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Vmware Reports Third Quarter 2015 Results

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

- Year-over-Year Revenue Growth of 10% to $1.67 Billion; up 14% on a constant currency basis

- GAAP net income per diluted share of $0.60, up 35% YoY; Non-GAAP net income per diluted share of $1.02, an increase of 18% YoY

PALO ALTO, Calif., October 20, 2015

VMware, Inc. (NYSE: VMW), a leader in cloud infrastructure and business mobility, today announced financial results for the third quarter of 2015:

Revenues for the third quarter were $1.67 billion, an increase of 10% from the third quarter of 2014, or up 14% year-over-year in constant currency.

License revenues for the third quarter were $681 million, an increase of 7% from the third quarter of 2014, or up 11% year-over-year in constant currency.

GAAP net income for the third quarter was $256 million, or $0.60 per diluted share, up 35% per diluted share compared to $194 million, or $0.45 per diluted share, for the third quarter of 2014. Non-GAAP net income for the quarter was $433 million, or $1.02 per diluted share, up 18% per diluted share compared to $377 million, or $0.87 per diluted share, for the third quarter of 2014.

GAAP operating income for the third quarter was $326 million, an increase of 35% from the third quarter of 2014. Non-GAAP operating income for the third quarter was $527 million, an increase of 15% from the third quarter of 2014.

Operating cash flows for the third quarter were $411 million. Free cash flows for the quarter were $321 million.

Cash, cash equivalents and short-term investments were $7.22 billion, and unearned revenues were $4.69 billion as of September 30, 2015.

Total revenues plus sequential change in total unearned revenues grew 3% year-over-year, and grew 8% year-over-year when adjusted for constant currency.

License revenues plus sequential change in unearned license revenues increased 2% year-over-year, and grew 7% year-over-year when adjusted for constant currency.

Our solid third-quarter financial results reflect VMwares strength in delivering extraordinary value to our customers, said Pat Gelsinger, chief executive officer, VMware. We are very optimistic about the long term value to VMware of the Dell and EMC plans to merge and the formation of the Cloud Services Business. VMwares mission and strategy remain unchanged as we continue to deliver extraordinary value to our customers through the power of disruptive innovation.

Consistent with our third-quarter earnings pre-announcement, Im pleased with our overall Q3 results, with total revenue exceeding the high end of our guidance range, said Jonathan Chadwick, chief financial officer, chief operating officer and executive vice president, VMware.

Recent Highlights & Strategic Announcements

Last week, VMware announced preliminary results for Q3 2015 in conjunction with the announcement by Dell and EMC that Dell is intending to acquire EMC, while maintaining VMware as an independent publicly-traded company.

VMware and EMC announced plans to form a new Cloud Services Business, jointly owned 50:50 by EMC and VMware, and offering customers the industrys most comprehensive hybrid cloud portfolio. This new Federation business will bring together vCloud Air, Virtustream, object storage and managed cloud services into one company under the Virtustream brand. The transaction is expected to close in early 2016, and VMware expects to consolidate Virtustreams results into its financial statements beginning in Q1 2016.

At VMworld 2015, VMware recently hosted over 32,000 customers, partners and influencers in San Francisco and Barcelona and announced a wave of new products, services and partner updates designed to help customers transform their businesses and embrace a new model for IT.

VMware announced new public cloud offerings for VMware vCloud Air, including object storage services and a global DNS service. VMware vCloud Air Object Storage is a portfolio of highly-scalable, reliable and cost effective storage services for unstructured data powered by Google Cloud Platform and EMC.

The company announced a major refresh of its Cloud Management Platform including vRealize Automation 7.0 and vRealize Business. Enhancements include the ability to deliver applications with application-centric networking and security across clouds and increased transparency and control over the cost and quality of IT services through a single dashboard.

VMware added to its cloud-native technology portfolio with two new projects designed to meet enterprise IT requirements across security and isolation, service level agreements, data persistence, networking services and management. VMware vSphere Integrated Containers will enable IT teams to run cloud-native applications on-premises and on VMwares public cloud, vCloud Air. The VMware Photon Platform is a platform purpose-built for running Cloud-Native Applications.

In the End-User Computing space, VMware announced support of Windows 10 with AirWatch Enterprise Mobility Management, which will support all the new capabilities introduced in Windows 10. Also announced was Project A2 which promises to be a new Windows management and application delivery technology that combines unified endpoint management and configuration with the ability to seamlessly move existing Windows applications into the new Windows 10 environment. Additionally, the company announced the acquisition of Boxer, a privately held company that offers a comprehensive and secure personal information management (PIM) solution for mobile devices to businesses and consumers.

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 the leader in virtualization and cloud infrastructure solutions that enable businesses to thrive in the Cloud Era. Customers rely on VMware to help them transform the way they build, deliver and consume Information Technology resources in a manner that is evolutionary and based on their specific needs. With 2014 revenues of $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, VMworld, vCloud, vCloud Air, vSphere, Photon Platform, vRealize 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 future growth, the potential long-term value to VMware of both the Dell and EMC merger and the formation of the Cloud Services Business, including with respect to the Cloud Services Business the expected closing timing and the expectation to consolidate the Cloud Services Businesss results into VMwares financial statements, as well as VMware vSphere Integrated Containers, Photon Platform and Project A2 technology previews and offerings. 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...