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VMware Reports Strong Q2 Earnings

Its AirWatch acquisition, although expensive, is apparently paying dividends.

VMware had a strong second quarter of 2014, increasing revenue by 17 percent year-over-year, according to data released by the company today.

In a webcast, VMware announced revenue of nearly $1.46 billion, slightly above what the company predicted earlier in the year. License revenue was up 16 percent year-over-year, coming in at $614 million for the quarter.

Operating income was down 26 percent from the same period a year ago, but that was due to the $1.54 billion acquisition of AirWatch, the mobile device management company. The company wasn't complaining, however. "AirWatch had a very strong quarter," said CFO Jonathan Chadwick during the webcast. Overall operating income was $200 million.

VMware has $6.64 billion in cash, cash equivalents and short-term investments on hand, the press release stated.

Pat Gelsinger, VMware CEO, said during the webcast that "We continue to see strong performance across our business, further evidence that VMware is uniquely positioned as IT transitions from client server computing to the mobile cloud era."

He also said that VMware is focusing on three key areas: hybrid cloud, the software-defined datacenter, and end-user computing. All of those sectors are experiencing growth, he said. As for the company's overall health, he pointed to Gartner's recent Magic Quadrant report that listed VMware as the industry leader in x86 server virtualization.

Chadwick said during the webcast that Q2 saw VMware's best-ever renewal rate in terms of the number of deals renewed. He added that approximately 37 percent of those renewals were enterprise licensing agreements (ELAs).

Q2 also improved on Q1 of 2014, which saw $1.36 billion in revenue. That was a 14 percent increase year-over-year. Licensing revenue in Q1 was $561 million.

More information on VMware's financials can be found on its Investor Relations page.

About the Author

Keith Ward is the editor in chief of Virtualization & Cloud Review. Follow him on Twitter @VirtReviewKeith.

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