Broadcom Inc. (NASDAQ:AVGO)

Current Tax Expense

The current tax expense exhibits an overall upward trend from 564 million USD in late 2020 to a peak of 1783 million USD in early November 2024, before declining slightly to 1636 million USD in November 2025. The consistent increase over the early years indicates growing taxable income or higher tax rates, with a notable spike between 2022 and 2024. The slight decrease in the final year may suggest reduced taxable income or adjustments in tax planning strategies.

Deferred Tax Expense (Benefit)

The deferred tax expense shows significant volatility throughout the periods. Starting at a substantial benefit of -1082 million USD in 2020 and maintaining a large negative figure in 2021, it sharply reduces to -45 million USD by 2022. In 2023, the benefit strengthens again to -501 million USD, but then reverses to a substantial expense of 1965 million USD in 2024, followed by a considerable benefit of -2033 million USD in 2025. This variability suggests fluctuations in temporary differences, changes in tax laws, or adjustments in deferred tax asset and liability valuations over the years.

Provision for (Benefit from) Income Taxes

The provision for income taxes aligns with the combined effects of current and deferred tax expenses, showing considerable fluctuations. It starts at a benefit of -518 million USD in 2020, shifts to a modest expense of 29 million USD in 2021, and rises sharply to 939 million USD in 2022 and 1015 million USD in 2023. In 2024, the provision peaks dramatically at 3748 million USD, before swinging back to a benefit of -397 million USD in 2025. This pattern reflects the influences of both current taxation increases and the highly volatile deferred tax entries, indicating complex tax position changes and possibly significant one-time tax adjustments during this period.

Statutory tax rate

The statutory tax rate remained constant at 21% throughout the entire period, indicating a stable corporate tax policy environment.

State, net of federal benefit

This component fluctuated slightly over the years, starting at -3.6% and moving closer to zero, with some minor negative values observed in the most recent periods. The impact of state taxes net of federal benefits thus appears to have moderated over time.

Foreign income taxed at different rates

A notable decreasing trend was observed in this category, starting from a significant negative adjustment of -48.6% and moving to smaller negative values, reaching -14.9% by the last period. This suggests that the differential tax impact on foreign income has diminished over time, possibly due to changes in foreign tax structures or company operations.

Deemed inclusion of foreign earnings

This item showed variability but remained positive throughout, fluctuating between 7.1% and 23.3%. The inclusion peaked early, declined in the middle years, and rose again, reflecting changing levels of recognized foreign earnings possibly due to modifications in global tax regulations or earnings mix.

Change in valuation allowance

Data are mostly missing except for the final reported year, where a 5.8% increase is recorded, indicating a recent adjustment in deferred tax asset valuation, potentially reflecting changes in expected future taxable income or realizability assessments.

Impact of non-recurring intra-group transfer of certain IP rights

Reported only once with a significant positive impact of 39.6%, this suggests a substantial one-time tax effect related to internal intellectual property transactions that year.

Releases and settlements from statutes expirations

This factor appeared intermittently with negative impacts of -2.2% and -7.9%, indicating recovery or adjustment of previously reserved tax liabilities upon statute expiration.

Foreign-derived intangible income deduction

This deduction was evident only in the earlier years with negative values (-1.5% and -3.1%) and was not reported later, suggesting possible legislative or operational changes reducing reliance on this tax benefit.

Tax contingency interest accrual

The interest accrual related to tax contingencies showed small positive effects, varying from 0.3% to 3.7%, signaling periodic adjustments related to tax uncertainties but generally minor in magnitude.

Excess tax benefits from stock-based compensation

There was a consistent negative effect from stock-based compensation benefits, ranging between -3% and -13.1%, with the largest impact recorded in 2024. This pattern reflects ongoing tax advantages realized from equity compensation plans, with some fluctuation in magnitude.

Research and development credit

The R&D credit contribution was consistently negative, indicating a tax benefit reducing overall tax rate between -1.4% and -6%. The largest credits appeared in 2024 and 2025, possibly in response to increased R&D expenditures or changes in tax credit eligibility.

Other, net

This residual category showed minor fluctuations around zero, generally contributing between -1.5% and 0.7%, indicating small net adjustments from miscellaneous tax factors.

Effective tax rate on income (loss) before income taxes

The effective tax rate demonstrated significant volatility, starting from a low of -21.2% and reaching a high of 37.8% in 2024 before dropping near zero and slightly negative again. This wide range indicates that the overall tax expense relative to pre-tax income has been affected by multiple dynamic components, including foreign income tax treatments, one-time events, and variations in tax benefits.

Net Operating Loss, Credit and Other Carryforwards

The net operating loss carryforwards increased steadily from 1,773 million US dollars in late 2020 to 4,261 million US dollars by late 2025, indicating an accumulation of tax loss benefits over time.

Capitalized Research and Development

This item showed no values until 2024, after which it appeared at 275 million, followed by a sharp increase to 2,459 million in 2025 and 3,581 million in 2026, reflecting substantial capitalization of R&D expenditures in recent years.

Deferred Revenue

Deferred revenue showed volatility, peaking at 1,332 million in 2021, then declining to 208 million in 2023, before rising again to 776 million in 2024 and decreasing to 490 million in 2025. This pattern suggests fluctuations in unearned revenue recognition.

Employee Stock Awards

Amounts related to employee stock awards decreased from 273 million in 2020 to 183 million in 2022, followed by a rebound to 474 million in 2025, indicating varying levels of stock-based compensation expense or grants.

Depreciation and Amortization

There are two entries with the same description but opposite signs, likely representing different presentation aspects. Positive figures start only in 2022 at 156 million, with peaks in 2023 (223 million), followed by decreases. The negative values decline from -1,477 million in 2020 to -7,157 million in 2025, showing significant changes in amortization or accumulated depreciation components.

Other Deferred Income Tax Assets

These assets decreased slightly from 449 million in 2020 to 329 million in 2023, then increased to 672 million in 2024 and settled at 519 million in 2025, reflecting modest fluctuations in tax-related assets not classified elsewhere.

Gross Deferred Income Tax Assets

Gross deferred tax assets rose substantially from 3,024 million in 2020 to a high of 9,405 million in 2025, indicative of growing future tax benefits recognized on the balance sheet.

Valuation Allowance

The valuation allowance, which offsets deferred tax assets, increased in magnitude from -1,707 million in 2020 to -3,983 million in 2025, suggesting increasing uncertainty or prudence regarding the realization of deferred tax assets.

Deferred Income Tax Assets

After an initial rise from 1,317 million in 2020 to 1,962 million in 2021, the deferred income tax assets dropped to 1,245 million by 2023 before surging to over 5,000 million in 2024 and 2025. This sharp increase may relate to recognition of additional tax benefits or changes in tax position.

Unamortized Debt Discount and Issuance Costs

This liability grew more negative from -57 million in 2020 to around -374 million in 2021, then fluctuated downward to about -359 million in 2025, indicating ongoing amortization or issuance of debt-related costs.

Foreign Earnings Not Indefinitely Reinvested

Negative balances increased gradually in absolute terms from -112 million in 2020 to -131 million in 2025, implying a relatively stable level of foreign earnings considered repatriable or exposed to taxes.

Other Deferred Income Tax Liabilities

Starting at no value in early years, this liability increased negatively to -210 million in 2024 and -286 million in 2025, indicating recognition of additional deferred tax liabilities.

Deferred Income Tax Liabilities

These liabilities decreased from -1,646 million in 2020 to -547 million in 2023, but then sharply increased in 2024 to -9,507 million before easing slightly to -7,933 million in 2025, reflecting significant fluctuations in tax timing differences or changes in tax law.

Net Deferred Income Tax Assets (Liabilities)

Initially negative at -329 million in 2020, this figure turned positive and remained modestly so through 2023, but experienced a dramatic decline to -4,541 million in 2024 and -2,511 million in 2025, revealing an overall increase in net deferred tax liabilities.

The analysis of the financial data over the observed periods reveals several noteworthy trends in the company’s liabilities, stockholders' equity, and net income, both on a reported and adjusted basis.

Total Liabilities

Reported total liabilities showed a slight decreasing trend from the beginning period through the fourth period, moving from 52,032 million US dollars to 48,873 million US dollars. However, in the subsequent two periods, there was a considerable increase, peaking at 97,967 million US dollars before decreasing slightly to 89,800 million US dollars. Adjusted total liabilities followed a similar pattern but consistently remained slightly lower than the reported liabilities, ending with 87,096 million US dollars in the final period.

Stockholders’ Equity

Reported stockholders' equity initially exhibited minor fluctuations with a peak in the second period, then declined in the third period before recovering in the fourth period. From the fifth period onwards, there was a significant increase, more than doubling to 67,678 million US dollars and further rising to 81,292 million US dollars. Adjusted stockholders’ equity remained marginally above reported values in most periods and demonstrated an analogous trend of strong growth during the last two periods, reaching 83,803 million US dollars.

Net Income

Reported net income showed consistent growth from the first through the fourth period, increasing from 2,960 million US dollars to 14,082 million US dollars. However, the fifth period marked a substantial decline to 5,895 million US dollars, followed by a sharp recovery to 23,126 million US dollars in the final period. The adjusted net income values were uniformly lower than reported net income in each period but mirrored the same overall trend. The adjusted net income also experienced a notable decline in the fifth period, with a recovery in the last period but did not reach the peak levels of reported net income.

Overall, the financial data suggest the company experienced a phase of liability reduction followed by a sharp increase, which may reflect significant financing activities or acquisitions in the latter periods. Equity values demonstrated resilience and substantial growth in recent periods, indicating strengthened financial position or capital increases. The fluctuations in net income, particularly the dip and subsequent strong rebound, highlight variability in profitability or extraordinary items impacting reported earnings, with adjusted figures providing a more moderated view. The consistent disparities between reported and adjusted figures underscore the influence of tax adjustments on the company's financial outcomes.

The financial performance exhibits significant fluctuations over the reported years, with notable variations between reported and adjusted figures.

Net Profit Margin

The reported net profit margin increased sharply from 12.39% in 2020 to a peak of 39.31% in 2023, then declined considerably to 11.43% in 2024 before rising again to 36.2% in 2025. The adjusted net profit margin shows a similar pattern but generally remains lower, ranging from 7.86% in 2020 to a high of 37.92% in 2023, dipping to 15.24% in 2024, and recovering to 33.02% in 2025. This suggests that adjustments, likely for extraordinary items or non-recurring events, have a dampening effect on profitability measures although the underlying profitability trends are broadly consistent.

Financial Leverage

Reported financial leverage ratios demonstrate a gradual decline from 3.18 in 2020 to 2.1 in 2025, indicating a reduction in reliance on debt or liabilities relative to equity. The adjusted leverage values follow the same downward trend, falling from 3.14 in 2020 to 2.04 in 2025. This downward movement in leverage ratios points to a strengthening balance sheet and possibly improved creditworthiness over the time period.

Return on Equity (ROE)

ROE figures reveal a sharp rise in profitability from equity investments, with reported ROE exceeding 50% from 2022 to 2023 and peaking at 58.7% in 2023. However, a substantial drop to 8.71% is observed in 2024 before rebounding to 28.45% in 2025. Adjusted ROE trends are similar but somewhat lower, reflecting less pronounced volatility. The high peaks and subsequent dips in ROE imply periods of exceptional performance as well as instances of significant setbacks or adjustments affecting equity returns.

Return on Assets (ROA)

ROA steadily increased from 3.9% in 2020 to 19.33% in 2023 for reported figures, followed by a sharp decline to 3.56% in 2024 and recovery to 13.52% in 2025. Adjusted ROA mirrors this pattern but remains consistently lower, indicating adjustments that moderate asset efficiency assessments. The overall trend shows improving asset utilization over the first four years, interrupted by a substantial downturn in 2024 before partial recovery.

Overall, the financial data reflects periods of substantial profitability growth and enhanced operational efficiency, as evidenced by improving margins, returns, and lower leverage through 2023. However, the year 2024 shows pronounced declines across almost all key metrics, suggesting either economic challenges, adjustments for non-recurring factors, or other disruptions. By 2025, a recovery trend is apparent though metrics do not uniformly return to previous peaks. Adjusted metrics are consistently lower than reported ones, highlighting the impact of certain financial adjustments on the company's performance indicators.

The financial data for the company over the observed periods reveals several significant trends in both reported and adjusted net income as well as profit margins.

Reported Net Income

Reported net income demonstrates a generally upward trajectory from 2020 through 2025, with a notable exception for the year ending November 3, 2024. Starting at $2,960 million in 2020, it nearly doubles by 2021 to $6,736 million and continues climbing to $11,495 million in 2022 and $14,082 million in 2023. However, in 2024, there is a sharp decline to $5,895 million before rising substantially again to $23,126 million in 2025. This volatility in 2024 interrupts an otherwise consistent growth pattern.

Adjusted Net Income

Adjusted net income follows a similar but less volatile pattern. It increases consistently from $1,878 million in 2020 to $5,739 million in 2021, then to $11,450 million in 2022 and $13,581 million in 2023. In 2024, unlike the reported figures, adjusted income shows growth to $7,860 million rather than a decline, before continuing upward to $21,093 million in 2025. This suggests that adjustments related to income tax or other deferred items have a mitigating effect on raw earnings fluctuations, especially in 2024.

Reported Net Profit Margin

The reported net profit margin indicates a rising profitability ratio from 12.39% in 2020, doubling to 24.54% in 2021, and increasing further to a peak of 39.31% in 2023. Similar to net income, there is a sharp decrease to 11.43% in 2024 followed by a rebound to 36.20% in 2025. These variations suggest a year of reduced profitability or possibly extraordinary items impacting net profit margins in 2024.

Adjusted Net Profit Margin

The adjusted net profit margin exhibits a pattern comparable to the reported margin but with somewhat lower margins and less extreme fluctuations. It grows steadily from 7.86% in 2020 to 37.92% by 2023. In 2024, although there is a decline to 15.24%, it remains higher than the reported margin for that year, and it recovers to 33.02% in 2025. This pattern implies that after adjusting for tax-related or other non-operational impacts, the underlying profitability remains comparatively stable and recovers more effectively.

In summary, the data exhibits a robust growth trend in both reported and adjusted net incomes and profit margins over the five-year period, interrupted by a significant dip in 2024. Adjusted figures suggest that the dip in 2024's reported results may be linked to temporary or non-recurring factors addressed by the adjustments. The recovery seen in 2025 indicates a resilience in earnings and profitability once these factors are accounted for. This analysis highlights the importance of considering adjusted financial measures to obtain a clearer picture of operational profitability and income trends over time.

The analysis of the adjusted financial data over the observed periods reveals several notable trends in the company's equity and leverage metrics.

Stockholders’ Equity

Both reported and adjusted stockholders’ equity exhibit fluctuations over the years, starting at approximately US$23.9 billion and US$24.2 billion respectively in the earliest period. There is a slight decline in equity values around the third and fourth periods, with reported equity decreasing to about US$22.7 billion and adjusted equity to approximately US$22.1 billion. However, a significant increase occurs in the last two periods, where reported equity surges to approximately US$67.7 billion and further to US$81.3 billion, while adjusted equity similarly rises to approximately US$72.2 billion and US$83.8 billion. This substantial growth in equity suggests strengthening financial position and increased net asset value in the most recent years.

Financial Leverage

The financial leverage ratios, both reported and adjusted, show a general declining trend over the periods examined. Initially, the reported leverage ratio begins at 3.18 and adjusted leverage at 3.14, indicating a relatively high level of debt relative to equity. Although there are small increases during the mid periods (notably the third period showing the highest leverage of approximately 3.23 and 3.31 respectively), the leverage steadily decreases thereafter. By the final periods, the reported leverage ratio falls to 2.45 and then to 2.10, with adjusted leverage similarly dropping to 2.29 and finally 2.04. This reduction in leverage ratios indicates deleveraging, suggesting the company is lowering its debt levels or increasing equity, thereby potentially reducing financial risk.

Overall, the data reflects an improvement in the company's capital structure, characterized by a marked increase in stockholders’ equity and a concurrent decrease in financial leverage in the recent years. These trends are indicative of a strengthening balance sheet and a possible strategic focus on enhancing financial stability.

The analyzed financial data indicates notable fluctuations and overall growth trends in both reported and adjusted figures over the periods examined. Net income exhibits significant variability, with reported net income more than quadrupling from approximately $2.96 billion in 2020 to $23.13 billion in 2025. Adjusted net income follows a similar pattern, rising from about $1.88 billion in 2020 to $21.09 billion in 2025, though the growth is somewhat more moderated compared to the reported figures. The sharp increase in net income between 2023 and 2025 is particularly striking, highlighting a period of accelerated profitability.

Stockholders’ equity also demonstrates growth over the time frame. Reported equity dips slightly between 2021 and 2022, from roughly $24.96 billion to $22.71 billion, before recovering and surging to $81.29 billion by 2025. Adjusted equity mirrors this trend, moving from about $24.20 billion in 2020 down to $22.14 billion in 2022, then increasing significantly to $83.80 billion in 2025. This pattern suggests a recovery and expansion phase after a period of contraction or capital adjustments.

Return on equity (ROE) metrics present notable volatility, with both reported and adjusted ROE showing marked rises up to 2023, followed by a substantial decline in 2024 and a partial recovery in 2025. Reported ROE increases from 12.4% in 2020 to a peak of 58.7% in 2023, then falls sharply to 8.71% in 2024 before rebounding to 28.45% in 2025. Adjusted ROE exhibits a similar trajectory, peaking at 58.31% in 2023, dipping to 10.88% in 2024, and recovering to 25.17% in 2025. The elevated ROE values in 2022 and 2023 indicate periods of enhanced profitability relative to equity, possibly driven by operational efficiency gains or financial structuring.

Net Income

Demonstrates strong growth trend overall with a peak in 2025, reflecting enhanced earnings capacity. The adjusted figures track closely but remain consistently below reported net income, indicating adjustments that moderately reduce reported earnings but follow the same growth pattern.

Stockholders’ Equity

Shows a temporary decline around 2022 across both reported and adjusted values, followed by rapid growth through 2025, suggesting capital accumulation or valuation increases potentially linked to retained earnings or equity financing.

Return on Equity

Exhibits high volatility with peak performance in 2023, followed by a steep decline and recovery phase. This pattern may reflect changes in income levels, equity base, or one-time impacts influencing the profitability ratio.

Analysis of Net Income Trends

There is a significant overall increase in reported net income over the six-year period, rising from $2,960 million to $23,126 million. The growth is especially pronounced between the years ending in 2022 and 2023, where reported net income increased sharply from $11,495 million to $14,082 million. However, the year ending in 2024 shows a notable decline to $5,895 million, followed by a strong recovery in 2025 to $23,126 million.

Adjusted net income follows a similar upward trajectory, increasing from $1,878 million in 2020 to $21,093 million in 2025. The adjusted net income shows consistent growth between 2020 and 2023, followed by a dip in 2024, albeit less pronounced than the reported net income decline. It rebounds substantially in 2025, indicating underlying profitability improvements when excluding the effects of income tax adjustments.

Return on Assets (ROA) Trends

Reported ROA exhibits strong growth from 3.9% in 2020 to a peak of 19.33% in 2023, reflecting improved asset efficiency and profitability. The following year shows a sharp decline to 3.56%, mirroring the net income decrease, before recovering to 13.52% in 2025. This pattern suggests volatility in asset returns possibly tied to external or operational factors impacting the company’s overall profitability.

Adjusted ROA values are slightly lower than reported ROA but show a comparable pattern. Starting at 2.47% in 2020, it rises steadily to 18.64% in 2023, declines to 4.75% in 2024, and then recovers to 12.33% in 2025. The adjusted figures confirm the impact of income tax adjustments on profitability metrics, yet the overall trend of improvement and subsequent volatility remains consistent.

Insights and Observations

The overall growth in both reported and adjusted net income alongside rising ROA up to 2023 indicates a period of strong financial performance and efficient asset utilization. The sharp declines in 2024 across all metrics suggest a temporary setback or one-time event negatively affecting profitability. The recovery in 2025 highlights resilience and potential operational improvements.

The differences between reported and adjusted figures imply that income tax adjustments have a material impact on reported profitability and returns, particularly noticeable in the volatility of 2024 results. This underscores the importance of considering adjusted metrics for analyzing underlying business performance.