Cloud Computing Firm VMware Reports Second Quarter 2010 Results Revenue Growth of 48%

Cloud Computing Firm VMware Reports Second Quarter 2010 Results Revenue Growth of 48%

PALO ALTO, CA, Jul 20, 2010 (MARKETWIRE via COMTEX) — VMware, Inc. (VMW 72.42, -0.93, -1.27%) , the global leader in virtualization solutions from the desktop through the datacenter to the cloud, today announced financial results for the second quarter 2010:

Revenues for the second quarter were $674 million, an increase of 48%
from the second quarter of 2009.

— GAAP operating income for the second quarter was $101 million, an
increase of 166% from the second quarter of 2009. Non-GAAP operating
income for the second quarter was $187 million, an increase of 94%
from the second quarter of 2009.

— GAAP net income for the second quarter was $75 million, or $0.18 per
diluted share, compared to $33 million, or $0.08 per diluted share,
for the second quarter of 2009. Non-GAAP net income for the second
quarter was $142 million, or $0.34 per diluted share, compared to $80
million, or $0.20 per diluted share, for the second quarter of 2009.

— Cash, cash equivalents and short-term investments as of June 30, 2010
were $2.8 billion, an increase of 21% compared to a year ago. Total
deferred revenues were $1.5 billion, an increase of 58% from the same
period a year ago.

— For the trailing twelve months ended June 30, 2010, operating cash
flows were $1.1 billion, an increase of 3% from the same period a year
ago. Trailing twelve month free cash flows were $1.0 billion, an
increase of 33% from the same period a year ago.

US revenues for the second quarter increased 43% to $334 million from the second quarter of 2009. International revenues for the second quarter grew 53% to $340 million from the second quarter of 2009.

License revenues were $324 million, an increase of 42% from the second quarter of 2009. Services revenues, which include software maintenance and professional services, were $350 million, an increase of 54% from the second quarter of 2009.

“Our strong second quarter results were driven by demand across all products and regions,” said Mark Peek, chief financial officer. “For the third quarter, we expect license revenues to be flat sequentially and total revenues to increase to a range of $680 and $705 million. For our 2010 annual revenues, we are raising our guidance to be in the range of $2.725 and $2.8 billion, an increase of 35% to 38% from 2009.”

“We are gratified that customers continue to recognize the value that VMware provides in modernizing infrastructures and providing a pragmatic path to cloud computing,” said Paul Maritz, president and chief executive officer. “As customers continue on this path, they are looking for a strategic partner to help move them forward, and VMware will continue to invest to deliver solutions that enable IT-as-a-service.”

Recent Highlights & Strategic Announcements

— On July 13, 2010, VMware announced VMware vSphere 4.1, an updated
version of VMware’s flagship virtualization and cloud infrastructure
platform. With VMware vSphere 4.1, VMware once again sets the bar in
virtualization, coupling dramatic scalability and performance
enhancements with new management capabilities to deliver the most
powerful foundation for cloud computing. The announcement included
additions to VMware’s vCenter Family of management products and new
packaging for the SMB market.

— In the second quarter 2010, VMware announced a series of moves to
further its Open Platform-as-a-Service (Open PaaS) offerings and
enable application portability across private and public cloud
environments. The announcements included the acquisition of Gemstone,
which introduces sophisticated data-caching capabilities; a new
partnership with Salesforce.com, whereby Java and Spring framework
developers will be able to deploy new applications into a cloud and
leverage Salesforce.com capabilities; and a partnership with Google,
whereby the Spring framework will be integrated with Google’s App
Engine.

— On June 10, 2010, VMware announced it is positioned by Gartner, Inc.
in the Leaders Quadrant of the Gartner Magic Quadrant for x86 Server
Virtualization Infrastructure. According to the report: “The x86
Server Virtualization Infrastructure market is a foundation for two
extremely important market trends — infrastructure modernization and
cloud computing.”(1)

— On June 9, 2010, VMware and Novell announced an expansion to their
partnership with an original equipment manufacturer (OEM) agreement
through which VMware will distribute and support the SUSE(R) Linux
Enterprise Server operating system at no additional cost to vSphere
customers. With this agreement, customers can more easily and
cost-effectively virtualize Linux applications, accelerate their
evolution to a fully virtualized datacenter and simplify portability
of their applications to cloud environments.

VMware plans to host a conference call today to review its second quarter results and to discuss its financial outlook. The call is scheduled to begin at 2:00 p.m. PT/ 5:00 p.m. ET and can be accessed via the Web at http://ir.vmware.com. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 30 days.

(1) Gartner, Inc “Magic Quadrant for x86 Server Virtualization Infrastructure,” Thomas Bittman et al, May 26, 2010.

About VMware

VMware delivers virtualization and cloud infrastructure solutions that enable IT organizations to energize businesses of all sizes. With the industry leading virtualization platform — VMware vSphere(TM) — customers rely on VMware to reduce capital and operating expenses, improve agility, ensure business continuity, strengthen security and go green. With 2009 revenues of $2 billion, more than 190,000 customers and 25,000 partners, VMware is the leader in virtualization which consistently ranks as a top priority among CIOs. VMware is headquartered in Silicon Valley with offices throughout the world and can be found online at www.vmware.com

VMware and VMware vSphere are registered trademarks or trademarks of VMware, Inc. in the United States and/or other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective companies.

About the Magic Quadrant

The Magic Quadrant is copyrighted 2010 by Gartner, Inc. and is reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner’s analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the “Leaders” quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Use of Non-GAAP Financial Measures Reconciliations of non-GAAP financial measures to VMware’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables entitled “About Non-GAAP Financial Measures.”

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