Product breadth is serving VMware well, company officials claimed today while reporting first-quarter earnings roughly on the mark with analysts’ expectations.
Specifics were mostly lacking. Notably, VMware didn’t count up the number of paying NSX customers as it has in the past. The total stood at 400 three months ago. By comparison, if you’re keeping score, Cisco recently said it’s got 300 customers for the Application Policy Infrastructure Controller (APIC), the element that drives its Application-Centric Infrastructure (ACI).
To be fair, not all VMware investors obsess over NSX the way we do — and VMware wanted to talk about other non-vSphere products, including AirWatch and the vCloud Air hybrid cloud. vCloud Air, in particular, claimed deployments this past quarter with Softbank in Japan, with Telstra in Australia, and in Germany, CEO Pat Gelsinger said on today’s earnings call with analysts.
President Carl Eschenbach did note that NSX was included in eight of the 10 largest enterprise license agreements (ELAs) booked in the quarter.
Enterprise license agreements (ELAs) — contracts that give customers “all-you-can-eat” access to a set of VMware products for a certain amount of time, often three years — represented 30 percent of first-quarter bookings, compared with 25 percent the previous quarter, VMware President Carl Eschenbach said.
Product breadth is important because VMware is maxing out its server virtualization franchise. Even those standalone vSphere represented roughly 45 percent of billings for the quarter, “it’s not in and of itself going to be a major growth driver,” CFO Jonathan Chadwick said on the call.
Moreover, NSX revenues are coming from customers’ networking, cloud, and security budgets — “new buyers and new sources of funds” compared with the server budgets that vSphere taps, VMware President Carl Eschbach said.
For the first quarter of 2015, VMware reported revenues of $1.51 billion and net income of $196 million, or 45 cents per share, compared with year-ago revenues of $1.36 billion and net income of $199 million, or 46 cents per share.
Non-GAAP net income of 86 cents per share beat the analyst consensus of 84 cents tallied by Thomson Financial.
As Reuters pointed out, VMware’s first quarter had the lowest growth rate of the past seven quarters, the result of generally tepid IT spending and the strengthening U.S. dollar. For all of 2015, VMware is predicting revenues of $6.57 billion to $6.69 billion, up 9 to 11 percent from 2014. VMware had originally predicted growth of 10 to 12 percent.
VMware expects second-quarter revenues to be $1.58 billion to $1.6 billion.
VMware stock traded down slightly in the first hour after markets closed in the United States. At press time, VMware had rebounded to trade up 60 cents (0.7%) at $86 in after-hours trading.