5 Key Numbers From Broadcom’s Q4 FY2024 Earnings
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TradingKey - It’s no surprise that Artificial Intelligence (AI) is hot right now. That’s because the potential possibilities of AI implementation, in everything from consumer businesses to renewable energy generation, are endless.
Right now, some of the biggest winners in the stock market from the AI theme are semiconductor companies. And one of the largest in the space is Broadcom Inc (NASDAQ: AVGO), a huge developer and designer of semiconductors, networking equipment, and infrastructure software products.
It has grown over the years to become a company with a market capitalisation of over US$800 billion, making it one of the largest listed companies in the US. On Thursday (12 December) after the market close, the company released its latest Q4 FY2024 earnings (for the three months ending 3 November 2024).
Broadcom stock popped over 10% in after-hours trading following the earnings release. Here are five key numbers that investors should be aware of from Broadcom’s latest set of earnings.
- Revenue up 51% year-on-year
Revenue for Broadcom soared 51% year-on-year to hit US$14.05 billion for the period – slightly ahead of expectations. For the whole of fiscal year 2024 (FY2024) revenue expanded by 44% year-on-year to a record US51.6 billion.
A lot of this growth was attributed to the acquisition of VMWare, a cloud software and virtualisation provider that helps clients reduce operating costs and achieve greater IT efficiencies. The company cost Broadcom US$69 billion to acquire and the deal closed in late November 2023, meaning all of FY2024’s periods had figures that included the integrated business.
Broadcom CEO Hock Tan told investors on the latest earnings call that VMWare’s quarterly costs have fallen from US$2.4 billion to US$1.2 billion while its gross margins have expanded from 30% to 70%. That has no doubt helped spur profitability and top-line growth for Broadcom.
- Free cash flow up 16% year-on-year
For investors, free cash flow is an important metric for understanding how good a company is at generating cash. Well, in the latest quarter, Broadcom continued to display that it’s doing a good job of creating free cash flow.
Its free cash flow for Q4 FY2024 came in at US$5.48 billion, up 16% year-on-year from the same period last year. Meanwhile, Broadcom’s operating cash flow for the period was US$5.6 billion and was also up 16% year-on-year.
Broadcom FY2024 financial metrics
Source: Broadcom earnings presentation, December 2024
- Dividend hike of 11%
While dividends might not be a focus for a lot of tech growth investors, Broadcom pays out a dividend to shareholders given its strong free cash flow generation.
Following on from its strong earnings, the company announced an 11% year-on-year hike to its quarterly dividend. It will now pay a dividend per share (DPS) of US$0.59, up from the US$0.53 DPS it has paid over the past four quarters.
- Guidance of US$14.6 billion in revenue for Q1 FY2025
What the market liked, though, was the guidance from Broadcom. The company said it expects Q1 FY2025 revenue to be around US$14.6 billion, representing a year-on-year increase in sales of 22%.
Meanwhile, it also said that Q1 FY2025 was projected to be approximately 66% of its projected revenue. Management says it sees this overall revenue growth stemming from the booming demand for generative AI infrastructure.
- AI revenue up 220% year-on-year in FY2024
Broadcom CEO Tan also revealed that for the whole of FY2024, the company saw AI revenue explode higher by 220% year-on-year. This was driven by the firm’s industry-leading AI XPUs and Ethernet networking portfolio.
During Q4 FY2024, the company saw its semiconductor-solutions business generate US$8.2 billion in revenue while its infrastructure software segment posted the remaining US$5.8 billion in revenue.
CEO Tan went on to say that the AI opportunity over the next three years is “massive” and that Broadcom is already working with three hyperscaler customers. He said that the AI market opportunity for accelerators and networking will range from US$60 billion to US$90 billion by FY2027.
