Summary
Broadcom Inc. (AVGO) reported its first quarter fiscal year 2019 results, ending February 3, 2019. The company saw a significant increase in net revenue, driven primarily by the recent acquisition of CA Technologies, which significantly boosted the infrastructure software segment. While semiconductor solutions revenue saw a decline, the growth in infrastructure software more than compensated, leading to a 9% year-over-year increase in total net revenue. The company also generated substantial operating cash flow, enabling significant share repurchases and dividend payments. However, operating income decreased due to increased operating expenses, largely attributed to amortization of acquisition-related intangibles and restructuring charges stemming from the CA merger. Key financial metrics show a strong balance sheet with substantial cash and equivalents. The company's debt levels increased significantly due to financing the CA acquisition. Management highlighted the strategic importance of the CA acquisition in transforming Broadcom into a broader infrastructure technology provider. Despite increased expenses and a dip in operating income, the company's strategic repositioning and continued cash generation present a mixed but evolving financial picture for investors.
Financial Highlights
56 data points| Revenue | $5.79B |
| Cost of Revenue | $2.58B |
| Gross Profit | $3.21B |
| R&D Expenses | $1.13B |
| SG&A Expenses | $471.00M |
| Operating Expenses | $2.65B |
| Operating Income | $555.00M |
| Interest Expense | $345.00M |
| Net Income | $471.00M |
| EPS (Basic) | $0.12 |
| EPS (Diluted) | $0.11 |
| Shares Outstanding (Basic) | 4.01B |
| Shares Outstanding (Diluted) | 4.19B |
Key Highlights
- 1Total net revenue increased by 9% to $5.79 billion compared to the prior year quarter, primarily driven by the infrastructure software segment, which grew by 328% to $1.40 billion due to the CA Technologies acquisition.
- 2Semiconductor solutions revenue decreased by 12% to $4.37 billion, impacted by lower demand in wireless content for mobile handsets and server storage connectivity.
- 3Gross margin improved to 55% from 49% in the prior year, benefiting from the higher-margin infrastructure software business and favorable FC SAN product margins.
- 4Operating income decreased by 41% to $555 million, impacted by a significant increase in operating expenses, including $573 million in restructuring, impairment, and disposal charges (up from $130 million) and higher amortization of acquisition-related intangible assets.
- 5The company repurchased approximately $3.44 billion of its common stock during the quarter under its enhanced share repurchase program.
- 6Cash provided by operating activities increased by 26% to $2.13 billion, supporting strong liquidity.
- 7Total assets grew significantly to $72.11 billion from $50.12 billion, largely due to goodwill and intangible assets arising from the CA merger.