VMware reports solid Q2 results with subscription and SaaS sales up 23%

The virtualization company published results slightly ahead of expectations, with strong growth in multi-cloud and modern applications businesses, along with End-User Computing.
Written by Stephanie Condon, Senior Writer

VMware on Thursday published second quarter financial results that came in slightly ahead of market expectations. 

The results, CFO Zane Rowe said in a statement, reflect strong year-over-year product bookings growth in major categories. That includes VMware's multi-cloud and modern applications businesses, along with End-User Computing.

The company's non-GAAP net income for the second quarter was $739 million, or $1.75 per diluted share. Revenue in Q2 was $3.14 billion, an increase of 9% from the second quarter of fiscal 2021.


Analysts were expecting earnings of $1.64 per share on revenue of $3.1 billion.

"Our customers are evolving their strategies from a 'cloud first' to a 'cloud smart' philosophy where they are picking the right clouds and cloud services for the right workload, and turning to a multi-cloud environment," CEO Raghu Raghuram said in a statement. "We are delivering the multi-cloud platform for all applications, enabling the digital innovation and enterprise control that our customers need to accelerate their businesses today and in the future." 

Raghuram took the helm as VMware's new chief executive on June 1, six months after Pat Gelsinger's departure to Intel. Prior to that, Raghuram was chief operating officer of products and cloud services for VMware. 

Meanwhile, VMware and parent company Dell Technologies are in the process of splitting into two independent companies. The long rumored spin-off was formally announced by Dell Technologies in April, and it's on track to be completed by November. 

Breaking down the Q2 results, services revenue came to $1.62 billion, while license revenue was $738 million. 

Subscription and SaaS revenue came to $776 million, an increase of 23% year-over-year. Subscription and SaaS annual recurring revenue (ARR) for the second quarter was $3.15 billion, an increase of 26% year-over-year. 

Subscription and SaaS accounted for 24.7% of total revenue.

Non-GAAP operating income for the second quarter was $924 million, a decrease of 3% from a year prior.

Operating cash flow in Q2 was $864 million. Free cash flow was $777 million.

For the third quarter, VMware expects revenue of $3.12 billion.

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