10-QPeriod: Q3 FY2021

Broadcom Inc. Quarterly Report for Q3 Ended Aug 1, 2021

Filed September 9, 2021For Securities:AVGO

Summary

Broadcom Inc. reported strong financial results for the third quarter and the first three quarters of fiscal year 2021, demonstrating significant year-over-year growth across key metrics. Total net revenue increased by 16% in the quarter and 15% year-to-date, driven by robust performance in the Semiconductor Solutions segment, which saw a 19% increase in revenue for both periods. The Infrastructure Software segment also contributed positively, with revenue up 10% for the quarter and 6% year-to-date. Profitability saw substantial improvement, with operating income rising 111% for the quarter and 139% year-to-date. This growth was fueled by increased gross margins, up to 62% in the quarter and 61% year-to-date, attributed to higher demand and lower amortization of acquisition-related intangible assets. The company also benefited from a decrease in operating expenses, primarily due to lower SG&A and restructuring charges compared to the prior year. Broadcom's balance sheet remains strong, with cash and cash equivalents increasing significantly, and the company generated substantial cash flow from operations, indicating a healthy financial position.

Financial Statements
Beta
Revenue$6.78B
Cost of Revenue$2.58B
Gross Profit$4.20B
R&D Expenses$1.21B
SG&A Expenses$346.00M
Operating Expenses$2.07B
Operating Income$2.13B
Interest Expense$415.00M
Net Income$1.88B
EPS (Basic)$0.44
EPS (Diluted)$0.42
Shares Outstanding (Basic)4.11B
Shares Outstanding (Diluted)4.29B

Key Highlights

  • 1Broadcom reported a 16% increase in total net revenue for the third quarter of fiscal year 2021, reaching $6.78 billion, compared to $5.82 billion in the prior year period.
  • 2Net revenue from the Semiconductor Solutions segment grew by 19% year-over-year for both the third quarter and the first three quarters of fiscal year 2021.
  • 3Operating income significantly increased, up 111% to $2.13 billion for the third quarter and up 139% to $5.94 billion for the first three quarters, highlighting strong operational leverage.
  • 4Gross margin improved to 62% in the third quarter of fiscal year 2021 from 57% in the prior year period, driven by favorable semiconductor segment margins and reduced amortization costs.
  • 5The company ended the quarter with a strong liquidity position, reporting $11.1 billion in cash and cash equivalents, an increase from $7.6 billion at the beginning of the fiscal year.
  • 6Cash flow from operating activities remained robust, generating $10.2 billion for the first three quarters of fiscal year 2021, up from $8.7 billion in the comparable prior year period.
  • 7Infrastructure Software segment revenue increased by 10% to $1.76 billion for the third quarter, demonstrating consistent growth in this segment.

Frequently Asked Questions

Broadcom Inc. reported a 16% increase in total net revenue for the fiscal quarter ended August 1, 2021, reaching $6.78 billion, compared to $5.82 billion in the same period of the prior year. This growth was driven by a 19% increase in the Semiconductor Solutions segment and a 10% increase in the Infrastructure Software segment.

Broadcom maintains a strong financial position. As of August 1, 2021, the company reported $11.1 billion in cash and cash equivalents, an increase from $7.6 billion at the start of the fiscal year. The company also generated $10.2 billion in net cash from operating activities for the first three quarters of fiscal year 2021, indicating robust operational cash generation.

The primary driver of Broadcom's revenue growth is its Semiconductor Solutions segment, which saw a 19% year-over-year increase in revenue for both the third quarter and the first three quarters of fiscal year 2021. This growth is attributed to higher demand for wireless content in mobile handsets, networking products, and wireless connectivity products.

Profitability has significantly improved. Operating income for the third quarter of fiscal year 2021 more than doubled, increasing by 111% to $2.13 billion, compared to $1.01 billion in the prior year. For the first three quarters, operating income increased by 139% to $5.94 billion. This improvement is due to higher gross margins, reduced amortization expenses, and decreases in SG&A and restructuring charges.