Yahoo Finance VMware (VMW) Q1 Earnings Beat Estimates, Revenues Rise Y/Y
VMware’s VMW first-quarter fiscal 2024 non-GAAP earnings of $1.28 per share beat the Zacks Consensus Estimate by 28% and increased 25.4% year over year.
Revenues of $3.28 billion missed the consensus mark by 0.96%. However, the top line registered year-over-year growth of 6%.
VMware, Inc. Price, Consensus and EPS Surprise
VMware, Inc. price-consensus-eps-surprise-chart | VMware, Inc. Quote
Top-Line Details
Region-wise, U.S. revenues (47.4% of revenues) increased 2.4% year over year to $1.55 billion. International revenues (52.5%) grew 9.6% to $1.72 billion.
Services revenues (47.1% of revenues) declined 4.5% year over year to $1.54 billion. Software Maintenance revenues (79.8% of Services revenues) declined 5.8% to $1.23 billion. Professional Services revenues (20.2% of Services revenues) were $309 million, up 0.65% year over year.
Total License and Subscription & SaaS revenues (52.9% of revenues) increased 17.6% from the year-ago quarter to $1.73 billion.
License revenues (29.8% of License and Subscription & SaaS revenues) decreased 9.6% year over year to $517 million due to the transition to subscription and SaaS.
Subscription & SaaS revenues (70.2% of segment revenues) increased 35.3% year over year to $1.21 billion.
Non-GAAP Operating Details
Research & development expenses as a percentage of revenues increased 80 basis points (bps) year over year to 25.8%.
Sales & marketing expenses as a percentage of revenues decreased 40 bps on a year-over-year basis to 33.7%.
General & administrative expenses as a percentage of revenues increased 330 bps on a year-over-year basis to 11.4%.
Operating margin contracted 380 bps on a year-over-year basis to 9.4%.
Balance Sheet & Cash Flow
As of May 5, 2023, VMware’s cash & cash equivalents were $6.5 billion compared with $5.1 billion as of Feb 3, 2023.
Total debt (including the current portion of long-term debt) was $10.4 billion as of May 5, 2023, compared with $10.4 billion as of Feb 3, 2023.
Operating cash flow was $1.75 billion in the fiscal first quarter compared with $1.63 billion reported in the previous quarter.
Free cash flow was $1.65 billion in the reported quarter compared with $1.5 billion in the previous quarter.
Revenue Performance Obligation increased 13% year over year to $13.01 billion.
Guidance
VMware has entered into a definitive agreement to be acquired by Broadcom AVGO.
Broadcom is set to acquire VMware for approximately $61 billion in cash and stock. VMW will not be providing financial guidance for the second quarter and full-year fiscal 2024.
Zacks Rank & Stocks to Consider
VMware currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Ciena CIEN and Soitec SLOIF, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Ciena have declined 7.8% year to date. CIEN is set to report its second-quarter fiscal 2023 results on Jun 6.
Shares of Soitec have decreased 17.6% year to date. SLOIF is set to report its first-quarter fiscal 2024 results on Jun 14.
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