While we expect our third quarter to be impacted by the macro environment and anticipated inventory adjustments in the HDD market segment, as the management team, we are driving improvements to what we can control. Our efforts have led to significantly better financial results and solid positioning in growing markets reflected by new product cycles and share gains. Year-over-year versus 2Q '11, revenues have grown over 30%; and on a non-GAAP basis, gross margin has expanded by 210 basis points; operating margins have grown from 12.4% to 18.6%; and EPS has doubled, from $0.10 a share to $0.21 per share.
As a company, LSI is centered in applications driving strong secular growth in data and traffic. We are rapidly building momentum in the fastest-growing sectors in technology, such as flash oriented storage and mega data centers.
As flash storage adoption increases in notebooks and data centers, LSI is in a leading position to deliver significant growth. We focused our strategy on hitting the inflection point of flash adoption, and as a result, have achieved key design wins that we believe will enable LSI to be the leader in this emerging, high-growth market segment. We believe we have the broadest and most competitive lineup of flash-based storage solutions.
While end-demand environments remain challenging, we expect to benefit from a number of new product cycles that will be ramping into production in the coming months. In addition to our ramps of our SandForce FSPs, Q3 will be the first quarter of initial production ramps for our Nytro PCIe flash adapter products and Axxia multi-core standard products, and we remain on track to be in production with all HDD customers by the end of this year.Read the rest of this transcript for free on seekingalpha.com