VMware sees strong Q2 demand, ups outlook for fiscal year

The company is growing license revenue at a healthy clip as its software-defined businesses fare well.

(Image: David Jensen/VMWare)

VMware said its second quarter results will be better than expected and it raised its outlook for its fiscal year.

The company said that its revenue for the second quarter will be between $1.89 billion and $1.906 billion, up roughly 12 percent from a year ago. VMware, a Dell Technologies portfolio company, said license revenue for the second quarter will be up 12.9 percent to $14.4 percent.

GAAP earnings for the second quarter will be between 78 cents a share to 86 cents a share and non-GAAP results will be $1.15 a share to $1.19 a share.

Wall Street was expecting second quarter non-GAAP earnings of $1.13 a share on revenue of $1.86 billion.

For fiscal 2018, VMware said it will report revenue of about $7.83 billion with non-GAAP earnings of about $5.08 a share. VMware reports its earnings Aug. 24.

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Analysts were optimistic about VMware demand. Jefferies analyst John DiFucci said:

We continue to believe that VMware is benefiting from a core compute business that is performing better than previously assumed, in addition to increased traction from NSX (software defined networking) and VSAN (software defined storage), successful investment in EUC (End User Computing), and meaningful go-to-market synergies with Dell/EMC.

Stifel analyst Brad Reback added:

VMware has put together a string of solid quarters that likely signal continued momentum with newer initiatives (NSX/vSAN/EUC) along with a stabilizing compute business. Consistent with our upgrade in June, we believe VMware remains well positioned to capitalize on its broader hybrid cloud strategy. We also remain positive on VMware's emerging partnership with AWS.

Separately, VMware said it would float another $1 billion in debt to buy back shares over the next 12 months.


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