01—Abstract
Summary
Summary of the 10-K filed December 17, 2021. Cited figures are marked; the original filing is the authoritative source.
Broadcom Inc. (AVGO) reported strong performance for the fiscal year ending October 31, 2021, with net revenue reaching $27.45 billiona, a 15% increase year-over-year, driven by robust demand in its Semiconductor Solutions segment.
The company highlighted an 18% increase in semiconductor revenue, largely attributed to strong wireless product demand and a rebound from a delayed production ramp in the prior year. Profitability also saw significant improvement, with operating income more than doubling to $8.52 billionb, resulting in a substantial increase in operating margin to 31% from 17% in the prior year. This growth was supported by lower acquisition-related amortization expenses and a favorable product mix within semiconductors.
The company generated $13.76 billionc in cash from operations, underscoring its strong financial health. Broadcom also continued to return capital to shareholders, paying $6.21 billion in cash dividends and authorizing a new $10 billion stock repurchase program.
Despite strong results, investors should note the continued customer concentration risk, with aggregate sales to its top five end customers accounting for over 35%d of net revenue, and Apple Inc. representing approximately 20%. The company also operates in a cyclical semiconductor industry and faces ongoing supply chain challenges exacerbated by global events, though these have been managed to enable record profitability.
02—Key points
Key Highlights
- Net revenue increased by 15% to $27.45 billion, driven by an 18% increase in Semiconductor Solutions revenue to $20.38 billion.
- Infrastructure Software segment revenue grew 7% to $7.07 billion.
- Gross margin improved to 61% from 57% in the prior year, primarily due to lower amortization of acquisition-related intangible assets and favorable semiconductor margins.
- Operating income surged to $8.52 billion, representing a 112% increase and an operating margin of 31%, up from 17% in the prior year.
- Generated $13.76 billion in cash from operations.
- Returned $6.21 billion to shareholders through cash dividends.
- Announced a $10 billion stock repurchase program authorized in December 2021, to be executed by December 31, 2022.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Broadcom kept $0.25.
- Revenue$27.45B100.0%
- Cost of revenue−$10.61B38.6%
- Gross profit$16.84B61.4%
- Operating costs−$8.32B30.3%
- Operating income$8.52B31.0%
- Interest, other & tax−$1.78B6.5%
- Net income$6.74B24.5%
Where FY2021 revenue went
$27.45B- Cost of revenue: $10.61B, 39% of revenue
- Net income: $6.74B, 25% of revenue
- R&D: $4.85B, 18% of revenue
- SG&A: $1.35B, 4.9% of revenue
- Other operating costs: $2.12B, 7.7% of revenue
- Interest, other & tax: $1.78B, 6.5% of revenue
Kept 25% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed December 17, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $27.45B$23.89B | +14.9% |
| Cost of Revenue | $10.61B$10.37B | +2.3% |
| Gross Profit | $16.84B$13.52B | +24.6% |
| R&D Expenses | $4.85B$4.97B | −2.3% |
| SG&A Expenses | $1.35B$1.94B | −30.4% |
| Operating Expenses | $8.32B$9.50B | −12.4% |
| Operating Income | $8.52B$4.01B | +112.2% |
| Interest Expense | $1.89B$1.78B | +6.1% |
| Net Income | $6.74B$2.96B | +127.6% |
| EPS (Basic) | $1.57$0.66 | +137.2% |
| EPS (Diluted) | $1.50$0.63 | +137.0% |
| Shares Outstanding (Basic) | 4.10B4.02B | +2.0% |
| Shares Outstanding (Diluted) | 4.29B4.21B | +1.9% |
05—Questions
Frequently Asked Questions
What were Broadcom's key financial performance indicators for the fiscal year ended October 31, 2021?
For the fiscal year ended October 31, 2021, Broadcom reported net revenue of $27.45 billion, a 15% increase year-over-year. Gross margin improved to 61%, and operating income significantly increased to $8.52 billion, resulting in an operating margin of 31%. The company generated $13.76 billion in cash from operations.
How did Broadcom's segments perform in fiscal year 2021?
The Semiconductor Solutions segment saw a substantial increase in net revenue by 18% to $20.38 billion, driven by strong demand in wireless products and networking. The Infrastructure Software segment also experienced growth, with net revenue increasing by 7% to $7.07 billion, supported by demand for FC SAN products, mainframe, and cybersecurity solutions.
What is Broadcom's approach to capital allocation and shareholder returns?
Broadcom continues to focus on returning capital to shareholders. In fiscal year 2021, the company paid $6.21 billion in cash dividends. Additionally, in December 2021, the Board of Directors authorized a significant $10 billion stock repurchase program, demonstrating confidence in the company's financial position and commitment to enhancing shareholder value.
What are the primary risks identified by Broadcom in its filing?
Broadcom identifies several key risks, including significant customer concentration (top five customers accounting for over 35% of net revenue, with Apple being approximately 20%), dependence on contract manufacturing and key suppliers, the cyclical nature of the semiconductor industry, potential impacts from global economic conditions and geopolitical factors, and intellectual property protection.
06—Continue