VMware(US:VMW)2021-11-24 02:24Financial Performance - VMware reported Q3 fiscal year 2022 revenue of $3.2 billion, with non-GAAP earnings of $1.72 per diluted share, exceeding expectations [7][19] - Combined subscription and SaaS and license revenue grew 16% year-over-year to $1.5 billion, with subscription and SaaS revenue of $820 million up 21% year-over-year [19][20] - Non-GAAP operating income for the quarter was $935 million, with a non-GAAP operating margin of 29.3% [20] - The company ended the quarter with $10.2 billion in unearned revenue and $12.5 billion in cash, cash equivalents, and short-term investments [20][21] Business Lines Performance - Subscription and SaaS ARR reached $3.3 billion, up 25% year-over-year, with strong contributions from VCPP, Tanzu, EUC, Carbon Black, and VMware Cloud on AWS [19][20] - License revenue grew 11% year-over-year to $710 million, with core SDDC product bookings increasing over 20% year-over-year [19][22] - VMware Cloud services saw momentum, particularly with hyperscalers like Amazon, Microsoft, Google, and Oracle [22] Market Data - VMware was ranked number one in the IDC report for Cloud System and Service Management Software Market Shares [13] - The company received recognition as a leader in the Gartner Magic Quadrant for Unified Endpoint Management Tools and WAN Edge Infrastructure [15] Company Strategy and Industry Competition - VMware aims to be a leader in multi-cloud solutions, focusing on delivering a cloud-native app platform, migrating enterprise applications, and building secure edge solutions [8][12] - The company is enhancing its product offerings, including the introduction of Project Arctic and VMware Sovereign Cloud initiative [11][12] - VMware's strategy includes tailoring go-to-market programs and sales incentives to drive subscription and SaaS growth [35] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the company's multi-cloud strategy and its ability to leverage partnerships for growth [27] - The company anticipates total revenue for fiscal 2022 to reach $12.83 billion, with a growth rate of approximately 9% year-over-year [24] - For Q4, VMware expects total revenue of $3.51 billion, reflecting a growth rate of approximately 7% year-over-year [25] Other Important Information - VMware completed a special dividend of $11.5 billion in conjunction with its spin-off from Dell Technologies [21] - The company repurchased approximately 1 million shares at an average price of $150 per share [23] Q&A Session Summary Question: License revenue performance and subscription trends - Management noted that license revenue was stronger than expected, while subscription and SaaS performance was in line with expectations, with a healthy year-over-year increase in ARR [30][32] Question: Partner ecosystem excitement post-spin-off - Management observed excitement among partners, with some planning to increase VMware-certified personnel and engage in co-marketing efforts [38][39] Question: Impact of term licenses on revenue - Approximately 13.5% of license revenue came from term licenses, which are seen as a bridge to subscription and SaaS offerings [49] Question: Adoption of vSphere 7 with Tanzu - Management reported successful adoption of vSphere 7, with customers appreciating the ability to run containers natively [52][54] Question: Impact of hardware supply shortages - Management indicated that while chip shortages are affecting the economy, VMware has not seen significant impacts on its business due to its software-centric model [58] Question: Guidance for Q4 and fiscal year-end - Management expressed optimism about Q4, noting strong demand and execution, while acknowledging that some deals may have landed in Q3 [64]