Broadcom Inc 10-Q for FY2021 Q3

Broadcom Inc. (AVGO)

10-Q 2021-09-09 For: 2021-08-01

Added on April 01, 2026

About this 10-Q

Broadcom Inc filed this 10-Q on September 9, 2021, covering the quarter ended August 1, 2021 (FY2021 Q3).

Headline figures

Quarter ended August 1, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $6.78B; up 16.4% from $5.82B a year earlier
Net income: $1.88B; up 172.7% from net income of $688M a year earlier
Diluted EPS: $4.20; up 189.7% from $1.45 a year earlier

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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
8.00% Mandatory Convertible Preferred Stock, Series A, $0.001 par value	AVGOP	The NASDAQ Global Select Market


			Page
PART I — FINANCIAL INFORMATION			1
Item 1. Condensed Consolidated Financial Statements — Unaudited			1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3. Quantitative and Qualitative Disclosures About Market Risk			35
Item 4. Controls and Procedures			35
PART II — OTHER INFORMATION			35
Item 1. Legal Proceedings			35
Item 1A. Risk Factors			35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			55
Item 3. Defaults Upon Senior Securities			55
Item 4. Mine Safety Disclosures			55
Item 5. Other Information			55
Item 6. Exhibits			56
SIGNATURES			57


			Page
Condensed Consolidated Balance Sheets — Unaudited			2
Condensed Consolidated Statements of Operations - Unaudited			3
Condensed Consolidated Statements of Comprehensive Income — Unaudited			4
Condensed Consolidated Statements of Cash Flows — Unaudited			5
Condensed Consolidated Statements of Stockholders’ Equity — Unaudited			6
Notes to Unaudited Condensed Consolidated Financial Statements			8


	August 1, 2021		November 1, 2020

	(In millions, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	11,105	$	7,618

Trade accounts receivable, net	2,234		2,297
Inventory	1,160		1,003

Other current assets	1,137		977
Total current assets	15,636		11,895
Long-term assets:
Property, plant and equipment, net	2,370		2,509
Goodwill	43,457		43,447
Intangible assets, net	12,719		16,782
Other long-term assets	1,698		1,300
Total assets	$	75,880	$	75,933
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	968	$	836
Employee compensation and benefits	893		877
Current portion of long-term debt	279		827
Other current liabilities	4,361		3,831
Total current liabilities	6,501		6,371
Long-term liabilities:
Long-term debt	40,178		40,235

Other long-term liabilities	4,834		5,426
Total liabilities	51,513		52,032
Commitments and contingencies (Note 11)
Preferred stock dividend obligation	27		27
Stockholders’ equity:
Preferred stock, $0.001 par value; 100 shares authorized; 8.00% Mandatory Convertible Preferred Stock, Series A, 4 shares issued and outstanding; aggregate liquidation value of $3,738 as of August 1, 2021 and November 1, 2020	—		—
Common stock, $0.001 par value; 2,900 shares authorized; 412 and 407 shares issued and outstanding as of August 1, 2021 and November 1, 2020, respectively	—		—
Additional paid-in capital	24,126		23,982
Retained earnings	320		—
Accumulated other comprehensive loss	(106)		(108)
Total stockholders’ equity	24,340		23,874
Total liabilities and equity	$	75,880	$	75,933


	Fiscal Quarter Ended				Three Fiscal Quarters Ended
	August 1, 2021		August 2, 2020		August 1, 2021		August 2, 2020

	(In millions, except per share data)
Net revenue:
Products	$	5,064	$	4,125	$	15,128	$	12,582
Subscriptions and services	1,714		1,696		4,915		4,839
Total net revenue	6,778		5,821		20,043		17,421
Cost of revenue:
Cost of products sold	1,572		1,383		4,792		4,290
Cost of subscriptions and services	157		154		450		475

Amortization of acquisition-related intangible assets	851		953		2,578		2,857
Restructuring charges	1		15		17		30
Total cost of revenue	2,581		2,505		7,837		7,652
Gross margin	4,197		3,316		12,206		9,769
Research and development	1,205		1,228		3,654		3,786
Selling, general and administrative	346		428		1,010		1,530
Amortization of acquisition-related intangible assets	494		600		1,482		1,802
Restructuring, impairment and disposal charges	26		52		122		163
Total operating expenses	2,071		2,308		6,268		7,281
Operating income	2,126		1,008		5,938		2,488
Interest expense	(415)		(464)		(1,451)		(1,357)

Other income, net	15		49		109		175
Income from continuing operations before income taxes	1,726		593		4,596		1,306
Benefit from income taxes	(150)		(96)		(151)		(331)
Income from continuing operations	1,876		689		4,747		1,637
Loss from discontinued operations, net of income taxes	—		(1)		—		(1)
Net income	1,876		688		4,747		1,636
Dividends on preferred stock	(74)		(74)		(224)		(223)

Net income attributable to common stock	$	1,802	$	614	$	4,523	$	1,413

Basic income per share attributable to common stock:
Income per share from continuing operations	$	4.38	$	1.53	$	11.06	$	3.53
Loss per share from discontinued operations	—		(0.01)		—		(0.01)
Net income per share	$	4.38	$	1.52	$	11.06	$	3.52

Diluted income per share attributable to common stock:
Income per share from continuing operations	$	4.20	$	1.46	$	10.54	$	3.37
Loss per share from discontinued operations	—		(0.01)		—		(0.01)
Net income per share	$	4.20	$	1.45	$	10.54	$	3.36

Weighted-average shares used in per share calculations:
Basic	411		403		409		401
Diluted	429		422		429		420


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	8.00% Mandatory Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Par Value		Shares	Par Value

	(In millions)
Balance as of November 1, 2020	4	$	—	407	$	—	$	23,982	$	—	$	(108)	$	23,874
Net income	—	—		—	—		—		1,378		—		1,378
Other comprehensive income	—	—		—	—		—		—		1		1


Dividends to common stockholders	—	—		—	—		(164)		(1,304)		—		(1,468)
Dividends to preferred stockholders	—	—		—	—		—		(74)		—		(74)
Common stock issued	—	—		2	—		35		—		—		35
Stock-based compensation	—	—		—	—		444		—		—		444

Shares repurchased for tax withholdings on vesting of equity awards	—	—		(1)	—		(217)		—		—		(217)
Balance as of January 31, 2021	4	—		408	—		24,080		—		(107)		23,973
Net income	—	—		—	—		—		1,493		—		1,493
Other comprehensive income	—	—		—	—		—		—		1		1
Dividends to common stockholders	—	—		—	—		(60)		(1,417)		—		(1,477)
Dividends to preferred stockholders	—	—		—	—		—		(76)		—		(76)
Common stock issued	—	—		3	—		71		—		—		71
Stock-based compensation	—	—		—	—		425		—		—		425

Shares repurchased for tax withholdings on vesting of equity awards	—	—		(1)	—		(471)		—		—		(471)
Balance as of May 2, 2021	4	—		410	—		24,045		—		(106)		23,939
Net income	—	—		—	—		—		1,876		—		1,876

Dividends to common stockholders	—	—		—	—		—		(1,482)		—		(1,482)
Dividends to preferred stockholders	—	—		—	—		—		(74)		—		(74)
Common stock issued	—	—		2	—		7		—		—		7
Stock-based compensation	—	—		—	—		421		—		—		421

Shares repurchased for tax withholdings on vesting of equity awards	—	—		—	—		(347)		—		—		(347)
Balance as of August 1, 2021	4	$	—	412	$	—	$	24,126	$	320	$	(106)	$	24,340


	8.00% Mandatory Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Par Value		Shares	Par Value

	(In millions)
Balance as of November 3, 2019	4	$	—	398	$	—	$	25,081	$	—	$	(140)	$	24,941
Net income	—	—		—	—		—		385		—		385

Cumulative effect of accounting change	—	—		—	—		—		(10)		8		(2)
Fair value of partially vested equity awards assumed in connection with an acquisition	—	—		—	—		1		—		—		1
Dividends to common stockholders	—	—		—	—		(996)		(301)		—		(1,297)
Dividends to preferred stockholders	—	—		—	—		—		(74)		—		(74)
Common stock issued	—	—		2	—		37		—		—		37
Stock-based compensation	—	—		—	—		545		—		—		545

Shares repurchased for tax withholdings on vesting of equity awards	—	—		(1)	—		(168)		—		—		(168)
Balance as of February 2, 2020	4	—		399	—		24,500		—		(132)		24,368
Net income	—	—		—	—		—		563		—		563
Other comprehensive income	—	—		—	—		—		—		1		1

Dividends to common stockholders	—	—		—	—		(818)		(488)		—		(1,306)
Dividends to preferred stockholders	—	—		—	—		—		(75)		—		(75)
Common stock issued	—	—		4	—		91		—		—		91
Stock-based compensation	—	—		—	—		517		—		—		517

Shares repurchased for tax withholdings on vesting of equity awards	—	—		(1)	—		(217)		—		—		(217)
Balance as of May 3, 2020	4	—		402	—		24,073		—		(131)		23,942
Net income	—	—		—	—		—		688		—		688
Dividends to common stockholders	—	—		—	—		(698)		(614)		—		(1,312)
Dividends to preferred stockholders	—	—		—	—		—		(74)		—		(74)
Common stock issued	—	—		2	—		46		—		—		46
Stock-based compensation	—	—		—	—		465		—		—		465

Shares repurchased for tax withholdings on vesting of equity awards	—	—		—	—		(198)		—		—		(198)
Balance as of August 2, 2020	4	$	—	404	$	—	$	23,688	$	—	$	(131)	$	23,557


	Fiscal Quarter Ended August 1, 2021
	Americas		Asia Pacific		Europe, the Middle East and Africa		Total

	(In millions)
Products	$	438	$	4,129	$	497	$	5,064
Subscriptions and services (a)	1,150		192		372		1,714
Total	$	1,588	$	4,321	$	869	$	6,778


	Fiscal Quarter Ended August 2, 2020
	Americas		Asia Pacific		Europe, the Middle East and Africa		Total

	(In millions)
Products	$	410	$	3,393	$	322	$	4,125
Subscriptions and services (a)	1,000		349		347		1,696
Total	$	1,410	$	3,742	$	669	$	5,821


	Three Fiscal Quarters Ended August 1, 2021
	Americas		Asia Pacific		Europe, the Middle East and Africa		Total

	(In millions)
Products	$	1,299	$	12,484	$	1,345	$	15,128
Subscriptions and services (a)	3,204		576		1,135		4,915
Total	$	4,503	$	13,060	$	2,480	$	20,043


	Three Fiscal Quarters Ended August 2, 2020
	Americas		Asia Pacific		Europe, the Middle East and Africa		Total

	(In millions)
Products	$	1,340	$	10,282	$	960	$	12,582
Subscriptions and services (a)	3,075		680		1,084		4,839
Total	$	4,415	$	10,962	$	2,044	$	17,421


		Contract Assets		Contract Liabilities

	(In millions)
Balance as of November 1, 2020		$	158	$	3,443

Balance as of August 1, 2021		$	142	$	3,628


	Semiconductor Solutions		Infrastructure Software		Total

	(In millions)
Balance as of November 1, 2020	$	25,959	$	17,488	$	43,447
Acquisition	—		10		10
Balance as of August 1, 2021	$	25,959	$	17,498	$	43,457


	Gross Carrying Amount		Accumulated Amortization		Net Book Value

	(In millions)
As of August 1, 2021:
Purchased technology	$	24,132	$	(16,498)	$	7,634
Customer contracts and related relationships	8,392		(4,218)		4,174
Order backlog	2,579		(2,223)		356
Trade names	797		(378)		419
Other	248		(131)		117
Intangible assets subject to amortization	36,148		(23,448)		12,700
In-process research and development	19		—		19
Total	$	36,167	$	(23,448)	$	12,719

As of November 1, 2020:
Purchased technology	$	24,119	$	(13,925)	$	10,194
Customer contracts and related relationships	8,389		(3,179)		5,210
Order backlog	2,579		(1,836)		743
Trade names	797		(322)		475
Other	252		(117)		135
Intangible assets subject to amortization	36,136		(19,379)		16,757
In-process research and development	25		—		25
Total	$	36,161	$	(19,379)	$	16,782


Fiscal Year:	Expected Amortization Expense
	(In millions)
2021 (remainder)	$	1,347
2022	4,367
2023	3,239
2024	2,369
2025	659
Thereafter	719
Total	$	12,700


Amortizable intangible assets:						August 1, 2021
						(In years)
Purchased technology						4
Customer contracts and related relationships						3
Order backlog						2
Trade names						9
Other						9


	Effective Interest Rate		August 1, 2021		November 1, 2020

	(In millions, except percentages)
March 2021 Senior Notes - fixed rate
3.419% notes due April 2033	4.66	%	$	2,250	$	—
3.469% notes due April 2034	4.63	%	3,250		—
			5,500		—
January 2021 Senior Notes - fixed rate
1.950% notes due February 2028	2.10	%	750		—
2.450% notes due February 2031	2.56	%	2,750		—
2.600% notes due February 2033	2.70	%	1,750		—
3.500% notes due February 2041	3.60	%	3,000		—
3.750% notes due February 2051	3.84	%	1,750		—
			10,000		—
June 2020 Senior Notes - fixed rate
3.459% notes due September 2026	4.19	%	1,695		1,695
4.110% notes due September 2028	5.02	%	2,222		2,222
			3,917		3,917
May 2020 Senior Notes - fixed rate
2.250% notes due November 2023	2.40	%	105		1,000
3.150% notes due November 2025	3.29	%	1,418		2,250
4.150% notes due November 2030	4.27	%	2,750		2,750
4.300% notes due November 2032	4.39	%	2,000		2,000
			6,273		8,000
April 2020 Senior Notes - fixed rate
4.700% notes due April 2025	4.88	%	1,247		2,250
5.000% notes due April 2030	5.18	%	2,250		2,250
			3,497		4,500
November 2019 Term Loans - floating rate
LIBOR plus 1.125% term loan due November 2022	1.54	%	—		1,819
LIBOR plus 1.250% term loan due November 2024	1.56	%	—		4,069
			—		5,888
April 2019 Senior Notes - fixed rate
3.125% notes due April 2021	3.61	%	—		525
3.125% notes due October 2022	3.53	%	—		693
3.625% notes due October 2024	3.98	%	622		1,044
4.250% notes due April 2026	4.54	%	1,183		2,500
4.750% notes due April 2029	4.95	%	3,000		3,000
			4,805		7,762


Fiscal Year:	Future Scheduled Principal Payments
	(In millions)
2021 (remainder)	$	—
2022	264
2023	403
2024	1,563
2025	1,832
Thereafter	37,437
Total	$	41,499


	Number of RSUs Outstanding	Weighted-Average Grant Date Fair Value Per Share

	(In millions, except per share data)
Balance as of November 1, 2020	32	$	188.35

Granted	1	$	404.43
Vested	(6)	$	211.74
Forfeited	(2)	$	187.68
Balance as of August 1, 2021	25	$	200.55



Fiscal Year:	Debt Principal, Interest and Fees		Purchase Commitments		Other Contractual Commitments

	(In millions)
2021 (remainder)	$	558	$	1,305	$	54
2022	1,819		78		239
2023	1,950		58		226
2024	3,084		—		162
2025	3,276		—		74
Thereafter	46,048		—		248
Total	$	56,735	$	1,441	$	1,003


	Employee Termination Costs		Other Exit Costs		Total

	(In millions)
Balance as of November 1, 2020	$	34	$	—	$	34
Restructuring charges	89		10		99
Utilization	(117)		(10)		(127)
Balance as of August 1, 2021 (a)	$	6	$	—	$	6


	Fiscal Quarter Ended								Three Fiscal Quarters Ended
Net Revenue by Segment	August 1, 2021		August 2, 2020		$ Change		% Change		August 1, 2021		August 2, 2020		$ Change		% Change

	(In millions, except for percentages)
Semiconductor solutions	$	5,021	$	4,219	$	802	19	%	$	14,749	$	12,437	$	2,312	19	%
Infrastructure software	1,757		1,602		155		10	%	5,294		4,984		310		6	%
Total net revenue	$	6,778	$	5,821	$	957	16	%	$	20,043	$	17,421	$	2,622	15	%


Fiscal Year:	Unrecognized Compensation Cost, Net of Expected Forfeitures
	(In millions)
2021 (remainder)	$	413
2022	1,279
2023	896
2024	522
2025	199
Thereafter	25
Total	$	3,334


	Fiscal Quarter Ended								Three Fiscal Quarters Ended
Operating Income by Segment	August 1, 2021		August 2, 2020		$ Change		% Change		August 1, 2021		August 2, 2020		$ Change		% Change

	(In millions, except for percentages)
Semiconductor solutions	$	2,720	$	2,112	$	608	29	%	$	7,828	$	6,046	$	1,782	29	%
Infrastructure software	1,226		1,069		157		15	%	3,700		3,250		450		14	%
Unallocated expenses	(1,820)		(2,173)		353		(16)	%	(5,590)		(6,808)		1,218		(18)	%
Total operating income	$	2,126	$	1,008	$	1,118	111	%	$	5,938	$	2,488	$	3,450	139	%


	Three Fiscal Quarters Ended
Cash Dividends Declared and Paid	August 1, 2021		August 2, 2020

	(In millions, except per share data)
Dividends per share to common stockholders	$	10.80	$	9.75
Dividends to common stockholders	$	4,427	$	3,915
Dividends per share to preferred stockholders	$	60.00	$	60.00
Dividends to preferred stockholders	$	224	$	224


Summarized Balance Sheet Information	August 1, 2021		November 1, 2020


	(In millions)
ASSETS
Current assets:
Amount due from Non-Obligor Group	$	1,228	$	1,889
Other current assets	9,153		4,091
Total current assets	$	10,381	$	5,980
Long-term assets:
Amount due from Non-Obligor Group, long-term	$	5,825	$	8,220
Goodwill	1,380		1,360
Other long-term assets	1,530		1,318
Total long-term assets	$	8,735	$	10,898
LIABILITIES
Current liabilities:
Amount due to Non-Obligor Group	$	7,726	$	7,147
Current portion of long-term debt	255		807
Other current liabilities	587		601
Total current liabilities	$	8,568	$	8,555
Long-term liabilities:
Amount due to Non-Obligor Group, long-term	$	484	$	—
Long-term debt	39,658		39,311
Other long-term liabilities	2,658		2,477
Total long-term liabilities	$	42,800	$	41,788


	Three Fiscal Quarters Ended
Summarized Statement of Operations Information	August 1, 2021


	(In millions)
Intercompany revenue with Non-Obligor Group	$	1,311
Intercompany gross margin	$	1,186
Net loss (a)	$	(983)


#			Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Broadcom Inc. hereby undertakes to furnish supplementally copies of any omitted schedules upon request by the SEC.
+			Indicates a management contract or compensatory plan or arrangement.


			BROADCOM INC.
			By:			/s/ Kirsten M. Spears
						Kirsten M. Spears
						Chief Financial Officer


/s/ Hock E. Tan
Hock E. Tan
Chief Executive Officer (Principal Executive Officer)


/s/ Kirsten M. Spears
Kirsten M. Spears
Chief Financial Officer (Principal Financial Officer)


Date:	September 9, 2021	/s/ Hock E. Tan
		Hock E. Tan
		Chief Executive Officer (Principal Executive Officer)