VMware posts solid Q2 results, despite DoJ fiasco

The virtualisation giant keeps investors ticking over with a solid set of results

VMware posted a solid set of second-quarter results on Tuesday, beating analysts’ expectations by a hair.

The virtualisation giant reported non-GAAP earnings of 93 cents per share on revenues of $1.6bn, a 10% year over year increase. Net income stood at $172m or 40 cents per share. Wall Street was expecting earnings of $.91 per share on 1.59bn in revenue.

GAAP revenue took a knock due to a settlement with the Department of Justice and the General Service Administration, to the tune of $75.5m, which was paid in cash in Q2. The Department of Justice accused VMware and government contractor Carahsoft Technology Corporation of violating the Fair Claims Act and overcharging the federal government. VMware steadfastly denies any wrongdoing, but agreed to stump up the cash to avoid protracted litigation.

“Our second quarter results are solid, building on our solid start to the year in Q1," said Pat Gelsinger, chief executive officer, VMware. "We experienced strong industry validation from industry analysts, partners and customers throughout the quarter and also unveiled our Business Mobility strategy and key announcements enabling organizations to transform their business processes."

VMware is the latest in a long line of global tech companies to turn to the more favourable constant currency formulas, in order to negate the effects of the strong US dollar; however, the reported numbers by themselves were still enough to keep investors from getting antsy.

Shares were up 81 cents, or 1%, following the release of the report and the tech giant is currently trading at around $87.45.

"We're pleased with our Q2 non-GAAP total revenues growth of 13% on a constant currency basis," said Jonathan Chadwick, chief financial officer and chief operating officer, VMware. "We continue to expand our portfolio to deliver new technologies, solutions and transformational opportunities to our customers."

MicroScope recently sat down with the director of VMware's Partner Organisation for UK and Ireland, Phil Croxford, to discuss how the virtualization kingpin is getting on with EVO:RAIL (to be published tomorrow).

Interestingly, the hyperconverged framework didn't even get a mention in the results. Until recently, customers needed to buy new vSphere licenses with their EVO:RAIL appliance, regardless of whether or not they already had licenses.

There was a lot of noise coming from competitors, the channel and customers. Since then, VMware has changed its position and customers can now apply existing licenses obtained from Enterprise Licensing Agreements (ELAs), OEM partners or other resale channels to their EVO:RAIL appliance. Analysts are in general agreement that the little mishap stunted initial growth of the whole EVO:RAIL ecosystem.

It will be interesting to see if - in Q3 - Pat et al choose to divulge some hard figures on the EVO family.

It did give some details on license revenues, which stood at $638m, up 4% year-over-year, or 9% when adjusted for constant currency.

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