VMware beats forecast with strong Q2 results

Revenue and profit were both up sharply from a year ago, the company said

VMware on Tuesday reported a 48 percent jump in revenue for the second quarter, a greater increase than expected, and raised its outlook for the full year on strong demand for its virtualization software.

The results see VMware back on a growth streak after its business sputtered during the recession. Its sales were flat in the second quarter last year but gradually recovered, increasing 18 percent in the December quarter and 35 percent in the first three months of this year.

Revenue for the quarter just ended was US$674 million, up from $456 million a year earlier and ahead of the $656 million that financial analysts had been expecting, according to Thomson Reuters.

Net profit was $75 million, or $0.18 per share, more than double the $33 million, or $0.08 per share, that VMware reported a year earlier. Excluding one-time charges the profit would have been $0.34 per share, $0.02 ahead of the analyst forecast.

Sales of new software licenses, seen as a measure of future growth, increased by 42 percent to $324 million. Services revenue, including software maintenance fees, climbed at a slightly higher rate to $350 million, VMware said.

The company expects to book about the same amount of license revenue in the third quarter, along with total revenue of up to $705 million -- higher than analysts currently expected. VMware raised its guidance for the full year to between $2.7 billion and $2.8 billion, which would be a 35 percent increase from 2009.

The results were driven by demand across all products and regions, Chief Financial Officer Mark Peek said in a statement.

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