The Cloud

VMware’s Cloud Offerings Drive Earnings Beat

Licensing revenue jumped 13.6% to $785 million, topping estimates of $772.9 million, while the legacy on-premises business grew in the "low single ...
Matthew HellerDecember 1, 2017
VMware’s Cloud Offerings Drive Earnings Beat

Enterprise software firm VMware posted better-than-expected quarterly revenue and profit, with strength across its product portfolio including the legacy on-premises business.

VMware’s revenue for the third quarter rose 11% to $1.98 billion while net income increased to $443 million, or $1.07 per share, from $319 million, or 75 cents per share, a year earlier. Adjusted earnings were $1.34 a share.

Analysts on average had expected adjusted profit of $1.27 per share and revenue of $1.96 billion.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

Licensing revenue jumped 13.6% to $785 million, beating analysts’ estimates of $772.9 million, as VMWare’s efforts to build a presence in cloud computing gained traction. Billings, a sales growth metric, were up 21% to $2.12 billion versus estimates of $2 billion.

“We had a solid third quarter,” CFO Zane Rowe said in a news release. “Our results reflect continued strength across the portfolio and customers’ commitment to VMware as a strategic partner for both on-premises and hybrid-cloud software solutions.”

CEO Pat Gelsinger told analysts in a conference call that VMware was successfully transitioning from virtualization software company to providing a broad portfolio of products and services across cloud, mobile, networking and security.

“We’re optimistic about the momentum across all of our growth businesses,” he said.

Among those businesses, NSX license bookings more than doubled from a year ago, vSAN license bookings jumped 150%, and the end-user computing business increased 40%. Growth in the traditional on-premises computing business was in the “low single digits,” according to Rowe.

“There is a broad installed base we can sell into with VSAN and NSX, as well as into the cloud,” Rowe said.

VMware is forecasting fourth-quarter revenue of $2.4 billion and full-year revenue of $7.875 billion, up 11% on the previous year. “We see a very robust hybrid environment developing, and the ability for VMware to sit in the middle of that is powerful,” Gelsinger said. “We find that in a multicloud future customers are more comfortable with their on-premises investments.”

Case Study: How Edgewood Tahoe’s CFO Saved 500 Jobs From the Ashes