01—Abstract
Summary
Summary of the 8-K filed September 5, 2024. Cited figures are marked; the original filing is the authoritative source.
Broadcom's Q3 fiscal 2024 (quarter ended August 4, 2024) results show consolidated revenue of $13.07 billiona, up 47% year over year, driven largely by the VMware acquisition.
Excluding VMware, revenue grew about 4%. Semiconductor solutions revenue was $7.27 billionb (up 5%), while infrastructure software reached $5.80 billion (up 200%). Non-GAAP net income was $6.12 billion and non-GAAP diluted EPS was $1.24, up from $1.05.
Adjusted EBITDA rose 42% to $8.22 billionc, or 63% of revenue, and free cash flow was $4.79 billion. GAAP results were distorted by a one-time, non-cash discrete tax provision of $4.5 billion tied to an intra-group transfer of IP rights to the United States. That charge produced a GAAP net loss of $1.88 billion and a GAAP diluted loss of $0.40 per share.
Investors should treat the non-GAAP figures as the better gauge of run-rate profitability, while recognizing that the excluded items (about $2.3 billiond of quarterly acquisition-related amortization and $1.4 billion of stock-based compensation) are substantial. Interest expense of $1.06 billion and total debt of roughly $70 billion remain significant burdens following the VMware deal, and goodwill and intangibles now total about $141 billion of the $168 billion asset base. Management guided fourth-quarter fiscal 2024 revenue to about $14.0 billion, including VMware, and Adjusted EBITDA to about 64% of revenue.
The company expects AI revenue of about $12 billion for fiscal 2024, driven by Ethernet networking and custom accelerators. The Board also declared a quarterly dividend of $0.53 per share, payable September 30, 2024 to holders of record on September 19, 2024. The filing notes that the company completed a ten-for-one forward stock split on July 12, 2024, with all per-share figures retroactively adjusted.
02—Key points
Key Highlights
- Revenue of $13.07B, up 47% YoY; up roughly 4% excluding VMware, per management.
- GAAP net loss of $1.88B (diluted EPS -$0.40) driven by a one-time, non-cash $4.5B discrete tax provision from an IP transfer to the U.S.
- Non-GAAP net income of $6.12B and non-GAAP diluted EPS of $1.24, up from $1.05 a year earlier.
- Adjusted EBITDA of $8.22B (63% of revenue), up 42% YoY; free cash flow of $4.79B (37% of revenue).
- Q4 FY2024 guidance: revenue of about $14.0B (up 51% YoY, including VMware) and Adjusted EBITDA of about 64% of revenue.
- Management expects FY2024 AI revenue of about $12B, led by Ethernet networking and custom AI accelerators.
- Quarterly dividend of $0.53 per share declared, payable September 30, 2024 to holders of record on September 19, 2024; cash balance of $9.95B at quarter end.
03—Questions
Frequently Asked Questions
Why did Broadcom report a GAAP net loss when non-GAAP net income was strongly positive?
The GAAP net loss of $1.88B resulted from a one-time, non-cash discrete tax provision of $4.5B tied to an intra-group transfer of certain IP rights to the United States as part of supply chain realignment. Non-GAAP results exclude this item along with amortization of acquisition intangibles, stock-based compensation, restructuring, and acquisition costs.
How much of the revenue growth came from the VMware acquisition?
Consolidated revenue grew 47% to $13.07B, but management stated that revenue rose only about 4% excluding VMware. Nearly all of the reported growth therefore reflects the acquisition, and infrastructure software revenue increased about 200% to $5.80B.
What is the outlook for the coming quarter and fiscal year?
For Q4 FY2024 (ending November 3, 2024), Broadcom guided to revenue of about $14.0B and Adjusted EBITDA of about 64% of revenue. Management also expects approximately $12B of AI revenue for fiscal 2024. Guidance is an estimate and actual results may differ materially.
Is the dividend affected by the GAAP loss, and what are the key dates?
The Board declared a quarterly cash dividend of $0.53 per share, payable September 30, 2024 to stockholders of record at the close of business on September 19, 2024. The filing does not link the dividend to the GAAP loss, and the company generated $4.79B of free cash flow in the quarter.
What are the main balance sheet concerns following the VMware deal?
Total debt stood at about $70B ($3.16B current and $66.8B long-term) against $9.95B of cash. Goodwill and intangibles total about $141B of $168B in assets. Quarterly interest expense was $1.06B, so debt service and integration progress remain key investor considerations.
04—Continue