VMware (NYSE: VMW) lived up to high analyst expectations when the enterprise software company reported its second-quarter results last week, helping support the stock's impressive 46% run-up over the past 12 months. Revenue and adjusted earnings per share both topped consensus analyst forecasts, and segment and regional results demonstrated broad-based strength. The results extend VMware's hot streak, which includes strong first-quarter results earlier this year.
To get a better idea of how VMware is performing, here's an overview of the company's second-quarter results for its fiscal 2019 in six key metrics.
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1. Revenue increased 13%
VMware's revenue increased 13% year over year to $2.17 billion. On average, analysts were expecting revenue of $2.15 billion.
This compares to 14% year-over-year revenue growth in Q1.
2. Non-GAAP EPS rose 14%
VMware's adjusted earnings per share increased 14% year over year to $1.54. This was above a consensus analyst estimate for $1.49. On a GAAP basis, VMware's earnings per share increased 58% year over year to $1.56.
3. License revenue jumped 15%
VMware's license revenue, which accounts for 41% of total revenue, increased 15% year over year to $900 million.
In addition, 19% year-over-year growth in license revenue plus the sequential change in unearned license revenue highlighted a healthy license billings trajectory.
4. Software maintenance revenue increased 12%
Software maintenance revenue, which is one of two of VMware's service segments, increased 12% year over year to $1.1 billion. As the company's biggest segment, software maintenance revenue accounts for just over half of total revenue.
5. Professional services revenue rose 6%
VMware's other service segment, professional services, saw revenue increase 6% year over year to $165 million. Accounting for just 7.6% of total revenue, this is VMware's smallest segment.
6. VMware's Cloud Provider Program revenue increased 30%
To provide more context on promising areas of its business, management also provides data on its hybrid cloud subscription and software-as-a-service revenue. This revenue category "continued to grow at a healthy rate year over year" and represents 10% of overall revenue, management said during the company's second-quarter earnings call. Further, management said its VMware Cloud Provider Program, or a service within its SaaS revenue category that allows its customers to use VMWare products on a pay-as-you-go monthly subscription model, saw revenue increase 30% year over year.
Overall, VMware's quarterly results were solid. During VMware's second-quarter earnings call, CEO Pat Gelsinger credited the company's "ongoing strength" to three factors: positive market response to its overall strategy and innovation, its "consistent go-to-market execution," and secular tailwinds for enterprise software companies.
"Customers are increasingly turning to VMware to partner with them to accelerate their digital journeys," explained Gelsinger. "Our interoperable cloud, mobility, networking, and security solutions form a powerful digital foundation for delivering the apps that drive business innovation and business success."
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