Core Viewpoint - The legal department of Zeekr has issued a statement regarding the accountability for malicious dissemination of false information related to Weir Motor, confirming that recent online claims about the company's production methods are unfounded [1] Group 1: False Information and Investigation - Recent rumors allege that Weir Motor uses "manual stator winding" and include misleading site images, which have been confirmed as false information [1] - The so-called "production site photos" are actually from the relocation of Changzhou Longnai Intelligent Equipment Co., Ltd., which is not a regular production supplier for Weir Motor [1] - The individual who took the misleading photos is a former employee of Changzhou Longnai, who allegedly fabricated false information through illegal photography and misrepresentation [1] Group 2: Company Principles and Production Methods - Weir Motor adheres to the principle of "safety first, quality foremost" in its operations [1] - The company utilizes automated winding equipment for stator winding processes, contradicting the rumors of "manual stator winding" [1]

Core Insights - CyLogic has appointed Chris Aleshire as Senior Vice President of Strategic Partnerships and Global Alliances, bringing 25 years of experience in Federal cybersecurity and cloud engineering [1][2] - Aleshire's role will focus on aligning CyLogic's cloud offerings with federal and commercial security requirements, enhancing performance, scalability, and security [1] - The company aims to build a world-class team dedicated to data protection, compliance, and cybersecurity, with Aleshire seen as a key addition to achieve growth milestones [3] Company Overview - CyLogic specializes in security-first enterprise cloud solutions, offering services that protect sensitive data across various environments, including cloud and on-premises [3] - The company has developed CyCloud, the first FedRAMP High-Ready cloud solution for the commercial sector, utilizing VMware Cloud Foundation software and Dell hardware [3] - CyLogic's Cyber Platform is designed to enhance security posture for small and medium organizations, focusing on data protection and resilience [3]

Core Insights - Broadcom's Q4 FY2024 earnings report resulted in a stock surge of over 25% due to strong revenue growth and increased demand for custom AI chip technologies [1] - For the first time, Broadcom's market capitalization exceeded $1 billion [1] Company Analysis - The company employs a research-driven approach to identify high-conviction stocks with significant growth potential across sectors such as big tech, semiconductors, AI, and healthcare [1] - Broadcom's investment strategies include analyzing both low-risk and selective high-risk opportunities that could outperform the market [1] - Each investment idea is supported by thorough research and strategic foresight, aimed at helping investors navigate complex market conditions [1]

Core Insights - Broadcom Inc. is enhancing its VMware Cloud Foundation (VCF) platform to support the adoption of artificial intelligence, national digital sovereignty, and cyber resilience for organizations [1][2] - The company announced new innovations and partnerships at VMware Explore 2024 in Barcelona, aimed at accelerating generative AI application development and cybersecurity initiatives [1][2] VMware Cloud Foundation Innovations - VMware Cloud Foundation is positioned as the first private cloud platform that combines public cloud scale with private cloud security and performance, offering a low total cost of ownership [2] - The platform supports a unified cloud experience and faster infrastructure modernization, enabling organizations to deploy consistently across various environments [2] - New releases of VMware Cloud Foundation 5.2 and 5.2.1 have been made this year, with plans to deliver VMware Cloud Foundation 9 [2] Advanced Services and Data Management - Broadcom introduced VMware Tanzu Data Services for VCF to enhance deployment and management of critical data services, which are essential for AI applications [3] - The service aims to improve operational efficiency and data security, addressing challenges in deploying modern application architectures [3] Cyber Resilience and Security Enhancements - VMware Live Recovery will now support Google Cloud VMware Engine (GCVE) for both cyber and disaster recovery, providing a secure and simplified experience for protecting workloads [4] - The VMware vDefend Advanced Service for VCF now includes GenAI-based intelligent assistance to help IT security teams manage threats more effectively [5] Generative AI Services Expansion - Broadcom's Private AI strategy focuses on privacy and control, allowing organizations to quickly onboard new AI services [6] - The company announced support for Microsoft's Azure AI Video Indexer on VMware Private AI, facilitating video and audio analysis on various platforms [6] Training and Certification Initiatives - Broadcom is offering a 50% discount on VMware Certified Professional (VCP) and VMware Certified Advanced Professional (VCAP) certification exams for VMUG Advantage subscribers [7] - A new VMware Certified Professional - VCF Architect certification has been introduced to validate skills in designing VCF solutions [9] Private Cloud Modernization Support - Broadcom is continuing its investments in the Private Cloud Modernization Program to assist businesses in transitioning to private cloud environments [8] - A Private Cloud Maturity and Optimization tool is now available for partners to help customers realize the value of private cloud solutions [10] Sovereign Cloud Services - 50 VMware Cloud Service Providers (VCSPs) are now offering sovereign cloud services based on VCF, ensuring local operations and data residency [11] - VMware Cloud Foundation includes features that meet sovereign cloud requirements, such as privacy-enhancing computation and integrated data protection [12] Industry Context - The increasing importance of digital sovereignty is highlighted as organizations seek to maintain control over their data and operations [13]

Core Insights - Broadcom Inc. has previewed VMware Explore 2024, a significant cloud event, scheduled for August 26–29, 2024, in Las Vegas, followed by another event in Barcelona from November 4–7, 2024 [1][2] Event Highlights - VMware Explore 2024 will feature a general session with Broadcom leaders, VMware experts, and customers discussing advancements in private cloud, generative AI, app delivery, and edge computing [2][3] - The event will include over 500 sessions across five content tracks, hands-on learning opportunities, and access to top cloud providers [4] - Attendees will have the chance to earn VMware Certified Professional (VCP) and VMware Certified Advanced Professional (VCAP) certifications on-site [4] Industry Context - The event aims to support organizations in modernizing their data centers and leveraging generative AI within enterprise environments, providing a platform for networking and knowledge sharing among industry leaders and practitioners [3][6] - VMware Explore 2024 is positioned as a key event for cloud infrastructure, offering insights into simplifying cloud complexity and enhancing enterprise workload management [6][7]

Revenue Performance - Total revenue for the six months ended August 4, 2023, was $6.685 billion, a 4% increase from $6.424 billion in the same period of 2022[96]. - Subscription and SaaS revenue increased by 34% to $2.476 billion for the six months ended August 4, 2023, compared to $1.842 billion in the same period of 2022[96]. - License revenue decreased by 17% to $1.136 billion for the six months ended August 4, 2023, down from $1.369 billion in the same period of 2022[96]. - Annual Recurring Revenue (ARR) reached $5.3 billion as of August 4, 2023, up from $3.9 billion as of July 29, 2022[101]. - Remaining performance obligations totaled $12.9 billion as of August 4, 2023, with approximately 55% expected to be recognized as revenue over the next twelve months[104]. - Professional services revenue increased by 2% to $617 million for the six months ended August 4, 2023, compared to $604 million in the same period of 2022[102]. - Reseller revenue decreased by $88 million (6.7%) for the three months ended August 4, 2023, compared to the same period in 2022, while internal-use revenue increased significantly[126]. - Revenue from Dell accounted for 37% and 36% of the company's consolidated revenue for the three and six months ended August 4, 2023, respectively[127]. Cost and Expenses - Subscription and SaaS revenue cost increased by $6 million (3%) for the three months ended August 4, 2023, and by $22 million (6%) for the six months ended August 4, 2023, primarily due to increased equipment and depreciation costs[110][111]. - Cost of services revenue rose by $32 million (9%) for the three months ended August 4, 2023, and by $55 million (8%) for the six months ended August 4, 2023, driven by cash-based employee-related expenses and merger-related costs[112]. - Research and development expenses increased by $32 million (5%) for the three months ended August 4, 2023, and by $90 million (7%) for the six months ended August 4, 2023, mainly due to higher cash-based employee-related expenses[115]. - Sales and marketing expenses grew by $25 million (3%) for the three months ended August 4, 2023, and by $77 million (4%) for the six months ended August 4, 2023, attributed to higher commission costs and retention compensation[114][116]. - General and administrative expenses increased by $5 million (2%) for the three months ended August 4, 2023, and by $133 million (30%) for the six months ended August 4, 2023, primarily due to merger-related costs and legal fees[119]. Financial Position - Total unearned revenue as of August 4, 2023, was $12.090 billion, down from $12.743 billion as of February 3, 2023[100]. - Cash provided by operating activities increased by $791 million to $2.194 billion for the six months ended August 4, 2023, compared to $1.402 billion for the same period in 2022[135]. - The company held cash and cash equivalents of $6.801 billion as of August 4, 2023, compared to $5.100 billion as of February 3, 2023[130]. - The company has unsecured senior notes with a net carrying value of $9.2 billion as of August 4, 2023, with interest paid of $114 million during the six months ended August 4, 2023[138]. - Cash used in investing activities increased by $79 million to $200 million for the six months ended August 4, 2023, compared to $121 million for the same period in 2022[136]. - Cash used in financing activities decreased by $1.4 billion to $298 million for the six months ended August 4, 2023, primarily due to the absence of a $1.5 billion repayment against a senior unsecured term loan facility[137]. - Financing fees from transactions financed through Dell Financial Services were $21 million for the six months ended August 4, 2023, compared to $17 million for the same period in 2022[131]. Investment and Tax - Investment income surged by $67 million (935%) for the three months ended August 4, 2023, and by $130 million compared to the same period in 2022, driven by higher investment yields[120]. - Interest expense rose by $6 million (8%) for the three months ended August 4, 2023, and by $15 million (10%) for the six months ended August 4, 2023, due to higher interest rates on the senior unsecured term loan[118][121]. - Other income (expense), net improved by $40 million (206%) for the three months ended August 4, 2023, and by $55 million for the six months ended August 4, 2023, influenced by changes in investment gains and foreign currency exchange[122][123]. - The effective income tax rate decreased to 15.0% for the three months ended August 4, 2023, from 27.6% in the prior year, primarily due to a discrete tax benefit recognized[124]. - The Transition Tax liability related to accumulated earnings of foreign subsidiaries was $334 million as of August 4, 2023, expected to be paid over the next two years[132]. Strategic Developments - The company is experiencing a shift towards subscription and SaaS offerings, impacting the growth rate of license revenue[99]. - Operating margin was negatively impacted due to incremental investments in the subscription and SaaS portfolio during the six months ended August 4, 2023[93]. - The Broadcom merger transaction is expected to be consummated on October 30, 2023, pending regulatory approvals[94]. - The company plans to continue a balanced capital allocation policy, including investments in product offerings and acquisitions[132]. - Customer deposits from transactions with Dell increased to $1.1 billion as of August 4, 2023, up from $766 million as of February 3, 2023[128].

Revenue Growth and Performance - Subscription and SaaS revenue increased by 35% to $1.217 billion in Q1 2024 compared to $899 million in Q1 2023[98] - Total revenue grew 6% to $3.277 billion in Q1 2024 compared to $3.088 billion in Q1 2023[98] - International revenue grew 10% to $1.722 billion in Q1 2024 compared to $1.570 billion in Q1 2023[98] - Annual Recurring Revenue (ARR) for subscription and SaaS reached $4.8 billion as of May 5, 2023, up from $3.7 billion in the same period last year[103] Revenue Decline and Challenges - License revenue decreased by 10% to $517 million in Q1 2024 compared to $572 million in Q1 2023[98] - Software maintenance revenue decreased by 6% to $1.234 billion in Q1 2024 compared to $1.310 billion in Q1 2023[98] - Unearned subscription and SaaS revenue stood at $4.386 billion as of May 5, 2023, slightly down from $4.401 billion as of February 3, 2023[102] - Total backlog decreased to $28 million as of May 5, 2023 from $72 million as of February 3, 2023[109] Cost and Expense Increases - Cost of subscription and SaaS revenue increased by 8% to $202 million in Q1 2024 compared to $187 million in Q1 2023[112] - Cost of services revenue increased by $23 million (7%) to $375 million, driven by $29 million growth in cash-based employee-related expenses[114] - Research and development expenses rose by $72 million (9%) to $847 million, primarily due to $56 million increase in cash-based employee-related expenses[115] - Sales and marketing expenses grew by $50 million (5%) to $1,104 million, mainly from $30 million higher commission costs and merger-related expenses[116] - General and administrative expenses surged by $122 million (49%) to $373 million, largely due to $85 million accrual for patent lawsuit and $52 million merger-related costs[118] - Total expenses increased by 6% to $397 million, representing 26% of services revenue[113] Financial Position and Cash Flow - Cash and cash equivalents increased to $6,548 million, with operating cash flow growing by $744 million to $1,750 million[129][131] - Cash used in investing activities increased by $23 million in Q2 2023 compared to Q2 2022, primarily due to the absence of proceeds from sales of equity securities[132] - Cash used in financing activities decreased by $628 million in Q2 2023 compared to Q2 2022, driven by the absence of a $750 million senior unsecured term loan repayment and suspension of stock repurchase programs[133] - The company repurchased $94 million worth of shares for tax withholdings on restricted stock vesting in Q2 2023[134] Debt and Interest Expenses - The company has $9.2 billion in unsecured senior notes outstanding as of May 5, 2023, with interest payments of $67 million in Q2 2023[135] - The company has a $4.0 billion senior unsecured term loan facility, with an outstanding balance of $1.2 billion as of May 5, 2023 and interest payments of $17 million in Q2 2023[136] - Interest expense rose by $9 million (13%) to $80 million, primarily from higher rates on senior unsecured term loan facility[120] Investment and Income - Investment income increased significantly by $63 million to $64 million, driven by higher yields on cash equivalents[119] Tax and Legal Provisions - Effective income tax rate remained stable at 25.0%, with $75 million income tax provision[124] Strategic and Forward-Looking Statements - The company suspended its stock repurchase program in connection with the Merger Agreement and did not repurchase any common stock after Q1 2023[137] - The company's forward-looking statements include expectations regarding the timing and completion of the proposed transaction with Broadcom, future financial performance, and impacts of corporate transactions[139] - The company's market risk exposures remained unchanged during Q2 2023[142] Revenue from Key Partners - Revenue from Dell accounted for 36% of total revenue, with $1,156 million in reseller revenue and $13 million in internal-use revenue[127] Remaining Performance Obligations - Remaining performance obligations totaled $13.0 billion as of May 5, 2023, with 54% expected to be recognized within the next 12 months[107]

Tax Liabilities and Agreements - The company is subject to potential tax liabilities due to its former controlling ownership by Dell, which could adversely affect its operating results and financial condition[91]. - The company has entered into Tax Agreements with Dell that govern its potential liabilities for other members of the consolidated tax groups, which could impact its financial condition[91]. - The 2017 Tax Cuts and Jobs Act requires the company to amortize research and development expenditures over five to fifteen years, increasing its cash taxes starting in fiscal 2023[93]. - The company is undergoing audits by the IRS for fiscal years 2015 through 2019, which may result in additional tax assessments that could materially affect its financial condition[93]. - The Inflation Reduction Act introduces a 15% corporate alternative minimum tax on adjusted financial statement income for companies with profits exceeding $1 billion, effective from fiscal 2024[94]. - The company may be liable for tax liabilities if the Spin-Off is later determined to not be tax-free, which could materially affect its operating results[92]. - VMware's income tax provision will be reported separately from Dell's consolidated tax group following the Spin-Off, impacting future tax reporting[255]. - VMware's unrecognized tax benefits increased to $575 million as of February 3, 2023, from $527 million as of January 28, 2022[357]. - VMware's payments to Dell under the Tax Agreements were $49 million for the year ended February 3, 2023, compared to $36 million for the year ended January 28, 2022[353]. - As of February 3, 2023, amounts due to Dell related to the Transition Tax were $445 million, down from $504 million as of January 28, 2022[354]. Cybersecurity Risks - Cybersecurity risks are increasing, with potential breaches threatening proprietary information and IT service interruptions, impacting the company's operations[95]. - The company relies on third-party systems for various business functions, increasing exposure to cyber risks and vulnerabilities[95]. - The company is considered an essential supplier in the digital supply chain for the U.S. government, making it a target for cyber-attacks[95]. - VMware faces significant cybersecurity risks due to increased remote work and geopolitical tensions, which may lead to delays in detection and response to cyber-attacks[96]. - The complexity of VMware's technical environment increases the risk of undetected errors and vulnerabilities in products, potentially impacting customer security[97]. - VMware's reliance on third-party information systems for business operations poses risks, as failures could disrupt order processing and service delivery[99]. - Ongoing legal and regulatory inquiries, including those related to cybersecurity incidents, could divert management resources and negatively impact VMware's reputation and financial condition[100]. Financial Performance - Total revenue for the year ended February 3, 2023, was $13.35 billion, an increase from $12.85 billion in 2022, representing a growth of approximately 3.9%[205]. - Subscription and SaaS revenue reached $4.01 billion, up from $3.21 billion in the previous year, marking a significant increase of 25.1%[205]. - Net income for the year was $1.31 billion, a decrease from $1.82 billion in 2022, reflecting a decline of 27.8%[205]. - Operating income for the year was $2.02 billion, down from $2.39 billion in 2022, a decline of 15.3%[205]. - Research and development expenses increased to $3.32 billion, up from $3.06 billion in the previous year, reflecting a growth of 8.5%[205]. - The effective income tax provision for the year was $478 million, compared to $265 million in 2022, representing an increase of 80.8%[205]. - VMware's total assets increased to $31,237 million in fiscal 2023 from $28,676 million in fiscal 2022, representing a growth of 5.5%[212]. - Cash and cash equivalents rose to $5,100 million in fiscal 2023, up from $3,614 million in fiscal 2022, marking an increase of 41.0%[212]. - VMware's total liabilities slightly increased to $29,703 million in fiscal 2023 from $29,552 million in fiscal 2022[212]. - The company generated $4,300 million in net cash from operating activities in fiscal 2023, a decrease of 1.3% from $4,357 million in fiscal 2022[215]. - VMware's unearned revenue grew to $7,079 million in fiscal 2023, up from $6,479 million in fiscal 2022, indicating an increase of 9.3%[212]. - VMware's stockholders' equity improved to $1,534 million in fiscal 2023, compared to a deficit of $876 million in fiscal 2022[212]. - VMware's long-term debt decreased to $9,440 million in fiscal 2023 from $12,671 million in fiscal 2022, a reduction of 25.5%[212]. Governance and Ownership - The company has restrictions on taking certain actions post-Spin-Off that could impact its strategic transactions without Dell's consent[92]. - Potential conflicts of interest exist within VMware's Board of Directors due to overlapping relationships with Dell, which may affect corporate opportunities[105]. - MSD Stockholders and SLP Stockholders hold significant influence, owning 39.5% and 9.8% of VMware's outstanding stock respectively, totaling 65.5% of Dell's outstanding stock as of March 21, 2023[106]. - The company has a stockholders agreement allowing MSD Stockholders to nominate two board members and SLP Stockholders to nominate one, potentially impacting governance[106]. - Anti-takeover provisions in Delaware law and company bylaws may delay or prevent changes in control, potentially affecting stockholder interests[108]. ESG and Sustainability - The company is committed to its 2030 Agenda for ESG goals, focusing on sustainability, equity, and trust, which may impact reputation and financial performance if not met[115]. - The company is actively developing internal systems to ensure accurate and timely reporting on ESG progress, aligning with emerging standards[115]. - Climate change poses long-term risks to business operations, including potential disruptions from extreme weather events and increased operational costs[113]. Revenue Recognition and Contracts - VMware's revenue is derived from licensing software, maintenance and support, subscriptions, hosted services, training, and consulting services, with significant judgments impacting revenue recognition timing and amounts[229]. - License revenue is recognized at a point in time upon delivery, while subscription and SaaS revenue is recognized ratably over the contract term, reflecting a shift in revenue recognition for certain term-based licenses[231][232]. - VMware's subscription and SaaS offerings typically have durations of one month, one year, or three years, with revenue recognized based on customer consumption or ratably over the contract term[232]. - The company introduced termination for convenience clauses in certain enterprise agreements, affecting revenue recognition for term-based licenses, which are now recognized as subscription and SaaS revenue[232]. - VMware evaluates contracts with multiple performance obligations and allocates total transaction value based on relative standalone selling prices[235]. - The allowance for credit losses was not significant as of February 3, 2023, and January 28, 2022, indicating a stable collection environment[244]. - VMware's return policy generally does not allow product returns for refunds, with reserves for product returns recorded based on historical return rates[237]. - The company recognizes revenue from professional services based on progress made toward total project effort, with fixed fee engagements recognized accordingly[234]. Foreign Exchange and Investments - The company is exposed to foreign exchange risks due to operations in multiple currencies, which may adversely affect revenue[110]. - VMware's foreign subsidiaries primarily use the U.S. dollar as their functional currency, with net gains and losses from foreign exchange transactions recorded in other income[239]. - VMware utilized derivative financial instruments, primarily foreign currency forward contracts, to manage foreign exchange risk associated with approximately 30% of sales denominated in foreign currencies[190]. - A hypothetical adverse foreign currency exchange rate movement of 10% could have resulted in a potential loss of $233 million in the fair value of forward contracts as of February 3, 2023[190]. - The carrying value of VMware's strategic investments was $87 million as of February 3, 2023, down from $163 million in the previous year, indicating a decrease of 46.7%[191]. - VMware's forward contracts had a total notional value of $677 million and $642 million as of February 3, 2023, and January 28, 2022, respectively[328]. Legal and Regulatory Matters - VMware's legal proceedings include ongoing litigation related to patent infringements, with a jury awarding approximately $237 million in damages in a previous case[284]. - Non-compliance with government contracting regulations could lead to penalties, including contract termination and suspension from future government contracts[104]. Other Financial Metrics - Advertising expenses for the year ended February 3, 2023, were $24 million, down from $35 million in 2022 and $33 million in 2021, indicating a decrease of 31.4% year-over-year[252]. - Total billings for the year ended February 3, 2023, were $10.5 billion, compared to $9.1 billion in 2022, reflecting a year-over-year increase of 15.4%[270]. - The aggregate transaction price allocated to remaining performance obligations as of February 3, 2023, was $13.6 billion, with approximately 54% expected to be recognized as revenue over the next twelve months[271]. - Customer deposits as of February 3, 2023, totaled $1.1 billion, which included $681 million in customer prepayments and $405 million in cloud credits[267]. - Deferred commissions included in other assets were $1.5 billion as of February 3, 2023, up from $1.2 billion in 2022, indicating a growth of 25%[268]. - Reseller revenue for the year ended February 3, 2023, was $5,039 million, an increase of 5.8% from $4,764 million in 2022[275]. - Internal-use revenue decreased to $54 million in 2023 from $56 million in 2022[275]. - VMware's minimum contractual commitments as of February 3, 2023, totaled $261 million, including purchase obligations and asset retirement obligations[288]. - VMware's ongoing related party transactions with Dell include purchasing products and services, which incurred costs primarily related to salaries and benefits[277].

Revenue Performance - Total revenue for the nine months ended October 28, 2022, was $9.635 billion, representing a 3% increase from $9.320 billion in the same period of the previous year[130]. - Subscription and SaaS revenue increased by 21% to $2.830 billion for the nine months ended October 28, 2022, compared to $2.336 billion for the same period in 2021[130]. - Annual recurring revenue (ARR) reached $4.1 billion as of October 28, 2022, up from $3.3 billion as of October 29, 2021[133]. - License revenue decreased by 5% to $1.990 billion for the nine months ended October 28, 2022, compared to $2.093 billion for the same period in 2021[130]. - Revenue from Dell accounted for 37% of consolidated revenue for the three months ended October 28, 2022, compared to 38% in the same period in 2021[162]. - Reseller revenue for the three months ended October 28, 2022, was $1,184 million, slightly up from $1,183 million in the same period in 2021[163]. Financial Outlook and Expectations - The company expects operating margin to be negatively impacted in fiscal 2023 due to increased investment in subscription and SaaS offerings[124]. - The company expects fluctuations in backlog amounts and composition, which are not indicative of future sales or revenue[140]. - The company expects annual interest expense associated with the 2021 Senior Notes to be approximately $100 million[155]. - The company expects to use free cash flow primarily to repay outstanding indebtedness through the end of fiscal 2023[172]. Backlog and Performance Obligations - As of October 28, 2022, the aggregate transaction price allocated to remaining performance obligations was $11.9 billion, with approximately 56% expected to be recognized as revenue over the next twelve months[139]. - Total backlog as of October 28, 2022, was $85 million, with $35 million excluded from remaining performance obligations due to cancellation clauses[140]. Expenses and Costs - Cost of subscription and SaaS revenue increased by 11% to $189 million for the three months ended October 28, 2022, and by 16% to $565 million for the nine months ended October 28, 2022[145]. - Research and development expenses rose by 4% to $669 million for the three months ended October 28, 2022, and by 6% to $1.968 billion for the nine months ended October 28, 2022[149]. - Sales and marketing expenses increased by 5% to $977 million for the three months ended October 28, 2022, and by 6% to $2.938 billion for the nine months ended October 28, 2022[151]. - Cost of services revenue increased by 4% to $353 million for the three months ended October 28, 2022, and by 7% to $1.049 billion for the nine months ended October 28, 2022[147]. - Total expenses for research and development reached $832 million for the three months ended October 28, 2022, reflecting an 8% increase compared to the same period in 2021[149]. - The increase in sales and marketing expenses was driven by higher commission costs of $60 million and increased stock-based compensation of $51 million[151]. - General and administrative expenses decreased by $38 million (13%) for the three months ended October 28, 2022, compared to the same period in 2021, primarily due to the absence of $66 million in costs related to the Spin-Off[153]. Cash Flow and Financing Activities - Cash and cash equivalents as of October 28, 2022, were $3.972 billion, an increase from $3.633 billion as of January 28, 2022[170]. - Net cash provided by operating activities decreased by $553 million to $2.667 billion for the nine months ended October 28, 2022, compared to $3.220 billion for the same period in 2021[173][174]. - Cash used in financing activities increased by $6.873 billion during the nine months ended October 28, 2022, primarily due to the absence of net cash proceeds from senior notes issuance in the prior year[176]. - The company has unsecured senior notes outstanding with an aggregated carrying value of $9.2 billion as of October 28, 2022[178]. - Cash used in investing activities increased by $19 million during the nine months ended October 28, 2022, primarily due to increased additions to property and equipment[175]. - Interest paid for the Senior Notes was $184 million for the nine months ended October 28, 2022, compared to $139 million for the same period in 2021[178]. Geopolitical and Regulatory Impact - The company suspended sales and services in Russia and Belarus in response to geopolitical events, with no material impact on financial statements expected[127]. - The merger agreement with Broadcom is expected to be consummated in Broadcom's fiscal year 2023, pending regulatory approvals[126]. - The company entered into a Merger Agreement with Broadcom, which includes a termination fee of $1.5 billion if the transaction does not close by February 26, 2023[172]. Tax and Other Financial Metrics - The effective income tax rate for the three months ended October 28, 2022, was 27.6%, up from 12.9% in the same period in 2021, driven by a higher estimated annual income tax rate due to changes in tax laws[159]. - Other income (expense), net showed a decrease of $24 million (221%) for the three months ended October 28, 2022, compared to the same period in 2021, primarily due to net losses on investments in equity securities[158]. - Interest expense increased by $49 million (28%) for the nine months ended October 28, 2022, compared to the same period in 2021, driven by the issuance of $6.0 billion in unsecured senior notes[155].

Revenue Performance - Total revenue for the six months ended July 29, 2022, was $6.424 billion, representing a 5% increase from $6.132 billion in the same period of 2021[123]. - Subscription and SaaS revenue increased by 22% to $943 million for the three months ended July 29, 2022, compared to $776 million in the same period of 2021[123]. - Annual recurring revenue (ARR) reached $3.9 billion as of July 29, 2022, up from $3.2 billion as of July 30, 2021[126]. - Remaining performance obligations totaled $12.1 billion as of July 29, 2022, with approximately 56% expected to be recognized as revenue over the next twelve months[132]. - License revenue for the six months ended July 29, 2022, was $1.369 billion, a decrease of 1% from $1.384 billion in the same period of 2021[123]. - Professional services revenue increased by 5% to $604 million for the six months ended July 29, 2022, compared to $575 million in the same period of 2021[127]. - Reseller revenue for the three months ended July 29, 2022, was $1,313 million, an increase from $1,162 million in the same period in 2021[156]. - Revenue from Dell accounted for 40% of consolidated revenue for the three months ended July 29, 2022, compared to 37% in the same period in 2021[155]. - Revenue recognized on transactions financed through Dell Financial Services (DFS) was $17 million for the six months ended July 29, 2022, compared to $15 million for the same period in 2021[160]. Expenses and Costs - Cost of license revenue for the three months ended July 29, 2022, was $39 million, remaining flat compared to $37 million for the same period in 2021[135]. - Cost of subscription and SaaS revenue increased by 16% to $190 million for the three months ended July 29, 2022, compared to $165 million for the same period in 2021[137]. - Cost of services revenue increased by 5% to $344 million for the three months ended July 29, 2022, compared to $328 million for the same period in 2021[139]. - Research and development expenses rose by 5% to $657 million for the three months ended July 29, 2022, compared to $625 million for the same period in 2021[142]. - Sales and marketing expenses increased by 5% to $987 million for the three months ended July 29, 2022, compared to $942 million for the same period in 2021[144]. - Total expenses for the three months ended July 29, 2022, were $1,080 million, up from $1,023 million for the same period in 2021, reflecting a 6% increase[144]. - General and administrative expenses increased by $20 million (4%) for the six months ended July 29, 2022, compared to the same period in 2021, primarily due to increased employee-related expenses and stock-based compensation[146]. - Cash-based employee-related expenses increased significantly across all categories, driven by headcount growth and salary increases[133]. - Increased travel-related expenses were noted due to lifted COVID-19 restrictions, impacting both sales and marketing expenses[144]. Financial Position and Cash Flow - Cash and cash equivalents decreased from $3.633 billion as of January 28, 2022, to $3.242 billion as of July 29, 2022[162]. - Net cash provided by operating activities was $1.402 billion for the six months ended July 29, 2022, down from $2.130 billion for the same period in 2021, a decrease of $728 million[165][166]. - Cash used in financing activities increased by $838 million during the six months ended July 29, 2022, primarily due to the repayment of $1.5 billion towards a senior unsecured term loan facility[168]. - Cash used in investing activities decreased by $23 million during the six months ended July 29, 2022, compared to the same period in 2021[167]. - The company has unsecured senior notes with an aggregated carrying value of $9.2 billion as of July 29, 2022, with interest paid amounting to $117 million for the six months ended July 29, 2022[169]. - The company plans to use free cash flow primarily to repay outstanding indebtedness through the end of fiscal 2023[163]. Strategic Developments - The company expects operating margin to be negatively impacted in fiscal 2023 due to increased investment in subscription and SaaS offerings[117]. - The company suspended sales and services in Russia and Belarus in response to geopolitical events, with no material impact on financial statements expected[120]. - The merger agreement with Broadcom includes a cash consideration of $142.50 per share or an exchange ratio of 0.25200 shares of Broadcom common stock[118]. - The Merger Agreement with Broadcom includes a termination fee of $1.5 billion if the transaction does not occur by February 26, 2023[163]. - The company suspended its stock repurchase program in connection with the Merger Agreement and did not repurchase common stock during the three months ended July 29, 2022[172]. Tax and Interest - Interest expense rose by $45 million (46%) for the six months ended July 29, 2022, compared to the same period in 2021, driven by the issuance of $6.0 billion in unsecured senior notes[148]. - The income tax provision for the three months ended July 29, 2022, was $132 million, with an effective tax rate of 27.6%, up from 14.4% in the same period in 2021[152]. - The effective tax rate may be significantly affected by the composition of earnings in U.S. and non-U.S. jurisdictions, particularly with the impact of the Inflation Reduction Act starting in fiscal 2024[152]. - The liability related to the one-time Transition Tax was $445 million as of July 29, 2022, expected to be paid over the next three years[163]. - The company expects annual interest expense associated with the 2021 Senior Notes to be approximately $100 million[148]. Customer and Market Dynamics - Customer deposits from transactions with Dell were $359 million as of July 29, 2022, up from $298 million as of January 28, 2022[157]. - Purchases and leases of products and services from Dell amounted to $53 million for the three months ended July 29, 2022, down from $61 million in the same period in 2021[159]. - Other income (expense), net decreased by $24 million for the three months ended July 29, 2022, resulting in a 528% decline compared to the same period in 2021, primarily due to net losses on investments in equity securities[150].