ALAB 2Q24 Results: Retimer Madness

Key Points

• Strong beat/raise with 2Q24 revenue ~$76.9M (+6% vs. DB estimate)
• 3Q24 guidance $98M (+22% vs. estimate), showing strong AI server deployment momentum
• Gross margin 78% (vs. est. 77%), with 3Q24 guided to 75% (vs. est. 74.2%)
• Addressed concerns about retimer content in NVIDIA GB200 vs. DGX
• Average retimer content per GPU increasing gen-to-gen despite potential SKU mix variance

GB200 Content Debate Resolution

• Company statement: Retimer content rising on next-gen platforms including GB200
• Coverage across 3rd-party merchant GPUs and internally developed processors (ASICs)
• Mix-dependent on customer customization vs. reference design adoption
• Investors should view broadening product mix as comforting vs. retimer concentration risk

Business Momentum

• AI server deployments continuing to drive strong growth in PCIe retimer products (Aries)
• Strong gross margins maintained despite Q/Q decline (-3 pts)
• Emerging tailwinds in alternative interconnects (AEC) and CXL protocols
• Long-term EPS trajectory expected in the $2+ range

Analyst View

• Strong competitive positioning with content rising in Gen 6 retimers
• Increasing tailwinds in AEC (Ethernet connectivity) and CXL should enable durability
• Valuation compression likely as content-related debates continue
• Raised CY24/25/26 EPS estimates by +32%/+30%/+20%, trimmed PT to $60

Financial Impact

• Raises full-year guidance significantly ahead of estimates
• Demonstrates execution capability as second public company report
• Balancing retimer concentration with diversification progress

Source

• File: ALAB-DB_ 2Q24 Results_ Retimer madness_07Aug2024.pdf
• Location: Dropbox/2. Semi/Networking/ALAB/

Related

• ALAB | _MOC-networking