UPDATED 06:01 EDT / APRIL 23 2014

VMware gains momentum with expectation-busting Q1 earnings

vmwareVMware has once again shown us there’s an absolute fortune to be made in the world of virtualization, reporting analyst-busting revenues in its earnings call yesterday.

The Palo Alto-based virtualization giant announced sales of a whopping $1.368 billion for Q1 of this year, a 14 percent rise from the previous year’s quarter, and way ahead of the $1.35 billion projected figure. Overall, its operating income amounted to $241 million, a 51 percent increase from the $160 million it raked in back in Q1 of 20143.

VMware also noted $561 million profits from sales of its licenses in Q1, plus an extra $799 million from maintenance. This amounts to a rapid start for the company that execs believe will result in massive growth by the end of the year.

“Our strong financial results reflect VMware’s unique position in helping customers transform their IT infrastructure,” said VMware boss and #theCUBE alum Pat Gelsinger. “As the industry shifts from client server computing to the mobile-cloud era, customers are choosing our solutions because we have the most complete vision and offering for navigating this evolving world.”

VMware hasn’t been sitting idle on the pile of cash its made. The company has spent a fortune, including some $77 million this last quarter, on “additions to property and equipment”, just shy of the $78 million it spent in Q1 2013. This extra hardware was purchased to support the underlying infrastructure of its new vCloud Hybrid Service that’s designed to take on rivals like AWS, Google Compute Engine and Azure. The company efforts have been rewarded too, with its chief operating officer Carl Eschenbach noting “greater than 100 percent year-on-year” growth in its cloud services. Star performers were its vCHS service and its service provider partner program, the executive added.

Notably, VMware opened its checkbook to acquire mobile management and security firm AirWatch at the end of the last quarter. In its earnings call, the company said it expects this to become a multi-million dollar per-quarter businesses later this year. VMware’s AirWatch acquisition is viewed as one of its biggest bets yet – not only does it think it can make money from virtualization, it’s also eying mobile devices and software-defined data centers too.

Not surprisingly, VMware’s shares were up 1.66 shortly after its earnings call. The company says its full revenues for 2014 will likely hit around $6 billion, an increase of around 14 to 17 percent from the previous year.


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