VMware Reports Third Quarter 2011 Results
- Year-over-Year Revenue Growth of 32% to $942 Million
- Operating Margin of 19.2%; Non-GAAP Operating Margin of 30.3%
- EPS Growth of 105% to $0.41; Non-GAAP EPS Growth of 36% to $0.53
- Trailing Twelve Months Operating Cash Flows Growth of 78% to $1.9 Billion; Free Cash Flows Growth of 72% to $1.8 Billion
PALO ALTO, Calif., October 17, 2011 —VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today announced financial results for the third quarter of 2011:
- Revenues for the third quarter were $942 million, an increase of 32% from the third quarter of 2010, and an increase of 30% measured in constant currency.
- Operating income for the third quarter was $181 million. Non-GAAP operating income for the third quarter was $285 million, an increase of 40% from the third quarter of 2010.
- Net income for the third quarter was $178 million, or $0.41 per diluted share, compared to $85 million, or $0.20 per diluted share, for the third quarter of 2010. Non-GAAP net income for the quarter was $230 million, or $0.53 per diluted share, compared to $165 million, or $0.39 per diluted share, for the third quarter of 2010.
- Operating cash flows for the third quarter were $524 million. Free cash flows for the quarter were $494 million, an increase of 108% from the third quarter of 2010.
- Trailing twelve months operating cash flows were $1.9 billion, an increase of 78%. Trailing twelve months free cash flows were $1.8 billion, an increase of 72%.
- Cash, cash equivalents and short-term investments were $4.0 billion and unearned revenue was $2.2 billion as of September 30, 2011.
U.S. revenues for the third quarter of 2011 grew 22% to $443 million from the third quarter of 2010. International revenues grew 42% to $498 million from the third quarter of 2010, and 37% in constant currency.
License revenues for the third quarter of 2011 were $444 million, an increase of 29% from the third quarter of 2010, and an increase of 25% measured in constant currency. Service revenues, which include software maintenance and professional services, were $498 million for the third quarter of 2011, an increase of 34% from the third quarter of 2010.
"VMware's third quarter results were driven by growth across all products. Demand was especially strong in the Asia Pacific markets and we also experienced the seasonal impact of sales to the US Federal Government," said Mark Peek, chief financial officer. "Fourth quarter 2011 revenues are expected to be in the range of $1.03 billion and $1.06 billion, a year-over-year increase of 23% to 27%."
"I'm pleased with another solid quarter for VMware illustrated by progress with new products, growth across our portfolio and a growing community. We are becoming a significant partner to businesses moving to the cloud," said Paul Maritz, chief executive officer.
Recent Highlights & Strategic Announcements
- During the third quarter, VMware announced the industry’s first cloud infrastructure suite and the general availability of VMware vSphere® 5, delivering nearly 200 new and enhanced capabilities to help customers transform IT by driving greater efficiency from existing investments and improving operational agility.
- In August 2011 at VMworld® Las Vegas, VMware announced a portfolio of new and emerging products to provide customers a cohesive path to IT as a Service. VMware announced a simple way to help organizations break free from device-centric legacy desktop models and work in the post-PC era. VMware View™ 5 simplifies IT manageability and control, while providing a high fidelity desktop virtualization experience. Updates to VMware Horizon™ will provide an open, user-centric platform for delivery of different application types within a unified application catalog from a wide range of devices.
- VMware announced a new enterprise database as a service platform accelerating development while automating administration of heterogeneous database technologies. VMware vFabric Data Director™ establishes a policy driven model for driving consistent security, data protection and resource consumption across an enterprise's database portfolio. VMware vFabric Postgres, the first database supported on Data Director, dynamically adapts to changing workloads to achieve greater memory efficiency and higher consolidation ratios.
- VMware announced the beta availability of VMware Micro Cloud Foundry™ as a free download. Cloud Foundry is the industry’s first open Platform as a Service (PaaS) solution, designed to deliver access to modern, high productivity frameworks and a rich ecosystem of application services from VMware, third parties and the open source community.
VMware plans to host a conference call today to review its third 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 at VMware’s Investor Relation’s page 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 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 2010 revenues of $2.9 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 vSphere, VMware View, VMworld, VMware vFabric Data Director and VMware Micro 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 expected fourth quarter revenues, the features and benefits of VMware vCloud Connector, VMware Horizon, and VMware Micro Cloud Foundry and the role of VMware products and services in customer adoption of cloud computing and the transition to the post-PC era. 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.