What Is Next For VMWare?

According to a Gartner report, VMWare (NYSE:VMW) accounts for 91% share of the virtualization infrastructure software market. Even after including vendors like Microsoft that provide virtual machine capabilities bundled with their other server offerings, VMWare still leads with about 60%-75% share of the market.

VMWare’s Financials

VMware’s fourth quarter revenues grew 16% over the year to $2.58 billion versus the Street estimate of $2.5 billion. Non-GAAP earnings were $1.98 per share, ahead of the Street’s forecast of $1.88. Net income for the quarter came in at $1.21 per share compared with a loss of $0.96 per share reported a year ago.

By segment, license revenues grew 21% over the year to $1.23 billion and services segment grew 13% to $1.36 billion for the quarter. Hybrid Cloud and SaaS accounted for 10% of total revenues and grew 35% over the year.

For the current year, VMware expects revenues of $10.03 billion with license revenues expected to grow 12.8% to $4.28 billion. It projected non-GAAP earnings of $6.49 per share. VMWare expects to end the current quarter with revenues of $2.25 billion and non-GAAP income of $1.27 per share. The market was looking for revenues of $10.04 billion and an EPS of $6.52 for the year and revenues of $2.24 billion and an EPS of $1.28 for the first quarter.

VMWare’s Market Expansion

Earlier this quarter, VMWare announced the biggest release of its NSX offering. VMware NSX is its network virtualization and security platform that offers logical network pieces to connect workloads on virtual machines. Till recently, NSX supported vSphere, VMWare’s original platform. The latest release decouples NSX from vSphere and works on other clouds including AWS, Microsoft Azure, and IBM Cloud. The move will help VMWare compete more strongly with Cisco. Known as NSX-T, the new offering will become its primary platform going forward to provide a unified network architecture for on-premises data center, enterprise branches, Internet of Things, and multiple public cloud providers.

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