VMware guides in-line, reports healthy NSX growth; EMC on deck

VMware (NYSE:VMW) guided on its Q2 CC for its Q3 revenue of $1.48B-$1.52B, in-line with a $1.5B consensus. Full-year revenue guidance has been narrowed to $5.96B-$6.08B from a prior $5.94B-$6.1B; consensus is at $6.02B.

License revenue rose 16% Y/Y in Q2, up from Q1's 15% and near the high end of guidance of $605M-$615M. VMware expects Q3 license revenue of $630M-$645M (+12%-14%), and full-year license revenue of $2.56B-$2.62B (+13%-15%).

Services revenue (driven by past deals) rose 18% in Q2 to $843M. Op. margin fell to 29.4% from 33.5% a year ago.

VMware's costly enterprise license agreements (ELAs) rose to 37% of bookings from 25% in Q1; eight $10M+ ELA deals were inked in Q2 vs. two in Q1.

Cloud management license bookings grew over 30% Y/Y for another quarter, and end-user computing (PC virtualization/AirWatch) rose over 50%. ~50% of ELAs once more included the entire vCloud Suite.

The company also says its much-hyped NSX networking virtualization/SDN platform is now on a $100M+/year run rate, and that its VSAN storage virtualization platform beat internal targets. Judging by total license growth rates, standalone server virtualization revenue is growing relatively slowly.

Unearned (deferred) revenue +22% Y/Y to $4.39B. Long-term unearned revenue +23% to $1.68B.

VMW +0.5% AH, as the guidance and a Q2 beat are taken in stride. Parent EMC, just challenged by Elliott Management to unload VMware, reports Wednesday morning.

Q2 results, PR, earnings slides (.pdf)

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