Broadcom’s Software ARR Grows 17% to $7.2B, Offsets Margin Pressure
AVGO•Broadcom’s infrastructure software segment saw 17% year-over-year ARR growth to $7.2 billion, accounting for 32% of revenue with a 79% operating margin versus 62% in Semiconductor Solutions. Management expects gross margin to drop to about 74% next quarter but retains a stable 67% operating margin supported by software.
1. Software Segment Growth
Broadcom’s infrastructure software business delivered 17% year-over-year growth in annual recurring revenue, reaching $7.2 billion last quarter and representing 32% of total revenue, underscoring a stable, subscription-based revenue stream.
2. Margin Comparison
The software segment posted an operating margin of approximately 79%, significantly higher than the 62% margin achieved by the Semiconductor Solutions unit, highlighting the profitability gap between the two divisions.
3. Management Outlook
Management projects consolidated gross margin will decline to about 74% next quarter due to a higher mix of custom AI chips but expects to maintain a stable 67% consolidated operating margin thanks to the high-margin software business.
