After A Strong Q1, What To Expect From VMware In The Second Quarter?
VMware (NYSE:VMW) announced its Q1 fiscal 2019 earnings on Thursday, May 31, reporting a 14% increase in net revenues to just over $2 billion. License revenues rose 21% on a y-o-y basis to $774 million for the quarter, while services revenues were up 10% to $1.2 billion. The virtualization and cloud computing provider has demonstrating strength in its business in recent years, with fast-growing segments such as network virtualization, hybrid cloud, hyper converged software and vSAN driving growth. The growth spree has continued in the current fiscal year, with the trend likely to continue in the coming quarters. As a result of a strong quarter, the company has revised its guidance for its full year results. Accordingly, we have also updated our model based on the latest guidance and market trends. Our revised $119 price estimate for VMware is still marginally lower than the current market price. In this note we focus on the company’s expected results for the fiscal second quarter.
VMware’s management has given positive guidance for revenues and profit margins for the fiscal second quarter. License revenues are expected to be up in the mid-teens to $875 million due to an expected increase in license bookings. Similarly, services revenues are expected to be up by nearly 10% to $1.3 billion. In addition to the strong revenue growth, VMware’s non-GAAP operating margin is expected to be nearly 3 percentage points higher over Q2’18 at 33.5%. In recent quarters, VMware’s operating profit margin (non-GAAP) has been at record high levels of around 33%. This trend is expected to continue through FY’19 due to a limited increase in SG&A expenses. As a result, net income and EPS should increase by around 25% on a y-o-y basis to $615 million and $1.49, respectively. We have summarized the company’s guided segment revenues and operating margin on our interactive dashboard platform. If you disagree with our forecasts, you can change expected revenue, operating margin and income margin figures for VMware to gauge how it will impact expected EPS.
See Full Analysis For VMware Here
What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs
For CFOs and Finance Teams | Product, R&D, and Marketing Teams
Like our charts? Explore example interactive dashboards and create your own