Broadcom Inc.

to Broadcom's Inc's third quarter fiscal year 2022 financial results conference call. At this time, for opening remarks and introductions, I would now like to turn the call over to G.U., head of investor relations of Broadcom Inc.

Thank you, Cherie, and good afternoon, everyone. Joining me on today's call are Hawk Tan, president and CEO, Kirsten Spears, chief financial officer, and Charlie Kawas, President, Semiconductor Solutions Group. Broadcom distributed a press release and financial tables after the market closed describing our financial performance for the third quarter fiscal year of 2022. If you did not receive a copy, you may obtain the information from the investor section of Broadcom's website at broadcom.com. This conference call is being webcast live and an audio replay of the call can be accessed for one year through the investor section of Broadcom's website. During the prepared comments, Hawk and Kirsten will be providing details of our third quarter fiscal year 2022 results, guidance for our fourth quarter, as well as commentary regarding the business environment. We'll take questions after the end of our prepared comments. Please refer to our press release today and our recent filings with the SEC for information on those specific risk factors that could cause our actual results to differ materially from the forward-looking statements made on this call. In addition to U.S. GAAP reporting, Broadcom reports certain financial measures on a non-GAAP basis. A reconciliation between GAAP and non-GAAP measures is included in the tables attached to today's press release. Comments made during today's call will primarily refer to our non-GAAP financial results. I'll now turn the call over to Hawk.

Thank you, Gee, and thank you, everyone, for joining today. then we feel somewhat surreal here with what I'm about to report and go through in my screen. Let me start by saying, while consumer IT hardware spending has been reported to be weak, very weak, from our vantage point, infrastructure spend is still very much holding. In our fiscal Q3 22, Consolidated net revenue was a record $8.5 billion, up 25% year on year. Semiconductor solutions revenue increased 32% year on year to $6.6 billion. And infrastructure software revenue grew 5% year on year to be $1.8 billion. In Q3, Our semiconductor business was robust, with solid contributions from all our end markets. Cloud and service provider growth remained strong, and in Q4, it's actually expected to accelerate year on year, driven by data center build outs and infrastructure upgrades. Year on year, enterprise continued to grow for the sixth consecutive quarter on campus deployments and data center refreshes. Looking at Q4, we expect enterprise to continue to grow double-digit percent year over year. Meanwhile, in wireless, which is very much tied to our large North American handphone OEM, it was solid in Q3, and it's expected to grow in Q4 as we ram the new platform. Now let me provide more color by end market. Starting with networking, networking revenue was a record $2.3 billion and was up 30% year on year, representing 35% of our semiconductor revenue. As both cloud and enterprise data centers refresh, they continue to increase adoption of our Tomahawk, Trident, and Jericho switching silicon platforms. Importantly, we expect these trends to continue. In mid-August, Broadcom announced the Tomahawk 5 switch series, providing 51.2 terabits per second of Ethernet switching capacity in a single monolithic device, double the bandwidth of any other switched silicon available in the market today. We also announced the industry first silicon photonics co-package with the Tomahawk, which will enable a new benchmark for low power and extend our leadership and innovation in hyperscale data centers. Networking remains strong, given these drivers, and in Q4, we expect this segment to be up 30% year over year. Next, server storage connectivity revenue was a record $1.1 billion, or 17% of semiconductor sales. As growth of 70% year-on-year exceeded our expectations. A primary driver remained the growth of a next-generation server storage connectivity, where we benefited from higher content and continued deployment of servers and storage in both cloud and enterprises. We anticipate this strong trend to actually continue, server storage connectivity revenue to grow about 45% year-on-year. Moving on to broadband, revenue of $1.1 billion grew 20% year-on-year in line with our expectations and represented 17% of semiconductor sales. This steady growth was driven by major service providers continuing to deploy next generation broadband fiber to the home globally with high attach rates of Wi-Fi 6 and 6E. We are the industry leader in investing in the next generation Wi-Fi 7 and unlocking amazing wireless experiences across home gateways, enterprise access points, and smartphones. and we expect first deployments to occur in the second half 2023. In Q4, we expect our broadband business to grow above 20% year on year. Finally, next moving to wireless. Q3 revenue of $1.6 billion represented 25% of our revenue in semiconductors. Sustained demand from our North American customer drove wireless revenue up 14% year-on-year in line with our guidance. In Q4, we expect wireless revenue to be seasonally up 20% sequentially and grow 10% year-on-year. Finally, Q3 industrial resales of $244 million declined 4% year-over-year, reflecting weakness in China, partially offset by continued strength in the US and Europe. Nonetheless, for Q4, we forecast industrial resales to rebound to high single-digit growth year on year. In summary, Q3 semiconductor solution revenues was up 32% year on year. In Q4, we expect semiconductor revenue to remain strong at 25% year on year. Now, putting this in perspective, and if we look at it on a sequential basis, Q3 grew 6%, as did Q2, and Q4 will grow another 6%, largely driven by the seasonality of wireless. Turning to software. In Q3, infrastructure software revenue of $1.8 billion grew 5% year-on-year and represented 22% of total revenue. In dollar terms, consolidated renewal rates averaged 128% over expiring contracts, and for strategic accounts, we averaged 140%. Within the strategic accounts, annual bookings of $461 million include $136 million of cross-selling of our portfolio products to these core customers. Now, 95% of our renewal value represented recurring subscription and maintenance. And just to put all this in context, over the past 12 months, Consolidated renewal rates averaged 122% over expiring contracts. And within strategic accounts, we actually averaged 137%. Because of these trends, our ARR, the indicator of forward software revenue, at the end of Q3 was $5.5 billion, which was up 5% from a year ago. And in Q4, we expect our infrastructure software revenue to sustain around mid-single-digit percentage growth year over year. In summary, therefore, we're getting consolidated Q4 revenue of $8.9 billion, up 20% year on year, or 5% sequentially. Now, before Kirsten tells you more about our financial performance for the quarter, let me provide a brief update on our pending acquisition of VMware. We're making good progress with our various regulatory filings around the world. We have an excellent team focused on these efforts, and we are moving forward as very much as expected in this regard. We continue to expect the transaction to be completed in Broadcom's fiscal year 2023. We remain excited about our acquisition of VMware and continue to be impressed by their world-class engineering talent as well as strong customer and channel partnerships. with tremendous respect for what VMware has built. And together, we will enable enterprises to accelerate innovation and expand choice by addressing the most complex technology challenges in this multi-cloud era. And with that, let me turn the call over to Kirsten.