VMware’s financial results for the fourth quarter and full year of 2016 marked improvements compared to the previous year.
Revenue for the fourth quarter was $2.03 billion, an increase of 9 percent from the fourth quarter of 2015. Non-GAAP net income for the quarter was $597 million, or $1.43 per share, up 13 percent per share compared to $534 million, or $1.26 per share, for the fourth quarter of 2015.
Revenue for the full year of 2016 was $7.09 billion, an increase of 7 percent on a non-GAAP basis. Non-GAAP net income for 2016 was $1.86 billion, or $4.39 per share, up 8 percent per share compared to $1.73 billion, or $4.06 per share, for 2015.
“Q4 closed out a strong fiscal 2016 and was one of the most balanced quarters for VMware in years,” said VMware CEO Pat Gelsinger. “We’re very pleased with our strong product momentum and customer enthusiasm for our cloud strategy.”
Working with Public Cloud
Aside from the good earnings, Gelsinger was bullish on the company’s cloud opportunities and especially its Cross-Cloud strategy announced in August 2016 and its recent partnership with Amazon Web Services (AWS).
Its Cross-Cloud enables its private cloud customers to also manage and secure applications running across public clouds, including AWS, Azure, and IBM Cloud. And its service VMware on AWS is a joint offering that lets customers run their vSphere private clouds alongside their applications in AWS’s public cloud.
“The development of Cross-Cloud and VMware on AWS are both proceeding,” he said. “We’re putting lighthouse customers on AWS and will be moving into Beta.”
He said the response to these initiatives from VMware customers “has been overwhelmingly positive.” And although the new initiatives won’t materially impact the company’s revenues in 2018, “strategically, it immediately impacts our business as customers take more advantage of the cloud: Part of our Q4 strength was a direct result of that.”
Public vs. Private Cloud
It wasn’t that long ago when VMware thought of public clouds as its enemy. But now, with its Cross-Cloud and VMware on AWS, the company has become a convert to using public clouds as part of a hybrid cloud strategy. Gelsinger said that two years ago enterprises weren’t sure if it was safe to move their workloads to public cloud. “That’s changed,” he said. “AWS is clearly part of their strategy.”
But, he said, as enterprises look at moving some of their workloads to public cloud they realize it’s a process that can’t happen overnight and they may need a private cloud on premises for years if not decades. “Hybrid cloud is the answer,” he said. “I’m going to build new applications in public and take advantage of my applications in the private cloud, and stitch those two together.”
VMware’s Interest in Telcos
“In the telco space, they largely run un-virtualized infrastructure,” said Gelsinger. “The size of the telco market is similar to the data center market. And it’s almost virgin territory…for us to pursue.”
Earlier this month, VMware joined Open-O as a premier member, indicating it’s serious about joining the party when it comes to telco virtualization.
In addition, Gelsinger sees more opportunity as service providers look to their 5G buildouts. “We believe the standard architecture will be an NFV buildout,” he said. “It will become a very large adjacent market for us to pursue.”