Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”) and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended October 30, 2022 (“fiscal year 2022”) included in our Annual Report on Form 10-K for fiscal year 2022 (“2022 Annual Report on Form 10-K”). References to “Broadcom,” “we,” “our,” and “us” are to Broadcom Inc. and its consolidated subsidiaries, unless otherwise specified or the context otherwise requires. This Form 10-Q may contain predictions, estimates and other forward-looking statements that involve a number of risks and uncertainties, which are made under the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements may include our pending acquisition of VMware, Inc.; projections of financial information; statements about historical results that may suggest trends for our business; statements of the plans, strategies and objectives of management for future operations; and statements of expectation or belief regarding future events (including any acquisitions we may make), technology developments, our products, product sales, expenses, liquidity, cash flow and growth rates, customer concentration and relationships, or enforceability of our intellectual property (“IP”) rights. Such statements are based on current expectations, estimates, forecasts and projections of our industry performance and macroeconomic conditions, based on management’s judgment, beliefs, current trends and market conditions, and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Accordingly, we caution you not to place undue reliance on these statements. Important factors that could cause actual results to differ materially from our expectations are disclosed under “Risk Factors” in Part II, Item 1A of this Form 10-Q, and in other documents we file from time to time with the Securities and Exchange Commission (the “SEC”). All of the forward-looking statements in this Form 10-Q are qualified in their entirety by reference to the factors listed above and those discussed under the heading “Risk Factors” below. We undertake no intent or obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.

Overview

We are a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. We develop semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products. We have a history of innovation in the semiconductor industry and offer thousands of products that are used in end products such as enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Our infrastructure software solutions enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms. Our portfolio of industry-leading infrastructure and security software is designed to modernize, optimize, and secure the most complex hybrid environments, enabling scalability, agility, automation, insights, resiliency and security. We also offer mission critical fibre channel storage area networking (“FC SAN”) products and related software in the form of modules, switches and subsystems incorporating multiple semiconductor products.

We have two reportable segments: semiconductor solutions and infrastructure software. Our semiconductor solutions segment includes all of our product lines and IP licensing. Our infrastructure software segment includes our mainframe, distributed and cyber security solutions, and our FC SAN business.

Quarterly Highlights

Highlights during the fiscal quarter ended July 30, 2023 include the following:

• We generated $4,719 million of cash from operations.

• We paid $1,901 million in cash dividends.

• We repurchased $1,707 million of common stock.

Pending Acquisition of VMware, Inc.

On May 26, 2022, we entered into an Agreement and Plan of Merger (the “VMware Merger Agreement”) to acquire all of the outstanding shares of VMware, Inc. (“VMware”) in a cash-and-stock transaction (the “VMware Merger”) that values VMware at approximately $61 billion, based on the closing price of Broadcom common stock on May 25, 2022. We will also assume VMware’s closing date outstanding debt.

Under the terms of the VMware Merger Agreement, each share of VMware common stock issued and outstanding immediately prior to the effective time of the VMware Merger will be indirectly converted into the right to receive, at the election of the holder of such share of VMware common stock, either $142.50 in cash, without interest, or 0.2520 shares of Broadcom common stock. The stockholder election will be subject to proration, such that the total number of shares of VMware common stock entitled to receive cash and the total number of shares of VMware common stock entitled to receive Broadcom common stock, will, in each case, be equal to 50% of the aggregate number of shares of VMware common stock issued and outstanding immediately prior to the effective time of the VMware Merger.

We will assume all outstanding VMware restricted stock unit (“RSU”) awards and performance stock unit awards held by continuing employees. The assumed awards will be converted into RSU awards for shares of Broadcom common stock. All outstanding in-the-money VMware stock options and RSU awards held by non-employee directors will be accelerated and converted into the right to receive cash and shares of Broadcom common stock, in equal parts.

Effective upon the effective time of the VMware Merger, one member of the VMware Board of Directors, to be mutually agreed by us and VMware, will be added to our Board of Directors.

In connection with the execution of the VMware Merger Agreement, we entered into a commitment letter on May 26, 2022, with certain financial institutions that committed to provide, subject to the terms and conditions of the commitment letter, a senior unsecured bridge facility in an aggregate principal amount of $32 billion. On August 15, 2023, we entered into a credit agreement (the “2023 Credit Agreement”), which provides us with the ability to borrow up to $28,390 million of term loan commitments and terminated the commitment letter entered into on May 26, 2022. The funding of the 2023 term loan commitments is dependent on the closing of the VMware Merger, and may be increased by up to $2,000 million.

The VMware Merger, which is expected to be completed on October 30, 2023, is subject to satisfaction or waiver of customary closing conditions, including clearance under the antitrust laws of certain jurisdictions. On October 3, 2022, we registered approximately 59 million shares of our common stock. On November 4, 2022, VMware stockholders adopted the VMware Merger Agreement. We and VMware each have termination rights under the VMware Merger Agreement and, under specified circumstances, upon termination of the agreement, we and VMware would be required to pay the other a termination fee of $1.5 billion.

Critical Accounting Estimates

The preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Our actual financial results may differ materially and adversely from our estimates. Our critical accounting estimates are those that affect our historical financial statements materially and involve difficult, subjective or complex judgments by management. Those estimates include revenue recognition, valuation of goodwill and long-lived assets, and income taxes.

There were no significant changes in our critical accounting estimates during the three fiscal quarters ended July 30, 2023 compared to those previously disclosed in “Critical Accounting Estimates” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2022 Annual Report on Form 10-K.

Results of Operations

Fiscal Quarter and Three Fiscal Quarters Ended July 30, 2023 Compared to Fiscal Quarter and Three Fiscal Quarters Ended July 31, 2022

The following tables set forth our results of operations for the periods presented:

						Fiscal Quarter Ended
						July 30, 2023						July 31, 2022						July 30, 2023						July 31, 2022
						(In millions)												(As a percentage of net revenue)
Statements of Operations Data:
Net revenue:
Products						$	6,917					$	6,627					78		%				78		%
Subscriptions and services						1,959						1,837						22						22
Total net revenue						8,876						8,464						100						100
Cost of revenue:
Cost of products sold						2,107						1,921						24						23
Cost of subscriptions and services						165						156						2						2
Amortization of acquisition-related intangible assets						439						705						5						8
Restructuring charges						1						1						—						—
Total cost of revenue						2,712						2,783						31						33
Gross margin						6,164						5,681						69						67
Research and development						1,358						1,255						16						15
Selling, general and administrative						388						323						4						4
Amortization of acquisition-related intangible assets						350						359						4						4
Restructuring and other charges						212						7						2						—
Total operating expenses						2,308						1,944						26						23
Operating income						$	3,856					$	3,737					43		%				44		%

						Three Fiscal Quarters Ended
						July 30, 2023						July 31, 2022						July 30, 2023						July 31, 2022
						(In millions)												(As a percentage of net revenue)
Statements of Operations Data:
Net revenue:
Products						$	20,740					$	19,097					78		%				79		%
Subscriptions and services						5,784						5,176						22						21
Total net revenue						26,524						24,273						100						100
Cost of revenue:
Cost of products sold						6,351						5,488						24						22
Cost of subscriptions and services						472						470						2						2
Amortization of acquisition-related intangible assets						1,415						2,142						5						9
Restructuring charges						3						4						—						—
Total cost of revenue						8,241						8,104						31						33
Gross margin						18,283						16,169						69						67
Research and development						3,865						3,722						15						16
Selling, general and administrative						1,174						1,012						4						4
Amortization of acquisition-related intangible assets						1,046						1,154						4						5
Restructuring and other charges						231						42						1						—
Total operating expenses						6,316						5,930						24						25
Operating income						$	11,967					$	10,239					45		%				42		%

Net Revenue

A relatively small number of customers account for a significant portion of our net revenue. Direct sales to WT Microelectronics Co., Ltd., a distributor, accounted for 21% and 20% of our net revenue for the fiscal quarter and three fiscal quarters ended July 30, 2023, respectively, and 18% and 19% of our net revenue for the fiscal quarter and three fiscal quarters ended July 31, 2022, respectively.

We believe aggregate sales to our top five end customers, through all channels, accounted for approximately 35% of our net revenue for each of the fiscal quarter and three fiscal quarters ended July 30, 2023 and July 31, 2022. We believe aggregate sales to Apple Inc., through all channels, accounted for approximately 18% and 19% of our net revenue for the fiscal quarter and three fiscal quarters ended July 30, 2023, respectively, and approximately 20% of our net revenue for each of the fiscal quarter and three fiscal quarters ended July 31, 2022. We expect to continue to experience significant customer concentration in future periods. The loss of, or significant decrease in demand from, any of our top five end customers could have a material adverse effect on our business, results of operations and financial condition.

From time to time, some of our key semiconductor customers place large orders or delay orders, causing our quarterly net revenue to fluctuate significantly. This is particularly true of our wireless products as fluctuations may be magnified by the timing of launches, and seasonal variations in sales, of mobile devices. In addition, the macroeconomic environment remains uncertain and may cause our net revenue to fluctuate significantly and impact our results of operations.

The following tables set forth net revenue by segment for the periods presented:

						Fiscal Quarter Ended																								Three Fiscal Quarters Ended
Net Revenue by Segment						July 30, 2023						July 31, 2022						$ Change						% Change						July 30, 2023						July 31, 2022						$ Change						% Change
						(Dollars in millions)
Semiconductor solutions						$	6,941					$	6,624					$	317					5		%				$	20,856					$	18,726					$	2,130					11		%
Infrastructure software						1,935						1,840						95						5		%				5,668						5,547						121						2		%
Total net revenue						$	8,876					$	8,464					$	412					5		%				$	26,524					$	24,273					$	2,251					9		%

						Fiscal Quarter Ended												Three Fiscal Quarters Ended
Net Revenue by Segment						July 30, 2023						July 31, 2022						July 30, 2023						July 31, 2022
						(As a percentage of net revenue)
Semiconductor solutions						78		%				78		%				79		%				77		%
Infrastructure software						22						22						21						23
Total net revenue						100		%				100		%				100		%				100		%

Net revenue from our semiconductor solutions segment increased in the fiscal quarter ended July 30, 2023 compared to the prior year fiscal period due to strong product demand, primarily for networking products. The increase in the three fiscal quarters ended July 30, 2023 compared to the prior year fiscal period was due to strong product demand, primarily for networking, server storage and broadband products. Net revenue from our infrastructure software segment increased in the fiscal quarter and three fiscal quarters ended July 30, 2023 compared to the prior year fiscal periods primarily due to increases in sales from our mainframe solutions products, partially offset by lower demand for our FC SAN products.

Gross Margin

Gross margin was $6,164 million, or 69% of net revenue, for the fiscal quarter ended July 30, 2023 compared to $5,681 million, or 67% of net revenue, for the fiscal quarter ended July 31, 2022, and $18,283 million, or 69% of net revenue, for the three fiscal quarters ended July 30, 2023 compared to $16,169 million, or 67% of net revenue, for the three fiscal quarters ended July 31, 2022.

The increases were primarily due to lower amortization of acquisition-related intangible assets, mainly from our 2016 acquisition of Broadcom Corporation, partially offset by less favorable margin within our semiconductor solutions segment driven primarily by product mix.

Research and Development Expense

Research and development expense increased $103 million, or 8%, and $143 million, or 4%, for the fiscal quarter and three fiscal quarters ended July 30, 2023, respectively, compared to the prior year fiscal periods. The increases were primarily

due to higher stock-based compensation expense as a result of annual employee equity awards granted at higher grant-date fair values in our fiscal year ending October 29, 2023 (“fiscal year 2023”), partially offset by lower variable employee compensation expense.

Selling, General and Administrative Expense

Selling, general and administrative expense increased $65 million, or 20%, and $162 million, or 16%, for the fiscal quarter and three fiscal quarters ended July 30, 2023, respectively, compared to the prior year fiscal periods. The increases were primarily due to higher costs incurred in connection with the pending VMware Merger and higher stock-based compensation expense as a result of annual employee equity awards granted at higher grant-date fair values in fiscal year 2023, partially offset by lower variable employee compensation expense.

Amortization of Acquisition-Related Intangible Assets

Amortization of acquisition-related intangible assets recognized in operating expenses decreased $108 million, or 9%, for the three fiscal quarters ended July 30, 2023 compared to the prior year fiscal period primarily due to lower amortization of customer-related intangible assets from our acquisition of LSI Corporation.

Restructuring and Other Charges

Restructuring and other charges in the fiscal quarter and three fiscal quarters ended July 30, 2023 primarily included non-recurring charges related to IP litigation.

Stock-Based Compensation Expense

Total stock-based compensation expense was $629 million and $1,533 million for the fiscal quarter and three fiscal quarters ended July 30, 2023, respectively, and $373 million and $1,146 million for the fiscal quarter and three fiscal quarters ended July 31, 2022, respectively. The increases were primarily due to annual employee equity awards granted at higher grant-date fair values in fiscal year 2023.

The following table sets forth the total unrecognized compensation cost related to unvested stock-based awards outstanding and expected to vest as of July 30, 2023. The remaining weighted-average service period was 3.6 years.

Fiscal Year:						Unrecognized Compensation Cost, Net of Expected Forfeitures
						(In millions)
2023 (remainder)						$	621
2024						2,245
2025						1,815
2026						1,379
2027						692
Thereafter						126
Total						$	6,878

During the first quarter of fiscal year ended November 3, 2019 (“fiscal year 2019”), our Compensation Committee approved a broad-based program of multi-year equity grants of time- and market-based RSUs (the “Multi-Year Equity Awards”) in lieu of our annual employee equity awards historically granted on March 15 of each year. Each Multi-Year Equity Award vests on the same basis as four annual grants made on March 15 of each year, beginning in fiscal year 2019, with successive four-year vesting periods. We recognize stock-based compensation expense related to the Multi-Year Equity Awards from the grant date through their respective vesting date, ranging from 4 years to 7 years.

Segment Operating Results

						Fiscal Quarter Ended																								Three Fiscal Quarters Ended
Operating Income by Segment						July 30, 2023						July 31, 2022						$ Change						% Change						July 30, 2023						July 31, 2022						$ Change						% Change
						(Dollars in millions)
Semiconductor solutions						$	4,092					$	3,916					$	176					4		%				$	12,215					$	10,891					$	1,324					12		%
Infrastructure software						1,444						1,283						161						13		%				4,163						3,903						260						7		%
Unallocated expenses						(1,680)						(1,462)						(218)						15		%				(4,411)						(4,555)						144						(3)		%
Total operating income						$	3,856					$	3,737					$	119					3		%				$	11,967					$	10,239					$	1,728					17		%

Operating income from our semiconductor solutions segment increased in the fiscal quarter ended July 30, 2023 compared to the prior year fiscal period primarily due to higher net revenue from networking products, and increased in the three fiscal quarters ended July 30, 2023 compared to the prior year fiscal period primarily due to higher net revenue from networking, server storage, and broadband products. Operating income from our infrastructure software segment increased in the fiscal quarter and three fiscal quarters ended July 30, 2023 compared to the prior year fiscal periods primarily due to higher net revenue from our mainframe solutions products, partially offset by lower net revenue from our FC SAN products.

Unallocated expenses include amortization of acquisition-related intangible assets; stock-based compensation expense; restructuring and other charges; acquisition-related costs; and other costs that are not used in evaluating the results of, or in allocating resources to, our segments. Unallocated expenses increased 15% for the fiscal quarter ended July 30, 2023 compared to the prior year fiscal period primarily due to higher stock-based compensation expense and non-recurring charges related to IP litigation, partially offset by lower amortization of acquisition related intangible assets. Unallocated expenses decreased 3% for the three fiscal quarters ended July 30, 2023, compared to the prior year fiscal period, due to lower amortization of acquisition-related intangible assets, partially offset by higher stock-based compensation expense, non-recurring charges related to IP litigation, and acquisition-related costs.

Non-Operating Income and Expenses

Interest expense. Interest expense was $406 million and $1,217 million for the fiscal quarter and three fiscal quarters ended July 30, 2023, respectively, compared to $406 million and $1,331 million for the fiscal quarter and three fiscal quarters ended July 31, 2022, respectively. The decrease for the three fiscal quarters ended July 30, 2023 compared to the prior year fiscal period was primarily due to losses on extinguishment of debt related to debt transactions incurred in the prior year fiscal period. We expect to incur additional interest expense in future periods as a result of indebtedness associated with the pending VMware Merger.

Other income (expense), net. Other income (expense), net, includes interest income, gains or losses on investments, foreign currency remeasurement and other miscellaneous items. Other income, net, was $124 million and $380 million for the fiscal quarter and three fiscal quarters ended July 30, 2023, respectively, compared to other income, net, of $6 million and other expense, net of $94 million for the fiscal quarter and three fiscal quarters ended July 31, 2022, respectively. The changes were primarily due to higher interest income as a result of higher interest rates and changes in investment gains or losses.

Provision for income taxes. The provision for income taxes was $271 million and $572 million for the fiscal quarter and three fiscal quarters ended July 30, 2023, respectively, compared to $263 million and $678 million for the fiscal quarter and three fiscal quarters ended July 31, 2022, respectively. The increase for the fiscal quarter ended July 30, 2023 compared to the prior year fiscal period was primarily due to higher income before income taxes, substantially offset by an increase in excess tax benefits from stock-based awards. The decrease for the three fiscal quarters ended July 30, 2023 compared to the prior year fiscal period was primarily due to an increase in the recognition of uncertain tax benefits as a result of lapses of statutes of limitations and an increase in excess tax benefits from stock-based awards, partially offset by higher income before income taxes.

Liquidity and Capital Resources

The following section discusses our principal liquidity and capital resources as well as our principal liquidity requirements and uses of cash. Our cash and cash equivalents are maintained in highly liquid investments with remaining maturities of 90 days or less at the time of purchase. We believe our cash equivalents are liquid and accessible.

Our primary sources of liquidity as of July 30, 2023 consisted of: (i) $12,055 million in cash and cash equivalents, (ii) cash we expect to generate from operations and (iii) available capacity under our $7.5 billion unsecured revolving credit facility. In addition, we may also generate cash from the sale of assets and debt or equity financings from time to time.

Our short-term and long-term liquidity requirements primarily arise from: (i) business acquisitions and investments we may make from time to time, including the pending VMware Merger, (ii) working capital requirements, (iii) research and development and capital expenditure needs, (iv) cash dividend payments (if and when declared by our Board of Directors), (v) interest and principal payments related to our $40,958 million of outstanding indebtedness, (vi) share repurchases, and (vii) payment of income taxes. Our ability to fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing global macroeconomic conditions and financial, business and other factors, some of which are beyond our control. We expect capital expenditures to be higher in fiscal year 2023 as compared to fiscal year 2022. Our debt and liquidity needs will increase as a result of the pending VMware Merger, and we intend to fund the cash portion of the consideration with the committed term loan proceeds from the 2023 Credit Agreement.

We believe that our cash and cash equivalents on hand, cash flows from operations, our revolving credit facility, as well as the committed term loan proceeds from the 2023 Credit Agreement related to the pending VMware Merger, will provide sufficient liquidity to operate our business and fund our current and assumed obligations for at least the next 12 months. For additional information regarding our cash requirement from contractual obligations and indebtedness, see Note 11. “Commitments and Contingencies” and Note 7. “Borrowings” in Part I, Item 1 of this Form 10-Q.

From time to time, we engage in discussions with third parties regarding potential acquisitions of, or investments in, businesses, technologies and product lines. Any such transaction, or evaluation of potential transactions, could require significant use of our cash and cash equivalents, or require us to increase our borrowings to fund such transactions. If we do not have sufficient cash to fund our operations or finance growth opportunities, including acquisitions, or unanticipated capital expenditures, our business and financial condition could suffer. In such circumstances, we may seek to obtain new debt or equity financing. However, we cannot assure you that such additional financing will be available on terms acceptable to us or at all. Our ability to service our senior unsecured notes and any other indebtedness we may incur will depend on our ability to generate cash in the future. We may also elect to sell additional debt or equity securities for reasons other than those specified above.

In addition, we may, at any time and from time to time, seek to retire or purchase our outstanding debt through cash tenders and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such tenders, exchanges or purchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Working Capital

Working capital decreased to $10,988 million at July 30, 2023 from $11,452 million at October 30, 2022. The decrease was primarily attributable to the following:

• Current portion of long-term debt increased to $1,119 million at July 30, 2023 from $440 million at October 30, 2022 due to certain debt instruments becoming due within the next twelve months, partially offset by a repayment.

• Cash and cash equivalents decreased to $12,055 million at July 30, 2023 from $12,416 million at October 30, 2022, primarily due to $5,741 million of dividend payments, $5,701 million of common stock repurchases, $1,407 million of employee withholding tax payments related to net settled equity awards, $347 million of capital expenditures, and a $260 million debt payment, substantially offset by $13,257 million in net cash provided by operating activities.

These decreases in working capital were offset in part by the following:

• Employee compensation and benefits decreased to $831 million at July 30, 2023 from $1,202 million at October 30, 2022, primarily due to the timing of employee bonus plan payments.

• Other current assets increased to $1,522 million at July 30, 2023 from $1,205 million at October 30, 2022, primarily due to an increase in contract assets, purchases of short-term investments and an increase in fair value of derivatives, offset in part by a decrease in prepaid income taxes.

Capital Returns

						Three Fiscal Quarters Ended
Cash Dividends Declared and Paid						July 30, 2023						July 31, 2022
						(In millions, except per share data)
Dividends per share to common stockholders						$	13.80					$	12.30
Dividends to common stockholders						$	5,741					$	5,026
Dividends per share to preferred stockholders						$	—					$	60.00
Dividends to preferred stockholders						$	—					$	224

On September 30, 2019, we issued approximately 4 million shares of 8.00% Mandatory Convertible Preferred Stock, Series A, $0.001 par value per share. These shares were converted into shares of our common stock during fiscal year 2022.

In December 2021, our Board of Directors authorized a stock repurchase program to repurchase up to $10 billion of our common stock from time to time through December 31, 2022, which was subsequently extended to December 31, 2023. In May 2022, our Board of Directors authorized another stock repurchase program to repurchase up to an additional $10 billion of our common stock from time to time through December 31, 2023 (the “May 2022 Authorization”). As of July 30, 2023, $7,299 million of the authorized amount remained available for repurchases.

During the three fiscal quarters ended July 30, 2023 and July 31, 2022, we repurchased and retired approximately 9 million and 12 million shares of our common stock for $5,701 million and $7,000 million, respectively, under these stock repurchase programs.

Repurchases under our stock repurchase programs may be effected through a variety of methods, including open market or privately negotiated purchases. The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors. We are not obligated to repurchase any specific amount of shares of common stock, and the stock repurchase programs may be suspended or terminated at any time.

During the three fiscal quarters ended July 30, 2023 and July 31, 2022, we paid approximately $1,407 million and $1,181 million, respectively, in employee withholding taxes due upon the vesting of net settled equity awards. We withheld approximately 2 million shares of common stock from employees in connection with such net share settlements during each of the three fiscal quarters ended July 30, 2023 and July 31, 2022.

Cash Flows

						Three Fiscal Quarters Ended
						July 30, 2023						July 31, 2022
						(In millions)
Net cash provided by operating activities						$	13,257					$	12,153
Net cash used in investing activities						(565)						(539)
Net cash used in financing activities						(13,053)						(13,800)
Net change in cash and cash equivalents						$	(361)					$	(2,186)

Operating Activities

Cash flows from operating activities consisted of net income adjusted for certain non-cash and other items and changes in assets and liabilities. The $1,104 million increase in cash provided by operations during the three fiscal quarters ended July 30, 2023 compared to the prior year fiscal period was primarily due to $2,422 million higher net income and a $624 million increase resulting from changes in operating assets and liabilities, offset in part by $1,942 million lower non-cash adjustments including deferred taxes and other non-cash taxes, and amortization of intangible assets.

Investing Activities

Cash flows from investing activities primarily consisted of capital expenditures, proceeds and payments related to investments and cash used for acquisitions. The $26 million increase in cash used in investing activities during the three fiscal quarters ended July 30, 2023 compared to the prior year fiscal period was primarily due to a $214 million increase in purchases of investments, net of proceeds from sales of investments, substantially offset by a $222 million decrease in cash paid for acquisitions.

Financing Activities

Cash flows from financing activities primarily consisted of our stock repurchases, dividend payments, proceeds and payments related to our long-term borrowings, and employee withholding tax payments related to net settled equity awards. The $747 million decrease in cash used in financing activities during the three fiscal quarters ended July 30, 2023 compared to the prior year fiscal period was primarily due to a $2,092 million decrease in payments on debt obligations and a $1,299 million decrease in stock repurchases, offset in part by a $1,935 million decrease in proceeds from long-term borrowings and a $491 million increase in dividend payments.

Accounting Changes and Recent Accounting Standards

For a description of accounting changes and recent accounting standards, including the expected dates of adoption and estimated effects, if any, in our condensed consolidated financial statements, see Note 1. “Overview, Basis of Presentation and Significant Accounting Policies” in Part I, Item 1 of this Form 10-Q.