Bulk of big Broadcom customers sign for VMware private cloud
New figures released by Broadcom claim around 70% of VMware's 10,000 largest customers have decided to acquire its Cloud Foundation stack.
Published on 7th March 2025
Broadcom’s acquisition of VMware appears to be a big success, on the balance sheet at least, after the company announced a big majority of its top 10,000 customers have decided to acquire its Cloud Foundation stack and posted strong growth.
The chips-and-code company today announced its results for the quarter ended February 2nd, its first for FY 2025. Revenue of $14.92 billion represented 25 percent year-on-year growth. Net income of $5.5 billion was a 315 percent increase on the result from Q1 2024.
Broadcom no longer breaks out VMware revenue: sales of their wares are all now lumped into its infrastructure software business unit, which posted $6.7 billion revenue for Q1, up from $4.55 billion for the same quarter last year. Direct comparisons of those numbers are not wise as Broadcom owned VMware for four fifths of Q1 2024.
Consider, instead, the $1.97 billion Q4 2023 and $7.6 billion FY 2023 software revenue that Broadcom recorded before it acquired VMware. Know, also, that Broadcom’s software sales grew by just three percent in FY 2023 and four percent in FY 2022.
That slow growth means the jump from $1.97 billion software revenue in Q4 2023 to $6.7 billion in Q1 2025 is likely due to VMware, which in its last quarter as an independent company reported $3.4 billion revenue.
It therefore looks a lot like Broadcom has added around $1 billion to quarterly VMware revenue in a little over a year.
How did it do that? As often explained, Broadcom stopped selling standalone VMware products and now only sells bundles of code and support under subscriptions that are more costly than previous licenses.
The biggest of those bundles is VMWare Cloud Foundation (VCF) and on Broadcom’s earnings call CEO Hock Tan told investors “We are upselling customers to a full stack VCF … and as of the end of Q1, approximately 70 percent of our largest 10,000 customers have adopted VCF.”
Bigger bills for existing VCF customers, and upselling others to VCF, probably explains the extra revenue.
Some of the extra net income probably comes from cutting costs at VMware, which in its final standalone quarter reported operating margin of 16 percent. Broadcom’s software business delivered 76 percent operating margin in Q1, an improvement on the 59 percent reported a year ago.
There continues to be news of big migrations away from VMware, but on the numbers Broadcom’s plans appear to have succeeded.
