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 Q3 Earnings Estimates, Revenues Up Y/Y
Read MoreHide Full Article
Broadcom (AVGO - Free Report) reported third-quarter fiscal 2022 non-GAAP earnings of $9.73 per share, which beat the Zacks Consensus Estimate by 1.14% and improved 39.8% year over year. Our earnings estimate was pegged at $9.67 per share.
Net revenues increased 25% year over year to $8.46 billion, which surpassed the Zacks Consensus Estimate by 0.70%. Our revenue estimate was pegged at $8.41 billion.
The year-over-year growth was driven by strength in networking and server storage.
Broadcom’s shares were up 2.03% in after-hours trading. Shares of Broadcom have declined 26.1% year to date compared with the Zacks Computer & Technology sector’s decline of 28.3%.
Quarter Details
Semiconductor solutions revenues (78.3% of total net revenues) totaled $6.62 billion, up 31.9% year over year. Our estimate for Semiconductor solutions was pegged at $6.38 billion.
Infrastructure software revenues (21.7% of net revenues) increased 4.7% year over year to $1.84 billion. Our estimate for Infrastructure software was pegged at $2.03 billion.
The non-GAAP gross margin expanded 90 basis points (bps) on a year-over-year basis to 75.9%. The improvement can be attributed to a higher revenue base.
Research & development, as a percentage of net revenues, declined 300 bps on a year-over-year basis to 11.8%. SG&A expenses declined 50 bps on a year-over-year basis to 2.7%.
Adjusted EBITDA increased 30.4% year over year to $5.38 billion. The adjusted EBITDA margin expanded 270 bps on a year-over-year basis to 63.5%.
The non-GAAP operating margin expanded 230 bps on a year-over-year basis to 58.4%, which can be attributed to an expansion in the gross margin.
Balance Sheet & Cash Flow
As of Jul 31, 2022, cash & cash equivalents were $9.98 billion compared with the $9 billion reported as of May 1, 2022.
The total debt (including the current portion of $304 million) was $39.5 billion as of Jul 31, 2022.
Broadcom generated cash flow from operations of $4.424 billion compared with $4.243 billion in the previous quarter. The free cash flow during the quarter was $4.308 billion compared with $4.158 billion in the prior quarter.
Broadcom spent $1.79 billion on share repurchases and eliminations. On Jun 30, 2022, the company paid a cash dividend of $4.10 per share of common stock, totaling $1.66 billion and a cash dividend of $20 per share of mandatory convertible preferred stock, totaling $75 million.
Guidance
For the fourth quarter of fiscal 2022, Broadcom anticipates revenues of $8.9 billion.
Adjusted EBITDA is expected at approximately 63% of projected revenues in the fiscal fourth quarter.
Image: Bigstock
Broadcom (AVGO) Beats Q3 Earnings Estimates, Revenues Up Y/Y
Broadcom (AVGO - Free Report) reported third-quarter fiscal 2022 non-GAAP earnings of $9.73 per share, which beat the Zacks Consensus Estimate by 1.14% and improved 39.8% year over year. Our earnings estimate was pegged at $9.67 per share.
Net revenues increased 25% year over year to $8.46 billion, which surpassed the Zacks Consensus Estimate by 0.70%. Our revenue estimate was pegged at $8.41 billion.
The year-over-year growth was driven by strength in networking and server storage.
Broadcom’s shares were up 2.03% in after-hours trading. Shares of Broadcom have declined 26.1% year to date compared with the Zacks Computer & Technology sector’s decline of 28.3%.
Quarter Details
Semiconductor solutions revenues (78.3% of total net revenues) totaled $6.62 billion, up 31.9% year over year. Our estimate for Semiconductor solutions was pegged at $6.38 billion.
Broadcom Inc. Price, Consensus and EPS Surprise
Broadcom Inc. price-consensus-eps-surprise-chart | Broadcom Inc. Quote
Infrastructure software revenues (21.7% of net revenues) increased 4.7% year over year to $1.84 billion. Our estimate for Infrastructure software was pegged at $2.03 billion.
The non-GAAP gross margin expanded 90 basis points (bps) on a year-over-year basis to 75.9%. The improvement can be attributed to a higher revenue base.
Research & development, as a percentage of net revenues, declined 300 bps on a year-over-year basis to 11.8%. SG&A expenses declined 50 bps on a year-over-year basis to 2.7%.
Adjusted EBITDA increased 30.4% year over year to $5.38 billion. The adjusted EBITDA margin expanded 270 bps on a year-over-year basis to 63.5%.
The non-GAAP operating margin expanded 230 bps on a year-over-year basis to 58.4%, which can be attributed to an expansion in the gross margin.
Balance Sheet & Cash Flow
As of Jul 31, 2022, cash & cash equivalents were $9.98 billion compared with the $9 billion reported as of May 1, 2022.
The total debt (including the current portion of $304 million) was $39.5 billion as of Jul 31, 2022.
Broadcom generated cash flow from operations of $4.424 billion compared with $4.243 billion in the previous quarter. The free cash flow during the quarter was $4.308 billion compared with $4.158 billion in the prior quarter.
Broadcom spent $1.79 billion on share repurchases and eliminations. On Jun 30, 2022, the company paid a cash dividend of $4.10 per share of common stock, totaling $1.66 billion and a cash dividend of $20 per share of mandatory convertible preferred stock, totaling $75 million.
Guidance
For the fourth quarter of fiscal 2022, Broadcom anticipates revenues of $8.9 billion.
Adjusted EBITDA is expected at approximately 63% of projected revenues in the fiscal fourth quarter.
Zacks Rank & Stocks to Consider
Broadcom currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Computer & Technology sector are Audioeye (AEYE - Free Report) , Airbnb (ABNB - Free Report) and Amphenol (APH - Free Report) . All three stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Audioeye, Airbnb and Amphenol are down 5.9%, 31.8% and 16%, respectively, on a year-to-date basis.