Astera Labs Inc Q2 2025 Earnings Call Transcript

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

Question: Harlan Sur - JPMorgan Chase & Co - Analyst : Congratulations on the very strong results. Within your Scorpio family of switching parts, it's good to see the strong ramp of Scorpio P this past quarter. Within the same portfolio, it looks like the team is qualified and set around its Scorpio X-Series for XPU to XPU ASIC connectivity. You talked about 10 platform wins. What's been the biggest differentiator? Is it performance, i.e., latency, throughput? Is it fully optimized with your signal conditioning products? Is that a consideration? And how much does the familiarity with COSMOS software play a role? And you guys have always called this an anchor product which pulls in more of your solutions alongside your COSMOS software suite. Is this how it's playing out with your basic XPU customers? You lead with Scorpio X, and you've been successful at driving higher attach with your other products?

Question: Harlan Sur - JPMorgan Chase & Co - Analyst : And for my second question, just over the past 90 days, we've heard a lot of focus and announcements on scale-up networking connectivity and UALink, as you mentioned, whereas the team did the Wall Street teach-in back in May. Obviously, the team is a key member of the UALink Consortium. AMD recently fully endorsed UALink as its scale-up networking architecture of choice for all future generations of its rack scale solutions, and we know of at least one other basic XPU vendor that's going to be moving to UALink as well. Beyond this, what has been the reception and interest level on UALink, and can or will the Astera team speed up its time to market on UALink-based products, or is the timing still to sample products next year with volume deployment in calendar '27?

Question: Ross Seymore - Deutsche Bank Securities Inc - Analyst : Congrats on the strong results and guidance. Maybe to no surprise, I want to stay on the Scorpio family. The diversity of engagements is also interesting to me, and as far as you're talking about it as an anchor tenant, I just wondered if you could go into a little bit of the profile, the types of customers, how it's changed from your initial customer. And then perhaps how much incremental business and interest those customers are showing in other products as they realize as well it's an anchor tenant? Sort of, how are you leveraging that Scorpio relationship to bring in more business? Any sort of illustrations of that would be helpful.

Question: Ross Seymore - Deutsche Bank Securities Inc - Analyst : I guess, my second question, one for Mike, and I think the first one's going to be pretty quick, so I might have a clarification in there as well. The gross margin has beaten, and you're staying solidly above your 70% long-term target. So I guess the question is, is there anything that slows down your trajectory to the 70%? And the clarification would be the tax rate at 20%, is that just this year but not next year? Which is the number we should think of going forward--the 15%, the 20%, or the 10% you used to be?

Question: Blayne Curtis - Jefferies - Analyst : Hey, guys. I'll echo the congrats on the results. I guess I want to ask on the Scorpio products. I mean, I think 10% in the June quarter was ahead of what many people were looking at. So maybe you can just help us with the shape of that product. I mean, you still said 10% for the year, I'm assuming it's or greater than 10%, but I'm sure it's much greater than that. I mean, can you help us a little bit with as you look to September, you have $15 million of growth, how to think about Aries or Scorpio and any kind of thoughts on how to guide us to model the Scorpio product line this year.

Question: Blayne Curtis - Jefferies - Analyst : And I just want to ask, I think, in terms of the scale-up opportunity, clearly, you were clear that X will be more material next year kind of preproduction this year. Just wanted to ask this because there was a lot of rumors out there in terms of are there any opportunities for scale up with Scorpio P or maybe in short, are you going to be shipping anything material this year for scale up versus the scale out you already talked about?

Question: Joseph Moore - Morgan Stanley - Analyst : I wonder if you could talk about UALink versus other architectures, and I guess your involvement with NVLink Fusion. Are you agnostic to those various solutions? Are you more favorable towards open source or proprietary? Just kind of walk us through the potential outcomes for you with these battles that are being fought.

Question: Joseph Moore - Morgan Stanley - Analyst : That's very helpful. And then I get this question a lot. If you guys can size your exposure to merchant GPU platforms versus ASIC, I know there's probably a little bit higher content opportunity for you on the ASIC side. But any sense for what that split looks like and where that may be going over time?

Question: Tom O'Malley - Barclays Services Corp - Analyst : You mentioned that you were engaged with 10-plus customers on the [expert] side. Could you just give us a picture of how many of those are engaged on PCIe today and how many of those are engaged on the UAL side? And if you're engaged with one on PCIe, are you often engaged with one on UAL as well? Can you maybe talk about that split right now?

Question: Tom O'Malley - Barclays Services Corp - Analyst : Helpful. And then as my follow-up, I'm curious, and there's been obviously a lot of news articles intraquarter about switching attach rates with XPUs and then also general purpose silicon. So if you look at the large guy in the market in a 72, already there's nine switch trays, a couple of switches per. So like a 25% switching attach rate to a single XPU or general piece of silicon in that instance, like when you're ramping an XPU with a custom silicon customer, can you maybe walk us through like specifically with the X switch, if that attach rate is higher or lower? Or what's the reason for that? That would be super helpful.

Question: Tore Svanberg - Stifel, Nicolaus & Company Inc - Analyst : And let me add my congratulations as well. I guess my first question is on you talked about this new revenue base. I mean you now have three product lines in production, that obviously doubled your revenue base now you're talking about Infrastructure 2.0 and Scorpio series or X series really sort of creating a new revenue level. So I mean, should we sort of infer with that you will double the sort of run rate again as X Series starts to ramp? Is that the way we should look at it?

Question: Tore Svanberg - Stifel, Nicolaus & Company Inc - Analyst : And as my follow-up, and related to UALink, it does feel like the standard is regaining a lot of traction. I'm just curious why that is. Is it because of AI moving more into inferencing? Is it because of the 128-gig version? It just feels like there has been a little bit of a change over the last few months. So any color you can add on that would be great.

Question: Tore Svanberg - Stifel, Nicolaus & Company Inc - Analyst : Yeah, I was asking about UALink sort of regaining a lot of traction, at least that's the way it feels to us. And I'm just wondering why that is. Is it because of AI moving more towards inferencing? Is it because of the 128-gig version? Or is there anything else that's going on 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 05, 2025 / 8:30PM, ALAB.OQ - Q2 2025 Astera Labs Inc Earnings Call

Question: N. Quinn Bolton - Needham & Company LLC - Analyst : Hey, Jitendra, just wanted to follow up on that question about SUE. Broadcom introduced their Tomahawk Ultra switch recently with a 250-nanosecond latency which seems like it significantly reduces the latency problems that traditionally Internet has had. Can you give us some sense how does that 250-nanosecond latency for SUE compared to what you're able to achieve on PCI Express and UALink? And then I've got a follow-up.

Question: N. Quinn Bolton - Needham & Company LLC - Analyst : Got it. My follow-up question, I think in the script, you guys talked about an expansion in the opportunities with Taurus. And I'm kind of wondering if you could expand on that. Is that -- are you seeing sort of adoption of higher per lane speeds on that Taurus product and adoption of 800-gig cables? Are you seeing adoption beyond your lead customer in Taurus? Just any additional color you could provide on Taurus would be helpful. 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 05, 2025 / 8:30PM, ALAB.OQ - Q2 2025 Astera Labs Inc Earnings Call

Question: N. Quinn Bolton - Needham & Company LLC - Analyst : Got it. So it sounds like the volume this year continues to be more 50 gig per lane and then you see that diversification in 2026 is 100 gig per land becomes more sees wider adoption?

Question: Papa Sylla - Citi Infrastructure Investments LLC - Analyst : Congrats for the great real guess my first question is kind of following your announcement of a partnership with a high kind of performance basic leader recently. I just can you touch a little bit more on the kind of extent of that collaboration. You did more at a chip level in terms of the IO chip type of kind of partnership? Or is it more the kind of device level with your Aries and Scorpio portfolio?

Question: Papa Sylla - Citi Infrastructure Investments LLC - Analyst : Got it. No, that's very helpful. And if I can squeeze just one more, and this might be more for Mike. On the gross margin, it seems like over the last 2 quarters, partially since the Scorpio announcement kind of gross margin keeps going up. But in the September quarter, you are adding it to 5% which at the varies at the midpoint seems to be kind of down a little bit. I'm just curious on just any additional color on that? Because it seems like by all indications, Scorpio will continue to go up and the mix trend we are seeing currently seems to be kind of moving in the same direction in September as well. So we were just kind of curious on that guide down in gross margin in the September quarter.

Question: Suji Desilva - Roth Capital Partners LLC - Analyst : Hi, Jitendra, Sanjay, Mike, congrats on the strong quarter here. Maybe you could give us a framework on the retimer content for a link that for scale out versus scale up. Maybe it's similar but maybe there's some differences would be curious to understand what the unit opportunities might be and how they might be different.

Question: Suji Desilva - Roth Capital Partners LLC - Analyst : Okay. And just to either 1 to be higher than the other necessarily, just to be clear.

Question: Suji Desilva - Roth Capital Partners LLC - Analyst : Neither won't be higher than the other scales to scale out necessarily.

Question: Suji Desilva - Roth Capital Partners LLC - Analyst : Helpful. And then my follow-up on Scorpio X, you talked about 10 customer engagements. I'm wondering if that implies multiple programs per customer, if they're going to think about using you standard in their platforms? Any color on how those are kind of shaping up would be helpful in programs versus customers.