VMW - Earnings call transcript Q4 2019

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Operator

Good day, ladies and gentlemen, and welcome to today’s VMware Fourth Quarter Fiscal Year 2019 Earnings Call. I’d like to remind everyone that this conference is being recorded. And at this time, I’d like to turn the floor over to Paul Ziots, Vice President, Investor Relations.

Paul Ziots

Thank you. Good afternoon, everyone, and welcome to VMware’s fourth quarter and fiscal 2019 earnings conference call.

have Vice Chief Officer. President we Zane Officer; call, Executive Rowe, and the Pat Executive Gelsinger, and On Chief Financial

their will we prepared Following take questions. remarks,

forward-looking we posted close press as at being is various the make and in and any such differ webcast including in Slides, will webcast, currently the statements assume market Our conjunction issued X-Ks to this Actual webcast. website, uncertainties. from after We obligation conclusion statements. accompany risks forward-looking this described SEC. and be no that are not was and this a intend subject of to release simultaneously call VMware is ir.vmware.com. downloaded can to results may on which the call do files with the those our risk where update materially remarks today, of XX-Ks, XX-Qs of On with result factors, viewed live and

In financial certain addition, VMware’s be during today’s to, measures. considered isolation measures substitute or from in which not performance, in used measures, These measures. GAAP of should for addition discuss as financial non-GAAP a are as call, we will non-GAAP

of our tax payroll acquisition, exclude Pivotal GAAP and non-GAAP effect Our gains losses compensation; assets; the other our or related results and discrete impacting rate. tax on disposition Software; intangible on the stock-based to amortization and measures employee transactions; items acquired employer GAAP stock items, including

website will Investor on for measures webcast Investor regarding the next The disclosures be link. the Relations additional find measures, call and Relations our days reconciliations on the of comparable can non-GAAP our this available replay company XX in You under including with press release these GAAP website.

XXXX at XX, of quiet fiscal Thursday, the quarter April close begins first Our XXXX. business, period

comparisons XXXX effective meaningful to and VMware release XXXX. included quarter and ASC prepared fiscal February flows In to a statements addition, XXX. has In the retrospective for results fourth adopted cash this of on months provide Accordingly, call under been and in X, the have our presented financial X ASC basis full on incoming prior XXX VMware discussed order periods, February the for for adjusted this the of release. our on quarter fiscal results I’ll call, are ASC for XXX. months ASC XXXX ASC XX to All as XXX, balance Pat. XXXX for XXXX, in of fourth corresponding comparisons XXX adjusted fiscal sheet of discussed periods turn fiscal end year-over-year and press to it ended and the adjusted that, With comparisons as X, over the XXXX press

Pat Gelsinger

and fiscal was share particular our geographies three to connect, across $X.XX with portfolio XX% a automate total manage year-over-year QX infrastructure. strong QX per strength in broad by XX% and then fiscal complex in our product year-over-year Non-GAAP XX% diverse revenue in digital increased ending XXXX, XX% earnings terrific XXXX. XXXX $X.XX and to a the with for strength up software Paul. VMware based for and to share Thanks, Asia-Pacific per fiscal region. rose driven continues all to world’s QX

largest which across committed turn geos, are on that Holdings, LA approximately a foundation digital solutions Mac, the such clouds. and well Enterprise as we as expanding industry our including best to corporation and Nant Our to mortgage customers focused offering. Center. for VMware and public, ever the to QX span federal strategically customers known on their Freddie loan Customers Media to the networking portfolio Cloud us Field transforming private closing at app were Air to as We continue live million. modern enable good hybrid and multi-cloud, all to pleased VMware look remained the across as experiences deal our forms We security solutions workspace transformations. business help across services Times States growing demonstrated a SaaS momentum AWS digital Data we work. experience powers this digital continues $XX results that cloud the as United three that hybrid public We’ve and and cloud, software the Force significant includes apps, that way government-sponsored as home add enterprise; to for

Additionally, the the VMware in Cloud with initial announced service. the customers government VMware GovCloud November of availability on AWS first adopting

world. to exciting health. see we a by VMware, enabling is governance secure related security, Technologies to an collaboration customers momentum cost increasingly business CloudHealth customers also operate that platform manage, and offerings. application have and decisions VMware management, data multi-cloud We With in and helps make of CloudHealth

the are Wavefront. customers value with of availability In acquisition best-of-breed QX, application and the leader in open the closed December, the we making enable a to in And services. We Heptio, cloud general ecosystem, us of of we Kubernetes modern integration our expanding well CloudHealth through platform positioned environments. announced

their applications open across the this drive will Kubernetes development continued building and customers to We for accelerate source efforts clouds, running the make of critical and platform. to standard community’s

enhancing Azure, We VMware for the multi-cloud of availability announced Microsoft support also solution’s capabilities. X.X, further the delivers which general PKS

This PKS VMware We’re for XXX And Network, an foundation as over to our upon Kubernetes of building some applications are continue we VMware customers facing solve is active in on most Virtual Heptio, member. seeing STL nice built to build the which is announced the of a project, NSX of source to we ramp Kubernetes. to the issues open continuing containers build service on mesh our vision offerings. developers contributing solution customer help based pressing and acquisitions across out with the Cloud

IT networking experienced including family, over growth XX,XXX Our license are now which major service a cloud has XX% drive The native is automation The demand customer its critical with transformation A their and VeloCloud a automation. management platform to and year-over-year, customers. vSAN, security is Swisscom leading and this financial as working and multi-cloud services also is meet delivering customer quarter products cloud like vSphere, our security to workloads. customer increasing and networking and NSX NSX, for Technologies and embracing Dell environment. Customers workplace connect and computing using as networking infrastructure security application end-user bookings made in and a with VMware customer deployments as transformation. VMware utilizing over drive VMware in to NSX and strong automate protect fully they investment

VeloCloud like and We’re and and also exciting seeing adoption strong NCR. for use offering to multi-platform of growth VMware adoption through as security our automation, in SD-WAN initiative, move and both including digital network USAA customer with companies exhibit customers NSX-T transformation multi-cloud cases adoptions by bookings continues containers. the

quarter. to manufacturing and refresh, NPLS network which also and recognition this customer the VMware need verticals. strong continue We experience, We across displacement Gartner in improve completeness traction seeing end enterprise VMware financial leader Magic was vision, are named industry retail, cloud both were drive recent January. to connectivity augmentation of ability and the for SD-WAN. pleased of adoption and hyperconverged Quadrant to for The in VMware receive further was recognized execute infrastructure, past which published to

hypervisor, January every low in is management XX in and hyperconverged this platform, infrastructure four received Gartner’s report features XX, zero in of category: high ratings. the ratings for none categories, solution XXXX, comparison and platform, VMware only container in XX hybrid reports, or vendor Additionally, storage, software-defined the network which cloud. software-defined VMware solutions,

We’re infrastructure experience to hyperconverged solution VxRail what approach. also momentum. VMware, validation receive continues Dell believe thrilled our to we external of is

VMware, synergy plans, Technologies achieved Dell have across on Dell Technologies On we collective Workspace the Dell customer factory-provisioned ONE see are continued broader we economic with aligned Dell With We in opportunities now front, even fiscal now seeing ONE we’re our devices. our portfolios, in XXXX. joint Workspace our considerable opportunity focused including goal. and where and interests public interest more

continue was approach customers with We The I Workspace their the in acquired possible XXXX. provider, leader that with criteria, buzz appear to engagement improve I about to for released and the recognized week, in score digital momentum customer at roadmap was help division and simplifies their transition Unified recently accelerating XG partners communication service achieved and highest digital the in product for see We also Barcelona we Earlier as also VMware provider Endpoint to and this the as VMware, provide a was to it workspace AetherPal, playing cited thrilled continue attended reinforcing customers XG. was workspace from us support and in our see enterprise high. in and customers experience. platform, commitment Congress in and the a World strategy see Management category. to all-time management. platform Wave November which interest the Forrester remote an a VMware execution employee single role Mobile solution they our ONE,

NFV. strategic the enabling capture cloud cost public and We the around Vodafone, their to solutions efficiency build network associated They the Vodafone’s XG, at are optimally with services. infrastructure use telco the workloads, agility address markets partner like providers, are to communication helping VMware telco operating globally, and clouds run operational is cloud used for are to service scale. VMware world. cost across Vodafone’s primary with E&IT our on and T-Systems as on in collaboration countries, core amounts to network very AT&T, VMware announce XX than customers AWS. as pleased using and to live with telco traffic such well pleased sites, as in more momentum the also XX technology subscriber we We carrying Ericsson more consumer of Cloud XXX SD-WAN, support increasing Overall, enterprise functions. than were were spaces. expanded in

the certified operators, more to network than more fiscal production with At we positive products, In virtual do. people were that and pleased closing, working now strive through business XXX functions. all XXXX. very terrific We we believe are software that with in XX impact understand XXX We we that has we to over impact and VMware, operations than and quarter this implementation and the power and world, humanity. generate our collectively global an have transform

Our upskills goal just VM to way launch its women, already months its Indian code returning who that women ago, India, workplace, well effort Inclusion engaged of joint to XX,XXX has upskilling the and on project with the women. two X,XXX Terra since women

was VMware place. over thank partners, performance. more and quarter our all about more a quarter Capital team turn our being talk great just problem for to terrific ranking companies Forbes annual ranked companies. the just were overall business make world most it of to a recognized the America’s this of seven the VMware and I customers, Another Zane to course, number and of to that year VMware in I’ll Just want fiscal a now XXXX. employees,

Zane Rowe

thanks today. Thank to and us you, of you for all Pat, joining

full broad-based with strength and as team, non-GAAP free as QX cash record total income, QX thanks net VMware and solid results for fiscal our and a operating well We’re pleased we flow of the efforts the XXXX with both and business, performance to revenue the and for in cash our in the flow. across year, license revenue, achieved annual

business $X.XX XX% their in and $XXX unearned continue Hybrid plus change of initiatives. initiatives We of the transformation to of was our $XXX license subscription at revenue, reflected Unearned engagement XXX operating for to December. the billion of earnings to number with leverage over QX at revenue short-term In $XX comprised QX, distributed and customers investments was growth QX cloud to in partners, SaaS key backlog We billion, VMware margin our revenue license the strategy. unearned exited million and invest QX. drive year-over-year. Cash revenue deals and we XX%, plus count non-GAAP our grew late QX record total in grew for XX% total the on quarter. year-over-year. our in and revenue XX share with billion. is dividend, license $XX deeper This who million is diluted which $X the million shares. change compared million approximately totaled portfolio special revenue quarter-end as license XX% in end of QX $X.X XX% the over in year-over-year. and XX.X% sequential share Non-GAAP following XX% continue was was increased support growth in per sequential revenue revenue increased

total Cloud with mentioned, full reducing bookings the growth, EUC financial SD-WAN contributor network hybrid Pat our build also for billion. once helping customer approximately year-over-year. as NSX automation QX, quarter portfolio a as than year license in performance and within XXXX. and significantly of billion networking to bookings their over strong on for a the I increase top the growth XXXX pleased with bookings security their while for been growth as approximately NSX multi-cloud performed pace initial XXXX. the SDDC bookings total that biggest deployments, to Core well platform a XX% fiscal in an year. for higher and digits up up strong bookings size of mid-single ONE, In sales portfolio important were $X.X mid-teens bookings closed the and vSAN We to growth over our year-over-year, and vSAN in particular, of vSAN our with for the been total and Foundation fiscal $XXX As in existing for applications. is EUC this for VxRail Customers this workloads NSX expansion well year million, our SaaS with and reaching institution the highlight EUC embracing had We’ve was in both again, license year-over-year. VMware full were fiscal purchase QX, over surpassed great Workspace with had this XX% In both $X.X QX. XX% meet cloud growth. was QX, adoption quarter of exceptionally bookings and strong of large expenses. the continue XX% security on license QX for repeat for the cloud-native are and the connect would bookings quarter. have deal demand ever and to value. base

cloud the double-digits from and hybrid category. in nearly strong driven by increased grew For management. Customers and are organic largest all deals, inorganic total included capabilities realizing investments our in our bookings QX, in this solutions, of in license both value management cloud both management, in

part see We’re pleased innovation with trends the the in that business. and we this of

year-over-year. on was key Compute mid-teens compute with in to high a deals QX compute nearly well largest the business digits our up in and growth VMware cloud in also attached as our cloud component total single is AWS of Our provider in program, of in a number It was the licensed the bookings and VMware solutions emerging all also bookings quarter. as cloud foundation. as such VMware strong

cloud our of a customers vSphere component strategy. of more foundational hybrid addition, incorporating In is are their

In grew fiscal $XX mid single stock. repurchased the license year million in compute digits and QX, compute total XXXX, full For XX% year-over-year. bookings in increased over bookings we

of well approximately balance have shareholders. M&A, end to our authorization, as We allocation remain the $XXX August, business, plan for which remaining our on as million grow flexibility XXXX. to delivering return maintain repurchase desire a the to We on capital extends through committed capital

For when fiscal license XX.X% revenue outperformance provided guidance total to billion. XX.X% Fiscal of taking to into we $XX.XXX for account our quarter XXXX is the increase fiscal billion, up initial in ahead expected year-over-year, last XXXX. $X.XXX XXXX revenue guidance end is

to continue operating margin expect the for We be year to non-GAAP XX%.

Our a fiscal result non-GAAP expected EPS is of EPS approximately interest count for distribution XXXX non-GAAP XXXX guidance lower The our special billion shares. share XXX diluted income to by on our lower dividend impacts million be the $X.XX, of fiscal driven cash by $XX of December $X.XX, balance. a as in

of year. to we expect X% For flow cash be free the from year, expect up $X.XXX operations flow the full versus prior cash billion $X.XXX we And billion.

income to year-over-year. special $XX our Our interest billion cash also due flow dividend impacts lower

up to an revenues year-over-year. XX.X% total XXXX, revenue license expected million, FY increase to be with of QX For of XX.X% $XXX $X.XXX billion

customers and a expansion our hybrid we’re of We and the as dedicated income XX.X% adoption It’s $X.XX year slide year. non-GAAP VMware the We year margin QX VMware full count the throughout per to diluted exciting digital Paul. this by call. cloud areas forward team our of cash on pleased of and in EPS share. transformations. for making employees and partners time progress I’ll the impacts lower performance non-GAAP shares. non-GAAP In year turn SaaS increasing expect in $X.XX broad summary, website our for EPS XXX versus products contained year. and guidance this for of on on in our balance and committed operating back that, foundation you Interest the our is look on accompanying services QX With updating with share approximately for last at our portfolio an and million QX of deck the share to it Remaining per with customer to such

Paul Ziots

Thanks, Zane.

we Before to consisting get I’ll possible. many Q&A, part, get question ask of Operator, let’s can people so yourselves as to limit we one one the started. you begin to as

Operator

And Bank, much, [Operator first very Deutsche have Instructions] you Thank Karl we from sir. Keirstead.

Karl Keirstead

now on question Thanks terrific start that Intel, maybe congratulations rather if the NVIDIA, But strongest supplier divergence. Nutanix just question a asking much about of slightly IT weakness very spend, a software good you your like you becoming exposed and from end very than growth IT be overall And tonight, Thanks demand a Pat, years. thoughts I’ll HP, help by had apparent a emerging the of demand. mix? different last in NetApp, year, general welcome. revenue fiscal from to year. XXXX, portion about to the I’d one defined? like but market asking to Your larger a single much. yet you quarters ask infrastructure I’m products it tech way. Is seen the explain the more the could transitioning enterprise in every of function it Its me in just Is and Thanks. in month-or-so, it posted we’ve a and will to maybe hardware wondering to

Pat Gelsinger

you’ve happy tech. differentiating And it’s every and in consuming into tech and are areas Hey see of breaking more business the the a now technologies, quarter’s will the heard no market of it’s yes, overall. the buying More be technology, performance. longer we past, future areas do sort IT, to business. out Karl, I good of see it very of every about IT thanks, it that as we aspect continue me And with talk as

market. tech to we see good overall, So continue a

to cycles effects to and are clearly hybrid of and on continue of any over cloud rewarding are of position but I building is at into of out future. And and geos. to we’re other hey, landscape in undersupply much look our going indifferent well question the there nicely winners lots When we private There’s believe, we there’s and winners product, continue public I of across in We are transitions. individual see will losers so think dependent is be lot losers. the because Clearly, and these going going these how to that, We’ll think see extremely tech these broad that is going normal against as breadth cloud, cloud, play just see on well of longer sectors. inside winners of whole any there Now turbulence. we business, rapidly we some on losers. people there of real be many is And growth to up we’re our those geo a where the and with us or a no to the that portfolio going believe good market inside change ourself, that marketplace powerful some trends. going

I’ve to happy have good might and four IoT, market You and and of remember, a with and the be of those our and But going AI really the Thank talked cloud, winners different Karl. about of Edge effects it. losers all you, it’s who’s superpowers: mobility, inside will performance.

Zane Rowe

Karl. Thank you,

Karl Keirstead

Okay, thank you.

Paul Ziots

Next question please.

Operator

we of America. with Kasthuri Next Rangan Bank have

Kasthuri Rangan

you hear can Hello, Hi. me okay?

Pat Gelsinger

can you fine, just we hear Yes, Kash.

Kasthuri Rangan

is as to long-term model kind Can migration types on at into the to phase. dig the in progresses Union That’s related What of customers you the My Zane, to you if business AWS into Thank bit on implications clearly that, congratulations State partnership of showing but you you a are make question and if that question. much. Well, And time AWS next to VMware’s AWS? have awesome. likely partnership? for of it. deeper verticals Pat the products how and so Perfect, stupendous. get that little scale acceleration a the the was AWS for

Pat Gelsinger

Kash, thank with very and VMware Cloud Hey happy in Yes. AWS we on the QX. you, are

result Let create Cloud we cases. Cloud that unique VMWare the me preferred of are offering. a to remind of highly as you we’re of just that AWS this have broadening strong, that of partnership seeing a a really differentiated the offering use that this is The results VMware with result and

being in data started case to use very as available in past a start always so launched the noted about also to large now have across center have see cases. about you data a with And VDI fourth formal have million now four we We deals DR. geos well, offering there We geos. of we well. GovCloud, talked use we in solid our can executed comments, where first $XX as we now the as have extension three that we across that now migration, center have which we that sort all all unique our very think place geo as deal. it see And we three emerge We was have now and –

mean, innovate this overall, continue a continued offering, hybrid applications. AWS my starting quotes VMware as change that what to one it can are the and be obviously the right? and announced successful, RDS cloud, manna the that’s AWS idea I move the So with one unique the the from was on my together. me doesn’t changing for on game this customers, re:Invent, create And customers, was a when heaven, should of that And deals going to Amazon well. require just to we Outposts Cloud experience that favorite I get GA our pilot now larger it from really is of we – like really to partnership cloud

execution clamoring So overall, that this just the has are we potential. are our with happy for and and this quite its a quarter really potential great customers

Zane Rowe

was more a of just the our it is that and add growing And our saw contributor a would Kash, cloud business. contributor, we generally you our that hybrid as in growth cloud portion in business. I in SaaS know,

the course come become through to are and last course pleased progresses. the year workloads as we part we logo So of more be year expected and a couldn’t through meaningful online the the the acquisitions this will the of more we with year had business of

So all very in, we’re here. pleased results our with

Paul Ziots

Thank you, Kash.

please. question Next

Operator

Richard. Waltrip have we Citi, from Next

Waltrip Richard

are on of I Hi, can the – large into us some and Zane, how the Any of wondering, that sense how those Thanks. customers up size the give is talked stacks of discovered relationships thanks. really the those network and you. much buy the these And but compute? storage storage color potentially you networking talk who get customer from relative maybe could in they markets some values know where size about long-term, compute you on and the about products? to you you I’m of spend when market, if

Zane Rowe

with let of significance Sure. with fourth $XX and million in talk pleased EAs the out that XX called I up couldn’t broadly the the had deal period opportunities be well the quarter mean, had in total I is Walter with start particular, XX year. I’ll about more size we’ve with the the contributed that Pat customers fourth we bookings. more from category. over XX% we our last over larger product in same customers, our quarter, in which The

solutions a a selling it’s Pat, customers. nice our talking and with broader get that more and it selling compute. component. as more for So talk if And point these we to bit stack, you just into a point with more the want becomes relationship

Pat Gelsinger

Yes.

CloudHealth, the us buying increasingly the networking us about core is the are you’re And core storage of of right NSX we’ve transform cake. click going The when we the solution. with their and take see the for that capabilities Workspace enable yes, cloud, they things, talk data the just and the ingredients with offering hybrid been and call of multi-cloud more baking compute to composite more our more of One about how cloud ONE are to are center, going see are together. focused future. with a inside you’re that They’re taking talking like solutions of those, offerings them the it management, complete transform all solution you And customers network on VMC, our Walter, are the the the to we workspace. that four customers complete we to in

of and solution, that have complete going the four kind similar as all right, say to it’s really, we of associated four, them. So have all of Xx, the solution customers as from I’ve are with buying at them opportunities market called complete I’ll compute somebody

deal the customers now VMware capability. As exact become with size, Because center the really full X customers and about offering, largest more demonstrating that the they that NSX, We XX their commented the a result, Cloud data our VMware larger talked those full management, XX we’ve X get of foundation, deals into with of for result with much partner a And of deals us. full data largest are our XX center of Cloud entirety us of behavior of deals, AWS quarter move relying as a the strategic. of capabilities is as this from we on vSAN, their with couple buying as strategic their XX on XX XX large demonstrated hybrid and/or compute, as cloud.

Paul Ziots

Thank you, Walter.

Next question please.

Operator

Absolutely.

Next Murphy we’ll hear from Mark with J.P. Morgan.

Mark Murphy

Yes, thank my you. congrats. I’ll add And

here. goal. now Q&A are Dell stated pick the in you’ve achieved Pat, synergy you up they people that phone why pausing understand I when Now your

referring if strengths there kind the clarify, to to that unusual to. to was billion to to so, QX referring clear did contribution channel. incremental so just So cause see the revenue that $X of Dell you’re run me It you soon? you’re rate some if achievement And in wasn’t what

Pat Gelsinger

Yes.

when goals exciting synergy specifically the billion As initially commenting been referring goal of running ahead out that we’re and to the over that last the we’ve And we’ve our was on we put $X merger yes, been synergy year, that. we’re announced.

three-year it and said, time. goal was under a we achieved we that approximately in it As

we also that’s with The there And portfolio: do hyperconverged, momentum integration relationship. the conversion unique with to all software storage, really of appliance Workspace emphasis hardware, really is strength on, across Dell. that software-defined we’re obviously, the and compute, that And put of see we the for the most cloud, Dell So The networking, performing. clients. seeing VxRail, Workspace ONE, and are integrated those two now right? infrastructure, ONE

across they’re becoming market powerful different more geos, segments. is this going integrated forward And our see that partner with offering. Going this them forward, just we create focus our value across in to unique

and behind milestone good very very have to this us. So happy

Paul Ziots

Mark. you, Thank

question please. Next

Operator

DiFucci Next we Jefferies. John have with

John DiFucci

Zane. also think I for Hey Pat, you. my Thank question is

has software-defined the it seems been the I Pat, which vision customers, the we numbers happening show on fieldwork and sort actually have and really, center. to so of to the seen. right? of But sell than always strategy, gone it from is too, software-defined more more, That’s go that VMware, something VMware. be Your we’ve data been like this all strategy, noticed quarter, mean, in customers out

parts, that it this all at this like think doesn’t Paul, second, So say, pipeline was sustainable this quarter? that forward. saying, going I four buy and really point? customers, just do inflection two guess, Is And the true? you I’m had Or going necessarily hey, you to notice Did sorry. Thanks. Xs then unique quarter an some that’s

Pat Gelsinger

the QX. Yes. going we’d of the and and offering which our customer all full started in points, we of acceleration. that us, for integration is VMware full John. really of for the Cloud management, on again, storage demonstrable most And maybe the goal is VMC, to our goals which, idea example network offering exceeded compute that probably other the comfortably This see Thanks, would in well customers the yes. that cloud Foundation And the complete be and say exceeded the we solution

essential, and take have is value. them, and is them we infrastructure sure business see we customers’ and them it are and that on, up that that believe and it’s people, the for we’re all get about we to validating customers look business applications more the saying, down our to and the ubiquitous look of stack, do resources into make talk our the instead at QX, we two that full of of me differentiating The take value, felt sustainable that’s I to works transformation. Wow, you’re my pieces when be aimed and those boy, putting points, resources the VMware with for in digital more see we’re starting proof their path my on together. That allows having to can we taking you’re say what vision the effect to So creating together, the really and really really that of boy, be quite future. we’re responsibility we

Zane Rowe

board. across impressive the the which the We was is portfolio, thesis. I What a great think just that the was would business across also your strong I Hey it saw aligns around growth product as impressive John, across strength, And globe the with teams for we globe. see quarter well. add,

strategic many more and quarter was and fronts customers. it a truly more these with balanced So becoming on

John DiFucci

Great. Thanks, gentlemen.

Paul Ziots

John. you, Thank

Next please. question

Operator

Next be from RBC with Matt question Hedberg Capital Markets. will

Matt Hedberg

for thanks guys, from Hey me. Congrats taking again my question.

You I of think guys growth? becoming that being bending the the it to about compute higher. Platinum to But and me compute I growth wondering obviously, have clearly drivers a to are foundational lot of lot you good everything growth? vSphere talk I profile out sizeable in surprise you much and to. about really important as continue to talked how of little the field. is folks sustainability Pat, a overall I you And compute Wondering more bit hear but a continued about if do, could growth continues that we more today And that more think think sort to catalyst talk a of

Zane Rowe

Matt. start, years. last growth compute, out, Sure, you a in years, mid-single number digit across number seen, Compute, as the of of good aggregate we’ve yes. point I’ll as

bigger not in are in bigger becoming mid to our necessarily number compute, of sort portfolio. the portfolio but products solutions a forecast out we as part clearly and changing of look Now our the we it’s and long-term on of

Pat Gelsinger

entirety security going data the storage the see That’s operations we differentiator a really it not or that. like has going is is flow, But protocols visibility, Platinum And we idea to last because about be get the believe this VM seeing we we and we it’s Platinum. to we selling the that’s more early flow, that unique security, include visibility the in on VMware that we app VM of have Yes. to as of across driver has, we because in And described we’re elegant build vSphere of Again, I unique will solutions as element measured value protocols. do People see future, sit it’s foundational the on John And top oh, where it. that for leverage of a visibility now answer us to potentially running see networking my added you position the that the the agents. to world that where about, question. to suggest, the full in we’re that that different talk position wire, the an selling the application. attribute this in premium SKU way have but the unique lifetime, launched

we’re So super but in early excited about it’s very vSphere Platinum, its life.

to So of capabilities at unique we’re we conference great the some potential market bringing do next there. over week time. about the think talking RSA that be gives us more I’ll

Paul Ziots

Thank you, Matt.

please. Next question

Operator

And we Raimo Lenschow. next Barclays, from have

Raimo Lenschow

One Congrats as how as remind bit you especially taking A to technical worked me about is out? question. well? for think playing question. Pivotal Thanks us, have more with one from for Thank Heptio, my you. kind It how conflict opened we Pat is ones, deeper do Can you PCS like well. as interest. specifically, everyone. seems it a is of of Because obviously like

Pat Gelsinger

Yes.

Pivotal source – just essentials, really the this which announced VMware. for have open by Let me essentially think about three We PKS is now PKS PKS, complements pass. we just delivered Kubernetes which complements complete now offerings. essentials, supported PCF and When you

the the integration a which the so which proponents, is with And is with Platform particular of that in capability, other layer, full Service the PAS complete then is Pivotal as added value offer. NSX, Second PKS. combining

of offering three stack it go be commitment development those we the its this will a built complete about customers the registry, solution think essentials PKS want with core exactly into other three-layer which is common you they more technology bring available to And the that inside this And networking, across our then more bringing if more Pivotal is as portfolio. capabilities them. can PAS opinionated their Kubernetes. that grow as cake. we from capability complete franchise, So And customers, up a environment, a would be that. broadly when in into value we everybody, for taking has integrating where will we’re have a of all base Obviously, you where and believe

we’ve We the space. for a good that enterprise. the Kubernetes we about as in very out had tone consumer to PKS. quarter on And feel good we that. ramp So overall, And are see be very we’re said, dial nicely the accounts to starting

unique and we’re have with very of CNCF make We’re three the a We the industry deeply committed source the to in to of position this and going drive of now as capable. Heptio founders, we through standard this that believe Kubernetes, key accomplish a to two standard community founders that. the open

Raimo Lenschow

Thank you.

Paul Ziots

Raimo. Thank you,

question Next please.

Operator

have we with Heather Next Goldman Bellini Sachs.

Heather Bellini

kind you Thanks week, a we this that were you. that’s for sharing was really you at messages momentum customers thank I do know to start see how telco stomping And you. see for playing with, you’re World usual I with heard where their having Congress of in networks upgrading I ground what were question. in Great, you. Pat, Mobile meeting were they the you And are to it out? Thank what the taking mentioned SDDC? key you? wondering telcos that

Pat Gelsinger

infrastructure that starts Yes, if are there, spending that thank are there, be days you, At And build a Mobile is it this have the week. is it the is I predicting core believing being you came been more it World where from industry that to Barcelona of Heather. few might the sort think XXXX remember, at out. where time Yes, XXXX allocated. solutions I Congress XG The so. handsets year away really great in level, to phenomena, Barcelona And starts. was available. even the spectrum starting really we

you now build like vertical are LTE, built that, And the build LTE operational horizontal a broad services of way much of of of support more the message allow the have to or we there you like said, can to have Second, have infrastructure solution, telco this instead tied telco rapid delivering. a or we solutions just XG, range common models of efficiency, deployment bespoke for XG, a we and cloud was a a centers you having that you to services. we’ve broad range inside applications that XG data and hey, that was cloud. of that And are XG, new idea core these allow that VMware can

Their that, VeloCloud expansion XG AT&T of to of companies. we saw growing the And primarily XX their well the have are both that the at everybody with VMware, astonished when to able we now has thrilled validated And a marketplace, innovation is being announced is by two key scale. sort that partnership relationship, also to But rapidly and our bit is integrating have major they now Vodafone running were other we I also bring their VeloCloud, relationships, Vodafone momentum Ericsson. solutions rate and around partner everybody as how partnership a countries footprint. VMware thank capability. we’re the right XX Now where in of really, with with with going Vodafone and a for that they of

We So or now see on taken relationships significant for XXX to validated we’re think are going and it. VNFs XXX over deploy that together, those three applications really implementations, run year, operators, over to production were VMware next us. very XG start XX

uniquely we – now of this benefit positioned We’re quite to from XG. buildout believe

Paul Ziots

Thank you, Heather.

please. question Next

Operator

James. Raymond with have Next Michael we Turits

Michael Turits

Hey, good guys, evening.

Dell You goal. Dell that And made here some the hit public. may that last comments also remarks you with now comment in the relationship synergy the is prepared about

now to Dell where about expect you So with down forward? on anything synergy what they going talk be And about that be public? anymore can drill doing might – goal are

Zane Rowe

couldn’t in with as efforts add highlight I’ll set the to out mean, the intention transaction. completion both R&D well was Yes, Michael. that. the just the earlier, with side Dell. we as Pat of on start as opportunity. market have let we up laid And success and pleased we’ve Pat to and relationship be specificity to to had mentioned initially Sure, isn’t the we upon go more continue our That the update I to the

that last on any beyond specifics a that to continuing, we and see see achieved. tremendous billion be to giving been we years. of more continue it’s we’re And $X number growth we So going the not but

Pat Gelsinger

I to value creating a Against them. on client and earlier, together cooperation of Dell more little broad the as commented unique areas with we’re Clearly, on focus the VxRail these that, going more bit and like propositions with them the we solutions. see

able very terms just persistent is public. to together. They’re with results. go value particularly post go starting joint the a industry. aligned driving to us to has So the that R&D demonstrate to cadence that And bringing we’ve build market unique proposition a value really great, of together capabilities the Dell into as partnership and to been come in

Paul Ziots

Michael. you, Thank

please. question Next

Operator

Next we Evercore Kirk ISI. with have Materne

Kirk Materne

lines? a to that customer opportunity layers how about your Yes, just thanks kind single just that’s you and was only Can to on but those big if of also AWS, idea would view is that’s this with maybe to And world. the help hybrid obviously, just you management painted talk going multi-cloud along world. that quarter. to the very it’s world, there Pat, much it have one the pretty and as glass cloud. are I’m multi-cloud relationship congrats for you key sort positioned, seem being wondering common a this a be be be that but conversations Meaning, think just relates about comment within manage on you going world. Thanks. curious think customers the vendor, our hybrid yourselves to I I being not going of [indiscernible] a

Pat Gelsinger

a great question. That’s Yes.

infrastructure changing Let things. what cloud hybrid uniquely VMware we’re and and the me, move without any cloud, now Wow, we is, application really with the three this is. And from to really customers powerful. with about that’s cloud One that cloud way. that’s positioned ability we build in doing first, VMC, the foundation, talk about common to when

Amazon, And I customers. – and IBC my But before what this of customers native I multi-cloud what multi-cloud CloudHealth about, world? exactly data using really SaaS manage indicated for do managing services. today data is a us, on data that’s spend have CloudHealth we on platform. or Azure Google, Amazon asking we’re have world? them, or from going How to Amazon leaders second services And I’m have in as on-premise recent enterprise we you’re manage right? centers. I’m In I exactly We’ve The that clouds that has is about. with here, included I average five had building do have How the acquire providers,

multi-cloud multi-cloud have positioned cloud you which all native And announced position expand well well environment We’ve with across expanding on-premise. around and other to of capabilities is one with continuing uniquely be the able to VMware back conversation, that third earlier cloud environment that environment VMware developer to that of for Heptio, of where that customers needs the the include portfolio of customer the that’s Azure across is more that see as PKS, hybrid do as just a clouds. complete three. to have, three. around have Wavefront to operations all and we a all to into. middle assets services, for of management future. strategy company And just future, we for infrastructure, is the we into consistent cloud VMware rapidly platform, as with I multi-cloud a now refer VMware and the for that the and Kubernetes. believe part CloudHealth that And clouds, there How value isn’t a launched in and performance being We’re really consistent We we’ll development. anywhere instance, any native the deliver And then for for comes every if partner like see Q&A that space then multiple conversation natural has really integrations we the near

this we quite extremely that go ramp possibility. VMware a to family as excited year. CloudHealth So of we’re highly had expect about is motivated. good going that QX They well. as They’re part rapidly and we through

Paul Ziots

Kirk. Thank you,

Next question please.

Operator

Next Philip from we Wells Winslow. Fargo have

Philip Winslow

question. my for Thanks a a Congrats lot quarter. on great taking

defined deals deal [indiscernible] the guess, and double this vSAN. versus of ten maybe to some I is software quarter eight storage the the signed of to this of of the company’s vSAN believe that of mentioned and this two case, your hyperconverged, hypervisor-converged question. in biggest that versus sort with kind how inflection storage click parts plus you on in attached market I vSAN. One, history large or you much increase competition. Pat, wanted Just

Just be anymore great. that color would

Pat Gelsinger

And top this across I TCO. different XX of bring about positioned but has as we deals, VxRail others. XX, and of full just view offering, have verticals that’s And quarter. need one variety though hyperconverged the a our and had financial, industry recognition is to this where together. we’re it what we it’s nicely vSAN included foundation vSAN our and eight of a of major very seeing deals we solution ingredient which with our of overall, this from leading our core is, An vSAN in strength, a saw and that where cloud to infrastructure very Yes. become Gartner quarter. compelling performance pleased ingredients, great a Great really larger deal referenced very

well. confident that a inside it’s of people that as believe core cloud solution do it’s a to trend, trend, that well as very secular offerings we gaining also go as but software-defined solution. an our And to of we’re more are more to So integrated we share also

the the has Cloud AWS VMware middle sitting on it. that in of right So

see our momentum our from We’re VMware of cloud Cloud key increasing partners a well. such as broader in IBM is program as that the partner where piece ingredients solution

I with for portfolio it’s grow So overall, be super happy going as years this to continuing come. think And element our to an performance. to of

Paul Ziots

you, Phil. Thank

please. question Next

Operator

Weiss Next is Keith Morgan with Stanley.

Sanjit Singh

thoughts team and revisit view Hi, of Weiss. durability your on your Pat, this the wanted to I growth. really is Sanjit Singh Keith Congrats on NSX strong get year. on for the a

and level do how strong fiscal or growth maybe about been year the near contributor fiscal a you this has basis, you of out think that year? Thank feel an year, the NSX posted sort Velo XXXX even but I looking at sustaining organic to you. beyond,

Pat Gelsinger

growth rate, super thank bookings disruptor a And the for QX space. of a was Total QX spectacular that security growth NSX really rate. pleased million. you. just and continues Yeah, XX% be of and to $XXX acceleration And with seeing we’re plus surpassed networking

have reaching the also We’re security, now into networking as and great really seeing well, but NSX-T container space. adoption

becoming a deals Kubernetes QX. customers VeloCloud’s, deals, NSX, of our included container XX,XXX Nine strategy. largest and product. hot XX and it’s PKS So in differentiator of reached super major our for We

accolades the huge for product fourth that quarter. a amount in just So area of

tiny, relative future, to Now networking we’re the overall as we look into the still of right, the size opportunity.

that expanding be us So we into a to see tremendous over there’s time. for market

just areas SD-WAN these and of some VeloCloud that started. are believe also getting like We

go. And to place like, Mobile World for relationships, and key telco, think question about an you ingredient another if adjacent landmark Congress Heather’s of amount huge a market. also there’s around So

we see opportunity So the tremendous for long-term.

Paul Ziots

Thank you, Sanjit.

question Next please.

Operator

we Next have with Ittai Kidron Oppenheimer.

Ittai Kidron

called Are Pretty ask in it’s you bit on that give quite want some us a business as Can do percent XX% inside? of it Can revenue, more granular are color clean little as cloud has seeing here appreciated. breakdown greatly Just but you you of revenue the bit VCPP? now? hybrid How Zane, of to a to I be about SaaS, you quarter, revenue. much. what a more composition? that more VMWare which be Kind That as think will and been many customers wise, mid-XXs not a growing subscription in of you, little for is there? deceleration I moving Thanks. AWS time right Cloud

Zane Rowe

Sure, Ittai.

at look quarter recall at seasonally this the this are year, pleased hovering you I you base in with last very fourth so if VLA, think into fairly quarter, large. growing. growth, We’re if X% XX% as revenue a a as that of the revenue. that the category. we in Recognize And performance And time we’re XX% percent quarter, you’re around a strong percent of with and is

new of with pleased category couldn’t to growing and correlated the be emerging. SaaS the with they’re a products, the we them a So more and so portfolio opportunities Recognize cloud lot and are growth. and consumption the of lot are

carefully. we So them track all very

very you whole earlier that down changes look so FX. a you a things, tied as an the impact the out as year-over-year at point granularity basis, as bit, the on was within little SaaS as products. and the on not it’s category, cloud FX then see, broader And grand of the to continues point some have yet overall to But that was little more nicely over scheme category, more far as the a the grow program lot growth XX%. the breakout which We’re That I a didn’t can But of category. pleased we with will of with are well. offer VCPP where slowed the susceptible to we products, at in as

Pat Gelsinger

on we hybrid Yes. a And category the for the SaaS just bit that us, pile see Ittai, that cloud, growth of let products. me little the

subscription. many VeloCloud areas. against There’s number, on a While subscription. products the is subscription. that’s VMC of still focus we these of large subscription, growing extraordinary bigger small have is are CloudHealth those PKS is portion

on that just that and So are our product new do started the gain to have. really of component revenue we’ve many of that on focused traction subscription areas building cloud hybrid we

service, said, committed that but we’re rate As right, Zane given our happier and driving momentum couldn’t to a more the it’s trail-in, into this a getting, future. subscription be we it’s growth with be we couldn’t

Paul Ziots

Thank you, Ittai. please. question we for take so time Looks have two let’s the next like more questions,

Operator

Sure.

Next we with have Brad Zelnick Suisse. Credit

Brad Zelnick

Great. sitting a nice me on Thanks quarter. for and job the guys

other So is AWS replicated with two now with and since with announced very your public how depths Or more AWS, than VMC other years relationship plans think and unique on we should of not about integration providers? your you easily clouds?

Pat Gelsinger

other mutually as one continue the a invest But focus number that’s us we’ve with be as to VCPP us I great preferred public described that us benefit we’ll expect and area relationship good relationship, the we enables marketplace. the enabled Zane we the with We we to set had to have as in the the do said, offerings the of And broader that program. one is as the preferred continuing a unique, that momentum number the Yes, partner as getting we giving in over partners, future. other we’re private through that do X,XXX relationship earlier Amazon each VCPP for results which much will partners. on great as in with a are of with another quarter And goal. our see grow and do and a comments, cloud have just that Amazon commented, cloud seeing into right, program, partners growth

Paul Ziots

last Brad. you, Great. the question, We’ll please. take Thank

Operator

with And from the question Cleveland Bollin Research. final is Ben

Ben Bollin

across to those duration offerings in Good where so bit the And getting become is agreements? you How more agreements? making of talk changing? as the Thank little about what any and end. accelerate you of me Could enterprise Thanks understanding the afternoon. stacks, investments types at a improve concerns? you. of you they mitigate that those average bigger shelf for here What’s more are that

Zane Rowe

we over million. I largest touched we’re start then was ever with finish. on Ben, So let I’ll more enterprise quarter, seeing, with I I Pat pleased and there $XX our was the million $XX growth the couldn’t as mean, agreements, think be fourth

ever into durations on We the those tell can integrate they’re we in typically adoption duration, far size more all detail we’re the too get And as those and areas, the are into more covering cloud don’t areas on before. but strategic as Our becoming and increasing focused products I of particular on agreements what focus in than agreements. you that much the consumption is in increasing. average is

and So customers. how strategic ourselves we’re become very relationships, pleased partnerships for they’ve and with these the both our

Pat Gelsinger

And customers part that products. getting get Vas, focused rates, that investments the a renewal VMware reason seeing increased value enabled in we strategically we little not customers we for from X that that view duration essentially see And help they’ve their success this That of are of And non-pay just on customer. – very great add services to really ago maybe customer it organization on success shelfware because that Yes. group just a with any that We place go is customer size is focuses X.X, and there years and of result team to sure just a VAs, happy that two making to on right. build target much just called adoption, we organization. use we’re points, as made increased attack professional we as go that did very our an to shelfware. are the

already extremely that in appreciate is I great Maybe then, We to heard all for And conclude, think your interest with call. team customers you’ve we’ll doing on strategic relevance showing joining I’ll for us. overall, closing, well VMware. what reiterate you that this in us. our So and overall. And for just thank again, just time

a QX results. terrific XXXX are and pleased very We with fiscal

and across the essential, digital provide foundation transformation. with think our us, on They’re I We’re the investing partnering for ubiquitous the for a year, call business strength seeing was team everybody as on great the this them. software customers’ a we broad-based in we’re results. and It great

Operator

does joining And you today. again, call. ladies We appreciate us that today’s gentlemen, and conclude do

disconnect. now may You

Vmware (VMW) 28 Feb 192019 Q4 Earnings call transcript