Broadcom Inc.

Welcome to Broadcom's Inc. Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over to GU, 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 Kowals, 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 2025. 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 remarks, Hawk and Kirsten will be providing details of our fourth quarter and fiscal year 2025 results, guidance for our first quarter of fiscal year 2026, 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 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, G. And thank you, everyone, for joining us today. Well, we just ended our Q4 fiscal 25, and before I get into details of that quarter, let me recap the year. In our fiscal 2025, consolidated revenue grew 24% year over year to a record $64 billion, and that's driven by AI semiconductors and VMware. AI revenue grew 65% year-over-year to $20 billion, driving the semiconductor revenue for this company to a record $37 billion for the year. In our infrastructure software business, strong adoption of VMware Cloud Foundation, or VCF as we call it, drove revenue growth of 26% year on year to $27 billion. In summary, 2025 was another strong year for Broadcom. And we see the spending momentum by our customers for in AI continuing to accelerate in 2026. Now let's move on to the results of our fourth quarter 2026. Total revenue was a record $18 billion, up 28% year-on-year, and above our guidance on better-than-expected growth in AI semiconductors, as well as infrastructure software. Q4 consolidated adjusted EBITDA was a record $12.12 billion, up 34% year-on-year. So let me give you more color on our two segments. In semiconductors, revenue was 11.1 billion as year-on-year growth accelerated to 35%. And this robust growth was driven by the AI semiconductor revenue of 6.5 billion, which was up 74% year-on-year. And this represents a growth trajectory exceeding 10 times over the 11 quarters we have reported this line of business. Our custom accelerator business more than doubled year over year as we see our customers increase adoption of XPUs, as we call those custom accelerators, in training their LLMs, and monetizing their platforms through inferencing APIs and applications. These XPUs, I may add, are not only been used to train and inference internal workloads by our customers. The same XPUs in some situations have been extended externally to other LLM peers. Best exemplified at Google, where the TPUs used in creating Gemini are also being used for AI cloud computing by Apple, Cohere, and SSI as a sample. And the scale at which we see this happening could be significant. And as you are aware, Last quarter, Q3-25, we received a $10 billion order to sell the latest TPU Ironwood Racks to Entropic. And this was our fourth customer that we mentioned. And in this quarter, Q4, we received an additional $11 billion order from the same customer for delivery in late 2026. But that does not mean our other two customers are using TPUs. In fact, they prefer to control their own destiny by continuing to drive their multi-year journey to create their own custom AI accelerators or XPU racks as we call them. And I'm pleased today to report that during this quarter, we acquired a fifth XPU customer through a $1 billion order placed for delivery in late 2026. Now moving on to AI networking. Demand here has even been stronger as we see customers build out their data center infrastructure ahead of deploying AI accelerators. Our current order backlog for AI switches exceeds $10 billion as our latest 102 terabit per second Tomahawk 6 switch, the first and only one of its capability out there, continues to book at record rates. And this is just a subset of what we have. We have also secured record orders on DSPs, optical components like lasers, and PCI Express switches to be deployed, all to be deployed in AI data centers. And all these components combined with our XPUs bring our total order on hand in excess of $73 billion today, which is almost half Broadcom's consolidated backlog of $162 billion. We expect this $73 billion in AI backlog to be delivered over the next 18 months. And in Q1 fiscal 26, we expect our AI revenue to double year on year to $8.2 billion. Turning to non-AI semiconductors, Q4 revenue of $4.6 billion was up 2% year on year and up 16% sequentially based on favorable wireless seasonality. Year on year, broadband showed solid recovery. Wireless was flat, and all the other end markets were down as enterprise spending continued to show limited signs of recovery. And accordingly, in Q1, We forecast non-AI semiconductor revenue to be approximately $4.1 billion, flat from a year ago, down sequentially due to wireless seasonality. Let me now talk about our infrastructure software segment. Q4 infrastructure software revenue of $6.9 billion was up 19% year-on-year, and above our outlook of 6.7%. Bookings continue to be strong as total contract value booked in Q4 exceeded $10.4 billion versus $8.2 billion a year ago. We ended the year with 73 billion of infrastructure software backlog, up from 49 billion a year ago. We expect renewals to be seasonal in Q1 and forecast infrastructure software revenue to be approximately 6.8 billion. We still expect, however, that for fiscal 26, infrastructure software revenue to grow low double-digit percentage. So here's what we see in 2026. Directionally, we expect AI revenue to continue to accelerate and drive most of our growth and non-AI semiconductor revenue to be stable. Infrastructure software revenue will continue to be driven by VMware growth at low double digits. And for Q1 26, We expect consolidated revenue of approximately $19.1 billion, up 28% year-on-year. And we expect adjusted EBITDA to be approximately 67% of revenue. And with that, let me turn the call over to Kirsten.