SDN Technology

'Impressive' NSX Drives VMware Growth

SDN, mobile management and cloud were growth drivers for VMware in 2014, and will continue to drive growth this year, executives said during the company's fourth-quarter earnings call late Tuesday.

VMware's NSX SDN software had a "particularly impressive year" in 2014, VMware Inc. (NYSE: VMW) CEO Pat Gelsinger said on the call. (See VMware Reports Record Revenue, but Income Down for 2014.)

NSX bookings more than doubled in the second half of 2014 compared with the first half, to more than $200 million, VMware said. NSX had more than 400 paying customers by the end of 2014, up 60% quarter-over-quarter.

"[NSX] is not only for early adopters at this point. It's moved beyond test and dev and into production," said Carl Eschenbach, VMware president and COO.

VMware landed a $10 million all-NSX deal with a large global financial services company looking to re-architect how it uses network services, Eschenbach said.

Also strong for VMware was AirWatch, its mobile management solution, which surpassed a record 15,000 customers globally, nearly double VMware's closest competitor.

And VMware's vCloud Air hybrid cloud platform has been in demand and now has 300 partners. It's driving engagements for other service offerings, including desktop-as-a-service (VDI) and management-as-a-service, the company said. VMware sees those areas as growth opportunities.

Fiscal-year revenues were up 16% year-over-year to $6.04 billion, exceeding $6 billion for the first time, the company said. Fourth-quarter year-over-year revenue growth was 15%, to a record $1.7 billion, up 16% on a constant currency basis.

Quarterly operating income was $344 million, down 8% year-over-year. Net income was $326 million, or $0.75 per diluted share, compared with $335 million, or $0.77 per diluted share, in the fourth quarter of 2013. These results include the impact of the acquisition of AirWatch, completed in the first quarter of 2014. (See VMware to Buy AirWatch for $1.54B.)

Annual operating income was $1.03 billion, down 6% from 2013. Net income was $886 million, or $2.04 per diluted share, compared with $1.01 billion, or $2.34 per diluted share, in 2013.

VMware's board authorized a $1 billion share buyback through the end of 2017.

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For fiscal 2015, VMware predicts revenues of between $6.6 billion and $6.7 billion.

Expect VMware to offer its own version of OpenStack this quarter, as discussed at its VMworld conference this summer, Gelsinger said. (See VMware Laughs at Container & OpenStack Threats.)

EMC, which owns a majority stake in VMware, has been under pressure from hedge fund management firm Elliott Management to make changes, including spinning off VMware. EMC this month added two members to its board as part of an agreement with Elliott.

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected]

Mitch Wagner 1/28/2015 | 11:24:06 AM
Machine VMware seems to be a growth machine. Doesn't always make for the most interesting stories -- a train wreck like Juniper is far more lively. 
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