VMware Reports Fourth Quarter and Fiscal Year 2023 Results
VMware reported a strong FY23 with a total revenue of $13.35 billion, marking a 4% increase from FY22. Subscription and SaaS revenue reached $4.01 billion, up 25% year-over-year. In Q4, revenue was $3.71 billion, a 5% rise from Q4 FY22. However, GAAP net income for FY23 fell 28% year-over-year to $1.31 billion or $3.09 per diluted share. Non-GAAP net income also decreased by 10% to $2.78 billion. The company is optimistic about its merger with Broadcom and growth in multi-cloud offerings, targeting an increase in customer demand.
- FY23 total revenue increased 4% to $13.35 billion.
- Subscription and SaaS revenue grew 25% to $4.01 billion.
- Q4 subscription and SaaS revenue rose 36% year-over-year.
- Subscription and SaaS ARR increased 30% to $4.66 billion.
- GAAP net income for FY23 decreased 28% to $1.31 billion.
- Non-GAAP net income fell 10% to $2.78 billion.
- GAAP operating income dropped 15% year-over-year.
FY23 Total Revenue of
FY23 Subscription and SaaS Revenue of
Quarterly Review
-
Revenue for the fourth quarter was
, an increase of$3.71 billion 5% from the fourth quarter of fiscal 2022. -
The combination of subscription and SaaS and license revenue was
, an increase of$2.03 billion 7% from the fourth quarter of fiscal 2022. -
Subscription and SaaS revenue constituted
32% of our total revenue for the quarter. -
Subscription and SaaS revenue for the fourth quarter was
, an increase of$1.18 billion 36% year-over-year. Approximately 10 percentage points of this year-over-year growth was associated with the extra week in the fourth quarter of fiscal year 2023. -
GAAP net income for the fourth quarter was
, or$494 million per diluted share, down$1.15 17% per diluted share compared to , or$586 million per diluted share, for the fourth quarter of fiscal 2022. Non-GAAP net income for the fourth quarter was$1.39 , or$915 million per diluted share, up$2.13 5% per diluted share compared to , or$855 million per diluted share, for the fourth quarter of fiscal 2022.2$2.02 -
GAAP operating income for the fourth quarter was
, a decrease of$658 million 16% from the fourth quarter of fiscal 2022. Non-GAAP operating income for the fourth quarter was , flat as compared to the fourth quarter of fiscal 2022.$1.14 billion -
Operating cash flow for the fourth quarter was
. Free cash flow for the fourth quarter was$1.63 billion .$1.51 billion -
RPO for the fourth quarter totaled
, up$13.56 billion 13% year-over-year.
Annual Review
-
Revenue for fiscal year 2023 was
, an increase of$13.35 billion 4% from fiscal year 2022. -
The combination of subscription and SaaS and license revenue was
, an increase of$6.85 billion 8% from fiscal year 2022. -
Subscription and SaaS revenue represented
30% of our total revenue for the fiscal year. -
Subscription and SaaS revenue for fiscal year 2023 was
, an increase of$4.01 billion 25% from fiscal year 2022. Approximately 2 percentage points of this year-over-year growth was associated with the extra week in fiscal year 2023. -
Subscription and SaaS ARR exiting fiscal year 2023 was
, an increase of$4.66 billion 30% from fiscal year 2022. -
GAAP net income for fiscal year 2023 was
, or$1.31 billion per diluted share, down$3.09 28% per diluted share compared to , or$1.82 billion per diluted share, for fiscal year 2022. Non-GAAP net income for fiscal year 2023 was$4.31 , or$2.78 billion per diluted share, down$6.53 10% per diluted share compared to , or$3.06 billion per diluted share, for fiscal year 2022.2$7.25 -
GAAP operating income for fiscal year 2023 was
, a decrease of$2.02 billion 15% from fiscal year 2022. Non-GAAP operating income for fiscal year 2023 was , a decrease of$3.74 billion 5% from fiscal year 2022. -
Operating cash flow for fiscal year 2023 was
. Free cash flow for fiscal year 2023 was$4.30 billion .$3.85 billion
“We are very pleased with our fiscal year 2023 performance. These results reflect consistent customer appetite for our multi-cloud offerings and our ability to help companies with a cloud smart approach,” commented
“We delivered strong performance to close out our fiscal year 2023, achieving over
Business Highlights & Strategic Announcements
-
At VMware Explore Europe 2022, the company announced new technology offerings to enable customers to accelerate their digital transformation, including:
-
Sovereign SaaS innovations that enable partners to deliver services equivalent to those found in public clouds, while also better assuring data is protected, compliant and resident within national territories. Solutions include VMware Tanzu on sovereign cloud and VMware Aria Operations Compliance pack for sovereign clouds. Additionally,
VMware achieved partner momentum having doubled the number of VMware Sovereign Cloud providers to 36 partners globally, up from 14 inApril 2022 . - VMware SD-WAN solutions that help enterprises more securely, reliably and optimally deliver applications, data and services—no matter where they reside—to the site, branch and home, across any network to any device.
- New Anywhere Workspace platform capabilities for Digital Employee Experience Management (DEEM), Workspace ONE Freestyle Orchestrator and VMware Horizon Cloud that help further ease management burdens for IT teams and improve their productivity with automation.
-
Sovereign SaaS innovations that enable partners to deliver services equivalent to those found in public clouds, while also better assuring data is protected, compliant and resident within national territories. Solutions include VMware Tanzu on sovereign cloud and VMware Aria Operations Compliance pack for sovereign clouds. Additionally,
-
VMware and Equinix expanded their global relationship and unveiled VMware Cloud on Equinix Metal, a new distributed cloud service that will deliver a more performant, secure and cost-effective cloud option to support enterprise applications. -
VMware and Hewlett Packard Enterprise expanded their partnership to bring together HPE GreenLake and VMware Cloud to deliver a fully integrated solution with a simple pay-as-you-go hybrid cloud consumption model. -
VMware was positioned as a Leader in the IDC MarketScape: Worldwide Virtual Client Computing 2022-2023 Vendor Assessment across both strategies and capabilities.3 The report highlighted VMware’s diverse ecosystem and growing body of certified engineers. -
VMware was positioned as a Leader in the IDC MarketScape: European End User Experience Management 2022 Vendor Assessment across both strategies and capabilities.4 The report highlighted VMware’s portfolio of technologies and ability to add new virtual environments during performance issues. -
VMware received recognition for its ongoing leadership in ESG, demonstrating progress on its 2030 Agenda:-
For the third consecutive year,
VMware was recognized by the 2022 Dow Jones Sustainability Indices, ranking in the 99th percentile for all companies. -
For the sixth consecutive year,
VMware was included in the JUST 100, a comprehensive ranking of ESG and stakeholder performance among America’s largest publicly traded companies. Within the software industry,VMware ranked number one in the “workers” category, demonstrating a commitment to fair and livable wages, worker safety, cultivating a diverse workplace, investing in workforce training and providing benefits and work-life balance. -
VMware was named one of the Best Places to Work in IT by Computerworld for the 9th consecutive year.
-
For the third consecutive year,
1The extra week during the fourth quarter of fiscal 2023 resulted in incremental ratable and professional services revenue on a comparable basis. For more information about impacts of the extra week in fiscal 2023, see the table titled “Supplemental Reconciliation of GAAP to non-GAAP Data—Estimated Impact on Revenue Growth Rates Associated with the Extra Week.” |
|
2Our annual effective tax rate is based upon, among other things, current tax law, including Internal Revenue Code Section 174 relating to research and development expense capitalization, which became effective beginning in VMware’s fiscal 2023. If in the future this provision is deferred, modified or repealed, our effective tax rate may fluctuate significantly in the quarter in which such change in law becomes effective. |
|
3IDC MarketScape: Worldwide Virtual Client Computing 2022-2023 Vendor Assessment (Doc #US49857422, |
|
4IDC MarketScape: European End User Experience Management 2022 Vendor Assessment (Doc #EUR148395522, |
About
Definitive Agreement to be Acquired by Broadcom
Additional Information
VMware’s website is located at vmware.com, and its investor relations website is located at ir.vmware.com. VMware’s goal is to maintain the investor relations website as a portal through which investors can easily find or navigate to pertinent information about
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to VMware’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled “About Non-GAAP Financial Measures.”
Annual Recurring Revenue (“ARR”)
ARR is an operating measure
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding the expected benefits to customers, partners and stockholders of VMware’s strategy, offerings, and partnerships; portfolio; progress in VMware’s business model transition; and the proposed acquisition of
|
||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenue: |
|
|
|
|
|
|
|
|
||||||||
License |
|
$ |
845 |
|
|
$ |
1,035 |
|
|
$ |
2,835 |
|
|
$ |
3,128 |
|
Subscription and SaaS |
|
|
1,183 |
|
|
|
868 |
|
|
|
4,012 |
|
|
|
3,205 |
|
Services |
|
|
1,686 |
|
|
|
1,628 |
|
|
|
6,503 |
|
|
|
6,518 |
|
Total revenue |
|
|
3,714 |
|
|
|
3,531 |
|
|
|
13,350 |
|
|
|
12,851 |
|
Operating expenses(1): |
|
|
|
|
|
|
|
|
||||||||
Cost of license revenue |
|
|
42 |
|
|
|
41 |
|
|
|
154 |
|
|
|
152 |
|
Cost of subscription and SaaS revenue |
|
|
204 |
|
|
|
188 |
|
|
|
788 |
|
|
|
690 |
|
Cost of services revenue |
|
|
412 |
|
|
|
378 |
|
|
|
1,540 |
|
|
|
1,429 |
|
Research and development |
|
|
908 |
|
|
|
806 |
|
|
|
3,317 |
|
|
|
3,057 |
|
Sales and marketing |
|
|
1,173 |
|
|
|
1,075 |
|
|
|
4,391 |
|
|
|
4,067 |
|
General and administrative |
|
|
315 |
|
|
|
260 |
|
|
|
1,130 |
|
|
|
1,068 |
|
Realignment |
|
|
2 |
|
|
|
— |
|
|
|
8 |
|
|
|
1 |
|
Operating income |
|
|
658 |
|
|
|
783 |
|
|
|
2,022 |
|
|
|
2,387 |
|
Investment income |
|
|
38 |
|
|
|
— |
|
|
|
65 |
|
|
|
2 |
|
Interest expense |
|
|
(83 |
) |
|
|
(80 |
) |
|
|
(304 |
) |
|
|
(252 |
) |
Other income (expense), net |
|
|
53 |
|
|
|
(41 |
) |
|
|
9 |
|
|
|
(52 |
) |
Income before income tax |
|
|
666 |
|
|
|
662 |
|
|
|
1,792 |
|
|
|
2,085 |
|
Income tax provision |
|
|
172 |
|
|
|
76 |
|
|
|
478 |
|
|
|
265 |
|
Net income |
|
$ |
494 |
|
|
$ |
586 |
|
|
$ |
1,314 |
|
|
$ |
1,820 |
|
Net income per weighted-average share, basic |
|
$ |
1.16 |
|
|
$ |
1.39 |
|
|
$ |
3.11 |
|
|
$ |
4.34 |
|
Net income per weighted-average share, diluted |
|
$ |
1.15 |
|
|
$ |
1.39 |
|
|
$ |
3.09 |
|
|
$ |
4.31 |
|
Weighted-average shares, basic |
|
|
425,814 |
|
|
|
420,089 |
|
|
|
423,150 |
|
|
|
419,504 |
|
Weighted-average shares, diluted |
|
|
429,809 |
|
|
|
422,976 |
|
|
|
425,860 |
|
|
|
422,394 |
|
__________ |
|
|
|
|
|
|
|
|
||||||||
(1) Includes stock-based compensation as follows: |
|
|
|
|
|
|
|
|
||||||||
Cost of license revenue |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
1 |
|
Cost of subscription and SaaS revenue |
|
|
7 |
|
|
|
5 |
|
|
|
25 |
|
|
|
21 |
|
Cost of services revenue |
|
|
27 |
|
|
|
22 |
|
|
|
106 |
|
|
|
92 |
|
Research and development |
|
|
174 |
|
|
|
126 |
|
|
|
616 |
|
|
|
528 |
|
Sales and marketing |
|
|
99 |
|
|
|
75 |
|
|
|
376 |
|
|
|
302 |
|
General and administrative |
|
|
42 |
|
|
|
34 |
|
|
|
166 |
|
|
|
131 |
|
|
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
(amounts in millions, except per share amounts, and shares in thousands) |
|||||||
(unaudited) |
|||||||
|
|
|
|
||||
|
|
|
|
||||
|
2023 |
|
2022 |
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
5,100 |
|
|
$ |
3,614 |
|
Short-term investments |
|
— |
|
|
|
19 |
|
Accounts receivable, net of allowance of |
|
2,510 |
|
|
|
2,297 |
|
Due from related parties |
|
2,078 |
|
|
|
1,438 |
|
Other current assets |
|
543 |
|
|
|
598 |
|
Total current assets |
|
10,231 |
|
|
|
7,966 |
|
Property and equipment, net |
|
1,623 |
|
|
|
1,461 |
|
Deferred tax assets |
|
6,157 |
|
|
|
5,906 |
|
Intangible assets, net |
|
478 |
|
|
|
714 |
|
|
|
9,598 |
|
|
|
9,598 |
|
Due from related parties |
|
208 |
|
|
|
199 |
|
Other assets |
|
2,942 |
|
|
|
2,832 |
|
Total assets |
$ |
31,237 |
|
|
$ |
28,676 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
267 |
|
|
$ |
234 |
|
Accrued expenses and other |
|
2,568 |
|
|
|
2,336 |
|
Customer deposits |
|
1,087 |
|
|
|
470 |
|
Current portion of long-term debt |
|
1,000 |
|
|
|
— |
|
Unearned revenue |
|
7,079 |
|
|
|
6,479 |
|
Due to related parties |
|
390 |
|
|
|
132 |
|
Total current liabilities |
|
12,391 |
|
|
|
9,651 |
|
Long-term debt |
|
9,440 |
|
|
|
12,671 |
|
Unearned revenue |
|
5,664 |
|
|
|
4,743 |
|
Income tax payable |
|
287 |
|
|
|
242 |
|
Operating lease liabilities |
|
845 |
|
|
|
927 |
|
Due to related parties |
|
648 |
|
|
|
909 |
|
Other liabilities |
|
428 |
|
|
|
409 |
|
Total liabilities |
|
29,703 |
|
|
|
29,552 |
|
Contingencies |
|
|
|
||||
Stockholders’ equity (deficit): |
|
|
|
||||
Class A common stock, par value |
|
4 |
|
|
|
4 |
|
Additional paid-in capital |
|
1,095 |
|
|
|
— |
|
Accumulated other comprehensive loss |
|
(4 |
) |
|
|
(5 |
) |
Retained earnings (accumulated deficit) |
|
439 |
|
|
|
(875 |
) |
Total stockholders’ equity (deficit) |
|
1,534 |
|
|
|
(876 |
) |
Total liabilities and stockholders’ equity (deficit) |
$ |
31,237 |
|
|
$ |
28,676 |
|
|
|||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||||||||
(in millions) |
|||||||||||||||
(unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Operating activities: |
|
|
|
|
|
|
|
||||||||
Net income |
$ |
494 |
|
|
$ |
586 |
|
|
$ |
1,314 |
|
|
$ |
1,820 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
328 |
|
|
|
284 |
|
|
|
1,234 |
|
|
|
1,110 |
|
Stock-based compensation |
|
349 |
|
|
|
262 |
|
|
|
1,290 |
|
|
|
1,075 |
|
Deferred income taxes, net |
|
(37 |
) |
|
|
12 |
|
|
|
(218 |
) |
|
|
(80 |
) |
(Gain) loss on equity securities and disposition of assets, net |
|
4 |
|
|
|
5 |
|
|
|
(6 |
) |
|
|
33 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
21 |
|
|
|
2 |
|
|
|
21 |
|
Other |
|
1 |
|
|
|
4 |
|
|
|
5 |
|
|
|
10 |
|
Changes in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
||||||||
Accounts receivable |
|
(602 |
) |
|
|
(626 |
) |
|
|
(218 |
) |
|
|
(379 |
) |
Other current assets and other assets |
|
(281 |
) |
|
|
(385 |
) |
|
|
(792 |
) |
|
|
(852 |
) |
Due from related parties |
|
(1,274 |
) |
|
|
(683 |
) |
|
|
(647 |
) |
|
|
95 |
|
Accounts payable |
|
(10 |
) |
|
|
11 |
|
|
|
38 |
|
|
|
98 |
|
Accrued expenses, customer deposits and other liabilities |
|
1,026 |
|
|
|
668 |
|
|
|
499 |
|
|
|
487 |
|
Income taxes payable |
|
75 |
|
|
|
5 |
|
|
|
283 |
|
|
|
28 |
|
Unearned revenue |
|
1,526 |
|
|
|
990 |
|
|
|
1,520 |
|
|
|
908 |
|
Due to related parties |
|
33 |
|
|
|
(17 |
) |
|
|
(4 |
) |
|
|
(17 |
) |
Net cash provided by operating activities |
|
1,632 |
|
|
|
1,137 |
|
|
|
4,300 |
|
|
|
4,357 |
|
Investing activities: |
|
|
|
|
|
|
|
||||||||
Additions to property and equipment |
|
(123 |
) |
|
|
(123 |
) |
|
|
(450 |
) |
|
|
(386 |
) |
Sales of investments in equity securities |
|
— |
|
|
|
9 |
|
|
|
20 |
|
|
|
77 |
|
Purchases of strategic investments |
|
— |
|
|
|
(5 |
) |
|
|
(11 |
) |
|
|
(11 |
) |
Proceeds from disposition of assets |
|
— |
|
|
|
9 |
|
|
|
91 |
|
|
|
14 |
|
Business combinations, net of cash acquired, and purchases of intangible assets |
|
(12 |
) |
|
|
(7 |
) |
|
|
(17 |
) |
|
|
(23 |
) |
Net cash used in investing activities |
|
(135 |
) |
|
|
(117 |
) |
|
|
(367 |
) |
|
|
(329 |
) |
Financing activities: |
|
|
|
|
|
|
|
||||||||
Proceeds from issuance of common stock |
|
2 |
|
|
|
3 |
|
|
|
250 |
|
|
|
270 |
|
Proceeds from issuance of senior notes, net of issuance costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,944 |
|
Borrowings under term loan, net of issuance costs |
|
— |
|
|
|
3,998 |
|
|
|
— |
|
|
|
3,998 |
|
Repayment of term loan |
|
(250 |
) |
|
|
(500 |
) |
|
|
(2,250 |
) |
|
|
(500 |
) |
Repayment of current portion of senior notes |
|
— |
|
|
|
(1,519 |
) |
|
|
— |
|
|
|
(1,519 |
) |
Repayment of note payable to |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(270 |
) |
Repurchase of common stock |
|
— |
|
|
|
(297 |
) |
|
|
(89 |
) |
|
|
(1,169 |
) |
Shares repurchased for tax withholdings on vesting of restricted stock |
|
(122 |
) |
|
|
(95 |
) |
|
|
(375 |
) |
|
|
(385 |
) |
Payment for Special Dividend |
|
— |
|
|
|
(11,499 |
) |
|
|
— |
|
|
|
(11,499 |
) |
Principal payments on finance lease obligations |
|
(1 |
) |
|
|
(1 |
) |
|
|
(5 |
) |
|
|
(5 |
) |
Net cash used in financing activities |
|
(371 |
) |
|
|
(9,910 |
) |
|
|
(2,469 |
) |
|
|
(5,135 |
) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
1,126 |
|
|
|
(8,890 |
) |
|
|
1,464 |
|
|
|
(1,107 |
) |
Cash, cash equivalents and restricted cash at beginning of the period |
|
4,001 |
|
|
|
12,553 |
|
|
|
3,663 |
|
|
|
4,770 |
|
Cash, cash equivalents and restricted cash at end of the period |
$ |
5,127 |
|
|
$ |
3,663 |
|
|
$ |
5,127 |
|
|
$ |
3,663 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
||||||||
Cash paid for interest |
$ |
66 |
|
|
$ |
54 |
|
|
$ |
292 |
|
|
$ |
200 |
|
Cash paid for taxes, net |
|
105 |
|
|
|
55 |
|
|
|
383 |
|
|
|
331 |
|
Non-cash items: |
|
|
|
|
|
|
|
||||||||
Changes in capital additions, accrued but not paid |
$ |
(24 |
) |
|
$ |
(5 |
) |
|
$ |
(1 |
) |
|
$ |
4 |
|
Changes in tax withholdings on vesting of restricted stock, accrued but not paid |
|
12 |
|
|
|
(1 |
) |
|
|
11 |
|
|
|
(7 |
) |
|
|||||||
GROWTH IN REVENUE PLUS SEQUENTIAL CHANGE IN UNEARNED REVENUE |
|||||||
(in millions) |
|||||||
(unaudited) |
|||||||
|
|||||||
|
|||||||
Growth in Total Revenue Plus Sequential Change in Unearned Revenue |
|||||||
|
|
|
|
||||
|
Three Months Ended |
||||||
|
|
|
|
||||
|
2023 |
|
2022 |
||||
Total revenue, as reported |
$ |
3,714 |
|
|
$ |
3,531 |
|
Sequential change in unearned revenue(1) |
|
1,526 |
|
|
|
989 |
|
Total revenue plus sequential change in unearned revenue |
$ |
5,240 |
|
|
$ |
4,520 |
|
Change (%) over prior year, as reported |
|
16 |
% |
|
|
||
|
|
|
|
||||
Growth in License and Subscription and SaaS Revenue Plus Sequential Change in Unearned License and Subscription and SaaS Revenue |
|||||||
|
|
|
|
||||
|
Three Months Ended |
||||||
|
|
|
|
||||
|
2023 |
|
2022 |
||||
Total license and subscription and SaaS revenue, as reported |
$ |
2,028 |
|
|
$ |
1,903 |
|
Sequential change in unearned license and subscription and SaaS revenue(2) |
|
1,197 |
|
|
|
433 |
|
Total license and subscription and SaaS revenue plus sequential change in unearned license and subscription and SaaS revenue |
$ |
3,225 |
|
|
$ |
2,336 |
|
Change (%) over prior year, as reported |
|
38 |
% |
|
|
||
__________ |
|
|
|
||||
(1) Consists of the change in total unearned revenue from the preceding quarter. Total unearned revenue consists of current and non-current unearned revenue amounts presented in the condensed consolidated balance sheets. |
|||||||
(2) Consists of the change in unearned license and subscription and SaaS revenue from the preceding quarter. |
REMAINING PERFORMANCE OBLIGATIONS |
|||||||
(in millions) |
|||||||
(unaudited) |
|||||||
|
|||||||
|
|||||||
Growth in Remaining Performance Obligations |
|||||||
|
|
|
|
||||
|
|
|
|
||||
|
2023 |
|
2022 |
||||
Remaining performance obligations(3) |
$ |
13,559 |
|
|
$ |
11,996 |
|
Change (%) over prior year |
|
13 |
% |
|
|
||
|
|
|
|
||||
Remaining performance obligations, current(4) |
$ |
7,322 |
|
|
$ |
6,793 |
|
Change (%) over prior year |
|
8 |
% |
|
|
||
__________ |
|
|
|
||||
(3) Remaining performance obligations represent the aggregate amount of the transaction price in contracts allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations include unearned revenue, multi-year contracts with future installment payments and certain unfulfilled orders against accepted customer contracts at the end of any given period. |
|||||||
(4) Current remaining performance obligations represent the amount expected to be recognized as revenue over the next twelve months. |
|
||||||||
SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP DATA |
||||||||
ESTIMATED IMPACT ON REVENUE GROWTH RATES ASSOCIATED WITH THE EXTRA WEEK(1) |
||||||||
(unaudited) |
||||||||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
For the Three Months Ended |
|||||||
|
|
|||||||
|
Change year-over- year, as reported (%) |
|
Estimated impact of extra week in fiscal 2023(1) (% pts.) |
|
Change year-over- year, adjusted for the extra week in fiscal 2023 (%) |
|||
Revenue: |
|
|
|
|
|
|||
License |
(18 |
) |
|
— |
|
|
(18 |
) |
Subscription and SaaS |
36 |
|
|
10 |
|
26 |
|
|
Services |
4 |
|
|
8 |
|
|
(4 |
) |
Total revenue |
5 |
|
|
6 |
|
(1 |
) |
|
|
|
|
|
|
|
|||
|
For the Twelve Months Ended |
|||||||
|
|
|||||||
|
Change year-over- year, as reported (%) |
|
Estimated impact of extra week in fiscal 2023(1) (% pts.) |
|
Change year-over- year, adjusted for the extra week in fiscal 2023 (%) |
|||
Revenue: |
|
|
|
|
|
|||
License |
(9 |
) |
|
— |
|
|
(9 |
) |
Subscription and SaaS |
25 |
|
|
2 |
|
|
23 |
|
Services |
— |
|
|
2 |
|
|
(2 |
) |
Total revenue |
4 |
|
|
2 |
|
|
2 |
|
__________ |
|
|
|
|
|
|||
(1) |
|
|||||||||||||||||||||||
SUPPLEMENTAL UNEARNED REVENUE SCHEDULE |
|||||||||||||||||||||||
(in millions) |
|||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
2023 |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
||||||||||||
Unearned revenue as reported: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
License |
$ |
21 |
|
$ |
28 |
|
$ |
20 |
|
$ |
20 |
|
$ |
19 |
|
$ |
17 |
||||||
Subscription and SaaS |
|
4,401 |
|
|
|
3,197 |
|
|
|
2,952 |
|
|
|
2,671 |
|
|
|
2,669 |
|
|
|
2,238 |
|
Services |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Software maintenance |
|
6,805 |
|
|
|
6,636 |
|
|
|
6,903 |
|
|
|
6,877 |
|
|
|
7,208 |
|
|
|
6,773 |
|
Professional services |
|
1,516 |
|
|
|
1,356 |
|
|
|
1,356 |
|
|
|
1,298 |
|
|
|
1,326 |
|
|
|
1,205 |
|
Total unearned revenue |
$ |
12,743 |
|
|
$ |
11,217 |
|
|
$ |
11,231 |
|
|
$ |
10,866 |
|
|
$ |
11,222 |
|
|
$ |
10,233 |
|
|
|||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA |
|||||||||||||||||||||||||||||||
For the Three Months Ended |
|||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) |
|||||||||||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
GAAP |
|
Stock-Based Compensation |
|
Employer Payroll Taxes on Employee Stock Transactions |
|
Intangible Amortization |
|
Realignment Charges |
|
Acquisition, Disposition and Other Items |
|
Tax Adjustment(1) |
|
Non-GAAP As Adjusted(3) |
||||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of license revenue |
$ |
42 |
|
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
32 |
|
Cost of subscription and SaaS revenue |
$ |
204 |
|
|
|
(7 |
) |
|
|
— |
|
|
|
(36 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
160 |
|
Cost of services revenue |
$ |
412 |
|
|
|
(27 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
— |
|
|
$ |
376 |
|
Research and development |
$ |
908 |
|
|
|
(174 |
) |
|
|
— |
|
|
|
(3 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
$ |
730 |
|
Sales and marketing |
$ |
1,173 |
|
|
|
(99 |
) |
|
|
(3 |
) |
|
|
(15 |
) |
|
|
— |
|
|
|
(8 |
) |
|
|
— |
|
|
$ |
1,050 |
|
General and administrative |
$ |
315 |
|
|
|
(42 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(49 |
) |
|
|
— |
|
|
$ |
224 |
|
Realignment |
$ |
2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
Operating income |
$ |
658 |
|
|
|
349 |
|
|
|
3 |
|
|
|
63 |
|
|
|
2 |
|
|
|
67 |
|
|
|
— |
|
|
$ |
1,142 |
|
Operating margin(3) |
|
17.7 |
% |
|
|
9.4 |
% |
|
|
0.1 |
% |
|
|
1.7 |
% |
|
|
— |
% |
|
|
1.8 |
% |
|
|
— |
|
|
|
30.7 |
% |
Other income (expense), net(4) |
$ |
53 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
$ |
54 |
|
Income before income tax |
$ |
666 |
|
|
|
349 |
|
|
|
3 |
|
|
|
63 |
|
|
|
2 |
|
|
|
69 |
|
|
|
— |
|
|
$ |
1,151 |
|
Income tax provision |
$ |
172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
64 |
|
|
$ |
236 |
|
||||||||||
Tax rate(2)(3) |
|
25.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.5 |
% |
||||||||||||
Net income |
$ |
494 |
|
|
|
349 |
|
|
|
3 |
|
|
|
63 |
|
|
|
2 |
|
|
|
69 |
|
|
|
(64 |
) |
|
$ |
915 |
|
Net income per weighted-average share, diluted(3)(5) |
$ |
1.15 |
|
|
$ |
0.81 |
|
|
$ |
0.01 |
|
|
$ |
0.15 |
|
|
$ |
— |
|
|
$ |
0.16 |
|
|
$ |
(0.15 |
) |
|
$ |
2.13 |
|
__________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. |
|||||||||||||||||||||||||||||||
(2) Our annual effective tax rate is based upon, among other things, current tax law, including Internal Revenue Code Section 174 relating to research and development expense capitalization, which became effective beginning in VMware’s fiscal 2023. If in the future this provision is deferred, modified or repealed, our effective tax rate may fluctuate significantly in the quarter in which such change in law becomes effective. |
|||||||||||||||||||||||||||||||
(3) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. |
|||||||||||||||||||||||||||||||
(4) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. |
|||||||||||||||||||||||||||||||
(5) Calculated based upon 429,809 diluted weighted-average shares of common stock. |
|
|||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA |
|||||||||||||||||||||||||||
For the Three Months Ended |
|||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) |
|||||||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
GAAP |
|
Stock-Based Compensation |
|
Employer Payroll Taxes on Employee Stock Transactions |
|
Intangible Amortization |
|
Acquisition, Disposition and Other Items |
|
Tax Adjustment(1) |
|
Non-GAAP As Adjusted(2) |
||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of license revenue |
$ |
41 |
|
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
32 |
|
Cost of subscription and SaaS revenue |
$ |
188 |
|
|
|
(5 |
) |
|
|
— |
|
|
|
(43 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
140 |
|
Cost of services revenue |
$ |
378 |
|
|
|
(22 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
355 |
|
Research and development |
$ |
806 |
|
|
|
(126 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
678 |
|
Sales and marketing |
$ |
1,075 |
|
|
|
(75 |
) |
|
|
(3 |
) |
|
|
(20 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
979 |
|
General and administrative |
$ |
260 |
|
|
|
(34 |
) |
|
|
— |
|
|
|
— |
|
|
|
(16 |
) |
|
|
— |
|
|
$ |
210 |
|
Operating income |
$ |
783 |
|
|
|
262 |
|
|
|
3 |
|
|
|
74 |
|
|
|
16 |
|
|
|
— |
|
|
$ |
1,137 |
|
Operating margin(2) |
|
22.2 |
% |
|
|
7.4 |
% |
|
|
0.1 |
% |
|
|
2.1 |
% |
|
|
0.4 |
% |
|
|
— |
|
|
|
32.2 |
% |
Other income (expense), net(3) |
$ |
(41 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
$ |
(39 |
) |
Income before income tax |
$ |
662 |
|
|
|
262 |
|
|
|
3 |
|
|
|
74 |
|
|
|
19 |
|
|
|
— |
|
|
$ |
1,018 |
|
Income tax provision |
$ |
76 |
|
|
|
|
|
|
|
|
|
|
|
87 |
|
|
$ |
163 |
|
||||||||
Tax rate(2) |
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
16.0 |
% |
||||||||||
Net income |
$ |
586 |
|
|
|
262 |
|
|
|
3 |
|
|
|
74 |
|
|
|
19 |
|
|
|
(87 |
) |
|
$ |
855 |
|
Net income per weighted-average share, diluted for Classes A and B(2)(4) |
$ |
1.39 |
|
|
$ |
0.62 |
|
|
$ |
0.01 |
|
|
$ |
0.17 |
|
|
$ |
0.04 |
|
|
$ |
(0.21 |
) |
|
$ |
2.02 |
|
__________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. |
|||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. |
|||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. |
|||||||||||||||||||||||||||
(4) Calculated based upon 422,976 diluted weighted-average shares for Classes A and B. |
|
|||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA |
|||||||||||||||||||||||||||||||
For the Twelve Months Ended |
|||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) |
|||||||||||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
GAAP |
|
Stock-Based Compensation |
|
Employer Payroll Taxes on Employee Stock Transactions |
|
Intangible Amortization |
|
Realignment Charges |
|
Acquisition, Disposition and Other Items |
|
Tax Adjustment(1) |
|
Non-GAAP As Adjusted(3) |
||||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of license revenue |
$ |
154 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(37 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
116 |
|
Cost of subscription and SaaS revenue |
$ |
788 |
|
|
|
(25 |
) |
|
|
— |
|
|
|
(146 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
$ |
616 |
|
Cost of services revenue |
$ |
1,540 |
|
|
|
(106 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(17 |
) |
|
|
— |
|
|
$ |
1,416 |
|
Research and development |
$ |
3,317 |
|
|
|
(616 |
) |
|
|
(1 |
) |
|
|
(10 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
$ |
2,689 |
|
Sales and marketing |
$ |
4,391 |
|
|
|
(376 |
) |
|
|
(7 |
) |
|
|
(61 |
) |
|
|
— |
|
|
|
(15 |
) |
|
|
— |
|
|
$ |
3,932 |
|
General and administrative |
$ |
1,130 |
|
|
|
(166 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(117 |
) |
|
|
— |
|
|
$ |
845 |
|
Realignment |
$ |
8 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
Operating income |
$ |
2,022 |
|
|
|
1,290 |
|
|
|
10 |
|
|
|
254 |
|
|
|
8 |
|
|
|
151 |
|
|
|
— |
|
|
$ |
3,736 |
|
Operating margin(3) |
|
15.1 |
% |
|
|
9.7 |
% |
|
|
0.1 |
% |
|
|
1.9 |
% |
|
|
0.1 |
% |
|
|
1.1 |
% |
|
|
— |
|
|
|
28.0 |
% |
Other income (expense), net(4) |
$ |
9 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
— |
|
|
$ |
— |
|
Income before income tax |
$ |
1,792 |
|
|
|
1,290 |
|
|
|
10 |
|
|
|
254 |
|
|
|
8 |
|
|
|
142 |
|
|
|
— |
|
|
$ |
3,497 |
|
Income tax provision |
$ |
478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
239 |
|
|
$ |
717 |
|
||||||||||
Tax rate(2)(3) |
|
26.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.5 |
% |
||||||||||||
Net income |
$ |
1,314 |
|
|
|
1,290 |
|
|
|
10 |
|
|
|
254 |
|
|
|
8 |
|
|
|
142 |
|
|
|
(239 |
) |
|
$ |
2,780 |
|
Net income per weighted-average share, diluted(3)(5) |
$ |
3.09 |
|
|
$ |
3.03 |
|
|
$ |
0.02 |
|
|
$ |
0.60 |
|
|
$ |
0.02 |
|
|
$ |
0.33 |
|
|
$ |
(0.56 |
) |
|
$ |
6.53 |
|
__________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. |
|||||||||||||||||||||||||||||||
(2) Our annual effective tax rate is based upon, among other things, current tax law, including the impacts of Internal Revenue Code Section 174 relating to research and development expense capitalization, which became effective beginning in VMware’s fiscal 2023. If in the future this provision is deferred, modified or repealed, our effective tax rate may fluctuate significantly in the quarter in which such change in law becomes effective. |
|||||||||||||||||||||||||||||||
(3) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. |
|||||||||||||||||||||||||||||||
(4) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. |
|||||||||||||||||||||||||||||||
(5) Calculated based upon 425,860 diluted weighted-average shares of common stock. |
|
|||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA |
|||||||||||||||||||||||||||||||
For the Twelve Months Ended |
|||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) |
|||||||||||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
GAAP |
|
Stock-Based Compensation |
|
Employer Payroll Taxes on Employee Stock Transactions |
|
Intangible Amortization |
|
Realignment Charges |
|
Acquisition, Disposition and Other Items |
|
Tax Adjustment(1) |
|
Non-GAAP As Adjusted(2) |
||||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of license revenue |
$ |
152 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(39 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
112 |
|
Cost of subscription and SaaS revenue |
$ |
690 |
|
|
|
(21 |
) |
|
|
— |
|
|
|
(171 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
498 |
|
Cost of services revenue |
$ |
1,429 |
|
|
|
(92 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
1,334 |
|
Research and development |
$ |
3,057 |
|
|
|
(528 |
) |
|
|
(2 |
) |
|
|
(8 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
2,519 |
|
Sales and marketing |
$ |
4,067 |
|
|
|
(302 |
) |
|
|
(7 |
) |
|
|
(85 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
3,676 |
|
General and administrative |
$ |
1,068 |
|
|
|
(131 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(142 |
) |
|
|
— |
|
|
$ |
794 |
|
Realignment |
$ |
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
Operating income |
$ |
2,387 |
|
|
|
1,075 |
|
|
|
11 |
|
|
|
303 |
|
|
|
1 |
|
|
|
142 |
|
|
|
— |
|
|
$ |
3,918 |
|
Operating margin(2) |
|
18.6 |
% |
|
|
8.4 |
% |
|
|
0.1 |
% |
|
|
2.4 |
% |
|
|
— |
% |
|
|
1.1 |
% |
|
|
— |
|
|
|
30.5 |
% |
Other income (expense), net(3) |
$ |
(52 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
31 |
|
|
|
— |
|
|
$ |
(21 |
) |
Income before income tax |
$ |
2,085 |
|
|
|
1,075 |
|
|
|
11 |
|
|
|
303 |
|
|
|
1 |
|
|
|
173 |
|
|
|
— |
|
|
$ |
3,647 |
|
Income tax provision |
$ |
265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
318 |
|
|
$ |
583 |
|
||||||||||
Tax rate(2) |
|
12.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.0 |
% |
||||||||||||
Net income |
$ |
1,820 |
|
|
|
1,075 |
|
|
|
11 |
|
|
|
303 |
|
|
|
1 |
|
|
|
173 |
|
|
|
(318 |
) |
|
$ |
3,064 |
|
Net income per weighted-average share, diluted for Classes A and B(2)(4) |
$ |
4.31 |
|
|
$ |
2.54 |
|
|
$ |
0.03 |
|
|
$ |
0.72 |
|
|
$ |
— |
|
|
$ |
0.41 |
|
|
$ |
(0.75 |
) |
|
$ |
7.25 |
|
__________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. |
|||||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. |
|||||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. |
|||||||||||||||||||||||||||||||
(4) Calculated based upon 422,394 diluted weighted-average shares for Classes A and B. |
|
||||||||||||||||
REVENUE BY TYPE |
||||||||||||||||
(in millions) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenue: |
|
|
|
|
|
|
|
|
||||||||
License |
|
$ |
845 |
|
|
$ |
1,035 |
|
|
$ |
2,835 |
|
|
$ |
3,128 |
|
Subscription and SaaS |
|
|
1,183 |
|
|
|
868 |
|
|
|
4,012 |
|
|
|
3,205 |
|
Total license and subscription and SaaS |
|
|
2,028 |
|
|
|
1,903 |
|
|
|
6,847 |
|
|
|
6,333 |
|
Services: |
|
|
|
|
|
|
|
|
||||||||
Software maintenance |
|
|
1,374 |
|
|
|
1,346 |
|
|
|
5,281 |
|
|
|
5,356 |
|
Professional services |
|
|
312 |
|
|
|
282 |
|
|
|
1,222 |
|
|
|
1,162 |
|
Total services |
|
|
1,686 |
|
|
|
1,628 |
|
|
|
6,503 |
|
|
|
6,518 |
|
Total revenue |
|
$ |
3,714 |
|
|
$ |
3,531 |
|
|
$ |
13,350 |
|
|
$ |
12,851 |
|
Percentage of revenue: |
|
|
|
|
|
|
|
|
||||||||
License |
|
|
22.7 |
% |
|
|
29.3 |
% |
|
|
21.2 |
% |
|
|
24.3 |
% |
Subscription and SaaS |
|
|
31.9 |
% |
|
|
24.6 |
% |
|
|
30.1 |
% |
|
|
25.0 |
% |
Total license and subscription and SaaS |
|
|
54.6 |
% |
|
|
53.9 |
% |
|
|
51.3 |
% |
|
|
49.3 |
% |
Services: |
|
|
|
|
|
|
|
|
||||||||
Software maintenance |
|
|
37.0 |
% |
|
|
38.1 |
% |
|
|
39.6 |
% |
|
|
41.7 |
% |
Professional services |
|
|
8.4 |
% |
|
|
8.0 |
% |
|
|
9.1 |
% |
|
|
9.0 |
% |
Total services |
|
|
45.4 |
% |
|
|
46.1 |
% |
|
|
48.7 |
% |
|
|
50.7 |
% |
Total revenue |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|||||||||||||||
REVENUE BY GEOGRAPHY |
|||||||||||||||
(in millions) |
|||||||||||||||
(unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenue: |
|
|
|
|
|
|
|
||||||||
|
$ |
1,748 |
|
|
$ |
1,645 |
|
|
$ |
6,528 |
|
|
$ |
6,232 |
|
International |
|
1,966 |
|
|
|
1,886 |
|
|
|
6,822 |
|
|
|
6,619 |
|
Total revenue |
$ |
3,714 |
|
|
$ |
3,531 |
|
|
$ |
13,350 |
|
|
$ |
12,851 |
|
Percentage of revenue: |
|
|
|
|
|
|
|
||||||||
|
|
47.1 |
% |
|
|
46.6 |
% |
|
|
48.9 |
% |
|
|
48.5 |
% |
International |
|
52.9 |
% |
|
|
53.4 |
% |
|
|
51.1 |
% |
|
|
51.5 |
% |
Total revenue |
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|||||||||||||||
RECONCILIATION OF GAAP CASH FLOWS FROM OPERATING ACTIVITIES |
|||||||||||||||
TO FREE CASH FLOWS |
|||||||||||||||
(A NON-GAAP FINANCIAL MEASURE) |
|||||||||||||||
(in millions) |
|||||||||||||||
(unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
GAAP cash flows from operating activities |
$ |
1,632 |
|
|
$ |
1,137 |
|
|
$ |
4,300 |
|
|
$ |
4,357 |
|
Capital expenditures |
|
(123 |
) |
|
|
(123 |
) |
|
|
(450 |
) |
|
|
(386 |
) |
Free cash flows |
$ |
1,509 |
|
|
$ |
1,014 |
|
|
$ |
3,850 |
|
|
$ |
3,971 |
|
About Non-GAAP Financial Measures
To provide investors and others with additional information regarding VMware’s results,
VMware’s management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, to calculate bonus payments and to evaluate VMware’s financial performance, the performance of its individual functional groups and the ability of operations to generate cash. Management believes these non-GAAP financial measures reflect VMware’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in VMware’s business, as they exclude charges and gains that are not reflective of ongoing operating results. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating VMware’s operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. Additionally, management believes information regarding free cash flow provides investors and others with an important perspective on the cash available to make strategic acquisitions and investments, to repurchase shares, to fund ongoing operations and to fund other capital expenditures.
Management believes these non-GAAP financial measures are useful to investors and others in assessing VMware’s operating performance due to the following factors:
-
Stock-based compensation. Stock-based compensation is generally fixed at the time the stock-based instrument is granted and amortized over a period of several years. Although stock-based compensation is an important aspect of the compensation of VMware’s employees and executives, the expense for the fair value of the stock-based instruments
VMware utilizes may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of VMware’s core business. - Employer payroll taxes on employee stock transactions. The amount of employer payroll taxes on stock-based compensation is dependent on VMware’s stock price and other factors that are beyond VMware’s control and do not correlate to the operation of the business.
-
Amortization of acquired intangible assets. A portion of the purchase price of VMware’s acquisitions is generally allocated to intangible assets, such as intellectual property, and is subject to amortization. However,
VMware does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition’s purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition. Therefore,VMware believes that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods. - Realignment charges. Realignment charges include workforce reductions, asset impairments, losses on asset disposals and costs to exit facilities. VMware’s management believes it is useful to exclude these items, when significant, as they are not reflective of VMware’s core business and operating results.
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Acquisition, disposition and other items. As
VMware does not acquire or dispose of businesses on a predictable cycle and the terms of each transaction can vary significantly and are unique to each transaction,VMware believes it is useful to exclude acquisition, disposition and other items when looking for a consistent basis for comparison across accounting periods. These items include:- Direct costs of acquisitions and dispositions, such as transaction and advisory fees.
- Costs associated with integrating acquired businesses.
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Accruals for the portion of merger consideration payable in installments that may be paid in cash or
VMware stock, at the option ofVMware . - Gains or losses on investments in equity securities, whether realized or unrealized.
- Charges recognized for non-recoverable strategic investments or gains recognized on the disposition of strategic investments.
- Gains or losses on sale or disposal of distinct lines of business or product offerings, or transactions with features similar to discontinued operations, including recoveries or charges recognized to adjust the fair value of assets that qualify as “held for sale.”
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Certain costs incurred related to
VMware's spin-off from its former parent company,Dell Technologies Inc. , completed onNovember 1, 2021 , such as legal and advisory fees. -
Certain costs incurred related to
VMware's pending acquisition by Broadcom Inc. ("Broadcom"), such as legal and advisory fees incurred to effect the acquisition and retention compensation incurred to preserve our business organization through the consummation of the merger. The acquisition is expected to occur in Broadcom's fiscal year 2023 and is subject to the receipt of regulatory approvals and other customary closing conditions.
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Tax adjustment. Non-GAAP financial information for the quarter is adjusted for a tax rate equal to VMware’s annual estimated tax rate on non-GAAP income. This rate is based on VMware’s estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating VMware’s non-GAAP income as well as significant tax adjustments. VMware’s estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that
VMware management believes materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to VMware’s estimated annual tax rates as described above, the estimated tax rate on non-GAAP income may differ from the GAAP tax rate and from VMware’s actual tax liabilities.
Additionally, VMware’s management believes that the non-GAAP financial measure of free cash flow is meaningful to investors because management reviews cash flow generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered to be a necessary component of ongoing operations.
VMware’s management also believes that the non-GAAP estimated revenue growth rate as adjusted for the extra week during the fourth quarter of fiscal 2023 is meaningful to investors, given that the extra week resulted in incremental ratable and professional services revenue on a comparable basis.
The use of non-GAAP financial measures has certain limitations because they do not reflect all items of income and expense that affect VMware’s operations. Specifically, in the case of stock-based compensation, if
Management encourages investors and others to review VMware’s financial information in its entirety and not rely on a single financial measure.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230301006224/en/
VMware Investor Relations
ir@vmware.com
VMware Global PR
druyak@vmware.com
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