Broadcom (AVGO) Q3 2024 earnings summary

Executive summary

• Q3 revenue reached $13.1 billion, up 47% year-over-year, driven by strong AI revenue growth, VMware integration, and accelerating AI networking demand.

• VMware contributed $3.8 billion to infrastructure software revenue, which totaled $5.8 billion, up 200% year-over-year.

• AI revenue for Q3 was approximately $3.1 billion, with fiscal 2024 AI revenue forecasted to exceed $12 billion.

• Adjusted EBITDA grew 42% year-over-year to $8.2 billion (63% of revenue); free cash flow was $4.8 billion (37% of revenue).

• GAAP net loss for the quarter was $1.9 billion, primarily due to a $4.5 billion discrete non-cash tax provision and restructuring charges.

Financial highlights

• Q3 consolidated revenue: $13.1 billion (+47% YoY); excluding VMware, revenue grew 4% YoY.

• Q3 operating income: $7.9 billion (+44% YoY); adjusted EBITDA: $8.2 billion (63% of revenue).

• Semiconductor Solutions revenue: $7.3 billion (+5% YoY); Infrastructure Software revenue: $5.8 billion (+200% YoY).

• Gross margin: 77.4% overall (non-GAAP); GAAP gross margin: 64% (down from 69% YoY) due to higher amortization.

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

Outlook and guidance

• Q4 consolidated revenue guidance: ~$14 billion (+51% YoY); adjusted EBITDA expected at ~64% of revenue.

• Fiscal 2024 revenue outlook raised to $51.5 billion; adjusted EBITDA outlook raised to 61.5%.

• AI revenue in Q4 expected to grow 10% sequentially to over $3.5 billion.

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