VMware International Sales Boost Q1 Earnings

By Chris Preimesberger  |  Posted 2010-04-20

VMware, maker of a hypervisor and virtualized desktops that have been selling particularly well in some far-flung worldwide markets, reported a bang-up first quarter in its April 20 earnings call.

International and U.S. domestic revenues for VMware were dead even, with each bringing in $317 million for a total of $634 million. The company's international income was up 40 percent over first-quarter 2009, while U.S. revenue increased 30 percent for the same period.

The company also reported a GAAP (Generally Accepted Accounting Principles) operating margin of 16.1 percent, a non-GAAP margin of 27.6 percent and operating cash flow growth of 37 percent, to $355 million.

Chief Financial Officer Mark Peek said on the call that quarterly sales were particularly strong in Europe, China and Japan.

License revenues came in at $312 million, an increase of 21 percent from a year ago. Services revenues, which include software maintenance and professional services, were $322 million, an increase of 51 percent.

"Our revenue was stronger than expected, but we're not ready to say that the recession has come to an end," Peek said. "We do know there is pent-up demand, that IT budgets are improving and that our execution was excellent."

CEO Paul Maritz agreed, saying, "It's too soon to say we're back in normal waters."

Peek said VMware expects its final 2010 revenues to come in between $2.65 billion and $2.75 billion, and increase of between 30 and 35 percent over 2009.

Chief Operating Officer Tod Nielsen told listeners on the earnings call that the desktop PC market is "aging" and that many enterprises are looking closely at adding some VDI (virtual desktop infrastructure) installations to go along with their client/server machines.

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