VMware reports strong Q3, raises Q4 outlook

Summary:VMware is quickly becoming a cash cow as license and maintenance revenue grow at a healthy clip.

VMware reported strong third quarter results and upped the outlook for the fourth quarter.

VMware reported third quarter earnings of $178 million, or 41 cents a share, on revenue of $942 million, up 32 percent from a year ago. Non-GAAP earnings were 53 cents a share.

Wall Street, which bases its estimates on non-GAAP earnings, was looking for third quarter earnings of 50 cents a share on $929.4 million.

As for the outlook, VMware projected fourth quarter sales between $1.03 billion to $1.06 billion, up 23 percent to 27 percent from a year ago. That range is better than the $1.03 billion Wall Street analysts were projecting.

VMware is quickly becoming a cash cow. In the third quarter, VMware delivered operating cash flow of $524 million and $1.9 billion of operating cash flow for the trailing 12 months. The company ended the quarter with $4 billion in cash, cash equivalents and short term investments.

By the numbers:

  • U.S. revenue in the third quarter was $443 million, up 22 percent from a year ago. International revenue was $498 million in the third quarter, up 42 percent from a year ago.
  • License revenue in the third quarter was up 29 percent from a year ago. Service revenue was up 34 percent in the quarter.
  • Research and development spending for the nine months ended Sept. 30 was $558 million, up from $475.3 million for the same period a year ago.

Topics: Virtualization, Banking, Enterprise Software, Hardware, VMWare

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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