Broadcom Q2 Results and Guidance Exceed Expectations, Shares Fall 2.9%

Broadcom reported Q2 results that topped estimates, with an adjusted EPS of $1.58. However, the company's shares fell 2.9% in extended trading. Broadcom's guidance also surpassed expectations, but the market seems to be focusing on the decline in shares.

Broadcom Inc. (NASDAQ: AVGO) reported its second-quarter fiscal year 2025 financial results, which exceeded market expectations. The company's adjusted EPS came in at $1.58, surpassing the estimated $1.48. However, Broadcom's shares fell 2.9% in extended trading, despite the positive earnings report.

Revenue for the second quarter reached $15.0 billion, a 20% increase year-over-year (YoY), driven by robust demand for AI semiconductor solutions and VMware. Non-GAAP net income was $7.787 billion, up 44% YoY, while GAAP net income was $4.965 billion, a 134% increase YoY. Adjusted EBITDA stood at $10.0 billion, representing 67% of revenue.

The company's free cash flow for the quarter was $6.4 billion, up 44% YoY. Broadcom also repurchased and eliminated 25.3 million shares for $4.216 billion. The company announced a quarterly cash dividend of $0.59 per share, totaling $2.785 billion.

Broadcom's third-quarter fiscal year 2025 revenue guidance was approximately $15.8 billion, an increase of 21% YoY, and adjusted EBITDA guidance was at least 66% of projected revenue.

Despite the positive earnings report, Broadcom's shares declined in extended trading, suggesting that the market is focusing on factors other than the financial results. The company's guidance for the third quarter was also well-received, but the market reaction indicates that investors are concerned about potential headwinds.

References:
[1] https://investors.broadcom.com/news-releases/news-release-details/broadcom-inc-announces-second-quarter-fiscal-year-2025-financial