Broadcom Inc Earnings - Q2 2025 Analysis & Highlights
Key Takeaways
Broadcom Inc.'s Q3 2025 earnings call highlighted record revenue driven by AI semiconductors and VMware growth, a substantial backlog, and strong Q4 guidance. Key themes included AI and non-AI semiconductor performance, infrastructure software growth, and capital allocation strategies.
Key Financial Results
Total revenue was a record $16 billion, up 22% year-on-year.
Consolidated adjusted EBITDA was a record $10.7 billion, up 30% year-on-year.
Gross margin was 78.4% of revenue.
Operating income was a record $10.5 billion, up 32% from a year ago.
Free cash flow was $7 billion, representing 44% of revenue.
Business Segment Results
Semiconductor revenue was $9.2 billion, up 26% year-on-year, driven by AI.
AI semiconductor revenue was $5.2 billion, up 63% year-on-year.
Non-AI semiconductor revenue was $4 billion, flat sequentially.
Infrastructure software revenue was $6.8 billion, up 17% year-on-year.
Capital Allocation
Paid stockholders $2.8 billion of cash dividends.
Capital expenditures were $142 million.
Ended the quarter with $10.7 billion of cash and $66.3 billion of gross principal debt.
Industry Trends and Dynamics
Robust demand from AI drove strong bookings.
Networking is becoming critical as LLMs evolve and compute clusters grow.
Demand for custom AI accelerators from three customers continued to grow.
Broadband showed strong sequential growth.
Competitive Landscape
Broadcom is gaining share with its XPU customers.
Broadcom's Ethernet networking is applicable to the challenges of scale up, scale out, and scale across in generative AI.
VMware Cloud Foundation version 9.0 provides a real alternative to public cloud.
Growth Opportunities and Strategies
Focus on AI revenue growth through XPUs and networking.
Continued growth in VMware through integrated cloud platform.
Scaling computing across data centers with Jericho3 Ethernet router.
Delivered VMware Cloud Foundation version 9.0, a fully integrated cloud platform.
Financial Guidance and Outlook
Q4 2025 consolidated revenue is expected to be approximately $17.4 billion, up 24% year-on-year.
Q4 adjusted EBITDA is expected to be 67% of revenue.
Q4 AI semiconductor revenue is forecasted to be approximately $6.2 billion, up 66% year-on-year.
Q4 non-AI semiconductor revenue is forecasted to grow low-double digits sequentially to approximately $4.6 billion.
Q4 infrastructure software revenue is expected to be approximately $6.7 billion, up 15% year-on-year.
Backlog
Current consolidated backlog hit a record $110 billion.
Other
Hock Tan will continue as CEO of Broadcom through 2030.
