VMware Reports Second Quarter 2012 Results

VMware News Releases

VMware Reports Second Quarter 2012 Results

- Year-over-Year Revenue Growth of 22% to $1.12 Billion

- Operating Margin of 18.9%; Non-GAAP Operating Margin of 31.9%

- Trailing Twelve Months Operating Cash Flows Growth of 33% to $2.05 Billion; Free Cash Flows Growth of 29% to $2.01 Billion

Supplemental Financial Tables

Non-GAAP Financial Measures

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

• Revenues for the second quarter were $1.12 billion, an increase of 22% from the second quarter of 2011, and 23% measured in constant currency.
• Operating income for the second quarter was $212 million, an increase of 13% from the second quarter of 2011. Non-GAAP operating income for the second quarter was $358 million, an increase of 23% from the second quarter of 2011.
• Net income for the second quarter was $192 million, or $0.44 per diluted share, compared to $220 million, or $0.51 per diluted share, for the second quarter of 2011.   Non-GAAP net income for the quarter was $296 million, or $0.68 per diluted share, compared to $235 million, or $0.55 per diluted share, for the second quarter of 2011. 
• Trailing twelve months operating cash flows were $2.05 billion, an increase of 33%.  Trailing twelve months free cash flows were $2.01 billion, an increase of 29%.
• Cash, cash equivalents and short-term investments were $5.3 billion and unearned revenue was $2.9 billion as of June 30, 2012.

U.S. revenues for the second quarter of 2012 grew 22% to $551 million from 2011.  International revenues grew 22% to $572 million from 2011.

License revenues for the second quarter of 2012 were $517 million, an increase of 11% from 2011.  Service revenues, which include software maintenance and professional services, were $606 million for 2012, an increase of 33% from 2011. 

“The quarter’s strong performance reflects the continued confidence customers have in our solutions,” said Paul Maritz, chief executive officer, VMware.  “Our products, amplified by the recent acquisitions, including Nicira, are providing the means for our customers to transform IT as we move into the Cloud Era.”

“We are very pleased with our second quarter results,” said Carl Eschenbach, chief operating officer, VMware. “Despite the tough market conditions, we achieved record quarterly results in total revenue, license revenue, and non-GAAP operating income.  Third quarter 2012 revenues are expected to be in the range of $1.11 and $1.15 billion.  Annual 2012 revenues are expected to be in the range of $4.540 and $4.635 billion, an increase of 20.5% to 23.0% from 2011.  Annual license revenues are expected to grow between 11% and 15%.”

Recent Highlights & Strategic Announcements

• Today, July 23, 2012 VMware announced the acquisition of Nicira, Inc., a pioneer in software-defined networking and a leader in network virtualization for open source initiatives.  VMware will acquire Nicira for approximately $1.05 billion in cash plus approximately $210 million of assumed unvested equity awards. The acquisition is a key part of VMware’s vision for delivering the software-defined datacenter. 
• In June 2012, VMware announced that it has been positioned by Gartner, Inc. in the Leaders Quadrant of the 2012 Magic Quadrant for x86 Server Virtualization Infrastructure.  According to Gartner*, “The x86 server virtualization infrastructure market is the foundation for two extremely important market trends that relate and overlap: infrastructure modernization and cloud computing. …Virtualization is a fundamental enabler to IaaS, and will be used to establish private cloud services, public cloud services and interoperable hybrid cloud services.”
• Recent product announcements included: VMware vFabric™ Suite 5.1, featuring new capabilities that automate the deployment and management of complex applications on VMware cloud infrastructure and the introduction of an in-memory distributed SQL database.  VMware View™ 5.1 and an updated portfolio of end-user computing solutions, including Horizon Application Manager™ 1.5 and VMware Project Octopus Beta, that will help IT organizations empower a more agile, productive and connected enterprise.
• Recently, VMware closed two acquisitions: DynamicOps, a provider of cloud automation solutions that enable provisioning and management of IT services across heterogeneous environments including VMware-based private and public clouds, physical infrastructures, multiple hypervisors and Amazon Web Services, and Wanova, a leading provider of physical desktop management solutions. With Wanova, VMware now offers leading solutions for centralized image management of both physical and virtual desktops. 

VMware plans to host a conference call today to review its second 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 athttp://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. 

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