VMware's Q4: $1.29 billion in revenue, beats estimates, cloudy outlook

The cloud-infrastructure company rode a strong fourth quarter into record earnings, but its 2013 outlook has come up short of analyst forecasts. Here's a look.
Written by Andrew Nusca, Contributor

Virtualization leader VMware released its fourth-quarter fiscal results a moment ago, and it's a solid quarter that beats Wall Street estimates.

(Credit: VMware)

The Palo Alto, California-based company recorded $1.29 billion in fourth-quarter revenue--an increase of 22 percent from the same quarter a year ago--and non-GAAP earnings per share of $0.81. Investors were looking for non-GAAP earnings of 78 cents per share on revenue of $1.28 billion.

The company raked in non-GAAP profits of $349 million for the quarter, about $0.81 per share. That's up from $266 million ($0.62 per share) for the same quarter a year ago. (The GAAP numbers for Q4 are as follows: $206 million, $0.47 EPS; up from $200 million, $0.46 EPS in 4Q11).

With the year behind it, the cloud-infrastructure company managed an annual operating margin of 18.9 percent (non-GAAP, 32.4 percent). Operating margin for the quarter was 19.5 percent (non-GAAP, 32.8 percent).

VMware ended the year with $4.63 billion in cash on hand.

All in all, VMware raked in $4.61 billion in 2012, an increase of 22 percent over the previous year. Its annual US revenues grew 22 percent, to $2.23 billion, in 2012. Its annual international revenues also grew by 22 percent, to $2.38 billion.

The company made $2.09 billion in license revenues in 2012, a 13 percent increase over last year, and $2.52 billion in service revenues, an increase of 31 percent over 2011.

As for 2013, the Q1 outlook is revenues of $1.17 billion to $1.19 billion, an increase of 11 percent to 13 percent over 1Q12. Still, that's short of investor expectations, which seek earnings of 75 cents per share (non-GAAP) on revenue of $1.25 billion.

As such, the company's shares took a considerable hit in after-hours trading, down more than 10 percent from market close.

(Credit: VMware)

VMware estimated that it will pull in between $5.23 billion and $5.35 billion in revenue for the year, an increase of 14 to 16 percent over 2012. It also cited an 8 percent to 11 percent predicted increase in annual license revenues.

(Credit: VMware)
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