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After the tone, please use your telephone keypad to enter your area code and phone number, then press the pound key. Good afternoon, ladies and gentlemen, and welcome to Broadcom's Symantec Enterprise Security business transaction call. As a reminder, this call is being recorded. Currently, all participants are in a listen-only mode. Following prepared remarks, we will begin a question-and-answer period. If you would like to ask a question, please press star one on your touchtone phone at any time during prepared remarks. We will be limiting analysts to one question each to get to as many questions as possible. If you have additional questions, please queue up again. I would now like to introduce your host for today's call, Ms. Ji Yoo, Director, Investor Relations. Ms. Ji Yoo, you may begin.
Thank you operator. Good afternoon, everyone. Joining me today are Hock Tan, President and CEO, and Tom Krause, Chief Financial Officer of Broadcom. Also joining us is Art Gilliland, Executive Vice President and General Manager of Enterprise Security at Symantec. During the prepared comments section of this call, Hock, Tom, and Art will be providing details regarding our acquisition of Symantec's Enterprise Security business that was announced earlier today. We will take questions after the end of our prepared remarks. Please refer to our press release issued today and our recent filings with the SEC for information on forward-looking statements and the specific risk factors that could cause our actual results to differ materially from the forward-looking statements made on this call. This conference call is being webcast live, and a recording will be available via telephone playback for one week.
It will also be archived in the Investor section of our website at broadcom.com. I'll now turn the call over to Hock.
Good afternoon. Welcome, everyone. Today, Broadcom announced the acquisition of Symantec's Enterprise Security business, the number one player in cybersecurity software. This transaction not only expands Broadcom's infrastructure software footprint, it also strengthens our position as one of the world's leading infrastructure technology companies, both in hardware and software. We plan to incorporate the Symantec brand into the Broadcom portfolio, while Symantec's consumer business will remain separate and be rebranded. For the remainder of the call, we will refer to Symantec Enterprise Security as just Symantec. To now start off, I'd like to briefly summarize why we're so excited about this transaction. I refer you to the deck of slides you may have on Webex. Acquiring Symantec furthers our efforts to build one of the world's leading infrastructure technology platforms.
It is the logical next step of Broadcom's Infrastructure Software strategy following our acquisitions of Brocade and CA, and adds a $160 billion cybersecurity market to Broadcom's addressable market. Now, by acquiring this number one cybersecurity franchise, we will gain a portfolio of mission-critical security solutions which are deeply embedded among our Global 2,000 customers. There will be meaningful cross-selling opportunities with Brocade and CA solutions, and we believe this acquisition will enable Broadcom to drive even greater levels of customer success. We expect Symantec to add more than $2 billion of sustainable run rate revenues with its leading franchises in cybersecurity. We also expect to achieve more than $1 billion in run rate cost synergies within 12 months post-close. Importantly, this transaction also provides us with the opportunity to achieve our financial objective of double-digit cash on cash returns.
Turning on to slide five, the next slide over, you can see this acquisition is a continuation of Broadcom's strategy of successfully expanding the company's footprint and roadmap by constructing a portfolio with a history of innovation and technology leadership. Symantec represents another step in building the company's Infrastructure Software strategy that we created and built upon with our Brocade and CA acquisitions. We have repeatedly, over the past several years, acquired strong franchise businesses with recurring cash flows and operational improvements potential that enable us to deliver strong cash-on-cash returns. Adding Symantec Enterprise Security enables us to leverage existing sales channels, cross-sell products, and generate value from synergies. We will intend to integrate rapidly Symantec onto the Broadcom platform and bring the same core customer relationships and efficiencies to the business as we have to the rest of the Broadcom portfolio. Turning on to slide number six.
This acquisition builds upon our, as I said, early acquisitions of Brocade two years ago and CA last year to further establish Broadcom as one of the world's leading infrastructure technology companies across both hardware and software. Post the Symantec deal, you can see in this slide that approximately 29% of our revenue will now come from software solutions. Our software revenues are predominantly recurring and reduce volatility overall. In addition, software helps open our technology and products to end users, not just original equipment manufacturers. Okay. Symantec is the number one cybersecurity software platform and comprises three key distinct market-leading franchises. Turning on to slide seven. First is endpoint security. Next, web proxy, which includes Symantec's Blue Coat acquisition from 2016, as well as integrated cloud access security brokers. Thirdly, data loss prevention, which as you know is part of data security and prevention.
Endpoint and web proxy operate in stable markets, while data security and cloud access security benefit from reliable revenue streams in growing markets. These market-leading franchises comprise the mission-critical products with best-in-class renewal rates within our core G2000 customer base. As you know, the Global 2000 drives a substantial percentage of the $1.6 trillion spent on enterprise IT every year. These enterprises have complex heterogeneous backends across SaaS, public cloud, hybrid, private cloud, client server, and mainframe environments that require a broad range of capabilities. Historically, they have often had to source products to meet their requirements from a wide variety of vendors. These Global 2000 customers are increasingly, however, demanding a more simplified vendor experience. Our focus, first with Brocade, then CA, and now Symantec, has been to grow our wallet share with the Global 2000 customer base.
One example clearly of how we have been able to do this has been to offer a large global financial institution. We have announced this, Barclays Bank, a strategic portfolio license agreement, or PLA as we call it, during a recent renewal. This enterprise-wide access to our entire suite of Infrastructure Software, and it will enable Barclays to implement a multi-year cross-organizational initiative to streamline its IT operations while reducing complexity and cost in order to speed time to market for value-added customer applications. It will also offer significant savings for them by reducing their need for multiple vendors. We have been successful in repeating this model with numerous G2000 core customers over the past nine months since we closed CA. Let's turn now to slide eight.
Revenue synergies aside, we view Symantec as a financially compelling opportunity to enhance business efficiency and drive margin improvement through right-sizing Symantec's cost structure. We have already created a go-to-market organization targeting the Global 2000 with Brocade and CA. We will add the Symantec products to this platform. The Symantec customer footprint largely overlaps that of CA and Brocade, and that will allow us to generate substantial synergies in selling. As has always been our business model, we only focus our R&D on strengthening our franchises. Consistent with this, we intend to enhance our investment in endpoint security, web security, and data loss prevention, while scaling down investment in other areas where the return on investment or ROI may not be as compelling. In corporate infrastructure, Broadcom has, over the years, built a very robust and efficient platform, scaling across IT, facilities, human resource, finance, and legal.
We intend to migrate Symantec over to this platform. As a result of all these actions, we project we can increase the existing $350 million of standalone EBITDA of Symantec enterprise business to roughly $1.3 billion pro forma EBITDA at the end state. To now dive deeper into Symantec's enterprise security products, I'll hand the call over to Art. Art?
Thank you, Hock, and thank you for inviting me to participate on the call. Hello, everyone. My name is Art Gilliland, and I'm the Executive Vice President and General Manager of Symantec's Enterprise Security business. My background is 20 years in the security industry, which has spanned across almost every security domain, delivering software and services to the largest enterprises and organizations in the world. I'll pick it up on slide nine. Symantec was founded in 1982, and over the last 37 years has established itself as the number one leader in enterprise security, reflected by its market share and product leadership across five Magic Quadrant. These leading product offerings have been sustained over decades in an industry that is changing constantly, with Symantec's core enterprise portfolio improving continuously to better serve customers' evolving cybersecurity requirements.
Symantec has not only maintained leadership in its core markets, but has also claimed leadership in the emerging markets which are most critical for its largest customers as they transition new services to the cloud. To that point, Symantec has continued to innovate across all of its core enterprise product lines. Moving to slide 10. Symantec Endpoint Protection provides threat protection for common devices customers use to access information, including desktops, servers, and mobile devices. Symantec Endpoint Protection incorporates advanced machine learning technology and supports our customers' transition to cloud-based threat protection. Symantec's continued investment in R&D demonstrates our commitment to adapt to the rapidly changing landscapes required to maintain a sustained leadership position over the last two decades. Symantec's newest version of our endpoint security products has a rearchitected management console designed natively for cloud deployment. Now on to slide 11.
With the acquisition of Blue Coat, Symantec entered the web security market with a proven technology leadership position. Over the last decade, Symantec has maintained a strong market position as a core element to our customers' infrastructure. Symantec Web Security is extremely well-positioned in the market, given its strong, established Blue Coat franchise. Blue Coat provides existing customers a great way to implement a hybrid on-premise cloud web proxy architecture or go completely to the cloud when they are ready. Looking at slide 12. Symantec has played an instrumental role in creating and leading the market for data loss prevention. Symantec has been an industry leader in data loss prevention for over a decade and has continued its innovation in this product line to maintain its market leadership position.
Given the increased importance of data privacy globally and the threat of information theft, Symantec is well-positioned to continue to strengthen its already strong market share and innovation leadership position. Turning to slide 13. While Symantec has maintained longstanding leadership positions in well-established areas where we have chosen to compete, Symantec has also innovated to capture leadership positions in critical markets that are important to our largest customers as they migrate and innovate new solutions in the cloud. Symantec is also a leader in the emerging cloud security market and provides a next-generation CASB technology that is on par with the best in the industry and enables companies and employees to utilize hundreds of third-party SaaS applications. Now moving on to slide 14.
As I have shared in each of our major product categories, Symantec has maintained a long-standing leadership position in the face of an array of established and emerging competitors. Symantec has successfully maintained its leadership position, not only through the breadth and diversity of its product offering, but also because of its strong brand and customer relationships. These help Symantec produce an integrated, best-in-class suite of solutions. The proposed acquisition by Broadcom further enhances this security portfolio by bringing market-leading identity security and management solutions. The exciting part for our customers is that when you put together the combined solutions, we'll offer enhanced protection, reduced management complexity, and an overall lower total cost of ownership across their security spend. The safety and security that Symantec provides its customers is of paramount importance, and we are committed to maintaining those very high standards.
Now I'd like to turn it over to Tom, who will discuss the details of this transaction. Tom?
Thank you, Art. Before I talk about the deal, I'd like to briefly mention our guidance. As you may have seen in the press release, we reaffirmed our revenue outlook for fiscal year 2019 and continue to expect to achieve $22.5 billion of revenues, including $17.5 billion from Semiconductor Solutions and $5 billion from Infrastructure Software. As we discussed on our last earnings call, our revised fiscal 2019 revenue guidance reflected an anticipated continuation of trade tension and the resulting impact on the demand environment. We do not see this dynamic changing in the near term. That being said, we have not seen any further deterioration in our business since our last call. With that, let's move on to a summary of the transaction, as you'll see on slide 15.
We will acquire the assets of Symantec's Enterprise Security business for $10.7 billion in cash on a cash-free and debt-free basis. In connection with this transaction, we are adjusting our capital allocation. Our dividend policy of distributing approximately 50% of prior year free cash flow to our shareholders will remain unchanged. As a result, given our annual guidance, we continue to expect to deliver, subject to board approval, a double-digit dividend increase at the end of the year. I would note this is largely the result of the contribution that the CA acquisition is making to our free cash flow in fiscal 2019. With our excess cash flow beyond the dividend, however, we now intend to shift our focus to rapidly paying down debt as opposed to stock repurchases.
As we've said many times before, the investment-grade market is critical to our strategy, and we fully intend to maintain our investment-grade credit rating. Now, as it relates to this deal, we expect Symantec to contribute more than $2 billion of sustainable incremental run rate revenues and approximately $1.3 billion of pro forma EBITDA, including synergies, after executing our revenue optimization strategy. We anticipate achieving more than $1 billion in run rate cost synergies 12 months post-close, primarily from sales, marketing, and G&A functions, while focusing R&D and support efforts on the highest ROI opportunities. The acquisition is subject to antitrust approvals in the U.S., E.U., and Japan, and other custom closing conditions. We expect the transaction to close in the first quarter of fiscal 2020, which starts November 4, 2019.
There is no regulatory approval required in China, and Symantec does not require a shareholder vote on their side. Now turning to slide 16. Symantec, as the leading security brand, aligns with what we look for in our acquisitions. Stable and growing markets, established leadership products that are mission-critical to customers, a long operating history, selling into similar customers, and an opportunity to rightsize costs and generate significant sustainable cash flows. First, Symantec operates in an established cybersecurity market projected to grow to approximately $161 billion. Second, Symantec holds a leadership position in each of its markets and is ranked the number one digital safety brand globally. Symantec's products are established and mission-critical to customers, with 99% of the top 500 customers having an average tenure of over three years. Further, those enterprise customers are global leaders in nearly every key vertical and represent 86% of the Fortune 500.
Symantec has a long operating history, founded in 1982, and has a strong IP portfolio. Symantec is also a financially compelling opportunity with more than $2 billion of sustainable run rate revenue and clear line of sight to achieving approximately $1.3 billion of pro forma EBITDA post synergies. You can see on slide 17 that since we started our diversification strategy in November 2016 with the acquisition of Broadcom, our total shareholder return is over two times ahead of the S&P 500 and approximately 50% ahead of the Nasdaq in the same period. Out of the top tech players shown here, Broadcom is proud to be among the leaders in total shareholder return as we execute our diversification strategy. In that time, Broadcom has returned approximately $19 billion to shareholders, about $12 billion of which was through share buybacks and eliminations, and about $7 billion of which was through dividends.
We believe we hold the necessary expertise to provide significant benefit to Symantec and continue our track record of building shareholder value over the long term. With that, I'll ask the operator to open the call to Q&A. Operator?
If you would like to ask a question, please press star one on your touchtone phone at any time. Again, we will be limiting analysts to one question each so we can get to everyone. If you have additional questions, please queue up again. Your first question comes from Harlan Sur with JP Morgan.
Good afternoon. Congratulations on the acquisition. When I think about these security related capabilities that Symantec brings to customers, endpoint protection, web, cloud security, these types of software applications are going to require higher and higher levels of performance, not only from the hardware, but also from the silicon as well, especially as more of these things move to the cloud. Actually here, there actually does appear to be some synergies with the semiconductor franchise. I know that the Broadcom team is already working with some of your cloud customers on silicon that accelerates security applications via your SmartNIC processors, custom-made capabilities. Hock, does this acquisition potentially enhance your semiconductor business and security and broaden your IP portfolio within your standard product or ASICs semiconductor franchises?
Well, thanks for your kind words at the beginning, and you do hit it right on too, which is a large part of the reason why we have pivoted after being very strong in hard semiconductors for many years into software solutions as well. As I said before, what you're saying is hardware and software in IT technology becoming more and interchangeable. Solutions of pure custom design, hard coding everything in silicon, has started to shift towards a situation where you actually make a trade-off, and the trade-off is towards merchant silicon and merchant silicon that you can program to enable a lot more functionality, easier scale out of data centers, especially in cloud, that we are directly engaging. Not just with cloud guys, by the way. With also large scale enterprises.
Hence I keep emphasizing in this entire process, I did that with Brocade, I did that with CA acquisition. I'm doing it now, which is we are very focused in our go-to-market, in our product development plans on the largest enterprises in the world. As I call them collectively, the G2000. Probably maybe slightly less in number than that, but it is. If you look at our pattern, as I said in the slides, we keep increasing the footprint they already have in Infrastructure Software. That is Brocade, CA mainframe, CA enterprise, distributed software, and now Symantec security solution. These are all embedded solutions, embedded software, very much in the core of the IT networks of these G2000. It's a big increase and it enables and facilitates as we start to engage these end users on our technology of networking in their own networks.
We're reaching out to end users and all these solutions we are acquiring and adding on to our portfolio has made it very much easier. You're right 100%, we are now very engaged in the largest enterprises, just as we are very engaged with the hyper-cloud guys on networking and security, not just for networking, but for endpoints as well.
Your next question comes from Vivek Arya with Bank of America Merrill Lynch.
Thanks for taking my question. Hock, in the past, when you acquired Brocade and CA, from the outside it seemed like there were limited kind of technology risk. You were getting into well established, some would say more mature technologies. In this case, with Symantec Enterprise Security, you're getting into more of a growth industry. There's perhaps more competition, maybe more technology risk. Could you address that perception? Thank you.
Thank you for that question. Yes, pleased to do so. I'll open it up in my simple-minded way of thinking, I'll invite Art to chip in and get me out of trouble when I go in the wrong place. It's very simple. See, in the largest enterprises in the world, we're engaged very closely with them now, from CA, Brocade, particularly more so. These are the biggest spenders of IT. They have the largest scale of IT infrastructure within their company. When you look at it, you can almost put it to, as one CIO of one of the biggest financial institutions tell me, what people may not fairly, pretty much get out there in the public is that 80% of our IT spend is on core building blocks infrastructure that runs our operation, that runs our business, 80%.
Those are very embedded applications, embedded infrastructure that do not change easily, and they're proven, trusted, and works. All of CA, all of Brocade, and a lot of Symantec are in those embedded applications. They do not change. They are sticky. That fits exactly the Broadcom franchise model of sustainable revenue. The 20%, he says, seems to get a lot of attention. They are the bright, shiny objects of advanced features that a lot of the world seems to look at. A lot of the world seems to miss the fact that that 80% spend that grinds up year after year, and embedded solutions, infrastructure solutions, do not easily get displaced nor change dramatically. Stable. They may not grow double digits, but they do grow as consumption, as the enterprises grow, and they are very sustainable. That's ours, in simple terms, our model.
Yeah, I think, this is Art. I think if you look at the portfolio that we're talking about here, even in an industry that is filled with sort of flash in the pan and sort of exciting new technologies, each of the technologies we've talked about have been market leaders for decades. They're market leaders, and any technology that's been a leader for that long has a sustained customer relationship, has a sustained deployment, and isn't about the shiny new object. This is about core infrastructure that customers use to protect themselves.
Your next question is from John Pitzer with Credit Suisse.
Yeah, good afternoon, guys. Hock, just on that, can you talk a little bit about the expected organic growth you see in the Symantec enterprise business? Is that $2 billion of revenue you talked about kind of a stable run rate? You also, in your prepared comments, talked about just revenue synergies with Brocade and CA. I'm just kind of curious, is that solely a function of just customer footprint and distribution, or are there actual technology building blocks from all three businesses that you can start to blend together to create sort of new innovative solutions? Thank you.
Very good question. Yes. It's both, to answer your question directly. The most obvious one is, as I say, we look at the G2000, the biggest spend of IT globally, enterprises, and we also see overlap of Brocade, overlap of CA software, and overlap of Symantec. It's not complete overlap. What we are doing is we actually, as we combine these three together, we actually are seeing an expansion of customers within the G2000 where we have some level of footprint. The cross-selling opportunities that present of expanding the footprint of all three to a larger group of large enterprises is there to drive organic growth within these three product lines. Keep in mind, we will create, as we have done for CA and Brocade, a common sales organization just targeting those G2000.
As the number of accounts expand with the addition of Symantec, so will we expand our sales organization. We see that as great investment to drive organic growth within the portfolio that we have, for sure. The other way we have, obviously, is to get very innovative of the way we sell our products, as I say, to offer portfolio-wide licensing arrangement to the same customer, and hence, through the benefits of doing this for enterprise-wide portfolio expansion as we go through customer by customer, to basically increase, as I put it, share the wallet in each of these customers.
The other area of organic growth, and to simply put it this way, we expect what is now approximately a $7 plus billion portfolio between Brocade, CA, and Symantec to be a different segment that will actually grow and grow within this scope of our core customer group within the Global 2000.
Your next question is from Stacy Rasgon with Bernstein Research.
Hi, guys. Thanks for taking my question. With more than $2 billion in revenue, to me, that suggests that you don't see very much of the current revenue profile at risk. They're running about two three, two four. How do I square that with that? I'm going to be a little blunt here. I guess no offense to Art, Hock, most of your investors sort of have a low opinion, I think, of the quality of this asset set. It looks like it's been losing share. It hasn't really been growing in a market that has been growing. I guess, how do investors get confidence that that franchise actually is sustainable and that it actually can hold it, especially given the magnitude of the cost cuts that are coming out of it?
It doesn't seem like it was able to grow before while that cost was still in there. I guess, how do your own investors get comfortable with this?
Well, I can go into reams and reams of discussion of how it is embedded and all that stuff, how we actually not look only for it to, as you say, possibly decline. We think it will actually grow in conjunction with our focus on the Global 2000 infrastructure, together with our other portfolio of products, which we have seen it grow. The best indicator, the proof is in the eating, as they say. We did Brocade over two years ago.
Whoever thought when we bought it, and we sat down in front of you two years ago in a call and said, "Well, this is about maybe $1.3 billion, $1.4 billion revenue, and we will make about $700 million, $800 million of EBITDA, and we'd like to think that it probably will be flat at best." Well, it grew pretty dramatically in 2017 and 2018, and we made over $1 billion of EBITDA just last year, and it continued to have momentum actually moving along. Now, 2018 was extraordinarily strong, even my view. 2019 sustained to a large extent. We bought CA. We see the same thing happening now, nine months, to be fair, so it's not as long as Brocade. We've been running franchises for a long time, and we know when something behaves like a franchise.
In the case of CA, we're booking in our core accounts, our rate of booking increases on an annualized basis, more than 78% a year on our core accounts as we increase capacity, as we increase products. Annualized on core accounts, which represents some 75% of the revenue, we're booking 78% annual growth rate, nine months out with renewals. Now, to be fair, on the long tail of the 25%, which tends to happen, which are the smaller enterprises, SMBs, where stickiness does not exist as much, where bright, shiny objects exist a lot, as we say. Sure, we expect attrition, especially when we're not focused on that, of about 10% or so revenue a year. That is more than compensated by the 75% growth in bookings and translating the revenues on the core accounts where that kind of enterprise software, those are very sustainable, very sticky.
Those are the core software, enterprise infrastructure software, built or embedded into the core IT infrastructure of those Global 2000 companies. You do not take them out easily, especially if you continue to do a great job of providing support and adoption for those Global 2000 enterprises. That's the game here. It's not, as I say, about looking at that 20% advanced feature software, which in my view, attracts everyone, no question, but it represents a small part of the real spend, and they are, your words exactly, very competitive, very often emerging players, and not in the least sticky.
We have reached the allotted time for questions. We'll now turn the call back to Tom Krause.
Okay, thanks everybody. Out of respect for our friends over at Symantec, they're going to be kicking off their call now. We're going to pause the call at this time. Thank you very much for joining, and we'll be talking again on September 12th when we do our next earnings call. Thanks, everybody.
Thank you.
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