Broadcom Inc. Q3 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q3 FY2020 net revenue was 5.8 billion dollars, up 1 percent sequentially and up 6 percent year over year.
  • Semiconductor Solutions revenue was 4.2 billion dollars, down 4 percent year over year but up 5 percent sequentially.
  • Infrastructure Software revenue was 1.6 billion dollars, up 41 percent year over year due to Symantec’s inclusion; flat sequentially.
  • Record gross margin at 74 percent, up 110 basis points sequentially and 220 basis points year over year.
  • Record free cash flow of 3.1 billion dollars (53 percent of revenue), up over 33 percent year over year.

Business Segment Performance

Semiconductor Solutions

  • Networking up 9 percent sequentially; driven by cloud demand and ramp of new Tomahawk 3 and Trident 3 switches. Strong routing demand with Jericho 2. Strength expected to continue into Q4.
  • Broadband up 7 percent sequentially; strong demand for DOCSIS 3.1 modems and Wi-Fi 6. Q4 expected to decline approximately 10 percent sequentially but remain up 20 percent year over year.
  • Wireless down 4 percent sequentially; typical seasonal ramp delayed. Q4 revenue expected to increase about 50 percent sequentially but remain roughly flat year over year due to lower unit shipments caused by product launch delays.

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Operator: Welcome to Broadcom Inc. Third Quarter Fiscal Year 2020 Financial Results Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over to Beatrice Russotto, Director of Investor Relations of Broadcom Inc. Please go ahead. Beatrice Russotto: Thank you, operator, and good afternoon, everyone. Joining me on today’s call are Hock Tan, President and CEO; and Tom Krause, Chief Financial Officer of Broadcom. After the market closed, Broadcom distributed a press release and financial tables describing our financial performance for the third quarter of fiscal year 2020. If you did not receive a copy, you may obtain the information from the Investors section of Broadcom’s website at broadcom.com. This conference call is being webcast live and a recording will be available via telephone playback for one week. It will also be archived in the Investors section of our website at broadcom.com. During the prepared comments, Hock and Tom will be providing details of our third quarter fiscal year 2020 results, guidance for our fourth quarter, 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

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