VMware meets Q1 expectations with 9 percent revenue growth

Top and bottom line results were slightly ahead of market estimates, with subscription and SaaS revenue up 29 percent.

VMware on Thursday published its first quarter financial results in line with market expectations. 

The company's non-GAAP net income for the first quarter was $744 million, or $1.76 per diluted share. Revenue for the first quarter was $2.99 billion, an increase of 9 percent from the first quarter of fiscal 2021.

vmware.png

Analysts were expecting earnings of $1.73 per share on revenue of $2.98 billion. 

"We are pleased with our Q1 financial performance as we delivered solutions for customers in strategic areas like multi-cloud, application modernization and digital workspaces, while focusing on providing a broader set of consumption choices with our Subscription and SaaS offerings," Interim CEO and CFO Zane Rowe said in a statement. "We are excited to welcome Raghu Raghuram as the next CEO of VMware. This milestone, along with the proposed Dell spin-off, sets the stage for the company's next innovative chapter."

Earlier this month, VMware announced that Raghu Raghuram, the current chief operating officer of products and cloud services for VMware, would take the helm as its new chief executive effective June 1. The virtualization company has been vetting CEO candidates since the departure of Pat Gelsinger in January. Meanwhile, VMware and parent company Dell Technologies are beginning the process of splitting into two independent companies. The long rumored spin-off was formally announced by Dell Technologies in April.

In a Thursday conference call, Raghuram offered his thoughts on VMware's position in the market, noting, "We are at the dawn of this multi-cloud era of computing."

He continued, "Post spin, we will be the only stand-alone cloud company that has the necessary strategic partnerships with all the major cloud companies and all the leading infrastructure companies to deliver on a truly customer-centered multi-cloud vision."

Breaking down the Q1 results, service revenue came to $1.6 billion, while license revenue was $646 million. 

Subscription and SaaS revenue came to $741 million, an increase of 29 percent. Subscription and SaaS accounted for 24.7 percent of total revenue.

For the second quarter, VMware gave an outlook of $3.1 billion in revenue. For the full fiscal year 2022, it's expecting revenue of $12.8 billion.