VMware Reports Fourth Quarter and Full Year 2011 Results

- Annual Revenue Growth of 32% to $3.77 Billion with Fourth Quarter Year-over-Year Growth of 27% to $1.06 Billion

- Annual Operating Margin of 19.5%; Non-GAAP Operating Margin of 31.0%.  Fourth Quarter Operating Margin of 20.2%; Non-GAAP Operating Margin of 31.9% 

- Trailing Twelve Months Operating Cash Flows Growth of 72% to $2.03 Billion; Free Cash Flows Growth of 62% to $1.95 Billion

PALO ALTO, Calif., January 23, 2012 — VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today announced financial results for the fourth quarter and full year of 2011:

  • Revenues for the fourth quarter were $1.06 billion, an increase of 27% from the fourth quarter of 2010, and an increase of 26% measured in constant currency. 
  • Operating income for the fourth quarter was $214 million, an increase of 64% from the fourth quarter of 2010. Non-GAAP operating income for the fourth quarter was $338 million, an increase of 37% from the fourth quarter of 2010.
  • Net income for the fourth quarter was $200 million, or $0.46 per diluted share, compared to $120 million, or $0.28 per diluted share, for the fourth quarter of 2010.   Non-GAAP net income for the quarter was $266 million, or $0.62 per diluted share, compared to $198 million, or $0.46 per diluted share, for the fourth quarter of 2010. 
  • Operating cash flows for the fourth quarter were $561 million, an increase of 38% from the fourth quarter of 2010.  Free cash flows for the quarter were $535 million, an increase of 32% from the fourth quarter of 2010.
  • Revenues for 2011 were $3.77 billion, an increase of 32% from 2010.
  • Operating income for 2011 was $735 million, an increase of 72% from 2010. Non-GAAP operating income for 2011 was $1.17 billion, an increase of 43% from 2010.
  • Net income for 2011 was $724 million, or $1.68 per diluted share, compared to $357 million, or $0.84 per diluted share, for 2010.   Non-GAAP net income for 2011 was $936 million, or $2.17 per diluted share, compared to $639 million, or $1.51 per diluted share, for 2010. 
  • Operating cash flows for 2011 were $2.03 billion, an increase of 72% and free cash flows for the year were $1.95 billion, an increase of 62% from 2010. 
  • Cash, cash equivalents and short-term investments were $4.51 billion and unearned revenue was $2.71 billion as of December 31, 2011.

U.S. revenues for 2011 grew 26% to $1.82 billion from 2010.  International revenues grew 38% to $1.94 billion from 2010.

License revenues for 2011 were $1.84 billion, an increase of 31% from 2010.  Service revenues, which include software maintenance and professional services, were $1.93 billion for 2011, an increase of 32% from 2010.

"The quarter's strong performance further signals that virtualization is the foundation for simplifying and automating IT," said Paul Maritz, chief executive officer, VMware.  "As customers continue to drive significant IT transformation, our task remains in providing solutions that go beyond cost reduction, yielding business and competitive value."

"We are pleased with our record fourth quarter results," said Mark Peek, chief financial officer, VMware.  "Our investments over the years have clearly paid off and we will continue to take advantage of long-term opportunities ahead.  First quarter 2012 revenues are expected to be in the range of $1.015 and $1.040 billion, an increase of 20% to 23% from the first quarter 2011.  Annual 2012 revenues are expected to be in the range of $4.475 and $4.6 billion, an increase of 19% to 22% from 2011, and annual license revenues are expected to grow between 11% and 16%."

Recent Highlights & Strategic Announcements

  • In October 2011, VMware unveiled three product suites designed to simplify and automate IT management. With significant enhancements to VMware® vCenter Operations™ and the introduction of new VMware® vFabric Application Management™ and VMware® IT Business Management suites, VMware will help customers amplify the value of their virtual environments and achieve the agility and economics of cloud computing. 
  • VMware announced VMware vCenter™ Protect Essentials Plus™, a complete on-premise management system designed to meet the needs of the small and midsize businesses (SMBs) and enhancements to its VMware Go Pro™ service, simplifying IT management for SMBs. 
  • VMware announced VMware® Horizon Mobile, a simple way for IT departments to securely provision, manage and de-provision a corporate mobile workspace to an employee’s Android device over-the-air, while enabling the employee to retain the privacy and control of their personal mobile environments.  VMware Horizon Mobile is expected to be available in early 2012.
  • In December 2011, VMware announced new VMware View™ Clients for Kindle Fire, Mac and Linux, along with updates to its popular VMware View Clients for Android and iPad.  The new VMware View Clients for Mac and Linux enable IT organizations to empower more agile, productive and connected workforce or school communities by providing an easy-to-access, high-fidelity desktop virtualization experience optimized for the device of their choice.  The new VMware View™ Clients for Mac and Linux are expected to be available in early 2012.

VMware plans to host a conference call today to review its fourth quarter and 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 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 300,000 customers and 25,000 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, VMware vFabric Application Management, VMware vCenter Protect Essentials Plus, VMware View and VMware Go Pro 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 expected first quarter and annual 2012 revenues and annual 2012 license revenue growth, the expected transformation of IT and the role and value proposition of virtualization and VMware solutions in the IT transformation, our ability to take advantage of long-term opportunities, the value to customers and the prospect of customer adoption of our new product suites, and the expected features and benefits and availability of VMware Horizon Mobile and VMware View Clients for Mac and Linux.  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 and cloud computing markets, and new product and marketing initiatives by our competitors; (iv) factors that affect timing of license revenue recognition such as product announcements, beta programs and product promotions that can cause revenue recognition of certain orders to be deferred; (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.