Broadcom Reports Significant Revenue Growth, Net Loss Due to VMware Acquisition Costs

Broadcom Inc. reported significant financial developments in its latest 10-Q filing for the fiscal quarter ended August 4, 2024. The company achieved net revenue of $13,072 million, a substantial increase from $8,876 million in the same quarter of the previous year. For the three fiscal quarters ended August 4, 2024, total revenue reached $37,520 million, compared to $26,524 million for the corresponding period in 2023. This growth was driven by a notable rise in subscriptions and services revenue, which surged to $5,633 million from $1,959 million year-over-year.

Despite the revenue increase, Broadcom reported a net loss of $(1,875) million for the quarter, a stark contrast to the net income of $3,303 million recorded in the prior year. The loss was attributed to higher costs associated with the recent acquisition of VMware, which was completed on November 22, 2023, for approximately $86.3 billion, including cash and stock. The integration of VMware is expected to enhance Broadcom's infrastructure software segment, which generated $5,798 million in revenue for the quarter, up from $1,935 million a year earlier.

Total assets as of August 4, 2024, soared to $167,966 million, significantly up from $72,861 million on October 29, 2023. This increase was largely due to the acquisition of VMware, which added substantial goodwill and intangible assets to the balance sheet. Goodwill rose to $97,873 million, while intangible assets increased to $43,034 million.

The company's total liabilities also grew, reaching $102,315 million, up from $48,873 million in the previous fiscal period. Long-term debt increased to $66,798 million, reflecting the financing of the VMware acquisition. The restructuring charges for the quarter amounted to $361 million, primarily related to employee termination costs, contributing to a total of $1,418 million in restructuring charges for the three fiscal quarters.

Broadcom's operating income for the quarter was $3,788 million, slightly down from $3,856 million in the prior year, while the gross margin decreased to 64% from 69%. The company also reported a significant increase in research and development expenses, which rose by 73% for the quarter and 83% for the three quarters, reflecting its commitment to innovation and integration efforts post-acquisition.

In terms of cash flow, Broadcom generated $4,963 million from operations during the quarter, with cash and cash equivalents decreasing to $9,952 million from $14,189 million at the end of the previous fiscal period, primarily due to cash outflows related to the VMware acquisition. The company declared a cash dividend of $0.525 per share for the quarter, up from $0.460 in the prior year.