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Virtualization solutions provider VMware (VMW +0.00%) reported its first-quarter results after the market closed on May 31. The company is seeing strong growth across many of its product lines, including growth businesses like NSX and vSAN. A potential merger with parent company Dell continues to cloud the company's long-term story, and VMware provided no new information on that front. Here's what investors need to know about VMware's first-quarter results.
Metric |
Q1 2019 |
Q1 2018* |
Year-Over-Year Change |
---|---|---|---|
Revenue |
$2.01 billion |
$1.77 billion |
13.6% |
GAAP net income |
$942 million |
$245 million |
284.5% |
GAAP earnings per share |
$2.29 |
$0.59 |
288.1% |
Non-GAAP earnings per share |
$1.26 |
$1.06 |
18.9% |
Data source: VMware. GAAP = generally accepted accounting principles. *Q1 2018 numbers adjusted to reflect the adoption of ASC 606.
VMware's second-quarter guidance:
VMware's full-year guidance:
During the quarterly conference call, in response to an analyst question, VMware CEO Pat Gelsinger discussed the long-term potential of NSX:
We are now at 4,500 customers for NSX, but I will say it's still largely a high-end product. We haven't really brought it into the mainstream offering. And that's something that we are definitely working on for the future, Mark, is to have versions of the product that [are] more mid-market for the hundreds of thousands of vSphere customers. Today, the product of the family really has been largely for the enterprise customer, tens of thousands of customers as opposed to hundreds of thousands. So, we do see this as something that's critical to our future.
Gelsinger also commented on the success of the company's IBM cloud partnership and its support for Microsoft Azure:
The VMware Cloud Provider Program, of which IBM is central, had another very good quarter. So that's seeing a great momentum, and the IBM partnership is going well. But as you suggest, we do see that customers will be using multiple cloud providers in the future, so we are expanding our relationship with Azure.
Management provided no further updates on the potential merger with parent company Dell.
VMware put up another solid quarter, with double-digit revenue and earnings growth, and its guidance calls for more of the same throughout the rest of the fiscal year. The company's focus on supporting multicloud and hybrid cloud environments, via partnerships with Amazon Web Services, IBM, and other cloud providers, is helping to drive cloud and subscription revenue higher.
This strong performance comes at a time of uncertainty surrounding a potential transaction with Dell, which owns around 80% of VMware. Rumors have been swirling for months, but investors may still have to wait a while before anything is announced.