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VMware (VMW) Q4 Earnings Beat Estimates, Revenues Rise Y/Y
VMware’s (VMW - Free Report) fourth-quarter fiscal 2023 non-GAAP earnings of $2.13 per share beat the Zacks Consensus Estimate by 7.58% and increased 5.4% year over year.
Revenues of $3.71 billion beat the consensus mark by 2.16%. The top line registered year-over-year growth of 5.2%.
VMware, Inc. Price, Consensus and EPS Surprise
VMware, Inc. price-consensus-eps-surprise-chart | VMware, Inc. Quote
Region-wise, U.S. revenues (47.1% of revenues) increased 6.3% year over year to $1.74 billion. International revenues (52.9%) grew 4.2% to $1.96 billion.
Services revenues (45.4% of revenues) rose 3.6% year over year to $1.68 billion. Software Maintenance revenues (81.5% of Services revenues) grew 2.1% to $1.37 billion. Professional Services revenues (18.5% of Services revenues) were $312 million, up 10.6% year over year.
Total License and Subscription & SaaS revenues (54.6% of revenues) increased 6.6% from the year-ago quarter to $2.02 billion.
License revenues (41.7% of License and Subscription & SaaS revenues) decreased 18.4% year over year to $845 million due to the transition to subscription and SaaS.
Subscription & SaaS revenues (58.3% of segment revenues) increased 30.6% year over year to $1.18 billion.
Non-GAAP Operating Details
Research & development expenses as a percentage of revenues increased 50 basis points (bps) year over year to 19.7%.
Sales & marketing expenses as a percentage of revenues increased 50 bps on a year-over-year basis to 28.3%.
General & administrative expenses as a percentage of revenues increased 10 bps on a year-over-year basis to 6%.
Operating margin contracted 150 bps on a year-over-year basis to 30.7%.
Balance Sheet & Cash Flow
As of Feb 3, 2023, VMware’s cash & cash equivalents were $5.1 billion compared with $3.97 billion as of Oct 28, 2022.
Total debt (including the current portion of long-term debt) was $10.4 billion as of Feb 3, 2023, compared with $9.69 billion as of Oct 28.
Operating cash flow was $1.63 billion in the fiscal fourth quarter compared with $1.26 billion reported in the previous quarter.
Free cash flow was $1.5 billion in the reported quarter compared with $1.16 billion in the previous quarter.
Revenue Performance Obligation increased 13% year over year to $13.5 billion.
VMware has entered into a definitive agreement to be acquired by Broadcom (AVGO - Free Report) .
Broadcom is set to acquire VMware for approximately $61 billion in cash and stock. VMW will not be providing financial guidance for the first quarter and full-year fiscal 2024.
Zacks Rank & Stocks to Consider
VMWare currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Agilent Technologies (A - Free Report) and AMETEK (AME - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent’s shares have lost 7.9% in the past year. A’s long-term earnings growth rate is currently projected at 10%.
AMETEK’s shares have gained 10.3% in the past year. The long-term earnings growth rate for AME is currently projected at 8.8%.