What To Watch For In VMware’s Q3 Results

VMware (NYSE:VMW) is slated to announce its third quarter results on November 29, post market close. Barring any disruptions from the Dell deal, the company looks on track to deliver another strong quarter. However, our current price estimate of $130 per share for VMware is marginally lower than the current market price. Our interactive dashboard on VMware’s Price Estimate outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation.

In Q2, VMware’s product license bookings saw double-digit growth across categories. The company saw license revenue grow to $900 million (+15% y-o-y), while total revenue grew to $2.17 billion (+13% y-o-y).

While Q2 numbers were ahead of market expectations, the guidance for Q3 was in line with expectations, though management raised its guidance for fiscal 2019 expected revenue to around $8.8 billion (+12% y/y).

The business momentum looks intact, with growth across NSX and vSAN. Going into the Q3 earnings announcement, we will be looking for incrementally positive commentary on the hybrid cloud side and also any color on how the demand is evolving. Given that storage companies have pointed towards slack in their business due to digestion issues, it is possible that some of that slack translates into margin expansion for the likes of VMware. Additionally, while VMware did not comment on the Dell transaction, any developments on that front could also impact the stock.

Do not agree with our forecast? Create your own price forecast for VMware by changing the base inputs (blue dots) on our interactive dashboard.