Broadcom (AVGO) 12 Dec 242024 Q4 Earnings call transcript

Welcome to the Broadcom Inc.'s Fourth Quarter and Fiscal Year 2024 Financial Results Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over Ji Yoo, Head of Investor Relations of Broadcom Inc.

Thank you, Sherry, and good afternoon, everyone.

Joining me on today's call are Hock Tan, President and CEO; Kirsten Spears, Chief Financial Officer; and Charlie Kawwas, President, Semiconductor Solutions Group.

Broadcom distributed a press release and financial tables after the market closed, describing our financial performance for the fourth quarter and fiscal year 2024.

receive Investors you at section not information obtain broadcom.com. did the from of you a may copy, the If Broadcom's website

replay through the This and section of can being is Investors accessed of website. audio be year conference call the X webcast for Broadcom's conference call an live

regarding Kirsten well comments, of business guidance details for the first be quarter of as year our the prepared will fiscal results, During fourth year XXXX as XXXX fiscal commentary Hock and providing quarter and environment. our

We'll end Please take our call. this our refer forward-looking actual SEC specific of to with our to and cause the for results filings the after statements today risk differ questions made the could from prepared factors information on on our comments. press recent that the release materially

addition Comments during tables reporting, U.S. non-GAAP included financial A reports reconciliation measures measures our to financial to GAAP attached results. will GAAP today's in basis. non-GAAP certain made is on and today's release. non-GAAP call a between primarily refer the to In Broadcom press

I Hock. call turn the over to will now

thank and Ji, transformative us for for everyone, has been you, Thank a today. Well, year Broadcom. joining this you,

XX% year revenue fiscal consolidated $XX.X to grew XXXX record a billion. Our year-over-year

revenue over our VMware, excluding Now X% organically. grew

through profit, year-on-year So dividends, $XX we returned buybacks billion grew eliminations. fiscal a 'XX excluding XX% XX% and operating record shareholders, our in costs, transition year-over-year, up and cash to

this There X were year. drivers transformation this of significant

reached largely XXXX. of is VMware The in focused exiting a virtualization. acquisition complete. the data the have leadership is VMware operating trajectory, fiscal and on of closed we technology and VMware Revenue integration margin growth weeks its XX% First, in early of on 'XX center

announced significantly than at years. deal. incremental We're to we the this well target are level billion achieve $X.X planning of our communicated we that the path on We when initial much X adjusted exceeds earlier the delivering EBITDA to a

AI. driver in was XXXX second The

or represented 'XX came drove up in during XPUs, AI which semiconductor to fiscal from This our strength to and networking of in 'XX from XXX% accelerators, record and $X.X billion XX% custom year. revenue grew the a in $XX.X billion fiscal AI Our semiconductor revenue. revenue, billion $XX.X

Okay.

fourth Now revenue net quarter year-on-year. $XX.X Consolidated give to more color. the up you billion on let's and of XX% move was

organic VMware, operating Excluding profit $X.X XX%. XX% growth was year-on-year. of was up And billion

costs For versus about these, software segment was $XX $X.X the In QX, booked into Cloud flat $XX And Foundation infrastructure $X.X Of up for XX% quarter over ABV virtualizing even as the booking CPU entire we QX. details billion, a slip center. XXX% value, on translated the software infrastructure represent $X.X up quarter million multiple in QX, as VMware, in this billion in in the sequentially, deals VMware ago. year-on-year, the into it, total from million of stack software QX. annualized billion or data VMware we call year, this revenue of full this

cloud X,XXX quarter in the operating averaging from environments XX,XXX acquisition brought down prior an just acquisition to margin cloud. our reference, drive XX%. VCF. VCF $X.X to private We customers to billion customers with And all year doing to than continue VMware. over QX, $X.X the in we've in enable for less over spending billion was spending down in the VMware the on-prem of $X.X we spending to By down over running QX. closing up signed billion per Since this, public largest in applications deploy ago, a as alternative

outlook on infrastructure to Moving QX software. for

We expect to to and QX XX% up year-on-year. revenue billion, sequentially grow XX% $X.X up

preceding to $X.X $X quarter. exceed in billion to expected is ABV VMware, compared the For billion

Turning to semiconductors.

XXX% hyperscale year-on-year. which to you more details revenue, of represented XX% revenue driven networking, year-on-year. shipments a was X of revenue, QX Networking. shipments $X.X as Let globally. billion This and our driven AI the strong grew by grew by JerichoX-AI In their connectivity networking XPU hyperscalers by Jericho AI QX, to AI deploy me in give our as Tomahawk growth markets. Xx momentum XX% doubling end AI more and fabrics. our of be in in connectivity customers we expect

X Our process into will next-generation in XPUs of are market in be nanometers the that first and its kind node.

volume the in for hyperscale fiscal track on customers are our 'XX. half of We shipments second at

revenue XX% server QX, we its $XXX storage. bottom million. From to And to server server has on grow. months connectivity expect storage to some QX X ago, to Turning continue storage in recovered revenue

Turning wireless. to

American was up our seasonal to of XX% we revenue higher because year-on-year $X.X As North by billion, expected, up X% customer wireless QX drove This launch sequentially. content.

multiyear be to in, road in have Bluetooth, across with maps sensing leadership touch. engaged continue we technologies very RF, customer including and this Wi-Fi, various We

year-on-year. reflecting In we expect down be sequentially, flat QX, In $XXX QX, reached million, still seasonality, wireless broadband to down but XX% year-on-year. at be bottom

providers expect this service now And this we significant QX. reflecting to during in We beginning seen show broadband have quarter. trend, across multiple recovery orders

resales QX Finally, X% in on industrial, million recovery second XXXX. half the represents only year-on-year. to resales, Measured on expect $XXX declined the industrial a of revenues. total XX% which of We only

I Before how let you X our next business the see QX evolving sum years. 'XX and me on a fiscal we outline longer-term over provide up guidance, semiconductor perspective

at saw of a markets, we portfolio fiscal bottom with semiconductors billion. non-AI the 'XX multiple in On end $XX.X broad cyclical its

expect the recovery We from industry's rate a this of digits. historical and mid-single growth level

or well contrast, open Ethernet and next our X connectivity. Specific opportunity XPUs own years scalable respective over In to their massive. the network have begun AI in as with AI their as XPUs hyperscalers see as develop journeys these sharp we custom accelerators

a this a multiyear, represents each them, quarter-to-quarter of journey. not For

own deployed X over XPU clusters multi-generational have single deploy In customers, who have years. to road to currently AI rates their X believe we developed know, hyperscale of next you the a XXXX, them varying As each X be we XPU map plans across fabric. at million

$XX revenue billion $XX XXXX market, in serviceable addressable the network AI or represent billion SAM, range to and an fiscal XPUs to alone. this expect for We of in

We our base from a are linear XXXX a expect share though, will in $XX.X mind to revenue billion. a show achieve this and leading will We'll ramp. be very strong Keep variability. this quarterly this not AI well ramp positioned market drive in opportunity of

selected X XPUs. To have and in their additional compound hyperscalers AI we advanced by been next-generation are this, development for own

We develop sight XXXX expand these before this to could, have SAM into line of therefore, revenue-generating customers prospects significantly. and

AI reality we going revenue non-AI semiconductor by will semiconductor is this our that the So AI will to Recognizing shift the and semiconductor business business this, for business. guiding the non-AI outgrow rapidly forward company segments. now

of year-on-year AI QX still XX% a revenue XX% of $X.X revenue and XX% from year-on-year revenue billion. the $X.X to XX% Semiconductor but a semiconductor strong QX. by billion year-on-year grew summarizing billion, sequentially. ago. to bottom declined X grew months So XXX% recovery $X.X Non-AI

Now moving on for to QX. our outlook

approximately billion. and revenue AI strong demand XX% revenue semiconductor expect grow to year-on-year remains expect year-on-year to to to AI we XX% billion. grow $X.X We $X.X

We down be year-on-year. expect non-AI mid-teens to about revenue semiconductor percent

summing EBITDA revenue. And QX up XX% be all this revenue guiding adjusted consolidated this XX% to we approximately drive up, so approximately QX year-on-year. of expect will we're to in total, And $XX.X billion,

call over to Kirsten. With that, this me let turn

Thank Hock. you,

QX quarter, XX% Let financial me now the Consolidated a up performance. from ago. $XX.X billion detail year our for additional on revenue was provide

R&D billion, points XX.X% Excluding revenue of consolidated year-on-year margins $X.X from up $X the revenue increased and acquisition ago were basis operating quarter. of year to QX in consolidation contribution primarily XX% XXX the the was expenses from billion, VMware, due year-on-year. were up and quarter, VMware. Gross the

or ago, a and was $X.X million depreciation. up billion operating Adjusted year of XX% figure revenue. of of XX% from $X.X This was QX billion excludes with was XX% revenue. margin at income operating $XXX EBITDA

P&L for and semiconductor by revenue segment represented our down XX%, for segments, of in XXX XX% of higher in margins R&D, $X.X quarter. operating was margins year-on-year billion XX% segment mix solutions X was Now expenses semiconductor with year-on-year. a increased Operating of a on primarily XX%. review were resulting semiconductors. million points semiconductor of our in driven to XX% year-on-year, the Revenue the XPUs. increased $XXX This AI solutions investment for Gross basis approximately up our starting total

Now software. software quarter. revenue. of Gross operating XX% of software were infrastructure $X.X operating for represented And in due XX% and the were was moving XXX% VMware year-on-year margin infrastructure billion, primarily XX%. the Revenue expenses on margins the in quarter, for software billion of up to infrastructure in infrastructure to $X.X contribution resulting

Excluding transition costs, margin was operating XX%.

to flow. on Moving in billion quarter revenues. of was $X.X cash Free the XX% cash and flow represented

mix billion and to $X percentage restructuring cash Excluding of $XXX of year-on-year represented cash higher spent of has in million capital revenue. XX% of million, taxable and regulations related same higher debt as from recent ago cash due a quarter cash the Free a taxes to were higher flows used the XXX, acquisition, $XXX integration continued the from year the declined interest of VMware up for expense corporate a and expenditures. revenue on flow income, to reenactment of due AMT. We Section cash proposed on free delay U.S. XX%

compared outstanding the quarter days a in quarter the sequentially. Days We days to down $X.X fourth fourth of ago. XX sales inventory ended XX year were with billion, X%

quarter the remain the debt. ecosystem. to gross inventory billion $XX.X manage billion fourth of continue disciplined how ended with We of and we We cash across on principal $X.X

additional of which due with pay of notes. quarter, came senior notes, $X.X rate debt, floating the to and We in hand $X billion used During replaced floating new reducing billion. debt on rate by mix debt QX, we cash a senior

The years these to billion and and years, X.X% respectively. of respectively. maturity rate and billion years, X.X% maturity debt is our to weighted rate X.X and coupon of weighted debt $XX years the Following coupon our floating average rate is $XX actions, fixed in rate average X.X in

We coming $XXX in fixed repay of due QX. rate expect senior approximately notes million to

Now let XXXX. financial for me performance our fiscal recap year

and year-on-year $XX.X hit excluding X% was revenue up year-on-year, a up record year-on-year, XX% up billion, VMware, excluding Infrastructure including revenue billion, $XX.X billion, VMware. year-over-year. and revenue $XX.X was organically, X% VMware. XX% XXX% growing Semiconductor Our software

grew to EBITDA billion, XXXX of flow Fiscal costs. adjusted year-on-year $XX.X and year-on-year represented XX% $XX.X up Free XX% $XX.X to XX% revenue. and integration restructuring billion cash billion was excluding and

allocation. Turning to capital

common $XX.X XXXX, the billion cash acquisition XXXX flows fiscal year and fiscal to quarterly increased our intend in target prior increase form and $X.XX split-adjusted to consisting billion, a of repurchases in with of to stock an our quarterly quarterly ability the larger dividends generate of announcing the base 'XX, XX% dividend and preceding quarter. are the of share approval. fiscal cash spent on billion an to count increase QX in in in eliminations. a $X.X per maintain basis, off board throughout this we of share share We cash $XX.X subject we from dividend For VMware, Aligned from

year-on-year. XX% annual highlight I would fiscal per to a a XXXX. stock common consecutive our we XXth in in basis, XXXX increase that on dividend initiated be $X.XX the dividends share represents implies increase of to split-adjusted this like annual since This that an fiscal record dividends

a QX Now comparable of moving in year-on-year keep fiscal 'XX fiscal on XX-week QX of was quarter basis, mind a guidance. and that a From is XX-week quarter. 'XX to

starting of XXXX, a are close on now stand-alone out the X basis. no the will and break revenue following past VMware we longer As costs of we QX year fiscal acquisition, VMware in

profitability, We and enterprise includes revenue will continue CA to mainframe, SAN, Fibre and report Brocade security, Channel infrastructure segment VMware. software which

revenue for $X.X billion, QX infrastructure year-on-year. $XX.X of semiconductor XX% up approximately software consolidated and $X.X is XX% revenue up revenue year-on-year, guidance billion, billion, Our for with of of

be be We approximately QX to to EBITDA a and XX% expect record shares. count QX diluted non-GAAP X.X billion adjusted share

modeling by For mix Note of basis margins higher mix of infrastructure year we through the to revenue expect semiconductors mix and and within software points software gross semiconductors. and mix consolidated product XXX impacted be QX on the semiconductors. purposes, sequentially that gross revenue the will be consolidated margins within infrastructure up product

to tax reduced approximately restructuring are costs expect to taxes, integration-related terms. debt net higher acquisition. XX.X% under and more as we QX by year cash related will tax VMware income refinance be interest We pay deductions to the impacted in GAAP in interest down non-GAAP XXXX due fiscal and the cash favorable rate and as expense be flows

That up the questions. prepared Operator, please open remarks. call concludes my for

will of [Operator with line come the And question Curtis from Jefferies. first our Instructions]. Blayne

kind XX% It's that thought question. a into heard low ASIC I April I maybe kind networking, couldn't of networking. get you the growth January? about a was talk seen seeing off say in right, I October just but Can clarification networking point you've math revenue that that of broader and you the AI. in you're just strength trends in versus is of question AI

in more a of I that's the growing, question. Well, networking back were lot more same of we the interesting we've the compared not that network very rate, connectivity, to Both half year. at continue a half year the components a before AI will fiscal been believe, of next but next And lot shipping, year, this fiscal first of first in this half year. of suspect XPUs

As of I much of start indicated, X-nanometer more 'XX. of in the the very ramping back will new XPUs half generation

the moment Fitzgerald. for come next from One C.J. line our Cantor that of will Muse question. with And

guess, in construct, hit see including speak for helpful. the kind revenue terms AI. I you Or to on hyperscale very XPU to I Hock, in the between that there fiscal including are you there of any mix all and what wanted billion be customers of you're would mix hoping range consumers? sort vertically 'XX help networking. within that And for you could billion the integrated see of $XX out in potential to you I was and that $XX

for clarify thanks the specific. very Well, be me Give here question. an and opportunity to you. Thank

revenue, total for all Not on It's of hyperscale market, addressable addressable It's call term the us. opportunity SAM. And That's customers. dollars, First, the the SAM. what this a revenue for our X as by it's it. I way. serviceable market TAM, serviceable not we

and market serviceable dollar approximately about addressable talking to XX% And talking connectivity AI could At XPUs that a probably estimate the scale, of about. connectivity. we're run XX% AI very It's to narrow to content. close we're

that our the come will question. moment And with Joe One Morgan line next Stanley. of for Moore from

from if the does do the inside market. NVIDIA? your present the products sort could are competitor they the get you your of How I How scale connectivity to XPUs dynamic how wonder sort talk -- to multiple XPU a some merchant competitive from the of reacting of Just rack? rack to customers for you? that

XXX,XXX scale to XX,XXX when connect terms fabric and trying million, on -- and or figure to XXX,XXX when is whole on it say it's of start of GPU, GPUs, XPUs up X you new architecture. out and cluster to a everybody you Well, in a a game single

guys you rack then what to joining hear have when And because you And have choice. out. you you so the no these have racks, of call scale do rack differences you you

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moment with our the One next come question. will for And from JPMorgan. that line of Sur Harlan

AI perspective? And accelerators on Hock, putting center the sort spending an are know fiscal opportunity the from appreciate year, look for I team and SAM about at this been custom your But data the we for 'XX. can CapEx I out what customers outlook. has a multiyear guide thinking of networking

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there. I clearly, what's break mean what's AI they to in no, outstrips between out not numbers. non-AI you on spend AI even spend tend CapEx. really I'm give the and And it Harlan, CapEx the the in non-AI I sure the think overall out hyperscalers doesn't. an

And so no, stop I won't necessarily that. at

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more a question. have I tactical

get the So year? off as you implications about software well and are margins? as QX, the we the that rolling for gross is year like which back elevating as QX half the have pushouts start And Should software pushouts we shape the into of of what it. those on -- think into

in as stronger. weaker maybe guess the I back Because as well little a XPU half, have software QX versus you'll like the

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No, QX, impact won't no. 'XX. have rest the it don't -- it a fiscal I on the doesn't. Not material of

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think X current X those question X not TAM same bigger? the multipart to Sorry billion including you the customers. each customers smaller or $XX You're do? billion there. have Or those the Do they're about new do that $XX

No.

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term Kirsten. after interest It's We Yes, loans. focus so go we'll on Ross. reducing expense, those want to

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successfully my $X X-part metric centers there XPUs? guess networking your can question. you ahead of a then wanting data of talked they of guys, is, you guys on I for VMware. a so dollar sovereign frame. that merchant $X silicon? use VMware of all, simple to Broadcom Or there noticing attach are are XPUs? And of piece? network congratulations we I outside for a time the much posts, is your that for Hock, huge question think example, to about Is is of my one to other sovereign For sticking play And strictly of to software In and integrating First words, in question, had are XPUs?

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be So XPUs. very done on that it much will way

of question to XX%, X% going And expands, XXX,XXX percent hit a you're of first silicon that AI XX% today up your connectivity, a as you more is more which up is networking between changing to you're guess to and saying, probably a GPU be ratios networking, into almost time ratio though to scale by clusters. there out. is are ratio the about I'm Scale in the increases GPUs well, on saying to we compute, as looked up of between there some X what ratio as number bigger bigger, million it's becomes XX% grows fabric to scale XPU that the as are XPUs, cluster we there AI we to the And move content why And the or important? at. and talking simple is exponentially, is of expand up at from single is And XPUs the look what's cluster important.

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it make clear. let's So

market our this very as very players. market space. in see, it's today having all very fair substantial don't know. large, But the There's gain opportunity. we're room best a is you terms do relevant All share. going to just many I share, In of technology, can We're well positioned for

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technology enables have the these that with The it, by Broadcom silicon here is very are of positioned we it X well customers boatloads, in ours. why which we

and depth of just teams other the been now other a didn't are in terms engagement -- on going on -- for this with side. side from has This engagement of each engineering the on based while So deep of we start. the -- we that, today, our based

them to technology. we few optical We customers are of to of actually map leads in. about very ours the in And we're great well the enabling and silicon positioned, packaging at. for where areas design, their well it's ambition enable -- design underway a very to technology these good to are road be have, talking We're multiyear where creating get because we to

One moment And of that for Securities. with line from our Stein the William next Truist question. will come

is the the this to all it. business technologies for customers, exposure thinking change this that to growth great turn does area we've to slow the to of all in M&A in and potential congrats core, Hock, events of AI as of level add sort quarter your wonder, to want your organic it given does ASICs interest accustomed sudden change capabilities forward? focus its And what sort year mature, a I of in year M&A? I with your on results these tacked at M&A the But been to bring last a stunning business with acceleration and of to going with of And my outlook. the the

doesn't. it No,

are company always strategy open we're our a assets, semiconductors be still been last our of be always the to for infrastructure open, is and because in good which they model this open, in of software. or part business interested franchise years, they very portfolio in XX We that's core adding

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it no, So hasn't all. thinking changed our at

of that Rakesh from next with line for moment One question. And Vijay will Mizuho. come our the

here. results great Hock,

about XX% or AI Just looks a side. have the here silicon back $XX.X it TAM question the share. here, of like SAM custom on guess you -- I billion

silicon assuming AI billion to So custom XX% 'XX. in 'XX, like $XX be out revenues that fiscal looking your should

you sight into maybe So million see -- that of do ramp to we with do do Ethernet How numbers, have are and all to X a showing 'XX, that? a nice Ultra XPUs? line those the good we hit pretty fiscal

sight really We guidance for have year. it want X We share a doing, don't that I beyond you matter, nor, we're we enough of with know. a in give a you to AI its could do revenue company, giving headed. do want to you of to policy where this this of good -- where sense journey what line we But sense terms you to is a don't quarter have semiconductor want of trajectory. this lead of us, a give AI

sense now very least guiding we trajectory at going non-AI we that almost, that what made AI forward the revenue, versus it is. open, AI revenue Given a are give are only figured of official we you

On the known have it. non-AI, we

GDP a with known us You long it's growing it mid-single-digit It's stable, have mature, for evolving, plus. time.

you that. given never we've AI,

now, in terms potential unprecedented of step some this market laying of for So road ways, AI. that's why we that map take in

end customers the only market is serve. markets have Now and we we have we the

XXXX. -- rate is somewhat we we we this some and our see the comes we'll a big part could a It's each given how of deployment situation customers their of only expect own in X adoption there because and of XPUs, where see SAM be is, very be that journey to much and to the quarter-to-quarter variable. that, progresses variability, of So in create there extent, journey. -- the clarity How typically. customers and fact their of But the chunks, with are that we

my answer give you I've So what to best is any far. can't beyond you given so I clarity

you when CSPs, Got And X ramping? other them the see do it.

I all, of production. first get to into get Well, got got to production. They into

bridge it? that cross very deeply we get We're We when to don't pretty why So to them production engaged. stage. we hard with get are working it

and got they get to tape-out have chips. it. software it to ready, get tested, on they going they We And to got but get their -- got

So over years. But next now, sure. definitely, I'm the not X

thank call for Investor would like closing That question-and-answer time Head is our Yoo, over session. now to the back have turn we And remarks. all of for to I you. the Relations, Ji

you for call. X, close its at Broadcom A year plans report the you, follow conclude may earnings of to after today. first Time. webcast the will Broadcom's market Thank X:XX of of Operator, earnings Thank will on all Thursday, XXXX Pacific p.m. earnings call conference for you call currently fiscal That our end XXXX. quarter Sherry. March joining. public

This for concludes you today's program. participating. all Thank

now may disconnect. You