VMware’s Record Quarter Shows Hybrid Cloud Strength

VMware, virtualisation and cloud infrastructure player, announced its Q4 results yesterday, beating analysts’ expectation and confirming its strength in the data centre.

Annual revenue growth upped 16 percent to $6.04 billion, with a year-over-year revenue growth of 15 percent to $1.7 billion.

License revenues for the fourth quarter were $777 million, an increase of 13 percent from the fourth quarter of 2013, or up 16 percent year over year.

400 customers for VMware NSX

VMware also announced it now has more than 400 customers for VMware NSX, the network virtualisation and security platform for software defined data centres.

“Customers continue to partner with VMware because we offer a new model for IT designed to rapidly and automatically deliver any app, anywhere, without sacrificing the need for security, availability and compliance,” said Pat Gelsinger, VMware CEO.

“In 2014, we surpassed the 6 billion dollar revenue mark for the first time, and in 2015 we’re looking forward to providing our customers with extraordinary value through the strongest portfolio of products, services and solutions in our history.”

Vmware has shown muscle in the one of the fastest-growing market segments, hybrid cloud. Its Vcloud Air alongside the firm’s SaaS offerings so far only make up 5 percent, or $85 million, of VMware’s net revenues, but this is up from 3 percent the same time last year showing its strong growth momentum.

Operating income for the fourth quarter was $344 million, a decrease of 8 percent from the fourth quarter of 2013. Non-GAAP operating income for the fourth quarter was $567 million, an increase of 7 percent from the fourth quarter of 2013.

But as we all know, cloud revenue is a double-edged sword in the short-term, with VMware CFO Jonathan Chadwick warning that the fast growth of these offerings will have a detrimental impact on the company’s growth in the next twelve months. This is because SaaS revenue, on a subscription basis, comes in slower than bulk one-off payments.

Chadwick said on a conference call that he predicted revenue could dip 1 percent because of the cloud shift, with more negative impact coming from customers switching from buying licenses to using SaaS.

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