Broadcom Inc.

Welcome to Broadcom, Inc.' 's first quarter fiscal year 2026 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, Operator, and good afternoon, everyone. Joining me on today's call are Hawk Tan, President and CEO, Kirsten Spears, Chief Financial Officer, Charlie Kawas, President Semiconductor Solutions Group, and Ram Balaga, President Infrastructure Software Group. Broadcom distributed a press release and financial tables after the market closed describing our financial performance for the first quarter fiscal year 2026. 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 Investors section of Broadcom's website. During the prepared comments, Hawk and Kirsten will be providing details of our first quarter fiscal year 2026 results, guidance for our second 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 table attached to today's press release. Comments made during today's call will primarily refer to our non-GAAP financial results. I will now turn the call over to Hawk.

Thank you, Chi, and thank you, everyone, for joining us today. In our fiscal Q1 2026, total revenue reached a record $19.3 billion, and that's up 29% year-on-year. and exceeding our guidance on the back of better than expected growth in AI semiconductors. This top line strength translated into exceptional profitability with Q1 consolidated adjusted EBITDA hitting a record $13.1 billion, which is 68% of revenue. These figures demonstrate that our scale continues to drive significant operating leverage. Now we expect this momentum to accelerate as our custom AI XPUs hit their next phase of deployment among our five customers. So looking ahead to next quarter, Q2 26, We're guiding for consolidated revenue of approximately $22 billion, which represents 47% year-on-year growth. Let me now give you more color on our semiconductor business. In Q1, revenue was a record $12.5 billion as year-on-year growth accelerated to 52%. This robust growth was driven by AI semiconductor revenue, which grew 106% year-on-year to $8.4 billion, way above our outlook. In Q2, this momentum accelerated and we expect semiconductor revenue to be $14.8 billion, up 76% year-on-year. Driving this is AI revenue growth, which will accelerate very sharply to 140% year-on-year to $10.7 billion. Now, our custom accelerator business grew 140% year-on-year in Q1. This momentum continues in Q2. The RAM of custom AI accelerators across all our five customers is progressing very well. For Google, we continue our trajectory of growth in 26 with strong demand for the seventh generation Ironwood TPU. In 2027 and beyond, we expect to see even stronger demand from next generations of TPU. For Entropic, we are off to a very good start in 2026 for one gigawatt of TPU compute. And for 2027, this demand is expected to surge in excess of three gigawatts of compute. Our XPU franchise, I should add, extends beyond TPUs. Now, contrary to recent analyst reports, Meta's custom accelerator MTIA roadmap is alive and well. We're shipping now. And in fact, for the next generation XPUs, we will scale to multiple gigawatts in 27 and beyond. Rounding off for customers four and five. We see strong shipments this year and which we expect to more than double in 2027. We also now have a sixth customer. We expect OpenAI to deploy in volume their first generation XPU in 2027 and over one gigawatt of compute capacity. Let me take a second to emphasize our collaboration with these six customers to develop AIXPUs is deep, strategic, and multi-year. We bring to the partnerships, each of them unmatched technology in service, silicon design, process technology, advanced packaging, and networking to enable each of these customers to achieve optimal performance for their differentiated LLM workloads. We have the track record to deliver these XPUs at high volumes at an accelerated time to market with very high yields. And beyond technology, we provide multi-year supply agreements as our customers scale up deployment of their compute infrastructure. Our ability to assure supply in these times of constrained capacity in leading edge wafers, in high bandwidth memory and substrates ensures the durability of our partnerships. and we have fully secured capacity of these components for 26 through 28. Consistent now with the strong outlook for our XPUs, demand for AI networking is accelerating. Q1 AI networking revenue grew 60% year on year and represented one third of total AI revenue. In Q2, we project AI networking to accelerate a lot more and grow to 40% of total AI revenue. We are clearly gaining share in networking. Let me explain. In scale out, Our first to market Tomahawk 6 switch at 100 terabits per second, as well as our 200 G30s are capturing demand from hyperscalers, whether they use XPUs or GPUs this year. This lead will extend in 27 with our next generation Tomahawk 7 featuring double performance. Meanwhile, in scale up as cluster sizes and our customers expand we are uniquely positioned to enable these customers to stay on direct attached copper through our 200g service as we next step up to 400 g ag studies in 2028 our xpu customers will likely continue to stay on direct attached copper. And this is a huge advantage as the alternative of going to optical is more expensive and requires significantly more power. Reflecting the foregoing factors, our visibility in 2027 has dramatically improved today in fact we have line of sight to achieve ai revenue for from chips just chips in excess of 100 billion in 2027 we have also secured the supply chain required to achieve this Now turning to non-AI semiconductors. Q1 revenue of $4.1 billion was flat year-on-year in line with guidance. Enterprise networking, broadband, server storage revenues were up year-on-year offset by a seasonal decline in wireless. In Q2, we forecast non-AI semiconductor revenue to be approximately $4.1 billion up 4% from a year ago. Let me now talk about our infrastructure software segment. Q1 infrastructure software revenue of $6.8 billion was in line with our guidance, up 1% year on year. For Q2, we forecast infrastructure software revenue to be approximately $7.2 billion, up 9% year on year. VMware revenue grew 13% year on year. Bookings continued to be strong, and total contract value booked in Q1 exceeded $9.2 billion, sustaining an ARR, which is annual recurring revenue growth, of 19% year upon year. Let me reinforce that this growth in our infrastructure software business reflects our focus and investments in foundational infrastructure. And our infrastructure software is not disrupted by AI. In fact, VMware Cloud Foundation, VCF, is the essential software layer in data centers integrating CPUs, GPUs, storage and networking into a common high performance private cloud environment. As the permanent abstraction layer between AI software and physical chips, silicon, VCF cannot be disintermediated or replaced. It allows enterprises, in fact, to scale complex generative AI workloads effectively. with agility that hardware alone cannot provide. We are confident that the growth in generative and agentic AI will create the need for more VMware, not less. So in summary, let me put it all together. For Q2, 2026, we expect consolidated revenue growth to accelerate to 47% year-on-year and reach approximately $22 billion. And we expect adjusted EBITDA to be approximately 68% of revenue. So with that, let me turn the call over to Kirsten.