VMware Reports Fourth Quarter and Fiscal Year 2018 Results

VMware, a leading provider of enterprise software, today announced financial results for the fourth quarter and full fiscal year 2018.

Quarterly Review:

• Revenue for the fourth quarter was $2.31 billion, an increase of 14% from the fourth quarter of 2016.
•  License revenue for the fourth quarter was $1.07 billion, an increase of 20% from the fourth quarter of 2016.
•  GAAP net loss for the fourth quarter was $440 million, or $1.09 per diluted share, compared to GAAP net income of $441 million, or $1.04 per diluted share, for the fourth quarter of 2016. GAAP results include an estimated net tax expense recognized in connection with the enactment of the Tax Cuts and Jobs Act of $970 million.  An estimated $800 million of this tax relates to the international portion of our earnings, and an estimated $167 million of this tax relates to the re-measurement of deferred taxes using lower U.S. tax rates.  Non-GAAP net income for the quarter was $691 million, or $1.68 per diluted share, up 18% per diluted share compared to $597 million, or $1.43 per diluted share, for the fourth quarter of 2016.
• GAAP operating income for the fourth quarter was $648 million, an increase of 19% from the fourth quarter of 2016. Non-GAAP operating income for the fourth quarter was $862 million, an increase of 15% from the fourth quarter of 2016.
•  Operating cash flows for the fourth quarter were $847 million. Free cash flows for the quarter were $748 million.
•  Total revenue plus sequential change in total unearned revenue grew 14% year-over-year.
•  License revenue plus sequential change in unearned license revenue grew 13% year-over-year.

Annual Review:

• Revenue for fiscal year 2018 was $7.92 billion, an increase of 12% from 2016.
•  License revenue for fiscal year 2018 was $3.19 billion, an increase of 14% from 2016.
• GAAP net income for fiscal year 2018 was $570 million, or $1.38 per diluted share, compared to $1.19 billion, or $2.78 per diluted share, for 2016.  GAAP results include an estimated net tax expense recognized in connection with the enactment of the Tax Cuts and Jobs Act of $970 million.  An estimated $800 million of this tax relates to the international portion of our earnings, and an estimated $167 million of this tax relates to the re-measurement deferred taxes using lower U.S. tax rates. Non-GAAP net income for the year was $2.15 billion, or $5.19 per diluted share, up 18% per diluted share compared to $1.86 billion, or $4.39 per diluted share, for 2016.
• GAAP operating income for fiscal year 2018 was $1.69 billion, an increase of 17% from 2016. Non-GAAP operating income for the year was $2.63 billion, an increase of 15% from 2016.
•  Operating cash flows for fiscal year 2018 were $3.21 billion. Free cash flows for the year were $2.95 billion.
•  Cash, cash equivalents and short-term investments were $11.65 billion, and unearned revenue was $6.25 billion as of February 2, 2018.

“Our strong Q4 and terrific fiscal year 2018 results demonstrate the power of our broad-based portfolio and a strategy that continues to resonate, resulting in strong customer momentum,” commented Pat Gelsinger, chief executive officer, VMware. “As we celebrate our twentieth anniversary this year, we remain committed to delivering breakthrough software innovation that drives customer success.”

“Q4 closed a strong fiscal year 2018 for VMware,” said Zane Rowe, executive vice president and chief financial officer, VMware. “We achieved $7.9 billion in revenue and operating cash flows of over $3.2 billion for the year, while continuing to invest in products and services to drive future growth.”

Recent Highlights & Strategic Announcements:

1. VMware announced expanded availability of VMware Cloud on AWS to include the AWS U.S. East (N. Virginia) region in addition to the U.S. West (Oregon) region. VMware and AWS also introduced additional VMware capabilities and support for VMware Site Recovery and VMware vMotion, making it even easier for customers to move, run and protect mission-critical applications at scale.
2. VMware completed its acquisition of VeloCloud Networks. This industry-leading, cloud-delivered SD-WAN solution is now a part of VMware’s growing software-based networking portfolio. The acquisition of VeloCloud significantly advances the company’s strategy of enabling customers to run, manage, connect and secure any application on any cloud to any device.
3. VMware introduced VMware Cloud Foundation 2.3, the latest release of its integrated hybrid cloud platform. VMware Cloud Foundation 2.3 introduces integrated cloud management platform (CMP) capabilities that provide customers with a simplified path to building a hybrid cloud, based on consistent infrastructure and operations.
4. In February, VMware and Pivotal announced the general availability of Pivotal Container Service (PKS). PKS is a Kubernetes-based container service designed to meet the needs of operators and developers by providing native Kubernetes combined with advanced day-1 and day-2 capabilities needed to run Kubernetes at scale in production.
5. VMware has been positioned in the Leaders quadrant of Gartner, Inc.’s February 2018 Magic Quadrant for Hyperconverged Infrastructure.
6. VMware has been positioned as a leader in The Forrester Wave: Enterprise Mobility Management, Q4 2017, evaluating enterprise mobility management (EMM) vendors. The company was also named a leader in the “IDC MarketScape: Worldwide Enterprise Mobility Management Software for Ruggedized/IoT Device Deployments 2017 Vendor Assessment.”
7. VMware announced the general availability of VMware Pulse IoT Center, the first solution in a new family of VMware Internet of Things (IoT) offerings. VMware Pulse IoT Center is an enterprise grade, IoT device management and monitoring solution that helps Information Technology and Operational Technology organizations to onboard, manage, monitor and secure their IoT use cases from the edge to the cloud.