VMware(US:VMW)2023-06-08 20:04Revenue Growth and Performance - Subscription and SaaS revenue increased by 35% to $1.217 billion in Q1 2024 compared to $899 million in Q1 2023[98] - Total revenue grew 6% to $3.277 billion in Q1 2024 compared to $3.088 billion in Q1 2023[98] - International revenue grew 10% to $1.722 billion in Q1 2024 compared to $1.570 billion in Q1 2023[98] - Annual Recurring Revenue (ARR) for subscription and SaaS reached $4.8 billion as of May 5, 2023, up from $3.7 billion in the same period last year[103] Revenue Decline and Challenges - License revenue decreased by 10% to $517 million in Q1 2024 compared to $572 million in Q1 2023[98] - Software maintenance revenue decreased by 6% to $1.234 billion in Q1 2024 compared to $1.310 billion in Q1 2023[98] - Unearned subscription and SaaS revenue stood at $4.386 billion as of May 5, 2023, slightly down from $4.401 billion as of February 3, 2023[102] - Total backlog decreased to $28 million as of May 5, 2023 from $72 million as of February 3, 2023[109] Cost and Expense Increases - Cost of subscription and SaaS revenue increased by 8% to $202 million in Q1 2024 compared to $187 million in Q1 2023[112] - Cost of services revenue increased by $23 million (7%) to $375 million, driven by $29 million growth in cash-based employee-related expenses[114] - Research and development expenses rose by $72 million (9%) to $847 million, primarily due to $56 million increase in cash-based employee-related expenses[115] - Sales and marketing expenses grew by $50 million (5%) to $1,104 million, mainly from $30 million higher commission costs and merger-related expenses[116] - General and administrative expenses surged by $122 million (49%) to $373 million, largely due to $85 million accrual for patent lawsuit and $52 million merger-related costs[118] - Total expenses increased by 6% to $397 million, representing 26% of services revenue[113] Financial Position and Cash Flow - Cash and cash equivalents increased to $6,548 million, with operating cash flow growing by $744 million to $1,750 million[129][131] - Cash used in investing activities increased by $23 million in Q2 2023 compared to Q2 2022, primarily due to the absence of proceeds from sales of equity securities[132] - Cash used in financing activities decreased by $628 million in Q2 2023 compared to Q2 2022, driven by the absence of a $750 million senior unsecured term loan repayment and suspension of stock repurchase programs[133] - The company repurchased $94 million worth of shares for tax withholdings on restricted stock vesting in Q2 2023[134] Debt and Interest Expenses - The company has $9.2 billion in unsecured senior notes outstanding as of May 5, 2023, with interest payments of $67 million in Q2 2023[135] - The company has a $4.0 billion senior unsecured term loan facility, with an outstanding balance of $1.2 billion as of May 5, 2023 and interest payments of $17 million in Q2 2023[136] - Interest expense rose by $9 million (13%) to $80 million, primarily from higher rates on senior unsecured term loan facility[120] Investment and Income - Investment income increased significantly by $63 million to $64 million, driven by higher yields on cash equivalents[119] Tax and Legal Provisions - Effective income tax rate remained stable at 25.0%, with $75 million income tax provision[124] Strategic and Forward-Looking Statements - The company suspended its stock repurchase program in connection with the Merger Agreement and did not repurchase any common stock after Q1 2023[137] - The company's forward-looking statements include expectations regarding the timing and completion of the proposed transaction with Broadcom, future financial performance, and impacts of corporate transactions[139] - The company's market risk exposures remained unchanged during Q2 2023[142] Revenue from Key Partners - Revenue from Dell accounted for 36% of total revenue, with $1,156 million in reseller revenue and $13 million in internal-use revenue[127] Remaining Performance Obligations - Remaining performance obligations totaled $13.0 billion as of May 5, 2023, with 54% expected to be recognized within the next 12 months[107]