On September 5, 2024, Broadcom Inc (AVGO, Financial) released its 8-K filing announcing its financial results for the third quarter of fiscal year 2024, ended August 4, 2024. Broadcom, the sixth-largest semiconductor company globally, has expanded into various software businesses, generating over $30 billion in annual revenue. The company sells 17 core semiconductor product lines across wireless, networking, broadband, storage, and industrial markets, and also offers virtualization, infrastructure, and security software to large enterprises, financial institutions, and governments.
Performance Overview
Broadcom Inc (AVGO, Financial) reported a revenue of $13,072 million for the third quarter, marking a 47% increase from the prior year period. This figure surpassed the analyst estimate of $12,959.60 million. However, the company reported a GAAP net loss of $1,875 million, primarily due to a one-time discrete non-cash tax provision of $4.5 billion related to an intra-group transfer of certain IP rights to the United States.
On a non-GAAP basis, Broadcom reported a net income of $6,120 million, with an adjusted EBITDA of $8,223 million, representing 63% of revenue. The GAAP diluted loss per share was $4.40, while the non-GAAP diluted EPS stood at $10.24, exceeding the analyst estimate of $9.64.
Financial Achievements and Challenges
Broadcom's significant revenue growth was driven by its AI semiconductor solutions and the integration of VMware. The company expects AI-related revenue to reach $12 billion for fiscal year 2024, driven by Ethernet networking and custom accelerators for AI data centers. However, the GAAP net loss highlights the challenges posed by substantial tax provisions and restructuring charges.
“Broadcom’s third quarter results reflect continued strength in our AI semiconductor solutions and VMware. We expect revenue from AI to be $12 billion for fiscal year 2024 driven by Ethernet networking and custom accelerators for AI data centers,” said Hock Tan, President and CEO of Broadcom Inc.
Key Financial Metrics
| Metric | Q3 FY2024 | Q3 FY2023 | Change |
|---|---|---|---|
| Net Revenue | $13,072 million | $8,876 million | +47% |
| GAAP Net Income (Loss) | $(1,875) million | $3,303 million | -$5,178 million |
| Non-GAAP Net Income | $6,120 million | $4,596 million | +33% |
| GAAP EPS (Diluted) | $(4.40) | $0.77 | -$5.17 |
| Non-GAAP EPS (Diluted) | $10.24 | $1.05 | +875% |
| Cash Flow from Operations | $4,963 million | $4,719 million | +5% |
| Free Cash Flow | $4,791 million | $4,597 million | +4% |
Income Statement Highlights
Broadcom's gross margin for Q3 FY2024 was $8,356 million, up from $6,164 million in Q3 FY2023. Operating income stood at $3,788 million, compared to $3,856 million in the previous year. The company reported a significant increase in research and development expenses, which rose to $2,353 million from $1,358 million in Q3 FY2023.
Balance Sheet and Cash Flow
As of the end of the third fiscal quarter, Broadcom's cash and cash equivalents were $9,952 million, slightly up from $9,809 million at the end of the prior quarter. The company generated $4,963 million in cash from operations and spent $172 million on capital expenditures, resulting in a free cash flow of $4,791 million.
Dividend and Future Outlook
Broadcom's Board of Directors approved a quarterly cash dividend of $0.53 per share, payable on September 30, 2024. Looking ahead, the company provided fourth-quarter revenue guidance of approximately $14.0 billion, including contributions from VMware, and an adjusted EBITDA guidance of approximately 64% of projected revenue.
“Consolidated revenue grew 47% year-over-year to $13.1 billion, including the contribution from VMware, and was up 4% year-over-year, excluding VMware. Adjusted EBITDA increased 42% year-over-year to $8.2 billion,” said Kirsten Spears, CFO of Broadcom Inc.
For more detailed insights and analysis, visit the full earnings report on the SEC website.
Explore the complete 8-K earnings release (here) from Broadcom Inc for further details.
