AVGO - Earnings call transcript Q2 2022

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Operator

Welcome to Broadcom's Inc.'s VMware Transaction and Second Quarter Fiscal Year 2022 Financial Results Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over to Ji Yoo, Director of Investor Relations of Broadcom Inc.

Ji Yoo

Thank you, operator, and good morning, everyone.

Joining me on today's call are Hock Tan, President and CEO; Kirsten Spears, Chief Financial Officer; Tom Krause, President, Broadcom Software Group; and Charlie Kawwas, Chief Operating Officer. This morning, Broadcom issued a press release and presentation regarding our announced agreement to acquire VMware.

fiscal 'XX our tables. and distributed also second results quarter financial We

at call our you copy, a for Investors week. Investors from website a not recording the section archived in It at This may Broadcom's If broadcom.com. via receive X information will you be did telephone live, being is webcast obtain website available the of will of broadcom.com. and be conference playback section the also

and SEC be results, remarks, providing our of as prepared filings During from our the made could Hock, We'll differ questions of regarding call. announced our second Kirsten prepared will business the information third comments. for commentary cause regarding to Tom acquisition statements take details the Please risk after VMware release quarter today. and our with fiscal our recent guidance presentation refer quarter factors Broadcom's the materially end the forward-looking press and to the as environment. specific on results that this year actual and well 'XX for on our

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

Hock Tan

joining Thank you, Ji, today. and for everyone you thank

let me we broader our course, me, off markets, indulge and the outlook fiscal in. could you and results play reviewing QX, If start by our for QX of

continue revenue quarter, and $X.X at the grew backlog billion. be times software, $XX and year-on-year strong, as to up extended. ago. as year billion $X.X lead $XX revenue net XX% infrastructure but software billion bookings preceding In referenced year-on-year In QX even Hardware, $X.X and to ago. $XX XX% billion to compared compared billion of So backlog was billion year at 'XX, quarter consolidated $XX ended over in to in over year-on-year. to was end as consolidated to $XX Solutions a the unchanged, Semiconductor a accelerated record by the grew our remain QX billion, billion growth well Demand, X% revenue a fiscal

Let end me provide more quarter. our AI record engines Starting using this substantial color XX% a There growth Silicon networking. were during revenue of billion hyperscalers was We deployment X accelerating drivers. markets. with networks with major by year-on-year. Networking $X.X by to saw and their

in switching growth routing, in year-over-year as Broadcom's More on importantly, a excess continue proprietary the we merchant and merchant to service next-generation in result, XX% QX. in accelerate will hyperscale, platform continuing enterprises fundamental to providers saw at of solutions. based and adoption silicon expect our of of This transition we And expense networking.

million, was server our $XXX storage Next, XX% revenue guided, we and as accelerated growth. to connectivity year-on-year

spending drove was service enterprise mega strong, increase portion our While content next-generation in growth. this a storage substantial of in rate

their disk are server to aggressively our hard massive scale solutions nearline consumption next-generation arrays. hyperscalers Additionally, drive storage of adopting

to grow revenue XX% we same over with drivers QX, to these in year-on-year. So continue expect

to Now QX rate fetch the with year-on-year. Wi-Fi billion of on of globally. and moving quarter of providers XX% $X.X X PON [Indiscernible] high cable to major revenue XE grew broadband. modem good and Deployment next-generation continue among service during be

an lockdowns percentage a and QX, to Accordingly, rate pandemic Broadcom's slightly from quarter-on-quarter, we innings. early broadband guided sustain still in seasonal measured, flat Investments in our broadband expansion as however, reminder, are reflecting wireless a QX investments XX% QX, content. is but to we are a particularly phenomenon. a increase XX% as and wireless, billion year-on-year. down On growth X% up multiyear In around the revenue quarter-on-quarter. ago, revenue be arising revenue in do was from Just from of in expect mid-teens ago, COVID-XX expect the we $X.X to a declined year year

resales renewable continue Reflecting Finally, continued strong be levels in QX and $XXX grew factory remain in health month. stable be strong by to around vehicles, lean. energy, expect QX, resales electric inventory Industrial, such lean million we automation resales, industrial driven our of care. at and X to the from And demand in to XX% channel inventory very year-over-year, to

in So the revenue XX% year-on-year, from XX% year-on-year was in Solutions up a QX preceding Semiconductor summary, step-up the quarter. growth

This and above, XX% to semiconductor silicon QX in year-on-year. highlighted I and storage and expect increase this revenue in in server merchant QX will growth. content shift a accordingly, As in we fundamental continue grow drove accelerated switching routing to

Now software. of XX% contracts. grew renewal terms, billion year-on-year. revenue infrastructure software represented X% averaged year-on-year In revenue software QX, total and XXX% In dollar turning consolidated expiring X% to of Core rates grew over revenue. $X.X

up cross-selling, we year-over-year. these of stable value Over will concludes on to revenue to growth to of up accounts, expect renewal XX% been billion, QX perhaps hear including growth the have quarter portfolio a our we ARR at Within business, While revenue Semiconductor to consolidated software infrastructure what will XX% turn our software $XXX PLAs summary, sustain strong, was strategic QX continue of contracts, accounts, mid-single-digit all renewals expect our now about. growth our In XX% $X.X revenue I in my end more billion. expiring results. represented to of our for products strategic be discussion million Layering which same waiting year-on-year. you to percent second averaged year-on-year subscription outlook that our and from $XXX of which $X.X year we XXX%. recurring X% of represented was and million customers. QX And ago. maintenance. of at the in QX, represented Well,

Now please refer slides to acquire our to regarding our agreement accompanying VMware.

feel on to are software we stronger. semiconductors the reassure might very As of our never cycle think acquisition never we have fundamentals and semiconductor and today, core of do both in want I been what in business, you know, of Irrespective you where in is strong unless embarked solid. an you we the our

We have are. reviewed grounded these how just solidly businesses

Broadcom's solutions the The of efficiency control me on-premise and performance enterprise VMware, company over its to pioneer, private exciting centers. scale VMware and let significant platform very extended of will to in discuss infrastructure. business bringing and cloud applications develop we platform take where to for Starting we and position The giving future believe where enterprises. data bring a adding and one hybrid began the truly our business to it our is fashion. levels Slide is company mission-critical opportunity to next By So enterprises VMware as everywhere now cloud apps with now level. reinforce will of security, be powering for #X. revolutionary their solutions what -- powers an with unmatched VMware a unique is their iconic possible cloud-neutral globally. that levels modern software trade-offs the cloud, the provider run as its premier to multi-cloud, core anywhere, infrastructure known providing company customers most today, enterprises underlying to virtualization

reasons and its of culture One partner we interested very VMware became customer of the relationships. in was strong engineering-centric world-class and team, because

in blue-chip and engine. the mission customer with innovation has The provider the incredible growing the aligns Slide attributes VMware in critical platform seek and platforms shown in the And importantly As incredibly global leader all Broadcom is for we markets. a company base big, well with technology it VMware an operate. an we strategy. X, is indispensable

in applications As Tom deploy uniquely are next software seamlessly with positioned to to create in shareholders. cloud manage profile that enterprises, and discuss together VMware portfolio, of application the across to securely, for our value adding will an also and a addition existing to their Broadcom, proposition new will value value type more us, for has develop, Broadcom's dimensions for detail, their And create of accelerate compelling to life for every workloads. we enable them powerful enabling customers, cycle ideal

contribute world's for approximately of of fully our we forma Slide technology Broadcom, pro EBITDA onto billion X billion and with infrastructure the of $XX that $X.X forma once 'XX, is are more the integrated revenue, part this fiscal have we than target platform. one largest pro creating of is As our companies. to on company shows VMware

franchises. to the just semiconductor this one the is have fiscal in business organic 'XX, Revenues of growth. billion XX organic. And largest Our billion is classic-Broadcom to as all business continues strong growth $XX.X acquisition key It with following XXXX very globally profitable. from I reviewed, in post grown of being semiconductor highly $XX.X

over fiscal to With be 'XX. of approximately market products, deeper the we With of invest commitment R&D to solutions revenue customer our into for and of will type half close of to software base. VMware, addition innovative able will VMware our business now to will this and the that forma our new a I'll pro hand revenue software billion call continuing fund and opportunity significantly and scale To $XX dive now represent support total the Tom. innovation, with

Tom Krause

Thanks, Hock.

Now turning to Slide X.

sits of enterprises drive and nexus modes at the that As enterprise opportunity their to a Hock competitive the enables previewed, largest VMware today. with X essence, operational develop platform advantage infrastructure by In to foundational is leveraging technology run VMware applications. in

agile move of many and private them risk need this, These their complex fashion. want To do by cost-effective types also and the data large to IT retaining multinational data. innovate, in fast infrastructure develop with This and cloud same centers, of is are serves deploying flexible, but worked applications continues run applications challenges. organizations of that to have market enterprises we the enable their VMware First, enterprises very with cloud in a these underlying growth own mitigate Broadcom, and workload customers at software large and grow. in control but to private to

technologies as growing Beyond cloud, public public to enterprises cutting-edge rapidly. the cost brings leverage workloads scalability cloud to benefits enables drive know, also private and their unprecedented and The are we forward. cloud business all

cloud clear So cloud going be to enterprises these it is for private modes, that are forward. think important public and of both going we

the critical a Slide the infrastructure software X. for leverage private that Turning enterprises to benefits platform VMware both to public is truly of cloud. is and foundational

an deliver talent. together, built, customers. By of respect We our the incredible leading R&D even innovation will more teams tremendous by bringing our VMware platform to team have has for supported we

entire storage think physical really the automation, we provides glass. X of about which VMware's for within pillar vSAN cloud life to that private is of vRealize category network single as a data cloud As manage entity enterprises the cycle their vSphere platform consists pillars: cloud management solution, pane and virtualization platform single workloads NSX, private a and infrastructure First, from enables virtualization server core management platform, analytics defining it,

platform or for cloud securing private, Tanzu in platform public provides end-to-end hybrid management applications VMware's modern environments. and Next, operating application an building, deploying,

cloud. of to virtualize proposition positioned to one basically from server VMware in Slide On experiences. which first time, is with has this of anywhere, enterprises center, the Then technology entire and underlying makes storage. the vSAN X, of VMware's bulk today operations of Finally, this made the virtualization, world. with value continue and easy VMware Over today pillar, employees and well has the end and securely a and from the the extremely virtualization private of solutions data evolved core to enabling its They the me resources NSX VMware seamless pioneered development proposition is robust enabling grow let value anytime to forward. center security user further foundational concept on by the to employee all infrastructure. that with compute to and manage the entire portfolio contribution it revenue vRealize, and going computing work extended this data operate enable VMware to software-defined networks as and double-click is

VMware them With that the this mass and and want, virtualizing delivers networking incredibly In about a code evolve cloud way they operating benefits software the is enterprise scalability, ushering excited or Foundation. marry across platform coming VMware the private with unique infrastructure public developers, the offers about thinking complete anywhere cloud, concert the to simplicity to the flexibility Stepping once letting even of and it's Cloud opportunity to for VMware enterprise in of in Azure, with Cloud products, gives storage. also AWS, the adoption. VMware to more products it our to Slide age back our benefits environment with cost the seamless deliver a servers, VMware VMware deploy whether capability, This across the customers. in these Foundation platform infrastructure cloud embrace on are end-to-end offers cloud our in the GCP underlying clouds. same portfolio, to we XX capabilities existing and of the private write

and address value of Rally development significant life We security cycle. and developed, mainframe of infrastructures; to Once As like VMware's to Tanzu the through need of public stream from we and applications a entire manage know, cloud. a to think these Starting all that changing the VMware's to underlying value bring life application accelerate of Clarity. different and applications application products development. reside enterprises operation to we vSphere can wide augment Broadcom And and in constantly variety applications enterprise Cloud the and with Foundation DevOps these products We native thousands operating Carbon products. their management these Symantec's server, help portfolio a assets security cloud hybrid with of client on of and multi-cloud wide the VMware's seamlessly across are endpoint stages in management software complement stream management, deploy applications along areas And capabilities leading offerings with secure of Black's apps environments. combined can can distributed for security the variety portfolio of together, value of cycle. all our

hybrid we're to a today, enable performance and to all working in of leading high to critical set be Now has applications. to And this. given ubiquitous access it's environment able products enterprise seamless, the VMware for these enable

can the Finally, these to issues monitor changing, are and Since able applications application and it's operational well. these are to into apps, continuous Automation step. the close these delivery of any ensure back development and be constantly AI exciting existing loop Observability, applications feed Ops to right portfolio Broadcom's Enterprise runtime and running optimize

paradigms, value We the ported delivering that portfolios any support infrastructure. exciting applications this business in applications enables So in functions remain of being us, applications private when to entire this think customers. are unique several cloud what's and support that for the will that centers, critical IT run that life providers. adds generation do we put that end-to-end together, is run X one of that underlying to natively application new to the and solution enterprise data major public you we types X written to application we're are can the massive public enterprises cloud an and across cycle, or the That's cloud including

me renamed Moving our about reminds to the is ourselves And Avago, really slide. ultimately, I of think transformed When Broadcom. and time why when it the classic Broadcom. modernized acquired as semiconductor we this next deal, business. This this we

as will the apps, We're As we of existing brand, software and business transformation an the benefit combined Broadcom's come software a the long-standing of and to together to broadest our platforms transformation. deliver level represents channel we with partners, a VMware closing VMware, announce robust range others. operate Together, rebrand iconic solutions software will for to among from providers excited incorporating this the that we platform and trusted the same stand solutions hyperscalers, our unparalleled ecosystem following VMware's accelerate and VMware, of and position cloud within security transaction, and Broadcom of digital tools infrastructure into Software customers' Group, platform. as vibrant

of are on industry important hybrid derived heterogeneous and all as they our this have a are budgets. multinationals, majority through Turning collective that organizations These fit around focused serving are all When as attributes. regulated And and strategies. X usually are largest we to we the channel the combination sales major direct VMware to and risk-averse large highly well multi-cloud globally. revenues, verticals key also and enterprises at built of all Broadcom complex with and from our Slide XX. they and expanding They environments IT customers our cover global with partners. look Together, transaction, and via sell customers

the data explore are unfavorable certain of by cloud, many want of including they sensitive have, the workload and/or number handle the more While types, they held that the back companies these regulation. many workloads they cloud to public economics moving for of the to applications factors, public

these will VMware, summary, result, we as amount have benefits time and is and largest a cloud keep to are partner here a environments to together of enterprises operating multi-cloud world's to created the positioned a containing challenge we the to with embrace that leverage a solve. our increasingly In to customers qualified environment. private cloud, uniquely are complex help hybrid companies As well. best with over operational complexity of to public The the

VMware's on R&D shown in customer knobs turn increase can billion we value that model investment to EBITDA approximately this Applying to stand-alone are focus. applying we billion As record to built proven XX, business creating $X.X pro model some a $X.X to and same of multiple track within by of profitability. approximately closing. significant VMware, Broadcom's on disciplined have run Slide rate and Driving EBITDA shareholder revenue forma this years targeting growth tailwinds of are we X material on

We we value, to Some general not efficiency can functions. envision administrative development, of duplicative at customer top recurring uniquely EBITDA our eliminating long-term and support where and focusing mid-single opportunities base revenues faster, and digits gains on we mid-XXs. margins marketing line on driving for focusing on software, installed can grow efforts by where a our research a the in these model if sales and basis, while include driving deliver

will the this sales dollars as Given reinvest into as both very marketing. well to and us our R&D allow back scale, significant via business,

Slide the XX, talk deal about let's structure. on Now

We shares are cash, of a acquiring XX% all VMware's stock $XX approximately in XX% transaction. billion for outstanding

debt. of shares VMware's VMware in or Additionally, elect of we cash their option have $XXX.XX stock assuming between shareholders of receiving shares. X.XXX are common Broadcom the to will for each billion $X net

fully consortium pro We transaction expect with billion new of committed shareholders The financing a debt approximately XX% financed at close. forma to VMware banks. $XX company will be from own of the in

XXXX. shareholders. Michael provision. committed remain acquisition our Shop" transaction, other our a have investment-grade of our on vote financial The an "Go update Dell does is who provide including closing We Lake to The approvals VMware transaction and results and strong of through capital balance Silver the include agreement are to the in XX-day the agreed and quarter rating. regulatory to over we favor a I'll committed customary to Kirsten, the to policy. subject close merger expect to hand it fiscal we go and going is to sheet, in approval and of steadfastly conditions, allocation

Kirsten Spears

you, Tom. Thank

billion XX% Let basis the year-on-year, by margin me Operating now for a ago. were income approximately in expenses was financial $X.X ago. performance. up Operating billion for XX.X% XXX the up a provide and from additional was up $X.X on of million excludes and year revenue, figure XX% revenue was Operating $X.X XX% XXX billion was depreciation. year-on-year. quarter, Gross up up from quarter detail or points was R&D. points in X% year Adjusted our investment quarter basis Revenue billion, the $X.X driven XX% This $XXX of margin was of year-on-year. revenue. EBITDA of

segment for our total Now a product in review revenue. operating year-on-year. XX% XXX $X.X P&L Revenue million of Gross content our was mix year-on-year. in was the R&D segment up expenses XX% favorable margins and up QX year-on-year, XX% was XX% This for margins semiconductor X QX, the segments. solutions driven by semiconductor approximately in Solutions were was Operating represented XX%, our product across products increased billion $XXX of for Semiconductor growth next-generation XX%. up basis $XXX quarter, points up and portfolio. million year-on-year. our extensive to

XX%. was profit up semiconductor XX%, while So grew revenue operating

infrastructure the XX up quarter, quarter, in year-over-year. basis up and year-on-year. X%. was for operating $XXX margin the million X% up segment. $X.X operating year-over-year. Infrastructure Gross to Revenue for infrastructure billion in Infrastructure XX% grew Operating and Moving represented software was X% were points This software XX% Software in XX% for was was revenue. QX the of P&L profit margin Software our expenses

flow flow. second revenue, quarter we expenditures. Moving of the second the outstanding XX% of million with in in $X.X $XX were and ended to $X.X days capital the we Free XX Days inventory spent quarter quarter, sales billion. cash representing was cash on billion,

during were which debt to liability unchanged relatively $X also quarter, years, extend cash from We of able short at XX.X and we weighted the weighted is to average rate maturity average our with ended $XXX X.X%. With with quarter interest billion billion $XX.X the second of management gross of term. million XX.X the activities debt,

$X.X AVGO equity, we $XXX on of to repurchased to stockholders paid common to on Turning stock count shares. share Based QX of share third excess billion cash of return count non-GAAP EBITDA million. fiscal adjusted business and eliminated for $X.X Consistent our of dividends. non-GAAP our to stock is taxes and with for In trends diluted be million guidance approximately capital of vesting common due quarter, elimination we $X.X revenue. million. in allocation. projected QX resulting expect in the approximately of quarter we employee billion the XXXX commitment of that and Note, consolidated X the billion, shareholders, cash for XXX was XX.X% in conditions, XXX The diluted million of current revenues

on our a CAGR allocation of Historically, me flow free last acquisition years, have organically over grown we increase the X going With XX% share VMware, thinking let forward. cash at now to the capital acquisitions. policy through and

third With free acquisition organic has on quarter a growth. VMware, expect our to of and dividend of already enhance of earnings per approved stock Board strong cash the cash common $X.XX share. The our we Directors flow

acquisition the Following VMware, remain flows dividends. dividend of policy as to cash committed returning free prior of year's our we of XX%

normalized gross Between to than post within are leverage also now rating expect to X.Xx approximately maintaining at less close, considerable X generate plan we flow. free and gross to close. debt ratio approximately rapidly X.Xx committed from We closing, deal of our deal and debt-to-EBITDA to delever EBITDA cash investment-grade years to

remaining under current authorization the the to billion date. relates have $X buyback, to it we As

addition, back are open In today remarks. of announcing That Operator, up call end December please authorization XXXX. of to $XX for the my an the buy questions. billion prepared through we concludes incremental shares

Operator

Bank. question Instructions] from Ross [Operator our And from Seymore first comes Deutsche

Ross Seymore

Tom, wanted results. side the of question and to ask on deal VMware I a things. the the on Congratulations

You side faster revenue EBITDA. asset you growth it's an mid-XXs that things, as are about that mid-single or than far how the growing that. I to piece? growth What the of side Can XX. a long-term the Slide little you And rate in Street to level you of us bit to VMware give on, of levers little is the of you of the then EBITDA bit and on think a just mid-XXs of -- model, you bit doing idea those It the then according like fall mid-single-digit overall? gave revenue and a equation? showed talk out a seems all that get as assuming Can growth

Tom Krause

Sure, Ross, the thanks for question.

me you about start growing to it things the double what top line let think think growing That's single When key Let with to But all about high and what's public Hock fundamentally, cloud then top back the is really high X it's if a mean and drive comfortable embellish. digits, case going of private I'll got fundamentally, actually I that's the this on Slide business line, actually cloud number and the are mid- here. we us on. growth. has workload deck, if about digits. going everyone

transition addition licensing I focus rapid from subscription. transition going to perpetual and a going through that, a think in on to to we are

pretty We know, software covered when revenue. we much multiple in being on business. faster, you the about When to at recurring if we X%, knobs. able sustain about business, XXX% think As And growth EBITDA, they're that. think with totally not been we've focused ARR combined the see we

at XX. can look You Slide

In the core reinvest to the we're core back terms going of franchises. R&D, business, in

the are businesses that's the to of through the pillars and are really this core core the that of about vRealize. think different These where the revenues, infrastructure X reinvestment it. is it's the and I But bulk went vSAN, business, you business, occur. to going driving vSphere, If

to our customers. going focus are common We on

engine VMware We significant at have significant regard, in ours. than here Broadcom a software, obviously, their actually does so go-to-market much own more

have to we're the see have leverage a of there. in and getting valuable and very of that, also channel. a beyond coverage areas sales force, that synergies those And we we advantage so both direct going fact we take But common

allow terms some going channel, lot we've there's that's to acquisitions a in value in Symantec revenues the relative And of that channel. support the to think and cost-effective continue we the us to CA to way. of want the learned and a to I support more -- things

We've leverage a some X% of course, for revenue. you run So of we companies see long to then, opportunity we real time. know, And all as G&A integrating at that. been

tremendous forward. from there's We opportunity even going significant anything have scale. we think a to we lot us add the that? to to see. of And redundancies you is This scale there drive want give more to going Hock, synergies

Hock Tan

No. Tom. to revenue we and you make Well the done going hear how pointedly your it. is do X answer on question on spending. on, where side, directly do explaining we Ross, But can one the Thanks, the investment, the dynamics

and see The the can a dip, lot -- of them of digits, the a are model a to beginning, we that you as years more a a you probably higher is to whether a is the subscription. growth in sense, more line consistent we substantial perpetual subscription. the over over you see that with X subscription, you'll the view, at we model. if growth rapid that's From point perpetual why or we frankly, convert it a followed depending economic go see subscription. on But it's you we has to back run slight a than Tom a other view, ourselves that their contracts, billion VMware from in by And perpetual. time top as to structuring is a on through way want same. -- -- And the make indicated, an recovery the that. converting lot will very And licenses, we recovery next of years couple likely and based a take but run $X within a mid-single on-prem reporting probably, to -- are, to they where have point rate are of perpetual, any, it, slower restructuring And this,

Operator

Our from from Ambrish Srivastava next BMO. question comes

Ambrish Srivastava

than businesses to two, the two. these a how you combining Just -- comment and following very up would -- this in on out you rate, Hock's growth getting software what need seem could different other had in a in doesn't you these through have It faster-growing was other business back that And growth partnerships the see parts This just trajectory. today? the pieces business of you the had Ross of businesses you getting be that like change synergies talk the term, like asset past? go-forward longer back basis, to laying Can terms you're on on the divest us asking. what would is to in than if to

Tom Krause

you And billion we go billion that fact of if software their mean huge I $XX bulk can to The where engine software certainly. we're gives the from about to that No, deal. combined spend it, the a big standpoint, leverage go-to-market the a $X-plus revenue go-to-market going of closer from is Yes. scale us that's fact companies think to economies. much at that dollars.

to marry of I all think focused a couple to what customers. in is of and with These largest Europe, be multinationals we're the sales North across Asia direct very large going force America are thousand parts partner effectively covers primarily the also channel but do which key arrangements. in able verticals, a significant

our I significantly distribution side, There's partners We so channel, the learned to an a big model, worked with GSIs resellers. X-tier think the thing on and embrace key also there's VMware. we've opportunity. is distribution one opportunity does value-added GSI

with do in can't X of we companies. today, that scale, scale And advantage I totality, its our at can so when the newfound take we definitely given look what the between

When into refer what supports the software, about Beyond R&D of of lot side [Indiscernible] you equation, to when a there's that, dig about Ross. follow to and we with we the think think it when of engineering. in the as central the deeper up about development talked sometimes you what

own having drive capability, develop this the be expensive. benefits. and to cloud It software much able private continuously with So operations, a kind centers data your the the also significant basis, on having over requires of portfolio R&D working drive is scale or larger that's continuous delivery, applications to investment testing consistent business continuous to providers, going ability is that to a

your So add hopefully, that want you to anything that. Hock, helps answer question.

Hock Tan

of the it's will day, a again, of seen at we we is do Well, the and if lot we great a this which keep issue, we that -- around hardware -- have dancing to. have the end in we're R&D is us we And all franchise. invest central and

in will In better, we here. And much far. execution. so it's hopefully been believe different, nutshell, what all seeing terms what of we're seeing We a much, that's, monetization, have execute than we about

Operator

question from next Bernstein Research. Rasgon Our Stacy comes from

Stacy Rasgon

come sounds into changing, well. be businesses maybe bit how guess because And can as the sort I and what -- comments channel of sound the I oversimplify, talk on I'm now that because driving but let your like the your kind of cost synergies tail before. now, feeding found guess of actually long growth interesting mean of changing seeing to to prior the to rate. about in it smaller to of strategy that more that does the for I new sort do I be doesn't the focus was sort that customers? model everything leveraging like the are customers to going degree that largest upside channel have and that other like this will What could to that a you're wither. be is after out you sort other little relative it that into like especially right Tom, that you've it'd going the And it? going feeding you little Am be tail long differently seen to tail of you business harder on you're of thinking of actually a in

change business especially about that anything in be talking could customers the mid-single long us on conservatism again, although, in you still model, maybe helpful. there's tail that number. around would You're of maybe of some the But give digits, some

Tom Krause

up picking you're it, Stacy. No, on Yes.

I of because Stacy, has based and portfolio capability on portfolio it breadth the that lot a of that of Yes, [Technical Difficulty]. of VMware we fact relative is and we lot today. the where it is think the the a sit to

Symantec, which a sales that's a drive Blue and were synergy motion. driving. some When much Broadcom. And right. of the half is that overall opportunity we call bought about of mainframe area, software XX% business mainframe very direct of toward at of You're Coat account the made in DLP up customer we lot accounts at Today's is saw particularly also we the XXX our strategic levered what revenues. about still with least activities we around where CA, That's to

slightly that motion. made our we frankly, as That, because the sense. go-to-market could drive north of So business margins, that operating was much to meant of in invest course, have XX% model we didn't

we we XXX,XXX private and more a serves for their vSphere, cloud to that applications, the I over at driving think much or it VMware, look with opportunity. the when whether public fact at it modern back the be we bigger cloud, is company look we look core, at going see customers, and that with growth the

need in to marketing. we and invest so that support to And opportunity, sales

was when said mid-XXs. So think that running about much that XXs a on but a today. scale, lower we're I think bigger profile I EBITDA That's margin margins the at you discussing, I EBITDA

away sales of variance And of going can that channel back to go is to about learning want profitably. and gave up, want that investment. and the we how think some We actually [Indiscernible] reinvest the to it. from Symantec, continue growth revenue from the and into actually we drive We and walk back we we think marketing frankly in we and embrace All don't the revenues channel.

Operator

question comes from Vivek next America Bank of Our Arya Securities. from

Vivek Arya

a had the question accretion on side. then on and the I process

the only? is EBITDA X. accretive business? for margin. VMware think, software is Is closer rest Tom, a the jurisdictions push the regulator Do be business which software that on And product you year overlap is you Or running could any why that And the any of this against? see side, then you accretion mid-XXs XX%, will Shop" for in side, And from? to process back there approvals on I "Go Because I entire provision? need your So will that believe. said

thoughts would on So process the very just the helpful. accretion be and any

Tom Krause

Yes, sure.

will of the very accretive integration as through So this get process. gate, accretive out be and we will our it get

and going in As cash-on-cash value That's going In here for of drive you create to we we're jurisdictions, returns. areas. been at and the to then the file look value aggregate double-digit criteria, always our expect lot you expectations, we shareholders. think at a EBITDA that's look to a number of

else. that there is than XX ordinary much other deal to see the And -- and won't a then it was the the everything around when out days. a agreement say comment But in and "Go "Go Shop", there. on negotiated You'll of Shop" I nothing for merger highly filings

Hock Tan

we're indicated, today, that strategic adoption to accounts enterprises having probably on selling the it of it. hybrid on with the enabling handling do cloud is, extend indicated that, direct supporting to driving structure, clarify, To cloud largest on VMware. be create Tom focusing, tail just beyond clearly, drive where long XXX group -- core is their stacks X,XXX and various This growth to attention clear we'll And refer as to new private Tom lot of I make and the and mid-XXs a stand-alone focus And is very of And realm and larger software-defined think us to in world, support accounts. a what new that the where software get VMware our strategy a networks. -- especially VMware and revenue products as private of cloud. to the the products, of has, in will

sense it will business had base we are very us resellers, partners, will This of it larger In global before, now core Tom do But will handled where last at we the a it we positively, too, go not continues will we business GSI be and indicated. enable will we as through before. as handle we These model. X,XXX, call focused on had and have the group Distributors, these VMware will sure its now of that scale XXX simplifying are we focus guys we will make to our we a partners. to in very, through terms but of supported. XXX,XXX at well these the long that perhaps looked as that tail customers, grow, -- looking be and

Operator

Kumar next Piper from from Harsh Sandler. Our comes question

Harsh Kumar

congratulations sounds an like for on got a the it Broadcom. deal, First your I've related on question deal. business a of Hock, all, commentary some amazing change, organic of to

that also, if just silicon this business, there just sell. from anything making the a over whereas And customers solutions seeing that. to in can was I'd and the guys you networking which losing talk on concerns, to be your the happening? and now recently, solutions? supply is guys driving I are. was solutions curious, out Or your happened mentioned seem color something any the curious be about you shift you it's long about issues, other supply is merchant in to time you're don't You seeing proprietary that

Hock Tan

obviously, that Merchant resiliency, -- in taking boxes, and us starts for Okay. which happening for is networking Well, years, on X hardware been speak. solutions routing, very switching last been always proprietary disaggregation of solutions, has It for has to more a has interesting and silicon question the with side. more trend, that merchant a networking, in been share over black It over customers. so flexibility And offers hyperscale. enable software. for

we to and We fact may are in to centers generation. their for now after what's through triggering they now it. investing basically the that particular, And hiatus, that triggering are pandemic I data cutting in enterprise. centers. new are from which in probably next modernizing is probably and data now we what all talking providers perhaps time all, has upgrading And they're now about are XXXX be going indicated enterprises frame. They are related -- And reinvesting, maybe the is service an acceleration, investing in figure

And necessary a on point on trend over in it and of And we this if acceleration Qumran. challenge question, silicon has in We not these course, it larger what see been would latest and we're do very Over in patterns. carefully. as We're we fast the way, a spite bluntly, the challenge X's, our so, demand and we versions -- that And we Rather are of last unchanged. is sure the gaining of adoption that Tomahawk always in proprietary get as bumped under see a -- through blank: is in sense X over that doesn't big And indicated substantially. timely it being are basis it's making some it's look to clear. the put solution. merchant supply. up of going seeing at acceleration And X's and months it market challenged the and terms chain three that edge past the of just unchanged almost in unextended correspondingly. answer Trident the constant pass they -- backlog normal in one products, or we XX have meet seeing are want. we backlog seeing drivers. times To years. leading-edge share demand than I in we're a a what the in perceive I And an just our And you we acceleration at that demand lead question, growth our on All JerichoXc months, -- I'll supply

a to And there across And of to is areas. lucky keeps that our it's now a areas be of in be those couple we products. demand coming not is particularly out are couple in in infrastructure. that for happen still board, so So related to necessarily very there areas. the strong, in It's largely it

And we're -- continue still the particularly telcos, us course, in hyperscale, providers in of as new but earnings last we are We we are accelerating, see. enterprise, are continuing that, as have, than seeing subsystems we connectivity, those where accelerating. revenue now not selling bookings a X from content might in subsystems real where seeing, increase networking, are as service buying demand. that our And indicated are lot the server rather and customers includes generation, content call, by as we seeing these prefer both needs embellish just And meet strong to space, to the I we that storage, a in see enterprise. in dramatically supply add, chip. these well in I top that just of step-up And on critical demand

Operator

take Sachs. question from And Toshiya from Goldman last Hari our we'll

Toshiya Hari

for ever And particularly roughly successfully businesses, umbrella. cons to the valuation hoping so getting X you you deserve? be deal the you're X the under to I and these was assuming is businesses closes, Hock, up us business that splitting some like software. would X after the not remind going if pros you consider semis could feel and running acquisition, XX% XX% your you of

Hock Tan

the this putting benefits of have, to the software help To see and lot a way, under something IT is the know past. It's you IT franchises JPMorgan of what in system you a old what the you answer -- don't sell If wrong, and goes inside black Toshiya, customer and you going to -- merchant thing. the scream department. department you bottom for a is in right like we we hardware umbrella. silicon all to because trend. in hardware box support, software Think ask That's do model that a driving one line, what's it's it on these various

disaggregation know hardware I of a software. routers, are creating compute, we We model they divided. disaggregating whether the combined, about and we stronger between but is it sure that -- storage. than systems, systems, may of model software. are hardware technology much And a know enables think We and still And is switches, are not this Broadcom

that question. answers hope So I your

Operator

does turn session Yoo back over like to for closing Ji that any the conference. conclude today's And remarks. our question-and-answer call I'd to for now

Ji Yoo

you, operator. Thank

Operator, all Thursday, XXXX. and its for today. will Broadcom's That As call on you conference market for fiscal you A earnings report of Broadcom's of second released end X:XX 'XX June close earnings Time. third after of may call today, currently we of the September Broadcom results plans call call. previously p.m. no hold quarter will scheduled conference X. X, conclude we have 'XX Pacific of follow public at Thursday, the call will for quarter the fiscal webcast Thank to longer the our earnings joining.

Operator

participation, concludes for a Everyone, disconnect. This you. now you call. your have day. you may and wonderful today's Thank conference Thank

Broadcom (AVGO) 1 Jun 222022 Q2 Earnings call transcript