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Factors Setting the Tone for VMware's (VMW) Q4 Earnings

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VMware, Inc. (VMW - Free Report) is slated to release fourth-quarter fiscal 2020 results on Feb 27.

The leading virtualization solution provider’s earnings outperformed the Zacks Consensus Estimate by 4.5%, on average, over the trailing four quarters.

The Zacks Consensus Estimate for quarterly earnings has been unchanged over the past 30 days at $2.16 per share. The consensus mark for earnings is in line with management’s guidance, suggesting an increase of 9.1% from the year-ago period’s reported figure.

Further, the Zacks Consensus Estimate for revenues is pegged at $2.95 billion, indicating a 13.8% year-over-year rise. Also, the consensus mark for fourth-quarter revenues is in line with management’s guidance.
 

VMware, Inc. Price and EPS Surprise

VMware, Inc. Price and EPS Surprise

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

 

Key Factors to be Noted

VMware’s continued focus on expanding its product portfolio and new enterprise deal wins is likely to have driven the company’s growth in the to-be-reported quarter.

Over the last few months, the company launched a number of products, including VMware Tanzu, VMware Service-defined Firewall, and an updated VMware vRealize. The VMware Tanzu is a portfolio of products and services that helps enterprises build, run and manage software on Kubernetes. The freshly-updated version of VMware vRealize cloud management platform is helping the company further expand its capabilities in the hybrid cloud computing space.

The virtualization solution provider has also added new features to the VMware Cloud Provider Platform. These features enable cloud providers to deliver industrialized hybrid clouds to customers from any location, including customer data centers, cloud provider data centers, VMware Cloud on Amazon’s (AMZN - Free Report) Amazon Web Services (AWS) as a managed service and hyperscale public clouds. Product launches and feature updates are anticipated to have expanded clientele during the fiscal fourth quarter.

Moreover, the company’s strategy of building partnerships with the likes of International Business Machines (IBM - Free Report) , Amazon’s cloud computing arm AWS, and Microsoft (MSFT - Free Report) , is helping it expand customer base in the cloud space.

Notably, VMware Cloud on AWS is now available across 16 AWS regions globally. Per VMware, since August 2018, VMware Cloud on AWS customers has been up four times. The solid demand for the solution is expected to have aided the top line in the fourth quarter.

Furthermore, acquisitions are playing a key role in driving VMware’s revenues. The company completed the acquisition of Pivotal Software in the to-be-reported quarter. In the fiscal third quarter, VMware closed the buyout deal of Carbon Black. Moreover, in the fiscal second quarter, the company completed the acquisitions of Avi Networks, Bitfusion, Uhana and Veriflow. All these buyouts are anticipated to have brought in incremental revenues during the period under consideration.

Zacks Rank

VMware currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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