In a June 1 call with investors, the company reported another strong quarter, and increased its total revenue forecast for 2018 to $7.61 billion, up from $7.57 billion previously. VMware adopted Dell’s fiscal calendar after Dell finalized its EMC acquisition last year. The move gave Dell a majority stake in VMware.
VMware revenue for the first quarter, which ended May 5, reached $1.74 billion. VMware’s non-GAAP net income for the quarter was $412 million, or $0.99 per diluted share. This is up 15 percent per diluted share compared to $366 million, or $0.86 per diluted share, for the first quarter of 2016.
“We are confident about our outlook and growth opportunities, our strategy is resonating and our execution remains strong,” said VMware CEO Pat Gelsinger, adding that he was “particularly pleased with the volume of expanding strategic partnerships we announced [in the first quarter] in addition to the positive momentum across our portfolio.”
These partnerships— with Google, Microsoft, Amazon Web Services (AWS), and Oracle — also support VMware’s hybrid-cloud strategy, which paid off for the company in the first quarter. Hybrid cloud and software-as-a-service (SaaS) represented more than 9 percent of VMware’s total revenue, and grew over 30 percent year-over-year.
In May, VMware announced that its Horizon Cloud will run on Microsoft Azure. This allows customers to run managed applications and virtual desktops on Microsoft’s public cloud. The service also supports IBM’s public cloud.
Also last month, VMware partnered with Google in an effort to accelerate the adoption of Chromebooks.
Around the same time, VMware and Oracle teamed up to allow customers to manage and secure Oracle’s mobile business applications through VMware AirWatch.
Last October, VMware and AWS announced a joint service that lets customers run their vSphere private clouds from VMware alongside their applications in AWS’s public cloud. The service is called VMware Cloud on AWS. During the investor call, Gelsinger said the service is on track for mid-year delivery.
“Our software defined data center end user computing and hybrid cloud strategy is resonating well and driving increased customer interest across our product offerings,” VMware CFO Zane Rowe said on the earnings call. “Customers are also excited about our upcoming vSphere-based cloud service on AWS. VMware cloud on AWS service will be powered by VMware cloud foundation which includes vSphere, vSAN and NSX.”
NSX Sees ‘Great Momentum’
“NSX continues to see great momentum with large NSX wins across multiple verticals including healthcare, telecom, state, local, and federal governments, Gelsinger said, adding that nine of VMware’s top 10 deals this quarter included NSX. “It continues to be an integral piece of all of our offerings.”
NSX licensed bookings grew over 50 percent, year-over-year, and customer count increased to more than 2,600 total customers, representing 85 percent customer growth.
Security continues to be the top NSX use case and a large driver of sales.
Despite the better-than-expected earnings report, VMware shares dropped in after-hours trading and remained down about 1 percent at noon ET on Friday.
“VMW’s report was not enough given the high expectations following several strong quarters,” wrote BMO Capital Markets Analyst Keith Bachman in a research note. “We thought the results and guidance were good, but not great.”