VMware's Q1 solid, avoids enterprise software malaise

Summary:VMware CEO Pat Gelsinger said that the company's performance was solid "particularly in light of recent results from many of our industry peers."

Virtualization software giant VMware reported strong first quarter earnings that bucked a rough patch in the enterprise software market. However, VMware's outlook for the second quarter was a bit lighter than expectations.

The company reported first quarter earnings of $174 million, or 40 cents a share, on revenue of $1.19 billion, up 13 percent from a year ago. Non-GAAP earnings for the first quarter were 74 cents a share. Wall Street was expecting earnings of 70 cents a share on revenue of $1.18 billion.

As for the outlook, VMware projected second quarter revenue to be between $1.21 billion to $1.24 billion. License revenue in the second quarter will be between $515 million and $535 million.

Wall Street was expecting second quarter earnings of 77 cents a share on revenue of $1.25 billion.

In a statement, VMware CEO Pat Gelsinger said that the company's performance was solid "particularly in light of recent results from many of our industry peers." What's unclear is whether VMware's outlook is cautious based on its pipeline or because of an overall enterprise software slowdown .  Indeed, Oracle , IBM and Tibco all noted a software slowdown. 

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By the numbers:

  • First quarter license revenue was $488.2 million, up from $481.9 million a year ago.
  • Services revenue in the quarter was $703.2 million, up from $573.2 million a year ago.
  • R&D spending in the quarter was $270.6 million, up from $222.4 million a year ago.
  • Sales and marketing spending was $417.4 million, up from $363.4 million a year ago.
  • VMware ended the first quarter with cash, equivalents and short-term investments of $4.94 billion.

Topics: VMWare, Cloud, Data Centers, Enterprise Software, Virtualization

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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