Broadcom Inc (AVGO) — Q4 2022 Earnings Call Transcript

Thank you, Sherri, and good afternoon, everyone. Joining me on today’s call are Hock Tan, President and CEO; Kirsten Spears, Chief Financial Officer; and Charlie Kawwas, President of Semiconductor Solutions Group. Broadcom distributed a press release and financial tables after the market closed, describing our financial performance for the fourth quarter and fiscal year 2022. 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 an audio replay of the call can be accessed for one year through the Investors section of Broadcom’s website. During the prepared comments, Hock and Kirsten will be providing details of our fourth quarter and fiscal year 2022 results, guidance for our first 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 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 results. I’ll now turn the call over to Hock.

Well, thank you, Ji. And thanks, everyone, for joining us today. Before I provide color on our Q4 results, let me put in perspective what we achieved in fiscal year ‘22. For the year, I’m pleased to report that consolidated revenue hit a record of $33.2 billion, growing 21% year-on-year, yet another year of double-digit organic growth. This growth was driven by our strong partnerships with customers and increased R&D investments, which enable accelerated adoption of our next-generation technologies. With our robust business model, we grew our fiscal 2022 operating profit by 28% year-on-year and our free cash flow per share by 25% year-on-year. Now to discuss details of our fiscal Q4. In our fiscal Q4 ‘22, consolidated net revenue was a record $8.9 billion, up 21% year-on-year. Semiconductor solutions revenue increased 26% year-on-year to $7.1 billion, and infrastructure software revenue grew 4% year-on-year to $1.8 billion. In Q4, our semiconductor business continued to perform well across hyperscale, service providers, and enterprise. On top of this, wireless grew sequentially as we ramp up the new platform with our North American customer. In reporting these results, I’d like to emphasize we demonstrate our continued discipline in shipping our strong backlog only as and when needed by our end customers. So, in contrast to weak consumer electronics spending today and despite concerns of a global recession, we believe overall infrastructure spending remains strong, and we continue to experience sustained demand in most of our end markets, and this is what we continue to see in Q1. So, let me expand on this. Starting with networking. Networking revenue was a record $2.5 billion and was up 30% year-on-year, representing 35% of our semiconductor revenue. We see strong growth from the deployment of Tomahawk 4 for data center switching at hyperscale customers. And we see upgrades of edge and core routing networks with our next-generation Jericho portfolio at cloud and service providers. At multiple cloud customers, we continue to lead in delivering custom solutions for compute offload accelerators and actually surpassed the $2 billion amount in revenues in fiscal ‘22. Looking into Q1, we do expect networking revenue to be strong and grow about 20% year-over-year. Next, our storage connectivity revenue was a record $1.2 billion or 17% of semiconductor revenue and up 50% year-on-year. As we have mentioned in previous earnings calls, we are benefiting here from substantial content increases as both cloud and enterprise customers adopt our next-generation MegaRAID and storage adapters. This trend will continue in Q1, and we expect server storage connectivity revenue to grow above 50% year-on-year. Moving on to broadband. Revenue of $1 billion grew 20% year-on-year and represented 15% of semiconductor revenue. Our broadband business is benefiting from ongoing multiyear deployments by North American and European service providers of 10-gigabit PON and DOCSIS 3.1 with embedded Wi-Fi 6 and 6E. In Q1, we expect the secular drivers behind broadband to continue and our business to be strong at about 30% year-on-year growth. Moving on to wireless. Q4 revenue of $2.1 billion represented 29% of semiconductor revenue with the 13% year-on-year increase coming largely from higher content. In Q1, we expect wireless revenue to be sequentially flat and up low single digits year-on-year. Finally, Q4 industrial resale of $234 million grew 1% year-on-year as softness in China mostly offset the strength in North American and European automotive. In Q1, we forecast industrial resales to continue the trend of low single-digit percent growth year-on-year. And so in summary, Q4 semiconductor solutions revenue was up 26% year-on-year. And in Q1, we expect semiconductor revenue growth to sustain at approximately 20% year-on-year. Moving on to software. In Q4, infrastructure software revenue of $1.8 billion grew 4% year-on-year and represented 21% of total revenue. Core software revenue grew 5% year-on-year. In spite of adverse forex impact in dollar terms, consolidated renewal rates averaged 117% of expiring contracts. And in our strategic accounts, we averaged 128%. Within our strategic accounts, annualized bookings of $357 million included $101 million of cross-selling our portfolio of products to these customers. Over 90% of the renewal value represented recurring subscriptions and maintenance. Over the last 12 months, consolidated renewal rates averaged 120% over expiring contracts. And in our strategic accounts, we averaged 135%. Because of this, our ARR, which is annual recurring revenue, the indicator of forward revenue, at the end of Q4 was $5.4 billion, which was up 4% from a year ago. And in Q1, we expect our infrastructure software segment revenue to be flat year-on-year, reflecting core software revenue growth of mid-single-digit percent year-over-year, offset by a year-on-year decline in the Brocade enterprise and business. In summary, we’re guiding consolidated Q1 revenue of $8.9 billion, up 16% year-on-year. While we are fully booked for fiscal 2023, in this environment, we are not providing you guidance for the year. Before Kirsten tells you more about our financial performance for the quarter, let me provide a brief update on our pending acquisition of VMware. We are making progress with our various regulatory filings around the world, as we very much expect to have received merger clearance in Brazil, Canada and South Africa. We anticipate that the timeline for the review process will be more extended in other key regions, especially given the size of this transaction. Having said that, we’re still confident that this transaction will close and be completed in our fiscal 2023. The combination of Broadcom and VMware is about enabling enterprises to accelerate innovation and expand choice by addressing their most complex technology challenges in this multi-cloud era. And we are confident that regulators will see this when they conclude their review.

Thank you, Hock. Let me now provide additional detail on our financial performance. Revenue was $8.9 billion for the quarter, up 21% from a year ago. Gross margins were 75% of revenue in the quarter and up 10 basis points year-on-year. Operating expenses were $1.2 billion, up 3% year-on-year, driven by investment in R&D. Operating income for the quarter was $5.5 billion and was up 25% from a year ago. Operating margin was 62% of revenue, up approximately 240 basis points year-on-year. Adjusted EBITDA was $5.7 billion or 64% of revenue. This figure excludes $129 million of depreciation. Now, a review of the P&L for our two reportable segments. Revenue for our semiconductor solutions segment was $7.1 billion and represented 79% of total revenue in the quarter. This was up 26% year-on-year. Gross margins for our semiconductor solutions segment were approximately 71%, up 70 basis points year-on-year driven by product mix and adoption of next-generation products across our extensive product portfolio. Operating expenses were $825 million in Q4, up 4% year-on-year. R&D was $731 million in the quarter, up 4% year-on-year. Q4 semiconductor operating margins were 59%. So, while semiconductor revenue was up 26%, operating profit grew 33% year-on-year. Moving to the P&L for the infrastructure software segment. Revenue for infrastructure software was $1.8 billion, up 4% year-on-year and represented 21% of revenue. Gross margins for infrastructure software were 91% in the quarter and operating expenses were $348 million in the quarter, down 1% year-on-year. Infrastructure software operating margin was 72% in Q4, and operating profit grew 6%. Moving to cash flow. Free cash flow in the quarter was $4.5 billion, representing 50% of revenue. We spent $122 million on capital expenditures. Days sales outstanding were 30 days in the fourth quarter compared to 29 days in the third quarter. We ended the fourth quarter with inventory of $1.9 billion, up 5% from the end of the prior quarter because we expect the mix of revenue in Q1 to have a higher cost of materials. We ended the fourth quarter with $12.4 billion of cash and $39.5 billion of gross debt, of which $440 million is short term. Based on current business trends and conditions, our guidance for the first quarter of fiscal 2023 is for consolidated revenues of $8.9 billion and adjusted EBITDA of approximately 63% of projected revenue. In forecasting such operating profitability, we would like to point out that because of product mix changes, our non-GAAP gross margin could be down roughly 100 basis points from Q4 and R&D spending could be up sequentially as we step up hiring of engineers for multiple critical projects. Let me recap our financial performance for fiscal year 2022. Our revenue hit a record $33.2 billion, growing 21% year-on-year. Semiconductor solutions revenue was $25.8 billion, up 27% year-over-year. Infrastructure software revenue was $7.4 billion, up 4% year-on-year. Gross margin for the year was 76%, up 110 basis points from a year ago. Our operating expenses were $4.8 billion, up 6% year-on-year. Fiscal '22 operating income was $20.3 billion, up 28% year-over-year and represented 61% of net revenue. Adjusted EBITDA was $21 billion, up 27% year-over-year and represented 63% of net revenue. This figure excludes $529 million of depreciation. We spent $424 million on capital expenditures. And free cash flow grew 22% year-on-year to $16.3 billion or 49% of fiscal '22 revenue. Turning to capital allocation. For fiscal '22, we spent $15.5 billion, consisting of $7 billion in the form of cash dividends and $8.5 billion in repurchases and eliminations. We ended the year with $13 billion of authorized share repurchase programs remaining and expect to resume our repurchase of common stock as soon as we can under SEC rules. Excluding the potential impact of any share repurchases, in Q1, we expect the non-GAAP diluted share count to be $435 million. Aligned with our ability to generate increased cash flows in the preceding year, we are announcing an increase in our quarterly common stock cash dividend in Q1 fiscal 2023 to $4.60 per share, an increase of 12% from the prior quarter. We intend to maintain this target quarterly dividend throughout fiscal '23, subject to quarterly Board approval. This implies our fiscal 2023 annual common stock dividend to be a record $18.40 per share. I would like to highlight that this represents the 12th consecutive increase in annual dividends since we initiated dividends in fiscal 2011. That concludes my prepared remarks. Operator, please open up the call for questions.

You talked about infrastructure holding up well across most segments. I guess, I was hoping you could speak more to why infrastructure to date has been so immune from the weakness we’ve seen elsewhere in semis. Specifically, can you speak to trends you’re seeing perhaps in hyperscale versus enterprise? Any differences there? And also, can you speak to how you see these trends throughout all of fiscal '23? Thanks so much.

Great question. Currently, we observe continued strong spending in hyperscale, robust enterprise consumption, and ongoing broadband deployment growth across North America, Europe, and parts of Asia. This growth stems from investments made following COVID-19, which are part of multiyear plans. All these areas are on track as we anticipated. As I mentioned in previous earnings calls, I want to assure you that we do not believe we are shipping beyond actual demand. We carefully evaluate orders and our backlog, and we only ship to customers who can utilize the products within the same quarter. Based on our assessment of customers' willingness to accept and consume the products we ship, that’s our current situation. Regarding the rest of 2023, I am more cautious in providing an answer. I cannot predict if the strong demand for our products will continue throughout the year. However, in the next several months, we still see existing orders and customers willing to take our products. We have spoken with numerous CIOs from our largest enterprise clients, and none have indicated plans to reduce their IT spending. Many suggest that their spending will grow, while others expect it to remain flat. Therefore, I am cautiously optimistic about upcoming trends.

Hock, I want to follow on C.J.’s and maybe ask a similar question but in a slightly different way. Last quarter, you talked about actively scrubbing your backlog. And clearly, that’s helped to avoid some of the inventory pitfalls that some of your peers have seen. But have you noticed since last quarter’s call a change in either the rate of your backlog growth? I think it was up about 7% sequentially last quarter, the composition of your backlog or how actively and aggressively you need to scrub it? Any sort of changes in those forward-looking metrics that would alter your view on kind of the sustainability of demand, the duration of it, et cetera?

We are continuing to manage our backlog this quarter just as we did last quarter and even six months or a year ago. We remain focused on ensuring that we do not ship products to the wrong customers who may just place them on shelves. Our backlog remains strong, and you're correct that this influences our decisions. For instance, one quarter we might see broadband growing 20% year-on-year and networking growing 30% year-on-year, while in the next quarter those figures might flip to broadband growing 30% and networking growing 20%. This fluctuation is affected not only by hyperscale customers making purchases in a seasonal manner but also by the specific end markets involved. Thus, the combination of our backlog and the products we ship each quarter will vary, but it does not diminish the strength of our backlog. What we are currently shipping reflects the actual end demand for our products, which we consider most important.

So Hock, I guess just to ask the question explicitly. Last quarter, I think you said your semiconductor backlog was $31 billion and your lead times were still 50 weeks, give or take. What are those numbers now? Like, where is backlog and where are lead times?

Stacy, this is Kirsten Spears. We’re not going to guide the year. So, we’re not providing that...

I’m not asking you to guide the year. I’m not asking you to guide the year.

Right. We’re fully booked for the year. So, if I give you the backlog number, I’m effectively guiding you to the year. So, we’ve chosen not to provide that data at this time.

Okay. I guess, can you just tell me, has it gone up, flat or down?

Our forecast for the year is based on our backlog, but we will not be sharing that information as we don’t provide guidance. We expect to continue growing throughout the year.

Got it. But you think that backlog will grow for the year is what you’re saying?

Our year forecast will grow.

Hock, your server storage connectivity business has been extremely strong, right, up 50% plus in fiscal ‘22. And more importantly, that business continues to sustain based on the January quarter outlook. We typically tend to think about HDD controllers and preamps, but your business is much more diverse than this. So, can you just, first of all, walk us through like what percentage is MegaRAID, PCIe or what I call overall storage connectivity versus your storage controller business, which is primarily HDD controller and preamps? And maybe what’s driving the near-term growth in the storage franchise when many of your storage competitors and customers are seeing major weakness in this segment?

That’s an interesting question. Our server storage connectivity, which includes nearline hard drives and what we refer to as on-prem server storage connectivity along with host bus adapters, is indeed broad. I don’t have the exact numbers off the top of my head, but it's substantial, especially from the MegaRAID business. A significant portion of the growth, particularly the percentage increase I mentioned earlier, stems from the new generation of products being subsystems and boards rather than just chips. This contributes significantly to our growth. While unit growth has increased, it’s not quite at the 50% we previously announced. A large part of that 50% is attributed to content growth from shipping subsystems and boards instead of just chips. Nonetheless, unit growth is up overall, and while not everything is experiencing growth, there is enough positive trend across the board.

Hock, you keep on scrubbing demand and you’re shipping to what you think is consumption. So I guess I take it to believe that there’s still a gap between what you’re shipping and what customers want in any given quarter, I guess we could call that delinquencies, some others call that delinquencies. Obviously, you haven’t changed your approach, but I would imagine that this delinquency or this gap between what you’re shipping in a quarter and what your customers want, that’s probably declining. So I guess the question is, can you quantify the gap? And is the gap getting smaller? Thanks.

That's an interesting question. We don't really attempt to quantify the gap. A significant part of it is that I don't want to raise expectations too much, but customer backlog is sometimes often categorized or characterized under customer request dates. For example, in this particular quarter, our customer request date last quarter was significantly higher than what we actually shipped, and it was the same six months ago. Has it improved since six months ago? I can only speculate, and I don’t want to do that in this setting. However, there is still a substantial backlog of customer request dates that exceeds what we actually ship.

Thank you. I have two quick questions. First, Hock, have you noticed or do you expect to see any impact from the China lockdowns on your wireless business in Q2? It seems there was no effect in Q1, but I'm curious if there's something we should anticipate for Q2. Secondly, regarding the gross margin, I thought I heard that it decreased sequentially in your semiconductor business in Q1. Is this entirely due to mix, or is there a like-for-like impact we need to consider?

Let’s start with your first question. Our wireless segment relies on one customer, and the COVID shutdown has slowed inter-quarter shipments. It's too early for me to provide a clear view on Q2 since the period is still a way off, but there are shifts between Q4 and Q1 reflected in our numbers. This means that comparing year-on-year is a good approach. In Q4, the year-on-year figure was 13%, and Q1 actually saw a 1% increase, though there were movements in between. I believe this is related to the logistics challenges caused by COVID for our largest customer, although I can't provide a broader perspective. Regarding Q2, I really cannot offer any insights, as we lack visibility. Now, regarding your question about gross margin, it's entirely influenced by the product mix. Depending on the specific products we ship, the gross margins can vary due to market conditions and the ecosystem in those niche markets. Networking products generally have the highest margins, followed by broadband, while wireless has the lowest. From Q4 to Q1, we shifted away from networking somewhat and moved more towards broadband, with wireless still comprising a significant portion of our sales despite remaining consistent as a percentage. This is why we see a sequential impact on gross margin related solely to the mix of products we sell, as the natural gross margins vary across those products. You can also observe this in the way our inventory has grown. As reported, our inventory at the end of Q4 increased about 5% from the end of Q3, and this Q4 inventory is set to be shipped in Q1, despite our revenue guidance remaining relatively flat.

Great. You talked about being booked for the whole year next year. How much visibility do you think that gives you really? And I guess, what’s your philosophy going to be if customers with non-cancelable backlog come to you and try to make an adjustment in a potentially weaker economic period next year?

Let’s start with the first part. When we’re booked, we’re really booked. We have documentation confirming committed orders for us to ship. Our orders are non-cancelable, and customers are aware of this. When we say we are fully booked, it indicates that we have a backlog. Now, regarding your second question about what would happen if we experienced a significant recession in the next six to nine months, my answer is I don’t know. This uncertainty is part of why we’re not providing annual guidance. We will respond as circumstances require us to. But for now, we have the orders.

Thank you for taking my question, and congratulations on the strong results and outlook. It seems that while the capital allocation policy itself may not have changed, the tactics have. The payout ratio relative to free cash flow has been set slightly lower than 50%, and you are resuming buybacks. Could you discuss the reasoning behind these decisions? Do they indicate a change in perspective regarding the timing of the VMware closure, or are they linked to concerns about the macro environment or other factors? Thank you.

We have always intended to distribute approximately 50% of the previous year's free cash flows. In the current economic climate, we believe that a 12% year-over-year increase is a strong dividend. We are quite satisfied with that.

And don’t forget, we’re going to start buyback once the rules allow us to do that. And so, that’s another return of cash to shareholders, and we fully intend to get that going as soon as we could.

As soon as we can, and we still have $13 billion under that program.

Hock, I noticed in some of the prepared remarks you shared that your revenue from the compute offload ASIC franchise reached $2 billion for the fiscal year, which is about a third higher than last year. It seems like there was significant growth in that business earlier in the year, followed by a bit of a revenue plateau. This represents a considerable acceleration in the compute offload sector. Could you elaborate on the trends you're observing? Are you experiencing a diversification in your customer base or increased volume per tape-out as you refine the technology? I'm particularly interested in those trends since it appears that hyperscale companies are increasingly seeking custom silicon. Thank you.

Yes, you are correct that we have various programs from hyperscalers focused on custom or semi-custom silicon, which we collectively refer to as offload compute. Each of them has their own initiatives, which is positive and presents opportunities for our technologies to be utilized. However, the challenge lies in predicting the rate of ramp-up, as these programs tend to be quite variable and large. This is why we can project growth to $2 billion, reflecting an increase of about a third compared to last year, but the inconsistency makes it difficult to establish a clear trend. If you were to ask me to forecast over the next five years, I would say there is uncertainty about whether these hyperscalers will shift back to using merchant silicon rather than continuing with custom ASICs, which complicates the analysis. If you're looking for insights over the next year or two, I must honestly admit that I am not in a position to provide a reliable forecast.

Hock, I wanted to revisit your earlier comment and ensure I understand it clearly. You mentioned that customers are providing forecasts that are significantly longer, possibly in the context of lead times. I would like to gain a better understanding of the background for that statement. Although I understand you can't provide backlog details, any insights into the lead time discussion would be appreciated.

We haven't made any significant changes to our lead times, as I've mentioned before, and we continue to adhere to that approach. While we have a forecast, we are not discussing it in relation to the previous comment. I was referring to the backlog and the documentation we use. Additionally, even with those documents, we check the customer requested shipment dates and validate each demand before shipping in the current or previous quarter, depending on the situation. However, we are not providing any details about our forecast at this time because we are still working through the backlog.

Hock, I would like you to discuss your business in China, focusing on end consumption rather than the shipping perspective. I understand you may not have complete visibility into what is consumed at the end customer level, but could you share any trends you’re observing among enterprise, cloud, and service providers? How much of a challenge was China in fiscal year ‘22, and what are your expectations moving forward? What feedback are you getting from your end customers? Thank you.

To answer your question directly, China has experienced a slowdown in product consumption across various sectors, including industrial and infrastructure. While it hasn't completely collapsed, it has decreased compared to the previous year. We particularly notice this trend in our industrial business, where we've seen strength in Europe and North America, especially in the automotive sector, but weakness in China, which is a significant part of our industrial business. In terms of IT, we've also observed a slowdown. However, it's important to keep in mind that China accounts for just under 10% of our total revenues today. While this does have some impact, it is not substantial enough to significantly affect our overall growth trend for the entire company.

And any signs of improvement going forward, Hock, on the IT side, or is it too early to tell?

I think it’s too early for me to make a prediction. There is a sense of some reopening, but if I were to make a prediction, there’s a good chance I could be mistaken in a month if things shut down again.

Congratulations on going against the trend in semiconductors, Hock. I have a question that was partially addressed earlier. I want to discuss the difference between storage and the enterprise networking in China. One of your competitors in traditional hard disk drives mentioned a decline in demand for storage and significant inventory buildup, and we're seeing something similar in China’s networking sector. However, your company seems to be experiencing a notable divergence from that trend. Could you provide some insight into why there is such a difference?

The only explanation to an earlier question was our portfolio in service storage is pretty broad-based. Now, with a couple of areas that are very large areas like RAID, MegaRAID, particularly pretty much, but they are more than MegaRAID we have. You’re correct. It’s pretty broad-based. And there are some puts and takes, obviously. But overall, we see what we tell you.

Hock, I’d like to discuss your wireless business, which is more retail-oriented and likely to experience the first effects of any recessionary pressures. I know your guidance on this is solid. First, could you provide some insight into your firm order book? When the model year begins, you receive a projection for the total orders for the year, but firm orders come in later. How would you describe your firm order book or orders in general? Is it on a 30-day or 60-day basis? This information would help us anticipate any changes. Additionally, could you address how we should view the overall content with your largest customer over the next year? There is clearly heightened competition in some of your core areas, and I am curious if you are planning to shift more focus towards mixed signal custom products and potentially postpone some RF efforts. Thank you.

Okay. That's an interesting question. Let me address it. First, when you mention orders or shipment forecasts, we only provide guidance for Q1, so I can only share Q1 information. We have confirmed orders that cannot be canceled. We are providing numbers that we plan to ship based on our understanding of customer needs. These are committed orders, not forecasts, especially for Q1, which ends in January. We also have orders that extend beyond the end of January. Therefore, these are very committed orders and similarly, we have a reliable revenue forecast. Just to clarify, we have decent visibility from that particular customer as well. Regarding the second part of your question, we are very pleased with the content increase we've seen, not necessarily every year, but over several years, we consistently observe this growth. We remain well-positioned in our product lines that we consider almost franchise products for our North American customers, specifically in areas like Wi-Fi, Bluetooth, RF front end, and touchscreen controllers with high performance mixed signals. We focus exclusively on these areas because we believe we have the best technology and provide the most value to our customers. There's no reason to pursue areas where we are not the best and hope to take market share from competitors. I could say the same about my competitors' thinking. Answer is no.

Hock, you mentioned you’re fully booked for 2023. You’ve had a lot of questions on that one. So, I apologize in advance for squeezing in one last one. And I was wondering, if you look at the year as you see it booked today, if you could tell us in this like booking dynamics, where do you see for the full year 2023 the most growth and the least growth? I know you can’t give us like numbers, and you don’t want to guide. I completely accepted that. But if you could give us like a kind of idea of where things keep growing very fast, where things are slowing down in your order dynamics over the full year.

Infrastructure remains robust, as we have noted throughout this call. We continue to observe strength in infrastructure, particularly driven by hyperscale companies building their data centers and service providers like telecommunications companies. Our strength is evident in broadband access and gateways. It's understandable that this may be hard to visualize, but we are also seeing resilience in enterprise spending. In fact, we have not encountered many large enterprise customers whose IT budgets are expected to drop below 2022 levels. For most that we surveyed, spending is either stable or increasing as they prioritize the modernization of their platforms, workloads, and the digitization of their business models. This trend provides an explanation for the lack of a significant reduction in IT spending, even amid discussions of a potential global recession.

Thank you, Sherri. Broadcom currently plans to report its earnings for the first quarter of fiscal '23 after the close of the market on Thursday, March 2, 2023. A public webcast of Broadcom’s earnings conference call will follow at 2 p.m. Pacific. That will conclude our earnings call today. Thank you all for joining. Sherri, you may end the call.