VMware Reports First Quarter 2011 Results
- Year-over-Year Revenue Growth of 33% to $844 Million
- EPS Growth of 53% to $0.29; Non-GAAP EPS Growth of 50% to $0.48
- Operating Margin of 18.2%; Non-GAAP Operating Margin of 29.9%
- Trailing Twelve Months Operating Cash Flows Growth of 20% to $1.3 Billion; Free Cash Flows Growth of 39% to $1.3 Billion
- Revenues for the first quarter were $844 million, an increase of 33% from the first quarter of 2010.
- Operating income for the first quarter was $154 million, an increase of 50% from the first quarter of 2010. Non-GAAP operating income for the first quarter was $252 million, an increase of 44% from the first quarter of 2010.
- Net income for the first quarter was $126 million, or $0.29 per diluted share, compared to $78 million, or $0.19 per diluted share, for the first quarter of 2010. Non-GAAP net income for the quarter was $204 million, or $0.48 per diluted share, compared to $133 million, or $0.32 per diluted share, for the first quarter of 2010.
- Operating cash flows for the first quarter were $478 million, an increase of 35% from the first quarter of 2010. Free cash flows for the quarter were $473 million, an increase of 45% from the first quarter of 2010.
- Trailing twelve months operating cash flows were $1.3 billion, an increase of 20%. Trailing twelve months free cash flows were $1.3 billion, an increase of 39%.
- Cash, cash equivalents and short-term investments were $3.7 billion and unearned revenue was $2.0 billion as of March 31, 2011.
U.S. revenues for the first quarter of 2011 grew 26% to $400 million from the first quarter of 2010. International revenues grew 40% to $444 million from the first quarter of 2010.
License revenues for the first quarter of 2011 were $419 million, an increase of 34% from the first quarter of 2010. Service revenues, which include software maintenance and professional services, were $425 million for the first quarter of 2011, an increase of 32% from the first quarter of 2010.
“The quarter’s strong performance underscores the value that VMware is providing customers on their journey to cloud computing,” said Paul Maritz, chief executive officer. “Customers continue to invest in our portfolio of virtualization and cloud infrastructure solutions to remove complexity and enable IT as a Service.”
“VMware’s first quarter results were driven by strong demand across all geographies,” said Mark Peek, chief financial officer. “Second quarter 2011 revenues are expected to be in the range of $860 and $880 million, a year-over-year increase of 28% to 31%. For the year, we expect annual revenues to be in the range of $3.55 billion and $3.65 billion, an increase of 24% to 28% compared to 2010. We expect our non-GAAP operating margin for 2011 to expand slightly from 2010.”
Recent Highlights & Strategic Announcements
- In February 2011, VMware announced at VMware Partner Exchange 2011 new specializations, certification, solution competency and toolkits designed to help partners deliver enterprise hybrid cloud solutions. The industry’s premier event included more than 3,300 attendees, an increase of over 25% from the prior year, with 65 sponsors and exhibitors.
- In March 2011, VMware announced VMware vCenter™ Operations, a strategy and a new solution to simplify and automate how IT organizations manage services in dynamic virtual and cloud environments. vCenter Operations will integrate performance, capacity and configuration management capabilities.
- In April 2011, VMware introduced Cloud Foundry™, the industry’s first open Platform as a Service, representing a new generation of application platform, architected specifically for cloud computing environments and to be delivered as a service from enterprise datacenters and public cloud service providers.
- During the quarter, VMware announced it has reached a milestone in delivering the enterprise hybrid cloud with the availability of VMware vCloud® Datacenter Services from SingTel, BlueLock and Colt, beta services available from Verizon, and the addition of SOFTBANK TELECOM to the VMware vCloud Datacenter Services Program.
VMware plans to host a conference call today to review its first quarter 2011 results and to discuss its financial outlook. The call is scheduled to begin at 2:00 p.m. PT/ 5:00 p.m. ET and can be accessed via the Web at http://ir.vmware.com. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 30 days.
VMware delivers virtualization and cloud infrastructure solutions that enable IT organizations to energize businesses of all sizes. With the industry leading virtualization platform – VMware vSphere® – customers rely on VMware to reduce capital and operating expenses, improve agility, ensure business continuity, strengthen security and go green. With 2010 revenues of $2.9 billion, more than 250,000 customers and 25,000 partners, VMware is the leader in virtualization, which consistently ranks as a top priority among CIOs. VMware is headquartered in Silicon Valley with offices throughout the world and can be found online at www.vmware.com
VMware, VMware vSphere, VMware vCenter, VMware vCloud and Cloud Foundry are registered trademarks or trademarks of VMware, Inc. in the United States and/or other jurisdictions. Other marks mentioned herein are trademarks which are proprietary to VMware, Inc. or another company.
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to VMware’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled “About Non-GAAP Financial Measures.”
This press release contains forward-looking statements including, among other things, statements regarding VMware’s second quarter and annual revenue projections, expectations regarding 2011 operating margins, the expected value of VMware’s product portfolio in efforts by customers to remove complexity from IT infrastructures and implement cloud computing solutions and expectations for newly introduced solutions such as vCenter Operations and Cloud Foundry. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in consumer or information technology spending; (iii) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into the virtualization market, and new product and marketing initiatives by our competitors; (iv) factors that affect timing of license revenue recognition such as product announcements and beta programs; (v) our customers’ ability to develop, and to transition to, new products and computing strategies such as cloud computing and desktop virtualization; (vi) the uncertainty of customer acceptance of emerging technology; (vii) changes in the willingness of customers to enter into longer term licensing and support arrangements; (viii) rapid technological and market changes in virtualization software and platforms for cloud and desktop computing; (ix) changes to product development timelines; (x) VMware’s relationship with EMC Corporation and EMC’s ability to control matters requiring stockholder approval, including the election of VMware’s board members; (xi) our ability to protect our proprietary technology; (xii) our ability to attract and retain highly qualified employees; (xiii) the successful integration of acquired companies and assets into VMware; and (xiv) fluctuating currency exchange rates. These forward looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including our most recent reports on Form 10-K and Form 10-Q and current reports on Form 8-K that we may file from time to time, which could cause actual results to vary from expectations. VMware assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.