Broadcom(AVGO) - 2025 Q3 - Quarterly Results

Executive Summary & Financial Highlights This section highlights Broadcom's record-breaking Q3 FY2025 financial performance, including revenue growth, adjusted EBITDA, and free cash flow, alongside the Q4 outlook and dividend declaration Third Quarter Fiscal Year 2025 Financial Performance Broadcom achieved record Q3 FY2025 revenue of $16 billion, up 22%, driven by AI accelerators, networking, and VMware, with adjusted EBITDA up 30% and free cash flow up 47% - Broadcom President and CEO Hock Tan stated that the company's third-quarter revenue reached a new high, driven by the continued strong performance of custom AI accelerators, networking, and VMware; third-quarter AI revenue increased by 63% year-over-year to $5.2 billion, and fourth-quarter AI semiconductor revenue is expected to accelerate to $6.2 billion[3] - Broadcom CFO Kirsten Spears noted that consolidated revenue increased by 22% year-over-year to $16 billion, and adjusted EBITDA increased by 30% to $10.7 billion, reflecting strong operating leverage; free cash flow reached a record $7 billion, up 47%; the company returned $2.8 billion to shareholders through cash dividends[3] Key Financial Data for Q3 FY2025 (GAAP vs. Non-GAAP) | Metric | Q3 25 (Million USD) | Q3 24 (Million USD) | Change | | :--- | :--- | :--- | :--- | | GAAP | | | | | Net Revenue | 15,952 | 13,072 | +22% | | Net Income (Loss) | 4,140 | (1,875) | +$6,015 | | Diluted EPS | 0.85 | (0.40) | +$1.25 | | Non-GAAP | | | | | Net Revenue | 15,952 | 13,072 | +22% | | Net Income | 8,404 | 6,120 | +$2,284 | | Diluted EPS | 1.69 | 1.24 | +$0.45 | | Other Metrics | | | | | Operating Cash Flow | 7,166 | 4,963 | +$2,203 | | Adjusted EBITDA | 10,702 | 8,223 | +$2,479 | | Free Cash Flow | 7,024 | 4,791 | +$2,233 | Segment Net Revenue for Q3 FY2025 | Segment | Q3 25 (Million USD) | Q3 24 (Million USD) | Change | | :--- | :--- | :--- | :--- | | Semiconductor Solutions | 9,166 | 7,274 | +26% | | Infrastructure Software | 6,786 | 5,798 | +17% | | Total Net Revenue | 15,952 | 13,072 | - | Fourth Quarter Fiscal Year 2025 Business Outlook Broadcom anticipates Q4 FY2025 revenue of approximately $17.4 billion, a 24% year-over-year increase, with adjusted EBITDA expected to be 67% of projected revenue Fourth Quarter Fiscal Year 2025 Business Outlook | Metric | Q4 FY2025 Outlook | | :--- | :--- | | Revenue | Approximately $17.4 billion (24% YoY growth) | | Adjusted EBITDA | 67% of projected revenue | Quarterly Dividend Announcement The company's board of directors approved a quarterly cash dividend of $0.59 per share, payable on September 30, 2025, to shareholders of record as of September 22, 2025 - The company's board of directors has approved a quarterly cash dividend of $0.59 per share[4][8] - The dividend will be paid on September 30, 2025, to shareholders of record as of the close of business (5:00 p.m. Eastern Time) on September 22, 2025[8] - In the third fiscal quarter, the company paid a total of $2.786 billion in cash dividends[6] Company Information This section details Broadcom's corporate profile, its approach to non-GAAP financial reporting, and important cautionary notes regarding forward-looking statements About Broadcom Broadcom Inc. is a global technology leader specializing in designing, developing, and supplying a broad range of semiconductors, enterprise software, and security solutions for critical markets - Broadcom Inc. is a global technology leader that designs, develops, and supplies a broad range of semiconductors, enterprise software, and security solutions[14] - The company's product portfolio serves critical markets including cloud, data center, networking, broadband, wireless, storage, industrial, and enterprise software[14] - Solutions encompass service provider and enterprise networking and storage, mobile and broadband connectivity, mainframe, cybersecurity, and private and hybrid cloud infrastructure[14] Non-GAAP Financial Measures Broadcom provides non-GAAP financial measures to offer additional insight into its ongoing operational performance, excluding items management deems not reflective of core performance - Non-GAAP measures aim to provide additional insight into the company's ongoing operational performance and offer investors a more consistent basis for comparison[11] - Non-GAAP information excludes items such as acquisition-related intangible asset amortization, stock-based compensation expense, restructuring and other charges, acquisition-related costs (including integration costs), and non-GAAP tax adjustments[12] - The free cash flow metric has limitations as it omits certain components of the overall statement of cash flows, does not represent residual cash flow available for discretionary expenditures, and may be calculated differently from similarly titled measures used by other companies[13] Cautionary Note Regarding Forward-Looking Statements This announcement contains forward-looking statements based on current expectations and beliefs, involving risks and uncertainties that could cause actual results to differ materially - This announcement contains forward-looking statements regarding the company's anticipated future business and financial performance, as well as plans and expectations related to stock repurchases[15] - These statements are based on management's current expectations and beliefs, and current market trends and conditions, involving risks and uncertainties that could cause actual results to differ materially from forward-looking statements[15] - Specific uncertainties include global economic conditions, government regulations, trade restrictions and tensions, loss of key customers and demand fluctuations, semiconductor industry cyclicality, ability to realize anticipated benefits of the VMware acquisition, cybersecurity threats, and significant indebtedness[16][17] Financial Statements (Unaudited) This section presents Broadcom's unaudited condensed consolidated statements of operations, balance sheets, and cash flows, along with GAAP to non-GAAP reconciliations Condensed Consolidated Statements of Operations (Unaudited) This section presents Broadcom's unaudited condensed consolidated statements of operations for the quarters and three fiscal quarters ended August 3, 2025, and August 4, 2024 Condensed Consolidated Statements of Operations (Unaudited) | Metric (Million USD) | August 3, 2025 (Q3) | May 4, 2025 (Q2) | August 4, 2024 (Q3) | August 3, 2025 (YTD) | August 4, 2024 (YTD) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Revenue | 15,952 | 15,004 | 13,072 | 45,872 | 37,520 | | Cost of Sales | 5,249 | 4,807 | 4,716 | 14,827 | 14,013 | | Gross Margin | 10,703 | 10,197 | 8,356 | 31,045 | 23,507 | | Research and Development Expenses | 3,050 | 2,693 | 2,353 | 7,996 | 7,076 | | Selling, General and Administrative Expenses | 1,072 | 1,083 | 1,100 | 3,104 | 3,949 | | Operating Income | 5,887 | 5,829 | 3,788 | 17,976 | 8,836 | | Net Income (Loss) | 4,140 | 4,965 | (1,875) | 14,608 | 1,571 | | Diluted EPS | 0.85 | 1.03 | (0.40) | 3.02 | 0.33 | Financial Reconciliation: GAAP to Non-GAAP (Unaudited) This section provides detailed GAAP to non-GAAP financial reconciliation tables for key metrics, including gross margin, operating expenses, operating income, interest expense, and net income GAAP to Non-GAAP Gross Margin Reconciliation (Unaudited) | Metric (Million USD) | August 3, 2025 (Q3) | August 4, 2024 (Q3) | | :--- | :--- | :--- | | GAAP Gross Margin | 10,703 | 8,356 | | Acquisition-related intangible asset amortization | 1,519 | 1,525 | | Stock-based compensation expense | 251 | 174 | | Restructuring charges | 26 | 58 | | Non-GAAP Gross Margin | 12,499 | 10,113 | GAAP to Non-GAAP Operating Income Reconciliation (Unaudited) | Metric (Million USD) | August 3, 2025 (Q3) | August 4, 2024 (Q3) | | :--- | :--- | :--- | | GAAP Operating Income | 5,887 | 3,788 | | Acquisition-related intangible asset amortization | 2,026 | 2,337 | | Stock-based compensation expense | 2,322 | 1,381 | | Restructuring and other charges | 213 | 361 | | Acquisition-related costs | 7 | 81 | | Non-GAAP Operating Income | 10,455 | 7,948 | GAAP to Non-GAAP Net Income Reconciliation (Unaudited) | Metric (Million USD) | August 3, 2025 (Q3) | August 4, 2024 (Q3) | | :--- | :--- | :--- | | GAAP Net Income (Loss) | 4,140 | (1,875) | | Acquisition-related intangible asset amortization | 2,026 | 2,337 | | Stock-based compensation expense | 2,322 | 1,381 | | Restructuring and other charges | 213 | 361 | | Non-GAAP tax adjustments | (223) | 3,303 | | Non-GAAP Net Income | 8,404 | 6,120 | Adjusted EBITDA (Unaudited) | Metric (Million USD) | August 3, 2025 (Q3) | August 4, 2024 (Q3) | | :--- | :--- | :--- | | Adjusted EBITDA | 10,702 | 8,223 | Condensed Consolidated Balance Sheets (Unaudited) This section presents Broadcom's unaudited condensed consolidated balance sheets as of August 3, 2025, and November 3, 2024, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (Unaudited) | Metric (Million USD) | August 3, 2025 | November 3, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 10,718 | 9,348 | | Accounts receivable, net | 6,494 | 4,416 | | Inventories | 2,180 | 1,760 | | Total current assets | 24,998 | 19,595 | | Property, plant and equipment, net | 2,451 | 2,521 | | Goodwill | 97,801 | 97,873 | | Intangible assets, net | 34,344 | 40,583 | | Total assets | 165,621 | 165,645 | | Liabilities and Equity | | | | Accounts payable | 1,432 | 1,662 | | Short-term debt | 1,399 | 1,271 | | Total current liabilities | 16,704 | 16,697 | | Long-term debt | 62,830 | 66,295 | | Total liabilities | 92,344 | 97,967 | | Total stockholders' equity | 73,277 | 67,678 | | Total liabilities and equity | 165,621 | 165,645 | Condensed Consolidated Statements of Cash Flows (Unaudited) This section provides Broadcom's unaudited condensed consolidated statements of cash flows for the quarters and three fiscal quarters ended August 3, 2025, and August 4, 2024 Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric (Million USD) | August 3, 2025 (Q3) | August 4, 2024 (Q3) | August 3, 2025 (YTD) | August 4, 2024 (YTD) | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 7,166 | 4,963 | 19,834 | 14,358 | | Net cash provided by (used in) investing activities | 94 | 3,245 | (213) | (22,938) | | Net cash provided by (used in) financing activities | (6,014) | (8,065) | (18,251) | 4,343 | | Net increase (decrease) in cash and cash equivalents | 1,246 | 143 | 1,370 | (4,237) | | Cash and cash equivalents at end of period | 10,718 | 9,952 | 10,718 | 9,952 | Additional Information This section provides details on the financial results conference call and contact information for investor relations Financial Results Conference Call Broadcom held a conference call on September 4, 2025, to discuss Q3 FY2025 financial results and business outlook, with an audio replay available on the company's investor website - Broadcom held a conference call on September 4, 2025, at 2:00 p.m. Pacific Time to review Q3 FY2025 financial results and discuss the business outlook[9] - The conference call was accessible online via the investor section of Broadcom's website at https://investors.broadcom.com/[9](index=9&type=chunk) - An audio replay of the conference call is available on the investor section of Broadcom's website for one year[10] Contact Information This section provides contact information for Broadcom Inc.'s investor relations department - Contact: Ji Yoo, Investor Relations, Broadcom Inc[19] - Phone: 650-427-6000[19] - Email: investor.relations@broadcom.com[19]