VMware Earnings Preview: End-User Computing, Network Virtualization To Drive Growth

July 15th, 2016 by Trefis Team
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VMware (NYSE:VMW) is scheduled to announce its Q2 results on Monday, July 18. [1] VMware’s management expects the company to post 11% annual growth in revenues to $1.69 billion. Excluding the impact of the GSA settlement case, it would be a 6% growth in revenues. [2] The table below details expectations for the quarter, with consensus estimate figures taken from Yahoo! Finance. [3]

vmw_q216_ep1

VMware’s top line growth in Q2 and through 2016 is expected to be driven by maintenance and services revenues more than software licenses revenues. We forecast maintenance and professional services combined revenues to grow at 7% annually to just under $4.2 billion, while software licenses revenues could grow by 3% annually to $2.8 billion. VMware’s adjusted EBITDA margins for the year could be slightly lower than the previous year at around 36%, while the non-GAAP diluted EPS could be flat over the previous year at just over $4 per share.

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vmw_q216_ep3

Through the second quarter, VMware has built on these strengths to continue its growth spree in these domains. VMware announced its intent to acquire cyber security and software-defined data center operations company Arkin Net during Q2 to help customers adopt its NSX platform faster. [4] Additionally, VMware’s $1.5 billion AirWatch acquisition has been instrumental in driving the company’s growth in the end-user computing market. According to IDC, VMware has been the largest enterprise mobility management vendor over the last two years with a share of 16.5% in 2015. Revenues generated by VMware in the enterprise mobility market grew at almost 85% from 2014 through 2015. [5] Below is a summary of certain key metrics for VMware in the March quarter, highlighting strong growth areas for the company. 

VMW Q1 Earnings3Have more questions about VMware?

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  Our Full Analysis For VMware.

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Notes:
  1. VMware to Announce Second Quarter 2016 Financial Results on Monday, July 18, 2016, VMware Press Release, July 2016 [↩]
  2. VMware Q1 2016 Earnings Call Transcript, Seeking Alpha, April 2016 [↩]
  3. VMware Company Profile, Yahoo! Finance, July 2016 [↩]
  4. VMware Announces Intent to Acquire Arkin Net to Help Customers Accelerate Adoption of VMware NSX and Software-Defined Data Centers, VMware Press Release, Jun 2016 [↩]
  5. Global Analyst Firm Ranks VMware AirWatch the Largest Enterprise Mobility Management Vendor in the World, VMware Press Release, June 2016 [↩]