VMware Reports 4Q & Full-Year Earnings & vSAN Hits 7K Customers

Today VMware Inc. reported both its fourth quarter earnings for 2016 as well as its full year results. VMware is one of the top players in the virtualization and cloud business mobility. Not only is VMware reporting some terrific earnings numbers, they are also announcing 7,000 customers for the Hyper-Converged, software powered infrastructure solution vSAN.

Today VMware Inc. reported both its fourth quarter earnings for 2016 as well as its full year results. VMware is one of the top players in the virtualization and cloud business mobility. Not only is VMware reporting some terrific earnings numbers, they are also announcing 7,000 customers for the Hyper-Converged, software powered infrastructure solution vSAN.

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As far as numbers for the quarter go, VMware is reporting revenue of $2.03 billion for the fourth quarter, up 9% from the same time last year. Roughly half of that came from license revenue, $887 million. GAAP net income was $441 million ($1.04 per diluted share) up 18% from last year’s 4Q net income of $373 million. Non-GAAP net income was $597 million ($1.43 per diluted share), up 13% from last year’s $534 million. GAAP operating income for this quarter was $543 million, up 21% from last year, and non-GAAP operating income was $747 million, up 14% from the same time last year. Operating cash flow for this quarter was $463 million and free cash flow as $419 million.

For the year, VMware is reporting revenue of $7.09 billion up 8% and 7%, GAAP and non-GAAP respectively from 2015. License revenue wasn’t quite as big of a piece of pie as it was for the quarter but it was still $2.79 billion, up 3% from 2015. GAAP net income was up to $1.19 billion ($2.78 per diluted share) from $997 million a year ago. Non-GAAP was also up, $1.86 billion ($4.39 per diluted share) now versus $1.73 billion in 2015. GAAP operating income was up 20% to $1.44 billion and non-GAAP operating income was $2.26 billion for 2016. Operating cash flow was $2.38 billion and free cash flow was $2.23 billion. Cash, cash equivalents and short-term investments were $7.99 billion, and unearned revenue was $5.62 billion for the year 2016.

Less than a month ago we reported that vSAN had hit the 5,500 milestone in customer adoption. Our expectation was that it would hit 6,000 customers by the end of the next quarter. Well, to prove us wrong, VMware announced today that vSAN has hit over 7,000 customers. This means that they now have more customers than Nutanix and SimpliVity combined. Not only that, vSAN grew three times faster than the HCI market, partially thanks to the native vSAN integration with vSphere, vCenter and vMotion. Not only was this a huge boon to vSAN (there are over 500,000 vSphere customers) but the entire HCI market itself is becoming more software and less hardware focused. This means a software-based, HCI product like vSAN carries a greater appeal with its flexibility to users’ hardware choice (there are over 160 qualified Ready Node offerings currently).

This is an interesting, and dare I say, exciting turn of events. To have a flagship product in a market that is evolving to almost tailor to your product is a rare thing indeed and it will be interesting to see where vSAN goes from here. It had blown away our expectations more than once and it's difficult to even speculate where it goes next. 

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