VMware reports third quarter 2016 results

Johannesburg, 02 Nov 2016
Read time 6min 30sec

* Strong portfolio performance results in year-over-year revenue growth of 6% to $1.78 billion
* New VMware cross-cloud architecture and new cloud partnerships announced in the quarter to offer customers the most complete and capable hybrid cloud.

VMware (NYSE: VMW), a leader in cloud infrastructure and business mobility, has announced financial results for the third quarter of 2016:

* Revenue for the third quarter was $1.78 billion, an increase of 6% from the third quarter of 2015.
* Licence revenue for the third quarter was $691 million, an increase of 1% from the third quarter of 2015.
* GAAP net income for the third quarter was $319 million, or $0.75 per diluted share, up 25% per diluted share compared to $256 million, or $0.60 per diluted share, for the third quarter of 2015. Non-GAAP net income for the quarter was $485 million, or $1.14 per diluted share, up 12% per diluted share compared to $433 million, or $1.02 per diluted share, for third quarter of 2015.
* GAAP operating income for the third quarter was $381 million, an increase of 17% from the third quarter of 2015. Non-GAAP operating income for the third quarter was $592 million, an increase of 12% from the third quarter of 2015.
* Operating cash flows for the third quarter were $620 million. Free cash flows for the quarter were $590 million.
* Cash, cash equivalents and short-term investments were $8.25 billion, and unearned revenue was $5.09 billion as of 30 September 2016.
* Total revenue plus sequential change in total unearned revenue grew 13% year-over-year.
* Licence revenue plus sequential change in unearned license revenue grew 9% year-over-year.

"Our very good third-quarter financial results reflect VMware's strength in delivering strategic value to our customers," said Pat Gelsinger, chief executive officer, VMware. "We are helping customers run any application across their private, public and hybrid clouds with our new cross-cloud architecture, the industry's most complete and capable hybrid cloud offering."

Zane Rowe, executive vice president and chief financial officer, VMware, said, "We are pleased with our Q3 financial performance, which exceeded the midpoint of our revenue and operating margin guidance. We continue to broaden our portfolio with a range of products that will drive growth for the company."

Today VMware announced the formation of a new products and cloud services organisation focused on extending VMware's leadership across compute, storage, networking, management and business mobility. Raghu Raghuram and Rajiv Ramaswami will co-lead this new organisation and take on expanded roles as Chief Operating Officers, Products and Cloud Services. Sanjay Poonen is also taking on an expanded role as Chief Operating Officer, Customer Operations responsible for Worldwide Sales and Services, Channels, Marketing, and Global Communications. With these changes, Sumit Dhawan has been promoted to General Manager and Senior Vice President, End-User Computing, replacing Poonen in that role and Jeff Jennings has been promoted to Vice President and General Manager of the Networking and Security BU as Ramaswami moves into his COO role.

The company also announced a transition to the Dell fiscal year beginning on 4 February 2017. The first quarter for fiscal 2018 will begin on 4 February and end on 5 May 2017.

Recent highlights and strategic announcements

* At VMworld 2016, VMware recently hosted over 30 000 customers, partners and influencers in Las Vegas and Barcelona and introduced a wave of new products and services designed to help customers accelerate their digital transformation:
* As an extension of the company's hybrid cloud strategy, VMware unveiled its new Cross-Cloud Architecture, which enables customers to run, manage, connect and secure their applications across clouds and devices in a common operating environment.
* Expanding on VMware's partnership with IBM, the companies announced the availability of industry-first cloud services designed to quickly and easily move enterprise workloads to the cloud. With nearly 1 000 clients engaged, the global partnership between IBM and VMware is helping enterprises extend existing workloads to the public cloud in hours, versus weeks or months.
* VMware unveiled new releases of its industry-leading compute, storage and cloud management solutions to help IT operations teams more efficiently run, manage and secure their traditional and modern applications on- or off-premises. The new releases of VMware vSphere, VMware vSAN and VMware vRealize Automation all will introduce support for containers enabling developers to become more productive and IT to easily run containerised applications in production.
* New services for the Photon Platform will offer an end-to-end enterprise cloud-native infrastructure platform for running modern, containerised applications in production with end-to-end support provided by VMware.
* VMware announced a new endpoint management approach for managing Windows 10, along with advancements to VMware Horizon and VMware Workspace ONE. These innovations will help advance the digital workspace and solve the challenge of supporting an increasingly mobile workforce that demands anytime, anywhere access to all applications from any device.
* Two weeks ago, VMware, the leader in private cloud, and Amazon Web Services, the leader in public cloud, announced a partnership, to provide a new VMware vSphere-based cloud service running on AWS. VMware Cloud on AWS will make it easier to run any application, using a common set of familiar software and tools, in a consistent hybrid cloud environment. This new service will be the primary public cloud solution delivered, sold and supported by VMware.
* At AirWatch Connect, VMware announced additions its enterprise mobility management portfolio:
* To help businesses of any size deliver apps, configure e-mail, WiFi, and get devices up and running quickly, VMware launched AirWatch Express.
* VMware will add the industry's first unified solution for smart glasses management for augmented and mixed reality experiences to its AirWatch portfolio.
* Symantec selected VMware AirWatch to build enhanced endpoint security integrations
* For the seventh consecutive year, VMware was positioned in the Leaders Quadrant of Gartner, 2016 Magic Quadrant for x86 Server Virtualisation Infrastructure(1).
* Earlier this week, VMware released its Global Impact Report for 2015. In this report, VMware expands and elevates its long-standing commitment to driving innovations that contribute to a net positive future and sustainable growth. For example, since 2003 VMware's server virtualisation products have avoided 603 million megawatt hours of power consumption, enough to power 53 million average US households for one year(2).


1. Gartner, Thomas J. Bittman, et al., Magic Quadrant for x86 Server Virtualization Infrastructure, August 3, 2016.
2. IDC Executive Brief, sponsored by VMware, Green IT: Virtualization Delivers Energy and Carbon Emissions Reductions, October 2016.
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VMware, a global leader in cloud infrastructure and business mobility, helps customers accelerate their digital transformation. VMware enables enterprises to master a software-defined approach to business and IT with its Cross-Cloud Architecture and solutions for the data centre, mobility, and security. With 2015 revenue of $6.6 billion, VMware is headquartered in Palo Alto, CA and has over 500 000 customers and 75 000 partners worldwide.

Additional Information

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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."

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