VMware Reports First Quarter 2012 Results

- Year-over-Year Revenue Growth of 25% to $1.06 Billion - Operating Margin of 20.6%; Non-GAAP Operating Margin of 32.6% - Trailing Twelve Months Operating Cash Flows Growth of 64% to $2.12 Billion; Free Cash Flows Growth of 53% to $2.07 Billion

PALO ALTO, Calif., April 18, 2012 — VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today announced financial results for the first quarter of 2012:

  • Revenues for the first quarter were $1.06 billion, an increase of 25.1% from the first quarter of 2011, and 24.8% measured in constant currency.
  • Operating income for the first quarter was $217 million, an increase of 41% from the first quarter of 2011. Non-GAAP operating income for the first quarter was $344 million, an increase of 36% from the first quarter of 2011.
  • Net income for the first quarter was $191 million, or $0.44 per diluted share, compared to $126 million, or $0.29 per diluted share, for the first quarter of 2011.   Non-GAAP net income for the quarter was $287 million, or $0.66 per diluted share, compared to $204 million, or $0.48 per diluted share, for the first quarter of 2011. 
  • Trailing twelve months operating cash flows were $2.12 billion, an increase of 64%.  Trailing twelve months free cash flows were $2.07 billion, an increase of 53%.
  • Cash, cash equivalents and short-term investments were $5.22 billion and unearned revenue was $2.81 billion as of March 31, 2012.

U.S. revenues for the first quarter of 2012 grew 21% to $485 million from 2011.  International revenues grew 28% to $570 million from 2011.

License revenues for the first quarter of 2012 were $482 million, an increase of 15% from 2011.  Service revenues, which include software maintenance and professional services, were $573 million for 2012, an increase of 35% from 2011.

“The quarter’s solid performance across our portfolio underscores the value that VMware is providing customers as they work to transform their IT organizations,” said Paul Maritz, chief executive officer, VMware.

“VMware is well positioned for growth as the leader in virtualization and cloud infrastructure,” said Mark Peek, chief financial officer, VMware. “Second quarter 2012 revenues are expected to be in the range of $1.10 and $1.12 billion. Annual 2012 revenues are expected to be in the range of $4.525 and $4.625 billion, an increase of 20% to 23% from 2011, and annual license revenues are expected to grow between 12% and 16%.”

Recent Highlights & Strategic Announcements

  • In January 2012, VMware announced the availability of the VMware vCenter™ Operations Management™ Suite, a comprehensive management portfolio designed to help customers deliver IT as a service by simplifying and automating the operations of virtual and cloud environments.  Updates to the VMware vCenter Operations Management Suite include deeper integration of capacity and configuration management capabilities and new "application awareness" to enable customers to optimize infrastructure operations based on application needs.
  • In February 2012, VMware unveiled at VMware Partner Exchange new solution competencies, programs and rewards designed to help partners guide their customers into the Cloud Era.  The event grew by approximately 20% over 2011, attracting 4,000 IT experts from around the world to hear about the latest virtualization and cloud technology trends and learn hands-on how they can become the trusted advisers that will move customers to the next phase of IT as a service.
  • VMware recently celebrated the anniversary of Cloud Foundry™, the industry’s open platform as a service with announcements of new partnerships, a new system for managing open source software contributions, new tools for operating large-scale services, and additional multi-cloud deployment choices.
  • In April, VMware announced the availability of VMware Accelerate Advisory Services.  Addressing the increasing role IT organizations play in the overall effectiveness of business outcomes, these new strategy consulting services will target C-level executives, introducing a method to help accelerate IT and business transformation and deepen the understanding of how cloud computing can deliver business results.

VMware plans to host a conference call today to review its first quarter 2012 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 60 days.

About VMware

VMware is the leader in virtualization and cloud infrastructure solutions that enable businesses to thrive in the Cloud Era. Customers rely on VMware to help them transform the way they build, deliver and consume Information Technology resources in a manner that is evolutionary and based on their specific needs. With 2011 revenues of $3.77 billion, VMware has more than 350,000 customers and 50,000 partners.  The company is headquartered in Silicon Valley with offices throughout the world and can be found online at www.vmware.com.

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VMware, VMware vCenter Operations 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.”

Forward-Looking Statements

This press release contains forward-looking statements including, among other things, statements regarding VMware’s second quarter and annual revenue and license revenue projections, our expectations for growth and leadership in virtualization and cloud infrastructure, and expected benefits to customers of newly available VMware products and services, such as  the VMware vCenter Operations Management Suite, Cloud Foundry and VMware Accelerate Advisory Services.  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 promotions 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.