• Total Revenue: $19 billion, up 25% year on year.
• Adjusted EBITDA: $10.1 billion, up 41% year on year.
• Semiconductor Revenue: $8.2 billion, up 11% year on year.
• AI Revenue: $4.1 billion, up 77% year on year.
• Infrastructure Software Revenue: $6.7 billion, up 47% year on year.
• Gross Margin: 79.1% of revenue.
• Operating Income: $9.8 billion, up 44% year on year.
• Operating Margin: 66% of revenue.
• Free Cash Flow: $6 billion, representing 40% of revenue.
• Capital Expenditures: $100 million.
• Cash and Debt: $9.3 billion in cash and $68.8 billion in gross principal debt.
• Dividends Paid: $2.8 billion in cash dividends.
• Share Repurchase: $2 billion to repurchase 8.7 million shares.
• Q2 Revenue Guidance: $14.9 billion, up 19% year on year.
• Q2 AI Revenue Guidance: $4.4 billion, up 44% year on year.
• Q2 Infrastructure Software Revenue Guidance: $6.5 billion, up 23% year on year.

• Warning! GuruFocus has detected 6 Warning Signs with DOMO.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Broadcom Inc (NASDAQ:AVGO) reported a record total revenue of $19 billion for fiscal Q1 2025, up 25% year on year.
• AI revenue reached $4.1 billion, up 77% year on year, surpassing the guidance of $3.8 billion.
• The company is making significant R&D investments in AI, including the development of the industry's first 2-nanometer AI XPU.
• Infrastructure software revenue grew by 47% year on year, driven by the integration of VMware and the shift to subscription-based models.
• Broadcom Inc (NASDAQ:AVGO) is expanding its customer base, with four additional hyperscalers engaged in developing custom AI accelerators.

Negative Points

• Non-AI semiconductor revenue was down 9% sequentially due to a seasonal decline in wireless.
• Enterprise networking remains flat as customers work through channel inventory.
• Industrial sales were down double digits in Q1 and are expected to decline further in Q2.
• Free cash flow as a percentage of revenue is impacted by cash interest expenses and cash taxes.
• Concerns about geopolitical tensions and potential regulatory impacts on AI diffusion rules could pose risks to future operations.

Q & A Highlights

Q: Hock, you talked about four more customers coming online. Can you elaborate on the trend you're seeing? Can any of these customers be as significant as the current three? A: Hock Tan, President and CEO: These four are not yet customers as we define it. We enable hyperscalers to create compute systems, and it takes time to develop the software to make it work. There's no reason these four won't create demand similar to the first three, but it will likely happen later.

Q: Can you provide more color on the second-half AI profile, especially with the new 3-nanometer AI accelerator programs ramping? A: Hock Tan, President and CEO: We are seeing improved networking shipments and some pull-ins of shipments. However, I won't speculate on the second half beyond what we've guided.

Q: Are you seeing disruptions from tariffs or other dynamics, and how might this impact Broadcom's growth? A: Hock Tan, President and CEO: It's too early to tell about tariffs, but generative AI is accelerating semiconductor technology development. We're seeing innovation in higher performance accelerators and networking functionality.

Q: How do you view the conversion from design wins to deployment, especially with the new XPU engagements? A: Hock Tan, President and CEO: We define design wins as products produced at scale and deployed in production. It takes time from taping out to scale production, and we focus on partners who need large volumes.

Q: Is there any concern about new regulations impacting your AI design wins or shipments? A: Hock Tan, President and CEO: In this era of geopolitical tensions, there's always some concern, but we don't have any specific concerns about our current customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.