EPS of $1.14 increased by 154.4% from previous year
Gross margin of 68.0%
Net income of 5.50B
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Broadcom Inc (0YXG.L) QQ1 2025 Results Analysis: Margin Expansion, Robust Free Cash Flow, and AI-Driven Growth in a Diversified Semiconductors and Software Leader
Executive Summary
Broadcom reported a strong QQ1 2025, with revenue of USD 14.916 billion, marking a 19.5% year-over-year increase and a 6.1% sequential rise. The quarterly results feature substantial margin expansion, evidenced by a gross margin of approximately 68.0% and an operating margin of about 42.0%, yielding an EBITDA of USD 6.26 billion. Net income reached USD 5.503 billion, translating to non-GAAP and GAAP earnings momentum consistent with the top-line strength. Free cash flow was robust at USD 6.013 billion, supported by USD 6.113 billion of operating cash flow and disciplined capital expenditure. Management has continued to deploy capital toward value-enhancing activities, including USD 2.036 billion of share repurchases and USD 2.774 billion in dividends, while maintaining a solid cash balance of USD 9.307 billion. The mix of semiconductors and software positions Broadcom to benefit from data center, cloud, and AI-driven demand, yet the stock trades at a high multiple reflective of its premium growth profile and software-led strategy.
Summary of key QQ1 2025 metrics (USD):
- Revenue: USD 14.916B; YoY +19.45%; QoQ +6.13%.
- Gross Profit: USD 10.145B; Gross Margin ~68.0%; YoY +30.47%; QoQ +12.70%.
- Operating Income: USD 6.260B; Operating Margin ~41.97%; YoY +111.13%; QoQ +35.29%.
- Net Income: USD 5.503B; Net Margin ~36.89%; YoY +159.45%; QoQ +27.27%.
- EPS (basic/diluted): USD 1.17 / USD 1.14; YoY EPS growth ~+154.35%; QoQ +27.17%.
- EBITDA: USD 6.26B; EBITDA Margin ~42.0% (EBITDA as a proxy for cash-generating capacity).
- Free Cash Flow (FCF): USD 6.013B; Operating Cash Flow: USD 6.113B; Capex: USD 0.100B; FCF yield supported by robust working capital management.
- Balance sheet highlights: Cash and cash equivalents USD 9.307B; Total debt USD 66.579B; Net debt USD 57.273B; Debt to equity ~0.95; Interest coverage ~7.17x.
- Cash flow and capital allocation: Net cash provided by operating activities USD 6.113B; Net cash used for financing activities USD 5.98B; Dividends paid USD 2.774B; Share repurchases USD 2.036B; Net change in cash ~ -USD 0.041B; Cash at period end USD 9.307B.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
14.92B
19.45%
6.13%
Gross Profit
10.15B
30.47%
12.70%
Operating Income
6.26B
111.13%
35.29%
Net Income
5.50B
159.45%
27.27%
EPS
1.17
154.35%
27.17%
Key Financial Ratios
currentRatio
1
grossProfitMargin
68%
operatingProfitMargin
42%
netProfitMargin
36.9%
returnOnAssets
3.33%
returnOnEquity
7.89%
debtEquityRatio
0.95
operatingCashFlowPerShare
$1.3
freeCashFlowPerShare
$1.28
dividendPayoutRatio
50.4%
priceToBookRatio
14.65
priceEarningsRatio
46.44
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Earnings transcript data were not provided in the supplied dataset. Consequently, no management quotes or thematic extracts from an earnings call are available to include in this section.
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Forward Guidance
No formal forward-looking targets or guidance were disclosed in the provided data. Given the earnings trajectory, Broadcom’s near-term performance is likely to be driven by: (1) sustained data center/cloud capex and AI workloads feeding semiconductor Solutions and Infrastructure Software demand; (2) continued software revenue growth and subscription-based offerings; (3) ongoing share repurchases and dividend policy supporting shareholder value. Achievability of any implied targets will hinge on cloud hyperscale spend, inventory cycles, geopolitical dynamics affecting supply chains, and relief from component supply constraints. Investors should monitor: AI/large-scale data center capex trends, software ARR growth, quarterly billings mix, and net debt trajectory as it relates to financing costs in a rising rate environment.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0YXG.L Focus
68.01%
42.00%
7.89%
46.44%
0R2H.L
56.80%
32.50%
7.15%
34.30%
0R2E.L
45.20%
39.30%
10.10%
21.53%
0R08.L
21.50%
7.73%
7.58%
19.69%
0Y0Y.L
33.00%
16.70%
7.81%
25.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Outlook is constructive but valuation-sensitive. The QQ1 2025 results demonstrate broad-based profit expansion, robust cash generation, and disciplined capital allocation, supporting a positive longer-term thesis around AI/data center demand and software-driven growth. However, the high price multiples (P/E ~46x, P/S ~68.5x, P/FCF ~170x) imply that downside risk could be pronounced if growth accelerations do not materialize or macro conditions worsen. The recommended stance is to maintain an overweight position for investors with a long horizon who can tolerate premium valuations, while monitoring leverage dynamics, debt refinancing risk, and the cadence of data center/AI spend. Key catalysts include stronger software ARR growth, upside in enterprise networking and security solutions, and any favorable shifts in data-center chipset demand. Watch the debt maturation profile and free cash flow conversion to ensure balance-sheet resilience during potential cycle downturns.
Key Investment Factors
Growth Potential
Broadcom benefits from a diversified portfolio across Semiconductor Solutions and Infrastructure Software. AI-enabled data-center and cloud infrastructure demand remains a key growth driver, complemented by software-led recurring revenue growth (subscription/maintenance) and higher-margin products. The company’s ability to convert semiconductor strength into software earnings provides a durable growth runway and resilient cash generation.
Profitability Risk
Key risks include semiconductor demand cyclicality and capex downturns, continued high leverage and interest costs, exposure to geopolitical supply chain risks, and execution risk in managing a large, integrated product and software ecosystem. Valuation is premium given growth expectations, which subjects the stock to multiple compression if growth decelerates or macro conditions deteriorate.
Financial Position
Strong operating cash flows support a generous capital allocation framework (dividends and buybacks). However, a large net debt position (~USD 57.3B) constrains balance sheet flexibility if financing costs rise or if working capital needs increase. Interest coverage (~7.17x) and robust liquidity provide a cushion, but investors should monitor debt maturity profile and potential refinancing risk.
Broadcom Inc (0YXG.L) QQ3 2024 Results — Revenue Up 9% YoY to USD 13.07B; Net Loss Driven by Tax; Robust Free Cash Flow Supports Leverage and Capita...