Broadcom Limited (NASDAQ:AVGO) Q1 2017 Earnings Conference Call - Final Transcript

Mar 01, 2017 • 05:00 pm ET

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Broadcom Limited (NASDAQ:AVGO) Q1 2017 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Welcome to Broadcom Limited's First Quarter Fiscal Year 2017 Financial Results Conference Call. At this time for opening remarks and introduction, I would like to turn the call over to Ashish Saran, Director of Investor Relations. Please go ahead, sir.

Executive
Ashish Saran

Thank you, operator, and good afternoon, everyone. Joining me today are Hock Tan, President and CEO, and Tom Krause, Chief Financial Officer of Broadcom Limited. After market closed today, Broadcom distributed a press release and financial tables describing our financial performance for the first quarter of fiscal year 2017. If you did not receive a copy, you may obtain the information from the Investor section of Broadcom's website at www.broadcom.com.

This conference call is being webcast live, and a recording will be made available via telephone playback for one week. It will also be archived in the Investor section of our website at broadcom.com. During the prepared comments section of this call, Hock and Tom will be providing details of our first quarter fiscal year 2017 results, background to our second quarter fiscal year 2017 outlook, and some commentary regarding the business environment. We will take questions after the end of our prepared comments.

In addition to US GAAP reporting, Broadcom reports certain financial measures on a non-GAAP basis. A reconciliation between GAAP and non-GAAP measures is included in the tables attached to today's press release. Comments made during today's call will primarily refer to our non-GAAP financial results.

Please refer to our press release today and our recent filings with the SEC for information on specific risk factors that could cause our actual results to differ materially from the forward-looking statements made on this call. At this time, I would like to turn the call over to Hock Tan. Hock?

Executive
Hock Tan

Thank you, Ashish. Good afternoon, everyone. Well we delivered strong financial results for the first quarter, with revenue of $4.15 billion and gross margin at 62.4%, both at the very top end of our guidance. Earnings per share of $3.63 grew by 5% sequentially, while net revenue was essentially flat.

Revenue was better than expected in all four segments. The benefits we achieved through business diversification clearly came through this quarter, with growth in Wired, enterprise storage and Industrial completely offsetting the difficult negative seasonality from Wireless. The integration of classic Broadcom has gone very well and is now mostly complete. We remain focused on driving financial performance towards our long-term operating margin and free cash flow targets.

Let me now turn to a discussion of our segment results starting with Wired, our largest segment. In the first quarter, Wired revenue came in at $2.09 billion, better than expected, and represented 50% of our total revenue. Revenue for this segment was up slightly on a sequential basis. We benefited from strong demand for our ethernet switching and routing products from cloud data center operators. This growth was partially offset by the continuing seasonal decline in demand for our broadband carrier access and set-top box products, which we expect to bottom