VMware Q1 strong, maintenance revenue surges

CEO Paul Maritz said that VMware saw "solid performance across our portfolio" amid strong financial results.

VMware delivered strong first quarter results as it continues to dominate the virtualization market.

The company reported first quarter earnings of $191 million, or 44 cents a share, on revenue of $1.06 billion. Non-GAAP earnings were 66 cents a share. Wall Street was expecting earnings of 60 cents a share on revenue of $1.028 billion.

As for the outlook, VMware CFO Mark Peek, who is headed to Workday shortly, projected second quarter revenue between $1.1 billion and $1.12 billion. Annual revenue will be $4.52 billion to $4.62 billion. Wall Street was looking for second quarter revenue of $1.1 billion and 2012 sales of $4.57 billion.

In a statement, CEO Paul Maritz said that VMware saw "solid performance across our portfolio." On a conference call, Maritz added:

We made a firm foundation for 2012 despite lingering concerns about the fragility of the macroeconomic environment. We believe that this foundation reflects the validity of our basic thesis that our customers want on the one hand, to achieve greater efficiencies under their existing IT operations, and on the other hand, free up the resources to transform their applications in business models for the future.

He also said that VMware was upbeat about a new services effort.

We are responding to demand from our customers to address the operational, process and people aspects of operating infrastructure in a modern cloudlike manner. Thus introducing a set of professional services offerings under the label, Accelerated Advisory Services.

In a nutshell, VMware sees itself raking in more dough from maintenance and services contracts. By the numbers:

  • U.S. revenue in the first quarter was $485 million, up 21 percent.
  • International revenue in the first quarter jumped 28 percent from a year ago to $570 million.
  • License revenue in the first quarter checked in at $482 million, up 15 percent. Service revenue was $573 million, up 35 percent. Service revenue includes maintenance and services.

VMware is majority owned by storage giant EMC, which will report earnings Thursday morning.