Broadcom(AVGO) - 2024 Q4 - Annual Report

Financial Performance - Total net revenue for the fiscal year ended November 3, 2024, was $51.574 billion, compared to$35.819 billion in the previous year[115] - Net income for the fiscal year ended November 3, 2024, was $5.895 billion, down from$14.082 billion in the previous year[115] - Comprehensive income for the fiscal year ended November 3, 2024, was $5.895 billion, compared to$14.343 billion the previous year[118] - Net income for the fiscal year ending October 29, 2023, was $5.895 billion[127] - Net income attributable to common stock for fiscal year 2024 was$5.895 billion, compared to $14.082 billion in fiscal year 2023[193] - Diluted net income per share for fiscal year 2024 was$1.23, down from $3.30 in fiscal year 2023[193] Tax and Financial Liabilities - The company's effective tax rate and cash tax costs are expected to increase due to U.S. tax reforms and global minimum tax implementations, with Singapore's adoption effective for fiscal year 2026[316] - Tax incentives and holidays decreased the provision for income taxes by approximately$2.261 billion and increased diluted net income per share by $0.47 for fiscal year 2024[316] - The company is subject to tax audits in various jurisdictions, including those related to the VMware Merger and Dell's consolidated group, which could materially affect tax provisions and accruals[316] - Potential tax liabilities from VMware's spin-off from Dell in November 2021 could have a material adverse effect on the company's financial condition and operating results if deemed not tax-free[316] - The company's tax incentives and holiday arrangements are subject to compliance conditions, and any changes or terminations could significantly increase corporate income taxes[316] Intellectual Property and Legal Risks - The company relies on a combination of IP rights including patents, copyrights, trademarks, and trade secrets to protect its intellectual property[312] - The company may be subject to warranty claims, product recalls, and product liability, which could significantly impact its financial condition and results of operations[313] Market Competition and Gross Margins - The company faces intense competition in its industries, which could hinder revenue growth due to rapid technological changes, aggressive pricing, and new delivery methods[310] - Competitors with greater resources, longer operating histories, and stronger market positions could adversely impact the company's market share and gross margins[310] - Gross margin is highly dependent on product mix, price erosion, and capacity utilization, with shifts in sales mix potentially leading to lower margins[310] Stock and Equity Information - As of November 29, 2024, the company had 4,687,356,156 shares of common stock outstanding[333] - The aggregate market value of voting and non-voting common equity held by non-affiliates was approximately$583.1 billion as of May 3, 2024[333] - The company completed a ten-for-one forward stock split of its common stock on July 12, 2024, retroactively adjusting all share, equity award, and per share amounts in the financial statements[131] Debt and Interest Rate Sensitivity - The company had $56.3 billion in principal amount of fixed rate senior notes outstanding as of November 3, 2024, with an estimated fair value of$51.4 billion[86] - A hypothetical 50 basis point change in market interest rates would alter the fair value of fixed rate senior notes by approximately $1.7 billion as of November 3, 2024[86] - The company had$13.6 billion of outstanding 2023 Term Loans as of November 3, 2024, with a hypothetical 100 basis point change in interest rates impacting interest expense by approximately $137 million[86] Foreign Exchange and Hedging - The company uses foreign exchange forward contracts to hedge currency exchange rate risks, with a hypothetical 10$9.348 billion as of November 3, 2024, from $14.189 billion the previous year[111] - Net cash provided by operating activities for fiscal year 2024 was$19.962 billion, compared to $18.085 billion in fiscal year 2023 and$16.736 billion in fiscal year 2022[122] - Cash and cash equivalents at the end of fiscal year 2024 were $9.348 billion, down from$14.189 billion at the end of fiscal year 2023 and $12.416 billion at the end of fiscal year 2022[122] - Cash paid for interest in fiscal year 2024 was$3.25 billion, compared to $1.503 billion in fiscal year 2023 and$1.386 billion in fiscal year 2022[122] - Cash paid for income taxes in fiscal year 2024 was $3.155 billion, up from$1.782 billion in fiscal year 2023 and $908 million in fiscal year 2022[122] Acquisitions and Mergers - Broadcom completed the acquisition of VMware on November 22, 2023, for$30.788 billion in cash and 544 million shares of Broadcom common stock valued at $53.398 billion[130] - Acquisitions of businesses, net of cash acquired, amounted to$25.978 billion in fiscal year 2024, a significant increase from $53 million in fiscal year 2023 and$246 million in fiscal year 2022[122] - Total assets acquired in the VMware Merger amounted to $110,922 million, with goodwill accounting for$54,206 million[160] - The fair value of net assets acquired in the VMware Merger was $79,648 million[160] - VMware contributed$12,384 million in net revenue for fiscal year 2024[160] - The EUC business was sold for $3.5 billion in fiscal year 2024[160] - Total identified intangible assets from the VMware Merger were valued at$45,572 million, with developed technology accounting for 24,156 million[162] - IPR&D from the VMware Merger was valued at 4,730 million, with VMware cloud foundation releases accounting for $790 million,$2,900 million, and $750 million respectively[164] - The acquisition of Seagate's SoC operations was completed for$600 million in April 2024[166] Research and Development - Research and development expenses increased to $9.310 billion for the fiscal year ended November 3, 2024, from$5.253 billion the previous year[115] Assets and Liabilities - Goodwill increased significantly to $97.873 billion as of November 3, 2024, from$43.653 billion the previous year[111] - Long-term debt rose to $66.295 billion as of November 3, 2024, compared to$37.621 billion the previous year[111] - Total assets grew to $165.645 billion as of November 3, 2024, from$72.861 billion the previous year[111] - Total stockholders' equity as of November 3, 2024, was $67.678 billion[127] - Goodwill balance as of November 3, 2024, increased to$97.873 billion, primarily due to the acquisition of VMware for $54.206 billion[189] - Intangible assets as of November 3, 2024, totaled$55.879 billion, with a net book value of $40.583 billion[191] Revenue Streams - Subscriptions and services revenue increased to$21.215 billion for the fiscal year ended November 3, 2024, from $7.928 billion the previous year[115] - Pro forma net revenue grew to$52,188 million in 2024 from $48,227 million in 2023[165] Amortization and Depreciation - Amortization of acquisition-related intangible assets rose to$6.023 billion for the fiscal year ended November 3, 2024, from $1.853 billion the previous year[115] - Expected amortization expense for fiscal year 2025 is$8.055 billion, with a total of $38.243 billion expected over the next five years and thereafter[191] - Depreciation expense rose to$593 million in 2024 from $502 million in 2023[179] Stock-Based Compensation and Dividends - Stock-based compensation for the fiscal year ending October 29, 2023, amounted to$5.747 billion[127] - Dividends to common stockholders for the fiscal year ending October 29, 2023, totaled $7.005 billion[127] - Repurchases of common stock for the fiscal year ending October 29, 2023, amounted to$7.176 billion[127] - Payments of dividends in fiscal year 2024 totaled $9.814 billion, up from$7.645 billion in fiscal year 2023 and $7.032 billion in fiscal year 2022[122] - Repurchases of common stock under the repurchase program amounted to$7.176 billion in fiscal year 2024, compared to $5.824 billion in fiscal year 2023 and$7 billion in fiscal year 2022[122] Inventory and Receivables - Total inventory as of November 2024 was $1,760 million, down from$1,898 million in October 2023[170] - Total trade accounts receivable sold under factoring arrangements were $5,900 million in fiscal year 2024[176] Discontinued Operations - Discontinued operations from the EUC business resulted in a net loss of$273 million in fiscal year 2024[184] Leases and Contractual Obligations - Cash paid for operating leases increased to $223 million in 2024 from$90 million in 2023[186] - ROU assets obtained in exchange for operating lease liabilities surged to $1,165 million in 2024 from$28 million in 2023[186] - Weighted-average remaining lease term for operating leases extended to 11 years in 2024 from 10 years in 2023[186] - ROU assets for operating leases rose to $1,325 million in 2024 from$463 million in 2023[188] - Total undiscounted liabilities for operating leases stood at $1,795 million in 2024[188] - Contract assets increased significantly to$4,402 million in 2024 from $955 million in 2023[154] - Contract liabilities jumped to$14,495 million in 2024 from $2,786 million in 2023[154] Property, Plant, and Equipment - Total property, plant, and equipment net value increased to$2,521 million in 2024 from $2,154 million in 2023[171] Pension Plans - Expected benefit payments for fiscal year 2025 are$99 million, with a total of $440 million expected from 2030 to 2034[200] - The U.S. qualified pension plan assets were 100% allocated to fixed income for both fiscal years 2024 and 2023[200]