Broadcom turns 41¢
of every dollar into
free cash — and
owes $66B.
A cash machine with a mortgage from buying VMware.
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✦ The bottom line
Broadcom generated $8.0 billion of free cash flow — 41% of revenue — at a 68% profit margin on an adjusted basis. It also carries $66 billion of debt from acquisitions.
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✦ Teach me
Real cash left over
Operating cash minus what a company spends on buildings and equipment. Broadcom designs chips but doesn't make them (no factories), so it spends almost nothing on equipment — and keeps an unusual amount of cash.
Wall Street calls this
Free cash flow
Turning *41%* of revenue into free cash is rare. It's what lets Broadcom carry heavy debt and still flood shareholders with cash.
Cash kept · free cash flow
$8.0
B
Free cash flow of $8.0B — 41% of revenue — on just $250M of capital spending. A fabless model converts sales into cash beautifully.
How does Broadcom convert sales to cash this efficiently? Margins. Combine high-priced chips with even-higher-margin software and you get one of the fattest profit profiles in tech. The cleanest measure of that is adjusted EBITDA — roughly, profit before the accounting noise. Here's how much of each dollar it captures.
Profitability · adjusted EBITDA margin
68
%
Adjusted EBITDA of $13.1B equals 68% of revenue — among the highest in all of technology.
Here's the catch, and the one place Broadcom looks different from its mega-cap peers. Apple and Microsoft sit on net cash. Broadcom does the opposite: it borrowed heavily to buy VMware for ~$69 billion, and that debt is still on the books. The cash machine can service it — but it's a real obligation, not a cushion.
The mortgage · total debt
$66
B
About $66B of debt against $14B of cash — net debt, unlike its net-cash peers. The huge cash flow covers the interest roughly 10x over, so it's heavy but manageable.