01—Abstract
Summary
Summary of the 10-K filed December 14, 2023. Cited figures are marked; the original filing is the authoritative source.
Broadcom Inc. (AVGO) has filed its annual report for the fiscal year ended October 28, 2023, detailing a strong financial performance driven by its semiconductor solutions segment, which saw revenue growth primarily from networking, server storage, and broadband products.
The company completed the significant acquisition of VMware in November 2023 for approximately $86.3 billiona, a move intended to bolster its infrastructure software capabilities. This acquisition, however, is not reflected in the financial results for the reported fiscal year. Broadcom continues to demonstrate robust operational execution, generating substantial cash from operations and returning capital to shareholders through dividends and stock repurchases.
The company faces ongoing risks related to global economic conditions, customer concentration (with Apple being a significant customer), and the cyclical nature of the semiconductor industry. Integration of the VMware acquisition and managing its substantial indebtedness are key areas for investors to monitor in the upcoming periods.
02—Key points
Key Highlights
- Broadcom completed the acquisition of VMware for approximately $86.3 billion, significantly expanding its infrastructure software business, though this is not reflected in the fiscal year 2023 results.
- Net revenue increased by 8% to $35.8 billion, with the semiconductor solutions segment growing 9% driven by strong demand in networking, server storage, and broadband.
- Gross margin improved to 69% from 67% in the prior year, primarily due to lower amortization of acquisition-related intangible assets.
- Operating income increased by 14% to $16.2 billion, reflecting growth in both semiconductor and infrastructure software segments.
- The company generated $18.1 billion in cash from operations, underscoring its strong cash-generating capabilities.
- Broadcom returned $13.5 billion to shareholders through dividends ($7.6 billion) and stock repurchases ($5.8 billion) during the fiscal year.
- Significant customer concentration remains a key risk, with sales to distributors accounting for 57% of net revenue and Apple representing approximately 20% of net revenue.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Broadcom kept $0.39.
- Revenue$35.82B100.0%
- Cost of revenue−$11.13B31.1%
- Gross profit$24.69B68.9%
- Operating costs−$8.48B23.7%
- Operating income$16.21B45.2%
- Interest, other & tax−$2.13B5.9%
- Net income$14.08B39.3%
Where FY2023 revenue went
$35.82B- Net income: $14.08B, 39% of revenue
- Cost of revenue: $11.13B, 31% of revenue
- R&D: $5.25B, 15% of revenue
- SG&A: $1.59B, 4.4% of revenue
- Other operating costs: $1.64B, 4.6% of revenue
- Interest, other & tax: $2.13B, 5.9% of revenue
Kept 39% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed December 14, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $35.82B$33.20B | +7.9% |
| Cost of Revenue | $11.13B$11.11B | +0.2% |
| Gross Profit | $24.69B$22.09B | +11.7% |
| R&D Expenses | $5.25B$4.92B | +6.8% |
| SG&A Expenses | $1.59B$1.38B | +15.2% |
| Operating Expenses | $8.48B$7.87B | +7.8% |
| Operating Income | $16.21B$14.22B | +13.9% |
| Interest Expense | $1.62B$1.74B | −6.6% |
| Net Income | $14.08B$11.49B | +22.5% |
| EPS (Basic) | $3.39$2.74 | +23.7% |
| EPS (Diluted) | $3.30$2.65 | +24.5% |
| Shares Outstanding (Basic) | 4.15B4.09B | +1.5% |
| Shares Outstanding (Diluted) | 4.27B4.23B | +0.9% |
05—Questions
Frequently Asked Questions
What is the most significant event reported in this filing for investors?
The most significant event is the completion of the acquisition of VMware for approximately $86.3 billion on November 22, 2023. This strategic move is expected to substantially enhance Broadcom's infrastructure software offerings, although its financial impact will be recognized in future reporting periods.
How did Broadcom's financial performance fare in fiscal year 2023?
Broadcom reported an 8% increase in net revenue to $35.8 billion, with its semiconductor solutions segment showing robust growth of 9%. This growth was primarily driven by strong demand in networking, server storage, and broadband products. The company also saw an improvement in gross margin to 69% and a 14% increase in operating income to $16.2 billion.
What are the key risks highlighted by Broadcom in this filing?
Key risks include the potential negative impact of adverse global economic conditions, the cyclical nature of the semiconductor industry, and significant customer concentration, with a substantial portion of revenue derived from a few key customers like Apple. The company also acknowledges the substantial indebtedness incurred for the VMware acquisition and the challenges associated with integrating the acquired business.
How is Broadcom managing its capital and shareholder returns?
Broadcom generated $18.1 billion in cash from operations and continued its capital return strategy by paying $7.6 billion in dividends and repurchasing $5.8 billion of its common stock during the fiscal year. The company also has a $7.5 billion unsecured revolving credit facility available for liquidity.
06—Continue