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Vmware Reports First Quarter 2016 Results

The following excerpt is from the company's SEC filing.

- Year-over-Year Revenue Growth of 5% to $1.59 Billion

- Board authorizes share repurchase of up to $1.2 billion in 2016

VMware, Inc. (NYSE: VMW), a leader in cloud infrastructure and business mobility, today announced financial results for the first quarter of 2016:

Revenues for the first quarter were $1.59 billion, an increase of 5% from the first quarter of 2015, or up 6% year-over-year in constant currency.

License revenues for the first quarter were $572 million, a decrease of 1% from the first quarter of 2015, or up 1% year-over-year in constant currency.

GAAP net income for the first quarter was $161 million, or $0.38 per diluted share, down 17% per diluted share compared to $196 million, or $0.45 per diluted share, for the first quarter of 2015. Non-GAAP net income for the quarter was $366 million, or $0.86 per diluted share, flat per diluted share compared to $369 million, or $0.86 per diluted share, for the first quarter of 2015.

GAAP operating income for the first quarter was $192 million, a decrease of 12% from the first quarter of 2015. Non-GAAP operating income for the first quarter was $446 million, a decrease of 1% from the first quarter of 2015.

Operating cash flows for the first quarter were $720 million. Free cash flows for the quarter were $679 million.

Cash, cash equivalents and short-term investments were $8.25 billion, and unearned revenues were $4.98 billion as of March 31, 2016.

Total revenues plus sequential change in total unearned revenues grew 5% year-over-year, and grew 6% year-over-year when adjusted for constant currency.

License revenues plus sequential change in unearned license revenues grew 1% year-over-year, and grew 2% year-over-year when adjusted for constant currency.

VMware announced that its Board of Directors has authorized VMware to repurchase up to an aggregate of $1.2 billion of its Class A common stock through December 31, 2016 in the open market, subject to market conditions. VMware plans to repurchase $1.2 billion of its Class A common stock in 2016.

Q1 was a good start to 2016. We made solid progress with our strategic goal of building momentum for our newer growth businesses and in the cloud, said Pat Gelsinger, chief executive officer, VMware. We continue to see momentum across our portfolio of growth products and businesses, including NSX, Virtual SAN and End-User Computing.

Im pleased with the teams ability to execute according to our Q1 plan, commented Zane Rowe, executive vice president and chief financial officer, VMware. Our intent to repurchase $1.2 billion of stock this year underscores the confidence we have in the business and reinforces our capital allocation strategy, which includes returning capital to shareholders.

Recent Highlights & Strategic Announcements

In February, as part of VMwares strategy to help customers extend their private cloud into the public cloud, VMware and IBM announced a strategic partnership designed to enable enterprise customers to easily extend their existing workloads from their on-premises software-defined data center to the cloud. Customers will be able to leverage VMwares proven technologies with IBMs growing footprint of 45 Cloud Data Centers worldwide to help them scale globally and manage their data locally and securely.

The company launched VMware Workspace ONE, a new platform designed to deliver a digital workspace that integrates device management, application delivery and identity management technologies. These combined benefits, on a single mobile platform, enable secure management and delivery of business critical resources to employees for corporate IT, and consumer simple access for end-users.

VMware advanced its cloud management platform with the introduction of VMware vRealize Suite 7. The suites new product updates, together with pricing and packaging enhancements, are designed to help customers readily address the most common use cases VMware has identified in customers journey to the cloud.

In CEO Pat Gelsingers keynote at RSA, VMware demonstrated a technical preview of Distributed Network Encryption, powered by NSX. This is a unique new technology which enables the encryption of data and applications across clouds.

For the second year in a row, VMware has ranked on Fortune magazines list of 100 Best Companies to Work for in the U.S., competing among hundreds of companies for the honor. VMware was also highlighted as No. 8 of companies located in the San Francisco Bay Area, and No. 7 of information technology companies.

VMware continues to rapidly evolve its hyper-converged software with VMware Virtual SAN 6.2, the fourth-generation of VMwares simple, enterprise-grade native storage for vSphere. The new features will help customers to achieve a more cost-efficient performance, improve support for any application and accelerate time-to-value.

At Mobile World Congress, IBM, JAMF, MobileIron and AirWatch announced the formation of the AppConfig Community. With more than 60 member companies, the Communitys mission is to establish a common approach for enterprise app configuration and security based on OS native standards, including the extensive frameworks available in iOS.

VMware was positioned as a Leader in both The Forrester Wave: Hybrid Cloud Management Solutions, Q1 2016 and The Forrester Wave: Private Cloud Software Suites, Q1 2016. According to Forresters reports, VMware achieved the highest score for cloud operations amongst the 11 hybrid cloud management vendors evaluated and the highest score for current offerings amongst the nine private cloud vendors evaluated.

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

. Slides will accompany the web broadcast. The replay of the webcast and slides will be available on the website for two months. In addition, six quarters of historical data for revenues which include year over year comparisons will also be made available at

in conjunction with the conference call.

About VMware

VMware is a global leader in cloud infrastructure and business mobility. Built on VMwares industry-leading virtualization technology, our solutions deliver a brave new model of IT that is fluid, instant and more secure. Customers can innovate faster by rapidly developing, automatically delivering and more safely consuming any application. With 2015 revenues of $6.6 billion, VMware has more than 500,000 customers and 75,000 partners. The company is headquartered in Silicon Valley with offices throughout the world and can be found online at

Additional Information

VMwares website is located at, and its investor relations website is located at VMwares 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, Workspace ONE, vRealize Suite, NSX, Virtual SAN, vSphere, and AirWatch, are registered trademarks or trademarks of VMware or its subsidiaries 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 VMwares 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 VMwares plans to repurchase its Class A common stock and its impact on its capital allocation strategy, continuing growth and momentum across VMwares portfolio of growth products and businesses, the growing availability of VMware technologies on IBMs cloud data centers and the expected benefits of the VMware/IBM partnership, VMware Workspace ONE, VMware vRealize Suite 7, VMware Virtual SAN 6.2 and the the AppConfig Community approach for customers. 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; (iii) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into the virtualization software and cloud, end user and mobile computing industries, and new product and marketing initiatives by VMwares competitors; (iv) VMwares customers ability to transition to new products and computing strategies such as cloud computing, desktop virtualization and the software defined data center; (v) the uncertainty of customer acceptance of emerging technology; (vi) changes in the willingness of customers to enter into longer term...