Broadcom Inc. (AVGO) Earnings Call Transcript & Summary

[Audio Gap] several years and then, more recently, had the pleasure to take on the role of running the software business. Just to level set everybody, Broadcom started out, obviously, as Avago. We did a number of acquisitions in the semiconductor space. We then added on to the portfolio by buying Brocade, which is in the Fibre Channel SAN switching business. And then more recently, in 2018, then 2019 bought CA and Symantec. What we're going to talk about today in the business that I'm responsible for is CA and Symantec. We have 2 reporting segments, I think most of you know, semiconductors and infrastructure software. Infrastructure software includes Brocade. What we're going to talk about today actually excludes Brocade. So this is really CA and Symantec. CA closed in November of '18, funny enough, about 3 years ago. And Symantec actually closed 1 year later in 2019. So with that, just at a glance, this is a business that does $5.2 billion of annual recurring revenue. We actually are very much focused on serving the largest enterprises in the world. The vast majority of our business comes from the Fortune 500. Our investment thesis is all around R&D, operations support. 80% of our workforce is actually totally focused in those areas. You can see that we spend about 14% of our R&D -- of our revenues on R&D on an annualized basis. We have a lot of technology and a lot of IP that's been developed over a number of years for continuing to invest in our products and our road maps. And then finally, with our model, given that we're an incumbent, we've been -- have a long operating history, been around a long time, our customer satisfaction score is really important. That ties to our support. And we're running in the high 90s, which is great. I'm going to spend a bunch of time on this slide. I think this really helps articulate our business model and how we take -- we think are fundamentally undervalued companies, buy them from the public market and actually turn them into great businesses, great cash flow generation in areas where we can actually sustain and grow revenues over time. So we are focused on the largest enterprise customers. What does that really mean? What it really means is, we're looking at businesses and customers that are fundamentally actually on-prem first. So these are companies that are investing significantly in their own private data centers. They have a long history of operating those data centers, and then we're seeing them expand dramatically their footprints, actually on an on-prem basis. It's not that they don't leverage the cloud. They certainly do, and they're moving workloads to the cloud every day, but they're very much hybrid and we think are going to be hybrid in perpetuity. And so that's really the focus of our business model. Beyond that, there's a tremendous amount of complexity and heterogeneity in terms of their environments. That means the existing infrastructure that they have, what they're doing in the cloud, all actually tailors toward the incumbent. And I'm going to go into all that in a lot more detail, then the 3 GMs are going to speak to this, are going to talk about what they've been doing in the past, but also where the roadmaps are going forward to support those organizations. Typically, they're also very regulated. So regulated risk-averse companies. Big, large IT budgets, those budgets are expanding actually quite rapidly, which is great for our business fundamentally, but they're also quite risk-averse. So what does that mean? They also have a lot of legacy environments. They have new workloads. And when you look at all of that, it really does favor the incumbent, which is really CA, Symantec and we're doing going forward. Our market is very much focused -- our go-to-market model is very much focused on these customers. So who are these customers? 600 of them actually today. So we have a highly strategic focus. And we'll get into what that means for the financial model, but it means basically our go-to-market and our selling costs are dramatically lower than a typical software business. If you look at the stats, 70% of the ARR that we drive, that $5.2 billion I mentioned, is actually from these 600 strategic accounts. They all have the characteristics of the businesses I talked about on the prior slide. 96 of those accounts, when we think about scale, actually have $10 million or more of recurring revenue a year. And actually, more than 600 of our accounts do more than $1 million a year of ARR. We organize ourselves, from a model standpoint, both with the business units as well as our go-to-market, totally focused on the priorities of these 600 strategic accounts. We obviously have different levels of focus between platinum, gold and silver in terms of our go-to-market. I won't spend a lot of time on that. And then behind that, we actually have a long tail of enterprise accounts, which are good customers. We're very much focused on making sure the products that are installed are current, and we're also focused on making sure we deliver great customer support. And that makes up the bulk of the rest of the business. In the long tail, which we call commercial, this is a small part of our business today. This is a part of the business that's attriting over time. And so our objective is really to grow with the strategic accounts, sustain with the enterprise accounts and then let the commercial accounts attrit, as I discussed. Thinking about the strategic customers. When we think about how do we grow from here, $5.2 billion of ARR, we really are looking at a couple of things that fundamentally drive growth. One is the fact that we actually have a tailwind from a market perspective. The markets we're in are growing, infrastructure, security, just as a level set, infrastructure is about a $3 billion business for us. Security is about $2 billion. So just to give you an idea. And these markets -- when we'll get into this in a lot more detail in the GM presentations, they're growing. We're seeing our customers who have very large IT budgets. I mean these budgets are typically $1 billion plus, some of them are $10 billion plus. They're really not as concerned about the budget, but they're mostly focused around vendor consolidation, capabilities and what they can do with their incumbent solutions. And so what we've seen is markets growing, actually relatively quickly, especially in these areas. But then on top of that, there's a bunch of organic things we can do. You can see the stat here, 80% of our customers on the strategic side actually are already licensed to 5-plus of our solutions. And so what we see is 2 fundamental opportunities. One, we can expand. So we can expand our footprint within these accounts in terms of under-deployment or vendor consolidation with software that's already being used today. The second area where we've been focused is actually on cross-selling and up-selling. So we can actually take a customer that has 3 or 4 of our solutions and then add on solutions that they don't already use today. We have a very focused enterprise license agreement approach, ELA, as you might hear that term. We're actually providing multiyear contracts where they can take advantage of our solutions across the portfolio. And we're really just at the beginning of that. Symantec, we've just integrated and rationalized that business over the last couple of years. CA, we've been running the business for 3 years, but this is really the upside opportunity in terms of driving growth. The market is growing. We can improve our installed base with what we already have embedded in these accounts, but then we can also up-sell and cross-sell. And so we're really looking forward to that. So with that in mind, what I wanted to do is actually take a look at some stats, and we haven't done a lot of disclosure today, but I think this will give you some insights into how we've been doing the last year. And these are things that we're going to track and look at going forward and hopefully be able to report out to you on a more regular basis. But if you look at large strategic deals, this is a sort of a key indicator for us. We've been driving 330 deals above $1 million over the last 12 months this year, which is up sharply from where we were a year ago, running about 285 deals above $1 million. Now how does that translate into bookings? Well, you can see we've actually booked on a trailing 12-month basis about $1.8 billion of bookings across those deals relative to the $1.1 billion at the end of last year. And so what we really focus on is large customers where we're the incumbents, where we see opportunity to improve our installed base, where we see opportunity to cross-sell. And that really translates into larger deals, larger number of deals and larger deal sizes. And so this is a key indicator for us. Similarly, we've been very focused on driving multiyear bookings. Part of our model is being able to provide visibility, not only for ourselves, but for our customers in terms of their budgets and their ability to expand their footprint without having to actually come back to us necessarily and buy more within the time frame of the contract. And so you can see how we're driving strategic deals with these accounts. If we go to last year where we were still integrating and rationalizing Symantec, we're running about 1.5 years average deal duration. Today, we're actually all the way up to 2.3 years. So a big improvement, not just in deal size, number of deals, but also the duration of the contracts that we're driving. And so you can see this trending more towards 3 years is sort of the optimized amount. I think, given the mix of enterprise and some commercial accounts, it will end up being about 2.5 years. We've made a tremendous amount of progress on this front, and we're really looking forward to continue to do that. Looking at ARR, I know this is an important statistic. It's something that we track regularly and something that we wanted to report out on today. When we exited last year, ARR was sub-$5 billion, and our total renewable backlog, which ties to the duration of the contracts, was running about 12.9 years. Big improvements here. We still have a lot of work to do, but ARR is actually up to $5.2 billion exiting Q3. If I annualize that, that's nearly 6% growth on a year-over-year basis. And I think as importantly, the renewable backlog is actually up to $14.4 billion. It's actually up double digits year-to-date. And so our focus right now is leveraging the market tailwinds, leveraging the fact that we have a lot of up-sell and cross-sell opportunities. We continue to improve the amount of usage from an installed base perspective. We think we can grow ARR mid-single digits consistently over time. And we also think we'd continue to improve on that total renewable backlog, which obviously improves the visibility in the business. And let's just really, frankly, focus on customer success. Let's focus on making sure that we're doing a good job for our customers from a support standpoint, but make sure we're also driving adoption that the customers value across the organizations. And the GMs are going to talk a lot more about that within their individual business units. And then finally, I think just as importantly, we're also focused on quality of revenue. I think when we bought CA and we certainly bought Symantec, there was still a pretty significant mix of perpetual license models, as well as term license models, as well as some of the SaaS-based cloud businesses they had. So if you look at last year when we exited the year, we were running actually about 43% subscription relative to maintenance. And what we really focused on is we've stopped selling perpetual licenses. We're totally focused on selling subscription license on a multiyear basis. And so you've seen a big improvement on that front as well. Today, 53% of our mix is actually subscription, with 47% on maintenance. I expect this to continue to meaningfully improve over time. In fact, I think subscription should be 90%-plus of our business over the next several years. To give you an idea, subscription bookings are actually up 25-plus percent on a year-over-year basis this year. So big focus on quality of revenue, translating older maintenance-based contracts into subscription-based enterprise license agreements. And I think this will, again, improve the quality of the revenue and the quality of the business as we look forward. Finally, on the software financial model. So I've talked a lot about the business model. I've talked about how we're able to take businesses, rationalize them, integrate them. Fundamentally, though, beyond just the revenue growth and how we're driving revenue growth, what we're really doing is we're reinvesting in the R&D. We're reinvesting -- these businesses we bought, we're running about 17%. We're running 14%. And the discrepancy there is the focused approach. Our priorities are all around these 600 strategic accounts. That allows us to focus our R&D resources in terms of their priorities, so we're not as levered across a broader set of customers, including SMB customers that have different needs and drive more R&D investment. But nonetheless, we're still investing at a pretty meaningful clip. If you look at sales and marketing, though, this is where there's a dramatic difference. When you buy companies that are incumbents, you buy companies that have been incumbents at these largest enterprise accounts for, in many cases, more than a decade, sometimes for more than 2 decades, you're already there, you're already installed. You already are basically doing renewals. So the question is, okay, as I'm driving upgrades, as I'm driving expansion, as I'm driving cross-selling, I don't have to spend a lot of money trying to land new accounts or land new products outside of my core account base. And so in the past, when we look at software businesses, and this goes for a lot of companies, they're actually spending far more on sales and marketing than they are in R&D, which is very much different than how Broadcom has operated historically and how we operate going forward. So you can see, we actually took a business -- or a set of businesses that were driving 30% sales and marketing as a percent of revenue, and we've driven that down into the single digits. And I think this will actually continue to scale with time. And so we see going forward we can drive 5%-plus revenue growth, very much focused on recurring revenues, very much focused on subscription-led revenues. We can drive gross margins in the mid-90s. We can continue to sustain our R&D investment, kind of in this mid-teens level. And we can drive sales and marketing over time in the 6%, 7% range. What does that mean in terms of cash flows and operating margins? Well, today, we're running about 70%. Now this excludes G&A, but G&A, Broadcom runs about 1%, 1.5%. So you can see there's not much discrepancy between operating margin here without the G&A and with the G&A. But nonetheless, 70% on $5.2 billion plus of ARR that's growing 5% is a business that's on track to generate $4 billion of operating income here over the next couple of years. So it's a great business. There's a lot of work to do. There's a lot of organic focus right now in terms of driving that growth. I think we're in a new phase. We've bought a couple of companies. We've gone through a lot of rationalization and integration, but I think we have an integrated team. We've got great leadership, and I'm really actually pretty excited about the future. And hopefully, through this little snapshot in terms of where we are, you get some insights into the quality of the business and some of the metrics. And then for most of the substance, I'll turn it over to the general managers. They're going to walk through each of those businesses for you. First and foremost will be Greg Lotko, who runs our mainframe business. I think just to take a minute on CA. I think when we bought CA, similar to our investment thesis around LSI or when we bought Broadcom or Brocade, fundamentally, we knew we had to get one thing right. And I think that was in the case of CA, is the mainframe business. And our view was fundamentally different than the public markets. Our view was that mainframe was not only sustaining, but actually it was growing in these strategic accounts. And we saw an opportunity to reinvest and actually increase R&D and focus on the mainframe business to actually drive a lot more value. And that's exactly what's happened. Fundamentally, through Greg and his leadership team, we have really done a great job actually not just stabilizing that business but growing that business. It's a key anchor tenant in the portfolio, and it's a big part of the reason CA has been such a successful investment. So with that, let me turn this over to Greg, and he can go through that business. Thank you.

I'm not sure if I did that or you did that, but that's okay. It happens. So think about your day, think about today. Many of you probably used a debit card or credit card, maybe you bought that coffee on the way here. You might have shipped a package. You might have checked a bank balance. Odds are a mainframe has already been involved with your day today. And I would tell you, you would be hard-pressed in any given day for a mainframe not to be part of that day because of the volume of the workload that it runs around the world. I think I'm controlling. So Tom talked about our team, and I want to talk about myself and our leadership team. I was with IBM for 30 years, came to CA and then Broadcom in 2017. And across my career, more than 85% of that time, I've been involved in leading teams that are doing work on mainframe technology, whether that be hardware or software. But I'd also tell you that, for a little more than half of that time, I've also had distributed technologies or cloud technologies. So when I talk to you about mainframe, I talk to you about it in the context of overall IT. Now for the mainframe experience, in the time I had at IBM, I've been the director, the leader of their 2 largest database systems, IMS and DB2. I also actually ran the hardware, the mainframe hardware, and either launched or set a strategy and direction for 3 generations. I also led the storage hardware business, then brought software into it. That includes [ the DSA K], the large disc and flash storage that's attached to mainframe, as well as the tape business. Now there's similar experience across my direct leadership team. Across those 5 folks, there's more than 75 years of experience in the mainframe space and 150 years of experience in IT in general. And if you go to the next layer below, the executives in our team, whether they be directors or senior directors, many of them have spent their entire career in the mainframe space. So we have a deep bench and a broad wealth of knowledge about the mainframe space. Now the usage of this platform continues to expand today, 3.5x growth in MIPS in just the last decade. Now for those of you who don't know what MIPS are, it's a measurement of processing capacity on the hardware for mainframe, and it's millions of instructions per second. 89% of the respondents that we survey saw growth in their usage of the platform in 2020. And 91% of those surveyed say, "Hey, the mainframe is a priority for them going forward." Now this is going to remain relevant for many years to come. 92% see the mainframe as a platform for ongoing growth. 74%, almost 3/4, see it as strategic to their overall business. And it's expected that companies that are leveraging mainframe, working in hybrid environments, think about the world as heterogeneous and connecting workloads, that there'll be a 2x expansion just in the next 3 years of those that are leveraging their mainframe environment and connecting it in a hybrid work environment. Now I would tell you, if you went back 5 or 10 years ago, you'd probably be hard-pressed to get IT analysts to agree on anything in the mainframe space. Some saw what was going on. Some saw the longevity of the platform and that it would grow depending on what was going on. But we're in an unprecedented time. When across all the major analysts and across the studies that you see, people are understanding how integral the mainframe is to modern workloads and connecting it across cloud, distributed and hybrid workloads. What a lot of folks don't realize is, even today, 70% of the world's production IT workloads are still processing on mainframes, 70% of the world's workload. 88% project that the mainframe is going to have a continuing role in their environment for the next decade and I will tell you even beyond that. 2/3 believe they'll never fully replace the mainframe, and that's because of the unique value and the capabilities that it delivers to workloads. Mainframes outperform multi-tier processes in a single frame because of the dynamic of the architecture and how it handles workloads. And organizations that transform on the platform and invest see a 6x return on every dollar that they invest in the platform. That's a great return on your investment. Now you might ask yourself, come on, why mainframe? Clearly, not every workload needs to run on the mainframe. A lot of the workloads that started on the mainframe started in the '60s when there wasn't another choice. And I would absolutely tell you there are certain workloads that shouldn't be on the mainframe today. They should be off. But when people see stats about what's going on in the world and they see the staggering volume, they question mainframe. They say, "Come on, 500 million tweets a day. Almost 2 billion people use Facebook on a day. And don't we all Google everything, right? It's 5.6 billion searches per day." Now think about it. Those are point interactions. You kick off a transaction, you get 1 thing back, and we're talking billions here, right? One single z15 frame, 1 box sitting on a 19-inch tile in a data center, in and of itself, can handle 1 trillion transactions a day. That's the differentiation. That's the power of the platform. That's the workload that it's driving out there. And there's no other platform on this planet -- don't take it from me, you can take it from IDC -- that can handle that same number of transactions with the high availability, the security and the stability that a mainframe provides. But it's that unique architecture that helps it excel. And I said it was different before. The type of thing that you have dedicated processors within the frame that handle I/O or certain workloads and that you're not trying to swap things in and out as often, but you're segmenting out the workload that's there. So if you think about those things that need to handle high volume or scale up rapidly or handle high throughput, very chatty apps, things that would be going back and updating storage in the transaction or reading from it and going back and forth, the variable demand, the way it can scale up or scale down, I know cloud does that, but not without somebody checking on that hardware and rolling it in and out, this capacity is within the frame and it grows up. And the world's fastest commercial processor out there is in the mainframe. It is high horsepower. When you talk about downtime, when you talk about resiliency, I know for many years, people talked about 5 9s of availability. And now the mainframe is up to 7 9s. You can get lost in all the 9s and understanding what that means. That's less than 3.5 seconds a year of planned and unplanned downtime. That's staggering. It's unmatched in the marketplace. There's pervasive encryption across the workloads. You can tie that into other security capabilities and deal with data at motion as well as in rest. And all of this now -- gone are the days where the mainframe had to sit in a dedicated space that needed certain power or cooling. This can all sit on a standard 19-inch tile in a data center and go anywhere you would slide in another rack. Now I started talking about examples of things you might do in your day, so that you'd realize that mainframe is touching a lot of these workloads in the world. And I started with debit and credit cards because that's -- when people think of the large businesses in the world, when they think of the heavy workloads and that throughput, they think of financial. And I wanted to pull you in on that. But it's beyond banking. I mean think about even just in banking, when the experiences of the last 1.5 years hit and there was economic uncertainty, a lot of us were probably checking stock portfolios and bank accounts a lot more frequently. That drives up transaction volume. Health insurance. This is how they guarantee the security and the privacy of information, by using this platform. All the top 10 insurers worldwide use the mainframe platform. In government, when COVID hit, politicians, governments were making decisions to say, "Hey, we're going to do stimulus checks, and we're going to start distributing them in 2 weeks, and they'll all be in your hands within a couple of weeks." Well, nobody talked to IT ahead of time. Thank God, they were using mainframes in the background to get those systems configured and tuned to drive that throughput and have it processed successfully. Retail. The largest retailers in the world use mainframes. And I can tell you a really clear differentiator, and I think we've all had this experience. You go online, you're looking to buy a particular product. You see maybe 5 or 6 places that say they have it and there's varying prices. So what do we do? We go to the cheapest one. We pick the cheapest one. We go to order it and they say, "Sorry. Out of stock." So we go to the next cheapest one. Eventually, we get to one and they say, "Yes, it's in stock." We order it. We're thrilled. We figure we're going to get it in a couple of days. In the next day, we wake up, we look at our e-mail, we look on our phone, and it says, "Oh, sorry, that's on back order. You're not going to have that for another few weeks." I can tell you those retailers are not using mainframe. Because in a mainframe world, you would real-time go back to that data center, go back to that inventory system, check whether or not you have the product, decrement your inventory and then set it up to have the shipment made. And again, think about it, this is the difference between those Facebook, Google transactions. Multiple things are kicked off when you do something in a mainframe. Now I happen to know who a lot of those retailers are. So when I want something on time, I go to the ones that are running mainframes. Airlines and reservation systems, hospitality, think airlines, think hotels. This is one of the important reasons why they use mainframe, to have that real-time update and be able to manage the ticketing systems. Airlines also actually use it for the parts availability or plane placement. And in automotive, 5 of the top 5 global automotive companies are using this. And think about why. It's the complexity of all the parts that they need to have in place to run that manufacturing line and have that supply chain working. This is really what the start of the design of the mainframe was all about. The mainframe started with tracking systems for all the parts, to the rockets, to do the Apollo mission. And then it expanded beyond there into business. Next slide. Thank you. So we participate in about $7 billion of this market space. And in every space that we compete, whether you look at IDC or Gartner, we're #1 or #2. Gartner has us overall #1. There are really 3 big players: us, IBM and BMC Compuware. The whole rest of the share is by niche players with point products. It's a very stable market. There's not huge market shifts. I mean, think about this, 1% market share shift would be $70 million. So very stable players that have been investing for a long time and are focused on the capabilities that these customers need. So the business value of transformation on the mainframe. I already talked in an earlier slide about the benefits of modernizing on the platform versus just migrating off or modernization to put a capability down a new technology. When you do that in place, when you do it on the mainframe for workloads that excel there, you'll get a 6x return on that investment. So every buck you spend, you get $6 back in savings. You get about a 20% average reduction in the cost of operations when you transform that platform and almost 2/3 more frequent updates to your applications as you bring modern DevOps practices to the platform. Now with Broadcom, across our portfolio, we've driven really fabulous results with our customers. 40% reduction in manual effort through automation on the platform. And then we recognize that almost 90% of developers out there are using open source tools. They're not using them exclusively, but it absolutely informs our strategy and direction. The idea that you have these developers going out there, using things that maybe they learned in college, maybe things that they can use to interact with other platforms, and that really drives into the discussion and the focus we have on opening up the platform. And 60% of our customers have engaged with us in what we talk about as beyond the code initiatives. Now get back to that in a minute, but I'll stick with the portfolio first. The mainframe is really a system that you have to do everything soup to nuts on. You need to be able to have DevOps tools to develop applications and deploy capabilities. You need core infrastructure, whether that be databases, transaction management systems, the tools that help you manage and monitor those things, automation to be able to tie the things you're doing across workload, whether that be in your development processes or your production workloads and understand with intelligence what's going on across that environment. And you need to keep that platform secure. We actually have 2 of the enterprise security managers for the platform in our portfolio, as well as capabilities that interact with those delivered from other providers, RACF is from IBM. At the core of this strategy though, is our open first philosophy. I want to differentiate to our customers based on the capability we have in our products and the capabilities that we have in our team, not by brittle connections that say you have to use this tool with that tool or only with particular vendors. So across our entire portfolio, we are opening up APIs and publishing those, so not just so that you can interact and connect our portfolio, but so that you can connect it to other vendors in the space or bring open source technologies to bear. Now it's important that we do that in an open fashion, because we don't know what the next technology is. We don't know what the next open technology is that people are going to want to use on other platforms and then be able to apply to the mainframe environment. We also want to make sure that we can attract new developers, new operators to the platform so that they can leverage the capabilities and the core strengths of the platform without having to learn all the specifics or the unique interaction characteristics from years ago. That's why we participate heavily in the open source space for mainframe. That doesn't mean that we're taking our technology and donating it to open source. It means opening up the APIs. It means working on those open technologies and contributing to them so that they have the connections into mainframe and then ensuring that we're doing things in an open fashion so that customers can interact in a multi-vendor strategy. The reality of businesses today, due to acquisitions and divestitures, is they have a broad portfolio of capabilities that have come from a variety of vendors. Fundamentally, bottom line, we want our customers to be successful, and we can do that by providing flexibility across our portfolio. We also participate out there where our customers are to learn about the platform and the capabilities, whether that be through users groups or open education initiatives or conferences and even things that we hold individually, making them available to our customers. We went to -- I'm not going to touch that. Look, anybody can be a vendor. Anybody can develop software and deliver it for the platform. I showed you our portfolio, and I talked about the pillars, and I talked about being open. The reality is, on this platform, you could just get the hardware and the OS from IBM, and you could do everything else you would need to do on the mainframe platform, purely with software, from Broadcom. But it's a heterogeneous environment out there, not only for the things that are delivered for the platform, but as we open up and the things that can interact with the platform. The real challenge, the biggest challenge that has been out there, is how do we help onboard skills to the platform. How do we make this platform more accessible to IT shops to interact and connect those with other workloads? We're a partner. We're not a vendor. And that means we don't just deliver software, drop it off at the door, they install it, we go away, call us if you have a support issue. We partner to help our customers be successful. And that's recognizing that they need help building skills. And this is part of the beauty of coming to Broadcom. Broadcom brought a lot of investment to us, and this is how we drove additional value beyond products into our business. Our Vitality Residency Program is unique in the industry. We recognize that customers were having challenges hiring individuals to work on the mainframe. Less universities teach the technology, and they were having trouble finding people. But even that wasn't the biggest issue. The biggest issue was how they run their businesses in their own budget. The reality that they may have a 20-person shop. And when they ask their boss and say, "Hey, I got Joe that's going to retire or Mary that's going to retire in another year, can I hire somebody so that we can cross-train and skill them up? And when the other person retires, I'll go back down to 20?" They say no. They say, how many are you budgeted for? 20? You're approved for 20. Worry about it when the person retires." That doesn't work. So we simply said, "What if we hire the individual, what if we train them on the fundamentals of mainframe? What if we work with our customers as a partner to determine where that need is, ACF2, Top Secret, Endevor or IDMS, Datacom, give them a deep dive immersion on that training for probably 4 to 6 months? And then we deploy them out to the customer for an additional 6 months to work side by side with their employees to invest in that customer in a partnership so they have that crossover, so they have that learning. And we've done this. We launched this a little over 2 years ago. Our first cohort was about 5 people who were placed rapidly. We've now run more than 60 individuals around the world, and we're continuing to expand this. This is on our dime. At the end of the experience, at the end of the year, if the customer wants to hire them, no finder's fee, no services and arrears, they hire them and they go into their business. This is a win-win. We get somebody who understands our products and is going to be more successful using them, they get somebody who's skilled up. Education, the next challenge. How do you learn, where do you learn about this mainframe stuff? We had a lot of online education that was non-instructor-led. So honestly, a pretty fixed cost for us. And we were looking at how many customer seats we're taking each year. And we said, "If we open this up, if we said, look, if you've got license to that software product, have at it. You can take the class for free. Take as many seats as you want. Have your chief bottle washer do it, the CEO, whatever." In the first year alone, the number of customer seats taken doubled. In the second year, we grew yet again another 50%, and we're going to grow again this year. More than 3x improvement in customers taking advantage of education and having those skilled workers on our products in their shops. But it doesn't stop there. Think about those folks that are becoming executives today, that are becoming CIOs, that maybe don't know what a mainframe is, maybe never had that in their sphere of control or what they had to manage. We also launched a program for mainframe insights for senior managers and executives. We record those. They're available on demand. They run it at about 20, 30 minutes. And we dive into topics, whether it be strategic outsourcing, security, terms, capacity planning so that they can get their feet wet and understand the teams that they're leading. We also launched custom MRI assessments. Now we don't roll in a scanner and do magnetic resonance imaging on the mainframe, but we did pick that name on purpose. It's Mainframe Resource Intelligence. We have tools and capabilities, where we can go into a shop, analyze their environment, looking for security exposures, performance improvements, tuning settings, capacity efficiencies. And we do this not only for our own portfolio, but for competitors as well. Again, with the focus of helping our customers be more effective and efficient. Now every computer environment has changed. You upgrade hardware, you upgrade OS, you upgrade databases, but you might use somebody else's tools. We have a wide breadth of experience on our team, having worked on a bunch of different products and understanding the platform for many, many years. Too often, customers will think just about the product or the piece part of component that they're upgrading. What we've stepped back and said to our customers is, come to us, tell us when you're introducing any change into your mainframe environment, whether it be hardware, OS, somebody else's database, but you're using our tools, something that could possibly impact security, anything. And we'll do a review in partnership with you ahead of time. This has greatly reduced the incidences or issues that large companies have when they do migrations through their change management. In fact, since we launched this, we have yet to see any customer that's participated with this experience who has had one, during one of their migrations. That's investment and partnership upfront. Now I talked about the environment and that it's heterogeneous. There's products from a bunch of different vendors out there. We have an opportunity to grow our business not only from usage, but when customers use our portfolio versus somebody else's. Now swapping out to end up with something that might have about the same capability, can just get into a conversation about the financials of the product. And anybody can negotiate and make that look appealing. But the rub, the problem here, is usually the time it takes to get to a return on investment. Think about what I said about skills. Our customers don't always have the people they need to do that migration efficiently, effectively or as rapidly as they would like to. We launched this thing called Win-No-Fee services, where we said, "Look, if you're going to migrate off of a competitor product and come to ours, we'll help you." So long as you meet the functional and the performance characteristics, we won't charge you -- either little or no cost on those services, because we're going to make our money in the ongoing relationship." And that's what partnerships are about. So what you get is something for nothing. Investing in the customer, side-by-side, to help them migrate so they get to a quicker ROI. We've also launched consumption licensing. You hear a lot of people talk about cloud-like financials and business dynamics. Just like a cellphone plan, you can set a baseline and say, "Hey, here's the capacity, the flow of work that I'm going to do on the mainframe, and I want to set that as my baseline. I want to know that, as long as I don't go over that, that's what I'm going to pay each year." You also want to know, if I make extra calls or I use more minutes, exactly what it's going to cost me per minute. That's what mainframe consumption licensing is. We set a baseline, we set a linear price per MSU, which is a measure of flow of MIPS. It's complicated. Don't worry about it. Think about it like cellphone minutes. If you underutilize in any year during the term, you can roll over those MSUs or those minutes to the next year. And if you go over, you know exactly what you're going to pay per capacity used. And finally, we don't know what we don't know. And we don't know what our customers don't know. But we know they have challenges. We know they have problems. We engage in them in design thinking workshops, in the areas of our portfolio, in the areas of education or skills challenges or anything else that they would bring to the table, to figure out a mutually beneficial solution. Sometimes that involves our product. Sometimes that means we're going to enhance our product or more for expand the capability. Sometimes it just boils down to changing processes and practices and how they're running the environment, all with the idea of partnership. So I talked a bit about open and why it's important to open up this platform, and there's a variety of ways that you can think about this. A lot of people use modern DevOps practices and they use these tools siloed to different platforms. We don't want that happening anymore. We realize that these workloads are integrated. We realize that when you make that bank transaction or that debit or credit on your cellphone, it's hitting an edge server, it's going through the cloud. It might be hitting a distributed server, going back to a mainframe and then coming back. When these businesses are working on their development, they need to be able to think full scope, mobile to mainframe, across that entire environment. That's why we're opening up, and that's why we're ensuring our DevOps tools that are focused on the mainframe interact with distributed tools or you can use the same tools distributed cloud to mainframe across the board. Now there are also synergies across our portfolio. You're going to hear from Serge and you're going to hear from Rob. Think about 0 trust and reducing risk and security. I said the mainframe is the most secure platform on the planet, and that's why certain businesses go to it. You can do multifactor authentication prior to interacting with the mainframe. And through our open APIs, you can do that with other vendors or you can use that with Symantec's capabilities. We also have customers with those workloads that run mobile to mainframe that want to do automation, to orchestrate or to have intelligence across that workload across the same -- across that whole portfolio. And they want to be able to deal with one vendor or have those technologies tie in together. While we open up to vendors, we also have capabilities across Serge's division and ours that tie together that allow customers to automate workloads across those platforms as well as have intelligence on how they're performing or if they start to trend with issues. What I want you to get out of this, is that this is a stable space with 3 big players, Broadcom making significant investment, us differentiating in the marketplace, not only with the full suite of products that we have, but how we're partnering with our customers and how we're working and interacting with capabilities across our divisions, all to drive more value to our customers. Thank you.

All right. Thanks, Greg. I appreciate you spending time on mainframe. Up next is Serge Lucio, who runs our enterprise software business. And I talked about with CA, we had to get the mainframe thesis right. And I think, hopefully, through Greg's presentation, you have a better understanding of where that business is and where it's going. It's interesting, on the distributed side, today, it was a very fragmented set of products across a number of different domains. And I think in essence, when we thought about the investment thesis with CA, it was really -- we're going to get mainframe right. And then amongst this broad set of distributed products, there's going to be some pockets of real opportunity. And I think over the last 3 years, the good news is, we've found a couple of really interesting growth vectors, businesses that have some scale, businesses that are very well suited for our target strategic customer base, and they can actually grow double digits on an annual basis going forward. And so we've put a lot of investment, a lot of leadership focus around a couple of those areas. We're not going to talk about all of them today, but in particular, around areas like value stream management, where we have a leadership position. And then I think just as interesting, maybe even more interesting is around the network monitoring space. And I think what you'll see is there's some interesting synergies between what we're doing on the software side and also what you see through our semiconductor business and actually even some of our security portfolio. So with that, let me turn it over to Serge, and he can walk you through those businesses.

So I'll start with a brief introduction. Okay. So my name is Serge Lucio. I actually joined CA Technologies about 5 years ago. I started leading the strategy and product management for the mainframe division at the time. So I helped shape some of the strategy that Greg just took you through. But my background is really on the distributed side. In fact, I started my career as a software developer, working for a start-up back in France, specializing in software testing for network equipments. We had a successful exit in 2001. And Rational Software acquired the company, and I joined a company in the U.S., so moved to the U.S. at that stage. And for about 15 years, I was involved in a number of product leadership roles at IBM, across a number of product segments that I manage today. So of course, the testing part of the portfolio of IBM Rational at the time. Then subsequently, I got into the Agile management project and portfolio management, spent quite a bit of time leading M&A for the Rational division, did a few transactions in the areas of application security, and then finally ended up being kind of a leader for the DevOps portfolio as part of IBM Cloud. So through the 15 years, I was at IBM, I ended up competing with a number of the solutions that I lead today. And really, I grew a lot of respect for those solutions. In many ways, I thought that these solutions were better than the solutions I was leading at IBM. So really what makes me uniquely qualified for leading the enterprise software division, is really kind of a breadth of experiences I've had across many segments that we have in the portfolio. So I'm sure most of you probably are wondering what is enterprise software about anyway. So let me try to introduce at a very high level to what we're doing. So at its core, we're really about helping organizations go from ideas and build software ultimately to drive outcomes. And fundamentally, you can think of kind of 2 phases of this life cycle. On one hand, there is a clear phase around customers trying to innovate. And then eventually, they deliver software and they get into this operation phase. So those are kind of 2 key areas we're going to be talking about today. But if you peel the onion and get to the next level, you can start to look at the number of tools which are involved in that life cycle. From an idea, you're going to first define what is the investment that you're going to put in that specific idea, right? Once you have an investment that's secured, you're going to plan for the delivery of that. Developers are going to be building it. You're going to be testing it. That's the innovate phase. And ultimately, you're going to deploy this solution in production, typically in a data center on some servers. And so getting this kind of operation phase. And during that phase, you are monitoring the software, you're delivering fixes, you're delivering changes, right? So you're upgrading the software. Now across this life cycle, which really is iterative, right, we are presenting this as kind of this linear process. But in fact, most of our large enterprise customers iterate through the sequence of steps every 3 months, every month, and for the best, every 2 weeks. These customers use a number of tools. In fact, according to Gartner, on average, larger enterprise customers we serve use 28 different tool chains. Now these tool chains comprise oftentimes dozens of products. So in reality, what you have in terms of the landscape, we're one of the many, many providers that these enterprises are using today. So why is that? Of course, there's been technology transitions, right? The tools that historically these customers used on the mainframe are not the same as the tools we are using, for instance, for the cloud. The second key issue that these large enterprise face is that they've gone through merger and acquisitions, so it's very common that they are going to acquire a company with a totally different tool set. Then there is leadership preference, right? New leaders come in. They have different opinions with respect to what tools they want to see their teams use. And invariably, we get into new tools being added to the tool chains. And the reality is that the switching costs are extremely high. In fact, if you look at some of our customers, they have been migrating from some of our competitors, from homegrown tools to our own solutions, but the time to do this migration is oftentimes measured in years. Recently, one of our large customers, a large financial institution, tried to replace one of their enterprise monitoring tools, which was a homegrown tool, something that they had developed internally, and took them 18 months to migrate from that tool to our commercial solution. And so really, we're kind of in this kind of status quo. It's not to say that customers are not moving across tools. But to a large extent, it is an impossible mission to standardize on a set of tools. Now with that context, these customers -- CEO will have a set of challenges, right? They are constantly trying to innovate specifically and trying to digitally transform. Now when you think about digital transformation, we're kind of in Phase 2 of a digital transformation. Phase 1 was very much about automating existing processes, was very much about applying your robotic process automation, trying to have processes which were more efficient, which was about remote workers, right? That was kind of Phase 1. In Phase 2, many of our large enterprise customers are really looking at introducing new services to drive revenue growth. Now through COVID and the pandemic, what we saw was a rapid acceleration of these initiatives. And in many cases, it was a matter of survival. So if I take one of our large enterprise customers, Chipotle, they were able to quickly pivot their investments right at the onset of a pandemic and through the pandemic were able to continue to grow double digits their revenues. And so for many of our large enterprise customers, they realized that they need a new operating model to actually be able to innovate, and innovate in a way that is much closer to what a start-up or our start-up or our born digital company would be innovating. Now a couple of weeks ago, I met with one of our customers, a large insurance company in the U.S. And I'm going to use this as kind of an example of really what's happening in concrete terms with many of our enterprise customers. So this insurance company, if you think about their IT landscape today, they run 2 data centers, 2 mainframes. They are essentially a claim processing company, right? So you can imagine that the value from an IT point of view is processing claims. They are trying to reinvent themselves as an integrated health care service provider. So tomorrow, they are looking at serving millions of constituents completely directly. They are looking at the network of doctors, hospitals, facilities. And so they are looking at a totally different landscape in terms of their IT. And that is really what we're talking about when we're talking about changing the operating model. Now it really affects kind of the 2 areas I talked about in very different ways. So let me start with how it affects, how people innovate. If you look at these large insurance companies, today, they are organized very much like most of our large enterprise customers, meaning that they have functional silos. On one hand, they have teams focused on software development, that line of business teams who are basically directing the investments for the software development teams; IT operations teams, which are managing the operations of the systems, whether we're talking about mainframes, data centers or the cloud; security teams. And within each of these teams, you can actually see that there is further decomposition. And back to what Tom was describing earlier, at their core, these organizations run based on their existing processes, right? Their processes is really what defines the collaboration across all these different teams. Now when you look at born digital companies, which are represented on the right-hand side of the chart, what you see is a very different way to organize on teams and organize innovation. And typically, what people are using is what we call value streams. So what are value streams? You can think of value streams as collection of teams essentially serving a specific stakeholder. So in my example, it could be a set of teams dedicated to serve the needs of the doctors. It might be -- they might think about introducing a new service around telemedicine, right? And if you think about telemedicine, they are going to have video conferencing, they need to develop capabilities to help book those doctors. And in this specific example, this customer is actually building some advanced technology using machine learning to be able to summarize a patient chart for the doctor so that the doctor can be ready within a couple of minutes before meeting with the patient. And so each of these value streams essentially is a collection of teams, which is dedicated to serving the needs of a specific buyer or stakeholder. And they're measuring their performance based on some key results. So in this case, it might be what is the utilization of those doctors. So their orientation is very much about driving business value. On the left-hand side, if you look at the software development teams, they don't really care about the business outcome that they're delivering. They are really focused on delivering on time and on budget. They don't really care if ultimately what is being delivered is meaningfully impacting the business. So in many ways, you can see on the right-hand side, these teams operate almost like mini start-ups within these organizations, right? And that starts to create a new set of challenges around how initiatives get funded. The funding model on the left-hand side is very much about funding a specific silo. On the right-hand side, you have a funding model, which is very different, very much like a portfolio management where you are funding these value streams over time. Similarly, because you have way more autonomy at the value stream level, it becomes very challenging to actually see -- have visibility as to what is happening across the organization. So for most of our large enterprise customers, they are on this journey to go from the left to the right. And they've done that probably in some pockets, but doing that at scale is really the challenge that most of our large enterprise customers are faced with. So that's around the innovation part of the operation model. The second key dramatic challenge is around how they operate those systems. So if you go back to my example of these large insurance companies, they are going from about 2 data centers to 6 data centers tomorrow. Obviously, they are going to be leveraging the cloud to perform some workloads like analytics. They are going to have mobile applications deployed across millions of stakeholders. And so you can immediately see that kind of the complexity of the environment is increasing dramatically. But it's not just that you have this more open environment and the scale of that environment. It's also the architecture of the software we're building these days. If you go back just 10 years ago, we were building applications, which are essentially 3-tier applications. So in application, we essentially run on 3 servers. Today, we're running -- we're increasingly building applications which are based on containers, on micro services. So what it means in practice is that in the past, you were managing 3 systems. Today, to manage that same workload or that same application, you need to manage oftentimes thousands of containers. And so we're really talking about 1 to 2 orders of magnitude more elements in the infrastructure, which have to be monitored. Now it's not just the scale in terms of a number of elements that have to be monitored, it's also that it's a very volatile environment. In the past, in order to deploy an application, an engineer in IT operations would be configuring a server, installing the software and that would be it. Today, increasingly with container-based technologies, what's happened in practice is that you have an orchestrator, whether it's OpenShift, Kubernetes, which is dynamically starting these containers every single second. And so you now graph this very static environment that you can really understand well, you have this very dynamic and large-scale environment. And the net of it is that there is just no hope for humans to be able to comprehend what's happening. And the reality is that these organizations need to go from essentially a human-based process to a process that is fundamentally based on technology where you are going to be applying analytics, machine learning and automation to get to self-healing system. So those are really the 2 big challenges that we see with our large enterprise customers that we're trying to address and where we see the opportunity to drive double-digit growth. Now the way we've chosen to approach this is recognizing that, again, most of these large enterprises have decades of investment in these tools at the bottom and there's just no way these customers are going to be standardized on any of our tools. So we needed to find a way to help these organizations transform today and not tomorrow. And so in many ways, what we've built with these 2 solutions that you see on the top is really about augmenting what they are doing today at the bottom. So we are not going to force these customers to replace the tools that they are using every day. We're not going to force their teams to be retrained. But instead, we're going to augment that. And we're doing that with, on one hand, with the product owners with our solution that comprises 2 of our products, Clarity and Rally. And on the other hand, for the operations manager, we're increasingly focused on DX NetOps as our solution to help these organizations really transform. So with that context, what I'd like now to do is to actually give you more details on each of these solutions. First on kind of what are the unique problems we are solving for our customers, how we're solving these problems and how we fare relative to the competition. So let me start with the innovate phase. So back to my insurance company, 1,000 developers today, they are scaling to about 10,000 developers tomorrow. On average, when you look at our large enterprise customers, the 600 strategic accounts that Tom talked about, these organizations typically have anywhere between 10,000 to 30,000 developers. That's about the range. And of course, when you manage this at that level of scale, what happens is that you end up having to manage hundreds, thousands of projects. So the first thing that happens typically to manage that kind of scale is you invest in people, you invest in project managers and you spend a lot of money in doing that. In fact, 1 of our large enterprise customers reported to us before adopting our solution that they had about 1,000 project managers producing 100,000 PowerPoint pages on a weekly basis just to provide status reporting. Now other customers try to solve that through technology, right? So they may start to build a homegrown solution, which is going to aggregate the status across all these project teams and ultimately roll it up. And what oftentimes starts as being a 5- to 10-team member project, in some cases, ends up being 100 people -- 100 engineers fully dedicated to actually just provide a system to report on really what's happening across these thousands of teams. So that's the first source of waste, which is really about -- you can think of it of just trying to understand what is going on. What is the status of the investment? Are we delivering on time, on budget? The second one is that invariably, when we're talking about hundreds of projects, you have dependencies. When we talk about these value streams, you can think of the value stream team that is focused on the doctors as dependencies on the teams which are serving the patients. And oftentimes, the challenge is managing those dependencies at this kind of scale. And so the second source of waste is really driven by the fact that these organizations end up invariably with idle time, right? Teams are waiting for other teams to complete some work before they can continue and finish their own work. So those are kind of 2 first kind of source of waste. But the bigger one and the one that you see on the bottom right of this chart is $1 million being wasted every 20 seconds is really driven by what we call overproduction or Toyota actually introduced first is notion of overproduction. So what is overproduction? There's first one source of overproduction, which is just people working on stuff that nobody knows about. The leadership team doesn't know about, and believe me, I've been there in my own organization. Typically, you have about 10% of your organization where you don't really understand or have clear visibility as to what is happening. So that's one first source. But the bigger one is really the time it takes to actually get feedback. Keep in mind that when we develop software, we have an idea, right? We have an hypothesis as to what that software is going to deliver in terms of value, but we don't have certainty until we actually deliver this software and we actually are able to measure or quantify what is the value that is being experienced. And so the reality is that oftentimes, we build things which do not materially impact the business, do not drive value, right? Back to my analogy as a start-up, you build stuff and ultimately, maybe with the mark, maybe you don't. And so the big challenge is how quickly can you provide feedback to these development teams so that they can pivot their investments. Just think in your own experience and take a product that probably most of you have used, Microsoft Word. How many features of Microsoft Word do you use today? I'll bet that you probably are using less than 30% of those features. And yet Microsoft continues to maintain release after release 70% of these features that none of us is using. So that's the big problem. So how do we solve that? So it really starts at the bottom with Rally. Again, Rally is one of our products and it's all about providing visibility to the leadership team as to what is happening across tens of thousands of developers. Now Rally integrates with whichever solutions our customers are using today. So commonly, we will see Atlassian Jira, Azure DevOps is where -- more and more common these days. GitLab, which IPO-ed recently, is also an emerging player in that space that provides team collaboration. And Rally is able to ingest the data from all these different tools to first provide a real-time view as to what is happening, are we delivering on time and on budget. The second is that once we have this data, we're able to start to actually perform some very interesting analytics, specifically to identify any kind of dependencies that may exist across these different projects. And oftentimes, we're able to detect way early that there are dependencies which are not explicit in the plans. So Rally is fundamentally going after kind of the first 2 sources of waste that I talked about. Now we all have to recognize that there is another kind of value stream. So we call that this bottom layer kind of the delivery value stream, but there is this operational value stream. Again, if you think about this operating model, we are funding in a different way. We're funding these different value streams. And so over time, depending on the performance of these value streams, executives will want to pivot or shift investments across these value streams. And all that work typically is happening at this operational layer where you are deciding on the funding, you are defining a roadmap and expectations with respect to when you expect specific solutions to be released. And then ultimately, Clarity, which is our solution at this level, is integrated with financial systems. So we can integrate with financial systems, SAP, Oracle. We can integrate with user or experience management products to actually get feedback as to what is the value that is effectively delivered. And so the close integration with Clarity and Rally is really what's enabling us to constantly realign what is -- what the IT teams are doing as it relates to driving or maximizing business outcomes. So let me use an example of one of our customers. So Ford Motors. A few years ago, really at the onset of their Mustang Mach-E program, Ford really wanted to change the way they would drive this program. And so they wanted to go from a classic model, which is funding projects, to a model that would be really embracing value stream management and funding the product. And so across their 700 or so teams, really what they wanted to do is to measure these teams on 3 dimensions. The first one was predictability. And if you think about predictability and what I just described, one of the big challenges around predictability tends to be around 2 things, dependencies across these different projects and the ability to effectively forecast or estimate what is going to be the cost over time to actually build something. The second one was responsiveness. So through this kind of program, invariably, you need to pivot. You need to add more investments, shift investment across different parts of the project or program. So that was the second one. The third one was productivity in the sense of not just measuring the lines of code that these teams produce, but measuring what is the business value that ultimately this program delivered. Now we have this unique position that, for the most part, these 2 solutions, Clarity and Rally, are SaaS solutions. Clarity can be used on-premise. But the majority of our customers use these 2 solutions as a SaaS offering from us. And so we have these unique vantage points where we have visibility across hundreds of thousands of teams. And so one of the values we're also providing to Ford is actually to help them understand how their teams -- their 722 teams, really compare to really our teams across many industries. And so over the last 5 years, we've been able to get these 722 teams to perform in the top 25%, again, across the entire population of teams that we are managing today. So just to try to summarize our key differentiators. The first one is really around this notion of enterprise-wide insights. So the ability to aggregate data irrespective of which team collaboration tool you're using, whether it's one of our competitors or our own team collaboration tools. The second one is to tie that to the value that is being delivered by these teams. So again, when you think about Clarity, we integrate with these financial systems. We integrate with systems, which are going to be looking at customer churn, which are going to look at doctor utilization. So we can provide that feedback almost real-time to these development teams so that they can pivot, so that they can focus their investment in the right direction. And that's the third value. It's our ability to realign, constantly relying those teams to maximize the business output. Now many of our customers are turning to our solution because we are really unique in the industry. And for the last 5 years, Gartner has been recognizing our solution as a leader in their Magic Quadrant for enterprise agile planning. I think we could go as far as saying that we've invented this space. If you go back 15 years ago, Rally was the first solution that really provided this kind of end-to-end enterprise agile management solution for large organizations. In many ways, Rally invented the de facto standard that's used today across the industry, safe, which is the scaled agile trademark. Clarity has been a leader for over 20 years in strategic portfolio investment and management. And as the 2 are converging, what we clearly see is the renewed integration that we have across Clarity and Rally is really positioning us to continue to strengthen our position in this Magic Quadrant. So let me turn to talk to you a little bit about our DX NetOp solution and how we help our customers operate. So I'll start really with the basics, which is that -- when do you interact with a piece of software in the cloud, let's say, Office 365. This software is deployed in typically multiple data centers, right? It's running on a server that's connected to a network. So immediately, I want you to understand that it is a complex problem that when we talk about monitoring these systems, we talk first about monitoring these systems at different layers. You need to monitor the network, you need to monitor the servers where this software is running. Of course, you monitor the application and the health of the applications. And increasingly, we're monitoring also the users. We're trying to understand how these users are interacting with the systems. Are they actually getting the value that we anticipate them to deliver? Are they using specific features? And each of these monitoring technologies is very different. So naturally, you have classes of tools which are used for each of these layers. Now at each of these layers, there's further fragmentation. In fact, we recently conducted a survey with our large enterprise customers, and more than 50% of our large enterprise customers use more than 6 network monitoring tools. What's interesting is that as you go from network to infrastructure to application to end user, there's actually further fragmentation. And in fact, most of our large enterprise customers use dozens of tools when it comes to monitoring end users. So very complex kind of landscape in terms of a number of monitoring tools, which are, in effect, deployed at our large enterprise customers. Now the other thing that I think is important to understand is that when there is an issue, it's rarely an issue that's going to be isolated. So let me use a very trivial example. Let's say that you have a fiber optic link that breaks in the data center for whatever reason. As you can imagine, this fiber optic is connected to a router. This router is likely going to have some alarms, identifying that there is something wrong here. It's very likely that the servers which are leveraging this router are going to experience maybe not a loss of connectivity, but more likely they are going to see that maybe bandwidth is degraded. And ultimately, if we're talking about video streaming, you may end up in a situation where it starts to affect end users. People start to streaming video and then stop because the quality is poor, right? So you can hopefully see that there's this domino effect that, in fact, a single issue oftentimes results in dozens and sometimes hundreds of alarms across the many, many tools I was talking about. And so you live in this very kind of noisy environment. These IT operations teams really are dealing with tens of thousands, in some cases, 1 of our large customers -- 1 of the largest financial institutions in the U.S. is dealing with over 100,000 alarms every single day. Now when you look at these alarms, what's really challenging and shocking is that oftentimes, if you're an operator looking at a specific issue, it's very difficult to understand what is the impact from an end user point of view. And there is a very different -- very significant difference between not being able to post on Facebook for a couple of people and Facebook being down for everybody, right? And so the big challenge is oftentimes that you don't see the -- you are not able to parse noise versus signal. And everything is very noisy, and you're not able to prioritize the work to minimize the impact on the customer experience. Now the other reality is that today, the meantime to repair, so all the time it takes from having an alarm to that alarm being remediated, remains around 8 hours. Finally, if you go back to Facebook a few weeks ago, it took them 6 hours to remediate to their big issue. If you look at Roblox, for those of you who have some kids, it took them like 2 days to address their issue. So it's not uncommon to have these very long meantime to repairs. And during this time, of course, you're losing share. So how do we uniquely address the problem? At its core, it's actually very simple and very complex. The biggest challenge is to be able to correlate this information. Again, you have information that's coming -- most of our large enterprise customers have tons of data. They have tons of monitoring data. They have all these tools monitoring everything. But the challenge is that all this data is completely siloed. So what's happening at the network level, the infrastructure guys don't know about. And you can imagine that you have basically everybody is looking at the forest, nobody is looking at the tree. So the biggest challenge is really about being able to correlate this information from the network to the infrastructure, to the application, to the end users. Now once you are able to do that, and I'll go back to how we do it, you can start to do very, very interesting things, right, because you can start to look at all these alarms which are coming essentially from the same cluster and say, well, that's these 200 alarms are actually related to the same situation, to the same incident. And what we've experienced is that we can reduce the number of incidents that our customers are looking at by over 90%. Significant reduction in terms of labor cost for them when you think about 1 of these alarms oftentimes being anywhere between $10 to $100 to actually be able to analyze and remediate. Then once you have that, because we are able to correlate this information all the way to the end user, you can start to quantify what is the business impact? What is the user impact of these issues? What that means is that you can start to prioritize all these situations. What are the ones which have the most meaningful impact and the ones that you should be looking at first. Now because we've correlated also this information for each of these situations, we can go all the way back to what was the first alarm, which is likely the root cause. And then based on this alarm, we can start to categorize those alarms and use machine learning to identify what kind of automation script or service process can be applied to remediate to this issue. But all of this basically stems from just our ability to correlate this information. So most of our competitors will tell you, it's easy. Just ingest all data into Splunk or Elastic, choose your favorite solution. And believe me, we've tried to do that ourselves, right? We initially used Elastic to do that, and it just doesn't scale. It does not scale for the complexity and variety of data that we have to ingest. And so we had to find a new way. In the last 3 years, we've spent a lot of time actually building our correlation engine to what it is today and to a point where recently 1 of our large enterprise customers who had spent over a year implementing 1 of our competitors, implementing over 1,000 rules in that tool was able to just turn on our system and our system just worked out of the box. And so that's our secret sauce. It's all about being able to correlate that, and more importantly, to correlate that all the way to what is the end user impact. So let me use a concrete example, O2. O2 is one of the largest cellphone providers in the U.K., 30 million subscribers. And just like many of our customers, they are trying to introduce new services, new sources of revenues. And in their case, they wanted to introduce an SD-WAN service. So think of this as 15,000 WiFi antennas, public access points over the U.K. that will enable small businesses to access the Internet. Now you can immediately see we're talking about millions of devices connected to 15,000 access points, and you need to be able to not just monitor the access network in those devices but also what's happening in the back end, the ability of these people to eventually get to the Internet. So a very complex environment, a very diverse set of equipments that they have deployed across this environment. But the biggest issue that O2 was faced with is when something goes wrong, is it impacting a low-value customer, a high-value customer? Are we breaching on a quality of service or an SLA that we've extended to a customer? And so our ability to be able to correlate again all the way from the network to what is the end user impact was absolutely critical in their case. So it was not just about being able to provide them with a single pane of glass end-to-end visibility from the access network devices all the way back to the backhaul, but also our ability to quantify the business impact that really made a difference. In their case, we've been able to demonstrate our ability to reduce by more than 75% their meantime to repair. So just to summarize. For us, it's first and foremost, about unifying the relevant data. The second one, and hopefully, you understand that now, it's about quantifying what is the impact. These alarms are not all created equal. Some are really critical and you need to react very quickly. Some really do not matter because maybe they are taking care of the application layer. Maybe the application is actually designed in such a way that it's resilient to issues that may be happening at the network or infrastructure layer. Then it's all about pairing that with automation. Because ultimately, what you want to get to is a system which is almost self-healing, a system which has actually learned how to fix those own issues. And ultimately, it's all about driving the customer experience. So now let me talk about these customers. And I'd like to talk to you about the O2 customers by taking kind of the other side. If you're 1 of these O2 customers, let's say, a small bank in the U.K. today. And for a reason or another, you're trying to access, let's say, Office 365. And let's just imagine that you are not able to use Office 365. Your first instant is most likely that you're going to try to Google or go to another website. And let's imagine just for a second that you are successful at going to Google. Your second instant is going to call Microsoft Support and ask them to -- what's going on. And Microsoft tells you, well, everything is green on our side. Where is the issue? That's actually a scenario which is more and more common and one of the scenarios we are really excited about. So let me talk about the subway map. This white in the center is the Internet. We all take the Internet for granted, but it's a very, very complex network. In fact, when you are accessing the network, when you're using Office 365, you're likely traversing about 5 to 6 Internet service providers. Of course, you only care about AT&T or Verizon that provides you with a service, but the reality is that you have this chain of connectivity that gets you all the way back to the data center where Office 365 is running. And the reality is that you don't even decide where your traffic is going through the Internet, right? And as you can imagine, just like a subway, you have links here where you have a lot of bandwidth, you can carry a lot of data. You have links where -- which are really good at latency so the traffic goes extremely fast. And depending on the application you're running, well, your application may be actually very dependent on the characteristics of the network. And the reality is that we increasingly depend on the Internet across many -- and this is due to many drivers. So the first one is obviously the SaaS adoption. More and more, our large enterprise customers are relying on Workday, Office 365, right? A number of the solutions that we use to consume that were in the data center are now running in the cloud. The second is that many of our large enterprise customers are moving workloads to the cloud. But as Greg described this to you, many of these workloads are actually tethered to the mainframe. But there's a lot of connectivity between the cloud and what's happening in those data centers, whether it's a mainframe or distributed systems. And so connectivity between the cloud and the data centers is actually critical for these customers. The work from anywhere is another key driver. Increasingly, what we see is our large enterprise customers have more than 50% of their employees working remotely from home where they don't have any control or visibility as to what's happening in the home. And then even in parts of the network that historically we used to control, say, the connectivity between a branch office and a data center, we increasingly rely on SD-WAN technologies. Why? Because it's cheaper, right? Historically, you would be renting essentially a dedicated line just for you. But going to the broader Internet and using SD-WAN is cheaper, faster and more flexible in many ways. And so that's kind of a reality that in many ways, it's very difficult to troubleshoot what's happening. And just to help you understand, let's say, you are working from home, you are trying to access Office 365 and you go through kind of the path. The issue might be related to maybe something that's running on your computer and slowing it down. It might be related to maybe a bad WiFi reception. Maybe you have issue with your provider, whether it's Verizon Fios or Comcast, right? So you might have an issue, which is really on the access side. And maybe it's just you because a branch fell on your fiber optic line or maybe the entire neighborhood is affected by that, right? And at each of these stages, basically, today, for most of our larger enterprise customers, it's essentially a black hole. They do not know what is happening. Now what's interesting is that Broadcom is actually everywhere in that network. Our chips power all the routers, all these links across the Internet. Our chips are there. Similarly, when you look at the edge, we power a lot of the WiFi devices out there. We power a set of boxes which are in your house. Increasingly, and you will hear that from Rob, this network is being secured using technologies such as proxies, cloud access brokers, which are powered by Symantec. And so we have a lot of vantage point around this network. And so we believe that we have an incredible opportunity to actually spot the light across this entire network to help our customers really troubleshoot these kind of very complex problems. And EMA, one of the leading analysts in the network monitoring space, recently ranked us as the highest with respect to our technology call solution. And the slide has really 3 things. First, to hopefully, right now, you heard me, scalability. We're able to scale to millions of devices. Two, our ability to have advanced analytics to actually parse signal versus noise. And three, our unique ability to integrate directly into the telemetry that our chips are generating so that we can understand what are the network conditions and how the traffic, the congestion, the latency, the packet losses, all these different things which are happening on a real-time basis, are affecting an application. So we believe that this is kind of the next area of growth for us around the network. Now more and more of our large enterprise customers are turning to Broadcom to solve these 2 challenges, whether it's around are they transforming their operating model to innovate or to operate. And fundamentally, I believe that it really starts with a strategic relationship that we have with many of these large enterprise customers. Back to what Greg was describing, we're serving 600 accounts. So we can form a level of relationship with these accounts which is unmatched candidly in the industry. Second is that we've been dealing with these problems for decades. It's not just me. It's many people in my organizations. I've been dealing with these challenges for decades. The silos I was talking about, believe me, 20 years ago, we were talking about those things. What's different today is that it's a bit of a live or die for many of our large enterprise customers. They recognize that they have to transform and the pandemic has just accelerated that motion. But at the end of the day, there are really 3 things that make us absolutely unique and uniquely positioned to help our large enterprise customers. First, we embrace the ecosystem of tools that they are using today. We're not forcing them to move off of their existing tools. We recognize that they have decades of investment in those tools that these tools are tightly integrated with one another. Two, we really are focused on scale, right? In fact, many of the challenges I've been talking about during this presentation do not exist if you don't have 5,000, 10,000 developers, right? They only exist at this kind of scale. And so for us, scale is actually key. But with scale comes the need or the imperative to actually perform analytics. Now you cannot deal with that kind of scale by just providing dashboards or reports. We need to use advanced analytics and machine learning to be able to actually provide the right insights. And on one hand, when we look at Clarity and Rally, it's all about improving the resource utilization. It's all about removing the wastes that I've been talking about. When we talk about DX NetOps, it's all about reducing the amount of labor, first by being able to collapse all these alarms into these like situations or incidents, and we can -- we have proven repeatedly that we can reduce that by 70% to 80%. And then with that being able to provide a probable root cause for our customers so that they can accelerate their ability to repair and return to normal. Look, we're very excited about these 2 opportunities. For most of our large enterprise customers, again, they are just at the beginning of this journey. And we believe that we are absolutely uniquely positioned to help them. Thank you.

Thank you, Tom, Greg and Serge for your presentations. We are running a little bit ahead of schedule. So we will take an approximately 20- to 25-minute break for lunch. Boxed lunches will be available outside of this room, so please help yourselves. Thank you. [Break]

Okay. Let's get started again. Hope everybody enjoyed lunch. Up next is Rob Greer runs our Symantec business. I think what we found really interesting about Symantec when we made the purchase and did the diligence was, when we looked at the CA customer base and we started formulating the strategic focus on these 600 accounts, and then we compared that to actually the growth rate and all the exciting things happening in security, we saw an opportunity to marry those 2 things. And so it's been an interesting journey actually over the last couple of years with Symantec. We've gone through a major restructuring, integration, rationalization. There's a long tail of customers outside of our strategic focus. But what we found compelling and what we're really excited about going forward and what Rob is going to cover is that when we look at customers that have this significant on-prem footprint and they're investing in their own data centers and there's security needs that are unique to that and you marry it with what's happening in the cloud, what Symantec did over the course of a number of years through acquisition is they really set up a portfolio that was extremely well suited for that account base. So I'm excited to introduce Rob. He'll walk you through all those opportunities ahead of us. Thanks.

Thank you, Tom. Nothing like presenting right after lunch, get everybody's attention. Awesome. So for those of you, we'll see if this clicker is going to work for me this time. Okay. I got to press it really -- okay. Here we go. So my name is Rob Greer, I am the General Manager of the Symantec Enterprise division. And I'll spend a lot of time today telling you what that's about and why that matters. My background has been one of a boomerang, twice actually. I have been with Symantec 3 times and have returned twice all voluntarily over the last 16 years. And I have to say, I'm most happy about this version of Symantec, and hopefully, you will see the same way at the end of this discussion. Some of you might have interacted with me when I was the Chief Product Officer at ForeScout. I helped take the company public in 2017. So it was pretty awesome being back here 4 years later. And the team with me these days at Symantec, many of them have been with Symantec for multiple decades. And these are some of the most uniquely qualified individuals that help protect the world, frankly, against many of the threats that we see. So I'm really excited for the opportunity that's been given to me, and I look forward to engaging with you guys a lot in the future. So let's give you a little bit of context around what we were like at Symantec Corporation when we served basically everything in the market, from a small consumer to a small business, medium-sized enterprise to the largest enterprises. And back then, when we looked at our investments, it was like peanut butter, if you want to use that term. And it was really hard to make big bets in one of these areas without impacting one of the other segments. And so as Tom mentioned, we have had the opportunity as being part of Broadcom and now Broadcom software to really laser focus in investment around the key use cases, our largest organizations, enterprises, both public and private, need us to focus on. And they have very challenging environments to make secure and compliance. As you think about it, many of you work for large institutions, and there's a legacy that, that institution must keep. You can't just leave the old house behind or the old data center behind and go into a new environment because you have all these applications, you have all this data. And so it's a very complicated environment. And fortunately, for Broadcom and for Symantec Enterprise, we have capabilities that can protect what they've relied on us for several decades -- couple of decades, in some cases as well as where they're headed. And I'll spend some time on those key use cases. You really have an appreciation for where our relevance is. And during Q&A, I'm sure you'll have a lot of questions. So this strategy that has been revealed to you today by my colleagues has really worked well in less -- in a 2-year period for Symantec when you think about our coverage in the Fortune 500, a little less than half. Our coverage, we have around 773 customers that are residing in Global 2000 organizations. I'll share those characteristics that I showed you on the last slide. But the part that really excites me the most being the General Manager is 68% of those current Global 2000 customers that we have today, they have 2 or more of our franchises and our franchises are endpoint security, which Symantec was known for -- has been known for since its inception; our information protection; network security, which we recently got into about 5 years ago; and of course, e-mail security. And when you have customers that have already invested there, if you're having the right dialogue with them and they're adopting your technology, what an opportunity to expand that. Because today's world, large organizations don't want hundreds of tools. And in security, the more tools you have, the more options there are for bad actors to take advantage of the lack of coordination that happens. And you just have to read the news today and last week, every week, there's something out there. And if you add too much complexity with too many tooling in that environment, you're just making it easier for the bad guys. The part that I also want to kind of underscore is we have a huge footprint. We have 150 million enterprise users deployed today, okay? And we're getting lots of telemetry to help, protect and inform our customers. And over the last year, we've -- or last year -- since 2019, over the last 2 years, our cloud adoption use cases specifically to Symantec Enterprise has increased 40%. 20% of every dollar goes to R&D. So this is an investment area for Broadcom. I mean you have to in cybersecurity. Cybersecurity isn't something that you can just set it once and it's just going to protect you because every second there's something out there that is mutated that you have to be thinking about. But we're not the only ones that have seen some improvements in the last few years and have recognized it. If you look at Forrester, they recognize us as -- and have for many years, a leading unstructured data security platform. Many of you guys know of it as data loss prevention. We're also well known and recognized around cloud security gateways or cloud access security brokers and the combination of that. Many of you follow Gartner and others like IDC, they refer to this category as SASE, Secure Access Service Edge. You also get confused because we like words in our industry, Zero Trust or Zero Trust network access, which is basically a fancy word of saying secure remote access from anything, from anywhere, from any device. These are more -- this use case, frankly, is very relevant today given what we've gone through the last 2 years. So Symantec, as Tom stated, our card -- we have a good set of cards. We were dealt a good hand of cards. And the people before us, I was actually there when Bonti was acquired and actually ran that business, put -- had a foresight around what is required as more and more companies look to the Internet and to certain services that were not within their perimeter and thought what is the most important thing to protect. And it comes down to data. And nowadays, we're also seeing operational technology and infrastructure as another element that is elevated things to the connected nature of the world. But when you look at the technologies that we've acquired, DLP, CASB, secure web gateway, mobile threat defense, Zero Trust network access. A lot of these technologies, they have actually now been integrated. In fact, all of these have been integrated in the last 2 years. And I'm going to talk to you about why that matters and why that has -- why we have a competitive advantage with the customers who've already invested in our -- much of our on-prem footprint. So the last 2 years, those innovations have come out rapidly, but with a lot of relevance because our 600-plus customers that we spend most of our time with, the strategic customers, they want a single endpoint security platform. They don't want to buy an EDR product from CrowdStrike and another antivirus vendor from Trend Micro or name your vendor and then try to bring it together. And many of our customers have been with us for many years, and they need evolution of the types of attacks that have come to fruition over the last several years. And the way to deal with that is to buy simplify things. If you have cloud use cases, you need to address cloud used cases. If you want to manage things on-prem and in the cloud, which is hybrid, which is where we believe the end state is for our customers, you need to address both what they have today and where they're going. And so we have released an integrated endpoint security complete solution that is device, is per device, per user. And it is you buy it, it's subscription. You can run your management on-prem, you can run in the cloud, you can go at the speed that you want. We did the same thing with our web protection suite, which with the foundation from the industry leader in proxy when we bought Blue Coat, with a lot of great intellectual property, a lot of very, very loyal customers. They feed many of their security policies through our appliances, many of them on-prem, many of them virtual appliances, many of them in the cloud, most of them all 3. And they expect to be able to do what's required to protect their business and be compliant. We've innovated on something that's really newsworthy. It's ransomware, adapting to protect our customers against ransomware. And so our customers all have different usage patterns for their devices, for their laptops, whether it's MAC or PC. And we are able to know what normally happens and then adaptively create policies that are specific to that environment. It's very, very awesome innovations that have come out of that team. And of course, during COVID, all of us experienced what it's like to all of a sudden be thrown out of the office and remote. Well, majority of our large enterprise customers didn't already hand out laptops and phones and -- to everyone in the organization. So we were able to bring to market what we call cloud Mirror Gateway, which is the ability for you as an end user who's never been given a corporate device, go home to your MacBook Pro, open up your Chrome or your Safari and get access to applications that are either hosted inside your organization or as part of your SaaS service, maybe it's a Salesforce or Workday, And not put your company at risk around DLP, around compliance and around ransomware. And the way we were able to do that is to integrate the Elastica CASB with the Fireglass web isolation with the web security service that we built organically with our Blue Coat business. The area that I'm most proud of, though, the last 2 years is around our digital transformation. So we spend a lot of time getting in front of customers talking about digital transformation. Well, we went through it, and we went through it with a great partner. Google helped us transform. Many of that we had to rewrite in native software code. Some of it, we had a lift and shift because it was already there. We used to run our own data centers, a lot of our R&D, time and money. We had to build out capacity before it was actually used. It wasn't Elastic. And so the last 2 years, we have partnered with Google. We provided scalability. We are now more prevalent around the world than any other network in our space because we're leveraging the YouTube network. We have virtual points of presence in areas where there aren't Google data centers, and we've innovated and able to -- in order to give customers a localized experience. So you're in your local language for your environment, getting access in a secure way, thanks to the Google platform. Now our team gets to spend time working on security, making the products more usable, integrate key use cases with my colleagues around how do we secure access to mainframe or how do we share threat intelligence with our network AI Ops platform. Those are all the things that our customers ask us for. And so when you bring it all together, we are able to do something for large enterprise customers that I know of no other vendor who can do, which is take care of their devices, take care of their data, take care of their applications regardless of where those workloads are today and help them future-proof that transition to the cloud at their own time. And so we've simplified the user licensing model. In the past, we make it more complicated or customers they have to know how many cores they have or how much bandwidth. Now you just say, how many users you have, great, X dollars per month and we're going to solve those use cases. And so the foundation of our platform, best-in-class endpoint security, best-in-class data loss prevention, best-in-class proxy and network security, best-in-class e-mail security, all leveraging the Symantec Enterprise Cloud, which you'll hear more of as we move forward, is what our customers are looking for. They're looking for an on-ramp, a bridge to cover their entire landscape. And it's not just about data centers that are moving. It's the devices that they're using. You have to support Windows and Mac and Linux equally. You can't just be all in on Windows. Customers want currency on browser supports. And Microsoft Edge is now the standard versus Safari versus Chrome. This is very complicated. And many customers built these processes, and they look to Symantec Enterprise part of Broadcom software to be their partner. And so we're partnering very closely, similar to what Greg is doing in his side of the house. So what are the key budget areas that customers fund this. Now I was talking to one of our analysts here in the room during the break. The Board is demanding coverage on a lot of the stuff nowadays, so that's helping. But the reality is there's implications if you don't support -- if you don't have the right cyber hygiene. And that is -- there's regulations around the world. Some of them are geographic. Some of them are specific to industries like if you think about PCI compliance or HIPAA. Every country, every industry, potentially any states in the United States, there's different compliance issues. This is the #1 budget driver that you're going to see for any cybersecurity company that's focusing on the large enterprise. The second most important challenge that drives budget is something we're all accustomed to now, remote work. We're probably all a lot more efficient now than we were before, just to be honest, because we're always on. And -- but to be on and to get access to key applications and data and collaborate, you need to be able to do it in a safe way, a performant way, and you can't impact the user experience. This is difficult. It's very challenging because you're dealing with applications that don't lend themselves to these new containerized service lists deployment. Not all of us get that opportunity. Most of us in the room have to deal with older apps and newer apps at the same time. So how do you deal with that in a Zero Trust way? So many of us in this room probably experienced, there weren't enough VPNs for all the customers or the employees. There are not enough devices. This is -- this drove a lot of budget that came out of nowhere. And then lastly, the one that we all hear about, the one we hear in the news is around protecting against being the next victim of ransomware, being the next victim of taking down a critical piece of infrastructure like a pipeline or hospitals that are being ransoms to get access to patient data. This is real-world OT, IT convergence, it's here. And all of us should really think about how are we going to stay ahead of the bad guys. And that's where we want our resources. We're no longer building data centers. I get to put our engineers by focusing on that -- on those issues, not how to rack and stack on a 19-inch rack. So let's go through some simple use cases. We'll add a more technical level, so you guys can kind of associate a little bit more about what we're doing, okay? So large enterprises, as I mentioned, deal with lots of different compliance challenges. People need to behave a certain way. You have to handle data. You have to speak on -- you can't get on conference calls and talk about personal data, personal information, right? You have to train your people. You have to -- your devices need to have the right protections or patches or you need to prove that you're encrypting the device if it gets lost because if it gets lost, the company is liable for that for potentially data that is -- they're required to protect. And then, of course, the applications, which are sitting in your control and out of your control. Most of the time, it's a hybrid of both. And the vulnerabilities that are coming out every day that many of us don't control, open source. A lot of the supply chain attacks you've heard about you can probably go back in time and see some open source code that needed to be updated and everyone has been impacted by it, right? So what are companies -- what are they looking to do? Well, they need a consistent way to go and create policies such that they can get the right visibility as to are they compliant or not, okay? That's number one. That's just to keep the lights on. But most importantly, as data is moving in all these different directions, from device to device, to databases you control, to box on the Internet, all these different particular applications, how do you know where your data is? How do you know what data you care about? Which data must you care about improve? This is what our large enterprise customers are dealing with. And Symantec Enterprise Cloud because we care -- we understand the on-premise nature, we understand all the operating systems that matter and we understand how to deal with cloud workloads and traditional on-prem workloads. No other company has visibility and this is why many of our customers have been working with us to express the needs they have, so that they can expand and invest more and more in our franchises. The second key pain point I talked about earlier is around remote access. Well, what kind of remote access, Rob? Well, first is the one that you guys are used to. And that is -- but you're accessing cloud, let's say, CRM technology like a Salesforce, for example. Many times and traditionally, the customers can't deal with this use case at scale because they have to rattle that traffic back to the corporation through a data center, okay? And that's challenging. And so they're asking -- they're asking companies like Symantec, "Hey, we like to enable secure access to these workloads but we have all these compliance and security regulations that we can't go through our data center we just don't -- the users are not going to -- they're going to go on strike." And so that's one of the #1 use cases that we've all experienced. The second is around customers. We're all patients in our doctor's office. You need to go in there and upload, check-in, put some information that's personal to your health situation. How are you going to do that without putting your users and your organization at risk? And the third most common one, because we lack resources -- all of us lack security resources, could be a mainframe contractor that's in there, doing an MRI, for example, and they need to do it from a location and a device that's not under control of the organization that is contracting them. Leveraging the Symantec enterprise cloud, we solve all those use cases. And so when we're selling to customers now, unlike the old Symantec Corporation, we would sell the bill of materials. Oh, you need WSS and you need secure access cloud, you need more gateway. And now we say Symantec Enterprise Cloud, x dollars per user. So the simplification that we're now able to bring -- and oh, by the way, take your time on that legacy infrastructure that you have. And if you need help, we've got partners and our own people to help to get you there. And so that -- for all the foot out there, just recognize there's a lot of noise in this area around SASE, Zero Trust. For large enterprises, they can't just adopt that solution and turn off all the responsibilities they have. It's not that easy. And that's why we feel like we're in a uniquely positioned -- in unique position to help our customers and grow value in this part of the business. The last pain point, and I just -- I want to walk through this. This might be simple for many of you and for others, it might not, but let's talk about threats. How does it happen? And what can Symantec do uniquely to help our customers? Well, first, we've all experienced the phishing e-mail. Those tests we get all the time here, and I'll tell you, they're very challenging if you're not careful. And on your mobile device, you can't hover over a link there. So if you don't recognize it, do not tap on it, trust me, because you are putting your company at risk. And in this use case, what happens when a user taps or clicks on something they shouldn't, it can easily get exploited by vulnerabilities that are just pervasive across all these different operating systems. It could be one patch back on a MAC back book. It could be -- somebody is running a standardized Windows 10 that Microsoft is no longer patching a particular library. This stuff happens all the time. And now users get tricked on tapping on that. And then at that moment, the user may not know anything happen. It's happening transparently where all of a sudden, that endpoint is communicated into a control -- command control center where the bad actor is orchestrating how to get data that's interesting. Most of the time it's targeted by the way. It's not just a spray and pray, they're looking for something. They usually have information that would allow them to then find the stuff that matters and then ransom it ultimately. That's -- this happens the e-mails one path. It could happen in SaaS applications. It can happen in many different paths. It's the incursion that's most common as e-mail security. And that's where Symantec, we have a really strong e-mail security platform. And when you combine that with our Symantec Enterprise Cloud that I just discussed, we're in a very unique position. And we're able to do that and share telemetry because of our global intelligence network that's sitting on the Symantec Enterprise Cloud, okay? And what this does, it collects telemetry. And with the new Symantec Enterprise division that I've literally merged, the Blue Coat web poles and content analysis network focused team with the Symantec well-known Star team working as one. And so this data lake is able to now enrich customers, not just with 1 product, but the more products you use, more capabilities or use cases you have on Symantec's enterprise cloud, you're going to get the benefits of all this telemetry. And we're talking about 11 trillion elements today of telemetry. You have to use AI, you have to use machine learning. But more -- but just as important, you need a trusted adviser on the phone to help our customers deal with some of these -- most of these attacks that have never been seen before. And so we have a group of threat hunters that spends time with our strategic customers and help them think through this stuff, because it's new. We work closely with the government, DHS, sharing information. Recently, WastedLocker, which we blogged on and got a lot of coverage. And Symantec's been used to that over the years, you should expect more and more. We're heavily invested in and being relevant around our security research. But we were able to protect many of our customers -- all of our customers that we know of from getting hit by this ransomware, WastedLocker ransomware. And one customer had to pay about a $10 million ransom. So this is real money. And you combine that with disclosure and all the waste of time that executives have to deal with and the Board, and paying third parties like Mandiant and others to come in and help them, it adds up. And it's not fun for our customers to go through. And we are fortunate because we understand their pain, we understand the dynamics of their environment, and that's a lot easier than just outsourcing it to a tool vendor. So to bring it together, the foundation for the Symantec Enterprise Cloud, it isn't something we just built yesterday. We have evolved best-in-class technology that was acquired best-in-class. In the last 2 years, we have integrated it beyond that the speed at which never was done at Symantec, and I can voucher that being there 7 years prior in different stands. So I'm pretty excited about that investment. But you're probably saying, yes, Rob, I cover lots of cybersecurity companies. You sound like they do. Tell me what's unique. And if I click, here we are. First off, I want to underscore, hybrid is our view -- and we'll talk to your CIOs, the Chief Information Officer, not the Chief Investment Officer at your organizations, and ask them where you think that -- where do you think the end state is. It's hybrid. Hybrid work, hybrid cloud. And our competition -- and I would call it co-opetition, because we coexist with everyone of these vendors that you guys cover. And I will tell you, they all have great technologies. I'm not going to sit here and say they don't have good technologies. But they all are focused in a different -- their mission is different. Our mission is take best-in-class embedded security technologies that are proven and evolve those use cases to the ones in the cloud in a way that is convenient, in a way that is familiar, in a way that they know they could pick the phone up and talk to someone who understands what threats are, okay? When you look at the list that to your left, Microsoft has done a very good job on improving the security on their platform and integrating, in some cases, with third parties. But let's be honest, they're in business to outsource data centers and deliver the best productivity platform there is in the market. That's what they're in business for. We're in business for security, and we secure their products alongside their E5 licenses all the time. And most customers will tell you they can't just go all the way to Microsoft and address their use cases. So I want to make sure you guys understand that. Sure, I'll get some questions later on that. Palo Alto, Zscaler well known in their areas. And I would say that we differentiate based on our information protection and our threat protection technologies at scale worldwide and it's integrated in our ecosystem. And yes, we do integrate with other technologies through our integrated cyber defense API framework. But let's be clear, most customers aren't looking to retain all their vendors, they're looking to consolidate. And that's what we're driving our customers towards with bundling that makes sense, that's a win-win. And then CrowdStrike. I would just say that they just -- they're not as focused on the breadth of what I just described and they're cloud-only at this point. And so as you look at these companies, we coexist. And we have the on-prem footprint that many customers just need to know that they don't need to look elsewhere for in order to accommodate their entire needs. And over the upcoming year, we're investing more and more in our go-to-market alongside the Broadcom software sales team to reestablish many of the relationships with the CISOs that might have gone absent during the pandemic and the integration. So I'm really excited about where that's going to go. From an R&D perspective, beyond the go-to-market that I just said, we're never done in this industry. This is one of the coolest places to be because you have to innovate to stay ahead of the bad actors, and nation states that are always trying to get a leg up. And when you look at next-generation cloud-based attacks, leveraging much of our innovations around deception-based detection, integrating this adaptive technology that I talked about earlier, but more broadly into the network use cases and the cloud use cases is an area that we're -- you're going to see us communicate about as we move forward. Around data loss prevention, if I were to tell you one of the most unique things we've got is our data centricity. The fact we know what data matters and the fact that we can have that context when we're trying to make decisions on what we're going to protect in the very short window, our DLP is untouchable. And it's because of the investment that we've continued around that voluntary technology over the years. But we're not done. You have to auto discover data is everywhere. It can't be done manually. And so we're leveraging new techniques to get and innovate around that area in this world of hybrid that I've just been communicating about. And then lastly is around platforms. We've acquired a lot of companies. Yes, there's consoles that, in some cases, that we should consolidate, but many of those we've already done. It's about how you represent the data, how you show that context. When customers want to manage everything in the cloud, let them when they want to still manage elements on-prem, allow that to happen in concert with what's going on in the cloud. And so it's not either or, it's an and. And that's where we uniquely differentiate from everyone of the vendors that I discussed earlier. And then around the endpoint, which we have an amazing footprint, 160 million devices, where we can do to bring that data intelligence, data centricity and a more simplified user experience at the agent that you're going to see us continue to innovate there. And as you know, you can't put agents on everything. So you need network to be able to accommodate that when you can't put an agent on the device. So my last slide kind of brings us back to the beginning, because being that you're in the investing space and you care about or where is the upside? There's a lot of upside in our current customers. So just within the current Symantec enterprise Global 2000 customers, which -- there's a ton of overlap in the sense that 68% of them today have at least 2 or more. But if you look at the middle bucket, there's 2 or 3 Symantec franchises with just 58%. Such an opportunity to move them up to have the entire stack. And they're going to if they see the value that I had articulated in those use cases. We have to communicate that value. We have to help them get there in a partnership. And of course, there's many customers who maybe aren't using us more tactically in a particular area of their business, leveraging the power and the relationships that we get with Broadcom software, with what Greg and Serge are doing, we can expand even broader beyond a single franchise. And so with that, I think I'm 9 minutes early, and I went fast. I bring it back to Tom. Here we go.

We're going to just pause for a minute and get set up and then we'll run through Q&A. Just give us a minute.

I appreciate all the insights. I almost feel qualified to spell the word software now. But Tom, I'm wondering if you could just take a step back and help us understand if you were to sort of build a bridge PowerPoint chart, where the starting point was the growth rates of these businesses before you acquired them, which was effectively 0 to the growth rate now of greater than 5%. What are the 2 to 4 bars and the magnitude of those bars that get you from beginning to end? And as you discuss that, I'd kind of be interested to know what you did with incentive mechanisms of both companies, because we're all a big believer in this room that's what's rewarded is repeated. And so was it just a matter of re-incentivizing the teams? Or help us understand kind of that bridge.

Sure. So -- and it's not dissimilar to what we did on the semiconductor side for years, guys. When we go in and we buy these companies, we're very much focused on identifying where we can get the best return on investment with the portfolio that those companies have. And we take a very different approach. And so whether it be CA or Symantec, they're not dissimilar from Brocade, which you're familiar with some other companies. First and foremost, it's portfolio rationalization. So when we go in, we did a number of divestitures around CA and Symantec, and that allows us to get focused and those are businesses that don't fit our model and probably have more value with somebody else than us. Two, we -- as you saw today, we streamlined our business model to focus on where we think we can win. And then we go play to win. And so when you think about what we did in terms of taking companies that we're serving thousands and thousands of customers and really focusing now only on 600, that allows us to obviously rethink what the revenue growth profile is going to look like. And so when you think about a bridge, we also focused a lot more on recurring revenue. I talked about subscription. We're still in the early days of doing that. We've gotten out of a lot of the onetime perpetual license sales. We've gotten out of selling services just for the fact of maintaining revenues in the services business is not generating any profits. And so I think it always takes a couple of years to work through that redirection. But now that we're sort of one organic business and we have a number of these growth vectors, we've got the market behind us, we've focused on an ELA and PLA model where we're selling across solutions, that's how we're getting to this mid-single-digit growth rate expectation. Could we grow faster? I think we could. I think it would require more investment outside or certainly where there'd be more question around, are we really well suited to support those customers. But what we feel great about as I sit here today is, okay, these 600 accounts, they are hybrid, they're typically on-prem first. They leverage a lot of what we already have. We can expand a lot faster within those accounts by taking less risk. We don't have to sell as much, really just focused on adoption. And then, of course, we can cross-sell in term and upsell in terms of the solutions they don't have. Especially post pandemic, I think we got a lot of benefits from capacity expansion during the pandemic, and that was great, but we also -- that was positive. But I think the negative is we didn't have as much opportunity to engage with our customers, especially when Rob talked about going back out and engaging with CISOs and trying to sell Symantec Enterprise Cloud. Now we actually can go and upsell these capabilities. We're able to continue to invest on the R&D side, but I think there's a lot more opportunity to come. So it's to me it's mostly focused, it's -- when you're chasing a lot of different types of customers, a lot of different verticals scale across a broad portfolio. Yes, you can win and you can sign a contract, but often you sell software, you don't get adopted and you just have a tremendous amount of churn in the business. The churn has continued to go way down. Especially if I look at the strategic accounts, the churns come off significantly and we're really focused there. And then we're getting to bedrock. The bedrock in the outside of strategic and enterprise, and commercial you saw makes up basically 5% of the portfolio. And so all of those things are contributing to the mid-single-digit growth rate that we talked about.

Thank you, Tom. Thank you all for a very informative day. So Tom, I have 2 questions, one kind of on the business itself and then one on the bigger strategy from a broader Broadcom perspective. So from a broader Broadcom perspective, how would you explain to a layman the synergies between semiconductors and what you presented today, right? So that's question number one. And then on the specific, since we tend to simplify things and we understand them in terms of units and content and pricing, could you give us some color around those dynamics? So when you say 5%, is that mostly from content? Is that more from pricing? And then is there a lot more headroom in any one of those vectors?

Sure. So synergies, I think, are at 2 levels. And some of this has been realized, and I think some of it is still to come, and there's areas to explore. I think at a fundamental level, when you look at the center of our business, there has been a lot of disintermediation between the OEM traditional OEM model and the end user, especially in the cloud and increasingly on the telco side. Where you haven't seen that traditionally, but where we think that will continue over time is on the enterprise side. And so when we looked at platform technologies on the semi side, whether it be switching and routing, and you guys are familiar with all that, we saw an opportunity to get closer to those end customers. And if you remember, those end customers are also driving not just their direct private cloud spend, but they're also the ones spending money on AWS and Azure and GCP. And so having a seat at the table and really being able to be intimately involved in what those private data center build-outs look like, where their priorities are, being able to inform them directly as opposed through an intermediary like an OEM, around what our road maps look like and being able to architect in partnership with them, I think has quite a bit of value. I think it's more qualitative, frankly, it's harder to quantify, which I know is sometimes frustrating, but I think it enhances the overall value of Broadcom. And I think we've seen the benefits of that, especially now that we have a very defined view in terms of where the enterprise spend is. I think as all of you know, on the similar side, enterprise spend is still very meaningful and I think will continue to be a very meaningful part of what drives the semiconductor business. That spend is directly correlated to the software enterprise business that we're running here. So I think the intimacy there between the two is valuable. And a lot of that benefit is being realized or has been realized and I think we clearly are a major enterprise software company with over $5 billion of recurring revenue. And I think that's here to stay. At a second level, now you're getting into, okay, product synergies and where can we leverage software and embed that in semiconductors or vice versa. Serge has talked some about that, and I want to talk more about it, we can. But we're still exploring those opportunities. We see opportunities. We have a proxy business through Rob's business on the security side, network monitoring. We're doing work relative to switching route platforms. Have we realized anything there that's material? No. But the opportunities do present themselves. Our customers are, by definition, risk averse. They take time. They move extremely slowly. It's the exact opposite of dealing with some of our large mobile phone customers that move very quickly. And so you just have to be patient, spend time articulating the value. And then also, there's a lot of feedback back to our teams in their respective business units in terms of how we would change our road maps or adjust our road maps to respond to those opportunities. But fundamentally, I think there is some really nice synergies between the 2 businesses, especially when I think about being able to feel comfortable that we have relationships with enterprises that make up such a big part of the semiconductor end market spend. On the 5% growth in parsing, content or usage versus pricing, I think whenever we go in and we purchase companies, when we rationalize in restructuring them, often, there is a level of discounting that goes on with the very businesses that we see a lot of value in, in order for prior management teams and boards to try to show growth or drive growth in other areas. So I'd say earlier on in acquisitions, often, there is some fair market value adjustment we have to do relative to where businesses have been priced traditionally. Does that create some level of consternation and churn and that kind of thing? Yes. But fundamentally, these are mission-critical businesses, and we're adding a lot of value to the customers. And so we spent a lot of time articulating the amount of investment that we're actually putting back in the business. And then that's what translates into the second piece, which is really usage and expansion. So I'd say at this point, given that we've gotten through most of that rationalization and integration, CA has been under the tent for 3 years, Symantec has now been with us for 2 years. We're really kind of past that first phase. And really, that's what I'm excited about. I think one of the fun things about putting this day together and having Greg, Serge and Rob to articulate what they're doing and really show you the substance of the opportunity is, it's frankly all about organic growth and organic performance. And it's not really pricing. It's really how do we expand our users, how do we drive adoption, and how do we continue to sell new capability that the customer may not have adopted today into those accounts that are already are very familiar with Broadcom. So I think that's really the path forward in terms of how we drive growth.

Brad Zelnick with Deutsche Bank. I have 2 questions. Tom, first for you. Clearly, the recipe and software has been successful. Hoping you can comment on your broader aspirations, the type of targets? I know you're not going to give us a shopping list today, but even if you could maybe help in terms of where you might not go. Like could we see Broadcom going to application software. Is there a reason why this only applies the strategy to infrastructure and security? And then my question is for Rob. Rob, it's great to see you. It's great to see Symantec Enterprise doing so well. And I just reflect back on many years past, where there were a lot of smart people telling a similar story, and the promise was always consolidation back then, from John Thompson to Enrique to Greg Clark, Mike Brown, you've known them all. Why is it today, reflecting on all your years and all these experiences, that we're finally seeing this one difference come true? Consolidation is now happening. And why is it that you think it's sustainable? And maybe just lastly, as part of that, Symantec had always done a lot of tuck-in and some larger deals with Blue Coat, obviously. But is there a need to continue to do more deals just to keep up with the arms raised that we know as security?

Rob, you go ahead, and I'll take it later.

I'll answer that. So the good news is that the cards we were dealt with the great, I think, foresight that Greg Clark had and before him, Enrique and John, have set us up for really good success to come and already have gotten some of that success. So we're not -- we don't have a gap right now in our capabilities that -- it's about execution, it's about integration. It's about in some cases, making a decision on which engineer to use versus another because we got it from 2 different places. And we've done a lot of that. And we did it because of the culture of Broadcom. It's disciplined. You have limited resources and we invest a ton in R&D. And the type of inspection that's required to justify your investment, you just -- you have to bring it together. It's just the way the model works. And so I think that is different than when I was at Symantec in past years, where in a lot of cases, it's all the new stuff you're building at the expense of what your customers paid for. And that's the challenge when you're dealing with Magic Quadrants or whatever the latest industry analyst is putting out there, because our customers actually look to that to make buying decisions. And so if you're lacking that next shiny object, which Symantec in a public market had different challenges, a lot of perpetual licensing, very lumpy if you think about deals that you had to get done in a particular quarter to meet objectives and that sort of thing, we don't have that problem here. Because a lot of -- our focus is about adoption and getting our customers to stay with us as they transform to this hybrid world. So all of them are great leaders. So don't get me wrong, it's a focus and the ability to just target large enterprise customers that have common problems has really been the biggest impact.

Thanks, Rob. I think on the strategy and I think what you're really asking is from an M&A perspective, here's how I think about it. When 10 years ago, when I joined Avago and started working with Hock on M&A, and we've rolled out sort of a game plan, okay, how is this going to -- what can we do? It was really more around, okay, there's compute, there's memory, there's analog, but this is a highly fragmented communications connectivity segment of the semi open-market. And we think we can plot out a consolidation strategy, which is really not a consolidation, but really focused on, okay, we can find these great franchises that can stand on 2 feet, and then we get a lot of synergies by integrating them onto one platform. And ultimately, they were selling these business, we're selling to the same customers. They're selling the same OEMs. And that's something we saw early and we're able to execute on, thankfully, and no one -- a lot of the bigger companies that are in the space didn't get in our way, and so we're all thankful for that today. I think on the software side, it's not dissimilar in a sense where we see an opportunity to now look at the software roll through our lens, which is, okay, the largest enterprise in the world, what are the unique characteristics of those customers? What are their needs? And how can we construct a portfolio that serves them and serves them over time with what we have today and where we're investing organically. And then if it makes sense, adding on from there. And so is it about double-digit hyper growth? No. Is it about cloud only? No. Is it about serving tens of thousands and thousands of customers? No. It's really about mission-critical software that serves these common set of customers that have unique characteristics. And between balancing what we invest from a go-to-market standpoint with continued investment in the R&D part of the business, we think we can sustain this mid-single-digit type growth rate, especially as we start integrating these different solutions across enterprise license agreements more and more. And so I'm not going to get into targets or industries and that kind of thing, but it has to have a common thread around what are the unique needs of the customers. And as long as that is there, then I think from my perspective, the model makes sense.

Thanks for hosting this very insightful event. Harlan Sur of JPMorgan. Going back to the synergies, so I've recently had meetings with a large enterprise IT and data center team. They're looking at moving their networking infrastructure to more of a white box model and away from expensive OEM networking boxes. They're going to be using our Tomahawk and Trident family of chipsets. But does your seat at the table and engagements with these large corporations on the software side and directly with some of the hardware teams via the AI ops platform, has just helped to facilitate or accelerate this move to white box switching and routing? And do you see more and more of this disaggregation of hardware and software dynamics, i.e., the cloud model starting to become more of a discussion point with your largest enterprise customers, just given your close engagements.

Sure. Let me take the first part of that. And then given your question in one of the prior ones well, maybe Serge can sort of go back over some of the things he's seeing on the network monitoring side. But look, when we bought Broadcom, we call it Broadcom Classic, we bought Broadcom Classic, the #1 franchise in that portfolio was the switch and route business. And I think what was underappreciated by the market at the time and certainly underappreciated, but as we saw sort of the engagement model with the cloud playing out, a huge opportunity was really this disintermediation you're talking about. And so we had a unique vantage point because we were in the ASIC business, still are selling ASICs into those very same OEMs. But we saw the value that the Broadcom team was driving around, okay, how do I directly engage with cloud? What are their use cases? Why is it different? And so that's where this all started, in my opinion. From there, it's evolved. And it's certainly evolved. And I think the next sort of vertical or segment of the market that is catching on to this, frankly, before the enterprise is really on the telco side. And so they're seeing the benefits, obviously, of that disintermediation and taking advantage of being able to be early adopters of next-generation technology. And that's of real value to them. But I think that's frankly still pretty early. On the enterprise side, we actually see a similar dynamic to the telco space. And so I think it's going to play a lot over time. I think especially for the largest enterprises that are spending billions of dollars a year on IT, it's particularly applicable. But the whole concept of white boxes and the standard platforms and the benefit of leveraging, okay, I'm going to go buy a box, it's the same box that's used to AWS for my own private user, it's very logical. And so I think we're really early there. But if I go back to kind of the synergy between software and semiconductor certainly having a seat at the table and being able to be in front of those developments and being able to think through, okay, well, here's our road map for the cloud that you guys hear about, always obviously just talking about that road map well in advance of when we disclose it publicly, those are the same things we can do with our largest enterprise. That's something we weren't doing before. So I think it's an exciting trend in development where this whole white box market and getting more value for the silicon and the software sits on top of it. Where it started in the cloud, it's moved to telco and now it's going to eventually move into the enterprise space. I think it's fantastic for the business, and it's an exciting next step. I don't know, Serge, do you want to spend a little bit more time on network monitoring and kind of some of the things we're seeing there?

Yes, sure. So I think what's been really interesting is that with the complexity that we see in our customers' environments, right? They have been reinvesting in kind of a network, designing their own data centers. And what we also see is that there is kind of a convergence between kind of 2 traditional roles that exist within the enterprise. On the one hand, historically, we've had kind of network operations teams kind of managing the network, running network, which were very different from network architects, which were kind of responsible for the technical choices and decisions on the really the selection of devices. These 2 spaces are increasingly coming together. And the driver for that is really that when you think about what I was talking about in terms of the scale and the complexity of these environments, we are moving to what many are calling intent-based network management. So what does it mean? It means that increasingly, we're trying to add design the time to find policies around how we intend the network to behave and automatically provision configure a network. And then over time, as we monitor this network, as we understand what's happening on the network, we leverage kind of this data to reconfigure and optimize the network. And so with these 2 commenced together, naturally, we from a software point of view, are starting to be dragged into conversations, which historically we have not been involved with around network architecture configuration, network automation. And that's one of the areas we are further investigating. And naturally, as many of these devices are powered by Broadcom chips, we're looking at synergies where we can directly get telemetry and flow data from the chipset to be able to automatically orchestrate what's happening at the switching and routing point of view. So again, it's kind of early days, but we see the trend and the convergence, and it's an area we continue to invest with, especially our networking and switching and routing divisions.

But as more and more of your AI teams interfacing with the silicon teams and saying, Here's what our customers are doing, here's what our next-generation platforms are working on. We need to build these capabilities into your next-generation switching or routing or gateway chips and so on?

I think at this stage, it's more about -- so as you probably know, we've been adopting site, right? So it's -- today, what truly is unique about our solution is we can directly integrate with open APIs, which are provided by Sonic. We can work with the switching and routing division to start to build specific analytics around things like micro burst, for instance, to understand that our congestion, for instance, is affecting packet loss where it's affecting latency. So it's way more about how we are consuming the data. In Phase II, what we are seeing increasingly is that there is an appetite for us to get into really kind of a day 1 provisioning and configuration, and the ongoing kind of orchestration of the network. And so we're having discussions with respect to how much is basically in the chip and the operating system, and how much is going to leave in kind of a network management plan that we kind of own today.

Great. Thanks for the great presentation today. Really appreciate it. A question for Rob and then for Tom. Rob, so when Serge was talking about the kinds of hooks that potentially on the chip side, is that something that applies to your business offsell? And then Tom, another question on synergies, if you haven't answered enough of them. The -- I think -- I guess what, a lot of people are kind of maybe trying to get you to say is that, I mean, if you think about the companies out there with hardware and software platforms together, you think about Apple or like an NVIDIA, you buy the iPhone, you're buying the software stack. You buy NVIDIA's chips, you're buying their CUDA software exactly. Why wouldn't that be the vision for what you guys are doing? Why wouldn't it be, yes, you're buying the Broadcom networking chips and you're going to have the software cycle? Like why wouldn't that be the natural vision where given all the M&A that's going on that, that's where ultimately, you're going to drive the company to?

Let me take that. I think your answer is pretty simple, Rob. So let's start here. So if you remember, Broadcom is not a single product or a single platform company, okay? Broadcom is a portfolio of franchises in discrete sectors within technology today, namely communications and connectivity semiconductors and now mission-critical enterprise software serving a very distinct set of customers. And so when you think about platforms and chip platforms and all of the software that you can bet in terms of design kits and other SDKs and all the things you can do out of the stack on the semiconductor side, that is different in many respects than what we're doing enterprise software. And so when I think about the synergies that you're describing, that would be more forcing synergies as opposed to creating value from, sort of, a natural evolution of where we're going. Now that being said, in the semiconductor world, and obviously, Serge just mentioned it around Sonic and some of the things that we've been doing with some of our platform plays, which is primarily on the switch and route side, we do, do some of that. And so that's a natural evolution. But that's obviously just one business within a pretty broad portfolio just in semiconductors. On the software side, in most respects, these are companies that we've purchased. And we've always valued ourselves on, okay, their ability to actually stand on their own 2 feet. So we do see the synergies. I've talked a lot about that today. But just as importantly, these are great businesses in their own right. They've been restructured and rationalized around the business model that we firmly believe in. We're reinvesting in those business organically through quite a bit of product development. And we're doing a great job, I think, of serving our target customer base in a way that's unique relative to the competition. So I see the synergies. But at the same time, I also see the organic opportunity that we have on the software side.

Yes, just to comment on -- we have had discussions clearly, we actually use Broadcom chips in our proxies, for example. But our STAR engines, which actually power other vendors' technologies, we have the ability to deliver those kind of services. But there's nothing really to announce about that at this point, but we're always bringing our R&D teams together, explore those types of things. But again, within an alignment with what Tom said, I have to stand alone as the best cybersecurity technology and cloud for our target customers, first and foremost. And if that doesn't put at risk -- if it doesn't put at risk that mission to go and do some of these opportunistic things, then what we'll explore it.

It's Matt Ramsay from Cowen. Thank you for everything, and I'll go on to the thesis that a simple question is a good one. So we'll see how it goes. And again, the grains of salt need to come out, it's the semiconductor guy asking about software. So Tom, in one of your slides, you said that 80% of your top 600 customers take at least 5 of your 10 solutions, right? And so I wanted to explore that a little bit. Within, say, the average of 5 that they take, are you single sourced, close to single source, how fragmented is that? And then on the other side, the 5 that they don't take from you, is that 1 big behemoth that has the other 5? Is that fragmented that you can pack man up, I just wanted to add up really high level, explore that a little bit.

That's actually a great question because this is one of the primary differences that we see in the reality of semiconductor versus software. I think on the semiconductor side, we're more used to, I won't call it a winner-take-all model, but certainly, the amount of share that you can have in any one particular area of confidence can be really high. In software, there are some examples of that. But if I'd say for the most part, there's a lot more fragmentation. Why is that? When I -- and I'm also newer to software, so I can say this is -- I've observed that decisions get made often in the line of business or for a particular company in a certain region. Then what ensues as a bunch of consolidation. They buy companies and things of that nature. And so you often do see vendor proliferation. I mean, I think if anything, that's one of the major themes and characteristics of the markets we're in is there's been a lot of vendor creep over the years. And I think idea that people are looking to go to the cloud and use cloud, Oracle, only makes that explode even further. And so the opportunity and what we're trying to articulate on that slide is, one, we've been very careful about the companies we've purchased in that they have quite a bit of synergies in terms of the end customers that we're serving, especially these Target 600. But on top of that, going forward, we're really in the beginning innings of trying to take advantage of exactly what we talked about, which is, okay, how do we solve for all that vendor proliferation? That's not something really the customers really like, to be honest. They can really take advantage of one platform provider that has all these capabilities that might be using a particular set of products and solutions from us, but only in one line of business and they can expand into their other 5 ones. That's the one use case, that's the expansion piece. The second piece is how do we get them to adopt technology and capability that they actually haven't used before. So they may be using Greg's mainframe software from the last 2 decades, but they never really got introduced to Rob's business other than maybe through DLP or through proxy. Okay, how do we then go transition that to a Symantec Enterprise Cloud engagement and marry that with mainframe ELA that we have? Those are real opportunities that are in front of us that we're working on, as we speak. And I think as we think about what drives that mid-single-digit growth rate over time, it's going to be not just if the market is growing and that there is a natural tailwind, but it's going to be this ability to expand with what we already have and then go and cross-sell and up-sell around a lot of the -- frankly, a lot of the good work that these teams are doing around product innovation.

Guys, thank you, first of all, for a great Analyst Day. I had 2 questions. One is for Greg. Greg, you made a great case for some of the Facebooks and the Twitters of the world to move to -- what you call was that -- the IBM Z type mainframe computer, but the reality is they don't. So you made a great case why they should, but maybe you could explain to them what is the assumption that they're not moving. Why are they not moving to it and why they're not able to see the value to it? And then for Tom, I think you had a slide, Tom, that you're at 46% subscription trying to go to 90% subscription over time. Could you maybe elaborate on the time frame you're thinking about? And so that's a lot of share gain. And would you not be able -- so does the 5% growth rate capture that sort of share gain? Or should, in the near term, while you're in that process, the growth rate may be a little bit more elevated?

Good. So I actually wasn't trying to make that they should go to mainframe. But I would tell you something like Twitter, where it's individual bursts like that, I probably never would recommend it. Somebody that's storing a lot of images and has to do retrieval over the mainframe paradigm would work a lot better. But I think I started talking about the percentage of workload on the mainframe, right? 70% in the world, and I know there was a question in the room. I've got a back channel about, gee, there's a lot of people that are saying cloud is 20%, why? And how do you reconcile those things? I think it's tied into this conversation. There are a bunch of workloads today, new workloads rolling out that would perform more optimally on the mainframe. The reality is if you're not already there, there is some level of bias that's saying the entry point to start is cheaper on the cloud, even though over time, you would see that the ongoing cost of that business and as you expand it is going to be more expensive to run in the cloud. So when we say or when anybody talked about the percentage of workload that's on mainframe in the world, we're talking about volume of data, we're talking about transaction throughput. We're not talking about the number of applications. And I would tell you, probably 10 years ago, I think it was 75%, 80% of the workload that was on the mainframe. But it's not that the amount of workload on the mainframe is declining. I don't want any of you to be confused by that. It is consistently growing and expanding. What's just happening is these other technologies that have come along have entered into the marketplace and then they've grown. You look at cloud and what's going on there. When we talk about cloud growing, it's not just what you think about in the cloud, it can be cloud on-prem and people start talking about hybrid and connecting them together. It can be as simple as -- and I know a lot of you are hardware, it can be as simple as a bunch of these software companies that said, "Hey, I'm no longer going to ship you a disk or a key with the upgrade to my software. You're going to download it from my website." And now they claim that as cloud software and cloud revenue. So mainframe is not declining, it's growing. There are workloads that I see today in the world that should start on the mainframe and they don't always. Some of them do. It's a small number each year, but there is significant growth going on and it will -- well into the future.

And so -- on the subscription transition -- put it that way. When we bought CA and certainly Symantec, there was residual effect of the fact that a lot of perpetual licenses have been sold traditionally, which meant from a recurring revenue basis, there was a fair amount of maintenance. The big driver of subscription growth is really the upgrade cycle that we're driving across these 3 businesses and others. And that's a big deal. It's actually probably the leading indicator in terms of where we see the portfolio going, in terms of its health over time. We've started out last year as I put the business and the software group together, basically focused on we're just going to sell subscriptions. So when we go sell an ELA or a PLA, we're going to sell a subscription solution and that's going to replace off in a number of stand-alone contracts that are typically on maintenance. And so we're at 43%. As you said, I think we're more over 50% exiting Q3. That number is going to continue to grow. I don't have a specific time frame in terms of when we're going to get there. But the goal is actually to sell exclusively subscription licenses over time. So I don't think there always be some residual maintenance revenue, I suspect. But I think our goal is clearly to get that up above 90% over time. And if we continue to execute on our plans, we'll get there.

I'll go with Matt's line of B&A semiconductor guy. So forgive me. So one of the financial metrics that you put up, Tom, I think the most impressive one was the sales and marketing going from 29% to 7% of sales. So the question for these 3 guys and forgetting that your boss is sitting to your right. Is 7% enough to do what you want to do? Did you have to leave anything on the table by cutting it that hard? And how do I reconcile that low number with each one of you had great presentations on increasing your customer interactions? I think your value beyond the code thing, Greg, and you talked about, that seems like a lot of sales and marketing effort to me. And I assume your answer is just going to be, well, we're just focused on a smaller amount of customers. So that allows us to do it. But at the end of it, is that number the right number? Are you walking away from anything? And how do you give those customers enough service at such a low sales and marketing budget?

I think you spend an inordinate amount of money in sales and marketing, going after smaller customer footprints, and we can get way more value to our business and drive more value to our customers, focusing at the top. Another thing relative to the Broadcom model has been really interesting and which has allowed us to do the Beyond code offerings in the mainframe spaces, education and services and most of any other computer company, software companies, certainly, my competitors in the mainframe space, runs as a horizontal, whereas I have that directly in the division. So you actually hit on both things. It's focused on the customer. And then within the division, the direct control I have of all the mainframe skills that were scattered and fragmented, each trying to kind of focus on a little bit of a niche, I can really focus them on driving value to the customers so that they're successful with our software solutions and make sure somebody isn't suboptimizing saying, "Oh, I want to try to make $1 or $2 more off of them taking one more class or doing this, focus it on the need and the software deployment align the education at the right time and the services to do that and you drive efficiency.

I'll just say this -- the benefit of having Broadcom software as you get to make bets in one area at the -- because you're generating so much success in another area. So it's a balancing act, diversification. And so I'm very happy with where we're at. Just remember that -- one of the cultural changes as a stand-alone company, Symantec Corporation tried to serve everybody where -- our mission is very focused. And yes, your answer that you had earlier, we absolutely stay focused and get the benefits from the same sales organization that's serving those accounts. So -- so far, so good.

Yes. Go ahead, sir. One may come up.

If you think about the traditional enterprise software model, you have a huge cost of acquisition of new customers. The classic ratio is that you need to generate 3 to 4x pipeline for conversion. So you spend a lot of time doing POCs on ultimately, people who are going to yield an ASP around 100,000 for my side of the portfolio. So you have that, which was the C model, which was terrible. And then on top of it, you basically have people -- sales guys were incentivized to basically just sign new logos. There was a complete bias at CA in terms of sales compensation to really focus on signing new customers. Again, that's 100,000 pop. And so with the model we currently have, we're really focused just on the 600 customers. But I look at my churn, my churn has improved by like a huge amount in just the last 3 years, because, again, we're very focused on the 600 accounts, and we're not focused on acquiring new customers. We're really focused on kind of developing relationships and expanding at these accounts. And that's really the significant shift.

There's also the reality in most of the software companies with a broad portfolio, where they have sales teams that are only get commissioned or incentivized to sell 1 pillar of the stack. So what you end up doing in that sales model as you overfund and you actually have this action that is not only competing with the competition, but it's competing with your own company for the next dollar. In Broadcom with the clarity we have around BSG we're focused on the customer's problem first and figuring out, okay, what is the next best opportunity? What is the thing that's going to drive the next best value to them for that next dollar procured by us. And then yes, we'll get around to the other stuff later. But it's not competing and expanding effort against each other or conflicting.

Yes. I'll just -- I'll close with this because we're out of time. But one thing I'm excited about, Ross, is that when you look at that model and we're able to drive this mid-single-digit growth rate that we feel really comfortable about that allows us to reinvest back, not just in R&D, but also in sales and marketing. So actually, when we think about the plan for next year, we're actually going to grow the sales and marketing dollars year-over-year, and that's because we've got some leverage in the model and that's supported by the growth rates we have. So I think we've got it tuned in a way where we can drive mid-single-digit recurring revenue growth. We can sustain the gross margins above 90%. If we can reinvest back in R&D and continue to increase that investment over time, in concert with some of the expansion and cross-selling that we're doing. And then we can engage and support the customers as we define them and continue to actually be able to grow some investment there. And so I think that's going to give us a little leverage in the model. We're running 70% plus and we'll get a little leverage from the revenue growth, but it does allow us to keep reinvesting and actually increasing the dollar spend on a year-over-year basis. Thanks, everybody, very much for attending. We appreciate your time today. Look forward to continue to engage.