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Broadcom financial results for Q1FY2022; forecasts Q2 revenue at $7.9B

Broadcom Inc., a global technology leader that designs, develops and supplies semiconductor and infrastructure software solutions, today reported financial results for its first quarter of fiscal year 2022, ended January 30, 2022, provided guidance for the second quarter of its fiscal year 2022 and announced its quarterly dividends.

“Broadcom’s record first quarter results were driven by strong enterprise demand, and continued investments in next generation technology by hyperscale and service providers,” said Hock Tan, President and CEO of Broadcom Inc. “Our second quarter outlook projects year-over-year growth to accelerate.”

“Consolidated revenue grew 16% year-over-year to a record $7.7 billion and operating profit increased 23%,” said Kirsten Spears, CFO of Broadcom Inc. “We generated $3.4 billion in free cash flow and are expecting free cash flow to remain strong in the second quarter. Consistent with our commitment to return excess cash to shareholders, we returned $4.5 billion to shareholders in the quarter including $1.8 billion of cash dividends and $2.7 billion of share repurchases.”

First quarter fiscal year 2022 financial highlights:

The Company’s cash and cash equivalents at the end of the fiscal quarter were $10,219 million, compared to $12,163 million at the end of the prior quarter.

During the first fiscal quarter, the Company generated $3,486 million in cash from operations and spent $101 million on capital expenditures. The Company spent $3,099 million on share repurchases and eliminations, consisting of $2,724 million in repurchases of 4.4 million shares and $375 million of withholding tax payments related to net settled equity awards that vested in the quarter (representing approximately 0.6 million shares withheld).

On December 31, 2021, the Company paid a cash dividend of $4.10 per share of common stock, totaling $1,689 million and a cash dividend of $20.00 per share of mandatory convertible preferred stock, totaling $75 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.

Second quarter fiscal Year 2022 business outlook
Based on current business trends and conditions, the outlook for the second quarter of fiscal year 2022, ending May 1, 2022, is expected to be as follows:

  • Second quarter revenue guidance of approximately $7.9 billion; and
  • Second quarter Adjusted EBITDA guidance of approximately 62.5 percent of projected revenue.

“Enterprise spending is on fire … and we are seeing a big part of that,” Broadcom’s chief executive, Hock Tan, told analysts on a conference call. He said that the sector has been recovering strongly from a “trough” in the first quarter of last year.

Broadcom’s chief financial officer, Kirsten Spears, told analysts that the company’s hardware had an order backlog of over $25 billion at the end of the quarter compared with $22 billion in the previous quarter.

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 on its common stock of $4.10 per share. The common stock dividend is payable on March 31, 2022 to common stockholders of record at the close of business (5:00 p.m. Eastern Time) on March 22, 2022.

The Company’s Board of Directors has also approved a quarterly cash dividend on its 8.00% Mandatory Convertible Preferred Stock, Series A, of $20.00 per share. This dividend is payable on March 31, 2022 to preferred stockholders of record at the close of business (5:00 p.m. Eastern Time) on March 15, 2022.

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.

CT Bureau

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