In a nutshell: The acquisition of VMware by Broadcom has yielded spectacular monetary outcomes, in response to the corporate’s latest quarterly revenue report. For the quarter that ended on February 2, Broadcom reported revenues of $ 14.92 billion, marking a major enhance of 25% 12 months after 12 months. Web revenue elevated to $ 5.5 billion, a notable enhance of 315% in comparison with the identical interval final 12 months.
A key promoter of this progress is the combination of VMware into the Broadcom infrastructure software program enterprise unit, which Revealed revenue of $ 6.7 billion within the first quarter of 2025, in comparison with $ 4.55 billion in the identical quarter of final 12 months.
Though Broadcom now not informs VMware revenue individually, the substantial enhance means that VMware contributions have been appreciable. Earlier than the acquisition, Broadcom software program gross sales skilled modest progress alone, with 3% will increase in fiscal 12 months 2023 and 4% in fiscal 12 months 2022.
To raised perceive VMware’s influence, it helps look at Broadcom software program earlier than acquisition. Within the fourth quarter of 2023, Broadcom registered $ 1.97 billion in software program revenue, which raised its complete of the complete 12 months for fiscal 12 months 2023 to $ 7.6 billion. VMware, in its final quarter as an unbiased firm, reported $ 3.4 billion in revenue. Given these figures, Broadcom has efficiently elevated quarterly VMware revenue by roughly $ 1 billion in simply over a 12 months.
This robust revenue progress is essentially attributed to Broadcom’s Grouping technique VMware merchandise in greater value subscription packages as a substitute of promoting them as unbiased licenses.
The best of those packages is VMware Cloud Basis (VCF), which features a full VMware applied sciences. Throughout Broadcom’s earnings name, the CEO Hock revealed that on the finish of the primary quarter, roughly 70% of the corporate’s 10,000 important purchasers had adopted VCF. The change to VCF, mixed with greater prices for current prospects, in all probability represents the substantial enhance in revenue.
As well as, a part of the rise in web revenue will be attributed to VMware price discount measures. In its final unbiased quarter, VMware reported an operational margin of 16%. In distinction, the Broadcom software program enterprise delivered an operational margin of 76% within the first quarter of 2025, in comparison with 59% a 12 months in the past.
Regardless of the obvious monetary success of the acquisition, Broadcom VMware administration has precipitated generalized buyer dissatisfaction.
The experiences point out that some prospects have confronted value will increase that go from three to 6 instances their earlier prices, and essentially the most excessive case is a rise of twenty instances reported. Consequently, many are actually at a crossroads, discussing whether or not to stick with VMware or discover different options.
Though Broadcom’s monetary outcomes recommend that their technique has successfully promoted revenue progress, lengthy -term implications stay unsure, since considerations persist about potential buyer migrations away from VMware.
