VMware Reports Fourth Quarter and Full Year 2010 Results
Annual Revenue Growth of 41% to $2.9 Billion with Fourth Quarter Year-over-Year Growth of 37% to $836 Million
Annual Operating Margin of 15.0%; Non-GAAP Operating Margin of 28.5% with Fourth Quarter Operating Margin of 15.6%; Non-GAAP Operating Margin of 29.6%
Trailing Twelve Months Operating Cash Flows Growth of 19% to $1.2 Billion; Free Cash Flows Growth of 43% to $1.2 Billion
Supplemental Financial Tables Non-GAAP Financial Measures
PALO ALTO, Calif., January 24, 2011 — VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today announced financial results for the fourth quarter and full year 2010:
- Revenues for the fourth quarter were $836 million, an increase of 37% from the fourth quarter of 2009.
- Operating income for the fourth quarter was $131 million, an increase of 84% from the fourth quarter of 2009. Non-GAAP operating income for the fourth quarter was $248 million, an increase of 57% from the fourth quarter of 2009.
- Net income for the fourth quarter was $120 million, or $0.28 per diluted share, compared to $56 million, or $0.14 per diluted share, for the fourth quarter of 2009. Non-GAAP net income for the quarter was $198 million, or $0.46 per diluted share, compared to $127 million, or $0.31 per diluted share, for the fourth quarter of 2009.
- Operating cash flows for the fourth quarter were $407 million, an increase of 43% from the fourth quarter of 2009. Free cash flows for the quarter were $406 million, an increase of 57% from the fourth quarter of 2009.
- Revenues for 2010 were $2.9 billion, an increase of 41% from 2009.
- Operating income for 2010 was $428 million, an increase of 95% from 2009. Non-GAAP operating income for 2010 was $813 million, an increase of 68% from 2009.
- Net income for 2010 was $357 million, or $0.84 per diluted share, compared to $197 million, or $0.49 per diluted share, for 2009. Non-GAAP net income for 2010 was $639 million, or $1.51 per diluted share, compared to $401 million, or $1.00 per diluted share, for 2009.
- Operating cash flows for 2010 were $1.2 billion, an increase of 19% and free cash flows for the year were $1.2 billion, an increase of 43% from 2009.
- Cash, cash equivalents and short-term investments were $3.3 billion and deferred revenue was $1.9 billion as of December 31, 2010.
U.S. revenues for 2010 grew 40% to $1.5 billion from 2009. International revenues grew 43% to $1.4 billion from 2009.
License revenues for 2010 were $1.4 billion, an increase of 36% from 2009. Service revenues, which include software maintenance and professional services, were $1.5 billion for 2010, an increase of 46% from 2009.
“VMware clearly benefited in the fourth quarter from both an uptick in spending and the momentum of virtualization as the central technology for modernizing infrastructures,” said Paul Maritz, president and chief executive officer. “Our task remains to help our customers evolve to the enterprise hybrid cloud by delivering solutions that increase efficiency while improving business agility.”
“We are pleased with our record fourth quarter results, driven by strength across all product categories and geographies,” said Mark Peek, chief financial officer. “As we continue to invest to take advantage of the generational shift underway in IT, we do not anticipate expansion of operating margins in 2011. First quarter 2011 revenues are expected to be in the range of $800 and $820 million, an increase of 26% to 29% from the first quarter 2010. Annual 2011 revenue is expected to be in the range of $3.45 and $3.55 billion, an increase of 21% to 24% from 2010, and annual license revenue is expected to grow between 14% and 19%.”
Recent Highlights & Strategic Announcements
- In October 2010, VMware announced expansion of VMware Ready™, a program to include mail security solutions that can easily extend the Zimbra™ solution with a virtual appliance running on top of VMware vSphere ®. Symantec and Trend Micro were among the first customers to deliver VMware Ready.
- In October 2010, VMware announced plans to provide a complete suite of cloud-based development and collaboration tools aimed at simplifying the entire application development process. Part of VMware’s Cloud Application Platform strategy, Code2Cloud is intended to build on leading open source development projects to deliver a completely unified, setup-free development infrastructure that delivers cloud as a service.
- In November 2010, VMware announced intent to provide a desktop virtualization solution based on the Cisco Unified Computing System (UCS) and VMware View™ 4.5 that will help channel partners accelerate deployment of virtual desktop solutions, scaling to meet customers’ business needs and regulatory requirements while reducing risk and total cost of ownership (TCO).
VMware plans to host a conference call today to review its fourth quarter and 2010 results and to discuss its financial outlook. The call is scheduled to begin at 2:00 p.m. PT/ 5:00 p.m. ET and can be accessed via the Web at http://ir.vmware.com. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 30 days.
VMware delivers virtualization and cloud infrastructure solutions that enable IT organizations to energize businesses of all sizes. With the industry leading virtualization platform – VMware vSphere ® – customers rely on VMware to reduce capital and operating expenses, improve agility, ensure business continuity, strengthen security and go green. With 2010 revenues of $2.9 billion, more than 250,000 customers and 25,000 partners, VMware is the leader in virtualization, which consistently ranks as a top priority among CIOs. VMware is headquartered in Silicon Valley with offices throughout the world and can be found online at www.vmware.com
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VMware and VMware vSphere are registered trademarks of VMware, Inc. in the United States and other jurisdictions. Other marks mentioned herein are trademarks which are proprietary to VMware, Inc. or another company.
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to VMware’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables entitled “About Non-GAAP Financial Measures.”
This press release contains forward-looking statements including, among other things, statements regarding VMware’s first quarter and annual revenue projections, expectations regarding 2011 operating margins, the expected role of virtualization and VMware products in efforts by customers to modernize and increase efficiency in IT infrastructures, expectations for the economic environment and opportunities for adjacencies to the VMware vSphere platform, VMware’s plans for future investment, shifts in IT implementations, and VMware plans for certain cloud-based development and collaboration tools and desktop virtualization solutions. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in consumer or information technology spending; (iii) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into the virtualization market, and new product and marketing initiatives by our competitors; (iv) factors that affect timing of license revenue recognition such as product announcements and beta programs; (v) our customers’ ability to develop, and to transition to, new products and computing strategies such as cloud computing and desktop virtualization; (vi) the uncertainty of customer acceptance of emerging technology; (vii) changes in the willingness of customers to enter into longer term licensing and support arrangements; (viii) rapid technological and market changes in virtualization software and platforms for cloud and desktop computing; (ix) changes to product development timelines; (x) VMware’s relationship with EMC Corporation and EMC’s ability to control matters requiring stockholder approval, including the election of VMware’s board members; (xi) our ability to protect our proprietary technology; (xii) our ability to attract and retain highly qualified employees; (xiii) the successful integration of acquired companies and assets into VMware; and (xiv) fluctuating currency exchange rates. These forward looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including our most recent reports on Form 10-K and Form 10-Q and current reports on Form 8-K that we may file from time to time, which could cause actual results to vary from expectations. VMware assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.