Broadcom has delivered a blockbuster second quarter of FY25, with its fiscal results announced on June 5th. Once again, the quarterly results showed significant growth, with revenue soaring 20% year-over-year to hit $15 billion for the quarter. The standout performer in the software portfolio once again appears to be VMware, a reflection of the ongoing VMware licensing changes in 2025 impacting customers globally.
Summary of the figures
Since acquiring VMware, Broadcom has supercharged its infrastructure software division, which now includes VMware, CA Technologies, and Symantec’s enterprise business. This unit was responsible for $6.6 billion of the revenue, up 25% from last year. VMware alone appears to have added around $1 billion in quarterly revenue under Broadcom’s stewardship. Operating margins for the division hit a staggering 76%, a leap from 60% a year ago – thanks to what Broadcom calls “disciplined integration.”
A key driver of this growth is Broadcom’s aggressive push for its VMware Cloud Foundation (VCF) bundle. According to CEO, Hock Tan, 87% of VMware’s top 10,000 customers have already signed up for VCF since the acquisition. While this has led to higher bills for many customers, Broadcom argues the bundled approach delivers long-term value and is continuing to prioritise VCF over other bundles.
What happens next?
In his call to investors, Mr Tan also told investors that Broadcom is now “more than halfway” through a license renewal cycle, which is expected to last another 18 months. This may be the first tacit acknowledgement from the company that its revenue growth in this area might not last forever, particularly as VMware licensing changes in 2025 continue to reshape customer decisions and contract strategies.
As bedigital has previously blogged, we are aware of many organisations making plans for life after VMware, potentially including a significant number of those which have already felt pushed into accepting VCF-based agreements, due to limited time available to research, plan and migrate to alternative solutions. Those who had more time on their hands have already started planning and a common scenario we are seeing is customers sweating their perpetual VMware licenses and moving to 3rd party support instead.
This solution isn’t completely foolproof, however, with Broadcom launching audits against many customers who have followed that path.
How can we help?
If you haven’t yet gone through a VMware renewal with Broadcom, you can download our whitepaper to explore your options. Better yet, schedule a call with one of our experts at bedigital to see how we can help you navigate this process and optimise your IT strategy in light of the ongoing VMware licensing changes in 2025.
