EARNINGS REVIEW
Broadcom, FY26 Q2 Earnings Results
Historical quarterly report · Results and outlook reflect information available at the time of that release. Actual results from later quarters have not been incorporated into the outlook.
Demand for custom AI accelerators and networking substantially increased semiconductor revenue, and FCF also grew. Next-quarter guidance suggests continued strong growth, but non-GAAP profitability guidance must be distinguished from GAAP results.
Assessment · Current revenue growth and cash conversion are strong. The priority is to check whether higher next-quarter revenue expectations translate into actual deliveries and cash collections. High adjusted margins alone do not establish debt capacity or scope for shareholder returns.
Key management and company statements
Earnings release · Excerpt from the original“increasing demand for custom AI accelerators and AI networking”Meaning · Demand for custom AI accelerators and AI networking is increasing.
Context · This explains AI semiconductor revenue of approximately 10.8 B$ and company-reported YoY growth of 143%.
Original statement ↗01 Revenue, operating income and results versus expectations
Year over year · revenue 15.004 → 22.187 B$ (+47.9% · +7.183 B$), operating income 5.829 → 10.788 B$ (+85.1% · +4.959 B$).
Quarter over quarter · revenue 19.311 → 22.187 B$ (+14.9% · +2.876 B$), operating income 8.563 → 10.788 B$ (+26.0% · +2.225 B$), operating margin 44.3% → 48.6% (+4.3%p).
Semiconductor revenue increased by 6.601 B$, and Infrastructure Software by 0.582 B$. AI semiconductor revenue of approximately 10.8 B$ is a subset of the semiconductor segment and must not be added to segment revenue again.
Results versus previous guidance
Approximate revenue guidance 22.000 B$ → actual 22.187 B$. 0.187 B$ above the point estimate.
02 Earnings sustainability · From operating income to net income
GAAP operating income was 10.788 B$. The company’s adjusted EBITDA of 15.244 B$ includes adjustments for interest, taxes, depreciation, amortization and other items; it has not been relabeled as operating income.
GAAP net income of 9.310 B$ is also distinguished from non-GAAP net income of 12.074 B$. Adjusted costs such as acquisition-related intangible amortization and stock-based compensation are not treated as economically meaningless.
- Operating income
- 10.788 B$
- Net non-operating income
- −0.658 B$
- Income tax expense
- −0.820 B$
- Consolidated net income
- 9.310 B$
Net income of 9.310 B$ in the existing quarterly dataset is on a consolidated basis.
03 Cash flow quality · Net income → OCF → FCF
OCF of 10.493 B$ and CapEx of 0.231 B$ are quarterly amounts directly provided by the company and reconcile to FCF of 10.262 B$. Low own-facility spending supports cash conversion, but its scope differs from customers’ and foundries’ infrastructure investment.
- Consolidated net income
- 9.310 B$
- Total net adjustments for noncash items, working capital and other items¹
- 1.183 B$
- Operating cash flow
- 10.493 B$
- Cash CapEx
- −0.231 B$
- FCF
- 10.262 B$
¹ Total net adjustments calculated as OCF−net income. This is not a single disclosed line item; it combines noncash items, working capital, classification differences and other adjustments.
FCF versus previous quarter · 8.010 → 10.262 B$, 2.252 B$ improvement.
04 Financial capacity · Net debt and payment obligations
Previous-quarter net cash · 2026-02-01
Cash and current investments 14.174 / Debt 66.057 B$
Current-quarter net cash · 2026-05-03
Cash and current investments 19.628 / Debt 64.907 B$
Net debt improved by 6.604 B$ from the previous quarter. The carrying amount of current debt is 2.252 B$. It may differ from the principal maturity schedule.
The company has net debt, so the uses of operating cash flow also matter. Cash dividends paid this quarter were 3.092 B$; dividends, share repurchases and debt repayment are capital allocation items after FCF is calculated.
Common definition · Cash and current investments = cash equivalents + current investments and deposits. Debt = carrying amount of interest-bearing borrowings (current + noncurrent), excluding separately reported lease liabilities. This differs from total liabilities of 91.467 B$. Restricted cash, noncurrent securities and noncurrent deposits are excluded from cash and current investments.
05 Investment, capital allocation and cash returns
Cash generation from AI growth is evident. However, quarterly growth rates can vary with major customer design and shipment schedules, so one quarter’s growth rate should not be fixed as a long-term assumption.
This quarter, cash CapEx/revenue is 1.0% and FCF/revenue is 46.3%. These ratios should not be used as a simple ranking of companies with different business models and FCF definitions.
06 Next-quarter and full-year outlook: implications
YoY +84.3% · QoQ +32.5%. Revenue comparison bases are 15.952 B$ for the year-earlier corresponding quarter and 22.187 B$ for this quarter. Growth rates are calculated from the original amounts.
The company projected next-quarter AI semiconductor revenue of approximately 16.0 B$, non-GAAP operating margin of approximately 67% and adjusted EBITDA margin of approximately 68%. The revenue point estimate is approximate, not range-based guidance.
The company did not provide a reconciliation of forward-looking adjusted measures to GAAP, so GAAP operating income has not been back-calculated and presented as firm guidance.
RPO / Backlog
QoQ 45.000 → 164.600 B$ (+265.8% · +119.600 B$).
YoY 24.700 → 164.600 B$ (+566.4% · +139.900 B$).
RPO from committed multiyear customer contracts, covering software and certain semiconductor contracts. Includes long-term AI accelerator contracts from 2026; distinct from the entire short-term semiconductor order backlog · Contract balances are not equivalent to confirmed next-quarter revenue or cash inflows. RPO scope differs across companies.
RPO disclosure ↗Quarterly results · CY-aligned presentation
Amounts in B$. Based on the CY-aligned year of this report, the table shows all 4 quarters of the preceding year and the current year to date. Each fiscal quarter is assigned to the CY quarter with the greatest overlap in actual reporting dates, alongside its original FY/CY quarter and start/end dates. Amounts have not been recalculated into actual calendar quarters.
| CY alignment | 2025 · 4 quarters | 2026 · 1 quarters | Change this quarter | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Metric | 2025 total4-quarter totalBalances are period-end | 1QFY25 Q225-02-03 ~25-05-04 | 2QFY25 Q325-05-05 ~25-08-03 | 3QFY25 Q425-08-04 ~25-11-02 | 4QFY26 Q125-11-03 ~26-02-01 | 2026 year to date1-quarter totalBalances are period-end | 1QFY26 Q226-02-02 ~26-05-03 | QoQvs FY26 Q1 | YoYvs FY25 Q2 |
| Revenue | 68.282 | 15.004 | 15.952 | 18.015 | 19.311 | 22.187 | 22.187 | +14.9%+2.876 B$ | +47.9%+7.183 B$ |
| Operating income | 27.787 | 5.829 | 5.887 | 7.508 | 8.563 | 10.788 | 10.788 | +26.0%+2.225 B$ | +85.1%+4.959 B$ |
| Operating margin | 40.7% | 38.8% | 36.9% | 41.7% | 44.3% | 48.6% | 48.6% | +4.3%p | +9.8%p |
| FCF | 28.911 | 6.411 | 7.024 | 7.466 | 8.010 | 10.262 | 10.262 | +2.252 B$ | +3.851 B$ |
| Operating cash flow | 29.684 | 6.555 | 7.166 | 7.703 | 8.260 | 10.493 | 10.493 | +27.0%+2.233 B$ | +60.1%+3.938 B$ |
| Cash CapEx | 0.773 | 0.144 | 0.142 | 0.237 | 0.250 | 0.231 | 0.231 | −7.6%−0.019 B$ | +60.4%+0.087 B$ |
| Net cash | −51.883 | −57.799 | −53.501 | −48.958 | −51.883 | −45.279 | −45.279 | +6.604 B$ | +12.520 B$ |
| Cash and current investments | 14.174 | 9.472 | 10.718 | 16.178 | 14.174 | 19.628 | 19.628 | +38.5%+5.454 B$ | +107.2%+10.156 B$ |
| Debt | 66.057 | 67.271 | 64.219 | 65.136 | 66.057 | 64.907 | 64.907 | −1.7%−1.150 B$ | −3.5%−2.364 B$ |
Indented rows are components or reference items for the parent metric. Net cash = cash and current investments − debt. Depending on the company definition, FCF may include additional adjustments such as lease principal and therefore differ from operating cash flow − cash CapEx. See the cash flow discussion for the detailed definition.
Annual totals and year-to-date totals appear before each year’s quarters. Revenue, earnings and cash flow are sums of quarterly figures; margin is total operating income ÷ total revenue; net cash, cash and debt are balances at the end of the last quarter. Do not treat totals covering different lengths of time as directly comparable annual figures.
Net cash = cash and current investments − debt. A negative figure indicates net debt. Changes in FCF and net cash are shown as absolute amounts in B$. Quarterly figures have not been adjusted to force reconciliation with disclosed annual totals.
Comparison bases, calculation methods and quarterly sources
Calculation and presentation · Amounts in B$. Figures disclosed in millions of US dollars are divided by 1,000 without altering the source values. Where only cumulative cash flows are available, the previous cumulative period within the same fiscal year is deducted. YoY, QoQ and margins are calculated using amounts before display rounding. Earnings changes from negative or 0 bases are expressed as profit/loss transitions and absolute amounts.
Opinions and outlook · Management quotations include original excerpts and their translations. Quotations not identified as earnings-call transcripts come from earnings releases. Interpretations and implications are the author’s judgments. No numerical probability of achieving a target is assigned without quantitative verification.