You know VMware
But did you know that VMware also runs a phenomenal cash-machine business model? Last night's third-quarter report gave the company a chance to flex its money-making muscles on a big stage.
Sales jumped 32% year over year to $942 million, and non-GAAP earnings more than doubled to $230 million, or $0.53 per diluted share. Yes, that 24% net margin is nice -- but it's all paper profits that are easily manipulated to meet arbitrary targets.
Cash is king, and we Fools often prefer to see the real green stuff flowing into the bank. On that note, VMware delivered 108% higher free cash flow compared with the year-ago period. That's $494 million, or a staggering 52% of revenues. The biggest driver of those ballooning cash flows is from customers who are signing long-term support contracts, which become deferred or unearned revenues and trickle down the income statement as the contracts get older. Fellow new-age computing specialist Red Hat
Consider that corporate parent EMC
Interested in more info about VMware? I have two suggestions for you:
- Add VMware to your watchlist to make sure that you stay on top of the company, stock, and industry.
- If you haven't seen that video report yet, you probably want to do it right now. Our top analysts delve far deeper into VMware's exciting business than this short article could ever hope to go. And did I mention that it's free?
Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Motley Fool owns shares of Apple and EMC. Motley Fool newsletter services have recommended buying shares of Apple and VMware, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio, follow him on Twitter or Google+, or peruse our Foolish disclosure policy.