VMware Reports $2.44B Revenue, Up 12% YoY, Acquiring Pivotal & Carbon Black
PALO ALTO, Calif. -- VMware today announced financial results for the second quarter of fiscal year 2020:
- VMware and Pivotal Software have entered into a definitive agreement under which VMware will acquire Pivotal for a blended price per share of $11.71, comprised of $15 per share in cash to Pivotal Class A stockholders, and VMware's Class B shares exchanged for Pivotal Class B shares held by Dell Technologies at an exchange ratio of 0.0550 shares of VMware Class B common Stock for each share of Pivotal Class B common stock. The transaction has an enterprise value of $2.7 billion.
- VMware and Carbon Black have entered into a definitive agreement under which VMware will acquire Carbon Black through a cash tender offer for $26 per share, representing an enterprise value of $2.1 billion.
- Revenue for the second quarter was $2.44 billion, an increase of 12% from the second quarter of fiscal 2019.
- License revenue for the second quarter was $1.01 billion, an increase of 12% from the second quarter of fiscal 2019.
- GAAP net income for the second quarter was $4.93 billion, including a $538 million unrealized loss on strategic investment in Pivotal Software and $4.9 billion discrete tax benefit resulting from an internal transfer of international intellectual property rights, or $11.83 per diluted share, compared to $644 million, or $1.56 per diluted share, for the second quarter of fiscal 2019. Non-GAAP net income for the second quarter was $667 million, or $1.60 per diluted share, up 4% per diluted share compared to $638 million, or $1.54 per diluted share, for the second quarter of fiscal 2019.
- GAAP operating income for the second quarter was $523 million, an increase of 3% from the second quarter of fiscal 2019. Non-GAAP operating income for the second quarter was $802 million, an increase of 9% from the second quarter of fiscal 2019.
- Operating cash flow for the second quarter was $699 million. Free cash flow for the second quarter was $611 million.
- Total revenue plus sequential change in total unearned revenue grew 17% year-over-year.
- License revenue plus sequential change in unearned license revenue grew 12% year-over-year.
"Building on another solid quarter, we are thrilled about announcing our intent to acquire Pivotal and Carbon Black," said Pat Gelsinger, chief executive officer, VMware. "These acquisitions address two critical technology priorities of all businesses today — building modern, enterprise-grade applications and protecting enterprise workloads and clients. With these actions we meaningfully accelerate our subscription and SaaS offerings and expand our ability to enable our customers' digital transformation."
"We are pleased with our strong financial performance in Q2, which reflected broad-based strength in all three geographies," said Zane Rowe, executive vice president and CFO, VMware. "Our cloud strategy and strong Hybrid Cloud and SaaS growth will substantially accelerate, as we bring Pivotal and Carbon Black into the portfolio."
VMware has announced that it has entered into agreements to acquire Pivotal and Carbon Black. These companies address key strategic IT priorities — building apps with a modern approach and protecting enterprise workloads and clients. With Pivotal, VMware will be able to deliver an integrated modern apps portfolio combining Pivotal's next-generation developer platform and VMware's Kubernetes portfolio. With Carbon Black, VMware will be able to provide a next generation security cloud with Carbon Black's protection suite and VMware's intrinsic security assets. Adding these companies to VMware's portfolio will allow VMware to deliver software solutions that enable customers to build, run, manage, connect and protect any app, on any cloud and any device.
Closing of both transactions is subject to closing conditions, and is expected in the second half of VMware's fiscal year 2020, which ends January 31, 2020.
Business Highlights & Strategic Announcements
VMware recently completed the following acquisitions:
- Avi Networks, a leader in multi-cloud application delivery services, that will further enable VMware to bring the public cloud experience to the entire data center—automated, highly scalable, and intrinsically more secure with the ability to deploy applications with a single click.
- Bitfusion, a pioneer in virtualization of hardware accelerated devices with a strong focus on GPU (graphics processor unit) technology, which enables VMware to make GPU and FPGA capabilities efficiently available for AI and machine learning workloads in the enterprise.
- Uhana, a company that is pioneering the use of deep learning and real-time AI in carrier networks and applications, to automate network operations and optimize application experience. Uhana brings AI techniques into VMware's software approach for the telecom industry, helping them accelerate their journey to 5G.
- Veriflow, an innovator in network verification, assurance, and troubleshooting, which helps customers model, analyze, and verify their hybrid networks to allow IT teams to operate, increase the security of, and build resilient networks. Veriflow's technology provides problem detection for critical network issues (physical and virtual).
VMware Inc. (NYSE: VMW)