Broadcom CEO Hock Tan said his efforts to reform how VMware goes to market and its licencing model are paying off – despite controversy over what many customers initially felt was a rough shakedown early on.
VMware “booked more than 15 million CPU cores of VCF” over the past quarter he said. VCF is its newly integrated “Virtual Cloud Platform” suite, which drove “80% of the total VMware products” booked in the quarter.
That translates into 32% quarter-on-quarter VMware bookings growth.
“ VMware bookings [are] continuing to accelerate” Broadcom CEO Hock Tan
“When we acquired VMware, our target was to deliver adjusted EBITDA of $8.5 billion, within three years of the acquisition. We are well on the path to achieving or even exceeding this EBITDA goal in the next fiscal '25.”
(VCF is a platform that offers vSphere, vSAN and NSX with the full Aria management and orchestration suite. The upcoming VCF 9 includes a centralised console to handle capacity and tenant management and for platform engineers, a “consumption-ready environment that supports traditional VMs, Kubernetes, and containerized applications” – the dozen consoles it would have taken to do all this before stripped back to two.)
Tan was speaking on a Broadcom earnings call for its fiscal Q3.
Broadcom’s $4.5 billion IP manoeuvres…
The company reported a net loss of $1.8 billion for the quarter on a $4.5 billion tax hit “from the impact of an intra-group transfer of certain IP rights to the United States as a result of supply chain realignment.”
“Historically, Broadcom has redomiciled ahead of a pending transaction, and I'm getting questions from investors if this action may relate to any asset sales as the company seeks to pay down debt” one analyst asked.
Broadcom’s CFO responded: “No, it was just the timing of when we chose to do it this time. And no, it doesn't have anything to do with that…”
CFO Kirsten M. Spears added on the call: “Excluding transition costs, [Broadcom’s] operating profit of $8 billion was up 45% from a year ago…”
Overall Q3 revenue of $4 billion grew 43% on-year “driven by strong demand from hyperscalers for both AI networking and on custom AI accelerators… Ethernet switching, driven by Tomahawk 5 and Jericho3-AI grew over four times year on year, while our optical lasers and thin dies used in optical interconnects grew three-fold” Broadcom executives said.
When it comes to revenue tailwinds, AI is driving “about two-thirds in compute and one-third in networking” said Broadcom CFO Spears.
