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VMware (VMW) to Report Q1 Earnings: What's in the Cards?

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VMware is slated to release first-quarter fiscal 2022 results on May 27.

For the quarter, total revenues are expected to be roughly $2.994 billion, suggesting 9.5% year-over-year growth. Non-GAAP earnings are expected to be $1.76 per share.

The Zacks Consensus Estimate for quarterly earnings has increased by couple of cents over the past 30 days to $1.51 per share, suggesting 0.7% decline from the figure reported in the year-ago quarter.

Further, the consensus mark for revenues is pegged at $2.92 billion, indicating a 6.9% increase from the year-ago reported number.

VMware, Inc. Price and EPS Surprise

 

VMware, Inc. Price and EPS Surprise

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

 

The company’s earnings beat the Zacks Consensus Estimate in all of the past four quarters, the average earnings surprise being 19.1%.

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

Key Factors to Note

VMware’s expanding product portfolio, along with solid adoption of cloud and security solutions, is expected to have driven top-line growth in first-quarter fiscal 2022.

The Zacks Rank #4 (Sell) company is benefiting from the ongoing cloud-based digital transformation. VMware expects Subscription, SaaS and license revenues to be $1.387 billion, indicating 12.5% year-over-year growth.

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, NVIDIA (NVDA - Free Report) , Zscaler and Samsung is helping it expand its customer base in the cloud space.

Moreover, strong demand for VMware Cloud on the AWS solution is likely to have aided top-line growth.VMware Cloud on AWS is a jointly engineered service that brings VMware Cloud Foundation tothe latter, with optimized access to AWS services.

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 first-quarter fiscal 2022 results are expected to bear the brunt of declining IT spending and a sluggish demand environment for on-premise IT infrastructure.

Key Q1 Developments

On Apr 15, VMware and Dell Technologies (DELL - Free Report) announced terms under which the former will be spun off from the latter. The terms include significant simplification to the corporate ownership structure and an $11.5-$12 billion special cash dividend to all VMware stockholders immediately prior to the spin off. Dell’s stockholders will receive about 0.44 shares of VMware for each of their shares, based on outstanding shares as of Mar 16. The transaction is expected to close during the fourth quarter of calendar 2021.

During the to-be-reported quarter, VMware unveiled expanded cloud workload protection capabilities to deliver security for containers and Kubernetes.

Moreover, VMware introduced fresh capabilities across its VMware vRealize Cloud Management portfolio of on-premises and Software as a Service (SaaS) solutions.

Additionally, VMware announced the expansion of its partnership with Lumen Technologies to fast-track the design, development and delivery of edge computing and more secure, work-from-anywhere solutions.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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