Broadcom(US:AVGO)2024-06-13 00:14Revenue and Growth - The company generated $12,487 million in total net revenue for the fiscal quarter ended May 5, 2024, compared to $8,733 million for the same period in the previous year, representing a growth of 43%[102] - The semiconductor solutions segment accounted for $7,192 million in revenue, while subscriptions and services contributed $5,295 million, indicating a significant increase in service revenue from $1,992 million in the prior year[102] - Total net revenue reached $12,487 million, reflecting a 43% increase compared to $8,733 million in the prior year[108] - Semiconductor solutions segment net revenue increased to $7,202 million, a 6% increase from $6,808 million in the prior year[108] - Infrastructure software segment net revenue surged to $5,285 million, a 175% increase from $1,925 million in the prior year[108] Expenses and Margins - The gross margin for the fiscal quarter was 62%, down from 70% in the previous year, with total operating expenses rising to $4,811 million from $2,107 million[102] - Research and development expenses increased to $2,415 million, representing 19% of total revenue, compared to 15% in the previous year[102] - Selling, general and administrative expenses increased by $839 million, or 192%, totaling $2,063 million for the two fiscal quarters[111] - Amortization of acquisition-related intangible assets increased by $479 million, or 138%, for the fiscal quarter[112] - Restructuring and other charges amounted to $292 million for the fiscal quarter, primarily due to employee termination costs from the VMware Merger[113] - Interest expense for the fiscal quarter was $1,047 million, up from $405 million in the prior year[117] Cash Flow and Dividends - Cash generated from operations for the fiscal quarter was $4,580 million, demonstrating strong operational cash flow[97] - The company paid $2,443 million in cash dividends during the fiscal quarter[97] - Cash dividends declared and paid increased to $4,878 million for the two fiscal quarters ended May 5, 2024, compared to $3,840 million for the same period in the prior year, with dividends per share rising from $9.20 to $10.50[122] - Net cash provided by operating activities was $9,395 million for the two fiscal quarters ended May 5, 2024, an increase from $8,538 million in the prior year, primarily due to contributions from VMware[124] Acquisitions - The acquisition of VMware was completed on November 22, 2023, with a total consideration of approximately $84,186 million, including $30,788 million in cash and $53,398 million in stock[98] - The acquisition of Seagate's SoC operations was finalized on April 23, 2024, for $600 million, aimed at enhancing the company's SoC product portfolio[99] - Cash used in investing activities surged to $26,183 million, largely due to $25,976 million paid for the VMware Merger and the acquisition of Seagate's SoC operations[126] Customer Concentration - Direct sales to a single distributor customer accounted for 29% of net revenue for the fiscal quarter, highlighting significant customer concentration risks[105] - The company expects continued significant customer concentration, with the top five customers accounting for approximately 40% of net revenue for the fiscal quarter[105] Financial Position - Cash and cash equivalents stood at $9,809 million as of May 5, 2024, with additional liquidity from a $7.5 billion revolving credit facility[118] - The VMware Merger was completed on November 22, 2023, resulting in significant changes to the balance sheet, including cash and cash equivalents decreasing to $9,809 million from $14,189 million[120] - The current portion of long-term debt decreased to $2,426 million, reflecting $934 million in repayments[121] - Trade accounts receivable increased to $5,500 million, attributed to strong collections[121] - The company had $48.1 billion in principal amount of fixed-rate senior notes outstanding as of May 5, 2024, with an estimated fair value of $42.4 billion[129] - A hypothetical 1% change in interest rates would affect the interest expense on the $28.4 billion of outstanding 2023 Term Loans by approximately $287 million over the next 12 months[129] Integration and Controls - The company is in the process of integrating VMware operations into its systems and control environment, maintaining appropriate internal controls over financial reporting during this transition[131]