VMware posted an earnings beat and continued growth in its cloud-delivered software with subscription and software-as-a-service (SaaS) revenue for the second quarter of its fiscal year 2022 topping $776 million, an increase of 23% year over year.

The biggest subscription and SaaS revenue boosts came from VMware Cloud Providers Partners’ multicloud offerings, its modern applications business, end-user computing (EUC), Carbon Black security portfolio, and VMware Cloud on AWS, which grew almost 80% year over year.

Additionally, subscription and SaaS annual recurring revenue for Q2 was $3.15 billion, an increase of 26% compared to last year.

Meanwhile software license revenue from the company’s traditional on-premise software business grew 3% to $738 million.

On a call with investors, VMware CEO Raghu Raghuram said this trend toward cloud-delivered software will continue. “Over the next year, I expect our sub and SaaS growth to accelerate,” Raghuram said.

But while the virtualization giant continues its push into the cloud, it recognizes that customers move at different paces along their digital transformations. “We continue to prioritize flexibility and choice for customers as they adopt our offerings, and in Q2 we saw customers take a slightly larger than expected mix of perpetual licenses, as well as term licenses, in certain product areas such as EUC,” VMware CFO Zane Rowe said.

In particular, VMware expected more Horizon customers to adopt the virtual desktop infrastructure as subscription software or SaaS, and instead more customers chose term licenses. This shifted the overall software revenue more toward on-premises sales than VMware had anticipated, Rowe explained.

Raghuram, who is approaching his 100th day as CEO of VMware, said he’s seeing customers evolve their strategy from “cloud first to cloud smart.” Essentially this means multicloud.

“Customers are now looking at their IT application assets and deciding which cloud, or whether it’s private or public cloud, individual applications should live on, based upon a number of factors,” Raghuram explained. These factors include technical considerations, business needs, cost, avoiding vendor lock-in, and data sovereignty, he added.

“And what we are doing is positioning our portfolio to become the multicloud platform,” Raghuram said, adding that VMware does this in three ways.

First: via its Kubernetes-based Tanzu portfolio, which allows customers to build and run applications across all public clouds.

Second, VMware remains committed to being the “Switzerland of the industry,” Raghuram said. VMware’s software stack runs on all public clouds regardless of infrastructure.

“And then last but not least is the fundamental change caused by the pandemic,” he said. “We are firmly in an age of distributed workforce.” And this is where VMware’s secure access service edge (SASE) networking and security portfolio, integrated with its Workspace One and Carbon Black product lines comes in to secure the distributed edge and automate the workspace.

Overall, VMware increased its Q2 revenue 9% year over year to $3.14 billion. Net income for the second quarter hit $739 million, or $1.75 per share, down 3% per share compared to $766 million or $1.81 per share for the second quarter of fiscal 2021. And operating income for the second quarter was $924 million, a decrease of 3% from the second quarter of fiscal 2021.

Additionally, VMware remains on track for its planned spinoff from Dell Technologies in early November.