Net income and EPS
VMWare’s (VMW) GAAP (generally accepted accounting principles) net income in 2Q15 was $172 million and its earnings per share (EPS) equaled $0.40 per diluted share. This compares to its net income of $167 million and EPS of $0.38 in 2Q14.
On a non-GAAP basis, VMWare’s net income for 2Q14 was $396 million and EPS of $0.93, compared with net income of $351 million and EPS of $0.81 in 2Q14. Licensing revenues increased 4% YoY and 9% on a constant currency basis (year-over-year) to $638 million in 2Q15.
Operating income and cash flows
GAAP operating income increased 3% YoY to $206 million, and non-GAAP operating income for 2Q15 increased 12% YoY to $479 million. Operating cash flows for 2Q15 were $3,166 million, whereas free cash flow stood at $238 million. Cash flow figures were negatively impacted by $75.5 million paid in connection with the GSA settlement in 2Q15.
“Our second quarter results are solid, building on our solid start to the year in Q1,” said Pat Gelsinger, CEO of VMware. “We experienced strong industry validation from industry analysts, partners and customers throughout the quarter and also unveiled our Business Mobility strategy and key announcements enabling organizations to transform their business processes.”
“We’re pleased with our Q2 non-GAAP total revenues growth of 13% on a constant currency basis,” said Jonathan Chadwick, CFO and COO of VMware. “We continue to expand our portfolio to deliver new technologies, solutions and transformational opportunities to our customers.”
Analysts are of the view that although VMware is a market leader in cloud infrastructure and business mobility, it faces increasing competition from tech heavyweights like Microsoft (MSFT), Hewlett-Packard (HPQ), and IBM and might lose market share in the long term.
To gain exposure to VMware, you can invest in the First Trust ISE Cloud Computing Index ETF (SKYY) and the iShares North American Tech-Software ETF (IGV). The stock accounts for 3.49% and 1.64% of these ETF portfolios, respectively.