Astera Labs Inc Q2 2024 Earnings Call Transcript

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

Question: Harlan Sur - JPMorgan Chase & Co. - Analyst : Good afternoon. Thanks for taking my question and congratulations on the strong results. During the quarter, lots of concerns around your large GPU customer and one of their next-generation GPU SKUs, the GB200. Glad that the team could clarify that your dollar content across all Blackwell GPU SKUs is actually rising versus prior-generation Hopper. But as you guys mentioned, AI ASIC accelerator mix is rapidly rising, and actually, we believe outgrowing GPUs both this year and next year and accounting for 50% of the XPU mix sort of next year, right? And with ASIC, it's 100% PCIe based. And as you pointed out, right, many of these ASIC customers are still in the early stages of the ramp. So given all of this, given some of the new product ramps with your AEC solution, what's the team's visibility and confidence level on driving

Question: Harlan Sur - JPMorgan Chase & Co. - Analyst : No, I appreciate that. And on top of the strong AI demand trend pulls, on top of the new product ramps that you guys articulated today, one thing I haven't baked into my model is the penetration of your retimer technology into general-purpose servers, right? And the good news is that we are finally starting to see the flash vendors aggressively bringing -- finally bringing Gen 5 PCIe SSDs to the market, which could potentially unlock the retimer opportunities in general-purpose servers where the Gen 5 retimer content today is still zero. So what's the team's outlook? Do you see that there may be some penetration starting in 2025 of your retimer solutions into general-purpose server? And maybe if you could size that potential opportunity for us?

Question: Harlan Sur - JPMorgan Chase & Co. - Analyst : Thank you.

Question: Joe Moore - Morgan Stanley & Co. LLC - Analyst : Great. Thank you. I wonder if you could talk about the competitive dynamics within PCI Gen 5 retimers. Are you seeing any number of people who have qualified solutions in China and in the US? Are you seeing any encroachment there? And then in terms of PCI Gen 6, can you talk about the prospects for when you start to see volume there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 8:30PM, ALAB.OQ - Q2 2024 Astera Labs Inc Earnings Call

Question: Joe Moore - Morgan Stanley & Co. LLC - Analyst : Great. Thank you.

Question: Blayne Curtis - Jefferies Group LLC - Analyst : Hey, thanks for taking my question. I just want to ask you in terms of the September outlook, you talked about meaningful revenue from AEC. I mean, I think the other point was that the gross margin was because of the mix, which I'm assuming is because of that ramp. But just trying to size it, I know you don't break out the segments, but if you can kind of just give us some broad strokes as to how much of the growth is coming from retimers versus Aries in September?

Question: Blayne Curtis - Jefferies Group LLC - Analyst : Got you, thanks. And then I want to ask on the Gen 6 adoption moving from pre-production to production. The main GPU in the market supports Gen 6. I think the CPUs that would talk Gen 6 are going to be a bit of a way -- over your way. So I'm just kind of curious, the catalyst there, do you expect Gen 6 to be in the market next or even if there is not CPUs that kind of speak Gen 6?

Question: Blayne Curtis - Jefferies Group LLC - Analyst : Thanks so much.

Question: Thomas O'Malley - Barclays Investment Bank - Analyst : Hey, guys. Thanks for taking my questions. Congrats on the nice results. I just wanted to ask a broader network architecture question. You talked a little bit more about PCIe over optical. And when you look at the back end today, I think there's a lot of efforts to improve the Ethernet offering as it compares to kind of the leader in the market as they kind of expand NVLink. Could you talk about when you see the inflection point with PCIe over optical kind of being the majority of the back end? Is that something that's coming sooner, just kind of the timeframe there. And then just explain a little further, I think you mentioned that it comes with a lot of additional retiming content when you use those cables. Just anything additional there, and then I have a follow up. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 8:30PM, ALAB.OQ - Q2 2024 Astera Labs Inc Earnings Call

Question: Thomas O'Malley - Barclays Investment Bank - Analyst : Helpful. As a follow up, I know this is a bit of a tougher question, but I do think that there is a lot of confusion out there. And I just would appreciate your thoughts. You mentioned in the prepared remarks hundreds of different types of deployment styles for the GB200. Obviously, certain hyperscalers are going to do it their way. And then certain hyperscalers are going to take what's called the kind of entire system, so the 36 of the 72. Can you talk about your assumptions for what you think will be the percentage that goes towards the full system and then kind of towards the hyperscalers that use kind of their own methods and talk about the content opportunities if they would kind of play out in those two scenarios? I do think that Nvidia and others are talking potentially about more systems than historical, but just maybe the puts and takes upon how different hyperscalers or architect systems and what it means for your content. Thank you.

Question: Thomas O'Malley - Barclays Investment Bank - Analyst : Thank you very much.

Question: Jeremy Kwan - Stifel Financial Corp. - Analyst : Yes. Good afternoon. This is Jeremy calling for Tore. And let me also add my congratulations on a very strong quarter and outlook. A couple of questions: first, could you provide maybe a revenue breakout between the three product segments here? I'm not sure if that was covered at all.

Question: Jeremy Kwan - Stifel Financial Corp. - Analyst : Great. And then I guess maybe looking more into the Leo CXL, I understand you are shipping pre-production. Is the -- when are you expecting to see more of a material ramp for Leo?

Question: Jeremy Kwan - Stifel Financial Corp. - Analyst : Great. Thank you. And if I could squeeze one last question in, can you give us maybe a sense of your revenue, how it might break out between modules and standalone retimers? Is there a way to kind of look at revenues in that way and how that can impact your SAM growth over time? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 8:30PM, ALAB.OQ - Q2 2024 Astera Labs Inc Earnings Call

Question: Quinn Bolton - Needham & Company, LLC - Analyst : Hey, guys. Thanks for taking my question. I guess, maybe a follow up just on the Blackwell question. It looks like there have been some recent architectural or system-level changes at Nvidia with sort of the introduction of the GB200A that looks like it uses PCI interconnect or PCI Express to connect the GPUs and the CPUs and perhaps a de-emphasis in the HGX platforms. Just wondering if you see any shifts in content, if that's favorable, if it's about a wash going from one platform to the other. And then I've got a follow up.

Question: Quinn Bolton - Needham & Company, LLC - Analyst : Got it. Okay. Thank you for that. And just maybe a clarification on the Taurus 400-gig ramp as well as the Aries SCM ramps. Are those ramping across multiple hyperscalers? Are they driven by a lead hyperscaler initially, and then you would expect to broaden it out to other hyperscalers as we move into 2025?

Question: Quinn Bolton - Needham & Company, LLC - Analyst : Is it similar for the Aries SCMs for back-end clustering as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 8:30PM, ALAB.OQ - Q2 2024 Astera Labs Inc Earnings Call

Question: Quinn Bolton - Needham & Company, LLC - Analyst : Got it. Thank you.

Question: Ross Seymore - Deutsche Bank AG - Analyst : Hi, guys. Thanks for taking the question. Apologies if I go back to one that's been hit on a couple of me. I want to do it nonetheless, and kind of the Blackwell topic and the content topic. You guys gave us the punchline that you believe your content, on average, will go up per GPU generation to generation. It also seems like you're getting across that the customization of it is still very broad based. And so just looking at the vanilla system SKUs and reference design Nvidia itself has might be misleading. Two-part question to this. Are you of the belief that your content is equal across the board in the same way it was in Hopper? Or do things get more skewed where there will be places where you'll have a significant step up in content and some configurations and others where you would have a significant step down, and the difference between those two might be where investors are getting a little bit confused?

Question: Ross Seymore - Deutsche Bank AG - Analyst : Thanks for that. And I guess as a follow up, you guys have focused more on this call about the internally developed accelerators than you have in calls in the past. And I realize there haven't been too many since your IPO. But are you trying to get across the key message that those are really growing as a percentage of your mix, that those are penetrating the market and kind of catching up and taking relative share from the GPU side of things? Or is your commentary meant to get across that Astera itself, with its retimers and other components, will take significant share in that kind of ASIC market relative to the GPU side?

Question: Ross Seymore - Deutsche Bank AG - Analyst : Thank you.

Question: Richard Shannon - Craig-Hallum Capital Group LLC - Analyst : Hey, guys. Thanks for taking my question. Maybe a question on PCI Express Gen 6 here. Last call, you talked about some of the wins -- the designs being decided in the next six months to nine months are obviously three to six months -- three more months farther forward here. Obviously, you've got some wins already on Gen 6, but I just want to get a sense of the share of the market kind of looking backwards. How much of that market has been decided versus up for grabs? Maybe you can help characterize what's left here to win in the next three months to six months. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 8:30PM, ALAB.OQ - Q2 2024 Astera Labs Inc Earnings Call

Question: Richard Shannon - Craig-Hallum Capital Group LLC - Analyst : Okay. Great. My follow-on question is a pretty simple one, just looking at the Taurus line here. Great to see the ramp. You're at 400 gig. And I don't want to kind of get too far ahead of what looks to be a pretty nice ramp here in the second half of the year, but I think you've talked about the 800-gig generation ramping later in 2025. Any update on that timing and how your design win is looking so far?

Question: Richard Shannon - Craig-Hallum Capital Group LLC - Analyst : Okay, great. Thanks, guys.

Question: Quinn Bolton - Needham & Company, LLC - Analyst : Hey, guys, just a quick follow up. I know you had a potential for an early lockup expiring Thursday morning. Just wanted to see if you guys could confirm, are we still within the 10-day measuring period so that you could trigger that early lockup? Or does the release of second-quarter results sort of end that period and we're now looking at a September 16 lockup expiration? Thank you.

Question: Quinn Bolton - Needham & Company, LLC - Analyst : It opens Thursday. Okay, thank you.