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VMware Beats Fiscal Q2 2019 Estimates on Strong Cloud Business

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Aug. 24 2018, Published 12:06 p.m. ET

EPS beats estimates

VMware (VMW) reported fiscal Q2 2019 financial results on August 23, 2018. Its non-GAAP EPS (earnings per share) after adjustments came in at $1.54 per share, easily outpacing analysts’ estimate of $1.49 per share. Moreover, the EPS in the reported quarter also increased by 14% YoY (year-over-year).

The graph above shows EPS for VMware in the last five quarters. During that timeframe, the company easily surpassed analysts’ estimate.

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Key analysis

In fiscal Q2 2019, VMware’s top line rose 13.8% YoY to nearly $2.2 billion. In the reported quarter, the License and Service revenue segments improved nearly 21% and 10%, respectively, on an annualized basis. The non-GAAP operating margin in Q2 2019 came in at 33.8% against 34.8% in fiscal Q2 2018.

The diverse product portfolio coupled with strong demand from the EMEA (Europe, Middle East, and Africa) region have contributed to revenue growth for the company. In addition, higher adoption of VMware cloud on Amazon’s (AMZN) AWS cloud platform has also supported business growth. During the quarter, the company also witnessed 150 partners joining the VMware cloud through the AWS partner program.

Outlook

VMware forecasts EPS in fiscal Q3 2019 to be at $1.50, which is lower than the current quarter. The company projected revenue in fiscal Q3 2019 to come in around $2.17 billion, reflecting 11.7% YoY growth, whereas in the same period, license revenue is projected to improve by 14.1% YoY to $865 million.

The company also estimates that operating margin in fiscal Q3 2019 will be 33% and the non-GAAP tax rate to be at 16%.

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