With its planned $61.2 billion sale to Broadcom Inc. under the cloud of investigations in the U.S. and Europe and speculation that the deal may be in trouble, VMware Inc. forged ahead today with a quarterly report that beat consensus estimates on both revenue and profit.

Revenue for the fourth quarter rose 5% from a year ago, to $3.71 billion, slightly ahead of analysts’ average estimate of $3.66 billion. Earnings of $915 million, or $2.13 per share, beat consensus estimates of $1.96 by nearly 8%.

VMware shares advanced more than 2% in early after-hours trading, although the price of just under $114 a share is well below the $132 a share the stock hit when the Broadcom acquisition was announced last May.

VMware’s subscription, software-as-a-service and license revenue totaled $2.03 billion, up 7% from a year earlier. The three segments accounted for 32% of total revenue for the quarter, compared with 31% a quarter earlier and 24.6% a year ago.

Subscription and SaaS revenue grew 36%, to $1.18 billion, although about 10% of that growth was thanks to an extra accounting week in the fourth quarter of the year.

Fourth-quarter operating income of $1.14 billion was flat from a year ago. Remaining performance operations, or the total future performance obligations arising from contractual relationships, grew 13%.

For the full year, revenue was $13.35 billion with subscription and SaaS revenue contributed $4.01 billion, up 25% from the previous year. Subscription and SaaS annual recurring revenue stood at $4.66 billion at the end of the year, an increase of 30% from a year earlier. Full-year net income was $2.78 billion, or $6.53 per diluted share, down 10% from 2022.

Multicloud validation

“These results reflect consistent customer appetite for our multicloud offerings and our ability to help companies with a cloud-smart approach,” Chief Executive Raghu Raghuram said in a statement. VMware has been keen on expanding out of its virtualization niche into software that helps businesses build and deploy applications across multiple cloud platforms as well as in on-premises infrastructure.

As is customary for companies in the process of being acquired, VMware didn’t hold a conference call with analysts.

Broadcom’s planned acquisition is the subject of a European Union investigation over concerns that Broadcom could prevent its hardware rivals from to interoperating with VMware’s server virtualization software, thus potentially raising prices and stifling innovation. A decision is expected by May 11.

There have also been recent reports that the Federal Trade Commission is seeking input from other companies in VMware’s market in preparation for a possible lawsuit to block the deal. And the U.K.’s Competition and Markets Authority regulatory body is investigating whether the transaction “may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.” A decision in that case is expected by March 22.

VMware products account for three of the top five branded virtualization platforms worldwide, with a total market share of just under 27%. However, that is less than half of the leading virtualization technology: “other.”

Regulatory investigations of a deal of this size aren’t uncommon and most analysts expect the acquisition to proceed. Broadcom has said it plans to close during its fiscal year ending in November and to combine its software businesses under the VMware brand.

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