as big as your Taurus family in the foreseeable future?

Question: Richard Shannon - Craig Hallum - Analyst : Okay, perfect. Thank you. And then second question is on CXL. I think you've mentioned a couple of applications here. Maybe if you can kind of express the breadth of interest here across hyperscalers and other customers for the ones you mentioned and also for the for the next ones that are a little bit more expansive in nature. How do you see the testing and specking out of those? Are those coming to market at the time you're hoping for it or a little bit more development required to get those to market?

Question: Richard Shannon - Craig Hallum - Analyst : Yes.