What happened
Shares of VMWare (VMW +0.00%) have jumped today, up by 7% as of 11:30 a.m. EDT, after the virtual computing specialist reported first-quarter earnings. The results beat expectations for both the top and bottom lines.
So what
Revenue in the first quarter increased 12% to $2.73 billion, compared to the consensus estimate of $2.65 billion in sales. That resulted in adjusted net income of $640 million, or $1.52 per share. Analysts were modeling for just $1.20 per share in adjusted profits. Subscription and software-as-a-service (SaaS) revenue soared 39% to $572 million, and remaining performance obligation (RPO) was $10.1 billion at the end of the quarter.
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"In these unprecedented times, we delivered solid performance and strong execution in [fiscal] Q1 FY21," CEO Pat Gelsinger said in a statement. "Ensuring the safety and well-being of our employees and addressing our customers' rapidly changing needs have been our top priorities."
Now what
COVID-19 has not impacted VMWare that badly directly. Many enterprise customers are continuing with cloud migration projects, Gelsinger noted on the conference call with analysts. However, the pandemic is creating considerable macroeconomic uncertainty and volatility, which could impact IT spending.
In terms of outlook, the economic environment is making it difficult to accurately forecast metrics, but VMWare expects revenue in the second quarter to be approximately $2.8 billion, with an adjusted operating margin of 28%. That should translate into adjusted earnings per share of $1.24. VMWare had previously withdrawn its full-year guidance and is not reinstating its outlook for the year.
