VMware Reports Second Quarter 04 Results

PALO ALTO, Calif., July 22, 2014 VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today announced financial results for the second quarter of 2014:

Revenues for the second quarter were $1.46 billion, an increase of 17% from the second quarter of 2013. Excluding revenues attributable to Pivotal and all divestitures that occurred in 2013, revenues for the second quarter increased 18% from the second quarter of 2013.1

Operating income for the second quarter was $200 million, a decrease of 26% from the second quarter of 2013, reflecting the impact of the AirWatch acquisition. Non-GAAP operating income for the second quarter was $428 million, an increase of 3% from the second quarter of 2013, also reflecting the impact of the AirWatch acquisition.

Net income for the second quarter was $167 million, or $0.38 per diluted share, down 32% per diluted share compared to $245 million, or $0.57 per diluted share, for the second quarter of 2013. Non-GAAP net income for the quarter was $351 million, or $0.81 per diluted share, up 2% per diluted share compared to $343 million, or $0.79 per diluted share, for the second quarter of 2013. Both GAAP and Non-GAAP results on a year-over-year basis primarily reflect the acquisition of AirWatch, completed in the first quarter of 2014.

Cash, cash equivalents and short-term investments were $6.64 billion, and unearned revenues were $4.39 billion as of June 30, 2014.

We continue to see strong performance across our business, further evidence that VMware is uniquely positioned as IT transitions from client server computing to the mobile cloud era, said Pat Gelsinger, chief executive officer, VMware. Across the board, customers are turning to VMware solutions to help chart an efficient path to the future without sacrificing the vital needs for security, availability and compliance required by all businesses.

Our comparable second-quarter revenue grew 18%, reflecting strong customer adoption of our products and services, said Jonathan Chadwick, chief financial officer. We are extremely pleased by the performance of our growth businesses, which made significant progress in accelerating our growth and delivering against our long-term strategy.

Recent Highlights & Strategic Announcements

Last week, VMware announced the expansion of its hybrid cloud service into Asia-Pacific with two new partnerships in Japan and China. In Japan, VMware announced a joint venture with SoftBank which launches our first vCloud Hybrid Service in Asia. This service is available now as a private beta and will become generally available in Q4 of this year. In China, the company announced plans with China Telecom for China Telecom to build a world-class hybrid cloud service in Beijing leveraging VMware's technology. By the end of the year, VMware operated clouds are expected to be available in over 75% of the world's cloud market. With approximately 4000 service provider partners, a VMware solution will be available in essentially every market on the planet.

In April, VMware announced VMware vCloud Hybrid Service - Disaster Recovery, a new cloud-based disaster recovery (DR) service that provides a continuously available recovery site for VMware virtualized data centers. This service is simple to set up, can be self-managed and is a fraction of the cost and complexity of traditional DR solutions.

VMware and SAP AG announced availability of the SAP HANA platform on VMware vSphere 5.5. By combining the power of SAP HANA with VMware vSphere 5.5, a foundational component of VMware vCloud Suite, customers can innovate and simplify their data centers by achieving faster time-to-value, higher service levels and lower total cost of ownership (TCO). SAP HANA support of VMware vSphere 5.5's virtualized environment will help further simplify and streamline data center operation for customers implementing a data center virtualization strategy.

VMware announced VMware Horizon 6, an integrated solution that delivers published applications and desktops on a single platform. Horizon 6 is the industrys most comprehensive desktop solution, with centralized management of any type of enterprise application and desktop, including physical desktops and laptops, virtual desktops and applications and employee-owned PCs.

In the second quarter, VMware received further industry recognition from Gartner, Inc.

For the fifth consecutive year Gartner named VMware a leader in the 2014 x86 Server Virtualization Infrastructure Magic Quadrant (MQ).2

In June, AirWatch by VMware was positioned as a leader in the Enterprise Mobility Management MQ, and for the second year in a row has been placed highest on the ability to execute axis. 3

In April, VMware appeared in their Data Center Networking MQ for the first time as a Visionary, with Gartner positioning us furthest on the completeness of vision axis in this space.4

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, six quarters of historical data for revenues and unearned revenues, excluding revenues generated each period by the products and services contributed to Pivotal on April 1, 2013 and the products and services associated with the divestitures 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 Pivotal Software, Inc. and the products and services associated with divestitures c

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