Broadcom records strong financial growth thanks to VMware
Broadcom’s acquisition of VMware has yielded impressive financial results, according to the company’s latest earnings report. In the quarter ending February 2, Broadcom reported revenue of $14.92 billion, up 25% year-over-year. Net profit reached $5.5 billion, a massive 315% surge compared to the previous year.
A key driver of this growth is the integration of VMware into Broadcom’s infrastructure software business unit. In the first quarter of 2025, this segment achieved revenue of $6.7 billion, compared to $4.55 billion in the same period last year.
Although Broadcom no longer reports VMware revenue separately, the strong growth indicates that VMware has contributed significantly to the company’s financial results. Prior to this deal, Broadcom’s software segment saw only modest growth, with increases of 3% in fiscal year 2023 and 4% in 2022.
Comparing to the pre-merger period, Broadcom achieved $1.97 billion in software revenue in Q4 2023, bringing total software revenue for the full year 2023 to $7.6 billion. Meanwhile, VMware reported $3.4 billion in revenue in its final quarter before the merger. These figures show that Broadcom has boosted VMware’s quarterly revenue by approximately $1 billion in just over a year.
Customers react to Broadcom’s new pricing strategy
Broadcom’s robust revenue growth stems from its software bundling strategy. The company has transitioned from a standalone licensing model to premium subscription bundles, most notably VMware Cloud Foundation (VCF) – an integrated solution encompassing the entire VMware technology stack.
According to CEO Hock Tan, by the end of Q1, approximately 70% of Broadcom’s top 10,000 customers had migrated to VCF. This change in business model, combined with significant price increases for existing customers, likely explains the company’s strong revenue growth.
In addition to price hikes, a portion of the net profit also comes from cost-cutting measures at VMware. Before the merger, VMware had an operating margin of 16%, while Broadcom achieved 76% in Q1 2025, up from 59% the previous year.
While the deal has brought massive financial benefits to Broadcom, customer dissatisfaction is on the rise. Numerous reports indicate that customers are facing price increases of 3 to 6 times, and in some cases, up to 20 times. This is causing many businesses to consider leaving VMware to seek alternative solutions.
Although Broadcom’s strategy has driven strong revenue growth, the long-term impact remains unclear. If customers continue to abandon VMware, Broadcom may face market share risks in the future.
