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VMware Reports Third Quarter 2013 Results

 

VMware Reports Third Quarter 2013 Results

 

- Year-over-Year Revenue Growth of 14% to $1.29 Billion

- Year-over-Year Revenue Growth of 19% excluding GoPivotal and divestitures in 2013 1

- GAAP Operating Margin of 22.4%; Non-GAAP Operating Margin of 33.9%

- GAAP EPS of $0.60; Non-GAAP EPS of $0.84, an increase of 20% year over year

 

Supplemental Financial Tables
Non-GAAP Financial Measures

PALO ALTO, Calif., October 21, 2013 — VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today announced financial results for the third quarter of 2013:

  • Revenues for the third quarter were $1.29 billion, an increase of 14% from the third quarter of 2012.  Excluding revenues attributable to GoPivotal and all divestitures that occurred in 2013, revenues for the third quarter increased 19% from the third quarter of 2012.1
    Operating income for the third quarter was $287 million, an increase of 51% from the third quarter of 2012. Non-GAAP operating income for the third quarter was $436 million, an increase of 19% from the third quarter of 2012.
  • Net income for the third quarter was $261 million, or $0.60 per diluted share, up 67% per diluted share compared to $157 million, or $0.36 per diluted share, for the third quarter of 2012. Non-GAAP net income for the quarter was $363 million, or $0.84 per diluted share, up 20% per diluted share compared to $303 million, or $0.70 per diluted share, for the third quarter of 2012.
  • Operating cash flows for the third quarter were $637 million, an increase of 46% from the third quarter of 2012.  Free cash flows for the quarter were $543 million, an increase of 50% from the third quarter of 2012.
  • Cash, cash equivalents and short-term investments were $5.84 billion, and unearned revenues were $3.64 billion as of September 30, 2013.

“VMware continues to build momentum globally, because we are uniquely positioned to help our customers transform to the mobile-cloud era of computing,” said Pat Gelsinger, chief executive officer, VMware.  “Customers are making long-term commitments to VMware to help them liberate resources from their current environments and power their businesses into the future.” 

“We are very pleased with our third quarter performance, meeting or exceeding all of our key goals for the quarter,” said Jonathan Chadwick, chief financial officer, VMware. “2013 continues to play out according to the plan we shared at the beginning of the year. We are seeing strong customer demand for new solutions such as the software-defined data center, and I’m excited about our prospects for the remainder of 2013 and beyond.”

As indicated in the financial results news release for the second quarter of 2013, VMware will provide forward-looking guidance in connection with this quarterly earnings announcement on its quarterly earnings conference call.

EDITOR'S NOTE: This press release was updated on November 7, 2013 from the version initially released and distributed on October 21, 2013 in order to correct two entries in the Consolidated Statement of Cash Flows for the three months ended September 30, 2013.  For further details, please see the Consolidated Statement of Cash Flows included below in this press release."

Recent Highlights & Strategic Announcements

  • At VMworld® 2013, VMware announced a wave of new products and services designed to extend the power of virtualization to the entire data center, including networking, storage and management, through its software-defined data center architecture (SDDC). VMworld 2013 and VMworld 2013 Europe set a new record with a combined total of over 31,000 registered attendees enjoying demos of newly-introduced technology, including VMware NSX™, VMware vSAN™, VMware vCloud® Suite 5.5, VMware vSphere® with Operations Management™ 5.5 and new cloud management solutions.
  • VMware announced the U.S. availability of the new VMware vCloud® Hybrid Service™ and added two additional U.S. data center locations, enabling customers to seamlessly extend their data center to the public cloud. VMware also announced that the service will be available in the U.K. in the first quarter of 2014, demonstrating VMware’s commitment to expand its hybrid cloud service into Europe and provide customers with the fastest, most reliable, and most compatible path to the cloud. New capabilities make it easy for customers to bring existing and new cloud-native applications to the public cloud and to extend their existing management tools.
  • VMware acquired Desktone, Inc., a privately held company that pioneered Desktop as a Service (DaaS) with an advanced multi-tenant desktop virtualization platform for delivering Windows desktops and applications as a cloud service to any user, anywhere, on any device.
  • VMware continues to attract diverse and talented new leaders to the company, including three new executive appointments during its third quarter: Sanjay Poonen, executive vice president and general manager of VMware’s End-User Computing business; Tony Scott, senior vice president and chief information officer; and Sanjay Mirchandani, senior vice president and general manager, VMware Asia Pacific & Japan.

The company will host a conference call today at 2:00 p.m. PT/ 5:00 p.m. ET to review financial results and business outlook. A live web broadcast of the event will be available on the VMware investor relations website at http://ir.vmware.com. Slides will accompany the web broadcast. The replay of the webcast and slides will be available on the website for two months. In addition, seven quarters of historical data for revenues and unearned revenues, excluding revenues generated each period by the products and services contributed to GoPivotal on April 1, 2013 and the products and services associated with the divestures that occurred in 2013, will also be made available at http://ir.vmware.com in conjunction with the conference call. 

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1Comparative growth percentages exclude revenues in each period attributable to the products and services contributed to GoPivotal, Inc. and the products and services associated with divestitures consummated by VMware in 2013.

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 2012 revenues of $4.61 billion, VMware has more than 500,000 customers and 55,000 partners.  The company is headquartered in Silicon Valley with offices throughout the world and can be found online at www.vmware.com.

Additional Information

VMware’s website is located at www.vmware.com, and its investor relations website is located at http://ir.vmware.com. VMware’s goal is to maintain the investor relations website as a portal through which investors can easily find or navigate to pertinent information about VMware, all of which is made available free of charge. The additional information includes materials that VMware files with the SEC; announcements of investor conferences and events at which its executives talk about its products, services and competitive strategies; webcasts of its quarterly earnings calls, investor conferences and events (archives of which are also available for a limited time); additional information on its financial metrics, including reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures; press releases on quarterly earnings, product and service announcements, legal developments and international news; corporate governance information; and other news, blogs and announcements that VMware may post from time to time that investors may find useful or interesting.

VMware, VMworld, NSX, VMware vSAN, vCloud, vCloud Hybrid Service, vSphere, and vSphere with Operations Management are registered trademarks or trademarks of VMware, Inc. in the United States and other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective organizations.

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 expectations for the transformation to a new era of computing, VMware’s continuing momentum, VMware’s prospects for the remainder of 2013 and beyond, the future availability of announced products and services and their benefits to customers, long-term customer commitments to VMware, and the planned expansion of the VMware vCloud Hybrid Service. 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, government, and information technology spending, including any residual impact of the partial U.S. federal government shutdown in October 2013; (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 VMware’s competitors; (iv) factors that affect timing of license revenue recognition such as product announcements and promotions and beta programs; (v) customers’ ability to develop, and to transition to, new products and computing strategies such as cloud computing, desktop virtualization and the software-defined data center; (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, end user, and mobile computing; (ix) changes to product development time lines; (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) VMware’s ability to protect its proprietary technology; (xii) VMware’s 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 VMware’s 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.