Source URL: https://www.theregister.com/2024/12/13/broadcom_q4_fy_2024_vmware/
Source: The Register
Title: Broadcom says VMware is a better money-making machine than it hoped
Feedly Summary: Also predicts it will take lion’s share of hyperscalers’ $60-90 billion XPU spend in 2027, helped by 3nm XPUs coming next year
Broadcom has told investors its integration of VMware is all but done, ahead of schedule, and that it has turned the virtualization giant into an even more prolific money machine than it hoped it would be possibke.…
AI Summary and Description: Yes
**Summary:** Broadcom’s recent integration of VMware is delivering outstanding financial results, with significant reductions in costs and impressive growth in subscription sales. The company’s strategy is becoming increasingly focused on AI-related silicon, with forecasts indicating strong future growth and leading market positions in hyperscale markets.
**Detailed Description:**
The text discusses Broadcom’s successful integration and financial performance following its acquisition of VMware, highlighting several critical aspects:
– **Integration Success:**
– The integration of VMware is reportedly ahead of schedule and has transformed VMware into a more profitable entity than initially expected.
– VMware’s quarterly costs have significantly decreased from $2.4 billion to $1.2 billion, while profit margins have soared from below 30% to 70%.
– **Subscription Sales Growth:**
– VMware achieved $2.7 billion in annual booking value (ABV) for subscription sales within the last quarter, an increase of $200 million since the previous quarter.
– The number of processor cores sold under subscription agreements rose from 19 million to 21 million in the latest quarter.
– **Highlighting VMware Cloud Foundation (VCF):**
– A substantial portion of the newly sold cores (17 million) will be used for VMware’s private cloud solution, VCF.
– 4,500 of Broadcom’s top 10,000 VMware customers have already subscribed to VCF.
– **Broadcom’s Financial Performance:**
– Broadcom’s software division experienced significant revenue growth, increasing from $7.6 billion in FY 2023 to $21.5 billion in FY 2024.
– VMware’s revenue as an independent company was notably less than what Broadcom is now achieving through its enhanced operational strategies.
– **Future Projections:**
– CEO Hock Tan predicts that VMware will see an $8.5 billion EBITDA growth sooner than initially anticipated.
– The focus on AI and silicon products is projected to yield substantial growth, particularly in relation to hyperscale customers planning to use Broadcom’s XPU accelerators.
– **Investment and Market Positioning:**
– Broadcom’s AI-related sales surged by 150%, indicating a strong market demand.
– Broadcom’s commitment to product innovations, including the upcoming release of next-generation XPUs built on a 3nm process, suggests a competitive technology edge.
– **Strategic Growth Opportunities:**
– Tan indicates ongoing discussions with hyperscale customers for potential custom accelerator developments.
– Investors reacted positively, reflected by a 15% increase in Broadcom’s share price after the earnings call.
This analysis reflects significant implications for the infrastructure and AI segments, emphasizing investment in software solutions and the strategic positioning of hardware necessary to support cloud operations and AI advancements. For security and compliance professionals, understanding how such large-scale integrations and product offerings influence the security landscape, especially in hyperscale computing environments, is crucial.