The 10-second takeaway
For the quarter ended Sep. 30 (Q3), VMware met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share shrank.
Gross margins expanded, operating margins shrank, net margins dropped.
VMware reported revenue of $1.13 billion. The 36 analysts polled by S&P Capital IQ looked for a top line of $1.13 billion on the same basis. GAAP reported sales were 20% higher than the prior-year quarter's $941.9 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 $0.70. The 38 earnings estimates compiled by S&P Capital IQ forecast $0.63 per share. GAAP EPS of $0.36 for Q3 were 12% lower than the prior-year quarter's $0.41 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 84.2%, 40 basis points better than the prior-year quarter. Operating margin was 16.8%, 240 basis points worse than the prior-year quarter. Net margin was 13.8%, 500 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $1.28 billion. On the bottom line, the average EPS estimate is $0.73.
Next year's average estimate for revenue is $4.59 billion. The average EPS estimate is $2.70.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 2,135 members out of 2,315 rating the stock outperform, and 180 members rating it underperform. Among 506 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 466 give VMware a green thumbs-up, and 40 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 $111.53.
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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. The Motley Fool owns shares of VMware. Motley Fool newsletter services recommend 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.