Summary
Broadcom Inc.'s (AVGO) second quarter fiscal year 2019 report (ended May 4, 2019) shows robust revenue growth, driven significantly by the integration of CA, Inc. acquired in November 2018. Total net revenue increased by 10% year-over-year to $5.52 billion, with the Infrastructure Software segment experiencing substantial growth, up 216% to $1.41 billion, primarily due to the CA acquisition. Conversely, the Semiconductor Solutions segment saw a 10% decline in revenue, reflecting softer demand in mobile and certain networking products. The company's financial performance benefited from strong gross margins, reaching 56% of net revenue, an improvement from 51% in the prior year quarter, largely due to the higher-margin software business. However, operating expenses rose considerably, up 58% year-over-year, primarily driven by increased amortization of acquisition-related intangible assets and higher restructuring, impairment, and disposal charges related to the CA integration. Net income attributable to common stock was $691 million, a significant decrease from $3.72 billion in the prior year quarter, largely due to the impact of the CA acquisition financing and associated expenses. Broadcom maintained a strong liquidity position with $5.33 billion in cash and cash equivalents. The company also actively managed its capital structure, issuing $11 billion in senior unsecured notes and establishing a commercial paper program, with proceeds used to repay a significant portion of its term loan facilities. Significant stock repurchases and dividend payments also continued, underscoring a focus on returning capital to shareholders.
Financial Highlights
56 data points| Revenue | $5.52B |
| Cost of Revenue | $2.43B |
| Gross Profit | $3.09B |
| R&D Expenses | $1.15B |
| SG&A Expenses | $419.00M |
| Operating Expenses | $2.12B |
| Operating Income | $970.00M |
| Interest Expense | $376.00M |
| Net Income | $691.00M |
| EPS (Basic) | $0.17 |
| EPS (Diluted) | $0.16 |
| Shares Outstanding (Basic) | 3.97B |
| Shares Outstanding (Diluted) | 4.22B |
Key Highlights
- 1Total net revenue increased 10% year-over-year to $5.52 billion, largely due to the CA, Inc. acquisition.
- 2Infrastructure Software segment revenue surged 216% year-over-year to $1.41 billion, a direct result of the CA integration.
- 3Semiconductor Solutions segment revenue decreased 10% year-over-year to $4.09 billion, impacted by lower demand in wireless and certain networking products.
- 4Gross margin improved to 56% of net revenue, up from 51% in the prior year quarter, driven by a favorable shift in revenue mix towards higher-margin software.
- 5Operating expenses increased significantly (58% YoY) due to higher amortization of acquisition-related intangibles and restructuring charges associated with the CA integration.
- 6Net income attributable to common stock decreased significantly to $691 million from $3.72 billion in the prior year quarter.
- 7The company maintained a strong liquidity position with $5.33 billion in cash and cash equivalents and actively managed its debt structure.