Backside line: Broadcom’s acquisition of VMware has yielded spectacular monetary outcomes, in keeping with the corporate’s latest quarterly earnings report. For the quarter ending February 2, Broadcom reported income of $14.92 billion, marking a major 25% year-over-year enhance. Web earnings surged to $5.5 billion, a exceptional 315% rise in comparison with the identical interval final yr.
A key driver of this progress is the mixing of VMware into Broadcom’s infrastructure software program enterprise unit, which posted income of $6.7 billion in Q1 2025 – up from $4.55 billion in the identical quarter final yr.
Though Broadcom not studies VMware’s income individually, the substantial enhance suggests VMware’s contributions have been appreciable. Earlier than the acquisition, Broadcom’s software program gross sales skilled solely modest progress, with will increase of three% in FY 2023 and 4% in FY 2022.
To higher perceive the influence of VMware, it helps to look at Broadcom’s software program income earlier than the acquisition. In This autumn 2023, Broadcom recorded $1.97 billion in software program income, bringing its full-year complete for FY 2023 to $7.6 billion. VMware, in its final quarter as an unbiased firm, reported $3.4 billion in income. Given these figures, Broadcom has efficiently elevated VMware’s quarterly income by roughly $1 billion in simply over a yr.
This sharp income progress is essentially attributed to Broadcom’s technique of bundling VMware merchandise into higher-priced subscription packages moderately than promoting them as standalone licenses.
The most important of those bundles is VMware Cloud Basis (VCF), which features a full stack of VMware applied sciences. Throughout Broadcom’s earnings name, CEO Hock Tan revealed that by the tip of Q1, roughly 70% of the corporate’s high 10,000 clients had adopted VCF. The shift to VCF, mixed with increased prices for present clients, doubtless accounts for the substantial income enhance.
Moreover, among the rise in internet earnings might be attributed to cost-cutting measures at VMware. In its closing standalone quarter, VMware reported an working margin of 16%. In distinction, Broadcom’s software program enterprise delivered a 76% working margin in Q1 2025, up from 59% a yr in the past.
Regardless of the obvious monetary success of the acquisition, Broadcom’s dealing with of VMware has sparked widespread buyer dissatisfaction.
Experiences point out that some clients have confronted value hikes starting from three to 6 occasions their earlier prices, with essentially the most excessive case being a reported twentyfold enhance. Consequently, many at the moment are at a crossroads, debating whether or not to stay with VMware or search various options.
Whereas Broadcom’s monetary outcomes recommend its technique has successfully pushed income progress, the long-term implications stay unsure, as considerations persist about potential buyer migrations away from VMware.
