Financial News

Broadcom Inc. Announces Second Quarter Fiscal Year 2023 Financial Results and Quarterly Dividend
  • Revenue of $8,733 million for the second quarter, up 8 percent from the prior year period
  • Adjusted EBITDA of $5,686 million for the second quarter
  • Non-GAAP diluted EPS of $10.32 for the second quarter; GAAP diluted EPS of $8.15 for the second quarter
  • Quarterly common stock dividend of $4.60 per share
  • Repurchased and eliminated 5.6 million shares for $3,420 million
  • Third quarter revenue guidance of approximately $8.85 billion, an increase of 5 percent from the prior year period
  • Third quarter Adjusted EBITDA guidance of approximately 65 percent of projected revenue (1)

SAN JOSE, Calif., June 1, 2023 /PRNewswire/ -- Broadcom Inc. (Nasdaq: AVGO), a global technology leader that designs, develops and supplies semiconductor and infrastructure software solutions, today reported financial results for its second quarter of fiscal year 2023, ended April 30, 2023, provided guidance for the third quarter of its fiscal year 2023 and announced its quarterly dividend.

"Broadcom's second quarter results were driven by demand for next generation technologies from hyperscale, while enterprise and service providers continued to sustain," said Hock Tan, President and CEO of Broadcom Inc. "Our third quarter outlook projects year-over-year growth, reflecting continued leadership in networking as we support a measured ramp into large scale AI networks."

"Consolidated revenue grew 8% year-over-year to $8.7 billion and adjusted EBITDA margin increased year-over-year to 65%," said Kirsten Spears, CFO of Broadcom Inc. "We generated $4.4 billion in free cash flow, and expect cash flows to remain strong for Q3."

Second Quarter Fiscal Year 2023 Financial Highlights    



GAAP


Non-GAAP

(Dollars in millions, except per share data)


Q2 23


Q2 22


Change


Q2 23


Q2 22


Change

Net revenue


$

8,733


$

8,103



+8 %



$

8,733


$

8,103



+8 %


Net income


$

3,481


$

2,590


+$

891



$

4,489


$

4,000


+$

489


Earnings per common share - diluted


$

8.15


$

5.93


+$

2.22



$

10.32


$

9.07


+$

1.25


 

(Dollars in millions)


Q2 23


Q2 22


Change


Cash flow from operations


$

4,502


$

4,243


+$

259


Adjusted EBITDA


$

5,686


$

5,111


+$

575


Free cash flow                                                                                          


$

4,380


$

4,158


+$

222


 

Net revenue by segment




























(Dollars in millions)














Q2 23


Q2 22


Change

Semiconductor solutions














$

6,808


78 %



$

6,229


77 %


+9 %

Infrastructure software















1,925


22




1,874


23



+3 %

Total net revenue














$

8,733


100 %



$

8,103


100 %





 

The Company's cash and cash equivalents at the end of the fiscal quarter were $11,553 million, compared to $12,647 million at the end of the prior quarter.

During the second fiscal quarter, the Company generated $4,502 million in cash from operations and spent $122 million on capital expenditures. The Company spent $3,420 million on share repurchases and eliminations, consisting of $2,806 million in repurchases of 4.6 million shares and $614 million of withholding tax payments related to net settled equity awards that vested in the quarter (representing approximately 1.0 million shares withheld).

On March 31, 2023, the Company paid a cash dividend of $4.60 per share, totaling $1,914 million.

The differences between the Company's GAAP and non-GAAP results are described generally under "Non-GAAP Financial Measures" below, and presented in detail in the financial reconciliation tables attached to this release.

Third Quarter Fiscal Year 2023 Business Outlook

Based on current business trends and conditions, the outlook for the third quarter of fiscal year 2023, ending July 30, 2023, is expected to be as follows: 

  • Third quarter revenue guidance of approximately $8.85 billion; and
  • Third quarter Adjusted EBITDA guidance of approximately 65 percent of projected revenue.

The guidance provided above is only an estimate of what the Company believes is realizable as of the date of this release. The Company is not readily able to provide a reconciliation of projected Adjusted EBITDA to projected net income without unreasonable effort. Actual results will vary from the guidance and the variations may be material. The Company undertakes no intent or obligation to publicly update or revise any of these projections, whether as a result of new information, future events or otherwise, except as required by law.

Quarterly Dividends

The Company's Board of Directors has approved a quarterly cash dividend of $4.60 per share. The dividend is payable on June 30, 2023 to stockholders of record at the close of business (5:00 p.m. Eastern Time) on June 22, 2023.

Financial Results Conference Call

Broadcom Inc. will host a conference call to review its financial results for the second quarter fiscal year 2023 and to discuss the business outlook, today at 2:00 p.m. Pacific Time.

To Listen via Internet: The conference call can be accessed live online in the Investors section of the Broadcom website at https://investors.broadcom.com/.

To Listen via Telephone: Preregistration is required by the conference call operator. Please preregister at https://register.vevent.com/register/BI477cd40fc5ac48df90bd808feab60734. Upon registering, you will be emailed a link to the dial-in number and unique PIN.

Replay: An audio replay of the conference call can be accessed for one year through the Investors section of Broadcom's website at https://investors.broadcom.com/.

Non-GAAP Financial Measures

The non-GAAP measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial data is included in the supplemental financial data attached to this press release. Broadcom believes non-GAAP financial information provides additional insight into the Company's on-going performance. Therefore, Broadcom provides this information to investors for a more consistent basis of comparison and to help them evaluate the results of the Company's on-going operations and enable more meaningful period to period comparisons. 

In addition to GAAP reporting, Broadcom provides investors with net income, operating income, gross margin, operating expenses, cash flow and other data on a non-GAAP basis. This non-GAAP information excludes amortization of acquisition-related intangible assets, stock-based compensation expense, restructuring, impairment and disposal charges, acquisition-related costs, including integration costs, purchase accounting effect on inventory, litigation settlements, loss on debt extinguishment, gains (losses) on investments, income (loss) from discontinued operations, non-GAAP tax reconciling adjustments, and other adjustments. Management does not believe that these items are reflective of the Company's underlying performance. Internally, these non-GAAP measures are significant measures used by management for purposes of evaluating the core operating performance of the Company, establishing internal budgets, calculating return on investment for development programs and growth initiatives, comparing performance with internal forecasts and targeted business models, strategic planning, evaluating and valuing potential acquisition candidates and how their operations compare to the Company's operations, and benchmarking performance externally against the Company's competitors. The exclusion of these and other similar items from Broadcom's non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent or unusual.

Free cash flow measures have limitations as they omit certain components of the overall cash flow statement and do not represent the residual cash flow available for discretionary expenditures. Investors should not consider presentation of free cash flow measures as implying that stockholders have any right to such cash. Broadcom's free cash flow may not be calculated in a manner comparable to similarly named measures used by other companies.

About Broadcom Inc.

Broadcom Inc. (NASDAQ: AVGO), a Delaware corporation headquartered in San Jose, CA, is a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. Broadcom's category-leading product portfolio serves critical markets including data center, networking, enterprise software, broadband, wireless, storage and industrial. Our solutions include data center networking and storage, enterprise, mainframe and cyber security software focused on automation, monitoring and security, smartphone components, telecoms and factory automation. For more information, go to https://www.broadcom.com.

Cautionary Note Regarding Forward-Looking Statements

This announcement contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning Broadcom. These statements include, but are not limited to, statements that address our expected future business and financial performance, our plans and expectations with regard to our share repurchases, and other statements identified by words such as "will," "expect," "believe," "anticipate," "estimate," "should," "intend," "plan," "potential," "predict," "project," "aim," and similar words, phrases or expressions. These forward-looking statements are based on current expectations and beliefs of the management of Broadcom, as well as assumptions made by and information currently available to such management, current market trends and market conditions and involve risks and uncertainties, many of which are outside the Company's and management's control and may cause actual results to differ materially from those contained in forward-looking statements. Accordingly, you should not place undue reliance on such statements.

Particular uncertainties that could materially affect future results include risks associated with: global economic conditions and concerns; cyclicality in the semiconductor industry or in our target markets; any loss of our significant customers and fluctuations in the timing and volume of significant customer demand; our dependence on contract manufacturing and outsourced supply chain; our dependency on a limited number of suppliers; government regulations and administrative proceedings, trade restrictions and trade tensions; global political and economic conditions; our significant indebtedness and the need to generate sufficient cash flows to service and repay such debt; the amount and frequency of our share repurchase programs; dependence on and risks associated with distributors and resellers of our products; dependence on senior management and our ability to attract and retain qualified personnel; failing to complete or realize the expected benefits of our acquisition of VMware, Inc.; any acquisitions we may make, including our acquisition of VMware, such as delays, challenges and expenses associated with receiving governmental and regulatory approvals and satisfying other closing conditions, and with integrating acquired businesses with our existing businesses and our ability to achieve the benefits, growth prospects and synergies expected by such acquisitions; involvement in legal proceedings; quarterly and annual fluctuations in operating results; our ability to accurately estimate customers' demand and adjust our manufacturing and supply chain accordingly; our competitive performance and ability to continue achieving design wins with our customers, as well as the timing of any design wins; prolonged disruptions of our or our contract manufacturers' manufacturing facilities, warehouses or other significant operations; our ability to improve our manufacturing efficiency and quality; our dependence on outsourced service providers for certain key business services and their ability to execute to our requirements; our ability to protect against cyber security threats and a breach of security systems; our ability to maintain or improve gross margin; our ability to protect our intellectual property and the unpredictability of any associated litigation expenses; compatibility of our software products with operating environments, platforms or third-party products; our ability to enter into satisfactory software license agreements; availability of third party software used in our products; use of open source code sources in our products; any expenses or reputational damage associated with resolving customer product warranty and indemnification claims; market acceptance of the end products into which our products are designed; our ability to sell to new types of customers and to keep pace with technological advances; our compliance with privacy and data security laws; the COVID-19 pandemic; fluctuations in foreign exchange rates; our provision for income taxes and overall cash tax costs, legislation that may impact our overall cash tax costs and our ability to maintain tax concessions in certain jurisdictions; and other events and trends on a national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. We are not obligated to repurchase any specific amount of shares of common stock, and the stock repurchase programs may be suspended or terminated at any time.

Our filings with the SEC, which you may obtain for free at the SEC's website at http://www.sec.gov, discuss some of the important risk factors that may affect our business, results of operations and financial condition. Actual results may vary from the estimates provided. We undertake no intent or obligation to publicly update or revise any of the estimates and other forward-looking statements made in this announcement, whether as a result of new information, future events or otherwise, except as required by law.

Contact:
Ji Yoo
Broadcom Inc.
Investor Relations
408-433-8000
investor.relations@broadcom.com

(AVGO-Q)


(1) The Company is not readily able to provide a reconciliation of the projected non-GAAP financial information presented to the relevant projected GAAP measure without unreasonable effort.

 

 

BROADCOM INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

(IN MILLIONS, EXCEPT PER SHARE DATA)



































Fiscal Quarter Ended


Two Fiscal Quarters Ended



April 30,


January 29,


May 1,


April 30,


May 1,



2023


2023


2022


2023


2022

















Net revenue


$

8,733


$

8,915


$

8,103


$

17,648


$

15,809

Cost of revenue:
















Cost of revenue



2,177



2,374



1,956



4,551



3,881

Amortization of acquisition-related intangible assets



441



535



707



976



1,437

Restructuring charges



-



2



1



2



3

Total cost of revenue



2,618



2,911



2,664



5,529



5,321

Gross margin



6,115



6,004



5,439



12,119



10,488

Research and development



1,312



1,195



1,261



2,507



2,467

Selling, general and administrative



438



348



368



786



689

Amortization of acquisition-related intangible assets



348



348



398



696



795

Restructuring, impairment and disposal charges



9



10



18



19



35

Total operating expenses



2,107



1,901



2,045



4,008



3,986

Operating income



4,008



4,103



3,394



8,111



6,502

Interest expense



(405)



(406)



(518)



(811)



(925)

Other income (expense), net



113



143



(86)



256



(100)

Income before income taxes



3,716



3,840



2,790



7,556



5,477

Provision for income taxes



235



66



200



301



415

Net income



3,481



3,774



2,590



7,255



5,062

Dividends on preferred stock



-



-



(75)



-



(149)

Net income attributable to common stock


$

3,481


$

3,774


$

2,515


$

7,255


$

4,913

















Net income per share attributable to common stock:
















Basic


$

8.39


$

9.03


$

6.16


$

17.40


$

11.98

Diluted (1)


$

8.15


$

8.80


$

5.93


$

16.95


$

11.53

















Weighted-average shares used in per share calculations:
















Basic



415



418



408



417



410

Diluted (1)



427



429



424



428



426

















Stock-based compensation expense:
















Cost of revenue


$

50


$

37


$

36


$

87


$

72

Research and development



354



267



261



621



529

Selling, general and administrative



109



87



89



196



172

Total stock-based compensation expense


$

513


$

391


$

386


$

904


$

773


















(1) Excludes the potentially dilutive effect of Mandatory Convertible Preferred Stock for the fiscal quarter and
two fiscal quarters ended May 1, 2022 as the impact was antidilutive. All outstanding shares of Mandatory
Convertible Preferred Stock were converted into our common stock during the fiscal quarter ended October 30,
2022.













 

BROADCOM INC.

FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED

(IN MILLIONS)





































Fiscal Quarter Ended


Two Fiscal Quarters Ended



April 30,


January 29,



May 1,


April 30,


May 1,



2023


2023



2022


2023


2022


















Gross margin on GAAP basis


$

6,115


$

6,004



$

5,439


$

12,119


$

10,488

Amortization of acquisition-related intangible assets



441



535




707



976



1,437

Stock-based compensation expense



50



37




36



87



72

Restructuring charges



-



2




1



2



3

Acquisition-related costs



-



-




3



-



7

Gross margin on non-GAAP basis


$

6,606


$

6,578



$

6,186


$

13,184


$

12,007


















Research and development on GAAP basis


$

1,312


$

1,195



$

1,261


$

2,507


$

2,467

Stock-based compensation expense



354



267




261



621



529

Acquisition-related costs



-



(1)




-



(1)



-

Research and development on non-GAAP basis


$

958


$

929



$

1,000


$

1,887


$

1,938


















Selling, general and administrative expense on GAAP basis


$

438


$

348



$

368


$

786


$

689

Stock-based compensation expense



109



87




89



196



172

Acquisition-related costs



93



42




32



135



43

Selling, general and administrative expense on non-GAAP basis


$

236


$

219



$

247


$

455


$

474


















Total operating expenses on GAAP basis


$

2,107


$

1,901



$

2,045


$

4,008


$

3,986

Amortization of acquisition-related intangible assets



348



348




398



696



795

Stock-based compensation expense



463



354




350



817



701

Restructuring, impairment and disposal charges



9



10




18



19



35

Acquisition-related costs



93



41




32



134



43

Total operating expenses on non-GAAP basis


$

1,194


$

1,148



$

1,247


$

2,342


$

2,412


















Operating income on GAAP basis


$

4,008


$

4,103



$

3,394


$

8,111


$

6,502

Amortization of acquisition-related intangible assets



789



883




1,105



1,672



2,232

Stock-based compensation expense



513



391




386



904



773

Restructuring, impairment and disposal charges



9



12




19



21



38

Acquisition-related costs



93



41




35



134



50

Operating income on non-GAAP basis


$

5,412


$

5,430



$

4,939


$

10,842


$

9,595


















Interest expense on GAAP basis


$

(405)


$

(406)



$

(518)


$

(811)


$

(925)

Loss on debt extinguishment



-



-




112



-



112

Interest expense on non-GAAP basis


$

(405)


$

(406)



$

(406)


$

(811)


$

(813)


















Other income (expense), net on GAAP basis


$

113


$

143



$

(86)


$

256


$

(100)

(Gains) losses on investments



11



(44)




99



(33)



115

Other income, net on non-GAAP basis


$

124


$

99



$

13


$

223


$

15


















Provision for income taxes on GAAP basis


$

235


$

66



$

200


$

301


$

415

Non-GAAP tax reconciling adjustments



407



574




346



981



641

Provision for income taxes on non-GAAP basis


$

642


$

640



$

546


$

1,282


$

1,056


















Net income on GAAP basis


$

3,481


$

3,774



$

2,590


$

7,255


$

5,062

Amortization of acquisition-related intangible assets



789



883




1,105



1,672



2,232

Stock-based compensation expense



513



391




386



904



773

Restructuring, impairment and disposal charges



9



12




19



21



38

Acquisition-related costs



93



41




35



134



50

Loss on debt extinguishment



-



-




112



-



112

(Gains) losses on investments



11



(44)




99



(33)



115

Non-GAAP tax reconciling adjustments



(407)



(574)




(346)



(981)



(641)

Net income on non-GAAP basis


$

4,489


$

4,483



$

4,000


$

8,972


$

7,741



































Weighted-average shares used in per share calculations - diluted on GAAP basis



427



429




424



428



426

Non-GAAP adjustment (1)



8



5




17



7



17

Weighted-average shares used in per share calculations - diluted on non-GAAP basis



435



434




441



435



443



































Net income on non-GAAP basis


$

4,489


$

4,483



$

4,000


$

8,972


$

7,741

Interest expense



405



406




406



811



813

Provision for income taxes on non-GAAP basis



642



640




546



1,282



1,056

Depreciation



129



127




135



256



271

Amortization of purchased intangibles and right-of-use assets



21



22




24



43



48

Adjusted EBITDA


$

5,686


$

5,678



$

5,111


$

11,364


$

9,929


















Net cash provided by operating activities


$

4,502


$

4,036



$

4,243


$

8,538


$

7,729

Purchases of property, plant and equipment



(122)



(103)




(85)



(225)



(186)

Free cash flow


$

4,380


$

3,933



$

4,158


$

8,313


$

7,543





































 Fiscal
Quarter
Ending 
















July 30,














Expected average diluted share count (2)


2023































Weighted-average shares used in per share calculation - diluted on GAAP basis


427














Non-GAAP adjustment (1)


11














Weighted-average shares used in per share calculation - diluted on non-GAAP basis


438















(1) Non-GAAP adjustment for the number of shares used in the diluted per share calculations excludes the impact of stock-based compensation
expense expected to be incurred in future periods and not yet recognized in the financial statements, which would otherwise be assumed to be used to
repurchase shares under the GAAP treasury stock method. In addition, the non-GAAP adjustment includes the impact of Mandatory Convertible
Preferred Stock that was antidilutive on a GAAP basis for the fiscal quarter and two fiscal quarters ended May 1, 2022

(2) Excludes the effects of potential share repurchases.

 

BROADCOM INC.

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(IN MILLIONS)



















April 30,


October 30,




2023


2022










ASSETS
















Current assets:








Cash and cash equivalents


$

11,553


$

12,416


Trade accounts receivable, net



3,031



2,958


Inventory



1,886



1,925


Other current assets



1,401



1,205


Total current assets



17,871



18,504










Long-term assets:








Property, plant and equipment, net



2,209



2,223


Goodwill



43,614



43,614


Intangible assets, net



5,434



7,111


Other long-term assets



2,539



1,797


Total assets


$

71,667


$

73,249


















LIABILITIES AND EQUITY
















Current liabilities:








Accounts payable


$

831


$

998


Employee compensation and benefits



634



1,202


Current portion of long-term debt



1,117



440


Other current liabilities



4,929



4,412


Total current liabilities



7,511



7,052










Long-term liabilities:








Long-term debt



38,194



39,075


Other long-term liabilities



3,955



4,413


Total liabilities



49,660



50,540










Stockholders' equity:








Preferred stock



-



-


Common stock



-



-


Additional paid-in capital



20,826



21,159


Retained earnings



1,363



1,604


Accumulated other comprehensive loss



(182)



(54)


Total stockholders' equity



22,007



22,709


  Total liabilities and equity


$

71,667


$

73,249


 

BROADCOM INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(IN MILLIONS)



















Fiscal Quarter Ended


Two Fiscal Quarters Ended



April 30,


January 29,


May 1,


April 30,


May 1,



2023


2023


2022


2023


2022

Cash flows from operating activities:
















Net income


$

3,481


$

3,774


$

2,590


$

7,255


$

5,062

Adjustments to reconcile net income to net cash provided by operating activities:















Amortization of intangible and right-of-use assets



810



905



1,129



1,715



2,280

Depreciation



129



127



135



256



271

Stock-based compensation



513



391



386



904



773

Deferred taxes and other non-cash taxes



(316)



(573)



-



(889)



70

Loss on debt extinguishment



-



-



100



-



100

Non-cash interest expense



33



32



33



65



65