Summary
Broadcom Inc.'s Q2 2020 (ended May 2, 2020) filing shows a resilient performance despite the early stages of the COVID-19 pandemic. Total net revenue increased by 4% year-over-year to $5.74 billion, driven by a significant 21% surge in the Infrastructure Software segment, largely due to the acquisition of Symantec's enterprise security business. The Semiconductor Solutions segment experienced a slight 2% decline in revenue but remained Broadcom's larger business segment. The company ended the quarter with a strong cash position of $9.2 billion, reflecting effective cash flow generation and strategic debt management. Management highlighted robust demand in semiconductors supporting remote work and learning, though acknowledging ongoing supply chain challenges and uncertainty related to the pandemic. Financially, Broadcom demonstrated strong operational execution. Operating income for the quarter was $766 million, down from $970 million in the prior year, impacted by increased R&D and SG&A expenses related to recent acquisitions. Despite these investments, the company maintained a healthy gross margin of 55%. Significant debt management activities were undertaken, including issuing new notes and repaying existing debt, aimed at strengthening the balance sheet and extending maturity profiles. The outlook remains cautiously optimistic, with continued focus on navigating supply chain issues and the evolving economic landscape.
Financial Highlights
57 data points| Revenue | $5.74B |
| Cost of Revenue | $2.55B |
| Gross Profit | $3.19B |
| R&D Expenses | $1.27B |
| SG&A Expenses | $501.00M |
| Operating Expenses | $2.42B |
| Operating Income | $766.00M |
| Interest Expense | $487.00M |
| Net Income | $563.00M |
| EPS (Basic) | $0.12 |
| EPS (Diluted) | $0.12 |
| Shares Outstanding (Basic) | 4.01B |
| Shares Outstanding (Diluted) | 4.17B |
Key Highlights
- 1Total net revenue increased by 4% to $5.74 billion compared to the prior year's quarter.
- 2The Infrastructure Software segment saw a substantial 21% year-over-year revenue increase to $1.72 billion, primarily driven by the Symantec acquisition.
- 3Despite a 2% revenue dip, the Semiconductor Solutions segment remained the larger business, with $4.03 billion in revenue.
- 4Broadcom reported $5.535 billion in cash flow from operating activities for the first two fiscal quarters of 2020, a significant increase from the prior year's $4.799 billion.
- 5The company ended the quarter with a robust cash and cash equivalents balance of $9.21 billion, up from $5.06 billion at the end of fiscal year 2019.
- 6Interest expense increased substantially due to debt incurred for acquisitions, totaling $487 million for the quarter.
- 7The company actively managed its debt, issuing $4.5 billion in senior unsecured notes and repurchasing $3.99 billion of existing notes during the quarter.