01—Abstract
Summary
Summary of the 10-Q filed September 11, 2024. Cited figures are marked; the original filing is the authoritative source.
Broadcom Inc. reported a significant increase in revenue for the quarter ended August 4, 2024, driven by the strong performance of its Infrastructure Software segment, largely due to the inclusion of VMware.
Total net revenue reached $13.07 billiona, up 47% year-over-year. The Semiconductor Solutions segment also saw a modest 5% increase. While gross margins decreased slightly year-over-year due to amortization related to the VMware acquisition, the company maintained a healthy 64% gross margin.
The company's financial statements reflect the substantial impact of the VMware acquisition, with a significant increase in total assets, goodwill, and long-term debt. Broadcom also successfully divested its End-User Computing (EUC) business for $3.5 billionb, which was reflected in discontinued operations.
Despite a net loss of $1.88 billionc for the quarter, largely impacted by acquisition-related costs and amortization, the company generated strong operating cash flow of $14.36 billion for the first three quarters of the fiscal year. The company reaffirmed its liquidity position, stating its cash and cash equivalents, operational cash flow, and revolving credit facility are sufficient for the next 12 months.
02—Key points
Key Highlights
- Total net revenue for the quarter ended August 4, 2024, was $13.07 billion, a 47% increase compared to the prior year period, driven by a substantial contribution from the Infrastructure Software segment post-VMware acquisition.
- The Infrastructure Software segment revenue grew by 200% year-over-year to $5.8 billion, while Semiconductor Solutions revenue increased by 5% to $7.3 billion.
- The company reported a net loss of $1.88 billion for the quarter, primarily influenced by acquisition-related costs, including significant amortization of acquisition-related intangible assets from the VMware merger.
- Operating cash flow for the first three fiscal quarters of 2024 was robust at $14.36 billion.
- Broadcom completed the sale of its End-User Computing (EUC) business to KKR & Co. Inc. for $3.5 billion, classifying its results as discontinued operations.
- The company's total assets significantly increased to $167.97 billion, with a substantial rise in Goodwill and Intangible Assets, reflecting the VMware acquisition.
- A ten-for-one forward stock split of common stock was completed on July 12, 2024, with all per share amounts retroactively adjusted.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2024, Broadcom lost $0.14.
- Revenue$13.07B100.0%
- Cost of revenue−$4.72B36.1%
- Gross profit$8.36B63.9%
- Operating costs−$4.57B34.9%
- Operating income$3.79B29.0%
- Interest, other & tax−$5.66B43.3%
- Net income−$1.88B14.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed September 11, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $13.07B$8.88B | +47.3% |
| Cost of Revenue | $4.72B$2.71B | +73.9% |
| Gross Profit | $8.36B$6.16B | +35.6% |
| R&D Expenses | $2.35B$1.36B | +73.3% |
| SG&A Expenses | $1.10B$388.00M | +183.5% |
| Operating Expenses | $4.57B$2.31B | +97.9% |
| Operating Income | $3.79B$3.86B | −1.8% |
| Interest Expense | $1.06B$406.00M | +162.1% |
| Net Income | -$1.88B$3.30B | −156.8% |
| EPS (Basic) | $-0.40$0.80 | −150.0% |
| EPS (Diluted) | $-0.40$0.77 | −151.9% |
| Shares Outstanding (Basic) | 4.66B4.13B | +12.9% |
| Shares Outstanding (Diluted) | 4.66B4.27B | +9.2% |
05—Questions
Frequently Asked Questions
What is the primary driver behind the significant revenue increase this quarter?
The substantial revenue increase of 47% year-over-year to $13.07 billion is primarily driven by the inclusion of VMware's results, which significantly boosted the Infrastructure Software segment's revenue by 200%.
Why did Broadcom report a net loss despite increased revenue?
The net loss of $1.88 billion for the quarter is largely attributable to significant amortization of acquisition-related intangible assets stemming from the VMware merger, along with other integration and transaction costs. These non-cash charges, combined with the impact of discontinued operations, outweighed the revenue growth.
How has the VMware acquisition impacted the company's balance sheet?
The VMware acquisition has led to a substantial increase in Broadcom's total assets, which grew to $167.97 billion. This includes a significant rise in Goodwill to $97.87 billion and Intangible Assets to $43.03 billion, reflecting the accounting treatment of the acquisition. Concurrently, long-term debt also increased significantly to $66.8 billion to help finance the transaction.
What is the significance of the EUC business divestiture?
Broadcom completed the sale of its End-User Computing (EUC) business for $3.5 billion. This strategic divestiture simplifies the company's portfolio and its financial results for this business are now presented under discontinued operations.
06—Continue