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VMware Posts Solid Q3 Earnings

Year-over-year growth is strong, while license revenue lags.

VMware's year-over-year growth in the third quarter of 2016 was 6 percent, headlining the company's latest earning statement.

Revenue for the quarter was $1.78 billion. Although that's a strong number, license revenue didn't fare as well, up just 1 percent from the same quarter in 2015, at $691 million. Overall, the numbers were good, as VMware's revenue came in at the high end of its guidance, and non-GAAP EPS surpassed company expectations. It was the first earnings report in which VMware is owned by Dell; the mega-merger closed in September, creating a huge new company that competes in all areas of the IT industry.

VMware CEO Pat Gelsinger was, naturally, pleased with the results. "Our very good third-quarter financial results reflect VMware's strength in delivering strategic value to our customers," he said in a press release. "We are helping customers run any application across their private, public and hybrid clouds with our new Cross-Cloud Architecture, the industry's most complete and capable hybrid cloud offering."

The other important number in Q3 is income. GAAP net income for the third quarter was $319 million, or $0.75 per diluted share, up 25 percent per diluted share compared to $256 million, or $0.60 per diluted share, for the third quarter of 2015. Non-GAAP net income for the quarter was $485 million, or $1.14 per diluted share, up 12 percent per diluted share compared to $433 million, or $1.02 per diluted share, for third quarter of 2015.

The more interesting financials will start coming next year, when the integration of Dell and former VMware parent EMC is further along, and materially affecting VMware's business.

About the Author

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

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