Why VMware Won Big on Earnings

By Chris Lange Updated Jan 13, 5:34AM EST · Published Jul 19, 10:40AM EDT

Why VMware Won Big on Earnings — © Thinkstock

VMware Inc. (NYSE: VMW) reported its second-quarter financial results after the markets closed on Monday, and as a result was one of the top performers in the market on Tuesday. Ultimately, this was a good quarter for VMware, building up its balance sheet, as well as looking to return over $1 billion to shareholders in its repurchase plan that it announced last quarter.

The company said that it had $0.97 in earnings per share (EPS) on $1.69 billion in revenue. Consensus estimates from Thomson Reuters had called for $0.95 in EPS on revenue of $1.68 billion. In the same period of last year, VMware posted EPS of $0.93 and $1.59 billion in revenue.

The company also said it had Licensing revenues of $644 million and Service revenues of $1.05 billion. Each category increased from the previous year, when VMware had Licensing revenues of $638 million and Service revenues of $959 million.

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Last month, the company made announcements that it would further innovate its Business Mobility strategy and product offerings. VMware plans to have a new endpoint security solution powered by Tanium called VMware TrustPoint, which will deliver an integrated solution for unified endpoint management and security.

Previously, VMware announced that it will return about $1.2 billion to shareholders via its repurchase plan. Keep in mind that the company has a market cap of roughly $29 billion, making this repurchase plan about 4% of the total cap.

Pat Gelsinger, chief executive officer of VMware, commented:

Q2 was a continuation of the good start to the year we experienced in Q1, both for results and against our strategic goal of building momentum for our newer growth businesses and in the cloud. Customers are turning to VMware to help them run, manage, secure and connect their applications across all clouds and all devices, with unparalleled connectivity, security and visibility.

On the books, VMware’s cash, cash equivalents and short-term investments totaled $8.67 billion at the end of the quarter, up from $7.51 billion at the end of the 2015.

Shares of VMware were trading up about 9% at $68.37 Tuesday morning, with a consensus analyst price target of $61.90 and a 52-week trading range of $43.25 to $93.43.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.