VMware reported solid results for its second quarter, with upticks in licenses, virtualized workspaces, mobility management, and NSX networking.

Charles Babcock, Editor at Large, Cloud

July 19, 2016

3 Min Read
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VMware announced results that saw company revenues grow $1.69 billion in the second financial quarter of 2016, an increase of 11% over revenues for the same quarter last year.

License revenues increased to $644 million, a 1% tick upward over the licenses in the second quarter of last year, according to VMware's July 18 announcement (PDF) of its results. The quarter closed on June 30.

Net income for the quarter was $265 million, or $0.62 per share, compared to $175 million, or $0.40 per share, last year. By the measure of non-GAAP accounting, earnings per share were $0.97.

That result was $0.02 higher than anticipated by the consensus of analysts on Wall Street, which projected revenues coming in $10 million lower than they did, according to the investor website Seeking Alpha.

Cash and short-term investments amounted to $8.67 billion as of June 30.

During the earnings call, CEO Pat Gelsinger said the quarter yielded "good overall results" with "good momentum for our newer growth businesses and in the cloud."

Gelsinger said license bookings for its NSX software-defined networking product doubled to bring the total number of customers to 1,700. NSX is a key product for VMware as a building block of the software-defined data center. If VMware can convince customers to go with its form of network virtualization, they'll be more likely to stick for the long term with its server and storage virtualization as well.

Gelsinger said regions outside North America were the star performers in the recently closed quarter. "Asia-Pacific performed particularly well, followed by EMEA and the Americas," Gelsinger said, according to the transcript.

The lines of business where VMware is growing revenues through its cloud service include its virtualized workspaces-as-a-service, Workspace ONE, based on its updated VMware AirWatch 8.4, and VMware Identity Manager, which delivers an identity-defined managed workspace.

Workspace ONE can be used as a substitute for on-premises desktop virtualization, which many customers have found complex to execute. It offers use endpoint security, TrustPoint, powered by the Emeryville endpoint security software supplier Tanium.

VMware continues to expand its Mobility Management customers. VMware was named a leader in the Gartner Magic Quadrant for Enterprise Mobility Management in June for a sixth year. It emerged with a leadership position as it also occupied the spot indicating the highest ability to execute and the furthest in completeness of vision. It was the first time VMware has occupied the leading position on both axes of the quadrant.

VMware officials also pointed that IDC has ranked AirWatch, its mobility management suite, as the largest enterprise mobility management product in marketshare. It's the second year it's held that distinction.

[Read more about VMware's latest acquisition.]

Gelsinger said VMware is seeing customer interest in its container host Linux, Photon, and its virtual machine-container integration software, vSphere. VMware offers the Pivotal Cloud Foundry development and container management platform, along with its VMware Integrated OpenStack. Customers can use the combination to implement more cloud-like operations in the enterprise data center or launch a private cloud behind their own firewall.

VMware has hired Dirk Hohndel as its chief open source officer. Hohndel has been a longtime leader in the open source community, Gelsinger said.

It's added Mike Wookey as CTO and vice president of the cloud management business unit. He was previously the chief architect and vice president of the enterprise management group at Oracle.

About the Author(s)

Charles Babcock

Editor at Large, Cloud

Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive Week. He is a graduate of Syracuse University where he obtained a bachelor's degree in journalism. He joined the publication in 2003.

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