Marvell Technology : Q1 2022 Additional Earnings Information

Marvell Technology, Inc.

First Quarter of Fiscal Year 2022

June 7, 2021

Discussion of Non-GAAP Financial Measures

Non-GAAP financial measures exclude the effect of share-based compensation expense, amortization of the inventory fair value adjustment associated with acquisition, 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 GAAP income in calculating 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. 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; significant changes in Marvell's geographic mix of revenue and expenses; or changes to Marvell's corporate structure. For the first quarter of fiscal 2022, a non-GAAP tax rate of 5.0% 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.

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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.

Marvell stand-alonenon-GAAP results represent combined non-GAAP results after excluding Inphi results for the portion of the first quarter falling after the acquisition date. We are providing the Marvell stand-alonenon-GAAP results on a one time basis for the first quarter of fiscal 2022 in light of the fact that our previously provided financial outlook for the first quarter excluded any impact of the Inphi acquisition.

© 2021 Marvell confidential. All rights reserved.

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Marvell Technology, Inc.

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

				August 3,		November 2,		February 1,			May 2,			August 1,		October 31,		January 30,			May 1,
				2019			2019			2020			2020			2020			2020			2021			2021
Assets
Current assets:
Cash and cash equivalents	$	573,496	$	438,369	$	647,604	$	667,548	$	831,534	$	832,041	$	748,467	$	522,512
Accounts receivable, net			452,746			495,216			492,346			468,760			483,542			490,271			536,668			694,395
Inventories			240,421			308,299			322,980			270,374			262,875			268,396			268,228			538,117
Prepaid expenses and other current assets			37,069			43,789			74,567			72,282			54,136			68,618			63,782			132,787
Assets held for sale			597,675			600,893			-			-			-			-			-			-
	Total current assets			1,901,407			1,886,566			1,537,497			1,478,964			1,632,087			1,659,326			1,617,145			1,887,811
Property and equipment, net			319,761			316,214			357,092			348,066			335,035			331,769			326,125			424,733
Goodwill			4,933,719			5,161,312			5,337,405			5,337,405			5,337,405			5,336,356			5,336,961			10,965,666
Acquired intangible assets, net			2,399,975			2,500,215			2,764,600			2,651,678			2,489,815			2,380,382			2,270,700			6,562,061
Deferred tax assets			9,789			14,192			639,791			639,470			645,633			646,837			672,424			725,636
Other non-current assets			416,489			424,763			496,850			525,946			486,507			470,102			541,569			664,030
	Total assets		$	9,981,140		$	10,303,262		$	11,133,235		$	10,981,529		$	10,926,482		$	10,824,772		$	10,764,924		$	21,229,937
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	211,422	$	212,955	$	213,747	$	185,711	$	238,537	$	224,112	$	252,419	$	304,425
Accrued liabilities			312,987			305,827			346,639			380,653			406,804			406,986			435,616			478,158
Accrued employee compensation			90,659			130,062			149,780			124,277			131,241			187,982			189,421			153,943
Short-term convertible debt			-			-			-			-			-			-			-			193,269
Short-term debt			-			-			-			-			448,248			349,004			199,641			30,308
Liabilities held for sale			5,604			5,610			-			-			-			-			-			-
	Total current liabilities			620,672			654,454			710,166			690,641			1,224,830			1,168,084			1,077,097			1,160,103
Long-term convertible debt			-			-			-			-			-			-			-			1,146
Long-term debt			1,685,359			2,036,441			1,439,024			1,439,852			992,436			992,801			993,170			4,673,707
Other non-current liabilities			471,297			446,549			305,465			315,414			291,679			274,270			258,853			539,611
	Total liabilities			2,777,328			3,137,444			2,454,655			2,445,907			2,508,945			2,435,155			2,329,120			6,374,567
Stockholders' equity:
Common shares			1,334			1,341			1,328			1,330			1,340			1,343			1,350			1,633
Additional paid-in-capital			6,271,120			6,355,723			6,135,939			6,144,907			6,225,242			6,260,906			6,331,013			12,879,095
Accumulated other comprehensive income			-			37			-			868			450			-			-			-
Retained earnings			931,358			808,717			2,541,313			2,388,517			2,190,505			2,127,368			2,103,441			1,974,642
	Total stockholders' equity			7,203,812			7,165,818			8,678,580			8,535,622			8,417,537			8,389,617			8,435,804			14,855,370
	Total liabilities and stockholders' equity		$	9,981,140		$	10,303,262		$	11,133,235		$	10,981,529		$	10,926,482		$	10,824,772		$	10,764,924		$	21,229,937
GAAP inventory turns			5.1			4.2			5.1			5.4			5.6			5.5			5.6			3.1
GAAP days in inventory			71			87			71			67			65			66			65			117

Marvell Technology, Inc.

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

				August 3,		November 2,		February 1,			May 2,			August 1,		October 31,		January 30,			May 1,
				2019			2019			2020			2020			2020			2020			2021			2021
Net revenue	$	656,568	$	662,470	$	717,671	$	693,641	$	727,297	$	750,143	$	797,819	$	832,279
Cost of goods sold			305,866			322,403			412,927			366,739			368,041			369,083			376,687			414,138
Gross profit			350,702			340,067			304,744			326,902			359,256			381,060			421,132			418,141
Operating expenses:
	Research and development			266,354			267,781			279,389			279,584			277,139			255,637			260,380			286,100
	Selling, general and administrative			113,990			118,993			121,592			122,027			112,794			115,501			116,918			201,466
	Legal settlement			-			-			-			-			-			-			36,000			-
	Restructuring related charges			16,586			14,802			18,258			21,287			120,590			19,312			9,570			12,886
	Total operating expenses			396,930			401,576			419,239			422,898			510,523			390,450			422,868			500,452
Operating loss			(46,228)			(61,509)			(114,495)			(95,996)			(151,267)			(9,390)			(1,736)			(82,311)
	Interest income			1,077			1,092			1,379			1,058			577			608			356			222
	Interest expense			(20,531)			(21,241)			(22,656)			(16,830)			(15,635)			(16,066)			(20,733)			(35,141)
	Other income (loss), net			(2,197)			689			1,124,179			3,754			(440)			299			(727)			1,223
	Interest and other income (loss), net			(21,651)			(19,460)			1,102,902			(12,018)			(15,498)			(15,159)			(21,104)			(33,696)
Income (loss) before income taxes			(67,879)			(80,969)			988,407			(108,014)			(166,765)			(24,549)			(22,840)			(116,007)
Provision (benefit) for income taxes			(10,548)			1,532			(784,266)			5,019			(8,872)			(1,641)			(39,376)			(27,765)
Net income (loss)		$	(57,331)		$	(82,501)		$	1,772,673		$	(113,033)		$	(157,893)		$	(22,908)		$	16,536		$	(88,242)
Net income (loss) per share - basic	$	(0.09)	$	(0.12)	$	2.66	$	(0.17)	$	(0.24)	$	(0.03)	$	0.02	$	(0.13)
Net income (loss) per share - diluted	$	(0.09)	$	(0.12)	$	2.62	$	(0.17)	$	(0.24)	$	(0.03)	$	0.02	$	(0.13)
Weighted average shares - basic			663,603			668,178			665,562			663,547			667,574			670,487			673,529			693,378
Weighted average shares - diluted			663,603			668,178			675,700			663,547			667,574			670,487			687,959			693,378

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	$	3,662	$	3,990	$	3,181	$	3,538	$	4,082	$	4,435	$	4,265	$	9,803
Research and development			40,492			42,997			34,088			37,815			39,678			36,856			36,518			38,377
Selling, general and administrative			19,522			20,378			15,901			18,334			18,826			18,496			18,696			61,413
	Total share-based compensation		$	63,676		$	67,365		$	53,170		$	59,687		$	62,586		$	59,787		$	59,479		$	109,593