Image source: VMware.

What: Shares of virtualization solution provider VMware (NYSE:VMW) surged on Tuesday following the company's second-quarter report. VMware beat analyst estimates on all fronts and raised its guidance for the full year. After rising as much as 10.7% during the day, VMware stock was up 9.3% at 2:50 p.m. EDT.

So what: VMware reported quarterly revenue of $1.69 billion, up 6% year over year excluding the effect of the settlement of a lawsuit in the prior-year period. This beat analyst estimates for revenue by about $10 million. License revenue increased 1% year over year, while services revenue jumped 9.4%.

On a GAAP (generally accepted accounting principles) basis, the company reported earnings per share of $0.62, up from $0.40 during the prior-year period. VMware reported non-GAAP EPS of $0.97, up from $0.93 during the prior-year period and $0.02 higher than analysts were expecting. 

In addition to beating analyst estimates, VMware raised its guidance for the full year. The company now expects revenue in a range of $6.95 billion to $7.05 billion, up from previous guidance of $6.785 billion to $6.935 billion. Non-GAAP EPS is expected to be between $4.27 and $4.33, up from a range of $4.07 to $4.16.

Now what: Solid revenue and earnings growth coupled with a guidance boost was enough to send shares of VMware soaring. The company also reiterated its $1.2 billion share buyback plan, which it announced last quarter but has yet to begin. Shares of VMware remain down nearly 20% over the past year, but the stock has clawed its way back from lows reached in February.

VMW Chart

VMW data by YCharts.

Earlier this year, a management shakeup that saw VMware's COO resign and the announcement of significant layoffs raised questions about the company's strategy. With a solid second-quarter report, VMware has quieted those concerns.