Tue, Apr. 21, 7:10 PM
- VMware (NYSE:VMW) guides in its Q1 earnings CC slides (.pdf) for Q2 revenue of $1.58B-$1.6B (+8%-10% Y/Y) and EPS of $0.90-$0.92, unfavorable to a consensus of $1.6B and $0.92.
- Likewise, full-year guidance is for revenue of $6.57B-$6.69B (9%-11%) and EPS of $3.94-$4.02 vs. a consensus of $6.69B and $4.00. However, with forex already expected to have a big impact - it's respectively expected to hurt Q2 and full-year sales growth by 4% and 3% - the numbers are being taken in stride.
- License revenue rose 3% Y/Y in Q1 to $576M, down from Q4's 13% growth but in-line with guidance of 2%-3%. 3%-4% license growth is expected in Q2, and 4%-7% growth in 2015. Services revenue (driven by past license deals) rose 17% in Q1 to $935M.
- As was the case in Q4, products other than standalone vSphere server virtualization licenses (hurt by high penetration rates and low-cost rivals) fared well. End-user computing (PC virtualization, AirWatch's enterprise mobility management offerings) license bookings rose over 50% in constant currency, with desktop licenses rising 15%. Hybrid cloud/SaaS revenue, which includes the vCloud Air cloud infrastructure platform, now makes up over 6% of revenue.
- Enterprise license agreements (ELAs - they cover a variety of products, and don't come cheap) made up 30% of bookings, down from 39% in seasonally strong Q4. CRN recently reported VMware is thinking of hiring a global sales chief in part to boost ELA sales.
- $438M was spent on buybacks, giving a boost to EPS. The unearned (deferred) revenue balance rose a healthy 14% Y/Y to $4.74B. Costs/expenses (non-GAAP) rose 13% to $1.06B.
- VMW -0.5% AH to $85.00. Q1 results, PR.
Tue, Apr. 21, 4:03 PM
Mon, Apr. 20, 5:35 PM
Wed, Jan. 28, 10:08 AM
- Though VMware (NYSE:VMW) beat Q4 estimates and added $1B to its buyback, the company guided on its CC (transcript, earnings slides) for Q1 revenue of $1.49B-$1.51B and full-year revenue of $6.64B-$6.76B, below consensus estimates of $1.55B and $6.85B.
- Also: License revenue growth is expected to fall to 2%-3% in Q1 from Q4's 13%, and amount to 6%-9% for the whole of 2015. If not for forex, guidance would respectively be for 5%-6% and 9%-12% growth.
- VMware plans to buy back at least $1B worth of shares in 2015, up from 2014's $700M. The capex budget (boosted by cloud investments) is $400M.
- Given the outlook, and the fact that VMware's Q4 license bookings for products other than its vSphere server virtualization platform (when sold by itself) grew nearly 40% in Q4, traditional vSphere sales appear to be under heavy pressure. Microsoft has been claiming share gains for its Hyper-v platform, and open-source solutions (Xen, KVM) have also been gaining ground.
- On the bright side, end-user computing bookings (PC virtualization and AirWatch's enterprise mobility management offerings) rose over 60%. AirWatch now has 15K+ customers (declared by VMware to be twice that of its nearest rival), and saw over $200M worth of 2014 bookings.
- The NSX SDN/networking virtualization platform is on a $200M+ bookings run rate, and saw its paid customer count rise over 60% Q/Q in Q4 to 400+. Paid customers for the VSAN storage virtualization platform have topped 1K.
- Needham has downgraded VMware to Hold. Parent EMC (EMC +0.5%) is up moderately ahead of tomorrow's Q4 report, aided by a 1% gain for the Nasdaq.
Tue, Jan. 27, 4:20 PM
Mon, Jan. 26, 5:35 PM
Dec. 19, 2014, 7:02 PM
- While Red Hat's (NYSE:RHT) revenue rose 15% Y/Y in FQ3 and its deferred revenue balance 16%, its billings proxy (based on cash flow) was up 19%, notes Barclays (Overweight). "Underlying momentum in the core business, emerging product groups, and better large deal activity reinforce our positive view on the stock."
- BofA/Merrill (Buy) observes billings growth doesn't fully reflect Red Hat's public cloud growth (+50% Y/Y), given public cloud solutions (offered via partners) are billed "one month in arrears instead of one or more years in advance." It also likes the fact over half of all public cloud clients are SMBs, many of whom weren't prior Red Hat customers, and believes interest in version 7 of Red Hat Enterprise Linux (RHEL) is stronger than for prior versions due to a bevy of new features.
- Citi (Neutral) is more cautious on account of valuation. "Upside beyond $70 (20x+ FCF) likely requires sustained high teens billings growth which looks like a stretch. We continue to like VMW best in infrastructure software due to discount versus peers and 2015 catalysts (notably vSphere 6).”
- On the CC (transcript), Red Hat stated app development and emerging technologies revenue (covers middleware, cloud, and storage software) rose 45% Y/Y, and was 14% of total revenue. 62% of bookings came from the Americas, limiting forex pressures a bit.
- Shares rose 10.6% in regular trading, easily taking out their post-Dot.com bubble highs.
- Prior Red Hat earnings coverage
Oct. 22, 2014, 1:22 PM
- Enterprise software vendors are having a rough day after VMware (VMW -5.6%) provided light Q4 guidance to go with a Q3 beat.
- On its CC (transcript), VMware also reported its bookings fell Q/Q in Q3. They were hurt by Russian and German softness, and a failure to close a major enterprise license agreement (ELA) with a federal client. ELAs made up 29% of Q3 bookings, down from 37% in Q2.
- Rivals Oracle (ORCL -1.5%), Red Hat (RHT -3.3%), and Citrix (CTXS -1.5%) are among the decliners, as are Splunk (SPLK -4.7%), Tableau (DATA -2.8%), Qlik (QLIK -2.5%), and MicroStrategy (MSTR -0.9%). Oracle provided light guidance last month.
- Several enterprise cloud software stocks are also selling off: N -2.5%. VEEV -2.9%. ZEN -4.2%. CSOD -2.3%. SAAS -3.2%. NOW -1.7%.
- Nomura and Raymond James have downgraded VMware. Nomura thinks 2015 guidance (expected in January) will also be light, and believes slow vSphere server virtualization growth (affected by competition and high penetration rates) will remain a headwind, given it's still over half of VMware's business. "Growth has to come from the vCloud Suite ... other newer products are just too small still to matter."
- Some of those "other newer products" are doing well: VMware's end-user computing license bookings (boosted by the AirWatch acquisition) rose over 60% Y/Y in Q3, and its much-hyped NSX software-defined networking platform now has 250+ paying customers (up from just 100 a few months ago).
- A slew of enterprise tech names sold off on Monday in response to IBM's Q3 report. Big Blue's software sales fell 2% Y/Y in Q3, after rising 1% in Q2. CA, Citrix, and ServiceNow report after the bell.
Oct. 21, 2014, 6:13 PM
- VMware (NYSE:VMW) has guided in its Q3 earnings CC slides (.pdf) for Q4 revenue of $1.67B-$1.71B, mostly below a $1.71B consensus. License revenue is expected to grow 11%-14% Y/Y; it was up 13% in Q3, and 16% in Q2.
- Meanwhile, parent EMC, which is set to report tomorrow morning, says it plans to disclose a "new business development." That appears to be fueling hopes a full VMware spinoff will be announced.
- EMC has already been reported to be thinking of fully unloading its VMware stake, as sought by Elliott Management.
- Earlier: VMware beats Q3 estimates
Oct. 21, 2014, 4:26 PM
Oct. 20, 2014, 5:35 PM
Aug. 25, 2014, 7:13 PM
- VMware (NYSE:VMW) has used its analyst day (held at VMworld) to guide for mid-teens 2015 revenue growth; consensus is at 15.5%. Op. margin is expected to grow 100 bps Y/Y.
- Software-related VMworld announcements include: 1) A collection of tools meant to support the OpenStack cloud infrastructure (IaaS) platform. 2) A partnership with Google, startup Docker, and the Pivotal spinoff through which VMware's software will support Docker's Linux app containers. 3) New mobile, storage, and on-demand services for the vCloud Air IaaS platform (formerly vCloud Hybrid). 4) Updates to VMware's NSX SDN platform and vCloud Suite that respectively add new security and provisioning features. 5) The vRealize Suite, a cloud management platform that bundles several existing products.
- The OpenStack and Docker announcements have raised eyebrows, given OpenStack competes with VMware's cloud management offerings and Docker's containers act as a lightweight alternative to traditional virtualization software. The vRealize Suite will square off against products from the likes of Microsoft and Red Hat.
- "VMware’s strategy would commoditize some of what EMC does," says Baird's Jason Noland, taking stock of VMware's hardware and software efforts. "Neither one will admit it, but they’re heading right at each other."
- EMC downplays the commoditization risk, calling it "speculation at best." The storage giant has already shown a willingness to embrace software platforms that can affect sales of its proprietary hardware, or at least lower vendor lock-in.
Aug. 7, 2014, 6:21 PM
- In addition to trouncing Q2 estimates, Arista (NYSE:ANET) is guiding for Q3 revenue of $142M-$150M, well above a $133.9M consensus.
- The data center switch vendor's gross margin rose 320 bps Y/Y in Q2 to 67.9%. GM is expected to fall to 64%-66% in Q3.
- GAAP opex (boosted by a $4.7M increase in stock compensation expense) rose 67% to $62.7M. One customer (likely Microsoft) made up over 10% of sales.
- On the CC, Arista disclosed a partnership with VMware (NYSE:VMW) that covers the latter's virtualization and cloud management offerings, and (notably) also its NSX networking virtualization/SDN platform.
- Arista and VMware have a common rival in Cisco, which towers over the data center switch market and is trying to counter NSX with its ACI/Insieme networking virtualization platform.
- Whereas NSX is meant to manage 3rd-party switches, ACI is focused on controlling Cisco gear. Cisco argues its hardware/software integration yields better network and app visibility; critics argue it yields higher costs and more complexity.
- VMware recently stated NSX is now on a $100M+/year run rate. Other partners include Juniper, Dell, and H-P.
Jul. 23, 2014, 10:19 AM
- EMC (EMC +1%) is reiterating 2014 revenue guidance of $24.575B, and raising 2014 EPS guidance by a penny to $1.91; that roughly matches a consensus of $24.57B and $1.91.
- With Elliott Management circling, the company now plans to buy back $3B worth of shares in 2014, up from a prior $2B. $600M was spent on buybacks in Q2, and $390M in Q1.
- Not surprisingly, EMC rejects Elliott's call to divest VMware (VMW +1.8%), and uses its earnings slides (.pdf) to point to synergies yielded by a "federation" strategy that involves holding onto VMware and Pivotal.
- Information Storage revenue (67% of total) rose 7% Y/Y in Q2 with the help of new products, a turnaround from Q1's 3% drop. High-end storage was still weak, declining 14% to $1.03B ahead of a VMAX refresh. But unified storage and backup/recovery (VNX, Data Domain) +6% to $1.57B, and emerging storage (flash and object storage, scale-out NAS) +52% to $470M. Other storage -6% to $900M.
- RSA Security +6% to $240M, content management +4% to $160M, Pivotal +29% to $54M.
- Product revenue only rose 2% Y/Y, while services revenue (more stable) rose 9%. Gross margin fell 50 bps Y/Y to 63.8%, and op. margin 160 bps to 22.6%, thanks partly to healthy increases in R&D and .SG&A spend.
- VMware is moving higher, following an initially muted reaction to its Q2 beat and in-line guidance. CLSA has upgraded shares to Buy, citing the strength of new products and the potential for a spinoff.
- Q2 results, PR
Jul. 22, 2014, 10:47 PM
- 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)
Jul. 22, 2014, 4:03 PM
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