VMware Reports ird Quarter 0 Results

- Year-over-Year Revenue Growth of 14% to $1.29 Billion

- Year-over-Year Revenue Growth of 19% excluding GoPivotal and divestitures in 2013 1

- GAAP Operating Margin of 22.4%; Non-GAAP Operating Margin of 33.9%

- GAAP EPS of $0.60; Non-GAAP EPS of $0.84, an increase of 20% year over year

Supplemental Financial Tables

Non-GAAP Financial Measures

PALO ALTO, Calif., October 21, 2013 VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today announced financial results for the third quarter of 2013:

Revenues for the third quarter were $1.29 billion, an increase of 14% from the third quarter of 2012. Excluding revenues attributable to GoPivotal and all divestitures that occurred in 2013, revenues for the third quarter increased 19% from the third quarter of 2012.1

Operating income for the third quarter was $287 million, an increase of 51% from the third quarter of 2012. Non-GAAP operating income for the third quarter was $436 million, an increase of 19% from the third quarter of 2012.

Net income for the third quarter was $261 million, or $0.60 per diluted share, up 67% per diluted share compared to $157 million, or $0.36 per diluted share, for the third quarter of 2012. Non-GAAP net income for the quarter was $363 million, or $0.84 per diluted share, up 20% per diluted share compared to $303 million, or $0.70 per diluted share, for the third quarter of 2012.

Operating cash flows for the third quarter were $637 million, an increase of 46% from the third quarter of 2012. Free cash flows for the quarter were $543 million, an increase of 50% from the third quarter of 2012.

Cash, cash equivalents and short-term investments were $5.84 billion, and unearned revenues were $3.64 billion as of September 30, 2013.

VMware continues to build momentum globally, because we are uniquely positioned to help our customers transform to the mobile-cloud era of computing, said Pat Gelsinger, chief executive officer, VMware. Customers are making long-term commitments to VMware to help them liberate resources from their current environments and power their businesses into the future.

We are very pleased with our third quarter performance, meeting or exceeding all of our key goals for the quarter, said Jonathan Chadwick, chief financial officer, VMware. 2013 continues to play out according to the plan we shared at the beginning of the year. We are seeing strong customer demand for new solutions such as the software-defined data center, and I'm excited about our prospects for the remainder of 2013 and beyond.

As indicated in the financial results news release for the second quarter of 2013, VMware will provide forward-looking guidance in connection with this quarterly earnings announcement on its quarterly earnings conference call.

Recent Highlights & Strategic Announcements

At VMworld 2013, VMware announced a wave of new products and services designed to extend the power of virtualization to the entire data center, including networking, storage and management, through its software-defined data center architecture (SDDC). VMworld 2013 and VMworld 2013 Europe set a new record with a combined total of over 31,000 registered attendees enjoying demos of newly-introduced technology, including VMware NSX , VMware Virtual SAN , VMware vCloud Suite 5.5, VMware vSphere with Operations Management 5.5 and new cloud management solutions.

VMware announced the U.S. availability of the new VMware vCloud Hybrid Service and added two additional U.S. data center locations, enabling customers to seamlessly extend their data center to the public cloud. VMware also announced that the service will be available in the U.K. in the first quarter of 2014, demonstrating VMware's commitment to expand its hybrid cloud service into Europe and provide customers with the fastest, most reliable, and most compatible path to the cloud. New capabilities make it easy for customers to bring existing and new cloud-native applications to the public cloud and to extend their existing management tools.

VMware acquired Desktone, Inc., a privately held company that pioneered Desktop as a Service (DaaS) with an advanced multi-tenant desktop virtualization platform for delivering Windows desktops and applications as a cloud service to any user, anywhere, on any device.

VMware continues to attract diverse and talented new leaders to the company, including three new executive appointments during its third quarter: Sanjay Poonen, executive vice president and general manager of VMware's End-User Computing business; Tony Scott, senior vice president and chief information officer; and Sanjay Mirchandani, senior vice president and general manager, VMware Asia Pacific & Japan.

The company will host a conference call today at 2:00 p.m. PT/ 5:00 p.m. ET to review financial results and business outlook. A live web broadcast of the event will be available on the VMware investor relations website at http://ir.vmware.com. Slides will accompany the web broadcast. The replay of the webcast and slides will be available on the website for two months. In addition, seven quarters of historical data for revenues and unearned revenues, excluding revenues generated each period by the products and services contributed to GoPivotal on April 1, 2013 and the products and services associated with the divestures that occurred in 2013, will also be made available at http://ir.vmware.com in conjunction with the conference call.

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1Comparative growth percentages exclude revenues in each period attributable to the products and services contributed to GoPivotal, Inc. and the products and services associated with divestitures consummated by VMware in 2013.

About VMware

VMware is the leader in virtualization and cloud infrastructure solutions that enable businesses to thrive in the Cloud Era. Customers re

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