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Broadcom (AVGO - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings of $10.99 per share, beating the Zacks Consensus Estimate by 7.22% and increasing 6.4% year over year.
Net revenues increased 34% year over year to $11.96 billion, surpassing the Zacks Consensus Estimate by 2.06%. The upside can be partly attributed to the inclusion of 10.5 weeks of contribution from VMware.
Top-Line Details
Semiconductor solutions revenues (62% of revenues) totaled $7.390 billion, up 4% year over year, driven by the strong adoption by hyperscalers.
AI revenues in semiconductors quadrupled year on year to reach $2.3 billion in the quarter.
Networking revenues were $3.3 billion, up 46% year over year and contributing 45% to Broadcom’s semiconductor revenues. The company witnessed strong demand for its custom AI accelerators, networking switches, routers and Network Interface Card from hyperscale customers.
Storage connectivity revenues were $887 million, contributing 12% to semiconductor revenues and down 29% year over year.
Broadband revenues declined 23% year over year to $940 million and contributed 13% to semiconductor revenues. Wireless revenues of $2 billion contributed 27% to semiconductor revenues and were down 4% year over year.
Industrial resale revenues of $215 million declined 6% year over year.
Infrastructure software revenues (38% of net revenues) increased 153% year over year to $4.571 billion.
Bookings in the software segment grew sequentially from less than $600 million to $1.8 billion in the fiscal first quarter.
Operating Details
The non-GAAP gross margin contracted 150 basis points (bps) on a year-over-year basis to 75%.
Research and development, as a percentage of net revenues, increased 160 bps on a year-over-year basis to 12.1%. SG&A expenses increased 370 bps on a year-over-year basis to 6.2%.
Adjusted EBITDA increased 26% year over year to $7.156 billion. The adjusted EBITDA margin contracted 390 bps on a year-over-year basis to 59.8%.
The non-GAAP operating margin contracted 380 bps on a year-over-year basis to 57.1%.
Balance Sheet & Cash Flow
As of Feb 4, 2024, cash and cash equivalents were $11.87 billion compared with $14.19 billion reported as of Oct 29, 2023.
Total debt (including the current portion of $2.433 billion) was $76 billion as of Feb 4, 2024, compared with $39.29 billion as of Oct 29, 2023.
Broadcom generated cash flow from operations of $4.815 billion compared with $4.828 billion in the previous quarter. The free cash flow in the quarter was $4.693 billion compared with $4.723 billion in the prior quarter.
Broadcom raised a quarterly common stock dividend of $5.25 per share for the first quarter of fiscal 2024.
On Dec 29, 2023, the company paid out a cash dividend of $5.25 per share of common stock, totaling $2.435 billion.
Guidance
For the fiscal 2024, the company expects revenues of $50 billion.
Adjusted EBITDA is expected to be 60% of projected revenues.
Zacks Rank & Stocks to Consider
Currently, AVGO has a Zacks Rank #4 (Sell).
Kanzhun (BZ - Free Report) , Blink Charging (BLNK - Free Report) and Adobe (ADBE - Free Report) are some better-ranked stocks that investors can consider in the broader sector.
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Broadcom (AVGO) Q1 Earnings Beat Estimates, Revenues Rise Y/Y
Broadcom (AVGO - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings of $10.99 per share, beating the Zacks Consensus Estimate by 7.22% and increasing 6.4% year over year.
Net revenues increased 34% year over year to $11.96 billion, surpassing the Zacks Consensus Estimate by 2.06%. The upside can be partly attributed to the inclusion of 10.5 weeks of contribution from VMware.
Top-Line Details
Semiconductor solutions revenues (62% of revenues) totaled $7.390 billion, up 4% year over year, driven by the strong adoption by hyperscalers.
AI revenues in semiconductors quadrupled year on year to reach $2.3 billion in the quarter.
Broadcom Inc. Price, Consensus and EPS Surprise
Broadcom Inc. price-consensus-eps-surprise-chart | Broadcom Inc. Quote
Networking revenues were $3.3 billion, up 46% year over year and contributing 45% to Broadcom’s semiconductor revenues. The company witnessed strong demand for its custom AI accelerators, networking switches, routers and Network Interface Card from hyperscale customers.
Storage connectivity revenues were $887 million, contributing 12% to semiconductor revenues and down 29% year over year.
Broadband revenues declined 23% year over year to $940 million and contributed 13% to semiconductor revenues. Wireless revenues of $2 billion contributed 27% to semiconductor revenues and were down 4% year over year.
Industrial resale revenues of $215 million declined 6% year over year.
Infrastructure software revenues (38% of net revenues) increased 153% year over year to $4.571 billion.
Bookings in the software segment grew sequentially from less than $600 million to $1.8 billion in the fiscal first quarter.
Operating Details
The non-GAAP gross margin contracted 150 basis points (bps) on a year-over-year basis to 75%.
Research and development, as a percentage of net revenues, increased 160 bps on a year-over-year basis to 12.1%. SG&A expenses increased 370 bps on a year-over-year basis to 6.2%.
Adjusted EBITDA increased 26% year over year to $7.156 billion. The adjusted EBITDA margin contracted 390 bps on a year-over-year basis to 59.8%.
The non-GAAP operating margin contracted 380 bps on a year-over-year basis to 57.1%.
Balance Sheet & Cash Flow
As of Feb 4, 2024, cash and cash equivalents were $11.87 billion compared with $14.19 billion reported as of Oct 29, 2023.
Total debt (including the current portion of $2.433 billion) was $76 billion as of Feb 4, 2024, compared with $39.29 billion as of Oct 29, 2023.
Broadcom generated cash flow from operations of $4.815 billion compared with $4.828 billion in the previous quarter. The free cash flow in the quarter was $4.693 billion compared with $4.723 billion in the prior quarter.
Broadcom raised a quarterly common stock dividend of $5.25 per share for the first quarter of fiscal 2024.
On Dec 29, 2023, the company paid out a cash dividend of $5.25 per share of common stock, totaling $2.435 billion.
Guidance
For the fiscal 2024, the company expects revenues of $50 billion.
Adjusted EBITDA is expected to be 60% of projected revenues.
Zacks Rank & Stocks to Consider
Currently, AVGO has a Zacks Rank #4 (Sell).
Kanzhun (BZ - Free Report) , Blink Charging (BLNK - Free Report) and Adobe (ADBE - Free Report) are some better-ranked stocks that investors can consider in the broader sector.
BZ currently sports Zacks Rank #1(Strong Buy), while BLNK and ADBE carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kanzhun’s shares have returned 2.3% year to date. BZ is scheduled to release fourth-quarter 2023 results on Mar 12.
Blink Charging’s shares have declined 7.7% year to date. BLNK is set to report its fourth-quarter 2023 results on Mar 14.
Adobe’s shares have dropped 6.6% year to date. ADBE is set to release its fourth-quarter fiscal 2024 results on Mar 14.