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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE) | | | | | |
☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended May 5, 2024
OR | | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
| | | | | | | | | | | | | | | | | | | | | | | |
| | Broadcom Inc. | | |
| | (Exact name of registrant as specified in its charter) | | |
| | | | |
Delaware | | 001-38449 | | 35-2617337 |
(State or other jurisdiction of incorporation or organization) | | (Commission file Number)
| | (I.R.S. Employer Identification No.) |
| | 3421 Hillview Ave | | |
| | Palo Alto, | CA | 94304 | | |
| | (650) | | 427-6000 | | |
| | (Address, including zip code, of principal executive offices and registrant’s telephone number, including area code) | | |
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Common Stock, $0.001 par value | AVGO | The NASDAQ Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Large accelerated filer | þ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
As of May 31, 2024, there were 465,488,374 shares of our common stock outstanding.
BROADCOM INC.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended May 5, 2024
PART I — FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements — Unaudited
BROADCOM INC.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED
BROADCOM INC.
CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED
| | | | | | | | | | | | | | |
| | May 5, 2024 | | October 29, 2023 |
| | | | |
| | (In millions, except par value) |
ASSETS | | | | |
Current assets: | | | | |
Cash and cash equivalents | | $ | 9,809 | | | $ | 14,189 | |
| | | | |
Trade accounts receivable, net | | 5,500 | | | 3,154 | |
Inventory | | 1,842 | | | 1,898 | |
| | | | |
Other current assets | | 8,151 | | | 1,606 | |
Total current assets | | 25,302 | | | 20,847 | |
Long-term assets: | | | | |
Property, plant and equipment, net | | 2,668 | | | 2,154 | |
Goodwill | | 97,873 | | | 43,653 | |
Intangible assets, net | | 45,407 | | | 3,867 | |
Other long-term assets | | 3,961 | | | 2,340 | |
Total assets | | $ | 175,211 | | | $ | 72,861 | |
LIABILITIES AND EQUITY | | | | |
Current liabilities: | | | | |
Accounts payable | | $ | 1,441 | | | $ | 1,210 | |
Employee compensation and benefits | | 1,385 | | | 935 | |
Current portion of long-term debt | | 2,426 | | | 1,608 | |
| | | | |
Other current liabilities | | 14,919 | | | 3,652 | |
Total current liabilities | | 20,171 | | | 7,405 | |
Long-term liabilities: | | | | |
Long-term debt | | 71,590 | | | 37,621 | |
| | | | |
Other long-term liabilities | | 13,489 | | | 3,847 | |
Total liabilities | | 105,250 | | | 48,873 | |
Commitments and contingencies (Note 11) | | | | |
Stockholders’ equity: | | | | |
Preferred stock, $0.001 par value; 100 shares authorized; none issued and outstanding | | — | | | — | |
Common stock, $0.001 par value; 2,900 shares authorized; 465 and 414 shares issued and outstanding as of May 5, 2024 and October 29, 2023, respectively | | — | | | — | |
Additional paid-in capital | | 69,754 | | | 21,099 | |
Retained earnings | | — | | | 2,682 | |
Accumulated other comprehensive income | | 207 | | | 207 | |
Total stockholders’ equity | | 69,961 | | | 23,988 | |
Total liabilities and equity | | $ | 175,211 | | | $ | 72,861 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BROADCOM INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Quarter Ended | | Two Fiscal Quarters Ended |
| | May 5, 2024 | | April 30, 2023 | | May 5, 2024 | | April 30, 2023 |
| | | | | | | | |
| | (In millions, except per share data) |
Net revenue: | | | | | | | | |
Products | | $ | 7,192 | | | $ | 6,741 | | | $ | 14,604 | | | $ | 13,823 | |
Subscriptions and services | | 5,295 | | | 1,992 | | | 9,844 | | | 3,825 | |
Total net revenue | | 12,487 | | | 8,733 | | | 24,448 | | | 17,648 | |
Cost of revenue: | | | | | | | | |
Cost of products sold | | 2,429 | | | 2,019 | | | 4,589 | | | 4,244 | |
Cost of subscriptions and services | | 713 | | | 158 | | | 1,667 | | | 307 | |
| | | | | | | | |
Amortization of acquisition-related intangible assets | | 1,516 | | | 441 | | | 2,896 | | | 976 | |
Restructuring charges | | 53 | | | — | | | 145 | | | 2 | |
Total cost of revenue | | 4,711 | | | 2,618 | | | 9,297 | | | 5,529 | |
Gross margin | | 7,776 | | | 6,115 | | | 15,151 | | | 12,119 | |
Research and development | | 2,415 | | | 1,312 | | | 4,723 | | | 2,507 | |
Selling, general and administrative | | 1,277 | | | 438 | | | 2,849 | | | 786 | |
Amortization of acquisition-related intangible assets | | 827 | | | 348 | | | 1,619 | | | 696 | |
Restructuring and other charges | | 292 | | | 9 | | | 912 | | | 19 | |
| | | | | | | | |
Total operating expenses | | 4,811 | | | 2,107 | | | 10,103 | | | 4,008 | |
Operating income | | 2,965 | | | 4,008 | | | 5,048 | | | 8,111 | |
Interest expense | | (1,047) | | | (405) | | | (1,973) | | | (811) | |
| | | | | | | | |
Other income, net | | 87 | | | 113 | | | 272 | | | 256 | |
Income from continuing operations before income taxes | | 2,005 | | | 3,716 | | | 3,347 | | | 7,556 | |
Provision for (benefit from) income taxes | | (116) | | | 235 | | | (48) | | | 301 | |
Income from continuing operations | | 2,121 | | | 3,481 | | | 3,395 | | | 7,255 | |
Income from discontinued operations, net of income taxes | | — | | | — | | | 51 | | | — | |
Net income | | $ | 2,121 | | | $ | 3,481 | | | $ | 3,446 | | | $ | 7,255 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Basic income per share: | | | | | | | | |
Income per share from continuing operations | | $ | 4.56 | | | $ | 8.39 | | | $ | 7.41 | | | $ | 17.40 | |
Income per share from discontinued operations | | — | | | — | | | 0.11 | | | — | |
Net income per share | | $ | 4.56 | | | $ | 8.39 | | | $ | 7.52 | | | $ | 17.40 | |
| | | | | | | | |
Diluted income per share: | | | | | | | | |
Income per share from continuing operations | | $ | 4.42 | | | $ | 8.15 | | | $ | 7.18 | | | $ | 16.95 | |
Income per share from discontinued operations | | — | | | — | | | 0.11 | | | — | |
Net income per share | | $ | 4.42 | | | $ | 8.15 | | | $ | 7.29 | | | $ | 16.95 | |
| | | | | | | | |
Weighted-average shares used in per share calculations: | | | | | | | | |
Basic | | 465 | | | 415 | | | 458 | | | 417 | |
Diluted | | 480 | | | 427 | | | 473 | | | 428 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BROADCOM INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME — UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Quarter Ended | | Two Fiscal Quarters Ended |
| | May 5, 2024 | | April 30, 2023 | | May 5, 2024 | | April 30, 2023 |
| | | | | | | | |
| | (In millions) |
Net income | | $ | 2,121 | | | $ | 3,481 | | | $ | 3,446 | | | $ | 7,255 | |
Other comprehensive loss, net of tax: | | | | | | | | |
Change in unrealized loss on derivative instruments | | — | | | (2) | | | — | | | (128) | |
| | | | | | | | |
| | | | | | | | |
Other comprehensive loss, net of tax | | — | | | (2) | | | — | | | (128) | |
Comprehensive income | | $ | 2,121 | | | $ | 3,479 | | | $ | 3,446 | | | $ | 7,127 | |
| | | | | | | | |
| | | | | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BROADCOM INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
| | | | | | | | | | | | | | |
| | Two Fiscal Quarters Ended |
| | May 5, 2024 | | April 30, 2023 |
| | | | |
| | (In millions) |
Cash flows from operating activities: | | | | |
Net income | | $ | 3,446 | | | $ | 7,255 | |
| | | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
Amortization of intangible and right-of-use assets | | 4,587 | | | 1,715 | |
Depreciation | | 288 | | | 256 | |
Stock-based compensation | | 3,039 | | | 904 | |
Deferred taxes and other non-cash taxes | | (805) | | | (889) | |
| | | | |
| | | | |
| | | | |
Non-cash interest expense | | 221 | | | 65 | |
Other | | 130 | | | (18) | |
Changes in assets and liabilities, net of acquisitions and disposals: | | | | |
Trade accounts receivable, net | | 1,243 | | | (91) | |
Inventory | | 68 | | | 39 | |
Accounts payable | | (167) | | | (194) | |
Employee compensation and benefits | | (409) | | | (566) | |
| | | | |
Other current assets and current liabilities | | (2,568) | | | 405 | |
Other long-term assets and long-term liabilities | | 322 | | | (343) | |
Net cash provided by operating activities | | 9,395 | | | 8,538 | |
Cash flows from investing activities: | | | | |
Acquisitions of businesses, net of cash acquired | | (25,976) | | | — | |
| | | | |
Purchases of property, plant and equipment | | (254) | | | (225) | |
| | | | |
Purchases of investments | | (72) | | | (197) | |
Sales of investments | | 131 | | | — | |
Other | | (12) | | | 1 | |
Net cash used in investing activities | | (26,183) | | | (421) | |
Cash flows from financing activities: | | | | |
Proceeds from long-term borrowings | | 30,010 | | | — | |
Payments on debt obligations | | (2,934) | | | (260) | |
| | | | |
| | | | |
| | | | |
Payments of dividends | | (4,878) | | | (3,840) | |
Repurchases of common stock - repurchase program | | (7,176) | | | (3,994) | |
Shares repurchased for tax withholdings on vesting of equity awards | | (2,662) | | | (947) | |
Issuance of common stock | | 64 | | | 63 | |
| | | | |
Other | | (16) | | | (2) | |
Net cash provided by (used in) financing activities | | 12,408 | | | (8,980) | |
Net change in cash and cash equivalents | | (4,380) | | | (863) | |
Cash and cash equivalents at beginning of period | | 14,189 | | | 12,416 | |
Cash and cash equivalents at end of period | | $ | 9,809 | | | $ | 11,553 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BROADCOM INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY — UNAUDITED
Two Fiscal Quarters Ended May 5, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Stockholders’ Equity |
| | | | | | Shares | | Par Value | | | | |
| | | | | | | | | | | | | | | | |
| | | | | (In millions) |
Balance as of October 29, 2023 | | | | | | 414 | | | $ | — | | | $ | 21,099 | | | $ | 2,682 | | | $ | 207 | | | $ | 23,988 | |
Net income | | | | | | — | | | — | | | — | | | 1,325 | | | — | | | 1,325 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Issuance of common stock upon the acquisition of VMware, Inc. | | | | | | 54 | | | — | | | 53,421 | | | — | | | — | | | 53,421 | |
Fair value of partially vested equity awards assumed in connection with the acquisition of VMware, Inc. | | | | | | — | | | — | | | 749 | | | — | | | — | | | 749 | |
Dividends to common stockholders | | | | | | — | | | — | | | — | | | (2,435) | | | — | | | (2,435) | |
| | | | | | | | | | | | | | | | |
Common stock issued | | | | | | 3 | | | — | | | — | | | — | | | — | | | — | |
Stock-based compensation | | | | | | — | | | — | | | 1,582 | | | — | | | — | | | 1,582 | |
Repurchases of common stock | | | | | | (7) | | | — | | | (5,655) | | | (1,572) | | | — | | | (7,227) | |
Shares repurchased for tax withholdings on vesting of equity awards | | | | | | (1) | | | — | | | (1,119) | | | — | | | — | | | (1,119) | |
Balance as of February 4, 2024 | | | | | | 463 | | | — | | | 70,077 | | | — | | | 207 | | | 70,284 | |
Net income | | | | | | — | | | — | | | — | | | 2,121 | | | — | | | 2,121 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Dividends to common stockholders | | | | | | — | | | — | | | (322) | | | (2,121) | | | — | | | (2,443) | |
| | | | | | | | | | | | | | | | |
Common stock issued | | | | | | 3 | | | — | | | 64 | | | — | | | — | | | 64 | |
Stock-based compensation | | | | | | — | | | — | | | 1,457 | | | — | | | — | | | 1,457 | |
| | | | | | | | | | | | | | | | |
Shares repurchased for tax withholdings on vesting of equity awards | | | | | | (1) | | | — | | | (1,548) | | | — | | | — | | | (1,548) | |
Other | | | | | | — | | | — | | | 26 | | | — | | | — | | | 26 | |
Balance as of May 5, 2024 | | | | | | 465 | | | $ | — | | | $ | 69,754 | | | $ | — | | | $ | 207 | | | $ | 69,961 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BROADCOM INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY — UNAUDITED
Two Fiscal Quarters Ended April 30, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Stockholders’ Equity |
| | | | | | Shares | | Par Value | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | (In millions) |
Balance as of October 30, 2022 | | | | | | 418 | | | $ | — | | | $ | 21,159 | | | $ | 1,604 | | | $ | (54) | | | $ | 22,709 | |
Net income | | | | | | — | | | — | | | — | | | 3,774 | | | — | | | 3,774 | |
Other comprehensive loss | | | | | | — | | | — | | | — | | | — | | | (126) | | | (126) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Dividends to common stockholders | | | | | | — | | | — | | | — | | | (1,926) | | | — | | | (1,926) | |
| | | | | | | | | | | | | | | | |
Common stock issued | | | | | | 2 | | | — | | | — | | | — | | | — | | | — | |
Stock-based compensation | | | | | | — | | | — | | | 391 | | | — | | | — | | | 391 | |
Repurchases of common stock | | | | | | (2) | | | — | | | (107) | | | (1,081) | | | — | | | (1,188) | |
Shares repurchased for tax withholdings on vesting of equity awards | | | | | | (1) | | | — | | | (324) | | | — | | | — | | | (324) | |
Balance as of January 29, 2023 | | | | | | 417 | | | — | | | 21,119 | | | 2,371 | | | (180) | | | 23,310 | |
Net income | | | | | | — | | | — | | | — | | | 3,481 | | | — | | | 3,481 | |
| | | | | | | | | | | | | | | | |
Other comprehensive loss | | | | | | — | | | — | | | — | | | — | | | (2) | | | (2) | |
| | | | | | | | | | | | | | | | |
Dividends to common stockholders | | | | | | — | | | — | | | — | | | (1,914) | | | — | | | (1,914) | |
| | | | | | | | | | | | | | | | |
Common stock issued | | | | | | 3 | | | — | | | 63 | | | — | | | — | | | 63 | |
Stock-based compensation | | | | | | — | | | — | | | 513 | | | — | | | — | | | 513 | |
Repurchases of common stock | | | | | | (5) | | | — | | | (248) | | | (2,575) | | | — | | | (2,823) | |
Shares repurchased for tax withholdings on vesting of equity awards | | | | | | (1) | | | — | | | (621) | | | — | | | — | | | (621) | |
Balance as of April 30, 2023 | | | | | | 414 | | | $ | — | | | $ | 20,826 | | | $ | 1,363 | | | $ | (182) | | | $ | 22,007 | |
| | | | | | | | | | | | | | | | |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BROADCOM INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Overview, Basis of Presentation and Significant Accounting Policies
Overview
Broadcom Inc. (“Broadcom”), a Delaware corporation, is a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. We develop semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products. We have a history of innovation in the semiconductor industry and offer thousands of products that are used in end products such as enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Our infrastructure software solutions enable customers to plan, develop, deliver, automate, manage and secure applications across mainframe, distributed, edge, mobile, and private and hybrid cloud platforms. Our portfolio of infrastructure and security software is designed to modernize, optimize, and secure the most complex private and hybrid cloud environments, enabling scalability, agility, automation, insights, resiliency and security. We also offer mission critical fibre channel storage area networking (“FC SAN”) products and related software in the form of modules, switches and subsystems incorporating multiple semiconductor products. Unless stated otherwise or the context otherwise requires, references to “Broadcom,” “we,” “our,” and “us” mean Broadcom and its consolidated subsidiaries. We have two reportable segments: semiconductor solutions and infrastructure software.
On November 22, 2023, we completed the acquisition of VMware, Inc. (“VMware”) in a cash-and-stock transaction (the “VMware Merger”). The VMware stockholders received approximately $30,788 million in cash and 54.4 million shares of Broadcom common stock with a fair value of $53,398 million. VMware was a leading provider of multi-cloud services for all applications, enabling digital innovation with enterprise control. We acquired VMware to enhance our infrastructure software capabilities. The results of operations of VMware are included in the unaudited condensed consolidated financial statements commencing on November 22, 2023. See Note 3. “Acquisitions” for additional information.
Basis of Presentation
We operate on a 52- or 53-week fiscal year ending on the Sunday closest to October 31 in a 52-week year and the first Sunday in November in a 53-week year. Our fiscal year ending November 3, 2024 (“fiscal year 2024”) is a 53-week fiscal year, with our first fiscal quarter containing 14 weeks. Our fiscal year ended October 29, 2023 (“fiscal year 2023”) was a 52-week fiscal year.
The accompanying condensed consolidated financial statements include the accounts of Broadcom and its subsidiaries, and have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information. The financial information included herein is unaudited, and reflects all adjustments which are, in the opinion of our management, of a normal recurring nature and necessary for a fair statement of the results for the periods presented. The October 29, 2023 condensed consolidated balance sheet data were derived from Broadcom’s audited consolidated financial statements included in its Annual Report on Form 10-K for fiscal year 2023 as filed with the Securities and Exchange Commission. All intercompany balances and transactions have been eliminated in consolidation. The operating results for the fiscal quarter ended May 5, 2024 are not necessarily indicative of the results that may be expected for fiscal year 2024, or for any other future period.
Significant Accounting Policies
Use of estimates. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates, and such differences could affect the results of operations reported in future periods.
2. Revenue from Contracts with Customers
We account for a contract with a customer when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable that we will collect substantially all of the consideration to which we are entitled. Revenue is recognized when, or as, performance obligations are satisfied by transferring control of a promised product or service to a customer.
Disaggregation
We have considered (1) information that is regularly reviewed by our Chief Executive Officer, who has been identified as the chief operating decision maker (the “CODM”) as defined by the authoritative guidance on segment reporting, in evaluating financial performance and (2) disclosures presented outside of our financial statements in our earnings releases and used in investor presentations to disaggregate revenues. The principal category we use to disaggregate revenues is the nature of our products and subscriptions and services, as presented in our condensed consolidated statements of operations. In addition, revenues by reportable segment are presented in Note 10. “Segment Information.”
The following tables present revenue disaggregated by type of revenue and by region for the periods presented: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Quarter Ended May 5, 2024 |
| | Americas | | Asia Pacific | | Europe, the Middle East and Africa | | Total |
| | | | | | | | |
| | (In millions) |
Products | | $ | 473 | | | $ | 6,267 | | | $ | 452 | | | $ | 7,192 | |
Subscriptions and services | | 3,401 | | | 487 | | | 1,407 | | | 5,295 | |
Total | | $ | 3,874 | | | $ | 6,754 | | | $ | 1,859 | | | $ | 12,487 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Quarter Ended April 30, 2023 |
| | Americas | | Asia Pacific | | Europe, the Middle East and Africa | | Total |
| | | | | | | | |
| | (In millions) |
Products | | $ | 780 | | | $ | 5,458 | | | $ | 503 | | | $ | 6,741 | |
Subscriptions and services | | 1,454 | | | 126 | | | 412 | | | 1,992 | |
Total | | $ | 2,234 | | | $ | 5,584 | | | $ | 915 | | | $ | 8,733 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Two Fiscal Quarters Ended May 5, 2024 |
| | Americas | | Asia Pacific | | Europe, the Middle East and Africa | | Total |
| | | | | | | | |
| | (In millions) |
Products | | $ | 1,181 | | | $ | 12,458 | | | $ | 965 | | | $ | 14,604 | |
Subscriptions and services | | 5,778 | | | 993 | | | 3,073 | | | 9,844 | |
Total | | $ | 6,959 | | | $ | 13,451 | | | $ | 4,038 | | | $ | 24,448 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Two Fiscal Quarters Ended April 30, 2023 |
| | Americas | | Asia Pacific | | Europe, the Middle East and Africa | | Total |
| | | | | | | | |
| | (In millions) |
Products | | $ | 1,389 | | | $ | 11,395 | | | $ | 1,039 | | | $ | 13,823 | |
Subscriptions and services | | 2,684 | | | 326 | | | 815 | | | 3,825 | |
Total | | $ | 4,073 | | | $ | 11,721 | | | $ | 1,854 | | | $ | 17,648 | |
Although we recognize revenue for the majority of our products when title and control transfer in Penang, Malaysia, we disclose net revenue by region based primarily on the geographic shipment location or delivery location specified by our distributors, original equipment manufacturer customers, contract manufacturers, channel partners, or software customers.
Contract Balances
Contract assets and contract liabilities balances were as follows:
| | | | | | | | | | | | | | |
| | May 5, 2024 | | October 29, 2023 |
| | | | |
| (In millions) |
Contract Assets | | $ | 2,430 | | | $ | 955 | |
| | | | |
Contract Liabilities | | $ | 16,702 | | | $ | 2,786 | |
Changes in our contract assets and contract liabilities primarily result from the timing difference between our performance and the customer’s payment. Contract assets and contract liabilities as of May 5, 2024 included the impact of VMware balances acquired on November 22, 2023. We fulfill our obligations under a contract with a customer by transferring products and services in exchange for consideration from the customer. We recognize a contract asset when we transfer products or services to a customer and the right to consideration is conditional on something other than the passage of time. Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional. We recognize contract liabilities when we have received consideration or an amount of consideration is due from the customer and we have a future obligation to transfer products or services. As of May 5, 2024, approximately 50% of contract liabilities related to contracts subject to termination for convenience provisions. The amount of revenue recognized during the two fiscal quarters ended May 5, 2024 that was included in the contract liabilities balance as of October 29, 2023 was $1,965 million. The amount of revenue recognized during the two fiscal quarters ended April 30, 2023 that was included in the contract liabilities balance as of October 30, 2022 was $2,287 million.
Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents the transaction price allocated to unsatisfied or partially unsatisfied performance obligations. Remaining performance obligations include unearned revenue and amounts that will be invoiced and recognized as revenue in future periods, but do not include contracts for software, subscriptions or services where the customer is not committed. The customer is not considered committed when termination for convenience without payment of a substantive penalty exists, either contractually or through customary business practice. Additionally, as a practical expedient, we have not included contracts that have an original duration of one year or less, nor have we included contracts with sales-based or usage-based royalties promised in exchange for a license of intellectual property (“IP”).
Certain multi-year customer contracts contain firmly committed amounts and the remaining performance obligations under these contracts as of May 5, 2024 were approximately $22.9 billion. We expect approximately 49% of this amount to be recognized as revenue over the next 12 months. For contracts with termination for convenience rights, our customers generally do not exercise those rights. In addition, the majority of our contracts have a duration of one year or less. Accordingly, our remaining performance obligations disclosed above are not indicative of revenue for future periods.
3. Acquisitions
Acquisition of VMware, Inc.
On November 22, 2023, we completed the VMware Merger. Pursuant to the Agreement and Plan of Merger, each share of VMware common stock issued and outstanding immediately prior to the VMware Merger was indirectly converted into the right to receive, at the election of the holder of such share of VMware common stock, either $142.50 in cash or 0.2520 shares of Broadcom common stock. The stockholder election was prorated, such that the total number of shares of VMware common stock entitled to receive cash and the total number of shares of VMware common stock entitled to receive Broadcom common stock, in each case, was equal to 50% of the aggregate number of shares of VMware common stock issued and outstanding immediately prior to the VMware Merger. Based on the VMware stockholders’ elections, the VMware stockholders received approximately $30,788 million in cash and 54.4 million shares of Broadcom common stock with a fair value of $53,398 million.
We funded the cash portion of the VMware Merger with the net proceeds from the issuance of the 2023 Term Loans, as defined and discussed in Note 7. “Borrowings”, as well as cash on hand. We assumed $8,250 million of VMware’s outstanding senior unsecured notes.
Purchase Consideration
| | | | | | | | |
| | (In millions) |
Fair value of Broadcom common stock issued for outstanding VMware common stock | | $ | 53,398 | |
Cash paid for outstanding VMware common stock | | 30,788 | |
Cash paid by Broadcom to retire VMware’s term loan | | 1,257 | |
Fair value of partially vested assumed VMware equity awards | | 805 | |
Fair value of Broadcom common stock issued for accelerated VMware equity awards | | 23 | |
Cash paid for accelerated VMware equity awards | | 13 | |
Effective settlement of pre-existing relationships | | 6 | |
Total purchase consideration | | 86,290 | |
Less: cash acquired | | 6,642 | |
Total purchase consideration, net of cash acquired | | $ | 79,648 | |
We assumed all outstanding VMware restricted stock unit (“RSU”) awards and performance stock unit (“PSU”) awards held by continuing employees. The assumed awards were converted into RSU awards for shares of Broadcom common stock. All outstanding in-the-money VMware stock options and RSU awards held by non-employee directors were accelerated and converted into the right to receive cash and shares of Broadcom common stock, in equal parts.
We allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. These fair values were based on estimates and assumptions made by management at the time of acquisition. As additional information becomes available, we may further revise our preliminary purchase price allocation during the remainder of the measurement period, which will not exceed 12 months from the date of the VMware Merger. Any such revisions or changes may be material.
The following table presents our preliminary allocation of the total purchase price, net of cash acquired, updated as of May 5, 2024:
| | | | | | | | |
| | Estimated Fair Value |
| | (In millions) |
Trade accounts receivable | | $ | 3,571 | |
Inventory | | 15 |
Assets held-for-sale | | 5,206 | |
Other current assets | | 757 | |
Property, plant and equipment | | 531 | |
Goodwill | | 54,206 | |
Intangible assets | | 45,572 | |
Other long-term assets | | 1,064 | |
Total assets acquired | | 110,922 | |
Accounts payable | | (359) | |
Employee compensation and benefits | | (848) | |
Current portion of long-term debt | | (1,264) | |
Liabilities held-for-sale | | (1,901) | |
Other current liabilities | | (11,041) | |
Long-term debt | | (6,254) | |
Other long-term liabilities | | (9,607) | |
Total liabilities assumed | | (31,274) | |
Fair value of net assets acquired | | $ | 79,648 | |
Goodwill is primarily attributable to the assembled workforce and anticipated synergies and economies of scale expected from the integration of the VMware business. The synergies include certain cost savings, operating efficiencies and other strategic benefits projected to be achieved as a result of the VMware Merger. Goodwill is not deductible for tax purposes.
Assets and liabilities held-for-sale primarily included VMware’s end-user computing (“EUC”) business and certain other assets and liabilities, which were not aligned with our strategic objectives. We do not expect to have significant continuing involvement after disposal and have presented the results in discontinued operations. In February 2024, we signed a definitive agreement to sell EUC for approximately $3.8 billion, before working capital adjustments and estimated selling costs. The sale is expected to close in calendar year 2024, subject to customary closing conditions.
Our results of continuing operations included $2,674 million and $4,776 million of net revenue attributable to VMware for the fiscal quarter and two fiscal quarters ended May 5, 2024, respectively. It is impracticable to determine the effect on net income attributable to VMware as we have integrated a substantial portion of VMware into our ongoing operations. Transaction costs related to the VMware Merger of $20 million and $240 million, respectively, were primarily included in selling, general and administrative expense for the fiscal quarter and two fiscal quarters ended May 5, 2024.
Intangible Assets
| | | | | | | | | | | | | | |
| | Fair Value | | Weighted-Average Amortization Periods |
| | (In millions) | | (In years) |
Developed technology | | $ | 24,156 | | | 8 |
Customer contracts and related relationships | | 15,239 | | | 8 |
Trade name | | 1,205 | | | 14 |
Off-market component of customer contracts | | 242 | | | 2 |
Total identified finite-lived intangible assets | | 40,842 | | | |
In-process research and development | | 4,730 | | | N/A |
Total identified intangible assets | | $ | 45,572 | | | |
Developed technology relates to products used for VMware cloud foundation, application management, security, application networking and security, and software defined edge. We valued the developed technology using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the developed technology less charges representing the contribution of other assets to those cash flows. The economic useful life was determined based on the technology cycle related to each developed technology, as well as the cash flows over the forecast period.
Customer contracts and related relationships represent the fair value of future projected revenue that will be derived from sales of products to existing customers of VMware. Customer contracts and related relationships were valued using the with-and-without-method under the income approach. In the with-and-without method, the fair value was measured by the difference between the present values of the cash flows with and without the existing customers in place over the period of time necessary to reacquire the customers. The economic useful life was determined by evaluating many factors, including the useful life of other intangible assets, the length of time remaining on the acquired contracts and the historical customer turnover rates.
Trade name relates to the “VMware” trade name. The fair value was determined by applying the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue under the trade name. The economic useful life was determined based on the expected life of the trade name and the cash flows anticipated over the forecast period.
Off-market component of customer contracts relate to rebates and marketing development funds provided to customers prior to the VMware Merger. We valued these contracts based on their remaining unamortized balances, which approximate their fair value. The economic useful life was determined based on the remaining terms of customer contracts.
The fair value of in-process research and development (“IPR&D”) was determined using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the IPR&D, less charges representing the contribution of other assets to those cash flows.
The following table presents the details of IPR&D by category as of the date of the VMware Merger:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Description | | IPR&D | | Percentage of Completion | | Estimated Cost to Complete | | Expected Release Date (By Fiscal Year) |
| | | | | | | | |
| | (Dollars in millions) |
| | | | | | | | |
VMware cloud foundation July 2024 releases | | $ | 790 | | | 67 | % | | $ | 38 | | | 2024 |
VMware cloud foundation March 2025 releases | | $ | 2,900 | | | 58 | % | | $ | 185 | | | 2025 |
VMware cloud foundation July 2025 releases | | $ | 750 | | | 43 | % | | $ | 65 | | | 2025 |
VMware cloud foundation networking and security virtualization | | $ | 265 | | | 21 | % | | $ | 59 | | | 2024 |
Application networking and security | | $ | 25 | | | 21 | % | | $ | 47 | | | 2024 |
VMware cloud foundation is a flexible and simplified private cloud platform with public cloud extensibility that integrates leading products including compute, storage, networking, and management into a single solution. It enables customers to modernize infrastructure and accelerate developer productivity, with greater resilience and security.
We believe the amounts of purchased intangible assets recorded above represent the fair values of, and approximate the amounts a market participant would pay for, these intangible assets as of the date of the VMware Merger.
Unaudited Pro Forma Information
The following unaudited pro forma financial information presents combined results of operations for each of the periods presented, as if VMware had been acquired as of the beginning of fiscal year 2023. The unaudited pro forma information includes adjustments to amortization for intangible assets acquired, stock-based compensation expense, interest expense for acquisition financing, amortization of deferred assets and liabilities, and depreciation for property and equipment acquired. The unaudited pro forma information presented below is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of fiscal year 2023 or of the results of our future operations of the combined business.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Quarter Ended | | Two Fiscal Quarters Ended |
| | May 5, 2024 | | April 30, 2023 | | May 5, 2024 | | April 30, 2023 |
| | | | | | | | |
| | (In millions) |
Pro forma net revenue | | $ | 12,507 | | | $ | 11,665 | | | $ | 25,030 | | | $ | 23,889 | |
Pro forma net income | | $ | 2,261 | | | $ | 1,796 | | | $ | 3,876 | | | $ | 3,849 | |
Acquisition of Seagate’s SoC Operations
On April 23, 2024, we acquired certain assets related to the design, development, and manufacture of System-on-Chip (“SoC”) operations of Seagate Technology Holdings plc for $600 million. We acquired these assets to strengthen our portfolio of SoC products.
The following table presents our preliminary allocation of the total purchase price. Goodwill is allocated to the semiconductor solutions segment and is deductible for tax purposes.
| | | | | | | | |
| | Estimated Fair Value |
| | (In millions) |
Intangible assets | | $ | 570 | |
Goodwill | | 14 | |
Other assets | | 16 | |
Total assets acquired | | $ | 600 | |
Intangible Assets
| | | | | | | | | | | | | | |
| | Fair Value | | Weighted-Average Amortization Periods |
| | (In millions) | | (In years) |
Customer contracts and related relationships | | $ | 410 | | | 11 |
Developed technology | | 90 | | | 11 |
Total identified finite-lived intangible assets | | 500 | | | |
In-process research and development | | 70 | | | N/A |
Total identified intangible assets | | $ | 570 | | | |
Customer contracts and related relationships represent the fair value of future projected revenue that will be derived from sales of SoC controller products for hard disk drive applications. Customer contracts and related relationships were valued using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the customer contracts and related relationships less charges representing the contribution of other assets to those cash flows. The economic useful life was determined based on the useful lives of other intangible assets and the length of time remaining on the acquired contracts.
Developed technology relates to SoC controller products for hard disk drive applications. We valued the developed technology using the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue under the developed technology. The economic useful life was determined based on the technology cycle related to each developed technology, as well as the cash flows over the forecast period.
The fair value of IPR&D was determined using the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue from the IPR&D.
4. Supplemental Financial Information
Cash Equivalents
Cash equivalents included $1,382 million and $1,470 million of time deposits and $1,438 million and $1,650 million of money-market funds as of May 5, 2024 and October 29, 2023, respectively. For time deposits, carrying value approximates fair value due to the short-term nature of the instruments. The fair value of money-market funds, which was consistent with their carrying value, was determined using unadjusted prices in active, accessible markets for identical assets, and as such, they were classified as Level 1 assets in the fair value hierarchy.
Accounts Receivable Factoring
We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions pursuant to factoring arrangements. We account for these transactions as sales of receivables and present cash proceeds as cash provided by operating activities in the condensed consolidated statements of cash flows. Total trade accounts receivable sold under the factoring arrangements were $1,250 million and $2,500 million during the fiscal quarter and two fiscal quarters ended May 5, 2024, respectively, and $900 million and $1,925 million during the fiscal quarter and two fiscal quarters ended April 30, 2023, respectively.
Inventory | | | | | | | | | | | | | | |
| | May 5, 2024 | | October 29, 2023 |
| | | | |
| | (In millions) |
Finished goods | | $ | 569 | | | $ | 676 | |
Work-in-process | | 866 | | | 901 | |
Raw materials | | 407 | | | 321 | |
Total inventory | | $ | 1,842 | | | $ | 1,898 | |
Assets and Liabilities Held-for-Sale
In connection with the VMware Merger, we classified VMware’s EUC business and certain other assets and liabilities, which were not aligned with our strategic objectives, as assets and liabilities held-for-sale. The carrying value of these assets and liabilities as of May 5, 2024 represented the fair value determined in the preliminary purchase price allocation of the VMware Merger, adjusted for operating activities since the date of the VMware Merger. As of May 5, 2024, the carrying values of these assets, net of liabilities, approximated the expected selling prices.
| | | | | | | | | | | | | | | | | | | | |
| | |
| | May 5, 2024 |
| | EUC | | Other | | Total |
| | | | | | |
| | (In millions) |
Assets held-for-sale: | | | | | | |
Goodwill | | $ | 2,268 | | | $ | — | | | $ | 2,268 | |
Intangible assets, net | | 2,545 | | | — | | | 2,545 | |
| | | | | | |
Other assets | | 57 | | | 351 | | | 408 | |
Total assets held-for-sale | | $ | 4,870 | | | $ | 351 | | | $ | 5,221 | |
| | | | | | |
Liabilities held-for-sale: | | $ | 1,581 | | | $ | 176 | | | $ | 1,757 | |
Discontinued Operations
We have presented the operating results of these assets and liabilities held-for-sale in discontinued operations as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Quarter Ended May 5, 2024 | | Two Fiscal Quarters Ended May 5, 2024 | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | (In millions) |
Net revenue | | $ | 329 | | | | | | | $ | 680 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Income from discontinued operations before income taxes | | $ | 11 | | | | | | | $ | 69 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Provision for income taxes | | (11) | | | | | | | (18) | | | | | | | | | |
Income from discontinued operations, net of income taxes | | $ | — | | | | | | | $ | 51 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Other Current Assets | | | | | | | | | | | | | | |
| | May 5, 2024 | | October 29, 2023 |
| | | | |
| | (In millions) |
Assets held-for-sale | | $ | 5,221 | | | $ | — | |
Prepaid expenses | | 1,742 | | | 743 | |
Other | | 1,188 | | | 863 | |
Total other current assets | | $ | 8,151 | | | $ | 1,606 | |
Other Current Liabilities | | | | | | | | | | | | | | |
| | May 5, 2024 | | October 29, 2023 |
| | | | |
| | (In millions) |
Contract liabilities | | $ | 10,519 | | | $ | 2,487 | |
Liabilities held-for-sale | | 1,757 | | | — | |
Tax liabilities | | 1,127 | | | 473 | |
Interest payable | | 450 | | | 380 | |
Other | | 1,066 | | | 312 | |
Total other current liabilities | | $ | 14,919 | | | $ | 3,652 | |
Other Long-Term Liabilities | | | | | | | | | | | | | | |
| | May 5, 2024 | | October 29, 2023 |
| | | | |
| | (In millions) |
Unrecognized tax benefits | | $ | 3,209 | | | $ | 2,792 | |
Contract liabilities | | 6,183 | | | 299 | |
Deferred tax liabilities | | 2,219 | | | 99 | |
Other | | 1,878 | | | 657 | |
Total other long-term liabilities | | $ | 13,489 | | | $ | 3,847 | |
Supplemental Cash Flow Information | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Quarter Ended | | Two Fiscal Quarters Ended |
| | May 5, 2024 | | April 30, 2023 | | May 5, 2024 | | April 30, 2023 |
| | | | | | | | |
| | (In millions) |
Cash paid for interest | | $ | 946 | | | $ | 397 | | | $ | 1,696 | | | $ | 758 | |
Cash paid for income taxes | | $ | 834 | | | $ | 891 | | | $ | 1,738 | | | $ | 1,164 | |
5. Goodwill and Intangible Assets
Goodwill
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Semiconductor Solutions | | Infrastructure Software | | Total | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | (In millions) | |
Balance as of October 29, 2023 | | | | | | | | | | $ | 26,001 | | | $ | 17,652 | | | $ | 43,653 | | |
Acquisition of VMware | | | | | | | | | | — | | | 54,206 | | | 54,206 | | |
Acquisition of Seagate’s SoC operations | | | | | | | | | | 14 | | | — | | | 14 | | |
Balance as of May 5, 2024 | | | | | | | | | | $ | 26,015 | | | $ | 71,858 | | | $ | 97,873 | | |
Intangible Assets
| | | | | | | | | | | | | | | | | | | | |
| | Gross Carrying Amount | | Accumulated Amortization | | Net Book Value |
| | | | | | |
| | (In millions) |
As of May 5, 2024: | | | | | | |
Purchased technology | | $ | 37,193 | | | $ | (13,616) | | | $ | 23,577 | |
Customer contracts and related relationships | | 22,950 | | | (7,397) | | | 15,553 | |
Trade names | | 1,854 | | | (445) | | | 1,409 | |
| | | | | | |
Other | | 177 | | | (109) | | | 68 | |
Intangible assets subject to amortization | | 62,174 | | | (21,567) | | | 40,607 | |
In-process research and development | | 4,800 | | | — | | | 4,800 | |
Total | | $ | 66,974 | | | $ | (21,567) | | | $ | 45,407 | |
| | | | | | |
As of October 29, 2023: | | | | | | |
Purchased technology | | $ | 12,938 | | | $ | (10,723) | | | $ | 2,215 | |
Customer contracts and related relationships | | 7,059 | | | (5,753) | | | 1,306 | |
Trade names | | 649 | | | (388) | | | 261 | |
| | | | | | |
Other | | 177 | | | (102) | | | 75 | |
Intangible assets subject to amortization | | 20,823 | | | (16,966) | | | 3,857 | |
In-process research and development | | 10 | | | — | | | 10 | |
Total | | $ | 20,833 | | | $ | (16,966) | | | $ | 3,867 | |
Based on the amount of intangible assets subject to amortization as of May 5, 2024, the expected amortization expense was as follows: | | | | | | | | |
Fiscal Year: | | Expected Amortization Expense |
| | |
| | (In millions) |
2024 (remainder) | | $ | 4,728 | |
2025 | | 7,604 | |
2026 | | 7,035 | |
2027 | | 6,065 | |
2028 | | 5,051 | |
Thereafter | | 10,124 | |
Total | | $ | 40,607 | |
The weighted-average remaining amortization periods by intangible asset category were as follows: | | | | | | | | |
Amortizable intangible assets: | | May 5, 2024 |
| | |
| | (In years) |
Purchased technology | | 7 |
Customer contracts and related relationships | | 7 |
Trade names | | 13 |
Other | | 7 |
6. Net Income Per Share
Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period.
Potentially dilutive shares outstanding include the dilutive effect of unvested RSUs and employee stock purchase plan (“ESPP”) rights (collectively referred to as “equity awards”). Potentially dilutive shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share.
The dilutive effect of equity awards is calculated based on the average stock price for each fiscal period, using the treasury stock method. Under the treasury stock method, the amount the employee must pay for purchasing shares under the ESPP and the amount of stock-based compensation expense for future service that we have not yet recognized are collectively assumed to be used to repurchase shares.
The following is a reconciliation of the numerators and denominators of the basic and diluted net income per share computations for the periods presented: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Quarter Ended | | Two Fiscal Quarters Ended |
| | May 5, 2024 | | April 30, 2023 | | May 5, 2024 | | April 30, 2023 |
| | | | | | | | |
| | (In millions, except per share data) |
Numerator: | | | | | | | | |
Income from continuing operations | | $ | 2,121 | | | $ | 3,481 | | | $ | 3,395 | | | $ | 7,255 | |
Income from discontinued operations, net of income taxes | | — | | | — | | | 51 | | | — | |
| | | | | | | | |
| | | | | | | | |
Net income | | $ | 2,121 | | | $ | 3,481 | | | $ | 3,446 | | | $ | 7,255 | |
| | | | | | | | |
Denominator: | | | | | | | | |
Weighted-average shares outstanding - basic | | 465 | | 415 | | 458 | | 417 |
Dilutive effect of equity awards | | 15 | | 12 | | 15 | | 11 |
Weighted-average shares outstanding - diluted | | 480 | | 427 | | 473 | | 428 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | |
Basic income per share: | | | | | | | | |
Income per share from continuing operations | | $ | 4.56 | | | $ | 8.39 | | | $ | 7.41 | | | $ | 17.40 | |
Income per share from discontinued operations | | — | | | — | | | 0.11 | | | — | |
Net income per share | | $ | 4.56 | | | $ | 8.39 | | | $ | 7.52 | | | $ | 17.40 | |
| | | | | | | | |
Diluted income per share: | | | | | | | | |
Income per share from continuing operations | | $ | 4.42 | | | $ | 8.15 | | | $ | 7.18 | | | $ | 16.95 | |
Income per share from discontinued operations | | — | | | — | | | 0.11 | | | — | |
Net income per share | | $ | 4.42 | | | $ | 8.15 | | | $ | 7.29 | | | $ | 16.95 | |
7. Borrowings | | | | | | | | | | | | | | | | | | | | |
| | Effective Interest Rate | | May 5, 2024 | | October 29, 2023 |
| | | | | | |
| | (Dollars in millions) |
2023 Term Loans - floating rate | | | | | | |
SOFR plus 1.125% term loan due November 2025 | | 7.10 | % | | $ | 9,195 | | | $ | — | |
SOFR plus 1.250% term loan due November 2026 | | 7.01 | % | | 11,195 | | | — | |
SOFR plus 1.625% term loan due November 2028 | | 7.21 | % | | 8,000 | | | — | |
| | | | 28,390 | | | — | |
April 2022 Senior Notes - fixed rate | | | | | | |
4.000% notes due April 2029 | | 4.17 | % | | 750 | | | 750 | |
4.150% notes due April 2032 | | 4.30 | % | | 1,200 | | | 1,200 | |
4.926% notes due May 2037 | | 5.33 | % | | 2,500 | | | 2,500 | |
| | | | 4,450 | | | 4,450 | |
September 2021 Senior Notes - fixed rate | | | | | | |
3.137% notes due November 2035 | | 4.23 | % | | 3,250 | | | 3,250 | |
3.187% notes due November 2036 | | 4.79 | % | | 2,750 | | | 2,750 | |
| | | | 6,000 | | | 6,000 | |
March 2021 Senior Notes - fixed rate | | | | | | |
3.419% notes due April 2033 | | 4.66 | % | | 2,250 | | | 2,250 | |
3.469% notes due April 2034 | | 4.63 | % | | 3,250 | | | 3,250 | |
| | | | 5,500 | | | 5,500 | |
January 2021 Senior Notes - fixed rate | | | | | | |
1.950% notes due February 2028 | | 2.10 | % | | 750 | | | 750 | |
2.450% notes due February 2031 | | 2.56 | % | | 2,750 | | | 2,750 | |
2.600% notes due February 2033 | | 2.70 | % | | 1,750 | | | 1,750 | |
3.500% notes due February 2041 | | 3.60 | % | | 3,000 | | | 3,000 | |
3.750% notes due February 2051 | | 3.84 | % | | 1,750 | | | 1,750 | |
| | | | 10,000 | | | 10,000 | |
June 2020 Senior Notes - fixed rate | | | | | | |
3.459% notes due September 2026 | | 4.19 | % | | 752 | | | 752 | |
4.110% notes due September 2028 | | 5.02 | % | | 1,118 | | | 1,118 | |
| | | | 1,870 | | | 1,870 | |
May 2020 Senior Notes - fixed rate | | | | | | |
2.250% notes due November 2023 | | 2.40 | % | | — | | | 105 | |
3.150% notes due November 2025 | | 3.29 | % | | 900 | | | 900 | |
4.150% notes due November 2030 | | 4.27 | % | | 1,856 | | | 1,856 | |
4.300% notes due November 2032 | | 4.39 | % | | 2,000 | | | 2,000 | |
| | | | 4,756 | | | 4,861 | |
April 2020 Senior Notes - fixed rate | | | | | | |
5.000% notes due April 2030 | | 5.18 | % | | 606 | | | 606 | |
| | | | | | |
April 2019 Senior Notes - fixed rate | | | | | | |
3.625% notes due October 2024 | | 3.98 | % | | 622 | | | 622 | |
4.750% notes due April 2029 | | 4.95 | % | | 1,655 | | | 1,655 | |
| | | | 2,277 | | | 2,277 | |
| | | | | | |
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| | | | | | | | | | | | | | | | | | | | |
| | Effective Interest Rate | | May 5, 2024 | | October 29, 2023 |
| | | | | | |
| | (Dollars in millions) |
2017 Senior Notes - fixed rate | | | | | | |
3.625% notes due January 2024 | | 3.74 | % | | — | | | 829 | |
3.125% notes due January 2025 | | 3.23 | % | | 495 | | | 495 | |
3.875% notes due January 2027 | | 4.02 | % | | 2,922 | | | 2,922 | |
3.500% notes due January 2028 | | 3.60 | % | | 777 | | | 777 | |
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