SAN JOSE, Calif., March 4, 2021 /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 first quarter of fiscal year 2021, ended January 31, 2021, provided guidance for the second quarter of its fiscal year 2021 and announced its quarterly dividends.

"We executed well during our first fiscal quarter driving 14% organic growth year on year," said Hock Tan, President and CEO of Broadcom Inc. "This growth reflects the critical role our technology franchises play in this environment of accelerated digital transformation."

"This quarter highlights the strength of our financial model with 14% year over year revenue growth translating to an increase in operating profit of 23%," said Kirsten Spears, CFO of Broadcom Inc. "We continue to deliver strong free cash flow, approximately $3 billion in the quarter, representing 35% growth on a year on year basis."

First Quarter Fiscal Year 2021 Financial Highlights




















GAAP


Non-GAAP

(Dollars in millions, except per share data)


Q1 21


Q1 20


Change


Q1 21


Q1 20


Change

Net revenue


$

6,655


$

5,858


+14%


$

6,655


$

5,858


+14%

Net income


$

1,378


$

385


+$

993


$

2,973


$

2,370


+$

603

Earnings per common share - diluted


$

3.05


$

0.74


+$

2.31


$

6.61


$

5.25


+$

1.36

 

(Dollars in millions)










Q1 21


Q1 20


Change

Cash flow from operations










$

3,113


$

2,322


+$

791

Adjusted EBITDA










$

3,941


$

3,265


+$

676

Free cash flow










$

2,999


$

2,214


+$

785

 

Net revenue by segment


























(Dollars in millions)












Q1 21


Q1 20


Change

Semiconductor solutions












$

4,908


74%


$

4,191


72%


+17%

Infrastructure software













1,747


26



1,667


28


+5%

Total net revenue












$

6,655


100%


$

5,858


100%




The Company's cash and cash equivalents at the end of the first fiscal quarter were $9,552 million, compared to $7,618 million at the end of the prior quarter.

During the first fiscal quarter, the Company generated $3,113 million in cash from operations and spent $114 million on capital expenditures.

On December 31, 2020, the Company paid a cash dividend of $3.60 per share of common stock, totaling $1,468 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 2021 Business Outlook

Based on current business trends and conditions, the outlook for the second quarter of fiscal year 2021, ending May 2, 2021, is expected to be as follows: 

  • Second quarter revenue guidance of approximately $6.5 billion; and
  • Second quarter Adjusted EBITDA guidance of approximately 59 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 on its common stock of $3.60 per share. The common stock dividend is payable on March 31, 2021 to common stockholders of record at the close of business (5:00 p.m. Eastern Time) on March 22, 2021.

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, 2021 to preferred stockholders of record at the close of business (5:00 p.m. Eastern Time) on March 15, 2021.

Financial Results Conference Call

Broadcom Inc. will host a conference call to review its financial results for the first quarter fiscal year ended January 31, 2021, and to discuss the business outlook, today at 2:00 p.m. Pacific Time. Those wishing to access the call should dial (866) 310-8712; International +1 (720) 634-2946. The passcode is 9555701. A replay of the call will be accessible for one week after the call. To access the replay dial (855) 859-2056; International +1 (404) 537-3406; and reference the passcode: 9555701. A webcast of the conference call will also be available in the "Investors" section of Broadcom's website at www.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 revenue, 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 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 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 which 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: the COVID-19 pandemic, which has, and will likely continue to, negatively impact the global economy and disrupt normal business activity, and which may have an adverse effect on our results of operations; 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; global economic conditions and concerns; global political and economic conditions; government regulations, trade restrictions and trade tensions; our significant indebtedness and the need to generate sufficient cash flows to service and repay such debt; 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; any acquisitions we may make, 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 or administrative proceedings; quarterly and annual fluctuations in operating results; our ability to accurately estimate customers' demand and adjust our manufacturing and supply chain accordingly; cyclicality in the semiconductor industry or in our target markets; 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 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; our ability to protect against a breach of security systems; 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. Many of the foregoing risks and uncertainties are, and will be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result. 

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

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



January 31,


November 1,


February 2,



2021


2020


2020











Net revenue


$

6,655


$

6,467


$

5,858

Cost of revenue:










Cost of revenue



1,814



1,753



1,636

Amortization of acquisition-related intangible assets



874



962



950

Restructuring charges



15



5



8

Total cost of revenue



2,703



2,720



2,594

Gross margin



3,952



3,747



3,264

Research and development



1,211



1,182



1,289

Selling, general and administrative



339



405



601

Amortization of acquisition-related intangible assets



494



599



603

Restructuring, impairment and disposal charges



71



35



57

Total operating expenses



2,115



2,221



2,550

Operating income



1,837



1,526



714

Interest expense



(570)



(420)



(406)

Other income (expense), net



117



31



(4)

Income from continuing operations before income taxes



1,384



1,137



304

Provision for (benefit from) income taxes



6



(187)



(76)

Income from continuing operations



1,378



1,324



380

Income from discontinued operations, net of income taxes



-



-



5

Net income



1,378



1,324



385

Dividends on preferred stock



(74)



(74)



(74)

Net income attributable to common stock


$

1,304


$

1,250


$

311











Basic income per share attributable to common stock:










Income per share from continuing operations


$

3.20


$

3.09


$

0.77

Income per share from discontinued operations



-



-



0.01

Net income per share


$

3.20


$

3.09


$

0.78











Diluted income per share attributable to common stock(1):










Income per share from continuing operations


$

3.05


$

2.93


$

0.73

Income per share from discontinued operations



-



-



0.01

Net income per share


$

3.05


$

2.93


$

0.74











Weighted-average shares used in per share calculations:










Basic



407



405



398

Diluted



428



426



420











Stock-based compensation expense included in continuing operations:










Cost of revenue


$

32


$

38


$

43

Research and development



328



318



391

Selling, general and administrative



84



93



111

Total stock-based compensation expense


$

444


$

449


$

545












(1) Excludes the potentially dilutive effect of Mandatory Convertible Preferred Stock as the impact was antidilutive.

 

BROADCOM INC.

FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED

(IN MILLIONS)























Fiscal Quarter Ended



January 31,


November 1,


February 2,



2021


2020


2020











Gross margin on GAAP basis


$

3,952


$

3,747


$

3,264

Purchase accounting effect on inventory



-



-



11

Amortization of acquisition-related intangible assets



874



962



950

Stock-based compensation expense



32



38



43

Restructuring charges



15



5



8

Acquisition-related costs



3



6



1

Gross margin on non-GAAP basis


$

4,876


$

4,758


$

4,277











Research and development on GAAP basis


$

1,211


$

1,182


$

1,289

Stock-based compensation expense



328



318



391

Acquisition-related costs



1



1



7

Research and development on non-GAAP basis


$

882


$

863


$

891











Selling, general and administrative expense on GAAP basis


$

339


$

405


$

601

Stock-based compensation expense



84



93



111

Acquisition-related costs



41



60



175

Litigation settlements



-



-



13

Selling, general and administrative expense on non-GAAP basis


$

214


$

252


$

302











Total operating expenses on GAAP basis


$

2,115


$

2,221


$

2,550

Amortization of acquisition-related intangible assets



494



599



603

Stock-based compensation expense



412



411



502

Restructuring, impairment and disposal charges



71



35



57

Litigation settlements



-



-



13

Acquisition-related costs



42



61



182

Total operating expenses on non-GAAP basis


$

1,096


$

1,115


$

1,193











Operating income on GAAP basis


$

1,837


$

1,526


$

714

Purchase accounting effect on inventory



-



-



11

Amortization of acquisition-related intangible assets



1,368



1,561



1,553

Stock-based compensation expense



444



449



545

Restructuring, impairment and disposal charges



86



40



65

Litigation settlements



-



-



13

Acquisition-related costs



45



67



183

Operating income on non-GAAP basis


$

3,780


$

3,643


$

3,084











Interest expense on GAAP basis


$

(570)


$

(420)


$

(406)

Loss on debt extinguishment



172



16



5

Interest expense on non-GAAP basis


$

(398)


$

(404)


$

(401)











Other income (loss), net on GAAP basis


$

117


$

31


$

(4)

(Gains) losses on investments



(119)



(10)



18

Acquisition-related gain



(2)



(4)



(4)

Other income (loss), net on non-GAAP basis


$

(4)


$

17


$

10











Provision for (benefit from) income taxes on GAAP basis


$

6


$

(187)


$

(76)

Non-GAAP tax reconciling adjustments



399



578



399

Provision for income taxes on non-GAAP basis


$

405


$

391


$

323











Net income on GAAP basis


$

1,378


$

1,324


$

385

Purchase accounting effect on inventory



-



-



11

Amortization of acquisition-related intangible assets



1,368



1,561



1,553

Stock-based compensation expense



444



449



545

Restructuring, impairment and disposal charges



86



40



65

Litigation settlements



-



-



13

Acquisition-related costs



43



63



179

Loss on debt extinguishment



172



16



5

(Gains) losses on investments



(119)



(10)



18

Non-GAAP tax reconciling adjustments



(399)



(578)



(399)

Discontinued operations, net of income taxes



-



-



(5)

Net income on non-GAAP basis


$

2,973


$

2,865


$

2,370





















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



428



426



420

Non-GAAP adjustment (1)



22



25



31

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



450



451



451





















Net income on non-GAAP basis


$

2,973


$

2,865


$

2,370

Interest expense on non-GAAP basis



398



404



401

Provision for income taxes on non-GAAP basis



405



391



323

Depreciation



138



139



146

Amortization of purchased intangibles and right-of-use assets



27



28



25

Adjusted EBITDA


$

3,941


$

3,827


$

3,265











Net cash provided by operating activities


$

3,113


$

3,348


$

2,322

Purchases of property, plant and equipment



(114)



(102)



(108)

Free cash flow


$

2,999


$

3,246


$

2,214























 Fiscal Quarter
Ending 









May 2,







Expected average diluted share count:


2021

















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


430







Non-GAAP adjustment (1)


20







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


450








(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. The non-GAAP adjustment also included the impact of Mandatory Convertible Preferred Stock that was
antidilutive on a GAAP basis. For the fiscal quarter ending May 2, 2021, the non-GAAP adjustment includes the impact of Mandatory Convertible
Preferred Stock that is expected to be antidilutive on a GAAP basis.

 

BROADCOM INC.

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(IN MILLIONS)



















January 31,


November 1,




2021


2020










ASSETS
















Current assets:








Cash and cash equivalents


$

9,552


$

7,618


Trade accounts receivable, net



2,524



2,297


Inventory



952



1,003


Other current assets



1,272



977


Total current assets



14,300



11,895










Long-term assets:








Property, plant and equipment, net



2,496



2,509


Goodwill



43,457



43,447


Intangible assets, net



15,419



16,782


Other long-term assets



1,300



1,300


Total assets


$

76,972


$

75,933


















LIABILITIES AND EQUITY
















Current liabilities:








Accounts payable


$

898


$

836


Employee compensation and benefits



494



877


Current portion of long-term debt



864



827


Other current liabilities



4,438



3,831


Total current liabilities



6,694



6,371










Long-term liabilities:








Long-term debt



41,068



40,235


Other long-term liabilities



5,211



5,426


Total liabilities



52,973



52,032










Preferred stock dividend obligation



26



27










Stockholders' equity:








Preferred stock



-



-


Common stock



-



-


Additional paid-in capital



24,080



23,982


Retained earnings



-



-


Accumulated other comprehensive loss



(107)



(108)


Total stockholders' equity



23,973



23,874


  Total liabilities and equity


$

76,972


$

75,933


 

BROADCOM INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(IN MILLIONS)













Fiscal Quarter Ended



January 31,


November 1,


February 2,



2021


2020


2020

Cash flows from operating activities:










Net income


$

1,378


$

1,324


$

385

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









Amortization of intangible and right-of-use assets



1,395



1,589



1,582

Depreciation



138



139



146

Stock-based compensation



444



449



545

Deferred taxes and other non-cash taxes



(149)



(459)



(72)

Loss on debt extinguishment



172



16



5

Unrealized gain on investments



(119)



-



-

Non-cash restructuring, impairment and disposal charges



15



12



11

Non-cash interest expense



22



25



30

Other



(5)



(9)



19

Changes in assets and liabilities, net of acquisitions and disposals:










  Trade accounts receivable, net



(247)



391



(392)

  Inventory



51



67



40

  Accounts payable



44



(230)



117

  Employee compensation and benefits



(375)



142



(217)

  Other current assets and current liabilities



408



(131)



346

  Other long-term assets and long-term liabilities



(59)



23



(223)

Net cash provided by operating activities



3,113



3,348



2,322











Cash flows from investing activities:










Acquisitions of businesses, net of cash acquired



(8)



-



(10,870)

Purchases of property, plant and equipment



(114)



(102)



(108)

Proceeds from disposals of property, plant and equipment



-



2



-

Other



-



-



(9)

Net cash used in investing activities



(122)



(100)



(10,987)











Cash flows from financing activities:










Proceeds from long-term borrowings



9,904



-



15,381

Repayment of debt



(9,200)



(3,000)



(4,537)

Other borrowings, net



-



-



718

Payment of dividends



(1,543)



(1,395)



(1,372)

Shares repurchased for tax withholdings on vesting of equity awards



(225)



(185)



(169)

Issuance of common stock



35



102



37

Other



(28)



(9)



(4)

Net cash provided by (used in) financing activities



(1,057)



(4,487)



10,054











Net change in cash and cash equivalents



1,934



(1,239)



1,389

Cash and cash equivalents at beginning of period



7,618



8,857



5,055

Cash and cash equivalents at end of period


$

9,552


$

7,618


$

6,444











Supplemental disclosure of cash flow information:










Cash paid for interest


$

372


$

383


$

381

Cash paid for income taxes


$

147


$

202


$

131

 

 

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SOURCE Broadcom Inc.

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