Broadcom(AVGO)2024-03-13 16:00Revenue and Segment Performance - Net revenue for the fiscal quarter ended February 4, 2024 was $11,961 million, a 34% increase compared to $8,915 million in the prior year fiscal quarter[100] - Semiconductor solutions segment revenue increased 4% to $7,390 million, driven by strong demand for networking products[100] - Infrastructure software segment revenue surged 153% to $4,571 million, primarily due to contributions from the VMware acquisition[100] - Operating income from the infrastructure software segment increased by 108% to $2,715 million, driven by contributions from VMware[108] - Direct sales to WT Microelectronics accounted for 27% of net revenue in the fiscal quarter ended February 4, 2024, up from 22% in the prior year fiscal quarter[97] Gross Margin and Expenses - Gross margin increased by $1,371 million to $7,375 million, but gross margin percentage decreased from 67% to 62% due to higher amortization of acquisition-related intangible assets[101] - Research and development expense increased 93% to $2,308 million, driven by higher stock-based compensation and headcount from the VMware acquisition[102] - Selling, general and administrative expense increased 352% to $1,572 million, primarily due to higher stock-based compensation and acquisition-related costs[103] - Amortization of acquisition-related intangible assets increased 128% to $792 million, mainly from customer-related intangible assets from the VMware acquisition[104] - Restructuring and other charges were $620 million, primarily due to employee termination costs associated with the VMware acquisition[105] - Unallocated expenses increased by 258% to $4,748 million, primarily due to higher amortization of acquisition-related intangible assets and stock-based compensation from the VMware Merger[108] VMware Acquisition and Integration - The company completed the acquisition of VMware for approximately $30.8 billion in cash and 54.4 million shares of Broadcom common stock valued at $53.4 billion[90] - The company is currently integrating VMware operations, control processes, and information systems into its systems and control environment[124] - The company signed a definitive agreement to sell VMware's end-user computing business for approximately $3.8 billion, expected to close in 2024[111] Stock-Based Compensation - Total stock-based compensation expense increased to $1,572 million for the fiscal quarter ended February 4, 2024, compared to $391 million in the prior year, primarily due to equity awards from the VMware Merger and higher grant-date fair values[106] - Unrecognized compensation cost related to unvested stock-based awards as of February 4, 2024, totals $12,132 million, with a remaining weighted-average service period of 3.3 years[107] Interest and Debt - Interest expense rose to $926 million, up from $406 million, due to debt incurred for the VMware Merger[109] - The company had $48.1 billion in principal amount of fixed rate senior notes outstanding as of February 4, 2024, with an estimated aggregate fair value of $43.2 billion[122] - A hypothetical 50 basis point change in market interest rates would alter the fair value of the fixed rate senior notes by approximately $1.6 billion as of February 4, 2024[122] - The company had $30.4 billion of outstanding term loans subject to floating interest rates as of February 4, 2024[122] - A hypothetical 1% change in the interest rate would impact the interest expense on the 2023 Term Loans by approximately $307 million over the next 12 months[122] Cash Flow and Financial Position - The company's cash and cash equivalents totaled $11,864 million as of February 4, 2024, with a $7.5 billion unsecured revolving credit facility available[111] - Net cash provided by operating activities increased to $4,815 million, primarily due to contributions from VMware[118] - Cash used in investing activities surged to $25,477 million, mainly due to $25,416 million paid for the VMware Merger[119] - Net cash provided by financing activities was $18,337 million, driven by $30,010 million in net proceeds from the 2023 Term Loans[120] Internal Controls and Reporting - The company's disclosure controls and procedures were deemed effective as of February 4, 2024, at the reasonable assurance level[124] - No material changes in internal control over financial reporting were identified during the period covered by the report[124]