The 10-second takeaway
For the quarter ended June 30 (Q2), VMware met expectations on revenue and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded significantly and GAAP earnings per share contracted.
Gross margins grew, operating margins contracted, and net margins shrank.
VMware tallied revenue of $1.12 billion. The 27 analysts polled by S&P Capital IQ expected sales of $1.11 billion on the same basis. GAAP reported sales were 22% higher than the prior-year quarter's $921.2 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.68. The 36 earnings estimates compiled by S&P Capital IQ predicted $0.66 per share. GAAP EPS of $0.44 for Q2 were 14% lower than the prior-year quarter's $0.51 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 84.0%, 60 basis points better than the prior-year quarter. Operating margin was 18.9%, 140 basis points worse than the prior-year quarter. Net margin was 17.1%, 680 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $1.14 billion. On the bottom line, the average EPS estimate is $0.64.
Next year's average estimate for revenue is $4.59 billion. The average EPS estimate is $2.70.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 2,117 members out of 2,299 rating the stock outperform, and 182 members rating it underperform. Among 502 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 455 give VMware a green thumbs-up, and 47 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on VMware is outperform, with an average price target of $120.12.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of VMware. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.