Broadcom Inc.

Hello, and welcome to Broadcom's Inc. First Quarter, Fiscal Year 2024 Financial Results Conference Call. At this time, for opening remarks and introductions, I will turn the call over to G.U., Head of Investor Relations of Broadcom Inc. You may begin.

Thank you, Operator, and good afternoon, everyone. Joining me on today's call are Hawk Tan, President and CEO, Kirsten Spears, Chief Financial Officer, and Charlie Kowals, President Semiconductor Solutions Group. Broadcom distributed a press release and financial tables after the market closed describing our financial performance for the first quarter of fiscal year 2024. 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 first quarter fiscal year 2024 results, guidance for our fiscal year 2024, 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 the specific risk factors that could cause our actual results to differ materially from the forward-looking statements made on this call. In addition to US 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, G. And thank you everyone for joining us today. In our fiscal Q1 2024, consolidated net revenue was $12 billion, up 34% year on year, as revenue included 10 and a half weeks of contribution from VMware. Excluding VMware, consolidated revenue was up 11% year-on-year. Semiconductor solutions revenue increased 4% year-on-year to $7.4 billion. And infrastructure software revenue grew 153% year-on-year to $4.6 billion. With respect to infrastructure software, revenue contribution from consolidating VMware drove a sequential jump in revenue by 132%. We expect continued strong bookings at VMware will accelerate revenue growth through the rest of fiscal 2024. In semiconductors, AI revenue quarterly year-on-year to $2.3 billion during the quarter, more than offsetting the current cyclical slowdown in enterprise and telcos. Now let me give you more color on our two reporting segments. Starting with software, Q1, Software segment revenue of $4.6 billion was up 156% year-on-year and included $2.1 billion in revenue contribution from VMware. Consolidated bookings in software grew sequentially from less than $600 million to $1.8 billion in Q1 and is expected to grow to over $3 billion in Q2. Revenue from VMware will grow double digit percentage sequentially quarter over quarter through the rest of the fiscal year. This is simply a result of our strategy with VMware. We are focused on upselling customers, particularly those who are already running their compute workloads with vSphere virtualization tools to upgrade to VMware Cloud Foundation, otherwise branded as VCF. VCF is the complete software stack integrating compute, storage, and networking that virtualizes and modernizes our customers' data centers. This on-prem self-service cloud platform provides our customers a complement and an alternative to public cloud. And in fact, at VM Explore last August, VMware and NVIDIA entered into a partnership called VMware Private AI Foundation. which enables VCF to run GPUs. This allows customers to deploy their AI models on-prem and wherever they do business without having to compromise on privacy and control of their data. And we're seeing this capability drive strong demand for VCF. from enterprises seeking to run their growing AI workloads on-prem. Reflecting all these factors, for the full year, we reiterate our fiscal 2024 guidance for software revenue of $20 billion. Turning to semiconductors, before I give you an overall assessment of this segment, let me provide more color by end markets. Q1 networking revenue of $3.3 billion grew 46% year-on-year, representing 45% of our semiconductor revenue. This was largely driven by strong demand for our custom AI accelerators at our two hyperscale customers. This trend extends beyond AI accelerators. Our latest generation Tomahawk 5 800G switches, Thor 2 Ethernet NICs, read-timers, DSPs, and optical components are experiencing strong demand at hyperscale customers, as well as large-scale enterprises deploying AI data centers. For fiscal 2024, given continuous strength of AI networking demand, we now expect networking revenue to grow over 35% year on year compared to our prior guidance for 30% annual growth. Moving on to wireless, Q1 wireless revenue of $2 billion decreased 1% sequentially and declined 4% year on year, representing 27% of semiconductor revenue. As you all may know, the engagement with our North American customer continues to be very deep, strategic, and, of course, multi-year. And in fiscal 2024, helped by content increases, we reiterate our previous guidance for wireless revenue to be flat year on year. Next, our Q1 server storage connectivity revenue was $887 million, or 12% of semiconductor revenue, down 29% year on year. We are seeing weaker demand in the first half, but expect recovery in the second half. Accordingly, We are revising our outlook for fiscal 24 server storage revenue to decline in the mid 20 percentage range year on year compared to prior guidance for high teens percent decline year on year. On broadband, Q1 revenue declined 23% year on year to $940 million and represented 13% of semiconductor revenue. We are seeing a cyclical trough this year for broadband as telco spending continues to weaken and do not expect improvement until late in the year. And accordingly, we're revising our outlook for fiscal 24 broadband revenue to be down 30% year-on-year from our prior guidance of down mid-teens year-on-year. And finally, Q1 industrial resales of $215 million declined 6% year on year. In fiscal 24, we continue to expect industrial resales to be down high single digits year upon year. And in summary, with stronger than expected growth from AI, more than offsetting the cyclical weakness in broadband and server storage, Q1 semiconductor revenue grew 4% year over year to $7.4 billion. Turning to fiscal 24, we reiterate our guidance for semiconductor solution revenue to be up mid to high single-digit percentage year on year. I know we told you in December our revenue from AI would be 25% of our full-year semiconductor revenue. We now expect revenue from AI to be much stronger, representing some 35% of semiconductor revenue at over $10 billion. And this more than offsets weaker than expected demand in broadband and service storage. So for fiscal 2024, in summary, we reiterate our guidance for consolidated revenue to be $50 billion, which represents 40% year-on-year growth. And we reiterate our full-year adjusted EBITDA guidance of 60%. Before I turn this call over to Kirsten, who will provide more details of our financial performance this quarter, Let me just highlight that Broadcom recently published its fourth annual ESG report available on a corporate citizenship site, which discusses the company's sustainability initiatives. As a global technology leader, we recognize Broadcom's responsibility to connect our customers, employees, and communities. Through our product and technology innovation and operational excellence, We remain committed to this mission. Kirsten?