VMware Inc.’s strategy shift from being a seller of individual virtualization products to becoming a more pervasive provider of packaged solutions shows no sign of slowing down.

The company today reported fiscal first-quarter revenues of $2.01 billion, up 14 percent year-over-year and ahead of the $1.96 billion the company forecast the previous quarter. License revenues grew 21 percent, to $774 million, while services revenue grew only 9 percent, indicating that the company’s shift to a more sustainable licensing model is paying off.

Net income of $516 million, or $1.26 per share, grew 18 percent from the year earlier and easily surpassed analysts’ average estimate of $1.15. The company also raised guidance on total fiscal year 2019 revenue to $8.78 billion, up 12 percent year-over-year and ahead of the consensus forecast of $8.73 billion.

“The market is responding positively to all aspects of our portfolio,” said Chief Executive Pat Gelsinger (pictured). “We’re seeing strong global acceptance and a positive environment for enterprise software companies in general.” International sales surpassed those in the U.S. for the first time, contributing 53 percent of revenue in the quarter.

Investors also responded positively, bidding up the company’s share price by 3 percent in after-hours trading. The stock is up more than 40 percent over the past 12 months.

Solution sales

The company has spent the past two years expanding its footprint beyond its core virtualization products into a portfolio with four overarching themes, Gelsinger said. They include private cloud, public cloud, networking/security and workplace transformation.

In line with that transition, VMware earlier this month outlined announced its vision for an end-to-end networking roadmap that’s heavy on virtualization and security. It also recently overhauled its Workspace endpoint management suite with improved security and management visibility. “People are no longer putting the Tinker Toys together themselves,” Gelsinger said. “They’re saying, ‘Give me the solution.’”

VMware doesn’t break out revenues by product line, but executives said growth outside of its core data center virtualization business was strong.

License bookings for NSX network virtualization software grew 30 percent in the quarter, and sales of the vSAN virtualized storage product climbed 70 percent. VSAN was included in all of the top 10 deals the company signed during that period.

“VMware is one of the players in what we call the ‘data center operating system,’ with compute, storage and network being virtualized,” said analyst Patrick Moorhead of Moor Insights & Strategy. “The company is the go-to source for both software-defined and managed compute and storage, and I think it will be a player with NSX networking.”

Executives said they’re also bullish on the potential for the VxRail hyperconverged appliance, which runs a full suite of the company’s software-defined data center products. Dell Technologies Inc. picked up VxRail with the acquisition of EMC Corp. and has ridden it to the No. 1 spot in hyperconverged market share, according to the latest International Data Corp. figures. Gelsinger said more than 14,000 customers are now running VxRail with vSAN, and that sales grew 70 percent from last year.  “We’re seeing tremendous trajectory for this product,” he said. “As hyperconverged becomes a more important category for our customers, we are the clear leaders.”

A multicloud story

On the cloud side, executives made it clear that they’re going to support whatever public cloud options customers demand. The company didn’t provide details on the performance of the company’s growing cloud partnerships with Amazon Web Services Inc. and IBM Corp, but Gelsinger said both are “going very well.”

VMware also recently took its first tentative steps to improve relations with longtime rival Microsoft Corp. by adding support for that company’s Azure infrastructure-as-a-service to NSX Cloud. The two companies also work together on virtual desktop infrastructure. Gelsinger implied that Google Inc.’s cloud will be next. “Our strategy is a multicloud one where we want customers to be able to take advantage of private cloud with multiple public cloud providers,” he said. “We will continue to fill out our portfolio of both cloud providers and service offerings.”

The company is also upping its commitment to containers, the lightweight VM technology that was once thought to be a threat to the company’s core business. “We see VMs and containers as very complementary, and we’re making it easier for customers to take advantage of both,” Gelsinger said. “We believe containers will accelerate interest in our core platforms.”

Analyst Moorhead agreed. “Reports of VMware’s ‘death by containers’ have been greatly exaggerated,” he said.

Gelsinger talked about the company’s acquisition strategy, its approach to product development and the promise of blockchain, among other topics, with John Furrier, co-host of SiliconANGLE Media’s mobile livestreaming studio theCUBE, at VMware Radio 2018 Wednesday. Here’s the full interview:

Image: SiliconANGLE