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Broadcom (AVGO - Free Report) reported fourth-quarter fiscal 2024 non-GAAP earnings of $1.42 per share, beating the Zacks Consensus Estimate by 2.16% and jumping 28% year over year.
AVGO’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average earnings surprise being 3.57%.
Net revenues rallied 51.2% year over year to $14.05 billion but lagged the Zacks Consensus Estimate by 0.06%. However, year-over-year top-line growth was driven by strong demand for AI semiconductor solutions and VMware.
AI revenues benefited from strong demand for Broadcom’s custom AI accelerators (XPUs) and networking.
AVGO shares were up more than 14.6% in pre-market trading following a solid first-quarter fiscal 2025 guidance. The stock has risen 66.8% compared with the Zacks Computer & Technology sector’s appreciation of 37.1% in the trailing 12 months.
AVGO’s Top-Line Growth Rides on Strong AI & VMware
Semiconductor solutions revenues (58.6% of net revenues) totaled $8.23 billion, up 12% year over year. The uptick was driven by the strong AI revenues, which surged 150% year over year to $3.7 billion.
Networking revenues of $4.5 billion soared 45% year over year. AI networking revenues, which accounted for 76% of networking revenues, skyrocketed 158% year over year. AI XPU shipments to AVGO’s three hyperscale customers doubled in the reported quarter. Broadcom saw four times growth in AI connectivity revenues, driven by its Tomahawk and Jericho shipments globally.
Non-AI semiconductor revenues declined 23% year over year to $4.5 billion.
Storage connectivity revenues were $992 million. It plunged 25% year over year but improved 5% sequentially.
Broadband revenues declined 51% year over year to $465 million. Wireless revenues of $2.2 billion moved up 7% year over year and 30% sequentially.
Industrial resale revenues of $173 million declined 27% year over year.
Infrastructure software revenues (41.4% of net revenues) soared 196% year over year to $5.82 billion, including a $3.8-billion contribution from VMware.
The annualized booking value for VMware solutions was $2.7 billion.
AVGO’s Operating Details
The non-GAAP gross margin was 77% compared with 74% in the year-ago quarter.
Research and development expenses, as a percentage of net revenues, decreased 20 bps year over year to 9.9%. SG&A expenses increased 190 bps to 4.3%.
Adjusted EBITDA rose 50% year over year to $9.09 billion. The adjusted EBITDA margin was 64.7% compared with 65.1% in the year-ago quarter.
The non-GAAP operating margin expanded 90 bps year over year to 62.7%.
AVGO’s Balance Sheet & Cash Flow
As of Nov. 3, 2024, cash and cash equivalents were $9.35 billion compared with $9.95 billion as of Aug. 4, 2024.
Total debt (including the current portion of $3.16 billion) was $67.57 billion as of Nov. 3, 2024, compared with $70 billion as of Aug. 4, 2024.
Broadcom generated $5.60 billion of cash flow from operations compared with $4.96 billion in the previous quarter. The free cash flow was $5.48 billion compared with $4.79 billion in the prior quarter.
In fiscal 2024, AVGO paid out $22.2 billion as dividends ($9.8 billion) and share repurchases ($12.4 billion).
AVGO Offers Solid Q1 Guidance
For first-quarter fiscal 2025, Broadcom expects revenues of $14.6 billion. AI revenues are expected to grow 65% year over year to $8.1 billion, while non-AI semiconductor revenues are expected to decline in the mid-teens percentage.
Infrastructure Software revenues are expected to grow 11% sequentially and 41% year over year to $6.5 billion. VMware ABV is expected to surpass $3 billion.
AI connectivity revenues are expected to be strong in the fiscal first quarter as hyperscalers continue to deploy Jericho.
Wireless revenues are expected to decline sequentially but remain flat year over year. Broadcom is expected to show recovery, given the rise in orders from multiple service providers.
The adjusted EBITDA margin is expected to be 66%. The gross margin is expected to expand 100 bps on a sequential basis.
Image: Bigstock
Broadcom Q4 Earnings Beat Estimates, Shares Rise on Strong Q1 View
Broadcom (AVGO - Free Report) reported fourth-quarter fiscal 2024 non-GAAP earnings of $1.42 per share, beating the Zacks Consensus Estimate by 2.16% and jumping 28% year over year.
AVGO’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average earnings surprise being 3.57%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net revenues rallied 51.2% year over year to $14.05 billion but lagged the Zacks Consensus Estimate by 0.06%. However, year-over-year top-line growth was driven by strong demand for AI semiconductor solutions and VMware.
AI revenues benefited from strong demand for Broadcom’s custom AI accelerators (XPUs) and networking.
AVGO shares were up more than 14.6% in pre-market trading following a solid first-quarter fiscal 2025 guidance. The stock has risen 66.8% compared with the Zacks Computer & Technology sector’s appreciation of 37.1% in the trailing 12 months.
Broadcom Inc. Price, Consensus and EPS Surprise
Broadcom Inc. price-consensus-eps-surprise-chart | Broadcom Inc. Quote
AVGO’s Top-Line Growth Rides on Strong AI & VMware
Semiconductor solutions revenues (58.6% of net revenues) totaled $8.23 billion, up 12% year over year. The uptick was driven by the strong AI revenues, which surged 150% year over year to $3.7 billion.
Networking revenues of $4.5 billion soared 45% year over year. AI networking revenues, which accounted for 76% of networking revenues, skyrocketed 158% year over year. AI XPU shipments to AVGO’s three hyperscale customers doubled in the reported quarter. Broadcom saw four times growth in AI connectivity revenues, driven by its Tomahawk and Jericho shipments globally.
Non-AI semiconductor revenues declined 23% year over year to $4.5 billion.
Storage connectivity revenues were $992 million. It plunged 25% year over year but improved 5% sequentially.
Broadband revenues declined 51% year over year to $465 million. Wireless revenues of $2.2 billion moved up 7% year over year and 30% sequentially.
Industrial resale revenues of $173 million declined 27% year over year.
Infrastructure software revenues (41.4% of net revenues) soared 196% year over year to $5.82 billion, including a $3.8-billion contribution from VMware.
The annualized booking value for VMware solutions was $2.7 billion.
AVGO’s Operating Details
The non-GAAP gross margin was 77% compared with 74% in the year-ago quarter.
Research and development expenses, as a percentage of net revenues, decreased 20 bps year over year to 9.9%. SG&A expenses increased 190 bps to 4.3%.
Adjusted EBITDA rose 50% year over year to $9.09 billion. The adjusted EBITDA margin was 64.7% compared with 65.1% in the year-ago quarter.
The non-GAAP operating margin expanded 90 bps year over year to 62.7%.
AVGO’s Balance Sheet & Cash Flow
As of Nov. 3, 2024, cash and cash equivalents were $9.35 billion compared with $9.95 billion as of Aug. 4, 2024.
Total debt (including the current portion of $3.16 billion) was $67.57 billion as of Nov. 3, 2024, compared with $70 billion as of Aug. 4, 2024.
Broadcom generated $5.60 billion of cash flow from operations compared with $4.96 billion in the previous quarter. The free cash flow was $5.48 billion compared with $4.79 billion in the prior quarter.
In fiscal 2024, AVGO paid out $22.2 billion as dividends ($9.8 billion) and share repurchases ($12.4 billion).
AVGO Offers Solid Q1 Guidance
For first-quarter fiscal 2025, Broadcom expects revenues of $14.6 billion. AI revenues are expected to grow 65% year over year to $8.1 billion, while non-AI semiconductor revenues are expected to decline in the mid-teens percentage.
Infrastructure Software revenues are expected to grow 11% sequentially and 41% year over year to $6.5 billion. VMware ABV is expected to surpass $3 billion.
AI connectivity revenues are expected to be strong in the fiscal first quarter as hyperscalers continue to deploy Jericho.
Wireless revenues are expected to decline sequentially but remain flat year over year. Broadcom is expected to show recovery, given the rise in orders from multiple service providers.
The adjusted EBITDA margin is expected to be 66%. The gross margin is expected to expand 100 bps on a sequential basis.
Zacks Rank & Stocks to Consider
Currently, AVGO has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Fortinet (FTNT - Free Report) , Garmin (GRMN - Free Report) and Marvell Technology (MRVL - Free Report) , each sporting a Zacks Rank #1(Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fortinet shares have gained 72.8% in the trailing 12 months. The long-term earnings growth rate for FTNT is pegged at 18.28%.
Garmin’s shares have climbed 71.9% in the trailing 12 months. The long-term earnings growth rate for GRMN is projected at 21.6%.
Shares of Marvell have risen 84.2% in the trailing 12 months. The long-term earnings growth rate for MRVL is pegged at 33.74%.