VMware revenue climbs 35 percent on 'pent-up demand'

The results beat expectations, though VMware said new license sales may fall next quarter

VMware's revenue jumped 35 percent in the first quarter, the company said Tuesday, another sign that businesses are opening their wallets again for enterprise IT purchases.

Profits climbed more modestly, but the virtualization software vendor still managed to report better numbers than expected. The results were driven by "pent-up customer demand" and strong sales in Europe, China and Japan, Chief Financial Officer Mark Peek said in a statement.

Revenue for the quarter, ended March 31, was US$634 million, up from $470 million for the same period last year. Net income before one-time charges was $133 million, or $0.32 per share, up from $100 million, or $0.25 per share, in last year's first quarter, VMware said.

Analysts had expected revenue of $593 million and earnings of $0.28 per share, according to a poll by Thomson Reuters.

The picture was not all rosy. Peek warned that new license sales, an indicator of future growth potential, are likely to be down next quarter compared with the first. But full-year revenue will rise by as much as 35 percent, VMware said, helped along by recent acquisitions.

Software license revenue for the quarter was $312 million, up 21 percent from the first quarter last year. Services revenue, comprised mainly of fees for software maintenance, increased 51 percent to $322 million.

Business outside the U.S. grew fastest. U.S. sales were up 30 percent, while international revenue climbed 40 percent.

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James Niccolai

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