A Look at VMware’s Fiscal Calendar Adjustment

VMware’s changed fiscal quarter under Dell ownership

In its 1Q18 earnings release, VMware (VMW) shared that it had adjusted its fiscal calendar and that its “revised fiscal calendar began on February 4, 2017 and [would] end February 2, 2018.”

This change can be attributed to Dell’s acquisition of VMware’s parent company, EMC, which was finalized in 2016. For this reason, VMware’s fiscal 1Q18 results are being compared to its 1Q16 results. The stub period of VMware’s fiscal 2017 was from January 1, 2017, to February 3, 2017.

A Look at VMware’s Fiscal Calendar Adjustment

Prior to its acquisition by Dell, which not only marked the tech industry’s biggest buyout at that time but also the largest financing commitment for a technology deal, EMC held an 80% stake in VMware. Following EMC’s acquisition by Dell, which completed on September 7, 2016, VMware became a part of Dell Technologies.

The above diagram identifies the Denali businesses allocated to the DHI Group and the Class V Group. Denali is Dell’s Holding Company. Dell used a tracking stock structure to acquire EMC and VMware.

Fiscal 2Q18 expectations

For fiscal 2Q18, VMware expects its revenue and EPS to be in the range of $1.84 billion–$1.89 billion and $1.11–$1.14, respectively. VMware’s revenue guidance for fiscal 2Q18 exceeds the expectations of analysts, who expect revenue of close to $1.81 billion.

Later in the series, we’ll discuss the factors that enabled VMware to raise its guidance.