Cloud Migration Boosts VMware
VMware reported healthy revenue and earnings during the first quarter of 2014 as cloud adoption gains steam.
The virtualization and cloud infrastructure specialist said its Q1 revenues totaled $1.36 billion, a 14 percent increase over the same quarter last year. Earnings during the period totaled $199 million, the company said, on operating income of $241 million, up a hefty 51 percent year-on-year.
The results were in line with Wall Street's expectations.
VMware CEO Patrick Gelsinger said the strong quarter reflected the growing shift from client-server computing to the "mobile-cloud era."
Jonathan Chadwick, VMware's chief financial officer, attributed the 18 percent increase in revenue growth (a figure that excludes revenue from, among other factors, 2013 divestitures) to a new product line-up and integration of AirWatch. VMware announced in February that it had completed its acquisition of AirWatch, a provider of enterprise mobile management and security products.
Also in February, VMware announced it was partnering with Google to provide secure, cloud access to Windows applications, data, and desktops on Google Chromebooks.
VMware also launched Horizon Data-as-a-Service during the first quarter that is designed to speed delivery of desktops in the cloud. It also launched VMware Horizon 6, an end-user computing desktop product to deliver published applications and virtual desktops on a single platform.
Carl Eschenbach, VMware's president and COO, said during a conference call that enterprise licensing agreements accounted for about 25 percent of total bookings in the first quarter. Overall, license revenues increased 15 percent year-on-year.
Eschenbach also said VMware's vCloud Hybrid Service public cloud business grew by more than 100 percent compared to the first quarter of 2013.
The company emphasized that it is hiring. Employee headcount jumped from 12,977 in the first quarter of 2013 to 16,339 at the end of March 2014, Eschenbach reported.
Meanwhile, the company's capital expenditures remained steady on an annual basis at $77 million but declined from $98 million in the fourth quarter of 2013.
VMware's revenue guidance for the second quarter ranges from $1.42 billion to $1.46 billion as the migration by enterprises to the cloud continues. The revenue guidance represents an annual increase of 18 percent at the high end of the forecast.
Meanwhile, fiscal 2014 revenue guidance was in the range of $5.94 billion and $6.1 billion, up 17 percent at the high end of the forecast.
Second quarter guidance on licensing revenues ranges between $605 million and $615 million, an increase of between 14 percent and 16 percent. Meanwhile, its annual licensing revenue forecast ranges between $2.55 billion and $2.63 billion, or 16 percent higher at the high end.
Eschenbach also predicted increasing demand for VMware's NSX network virtualization and security platform used in software-defined datacenters.
