Backside line: Broadcom’s acquisition of VMware has yielded spectacular monetary outcomes, based on the corporate’s latest quarterly earnings report. For the quarter ending February 2, Broadcom reported income of $14.92 billion, marking a big 25% year-over-year enhance. Internet earnings surged to $5.5 billion, a outstanding 315% rise in comparison with the identical interval final yr.
A key driver of this development is the combination 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 development, 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 fall 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 impartial 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 development is basically attributed to Broadcom’s technique of bundling VMware merchandise into higher-priced subscription packages slightly 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 top of Q1, roughly 70% of the corporate’s high 10,000 prospects had adopted VCF. The shift to VCF, mixed with greater prices for present prospects, probably accounts for the substantial income enhance.
Moreover, a few of the rise in web 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.
Stories point out that some prospects have confronted value hikes starting from three to 6 occasions their earlier prices, with probably the most excessive case being a reported twentyfold enhance. Consequently, many are actually at a crossroads, debating whether or not to stay with VMware or search different options.
Whereas Broadcom’s monetary outcomes recommend its technique has successfully pushed income development, the long-term implications stay unsure, as issues persist about potential buyer migrations away from VMware.