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VMware (VMW) to Report Q3 Earnings: What's in the Cards?

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VMware (VMW - Free Report) is slated to release third-quarter fiscal 2021 results on Nov 24.

For the quarter, total revenues are expected to be $2.80 billion, suggesting 5.4% year-over-year growth. Non-GAAP earnings are expected to be $1.42 per share.

The Zacks Consensus Estimate for quarterly earnings has been steady over the past 30 days at $1.43 per share, suggesting a decline of 4% from the year-ago period’s reported figure.

Further, the consensus mark for revenues is pegged at $2.81 billion, indicating a 14.3% rise from the year-ago reported number.

The company’s earnings beat the Zacks Consensus Estimate in three of the past four quarters, missing the same in one, the average earnings surprise being 13.1%.

VMware, Inc. Price and EPS Surprise


VMware, Inc. Price and EPS Surprise

VMware, Inc. price-eps-surprise | VMware, Inc. Quote

Let’s see how things shaped up prior to this announcement.

Key Factors to Note

VMware’s expanding product portfolio along with solid adoption of cloud, NSX, vSAN, EUC and security solutions is expected to have driven top-line growth in third-quarter fiscal 2020.

The Zacks Rank #3 (Hold) company is benefiting from the ongoing cloud-based digital transformation. Markedly, the company’s strategy to build partnerships with the likes of International Business Machines (IBM - Free Report) , Amazon Web Services (”AWS”), Microsoft Azure, Google Cloud, Oracle, Intel (INTC - Free Report) , NVIDIA (NVDA - Free Report) , Zscaler and Samsung is helping it expand its customer base in the cloud space. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Moreover, strong demand for VMware Cloud on AWS solution is likely to have aided top-line growth. VMware Cloud on AWS is a jointly engineered service that brings VMware Cloud Foundation to AWS, with optimized access to AWS services. The solution is available across 17 AWS regions, globally. Notably, the Datrium acquisition (completed in second-quarter fiscal 2021) expands VMware Cloud on AWS’ Site Recovery offering.

Furthermore, acquisitions of Pivotal Software, Carbon Black and SaltStack are expected to have been instrumental in driving VMware’s revenues during the period under consideration.

Nevertheless, VMware’s third-quarter fiscal 2021 results are expected to bear the brunt of declining IT spending and a sluggish demand environment due to the coronavirus outbreak.

Key Q3 Developments

During the quarter, VMware and Intel announced collaboration on developing an integrated software platform for virtualized Radio Access Networks (RAN) to accelerate the rollout of both existing LTE and future 5G networks.

The company expanded VMware vRealize Cloud Management on-premises and software as a service (SaaS) offerings. Moreover, it unveiled the newest versions of VMware Fusion and VMware Workstation desktop hypervisor solutions.

Moreover, VMware and NVIDIA announced a broad partnership to deliver both an end-to-end enterprise platform for AI (Artificial Intelligence) and a new architecture for data center, cloud and edge that uses NVIDIA’s data processing units to support existing and next-generation applications.

Lumen and VMware also announced a collaboration covering edge computing, networking and security.

Moreover, VMware announced Project Monterey, which is focused on evolving its architecture for the data center, cloud and edge to address the changing requirements of next-generation applications including AI, machine learning and 5G applications.

For the project, VMware is collaborating with Intel, NVIDIA, Pensando Systems, Dell Technologies, Hewlett Packard Enterprise and Lenovo.

Further, VMware announced updates to Tanzu support across VMware Cloud on AWS, Azure VMware Solution, and Oracle Cloud VMware Solution, and a partnership with GitLab.

Additionally, VMware unveiled its 5G Telco Cloud Platform, empowering Communication Service Providers to better meet the growing demand for 5G-powered innovations in Southeast Asia.

VMware also announced its collaboration with Samsung to further extend its leadership in 5G. The partnership will help both companies address the needs of Communication Service Providers related to the requirements of 5G networks.

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