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VMware (VMW) Earnings, Revenues Beat Estimates in Q4
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VMware, Inc. reported better-than-expected fourth-quarter 2016 results. Adjusted earnings of $1.11 surpassed the Zacks Consensus Estimate of $1.08. Revenues of $2.03 billion also topped the consensus mark of $1.99 billion.
On a year-over-year basis, revenues grew 8.8% driven by its innovative product offerings like NSX, AirWatch , vSphere, vSAN and vCloud Air Networkalong with strategic partnership with the likes of Amazon Web Services.The company’s hybrid cloud and SaaS offerings continued to grow in the fourth quarter and contributed about 8% of the total revenue.
Quarter Details
Revenues from services rose 9.8% year over year to $1.145 billion driven by strength in both its sub-segments.
License revenues increased 7.5% year over year to $887 million.
The company reported non-GAAP operating income of $747 million quarter, an increase of 14% year over year. Non-GAAP operating margin was 36.8%
Other Financial Details
VMware exited the quarter with cash and cash equivalents (including short-term investments) of $7.985 billion compared with $7.509 billion as on Dec 31, 2015. For the fiscal, operating cash flow came in at $2.38 billion and free cash flow was $2.23 billion.
For the quarter, the company reported operating cash flow of $463 million. Free cash flow was $419 million.
Also, the company announced a new share buyback program under which it will repurchase $1.2 billion worth of shares through fiscal 2018.
VMWare provided its guidance for the first quarter and updated its outlook for fiscal 2017.
For first-quarter 2018 the company expects revenues to range between $1.675 billion to $1.725 billion while License revenues are expected in a bracket of $590 million to $620 million. Non-GAAP earnings per share are expected to be in a range of 93 cents to 96 cents per share. Non-GAAP operating margin is expected to be 28.2%.
For the full year, revenues are expected to be $7.570 billion while License revenues are expected to be $2.970 billion, up 6% year over year. Non-GAAP operating margin is expected to be 32.3%. Non GAAP earnings per share are expected to be $4.87. Capex is expected to be $260 million. Operating cash flow and free cash flow for the fiscal are expected to be $2.65 billion and $2.39 billion.
Transition Details
As declared earlier, from Feb 4 onward, VMWare’s calendar will be aligned with Dell’s fiscal 2018 calendar wherein its first quarter will be from Feb 4 to May 5, 2017. The company will report the results of the transition period in the first 10Q of fiscal 2018.The new company called Dell Technologies holds approximately 80% of VMware shares, which were earlier held by its parent EMC.
Our Take
VMware remains one of the leading companies in the virtualization and cloud computing market. The company’s innovative product pipeline and robust international sales are expected to drive overall results. Additionally, the company continues to make strategic acquisitions and ink partnerships with the likes of Amazon.com Inc’s (AMZN - Free Report) , AWS and International Business Machines Corporation (IBM - Free Report) . These will likely drive long-term growth for the company.
Despite these, the company has been seeing weakness in its core business for a while. In order to overcome it, the company is offering newly developed cloud services like vCloud Air and vCloud Air Network along with its offerings like NSX, AirWatch, virtual SAN, and VxRail, which continue to aid the company. The vCloud Air Network revenues witnessed 35% growth, thereby aiding of hybrid cloud and SaaS revenues. However, rising competition from players like Microsoft (MSFT - Free Report) remains a concern.
In the last one year, VMWare has posted a positive return of 87.16% compared with the Zacks Computer Softwareindustry’s gain of 23.41%.
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VMware (VMW) Earnings, Revenues Beat Estimates in Q4
VMware, Inc. reported better-than-expected fourth-quarter 2016 results. Adjusted earnings of $1.11 surpassed the Zacks Consensus Estimate of $1.08. Revenues of $2.03 billion also topped the consensus mark of $1.99 billion.
On a year-over-year basis, revenues grew 8.8% driven by its innovative product offerings like NSX, AirWatch , vSphere, vSAN and vCloud Air Networkalong with strategic partnership with the likes of Amazon Web Services.The company’s hybrid cloud and SaaS offerings continued to grow in the fourth quarter and contributed about 8% of the total revenue.
Quarter Details
Revenues from services rose 9.8% year over year to $1.145 billion driven by strength in both its sub-segments.
License revenues increased 7.5% year over year to $887 million.
The company reported non-GAAP operating income of $747 million quarter, an increase of 14% year over year. Non-GAAP operating margin was 36.8%
Other Financial Details
VMware exited the quarter with cash and cash equivalents (including short-term investments) of $7.985 billion compared with $7.509 billion as on Dec 31, 2015. For the fiscal, operating cash flow came in at $2.38 billion and free cash flow was $2.23 billion.
For the quarter, the company reported operating cash flow of $463 million. Free cash flow was $419 million.
Also, the company announced a new share buyback program under which it will repurchase $1.2 billion worth of shares through fiscal 2018.
Vmware, Inc. Price, Consensus and EPS Surprise
Vmware, Inc. Price, Consensus and EPS Surprise | Vmware, Inc. Quote
Guidance
VMWare provided its guidance for the first quarter and updated its outlook for fiscal 2017.
For first-quarter 2018 the company expects revenues to range between $1.675 billion to $1.725 billion while License revenues are expected in a bracket of $590 million to $620 million. Non-GAAP earnings per share are expected to be in a range of 93 cents to 96 cents per share. Non-GAAP operating margin is expected to be 28.2%.
For the full year, revenues are expected to be $7.570 billion while License revenues are expected to be $2.970 billion, up 6% year over year. Non-GAAP operating margin is expected to be 32.3%. Non GAAP earnings per share are expected to be $4.87. Capex is expected to be $260 million. Operating cash flow and free cash flow for the fiscal are expected to be $2.65 billion and $2.39 billion.
Transition Details
As declared earlier, from Feb 4 onward, VMWare’s calendar will be aligned with Dell’s fiscal 2018 calendar wherein its first quarter will be from Feb 4 to May 5, 2017. The company will report the results of the transition period in the first 10Q of fiscal 2018.The new company called Dell Technologies holds approximately 80% of VMware shares, which were earlier held by its parent EMC.
Our Take
VMware remains one of the leading companies in the virtualization and cloud computing market. The company’s innovative product pipeline and robust international sales are expected to drive overall results. Additionally, the company continues to make strategic acquisitions and ink partnerships with the likes of Amazon.com Inc’s (AMZN - Free Report) , AWS and International Business Machines Corporation (IBM - Free Report) . These will likely drive long-term growth for the company.
Despite these, the company has been seeing weakness in its core business for a while. In order to overcome it, the company is offering newly developed cloud services like vCloud Air and vCloud Air Network along with its offerings like NSX, AirWatch, virtual SAN, and VxRail, which continue to aid the company. The vCloud Air Network revenues witnessed 35% growth, thereby aiding of hybrid cloud and SaaS revenues. However, rising competition from players like Microsoft (MSFT - Free Report) remains a concern.
In the last one year, VMWare has posted a positive return of 87.16% compared with the Zacks Computer Software industry’s gain of 23.41%.
Currently, VMWare has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>