Broadcom (AVGO) Q3 2024 earnings summary

Executive summary

• Q3 revenue reached $13.1 billion, up 47% year-over-year, driven by strong AI semiconductor solutions and VMware integration.

• Operating profit rose 44% year-over-year, but GAAP net loss was $1.9 billion due to a $4.5 billion non-cash tax provision and restructuring charges.

• Adjusted EBITDA was $8.2 billion (63% margin), and free cash flow was $4.8 billion (37% of revenue).

• Completed the $86.3 billion VMware acquisition and divested the EUC business for $3.5 billion.

• Declared a $0.53 per share dividend and completed a 10-for-1 stock split in July 2024.

Financial highlights

• Q3 gross margin was 77.4% (non-GAAP) and 64% (GAAP), with operating income at $7.9 billion (non-GAAP) and $3.8 billion (GAAP).

• Semiconductor Solutions revenue was $7.3 billion, up 5% year-over-year; Infrastructure software revenue was $5.8 billion, up 200% year-over-year.

• Research and development expense rose 73% year-over-year to $2.4 billion, mainly from VMware integration.

• Cash and cash equivalents at quarter-end were $10 billion.

• Paid $2.5 billion in dividends in Q3.

Outlook and guidance

• Q4 revenue is guided to approximately $14 billion, up 51% year-over-year, with adjusted EBITDA expected at 64% of revenue.

• Fiscal 2024 revenue outlook raised to $51.5 billion, with adjusted EBITDA margin for the year at 61.5%.

• AI revenue for FY24 expected to exceed $12 billion, driven by Ethernet networking and custom accelerators.

• Q4 gross margins expected to decline by about 100 basis points sequentially due to higher semiconductor mix.

• Sufficient liquidity is expected for at least the next 12 months, supported by cash, operations, and a $7.5 billion credit facility.