Aug 4, 2026 earnings call — Scorpio X-Series volume ramp and record revenue
Record revenue of $392.4 million and Scorpio X-Series entering volume production, expected to become largest product family by Q3.
Revenue $0.4B (est $0.4B) · EPS $0.80 (est $0.69) · Next-quarter revenue outlook $0.5B–$0.6B
Key quotes
"We expect Scorpio to become our largest product family in Q3, which is one quarter ahead of our prior expectations, marking an important strategic milestone."
"Optical connectivity represents a substantial expansion vector with the potential to unlock tens of billions of dollars of additional market opportunity beyond our current copper connectivity TAM."
Analyst Q&A 12
Scorpio X customer ramps and timing
Q (Harlan Sur · JPMorgan): He asked whether another hyperscaler will ramp the lower-rate Scorpio X and if Scorpio X revenue will exceed Scorpio P in Q3 or more likely in Q4.
A: Management said they started shipping pre-production parts to multiple customers this quarter. They expect their lead customer to ramp to high-volume production in Q3 and to surpass Scorpio P revenue, and they expect additional customer shipments by year-end.
"We do expect Q3 at least for our lead opportunity and lead customer to ramp to high-volume production in Q3 and essentially taking over, or surpassing the revenue from Scorpio P-Series." — Sanjay Gajendra (COO)
Drivers of Aries and retimer demand
Q (Blayne Curtis · Jefferies): He asked what drove the Aries record revenue and what design traction and retimer attach they see for next-generation AI servers.
A: Management said Aries 5 continues to expand and inference use cases are driving a new wave of growth. They said Aries 6 for Gen 6 supports higher data rates and higher attach rates, and they expect the retimer demand to continue as new generations arrive.
"If anything, the surprise is how long Gen 5 has continued, and given that there is a new set of use cases opening up for inference, all of those are contributing to help us achieve a new record on the Aries portfolio." — Sanjay Gajendra (COO)
UALink roadmap and customer adoption
Q (Joe Moore · Morgan Stanley): He asked about the UALink roadmap, whether there's a transition from PCI to UALink, and how broadly customers will adopt it.
A: Management said the ecosystem is evolving with new IP vendors and tools, and they see strong interest because UALink offers higher throughput and lower latency for inferencing. They plan to support XPUs due in 2027 with a full UALink portfolio anchored on their switch and signal-conditioning solutions.
"We plan to intercept the XPUs that are on track to be released in 2027 with our own UALink solutions." — Jitendra Mohan (CEO)
Scorpio X software features and customers
Q (Tore Svanberg · Stifel): He asked for more detail on the new software, efficiency gains, and whether the software is winning more customers.
A: Management said new customers are adopting the software-enabled devices, helped by higher radix and lane counts that connect more XPUs. They said in-network compute and HyperCast enable very low-latency inferencing and much higher efficiency, and COSMOS now acts as an orchestration layer, increasing customer stickiness.
"Both of these are very important technologies that really set us apart and enable very low latency inferencing as well as very high efficiency for in-network compute." — Jitendra Mohan (CEO)
CXL opportunity and switching content
Q (Natalia Winkler · UBS): She asked how the CXL controller opportunity affects switching content and how the CXL market will progress.
A: Management described three main CXL use cases: memory alternatives, GPU/accelerator attach (improving inference with KV cache acceleration), and memory expansion for compute/HPC. They said multiple design wins are in qualification now and expect high-volume production in 2027 while they continue to invest.
"For us, what we are tracking is, of course, multiple design win and opportunities at this point, with most of them in qualification or early stage this year and getting into high-volume production in 2027." — Sanjay Gajendra (COO)
Optical vs copper for Taurus and future
Q (Sean O'Loughlin · TD Cowen): He asked whether Taurus could move from copper to fiber/optical over time and if that would extend revenue lifetime.
A: Management said copper and optical will coexist: rack-level scale-up will stay copper for this and next generation, while optical will grow as cluster sizes and data rates increase. They are investing in electrical and photonics work, acquired aiXscale, and expect NPO in 2027 and CPO in 2028 and beyond, enabling optical engines and optical Scorpio switches.
"We do expect that for this generation and the next generation, the scale-up within a rack will continue to be copper." — Sanjay Gajendra (COO)
Dollar content per accelerator (XPU)
Q (Papa Sylla · Citi): He asked whether the $1,000+ per accelerator is pre-UALink, how Scorpio X reaches that level, and where content per accelerator may go over 2-3 years.
A: Management said dollar content per XPU has grown from low IPO-era numbers to multiple thousands today, with the X scale-up switch already offering over $1,000 per XPU. They said adding optical and more signal conditioning will further increase content, and their investment focus is to target multiple thousands per XPU and diversify hyperscaler customers.
"Now we see our business contributing multiple thousands of dollars per XPU with the X scale or scale-up switch itself offering over $1,000 per XPU." — Sanjay Gajendra (COO)
Gross margins as Scorpio grows
Q (Trip Smith · Barclays): He asked how Scorpio's growing share affects gross margins, the puts and takes, and how to model margins next few quarters (including Amazon warrant).
A: Management said Q3 gross margins are expected to be approximately 72%. They said margins vary by silicon versus module mix and by switching use case, Scorpio has a wide range by lane count and use, and as the portfolio scales they expect margins to trend toward a long-term target around 70%.
"As we mentioned in the prepared remarks, we do expect our Q3 gross margins to be approximately 72%." — Desmond Lynch (CFO)
China hyperscaler revenue contribution
Q (Ananda Baruah · Loop): He asked how to think about China hyperscale contribution across the portfolio as products evolve generation to generation.
A: Management said open protocols like PCIe, Ethernet, and NVLink are popular in China and the market is promising but smaller than elsewhere. They said revenues from China will increase in absolute terms, but the rest of the world will grow faster so China will remain a single-digit percentage of total revenue.
"As a percentage of total revenue, they will continue to be in the single digits." — Sanjay Gajendra (COO)
COSMOS software and XPU orchestration
Q (Suji Desilva · Roth Capital Partners): He asked whether the software might cross over to help XPUs as a coprocessor or remain a connectivity/orchestration layer.
A: Management said they are crossing that line: in-network compute and HyperCast let XPUs talk directly to the switch to orchestrate workloads, reducing latency and improving throughput. They said COSMOS now helps improve workload utilization and GPU utilization, making the software more powerful and stickier for customers.
"It's a very important development, and as I mentioned, it makes our software solution more powerful and a lot more sticky as customers designing our current generation of switches and then look to upgrade them in the future." — Sanjay Gajendra (COO)
End market concentration and product mix
Q (Jeff Koche · Raymond James): He asked how end market concentration has trended this quarter and how it may trend through 2027 with new launches.
A: Management said performance was broad-based across the portfolio: Aries set a record and remained the largest product line, Scorpio showed strong momentum and is expected to become the largest product line with high-radix ramps in Q3. They also noted Taurus growth on 400/800 gig demand and upcoming CXL revenue that will ramp more materially into 2027, highlighting continued diversification.
"Really looking at our drivers, I would say Aries delivered the record quarterly revenue in Q2 and remained our largest product line, really supported by the ongoing transition to PCIe 6.0 across both scale-out and scale-up connectivity." — Desmond Lynch (CFO)
Scorpio X customer breadth and cooling types
Q (Karl Ackerman · BNP Paribas): He asked about the breadth of Scorpio X customer wins, if neo-clouds are included, and whether Scorpio X works in liquid-cooled and air-cooled servers.
A: Management said demand for Scorpio X and P is exceptional with over 10 customers engaged and multiple pre-production shipments underway; they expect more customers to ramp late this year and early next year. They also said the chip supports both liquid and air cooling and that neo-clouds and enterprises can deploy Scorpio-based scale-up solutions using add-in card GPUs.
"We have over 10 customers engaged on the Scorpio X itself." — Sanjay Gajendra (COO)