We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Broadcom (AVGO) Beats Q2 Earnings Estimates, Set to Buy VMware
Read MoreHide Full Article
Broadcom (AVGO - Free Report) reported second-quarter fiscal 2022 non-GAAP earnings of $9.07 per share, which beat the Zacks Consensus Estimate by 4.01% and improved 37% year over year.
Net revenues increased 22.6% year over year to $8.10 billion, which surpassed the Zacks Consensus Estimate by 2.48%. The year-over-year growth was driven by the strength in networking and server storage.
Broadcom’s shares were down 0.27% in pre-market trading. Shares of AVGO have declined 20.1% year to date (YTD) compared with the Zacks Computer & Technology sector’s decline of 28.4%.
Broadcom Set to Acquire VMware
Broadcom announced that it entered into an agreement to acquire VMware for roughly $61 billion. Additionally, Broadcom will take over $8 billion of VMware’s net debt.
Post the completion of the transaction, the Broadcom Software Group will rebrand and operate as VMware, incorporating Broadcom’s existing infrastructure and security software solutions as part of an expanded VMware portfolio.
Under the terms of the agreement, VMware shareholders will elect to receive either $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share.
Upon closing the transaction, current Broadcom shareholders will own approximately 88% and current VMware shareholders will own roughly 12% of the combined company on a fully diluted basis. The transaction is expected to be complete in Broadcom’s fiscal 2023.
Quarter Details
Semiconductor solutions revenues (76.9% of total net revenues) totaled $6.23 billion, up 29.2% year over year.
Infrastructure software revenues (23.1% of net revenues) increased 4.7% year over year to $1.87 billion.
The non-GAAP gross margin expanded 140 basis points (bps) on a year-over-year basis to 76.3%. The improvement can be attributed to a higher revenue base.
Research & development, as a percentage of net revenues, declined 170 bps on a year-over-year basis to 12.3%. SG&A expenses declined 30 bps on a year-over-year basis to 3%.
Adjusted EBITDA increased 29.1% year over year to $5.11 billion. The adjusted EBITDA margin expanded 320 bps on a year-over-year basis to 63.1%.
The non-GAAP operating margin expanded 340 bps on a year-over-year basis to 61%, which can be attributed to an expansion in the gross margin.
Balance Sheet & Cash Flow
As of May 1, 2022, cash & cash equivalents were $9 billion compared with the $10.2 billion reported as of Jan 30, 2022.
The total debt (including the current portion of $302 million) was $39.5 billion as of May 1, 2022, unchanged sequentially.
Broadcom generated cash flow from operations of $4.243 billion compared with $3.486 billion in the previous quarter. The free cash flow during the quarter was $4.158 billion compared with $3.385 billion in the prior quarter.
During the reported quarter, Broadcom returned $4.5 billion to shareholders, including $1.7 billion in cash dividends and $2.8 billion in share repurchases.
Broadcom announced a new share repurchase program that authorized up to $10 billion of common stock, incremental to the $3 billion remaining under the current authorization to date.
Guidance
For the third quarter of fiscal 2022, Broadcom anticipates revenues of $8.4 billion.
Adjusted EBITDA is expected at approximately 63.5% of projected revenues in the fiscal third quarter.
Image: Bigstock
Broadcom (AVGO) Beats Q2 Earnings Estimates, Set to Buy VMware
Broadcom (AVGO - Free Report) reported second-quarter fiscal 2022 non-GAAP earnings of $9.07 per share, which beat the Zacks Consensus Estimate by 4.01% and improved 37% year over year.
Net revenues increased 22.6% year over year to $8.10 billion, which surpassed the Zacks Consensus Estimate by 2.48%. The year-over-year growth was driven by the strength in networking and server storage.
Broadcom’s shares were down 0.27% in pre-market trading. Shares of AVGO have declined 20.1% year to date (YTD) compared with the Zacks Computer & Technology sector’s decline of 28.4%.
Broadcom Set to Acquire VMware
Broadcom announced that it entered into an agreement to acquire VMware for roughly $61 billion. Additionally, Broadcom will take over $8 billion of VMware’s net debt.
Post the completion of the transaction, the Broadcom Software Group will rebrand and operate as VMware, incorporating Broadcom’s existing infrastructure and security software solutions as part of an expanded VMware portfolio.
Broadcom Inc. Price
Broadcom Inc. price | Broadcom Inc. Quote
Under the terms of the agreement, VMware shareholders will elect to receive either $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share.
Upon closing the transaction, current Broadcom shareholders will own approximately 88% and current VMware shareholders will own roughly 12% of the combined company on a fully diluted basis. The transaction is expected to be complete in Broadcom’s fiscal 2023.
Quarter Details
Semiconductor solutions revenues (76.9% of total net revenues) totaled $6.23 billion, up 29.2% year over year.
Infrastructure software revenues (23.1% of net revenues) increased 4.7% year over year to $1.87 billion.
The non-GAAP gross margin expanded 140 basis points (bps) on a year-over-year basis to 76.3%. The improvement can be attributed to a higher revenue base.
Research & development, as a percentage of net revenues, declined 170 bps on a year-over-year basis to 12.3%. SG&A expenses declined 30 bps on a year-over-year basis to 3%.
Adjusted EBITDA increased 29.1% year over year to $5.11 billion. The adjusted EBITDA margin expanded 320 bps on a year-over-year basis to 63.1%.
The non-GAAP operating margin expanded 340 bps on a year-over-year basis to 61%, which can be attributed to an expansion in the gross margin.
Balance Sheet & Cash Flow
As of May 1, 2022, cash & cash equivalents were $9 billion compared with the $10.2 billion reported as of Jan 30, 2022.
The total debt (including the current portion of $302 million) was $39.5 billion as of May 1, 2022, unchanged sequentially.
Broadcom generated cash flow from operations of $4.243 billion compared with $3.486 billion in the previous quarter. The free cash flow during the quarter was $4.158 billion compared with $3.385 billion in the prior quarter.
During the reported quarter, Broadcom returned $4.5 billion to shareholders, including $1.7 billion in cash dividends and $2.8 billion in share repurchases.
Broadcom announced a new share repurchase program that authorized up to $10 billion of common stock, incremental to the $3 billion remaining under the current authorization to date.
Guidance
For the third quarter of fiscal 2022, Broadcom anticipates revenues of $8.4 billion.
Adjusted EBITDA is expected at approximately 63.5% of projected revenues in the fiscal third quarter.
Zacks Rank & Stocks to Consider
Broadcom currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks to consider from the same sector are Pure Storage (PSTG - Free Report) , Samsara (IOT - Free Report) and The Descartes Systems (DSGX - Free Report) .
While Pure Storage sports a Zacks Rank #1 (Strong Buy), Samsara and Descartes each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Pure Storage’s shares have outperformed the sector YTD, declining 29.3%. PSTG is set to report first-quarter fiscal 2023 results on Jun 1.
Descartes’ shares have underperformed the sector YTD, declining 28.5%. DSGX is set to report first-quarter fiscal 2023 results on Jun 1.
Samsara is scheduled to release first-quarter fiscal 2023 results on Jun 2. IOT shares have been down 61.8% YTD.