Broadcom(AVGO) - 2025 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION This section presents Broadcom's unaudited condensed consolidated financial statements and management's discussion and analysis for the reported periods Item 1. Condensed Consolidated Financial Statements — Unaudited This section presents Broadcom Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), cash flows, and stockholders' equity, along with detailed notes explaining accounting policies, revenue recognition, acquisitions, debt, equity, income taxes, segment information, commitments, and restructuring charges for the periods ended August 3, 2025, and August 4, 2024 Condensed Consolidated Balance Sheets — Unaudited Provides a snapshot of Broadcom's financial position, detailing assets, liabilities, and equity at specific fiscal year-end dates | Metric | August 3, 2025 (In millions) | November 3, 2024 (In millions) | | :----------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $10,718 | $9,348 | | Total current assets | $24,998 | $19,595 | | Total assets | $165,621 | $165,645 | | Total current liabilities | $16,704 | $16,697 | | Total liabilities | $92,344 | $97,967 | | Total stockholders' equity | $73,277 | $67,678 | Condensed Consolidated Statements of Operations — Unaudited Presents Broadcom's financial performance over specific fiscal periods, including net revenue, gross margin, operating income, and net income | Metric (In millions, except per share data) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net revenue | $15,952 | $13,072 | $45,872 | $37,520 | | Gross margin | $10,703 | $8,356 | $31,045 | $23,507 | | Operating income | $5,887 | $3,788 | $17,976 | $8,836 | | Net income (loss) | $4,140 | $(1,875) | $14,608 | $1,571 | | Diluted net income (loss) per share | $0.85 | $(0.40) | $3.02 | $0.33 | Condensed Consolidated Statements of Comprehensive Income (Loss) — Unaudited Details Broadcom's net income or loss and other comprehensive income components for the reported fiscal periods | Metric (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net income (loss) | $4,140 | $(1,875) | $14,608 | $1,571 | | Other comprehensive income, net of tax | $15 | $1 | $14 | $1 | | Comprehensive income (loss) | $4,155 | $(1,874) | $14,622 | $1,572 | Condensed Consolidated Statements of Cash Flows — Unaudited Summarizes Broadcom's cash inflows and outflows from operating, investing, and financing activities for the reported fiscal periods | Metric (In millions) | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | | Net cash provided by operating activities | $19,834 | $14,358 | | Net cash used in investing activities | $(213) | $(22,938) |\ | Net cash provided by (used in) financing activities | $(18,251) | $4,343 | | Net change in cash and cash equivalents | $1,370 | $(4,237) | Condensed Consolidated Statements of Stockholders' Equity — Unaudited Outlines changes in Broadcom's stockholders' equity, including net income, dividends, and stock-based compensation, over specific fiscal periods | Metric (In millions) | Balance as of Nov 3, 2024 | Balance as of Aug 3, 2025 | | :------------------- | :------------------------ | :------------------------ | | Total Stockholders' Equity | $67,678 | $73,277 | | Net income | $14,608 | - | | Dividends to common stockholders | $(8,345) | - | | Stock-based compensation | $5,375 | - | Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, revenue, acquisitions, and other financial items 1. Overview, Basis of Presentation and Significant Accounting Policies Describes Broadcom's business, its operational segments, and the foundational accounting principles applied in the financial statements - Broadcom Inc. is a global technology leader in semiconductor and infrastructure software solutions, operating with two reportable segments: semiconductor solutions and infrastructure software[22] 2. Revenue from Contracts with Customers Details Broadcom's revenue recognition policies, disaggregating revenue by type and presenting contract balances | Revenue Type (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Products | $9,257 | $7,439 | $25,934 | $22,043 | | Subscriptions and services | $6,695 | $5,633 | $19,938 | $15,477 | | Total | $15,952 | $13,072 | $45,872 | $37,520 | | Contract Balances (In millions) | August 3, 2025 | November 3, 2024 | | :------------------------------ | :------------- | :--------------- | | Contract Assets | $7,575 | $4,402 | | Contract Liabilities | $14,336 | $14,495 | - Remaining performance obligations under firmly committed multi-year contracts were approximately $27.5 billion as of August 3, 2025, with about 34% expected to be recognized as revenue over the next 12 months[33] 3. Acquisitions Provides information on Broadcom's recent acquisition activities, including the financial impact and pro forma data - Broadcom completed the acquisition of VMware, Inc. on November 22, 2023, for approximately $30,788 million in cash and 544 million shares of common stock (fair value $53,398 million) to enhance infrastructure software capabilities[34] | Pro Forma Information (In millions) | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 4, 2024 | | :---------------------------------- | :------------------------------- | :-------------------------------------- | | Pro forma net revenue | $13,088 | $38,118 | | Pro forma net income (loss) | $(1,819) | $2,057 | 4. Supplemental Financial Information Presents additional financial details, including inventory, other current assets and liabilities, and discontinued operations - Trade accounts receivable sold under factoring arrangements totaled $1,700 million for the fiscal quarter and $5,651 million for the three fiscal quarters ended August 3, 2025[38] | Inventory (In millions) | August 3, 2025 | November 3, 2024 | | :---------------------- | :------------- | :--------------- | | Finished goods | $477 | $504 | | Work-in-process | $1,349 | $970 | | Raw materials | $354 | $286 | | Total inventory | $2,180 | $1,760 | | Other Current Assets (In millions) | August 3, 2025 | November 3, 2024 | | :--------------------------------- | :------------- | :--------------- | | Current portion of contract assets | $4,157 | $1,916 | | Prepaid expenses | $793 | $1,391 | | Other | $656 | $764 | | Total other current assets | $5,606 | $4,071 | | Other Current Liabilities (In millions) | August 3, 2025 | November 3, 2024 | | :------------------------------------ | :------------- | :--------------- | | Contract liabilities | $10,305 | $9,395 | | Interest payable | $644 | $535 | | Tax liabilities | $410 | $720 | | Other | $795 | $1,143 | | Total other current liabilities | $12,154 | $11,793 | | Other Long-Term Liabilities (In millions) | August 3, 2025 | November 3, 2024 | | :---------------------------------------- | :------------- | :--------------- | | Contract liabilities | $4,031 | $5,100 | | Unrecognized tax benefits | $3,817 | $3,669 | | Deferred tax liabilities | $3,552 | $4,703 | | Other | $1,410 | $1,503 | | Total other long-term liabilities | $12,810 | $14,975 | | Discontinued Operations (In millions) | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------ | :------------------------------- | :-------------------------------------- | | Net revenue | $178 | $858 | | Loss from discontinued operations, net of income taxes | $(443) | $(392) | 5. Intangible Assets Details Broadcom's intangible assets, their gross carrying amounts, accumulated amortization, and expected future amortization expenses | Intangible Assets (In millions) | Gross Carrying Amount (Aug 3, 2025) | Accumulated Amortization (Aug 3, 2025) | Net Book Value (Aug 3, 2025) | | :------------------------------ | :---------------------------------- | :------------------------------------- | :--------------------------- | | Purchased technology | $36,957 | $(17,034) | $19,923 | | Customer contracts and related relationships | $16,043 | $(3,757) | $12,286 | | Trade names | $1,685 | $(446) | $1,239 | | Other | $191 | $(115) | $76 | | Intangible assets subject to amortization | $54,876 | $(21,352) | $33,524 | | In-process research and development | $820 | — | $820 | | Total | $55,696 | $(21,352) | $34,344 | | Fiscal Year | Expected Amortization Expense (In millions) | | :---------- | :---------------------------------------- | | 2025 (remainder) | $2,072 | | 2026 | $7,880 | | 2027 | $6,805 | | 2028 | $5,673 | | 2029 | $4,547 | | Thereafter | $6,547 | | Total | $33,524 | 6. Net Income (Loss) Per Share Presents the calculation of basic and diluted net income (loss) per share, including weighted-average shares outstanding | Metric (In millions, except per share data) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net income (loss) | $4,140 | $(1,875) | $14,608 | $1,571 | | Weighted-average shares outstanding - basic | 4,714 | 4,663 | 4,705 | 4,606 | | Weighted-average shares outstanding - diluted | 4,860 | 4,663 | 4,841 | 4,762 | | Basic net income (loss) per share | $0.88 | $(0.40) | $3.10 | $0.34 | | Diluted net income (loss) per share | $0.85 | $(0.40) | $3.02 | $0.33 | 7. Borrowings Details Broadcom's debt structure, including principal outstanding, short-term and long-term debt, and future scheduled principal payments | Debt Type (In millions) | August 3, 2025 | November 3, 2024 | | :---------------------- | :------------- | :--------------- | | Total debt principal outstanding | $66,257 | $69,847 | | Short-term debt | $1,399 | $1,271 | | Long-term debt | $62,830 | $66,295 | - In July 2025, Broadcom issued $6,000 million in senior unsecured notes and used the proceeds to repay the remaining $6,000 million of its unsecured term facility due November 2028[59][60] - In January 2025, $3,000 million in senior unsecured notes were issued, contributing to the repayment of $5,595 million of the unsecured term facility due November 2026 and $2,000 million of the unsecured term facility due November 2028[59][60] - Broadcom entered into a new $7.5 billion unsecured revolving credit facility in January 2025, replacing a previous facility, with no outstanding borrowings as of August 3, 2025[64] | Fiscal Year | Future Scheduled Principal Payments (In millions) | | :---------- | :---------------------------------------------- | | 2025 (remainder) | $— | | 2026 | $3,152 | | 2027 | $6,137 | | 2028 | $7,120 | | 2029 | $4,655 | | Thereafter | $44,693 | | Total | $65,757 | 8. Stockholders' Equity Provides details on dividends, stock repurchase programs, and stock-based compensation expense and unrecognized costs | Metric (In millions, except per share data) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Dividends per share to common stockholders | $0.590 | $0.525 | $1.770 | $1.575 | | Dividends to common stockholders | $2,786 | $2,452 | $8,345 | $7,330 | - In April 2025, the Board authorized a new $10 billion stock repurchase program through December 31, 2025[69] - During the fiscal quarter ended May 4, 2025, 16 million shares were repurchased for $2,450 million, leaving $7,550 million available[69] | Stock-Based Compensation Expense (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Total stock-based compensation expense | $2,322 | $1,381 | $5,373 | $4,356 | - As of August 3, 2025, total unrecognized compensation cost related to unvested stock-based awards was $25,057 million, expected to be recognized over a weighted-average service period of 3.6 years[73] 9. Income Taxes Discusses Broadcom's income tax provision, the impact of new tax legislation, and unrecognized tax benefits - The 'One Big Beautiful Bill Act' enacted on July 4, 2025, led to a $1,058 million valuation allowance against CAMT credits due to immediate expensing of R&D and capital expenditures[76] | Provision for Income Taxes (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Provision for income taxes | $1,145 | $4,238 | $1,252 | $4,190 | - Unrecognized tax benefits and accrued interest/penalties totaled $6,930 million as of August 3, 2025, with an estimated reduction of $3.1 billion in Q4 2025 and up to $3.5 billion within 12 months due to lapsed statutes of limitations, potentially leading to a $2.1 billion discrete tax benefit in Q4 2025[79] 10. Segment Information Presents financial data disaggregated by Broadcom's two reportable segments: semiconductor solutions and infrastructure software - Broadcom operates two reportable segments: semiconductor solutions (AI and enterprise data centers, networking, connectivity, storage, etc., including IP licensing) and infrastructure software (IT environment simplification, private/hybrid cloud, application management, security, FC SAN products)[81][82] | Net Revenue by Segment (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Semiconductor solutions | $9,166 | $7,274 | $25,786 | $21,866 | | Infrastructure software | $6,786 | $5,798 | $20,086 | $15,654 | | Total net revenue | $15,952 | $13,072 | $45,872 | $37,520 | | Operating Income by Segment (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Semiconductor solutions | $5,217 | $4,042 | $14,729 | $12,136 | | Infrastructure software | $5,238 | $3,906 | $15,347 | $9,789 | | Unallocated expenses | $(4,568) | $(4,160) | $(12,100) | $(13,089) | | Total operating income | $5,887 | $3,788 | $17,976 | $8,836 | 11. Commitments and Contingencies Details Broadcom's contractual commitments, legal proceedings, and potential contingent liabilities | Fiscal Year | Purchase Commitments (In millions) | Other Contractual Commitments (In millions) | | :---------- | :------------------------------- | :------------------------------------------ | | 2025 (remainder) | $106 | $264 | | 2026 | $103 | $634 | | 2027 | $12 | $604 | | 2028 | $10 | $530 | | 2029 | $4 | $718 | | Thereafter | $— | $1,027 | | Total | $235 | $3,777 | - Broadcom does not believe any pending legal proceedings, regulatory investigations, or tax disputes will have a material adverse effect on its condensed consolidated financial statements, though outcomes are inherently uncertain[93] - A securities class action lawsuit against VMware and former officers regarding backlog statements was settled and approved by the California Court in March 2025[91] 12. Restructuring and Other Charges Provides information on restructuring activities, including employee termination costs and lease impairments, primarily related to acquisitions | Restructuring Liabilities (In millions) | Balance as of Nov 3, 2024 | Restructuring Charges | Utilization | Balance as of Aug 3, 2025 | | :------------------------------------ | :------------------------ | :-------------------- | :---------- | :------------------------ | | Employee Termination Costs | $119 | $302 | $(389) | $32 | | Lease and Impairment Costs | $— | $141 | $(141) | $— | | Total | $119 | $443 | $(530) | $32 | - Restructuring activities, primarily related to the VMware acquisition, are expected to be substantially completed by the end of fiscal year 2025[97] 13. Subsequent Events Discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On September 3, 2025, the Board of Directors declared a quarterly cash dividend of $0.59 per share, payable on September 30, 2025[99] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Broadcom's financial condition and results of operations for the fiscal quarter and three fiscal quarters ended August 3, 2025, compared to the prior year. It covers an overview of the business, quarterly highlights, critical accounting estimates, macroeconomic factors, and a detailed analysis of net revenue, gross margin, operating expenses, segment performance, non-operating items, liquidity, capital resources, and capital returns Overview Describes Broadcom's core business as a global technology leader in semiconductor and infrastructure software solutions - Broadcom is a global technology leader designing, developing, and supplying semiconductor and infrastructure software solutions, with two reportable segments: semiconductor solutions and infrastructure software[102][103] Quarterly Highlights Summarizes key financial achievements and corporate actions during the most recent fiscal quarter - Generated $7,166 million of cash from operations during the fiscal quarter ended August 3, 2025[104] - Paid $2,786 million in cash dividends during the fiscal quarter ended August 3, 2025[104] - Issued $6,000 million of senior unsecured notes and used proceeds to repay outstanding floating rate unsecured term loan[104] Critical Accounting Estimates Confirms the consistency of critical accounting estimates with prior disclosures, indicating no significant changes - No significant changes in critical accounting estimates during the three fiscal quarters ended August 3, 2025, compared to those previously disclosed in the 2024 Annual Report on Form 10-K[106] Macroeconomic Factors Discusses the potential impact of global economic conditions, trade tensions, and market volatility on Broadcom's business - Broadcom is subject to risks from the evolving macroeconomic environment, including financial market uncertainty, trade tensions, and economic volatility, which can impact net revenue and supply chain operations[107] Results of Operations Analyzes Broadcom's financial performance, covering net revenue, gross margin, operating expenses, and segment results Net Revenue Details Broadcom's revenue breakdown by product and subscription/services, highlighting customer concentration | Metric (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Products | $9,257 | $7,439 | $25,934 | $22,043 | | Subscriptions and services | $6,695 | $5,633 | $19,938 | $15,477 | | Total net revenue | $15,952 | $13,072 | $45,872 | $37,520 | - Direct sales to one semiconductor solutions customer (a distributor) accounted for 32% of net revenue for the fiscal quarter and 30% for the three fiscal quarters ended August 3, 2025[111][112] - Aggregate sales to the top five end customers accounted for approximately 40% of net revenue for both periods[111][112] Net Revenue by Segment Analyzes revenue performance across Broadcom's semiconductor solutions and infrastructure software segments | Segment (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | $ Change | % Change | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | $ Change | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :------- | :-------------------------------------- | :-------------------------------------- | :------- | :------- | | Semiconductor solutions | $9,166 | $7,274 | $1,892 | 26% | $25,786 | $21,866 | $3,920 | 18% | | Infrastructure software | $6,786 | $5,798 | $988 | 17% | $20,086 | $15,654 | $4,432 | 28% | | Total net revenue | $15,952 | $13,072 | $2,880 | 22% | $45,872 | $37,520 | $8,352 | 22% | - Semiconductor solutions revenue increased due to strong demand for networking products, primarily custom AI accelerators and AI networking solutions[115] - Infrastructure software revenue increased primarily due to strong demand for VMware Cloud Foundation (VCF) products and the transition to a subscription license model[116] Gross Margin Explains the factors influencing Broadcom's gross margin, including revenue mix and amortization | Metric (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Gross margin | $10,703 | $8,356 | $31,045 | $23,507 | | Gross margin as % of net revenue | 67% | 64% | 68% | 63% | - Gross margin increases were primarily driven by higher software revenue and strong product demand for AI-related semiconductor solutions, along with a higher software revenue mix and lower amortization of acquisition-related intangible assets as a percentage of revenue[117][118] Research and Development Expense Discusses changes in research and development expenditures, primarily driven by compensation - Research and development expense increased by $697 million (30%) for the fiscal quarter and $920 million (13%) for the three fiscal quarters ended August 3, 2025, primarily due to higher stock-based compensation[119] Selling, General and Administrative Expense Analyzes fluctuations in selling, general, and administrative costs, including impacts from headcount and acquisition-related expenses - Selling, general and administrative expense decreased by $28 million (3%) for the fiscal quarter and $845 million (21%) for the three fiscal quarters ended August 3, 2025, primarily due to lower compensation from headcount reduction and reduced VMware acquisition-related costs, partially offset by higher stock-based compensation in the fiscal quarter[120] Amortization of Acquisition-Related Intangible Assets Explains the decrease in amortization expense due to the full amortization of certain intangible assets - Amortization of acquisition-related intangible assets in operating expenses decreased by $305 million (38%) for the fiscal quarter and $907 million (37%) for the three fiscal quarters ended August 3, 2025, mainly due to the full amortization of customer-related intangible assets from prior software acquisitions (excluding VMware)[122] Restructuring and Other Charges Details the reduction in restructuring charges, mainly from lower employee termination costs related to integration - Restructuring and other charges in operating expenses decreased by $116 million (38%) for the fiscal quarter and $770 million (63%) for the three fiscal quarters ended August 3, 2025, primarily due to lower employee termination costs from VMware integration[123] Stock-Based Compensation Expense Discusses the drivers behind changes in stock-based compensation, including equity awards and vesting | Stock-Based Compensation Expense (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Total stock-based compensation expense | $2,322 | $1,381 | $5,373 | $4,356 | - The increase in stock-based compensation was due to Two-Year Equity Awards granted at higher grant-date fair values, partially offset by the full vesting and forfeitures of certain equity awards assumed in the VMware acquisition[125] | Fiscal Year | Unrecognized Compensation Cost, Net of Expected Forfeitures (In millions) | | :---------- | :---------------------------------------------------------------------- | | 2025 (remainder) | $2,172 | | 2026 | $8,104 | | 2027 | $6,925 | | 2028 | $4,772 | | 2029 | $2,487 | | Thereafter | $597 | | Total | $25,057 | Segment Operating Results Presents and analyzes the operating income performance of Broadcom's semiconductor solutions and infrastructure software segments | Operating Income by Segment (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | $ Change | % Change | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | $ Change | % Change | | :---------------------------------------- | :------------------------------- | :------------------------------- | :------- | :------- | :-------------------------------------- | :-------------------------------------- | :------- | :------- | | Semiconductor solutions | $5,217 | $4,042 | $1,175 | 29% | $14,729 | $12,136 | $2,593 | 21% | | Infrastructure software | $5,238 | $3,906 | $1,332 | 34% | $15,347 | $9,789 | $5,558 | 57% | | Unallocated expenses | $(4,568) | $(4,160) | $(408) | 10% | $(12,100) | $(13,089) | $989 | (8)% | | Total operating income | $5,887 | $3,788 | $2,099 | 55% | $17,976 | $8,836 | $9,140 | 103% | - Semiconductor solutions operating income increased due to strong demand for networking products, primarily custom AI accelerators and AI networking solutions[128] - Infrastructure software operating income increased primarily due to strong demand for VCF products and the transition to a subscription license model[129] Non-Operating Income and Expenses Reviews changes in interest expense, other income, and the provision for income taxes - Interest expense decreased due to an overall reduction in outstanding debt balances and debt refinancing activities[131] - Other income, net, increased in the fiscal quarter ended August 3, 2025, primarily due to a gain on the sale of a business, but decreased for the three fiscal quarters ended August 3, 2025, due to lower interest income[132] - The provision for income taxes for the fiscal quarter and three fiscal quarters ended August 3, 2025, was primarily due to a valuation allowance against CAMT credits, income before income taxes, and jurisdictional mix[134] Liquidity and Capital Resources Assesses Broadcom's ability to meet its financial obligations, detailing cash sources, working capital, and cash flow activities - Primary liquidity sources as of August 3, 2025, included $10,718 million in cash and cash equivalents, expected cash from operations, and available capacity under a $7.5 billion unsecured revolving credit facility[137] - Working capital increased to $8,294 million at August 3, 2025, from $2,898 million at November 3, 2024, primarily due to increased cash and cash equivalents, trade accounts receivable, and software contract assets[142][146] | Cash Flows (In millions) | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | | Net cash provided by operating activities | $19,834 | $14,358 | | Net cash used in investing activities | $(213) | $(22,938) |\n| Net cash provided by (used in) financing activities | $(18,251) | $4,343 |\n| Net change in cash and cash equivalents | $1,370 | $(4,237) | - The $5,476 million increase in cash from operations was primarily due to $13,037 million higher net income, partially offset by lower non-cash adjustments for deferred taxes and changes in operating assets and liabilities[148] - Cash used in investing activities decreased by $22,725 million, primarily due to the VMware acquisition in the prior year fiscal period[149] - Cash flows from financing activities decreased by $22,594 million, mainly due to prior year VMware acquisition financing, debt repayments, and higher dividend payments, partially offset by decreased stock repurchases[150] Capital Returns Outlines Broadcom's strategies for returning capital to shareholders, including dividends and stock repurchase programs | Metric (In millions, except per share data) | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------------ | :-------------------------------------- | :-------------------------------------- | | Dividends per share to common stockholders | $1.770 | $1.575 |\n| Dividends to common stockholders | $8,345 | $7,330 | - A new $10 billion stock repurchase program was authorized in April 2025, with $2,450 million repurchased and $7,550 million remaining as of August 3, 2025[142] - Employee withholding taxes on equity awards, totaling $3,860 million for the three fiscal quarters ended August 3, 2025, are now settled by selling a portion of vested shares, eliminating cash outflow[145] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses Broadcom's exposure to market risks, specifically focusing on interest rate risk and its potential impact on the fair value of fixed-rate borrowings and interest expense on floating-rate debt - As of August 3, 2025, fixed-rate borrowings had a principal amount of $65.8 billion and an estimated fair value of $62.5 billion[152] - A hypothetical 50 basis point change in market interest rates would alter the fair value by approximately $1.8 billion[152] - Broadcom had no floating-rate term loans outstanding as of August 3, 2025[153] Item 4. Controls and Procedures This section details management's evaluation of the effectiveness of Broadcom's disclosure controls and procedures and confirms no material changes in internal control over financial reporting during the reported period - Broadcom's CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of August 3, 2025[154] - There were no material changes in internal control over financial reporting during the period covered by the report[156] PART II — OTHER INFORMATION Presents additional non-financial information, including legal proceedings, risk factors, and other required disclosures Item 1. Legal Proceedings This section refers to Note 11, 'Commitments and Contingencies,' for detailed information on legal proceedings and associated risks - Information on legal proceedings is incorporated by reference from Note 11, 'Commitments and Contingencies,' in Part I, Item 1 of this Form 10-Q[158] Item 1A. Risk Factors This section outlines various material risks that could adversely affect Broadcom's business, operations, financial condition, and stock price, categorized into risks related to business, taxes, indebtedness, and common stock ownership - Broadcom's business, operations, and financial results are subject to risks related to its business, taxes, indebtedness, and owning its common stock[159][160][162][163] Risks Related to Our Business Identifies various operational and external risks that could negatively impact Broadcom's business and financial performance - Adverse global economic conditions, governmental regulations, and geopolitical factors, particularly trade tensions with U.S. trading partners like China, could negatively impact Broadcom's business, supply chain, and financial results[166][168][171] - Significant customer concentration, with sales to distributors accounting for 47% of net revenue and top five end customers for approximately 40% in the three fiscal quarters ended August 3, 2025, poses a risk of revenue fluctuation and adverse impact from customer demand reduction or loss[174] - Failure to successfully integrate the VMware acquisition, including customer acceptance of the transition to a subscription licensing model and simplified product portfolio, could adversely affect Broadcom's business and stock value[184][185] - Dependence on contract manufacturing (e.g., TSMC for 95% of wafers) and a limited number of materials suppliers creates supply chain risks, including capacity allocation, quality issues, and price increases, which could hinder product delivery and impact financial performance[201][203][206] - Cybersecurity threats, security breaches, and vulnerabilities in IT systems or products could lead to information loss, business disruption, reputational damage, and significant financial liabilities[194][197][214][217] Risks Related to Our Taxes Discusses potential tax liabilities and the impact of tax law changes on Broadcom's financial condition - Broadcom's income taxes are subject to volatility due to business reorganizations, tax structure changes, and new legislation like the 'One Big Beautiful Bill Act' and global minimum tax provisions, which may increase effective tax rates and cash tax costs[246][247] - There are potential tax liabilities from VMware's former controlling ownership by Dell, including indemnification obligations if the spin-off is deemed not tax-free, which could materially affect financial condition[249][253] - Changes or termination of tax incentives or tax holiday arrangements could significantly increase corporate income taxes and reduce profitability, as these incentives decreased the provision for income taxes by approximately $2,261 million in fiscal year 2024[250][251] Risks Related to Our Indebtedness Highlights the financial implications and constraints associated with Broadcom's substantial debt levels - Broadcom's substantial indebtedness of $66,257 million as of August 3, 2025, could adversely affect its financial health by increasing vulnerability to economic conditions, limiting flexibility, creating a competitive disadvantage, and dedicating a significant portion of cash flow to debt payments[254] Risks Related to Owning Our Common Stock Addresses factors that could influence the volatility of Broadcom's stock price and shareholder returns - Broadcom's stock price may be volatile due to factors such as analyst reports, demand for AI-related products, market fluctuations, acquisition announcements, and significant sales by large investors[256][257] - The amount and frequency of stock repurchases may fluctuate based on cash priorities, and there is no assurance that cash dividends will continue to be declared[259][260] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[262] Item 3. Defaults Upon Senior Securities This section confirms that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities to report[263] Item 4. Mine Safety Disclosures This section indicates that there are no mine safety disclosures to report - No mine safety disclosures to report[264] Item 5. Other Information This section states that there is no other information to report - No other information to report[265] Item 6. Exhibits This section provides a comprehensive index of exhibits filed with the Form 10-Q, including merger agreements, certificates of incorporation, bylaws, various senior notes indentures, and certifications - The report includes an exhibit index listing various documents such as merger agreements, corporate governance documents, debt instruments, and certifications[267][268][269] SIGNATURES Confirms the official submission of the report through the signature of a principal officer SIGNATURES This section contains the signature of Broadcom Inc.'s Chief Financial Officer, Kirsten M. Spears, certifying the filing of the report - The report is signed by Kirsten M. Spears, Chief Financial Officer of Broadcom Inc., on September 10, 2025[272]