Broadcom Achieves $4.79B Free Cash Flow in Q3 2024

Broadcom Inc. Reports Strong Q3 2024 Financial Results and Declares Quarterly Dividend

Broadcom Inc., a global leader in semiconductor and infrastructure software solutions, has announced its financial results for the third quarter of fiscal year 2024, which ended on August 4, 2024. The company also provided its business outlook for the fourth quarter and declared its quarterly dividend, reflecting strong financial performance and sustained growth in key markets.

Q3 2024 Financial Highlights

Broadcom reported revenue of $13.1 billion for the third quarter, marking a significant 47% increase compared to the same period in 2023. This growth was driven by continued demand for Broadcom’s AI semiconductor solutions and the successful integration of VMware. Excluding VMware's contribution, the company still experienced a year-over-year revenue increase of 4%, demonstrating robust organic growth.

Despite the strong revenue performance, Broadcom reported a GAAP net loss of $1.875 billion for the quarter, primarily due to restructuring and integration costs related to the VMware acquisition. However, on a non-GAAP basis, Broadcom achieved a net income of $6.12 billion, showcasing the underlying strength of its core operations. The company's adjusted EBITDA reached $8.22 billion, representing 63% of total revenue, a significant margin driven by efficiencies in both its semiconductor and software businesses.

Broadcom's cash from operations totaled $4.96 billion in the third quarter. After capital expenditures of $172 million, the company generated $4.79 billion in free cash flow, equating to 37% of its revenue. This strong cash flow reflects Broadcom’s ongoing ability to convert revenue into liquidity, supporting continued investments in innovation and growth.

AI and VMware Drive Growth

Hock Tan, Broadcom’s President and CEO, emphasized the continued momentum in the company’s AI semiconductor solutions, particularly in Ethernet networking and custom accelerators for AI data centers. AI-related products are projected to contribute approximately $12 billion in revenue for fiscal year 2024, underscoring Broadcom’s leadership in providing essential technologies to the rapidly expanding AI market.

Tan also highlighted the successful integration of VMware, which has been a key driver of Broadcom’s financial performance. "The transformation of VMware is progressing very well," Tan said. "The integration is pushing our adjusted EBITDA margin to 64% of revenue as we exit fiscal year 2024." VMware’s contributions have significantly bolstered Broadcom’s software segment, enhancing the company’s overall profitability and positioning it for long-term success in the enterprise software market.

Cash Flow and Balance Sheet Strength

CFO Kirsten Spears noted that Broadcom’s financial strength continued to improve during the quarter. Free cash flow, excluding restructuring and integration costs, rose by 14% year-over-year, reaching $5.3 billion. This increase reflects the company’s disciplined approach to managing costs while capitalizing on revenue growth opportunities in both its semiconductor and software businesses.

At the end of the third quarter, Broadcom’s cash and cash equivalents totaled $9.95 billion, up from $9.81 billion at the end of the previous quarter. The company also paid $1.35 billion in withholding taxes related to net settled equity awards during the quarter, resulting in the elimination of 8.4 million shares.

On June 28, 2024, Broadcom paid a cash dividend of $0.525 per share, totaling $2.45 billion. Additionally, the company completed a ten-for-one stock split on July 12, 2024, which retroactively adjusted all share and per-share figures.

Fourth Quarter Fiscal Year 2024 Outlook

Looking ahead, Broadcom provided guidance for the fourth quarter of fiscal 2024, which ends on November 3, 2024. The company expects to generate approximately $14 billion in revenue, marking a 51% increase from the prior year’s fourth quarter. This projection includes continued contributions from VMware and ongoing demand for Broadcom’s AI-driven solutions.

Broadcom also expects to maintain an adjusted EBITDA margin of approximately 64% of revenue in the fourth quarter, reflecting its ability to drive profitability as it integrates VMware and scales its AI-related offerings. The company remains focused on executing its long-term strategy of combining high-performance semiconductor solutions with enterprise software to address critical needs across multiple industries.

Quarterly Dividend Announcement

Broadcom’s Board of Directors has approved a quarterly cash dividend of $0.53 per share. The dividend will be payable on September 30, 2024, to stockholders of record at the close of business on September 19, 2024. This dividend reflects Broadcom’s commitment to returning value to shareholders through consistent payouts, supported by the company’s strong cash flow generation.

Financial Results Conference Call

Broadcom will host a conference call at 2:00 p.m. Pacific Time to review its financial results for the third quarter and discuss its outlook for the fourth quarter and beyond. A live audio webcast of the conference call will be available in the Investors section of Broadcom’s website. Following the call, an archived version will be available for those unable to participate live.

About Broadcom

Broadcom Inc. is a global technology leader specializing in the design, development, and supply of semiconductor and infrastructure software solutions. The company’s diverse product portfolio serves critical markets, including cloud data centers, networking, broadband, wireless, storage, industrial, and enterprise software. Broadcom’s solutions address key customer needs across areas such as service provider and enterprise networking, mobile device and broadband connectivity, mainframe and cybersecurity solutions, and hybrid cloud infrastructure.

As a Delaware corporation headquartered in Palo Alto, California, Broadcom continues to expand its leadership in both the semiconductor and software industries, leveraging its innovation to deliver mission-critical solutions that enable the digital transformation of businesses around the world.

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