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VMware Reports Fiscal Year 2021 Third Quarter Results
Total revenue growth of 8% year-over-year Subscription and SaaS revenue growth of 44% year-over-year; 24% of total revenue PALO ALTO, Calif.–(BUSINESS WIRE)– VMware, Inc. (NYSE: VMW), a leading innovator in enterprise software, today announced financial results for the third quarter of fiscal 2021: Revenue for the third quarter was $2.86 billion, an increase of 8% from the third quarter of …
Tue, 24 Nov 2020 00:00:00
Total revenue growth of 8% year-over-year
Subscription and SaaS revenue growth of 44% year-over-year; 24% of total revenue
-
Revenue for the third quarter was
$2.86 billion , an increase of 8% from the third quarter of fiscal 2020. -
The combination of subscription and SaaS and license revenue was
$1.32 billion , an increase of 10% from the third quarter of fiscal 2020. -
Subscription and SaaS revenue for the third quarter was
$676 million , an increase of 44% year-over-year, representing 24% of total revenue. -
GAAP net income for the third quarter was
$434 million , or$1.02 per diluted share, compared to$407 million , or$0.96 per diluted share, for the third quarter of fiscal 2020. Non-GAAP net income for the third quarter was$704 million , or$1.66 per diluted share, up 17% per diluted share compared to$602 million , or$1.42 per diluted share, for the third quarter of fiscal 2020. -
GAAP operating income for the third quarter was
$428 million , an increase of 15% from the third quarter of fiscal 2020. Non-GAAP operating income for the third quarter was$888 million , an increase of 17% from the third quarter of fiscal 2020. -
Operating cash flow for the third quarter was
$992 million . Free cash flow for the third quarter was$908 million . -
RPO for Q3 totaled
$10.2 billion , up 10% year-over-year. Excluding the impact in the third quarter of fiscal year 2020 of unearned revenue assumed in the acquisition ofCarbon Black , which negatively impacted the year-over-year growth rate by 5 percentage points, total revenue plus sequential change in total unearned revenue decreased 4% year-over-year. -
Excluding the impact in the third quarter of fiscal year 2020 of unearned revenue assumed in the acquisition of
Carbon Black , which negatively impacted the year-over-year growth rate by 10 percentage points, subscription and SaaS and license revenue plus sequential change in unearned subscription and SaaS and license revenue grew 1% year-over-year.
“Q3 was another good quarter for
“Subscription and SaaS revenue increased 44% year-over-year in Q3 and surpassed license revenue for the first time,” said
Business Highlights & Strategic Announcements
-
At VMworld 2020,
VMware welcomed nearly 200,000 registrants and introduced a wave of new offerings and partnerships designed to help customers navigate their own transformation journeys. The news across VMworld includes:-
VMware unveiled new innovations to deliver intrinsic security to the world’s digital infrastructure. Specifically, VMware Carbon Black Cloud Workload delivers advanced protection built into vSphere for better securing modern workloads to reduce the attack surface and strengthen security posture. -
VMware outlined VMware Workforce Anywhere solutions to provide exceptional workforce experiences, end-to-endZero Trust security controls and simplified management featuring VMware NSX Secure Access Service Edge (SASE), Workspace ONE and Carbon Black Endpoint Security capabilities. -
VMware announced partnerships withMenlo Security and Zscaler to help large global enterprises simplify the adoption of a complete SASE architecture and more effectively implementZero Trust security. -
VMware acquired SaltStack, a pioneer in building intelligent, event-driven automation software. SaltStack will enableVMware to significantly broaden its software configuration management and infrastructure and network automation capabilities. -
VMware unveiled updates to Tanzu support across VMware Cloud on AWS, Azure VMware Solution and Oracle Cloud VMware Solution. -
VMware announced Project Monterey—a technology preview focused on evolving the architecture for the data center, cloud and edge to address the changing requirements of next-generation applications including AI, machine learning and 5G applications. -
VMware and NVIDIA announced a broad partnership to deliver both an end-to-end enterprise platform for AI and a new architecture for data center, cloud and edge that uses NVIDIA® DPUs (data processing units) to support existing and next-generation applications. This will help accelerate AI adoption, enabling enterprises to extend existing infrastructure for AI, manage all applications with a single set of operations and deploy AI-ready infrastructure where the data resides, across the data center, cloud and edge.
-
- The company announced the 5G Telco Cloud Platform, a consistent cloud-first solution powered by a field-proven, carrier-grade, and high-performance cloud native infrastructure with intelligent automation. This new platform includes Tanzu Kubernetes Grid—an embedded Kubernetes distribution—that will allow Communication Service Providers to reliably build, manage and run containerized workloads across private, telco, edge and public clouds.
-
VMware announced it has collaborated with Samsung Electronics Co., Ltd. to further extend its leadership in 5G. Through this alliance, the companies seek to help communication service providers meet the requirements of 5G networks and accelerate the roll-out of 5G by optimizing Samsung’s portfolio of telco offerings from Core to Edge to RAN for both containerized network functions and virtualized network functions with VMware Telco Cloud Platform. -
The company unveiled
VMware vSphere 7 Update 1,VMware vSAN 7 Update 1 andVMware Cloud Foundation 4.1 product releases that streamline customer adoption of Kubernetes, support stateful applications with new developer-ready capabilities and enhance scalability and operations with new features.VMware also announced Tanzu editions—packaging portfolio capabilities to address the most common scenarios customers encounter in their modernization efforts. - In August, the company was positioned as a Leader in “The Forrester Wave™: Infrastructure Automation Platforms, Q3 2020.”1
-
In September,
VMware has again been positioned as a Leader in the Gartner 2020 Magic Quadrant for WAN Edge Infrastructure.2 This is the third consecutive yearVMware has been positioned as a Leader for VMware SD-WAN in Gartner’s evaluation for WAN Edge Infrastructure.
The company will host a conference call today at
1 Forrester, “The Forrester Wave™: Infrastructure Automation Platforms, Q3 2020,”
2 Gartner Magic Quadrant for WAN Edge Infrastructure,
About
Additional Information
VMware’s website is located at www.vmware.com, and its investor relations website is located at http://ir.vmware.com. VMware’s goal is to maintain the investor relations website as a portal through which investors can easily find or navigate to pertinent information about
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to VMware’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled “About Non-GAAP Financial Measures.”
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Revenue: |
|
|
|
|
|
|
|
|
||||||||
License |
|
$ |
639 |
|
|
$ |
728 |
|
|
$ |
2,019 |
|
|
$ |
2,147 |
|
Subscription and SaaS |
|
|
676 |
|
|
|
470 |
|
|
|
1,880 |
|
|
|
1,320 |
|
Services |
|
|
1,549 |
|
|
|
1,458 |
|
|
|
4,574 |
|
|
|
4,271 |
|
Total revenue |
|
|
2,864 |
|
|
|
2,656 |
|
|
|
8,473 |
|
|
|
7,738 |
|
Operating expenses(1): |
|
|
|
|
|
|
|
|
||||||||
Cost of license revenue |
|
|
44 |
|
|
|
42 |
|
|
|
119 |
|
|
|
116 |
|
Cost of subscription and SaaS revenue |
|
|
142 |
|
|
|
103 |
|
|
|
400 |
|
|
|
294 |
|
Cost of services revenue |
|
|
330 |
|
|
|
311 |
|
|
|
969 |
|
|
|
916 |
|
Research and development |
|
|
714 |
|
|
|
642 |
|
|
|
2,058 |
|
|
|
1,846 |
|
Sales and marketing |
|
|
912 |
|
|
|
918 |
|
|
|
2,727 |
|
|
|
2,674 |
|
General and administrative |
|
|
250 |
|
|
|
269 |
|
|
|
773 |
|
|
|
701 |
|
Realignment |
|
|
44 |
|
|
|
— |
|
|
|
47 |
|
|
|
— |
|
Operating income |
|
|
428 |
|
|
|
371 |
|
|
|
1,380 |
|
|
|
1,191 |
|
Investment income |
|
|
1 |
|
|
|
12 |
|
|
|
7 |
|
|
|
40 |
|
Interest expense |
|
|
(52 |
) |
|
|
(40 |
) |
|
|
(156 |
) |
|
|
(108 |
) |
Other income (expense), net |
|
|
177 |
|
|
|
17 |
|
|
|
186 |
|
|
|
75 |
|
Income before income tax |
|
|
554 |
|
|
|
360 |
|
|
|
1,417 |
|
|
|
1,198 |
|
Income tax provision (benefit) |
|
|
120 |
|
|
|
(30 |
) |
|
|
150 |
|
|
|
(4,842 |
) |
Net income |
|
|
434 |
|
|
|
390 |
|
|
|
1,267 |
|
|
|
6,040 |
|
Less: Net loss attributable to non-controlling interests |
|
|
— |
|
|
|
(17 |
) |
|
|
— |
|
|
|
(50 |
) |
Net income attributable to |
|
$ |
434 |
|
|
$ |
407 |
|
|
$ |
1,267 |
|
|
$ |
6,090 |
|
Net income per weighted-average share attributable to |
|
$ |
1.03 |
|
|
$ |
0.98 |
|
|
$ |
3.02 |
|
|
$ |
14.60 |
|
Net income per weighted-average share attributable to |
|
$ |
1.02 |
|
|
$ |
0.96 |
|
|
$ |
3.00 |
|
|
$ |
14.32 |
|
Weighted-average shares, basic for Classes A and B |
|
|
420,857 |
|
|
|
416,387 |
|
|
|
419,758 |
|
|
|
417,002 |
|
Weighted-average shares, diluted for Classes A and B |
|
|
423,400 |
|
|
|
423,035 |
|
|
|
423,093 |
|
|
|
425,366 |
|
__________ |
|
|
|
|
|
|
|
|
||||||||
(1) Includes stock-based compensation as follows: |
|
|
|
|
|
|
|
|
||||||||
Cost of license revenue |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
1 |
|
Cost of subscription and SaaS revenue |
|
|
4 |
|
|
|
3 |
|
|
|
13 |
|
|
|
10 |
|
Cost of services revenue |
|
|
25 |
|
|
|
20 |
|
|
|
74 |
|
|
|
58 |
|
Research and development |
|
|
140 |
|
|
|
118 |
|
|
|
397 |
|
|
|
328 |
|
Sales and marketing |
|
|
85 |
|
|
|
76 |
|
|
|
243 |
|
|
|
204 |
|
General and administrative |
|
|
50 |
|
|
|
39 |
|
|
|
141 |
|
|
|
104 |
|
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(amounts in millions, except per share amounts, and shares in thousands) |
||||||||
(unaudited) |
||||||||
|
|
|
|
|||||
|
|
|
|
|||||
|
2020 |
|
2020 |
|||||
ASSETS |
|
|
|
|||||
Current assets: |
|
|
|
|||||
Cash and cash equivalents |
$ |
3,898 |
|
|
$ |
2,915 |
|
|
Accounts receivable, net of allowance for doubtful accounts of |
|
1,789 |
|
|
|
1,883 |
|
|
Due from related parties, net |
|
672 |
|
|
|
1,457 |
|
|
Other current assets |
|
473 |
|
|
|
436 |
|
|
Total current assets |
|
6,832 |
|
|
|
6,691 |
|
|
Property and equipment, net |
|
1,311 |
|
|
|
1,280 |
|
|
Other assets |
|
2,698 |
|
|
|
2,266 |
|
|
Deferred tax assets |
|
5,865 |
|
|
|
5,556 |
|
|
Intangible assets, net |
|
1,059 |
|
|
|
1,172 |
|
|
|
|
9,559 |
|
|
|
9,329 |
|
|
Total assets |
$ |
27,324 |
|
|
$ |
26,294 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Accounts payable |
$ |
190 |
|
|
$ |
208 |
|
|
Accrued expenses and other |
|
2,232 |
|
|
|
2,151 |
|
|
Current portion of long-term debt and other borrowings |
|
— |
|
|
|
2,747 |
|
|
Unearned revenue |
|
5,205 |
|
|
|
5,218 |
|
|
Total current liabilities |
|
7,627 |
|
|
|
10,324 |
|
|
Note payable to |
|
270 |
|
|
|
270 |
|
|
Long-term debt |
|
4,715 |
|
|
|
2,731 |
|
|
Unearned revenue |
|
4,030 |
|
|
|
4,050 |
|
|
Income tax payable |
|
790 |
|
|
|
817 |
|
|
Operating lease liabilities |
|
904 |
|
|
|
746 |
|
|
Other liabilities |
|
512 |
|
|
|
347 |
|
|
Total liabilities |
|
18,848 |
|
|
|
19,285 |
|
|
Contingencies |
|
|
|
|||||
Stockholders’ equity: |
|
|
|
|||||
Class A common stock, par value |
|
1 |
|
|
|
1 |
|
|
Class B convertible common stock, par value |
|
3 |
|
|
|
3 |
|
|
Additional paid-in capital |
|
2,201 |
|
|
|
2,000 |
|
|
Accumulated other comprehensive loss |
|
(5 |
) |
|
|
(4 |
) |
|
Retained earnings |
|
6,276 |
|
|
|
5,009 |
|
|
Total stockholders’ equity |
|
8,476 |
|
|
|
7,009 |
|
|
Total liabilities and stockholders’ equity |
$ |
27,324 |
|
|
$ |
26,294 |
|
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||||||
(in millions) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
Operating activities: |
|
|
|
|
|
|
|
|||||||||
Net income |
$ |
434 |
|
|
$ |
390 |
|
|
$ |
1,267 |
|
|
$ |
6,040 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|||||||||
Depreciation and amortization |
|
261 |
|
|
|
219 |
|
|
|
757 |
|
|
|
626 |
|
|
Stock-based compensation |
|
304 |
|
|
|
256 |
|
|
|
869 |
|
|
|
705 |
|
|
Deferred income taxes, net |
|
20 |
|
|
|
(183 |
) |
|
|
(177 |
) |
|
|
(5,138 |
) |
|
Unrealized (gain) loss on equity securities, net |
|
(190 |
) |
|
|
(10 |
) |
|
|
(197 |
) |
|
|
(30 |
) |
|
(Gain) loss on disposition of assets, revaluation and impairment, net |
|
15 |
|
|
|
1 |
|
|
|
22 |
|
|
|
(4 |
) |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
8 |
|
|
|
— |
|
|
Other |
|
2 |
|
|
|
1 |
|
|
|
— |
|
|
|
4 |
|
|
Changes in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|||||||||
Accounts receivable |
|
181 |
|
|
|
48 |
|
|
|
102 |
|
|
|
164 |
|
|
Other current assets and other assets |
|
(277 |
) |
|
|
(91 |
) |
|
|
(622 |
) |
|
|
(444 |
) |
|
Due to/from related parties, net |
|
225 |
|
|
|
2 |
|
|
|
785 |
|
|
|
299 |
|
|
Accounts payable |
|
(15 |
) |
|
|
7 |
|
|
|
(4 |
) |
|
|
14 |
|
|
Accrued expenses and other liabilities |
|
186 |
|
|
|
(92 |
) |
|
|
393 |
|
|
|
(82 |
) |
|
Income taxes payable |
|
(2 |
) |
|
|
27 |
|
|
|
(53 |
) |
|
|
15 |
|
|
Unearned revenue |
|
(152 |
) |
|
|
176 |
|
|
|
(65 |
) |
|
|
618 |
|
|
Net cash provided by operating activities |
|
992 |
|
|
|
751 |
|
|
|
3,085 |
|
|
|
2,787 |
|
|
Investing activities: |
|
|
|
|
|
|
|
|||||||||
Additions to property and equipment |
|
(84 |
) |
|
|
(52 |
) |
|
|
(247 |
) |
|
|
(215 |
) |
|
Purchases of strategic investments |
|
(5 |
) |
|
|
(9 |
) |
|
|
(16 |
) |
|
|
(18 |
) |
|
Proceeds from disposition of assets |
|
— |
|
|
|
— |
|
|
|
21 |
|
|
|
22 |
|
|
Business combinations, net of cash acquired, and purchases of intangible assets |
|
(56 |
) |
|
|
(2,052 |
) |
|
|
(390 |
) |
|
|
(2,437 |
) |
|
Net cash paid on disposition of a business |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
Net cash used in investing activities |
|
(145 |
) |
|
|
(2,113 |
) |
|
|
(632 |
) |
|
|
(2,652 |
) |
|
|
|
|
|
|
|
|
|
|||||||||
Financing activities: |
|
|
|
|
|
|
|
|||||||||
Proceeds from issuance of common stock |
|
122 |
|
|
|
141 |
|
|
|
264 |
|
|
|
294 |
|
|
Net proceeds from issuance of long-term debt |
|
— |
|
|
|
— |
|
|
|
1,979 |
|
|
|
— |
|
|
Borrowings under term loan, net of issuance costs |
|
— |
|
|
|
1,993 |
|
|
|
— |
|
|
|
1,993 |
|
|
Repayment of term loan |
|
(1,500 |
) |
|
|
(1,400 |
) |
|
|
(1,500 |
) |
|
|
(1,400 |
) |
|
Repayment of current portion of long-term debt |
|
— |
|
|
|
— |
|
|
|
(1,257 |
) |
|
|
— |
|
|
Repurchase of common stock |
|
(255 |
) |
|
|
(242 |
) |
|
|
(566 |
) |
|
|
(1,279 |
) |
|
Shares repurchased for tax withholdings on vesting of restricted stock |
|
(44 |
) |
|
|
(41 |
) |
|
|
(319 |
) |
|
|
(393 |
) |
|
Payment to acquire non-controlling interests |
|
— |
|
|
|
— |
|
|
|
(91 |
) |
|
|
— |
|
|
Contribution from |
|
— |
|
|
|
27 |
|
|
|
— |
|
|
|
27 |
|
|
Principal payments on finance lease obligations |
|
(1 |
) |
|
|
— |
|
|
|
(3 |
) |
|
|
(1 |
) |
|
Net cash provided by (used in) financing activities |
|
(1,678 |
) |
|
|
478 |
|
|
|
(1,493 |
) |
|
|
(759 |
) |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
(831 |
) |
|
|
(884 |
) |
|
|
960 |
|
|
|
(624 |
) |
|
Cash, cash equivalents and restricted cash at beginning of the period |
|
4,822 |
|
|
|
3,856 |
|
|
|
3,031 |
|
|
|
3,596 |
|
|
Cash, cash equivalents and restricted cash at end of the period |
$ |
3,991 |
|
|
$ |
2,972 |
|
|
$ |
3,991 |
|
|
$ |
2,972 |
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|||||||||
Cash paid for interest |
$ |
51 |
|
|
$ |
67 |
|
|
$ |
142 |
|
|
$ |
131 |
|
|
Cash paid for taxes, net |
|
111 |
|
|
|
95 |
|
|
|
393 |
|
|
|
283 |
|
|
Non-cash items: |
|
|
|
|
|
|
|
|||||||||
Changes in capital additions, accrued but not paid |
$ |
(11 |
) |
|
$ |
10 |
|
|
$ |
(18 |
) |
|
$ |
5 |
|
|
Changes in tax withholdings on vesting of restricted stock, accrued but not paid |
|
(6 |
) |
|
|
53 |
|
|
|
(4 |
) |
|
|
49 |
|
|
||||||||
GROWTH IN REVENUE PLUS SEQUENTIAL CHANGE IN UNEARNED REVENUE |
||||||||
(in millions) |
||||||||
(unaudited) |
||||||||
|
||||||||
Growth in Total Revenue Plus Sequential Change in Unearned Revenue |
||||||||
|
|
|
|
|
||||
|
|
Three Months Ended |
||||||
|
|
|
|
|
||||
|
|
2020 |
|
2019 |
||||
Total revenue, as reported |
|
$ |
2,864 |
|
|
$ |
2,656 |
|
Sequential change in unearned revenue(1) |
|
|
(150 |
) |
|
|
329 |
|
Total revenue plus sequential change in unearned revenue |
|
$ |
2,714 |
|
|
$ |
2,985 |
|
Change (%) over prior year, as reported |
|
|
(9 |
)% |
|
|
||
|
|
|
|
|
||||
Assumed |
|
$ |
— |
|
|
$ |
(151 |
) |
Total revenue plus sequential change in unearned revenue, excluding impact of |
|
$ |
2,714 |
|
|
$ |
2,834 |
|
Change (%) over prior year, excluding impact of |
|
|
(4 |
)% |
|
|
||
|
|
|
|
|
||||
Growth in License and Subscription and SaaS Revenue Plus Sequential Change in Unearned License and Subscription and SaaS Revenue |
||||||||
|
|
|
|
|
||||
|
|
Three Months Ended |
||||||
|
|
|
|
|
||||
|
|
2020 |
|
2019 |
||||
Total license and subscription and SaaS revenue, as reported |
|
$ |
1,315 |
|
|
$ |
1,198 |
|
Sequential change in unearned license and subscription and SaaS revenue(2) |
|
|
(23 |
) |
|
|
223 |
|
Total license and subscription and SaaS revenue plus sequential change in unearned license and subscription and SaaS revenue |
|
$ |
1,292 |
|
|
$ |
1,421 |
|
Change (%) over prior year, as reported |
|
|
(9 |
)% |
|
|
||
|
|
|
|
|
||||
Assumed |
|
$ |
— |
|
|
$ |
(145 |
) |
Total license and subscription and SaaS revenue plus sequential change in unearned license and subscription and SaaS revenue, excluding impact of |
|
$ |
1,292 |
|
|
$ |
1,276 |
|
Change (%) over prior year, excluding impact of |
|
|
1 |
% |
|
|
||
__________ |
|
|
|
|
||||
(1) Consists of the change in total unearned revenue from the preceding quarter. Total unearned revenue consists of current and non-current unearned revenue amounts presented in the condensed consolidated balance sheets. |
||||||||
(2) Consists of the change in unearned license and subscription and SaaS revenue from the preceding quarter. |
||||||||
(3) Amount represents unearned revenue assumed in the acquisition of |
|
||||||||||||||||||
SUPPLEMENTAL UNEARNED REVENUE SCHEDULE |
||||||||||||||||||
(in millions) |
||||||||||||||||||
(unaudited) |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
2020 |
|
2020 |
|
2020 |
|
2020 |
|
2019 |
|
2019 |
|||||||
Unearned revenue as reported: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
License |
$ |
11 |
|
$ |
11 |
|
$ |
15 |
|
$ |
19 |
|
$ |
19 |
|
$ |
19 |
|
Subscription and SaaS |
|
1,596 |
|
|
1,619 |
|
|
1,579 |
|
|
1,534 |
|
|
1,199 |
|
|
976 |
|
Services |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Software maintenance |
|
6,574 |
|
|
6,696 |
|
|
6,611 |
|
|
6,700 |
|
|
6,106 |
|
|
6,042 |
|
Professional services |
|
1,054 |
|
|
1,059 |
|
|
1,013 |
|
|
1,015 |
|
|
893 |
|
|
851 |
|
Total unearned revenue |
$ |
9,235 |
|
$ |
9,385 |
|
$ |
9,218 |
|
$ |
9,268 |
|
$ |
8,217 |
|
$ |
7,888 |
|
||||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA |
||||||||||||||||||||||||||||||||
For the Three Months Ended |
||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) |
||||||||||||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
GAAP |
|
Stock-Based |
|
Employer |
|
Intangible |
|
Realignment |
|
Acquisition, |
|
Tax |
|
Non-GAAP |
|||||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Cost of license revenue |
$ |
44 |
|
|
|
— |
|
|
|
— |
|
|
|
(11 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
33 |
|
|
Cost of subscription and SaaS revenue |
$ |
142 |
|
|
|
(4 |
) |
|
|
— |
|
|
|
(48 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
90 |
|
|
Cost of services revenue |
$ |
330 |
|
|
|
(25 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
305 |
|
|
Research and development |
$ |
714 |
|
|
|
(140 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
573 |
|
|
Sales and marketing |
$ |
912 |
|
|
|
(85 |
) |
|
|
(1 |
) |
|
|
(23 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
803 |
|
|
General and administrative |
$ |
250 |
|
|
|
(50 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(28 |
) |
|
|
— |
|
|
$ |
172 |
|
|
Realignment |
$ |
44 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(44 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
|
Operating income |
$ |
428 |
|
|
|
304 |
|
|
|
1 |
|
|
|
83 |
|
|
|
44 |
|
|
|
28 |
|
|
|
— |
|
|
$ |
888 |
|
|
Operating margin(2) |
|
14.9 |
% |
|
|
10.6 |
% |
|
|
— |
% |
|
|
2.9 |
% |
|
|
1.5 |
% |
|
|
1.0 |
% |
|
|
— |
|
|
|
31.0 |
% |
|
Other income (expense), net(3) |
$ |
177 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(175 |
) |
|
|
— |
|
|
$ |
1 |
|
|
Income before income tax |
$ |
554 |
|
|
|
304 |
|
|
|
1 |
|
|
|
83 |
|
|
|
44 |
|
|
|
(147 |
) |
|
|
— |
|
|
$ |
838 |
|
|
Income tax provision |
$ |
120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
14 |
|
|
$ |
134 |
|
|||||||||||
Tax rate(2) |
|
21.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.0 |
% |
|||||||||||||
Net income |
$ |
434 |
|
|
|
304 |
|
|
|
1 |
|
|
|
83 |
|
|
|
44 |
|
|
|
(147 |
) |
|
|
(14 |
) |
|
$ |
704 |
|
|
Net income per weighted-average share, diluted for Classes A and B(2)(4) |
$ |
1.02 |
|
|
$ |
0.72 |
|
|
$ |
— |
|
|
$ |
0.20 |
|
|
$ |
0.10 |
|
|
$ |
(0.35 |
) |
|
$ |
(0.03 |
) |
|
$ |
1.66 |
|
|
__________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. |
||||||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. |
||||||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. |
||||||||||||||||||||||||||||||||
(4) Calculated based upon 423,400 diluted weighted-average shares for Classes A and B. |
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA |
||||||||||||||||||||||||||||||||
For the Nine Months Ended |
||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) |
||||||||||||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
GAAP |
|
Stock-Based |
|
Employer |
|
Intangible |
|
Realignment |
|
Acquisition, |
|
Tax |
|
Non-GAAP |
|||||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Cost of license revenue |
$ |
119 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(33 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
85 |
|
|
Cost of subscription and SaaS revenue |
$ |
400 |
|
|
|
(13 |
) |
|
|
— |
|
|
|
(138 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
249 |
|
|
Cost of services revenue |
$ |
969 |
|
|
|
(74 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
894 |
|
|
Research and development |
$ |
2,058 |
|
|
|
(397 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
$ |
1,658 |
|
|
Sales and marketing |
$ |
2,727 |
|
|
|
(243 |
) |
|
|
(4 |
) |
|
|
(71 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
$ |
2,404 |
|
|
General and administrative |
$ |
773 |
|
|
|
(141 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(104 |
) |
|
|
— |
|
|
$ |
527 |
|
|
Realignment |
$ |
47 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(47 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
|
Operating income |
$ |
1,380 |
|
|
|
869 |
|
|
|
7 |
|
|
|
244 |
|
|
|
47 |
|
|
|
108 |
|
|
|
— |
|
|
$ |
2,656 |
|
|
Operating margin(2) |
|
16.3 |
% |
|
|
10.3 |
% |
|
|
0.1 |
% |
|
|
2.9 |
% |
|
|
0.6 |
% |
|
|
1.3 |
% |
|
|
— |
|
|
|
31.3 |
% |
|
Other income (expense), net(3) |
$ |
186 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(182 |
) |
|
|
— |
|
|
$ |
5 |
|
|
Income before income tax |
$ |
1,417 |
|
|
|
869 |
|
|
|
7 |
|
|
|
244 |
|
|
|
47 |
|
|
|
(74 |
) |
|
|
— |
|
|
$ |
2,512 |
|
|
Income tax provision |
$ |
150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
252 |
|
|
$ |
402 |
|
|||||||||||
Tax rate(2) |
|
10.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.0 |
% |
|||||||||||||
Net income |
$ |
1,267 |
|
|
|
869 |
|
|
|
7 |
|
|
|
244 |
|
|
|
47 |
|
|
|
(74 |
) |
|
|
(252 |
) |
|
$ |
2,110 |
|
|
Net income per weighted-average share, diluted for Classes A and B(2)(4) |
$ |
3.00 |
|
|
$ |
2.05 |
|
|
$ |
0.02 |
|
|
$ |
0.58 |
|
|
$ |
0.11 |
|
|
$ |
(0.17 |
) |
|
$ |
(0.59 |
) |
|
$ |
4.99 |
|
|
__________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. |
||||||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. |
||||||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. |
||||||||||||||||||||||||||||||||
(4) Calculated based upon 423,093 diluted weighted-average shares for Classes A and B. |
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA |
||||||||||||||||||||||||||||
For the Three Months Ended |
||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) |
||||||||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
GAAP |
|
Stock-Based |
|
Employer |
|
Intangible |
|
Acquisition, |
|
Tax |
|
Non-GAAP |
|||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cost of license revenue |
$ |
42 |
|
|
|
— |
|
|
|
— |
|
|
|
(21 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
21 |
|
|
Cost of subscription and SaaS revenue |
$ |
103 |
|
|
|
(3 |
) |
|
|
— |
|
|
|
(26 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
73 |
|
|
Cost of services revenue |
$ |
311 |
|
|
|
(20 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
289 |
|
|
Research and development |
$ |
642 |
|
|
|
(118 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
524 |
|
|
Sales and marketing |
$ |
918 |
|
|
|
(76 |
) |
|
|
(1 |
) |
|
|
(26 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
816 |
|
|
General and administrative |
$ |
269 |
|
|
|
(39 |
) |
|
|
— |
|
|
|
— |
|
|
|
(55 |
) |
|
|
— |
|
|
$ |
175 |
|
|
Operating income |
$ |
371 |
|
|
|
256 |
|
|
|
1 |
|
|
|
74 |
|
|
|
55 |
|
|
|
— |
|
|
$ |
758 |
|
|
Operating margin(2) |
|
14.0 |
% |
|
|
9.6 |
% |
|
|
— |
% |
|
|
2.8 |
% |
|
|
2.1 |
% |
|
|
— |
|
|
|
28.5 |
% |
|
Other income (expense), net(3) |
$ |
17 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10 |
) |
|
|
— |
|
|
$ |
7 |
|
|
Income before income tax |
$ |
360 |
|
|
|
256 |
|
|
|
1 |
|
|
|
74 |
|
|
|
45 |
|
|
|
— |
|
|
$ |
737 |
|
|
Income tax provision (benefit) |
$ |
(30 |
) |
|
|
|
|
|
|
|
|
|
|
147 |
|
|
$ |
118 |
|
|||||||||
Tax rate(2) |
|
N/M |
|
|
|
|
|
|
|
|
|
|
|
|
|
16.0 |
% |
|||||||||||
Net income |
$ |
390 |
|
|
|
256 |
|
|
|
1 |
|
|
|
74 |
|
|
|
45 |
|
|
|
(147 |
) |
|
$ |
619 |
|
|
Less: Net income (loss) attributable to non-controlling interests |
$ |
(17 |
) |
|
|
26 |
|
|
|
— |
|
|
|
9 |
|
|
|
2 |
|
|
|
(3 |
) |
|
$ |
17 |
|
|
Net income attributable to |
$ |
407 |
|
|
|
230 |
|
|
|
1 |
|
|
|
65 |
|
|
|
43 |
|
|
|
(144 |
) |
|
$ |
602 |
|
|
Net income per weighted-average share attributable to |
$ |
0.96 |
|
|
$ |
0.54 |
|
|
$ |
— |
|
|
$ |
0.15 |
|
|
$ |
0.10 |
|
|
$ |
(0.34 |
) |
|
$ |
1.42 |
|
|
__________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
N/M – Tax rate calculated on a GAAP basis is not considered meaningful. |
||||||||||||||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. |
||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. |
||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. |
||||||||||||||||||||||||||||
(4) Calculated based upon 423,035 diluted weighted-average shares for Classes A and B. |
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA |
||||||||||||||||||||||||||||
For the Nine Months Ended |
||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) |
||||||||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
GAAP |
|
Stock-Based |
|
Employer |
|
Intangible |
|
Acquisition, |
|
Tax |
|
Non-GAAP |
|||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cost of license revenue |
$ |
116 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(62 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
53 |
|
|
Cost of subscription and SaaS revenue |
$ |
294 |
|
|
|
(10 |
) |
|
|
— |
|
|
|
(78 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
205 |
|
|
Cost of services revenue |
$ |
916 |
|
|
|
(58 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
854 |
|
|
Research and development |
$ |
1,846 |
|
|
|
(328 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
1,516 |
|
|
Sales and marketing |
$ |
2,674 |
|
|
|
(204 |
) |
|
|
(6 |
) |
|
|
(71 |
) |
|
|
— |
|
|
|
— |
|
|
$ |
2,394 |
|
|
General and administrative |
$ |
701 |
|
|
|
(104 |
) |
|
|
— |
|
|
|
— |
|
|
|
(89 |
) |
|
|
— |
|
|
$ |
508 |
|
|
Operating income |
$ |
1,191 |
|
|
|
705 |
|
|
|
7 |
|
|
|
214 |
|
|
|
89 |
|
|
|
— |
|
|
$ |
2,208 |
|
|
Operating margin(2) |
|
15.4 |
% |
|
|
9.1 |
% |
|
|
0.1 |
% |
|
|
2.8 |
% |
|
|
1.2 |
% |
|
|
— |
|
|
|
28.5 |
% |
|
Other income (expense), net(3) |
$ |
75 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(33 |
) |
|
|
— |
|
|
$ |
41 |
|
|
Income before income tax |
$ |
1,198 |
|
|
|
705 |
|
|
|
7 |
|
|
|
214 |
|
|
|
56 |
|
|
|
— |
|
|
$ |
2,181 |
|
|
Income tax provision (benefit) |
$ |
(4,842 |
) |
(4) |
|
|
|
|
|
|
|
|
|
5,191 |
|
|
$ |
349 |
|
|||||||||
Tax rate(2) |
|
N/M |
|
(4) |
|
|
|
|
|
|
|
|
|
|
|
16.0 |
% |
|||||||||||
Net income |
$ |
6,040 |
|
|
|
705 |
|
|
|
7 |
|
|
|
214 |
|
|
|
56 |
|
|
|
(5,191 |
) |
|
$ |
1,832 |
|
|
Less: Net income (loss) attributable to non-controlling interests |
$ |
(50 |
) |
|
|
73 |
|
|
|
— |
|
|
|
27 |
|
|
|
2 |
|
|
|
(9 |
) |
|
$ |
43 |
|
|
Net income attributable to |
$ |
6,090 |
|
|
|
632 |
|
|
|
7 |
|
|
|
187 |
|
|
|
54 |
|
|
|
(5,182 |
) |
|
$ |
1,789 |
|
|
Net income per weighted-average share attributable to |
$ |
14.32 |
|
|
$ |
1.48 |
|
|
$ |
0.02 |
|
|
$ |
0.44 |
|
|
$ |
0.13 |
|
|
$ |
(12.18 |
) |
|
$ |
4.21 |
|
|
__________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
N/M – Tax rate calculated on a GAAP basis is not considered meaningful. |
||||||||||||||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. |
||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. |
||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. |
||||||||||||||||||||||||||||
(4) During the second quarter of fiscal 2020, we completed an intra-group transfer of certain of our intellectual property rights to our Irish subsidiary, where our international business is headquartered. A discrete tax benefit of |
||||||||||||||||||||||||||||
(5) Calculated based upon 425,366 diluted weighted-average shares for Classes A and B. |
||||||||||||||||||||||||||||
|
||||||||||||||||
REVENUE BY TYPE |
||||||||||||||||
(in millions) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Revenue: |
|
|
|
|
|
|
|
|
||||||||
License |
|
$ |
639 |
|
|
$ |
728 |
|
|
$ |
2,019 |
|
|
$ |
2,147 |
|
Subscription and SaaS |
|
|
676 |
|
|
|
470 |
|
|
|
1,880 |
|
|
|
1,320 |
|
Total license and subscription and SaaS |
|
|
1,315 |
|
|
|
1,198 |
|
|
|
3,899 |
|
|
|
3,467 |
|
Services: |
|
|
|
|
|
|
|
|
||||||||
Software maintenance |
|
|
1,282 |
|
|
|
1,200 |
|
|
|
3,797 |
|
|
|
3,519 |
|
Professional services |
|
|
267 |
|
|
|
258 |
|
|
|
777 |
|
|
|
752 |
|
Total services |
|
|
1,549 |
|
|
|
1,458 |
|
|
|
4,574 |
|
|
|
4,271 |
|
Total revenue |
|
$ |
2,864 |
|
|
$ |
2,656 |
|
|
$ |
8,473 |
|
|
$ |
7,738 |
|
Percentage of revenue: |
|
|
|
|
|
|
|
|
||||||||
License |
|
|
22.3 |
% |
|
|
27.4 |
% |
|
|
23.8 |
% |
|
|
27.7 |
% |
Subscription and SaaS |
|
|
23.6 |
% |
|
|
17.7 |
% |
|
|
22.2 |
% |
|
|
17.1 |
% |
Total license and subscription and SaaS |
|
|
45.9 |
% |
|
|
45.1 |
% |
|
|
46.0 |
% |
|
|
44.8 |
% |
Services: |
|
|
|
|
|
|
|
|
||||||||
Software maintenance |
|
|
44.8 |
% |
|
|
45.2 |
% |
|
|
44.8 |
% |
|
|
45.5 |
% |
Professional services |
|
|
9.3 |
% |
|
|
9.7 |
% |
|
|
9.2 |
% |
|
|
9.7 |
% |
Total services |
|
|
54.1 |
% |
|
|
54.9 |
% |
|
|
54.0 |
% |
|
|
55.2 |
% |
Total revenue |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
||||||||||||||||
REVENUE BY GEOGRAPHY |
||||||||||||||||
(in millions) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
Revenue: |
|
|
|
|
|
|
|
|||||||||
|
$ |
1,466 |
|
|
$ |
1,323 |
|
|
$ |
4,268 |
|
|
$ |
3,835 |
|
|
International |
|
1,398 |
|
|
|
1,333 |
|
|
|
4,205 |
|
|
|
3,903 |
|
|
Total revenue |
$ |
2,864 |
|
|
$ |
2,656 |
|
|
$ |
8,473 |
|
|
$ |
7,738 |
|
|
Percentage of revenue: |
|
|
|
|
|
|
|
|||||||||
|
|
51.2 |
% |
|
|
49.8 |
% |
|
|
50.4 |
% |
|
|
49.6 |
% |
|
International |
|
48.8 |
% |
|
|
50.2 |
% |
|
|
49.6 |
% |
|
|
50.4 |
% |
|
Total revenue |
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
||||||||||||||||
RECONCILIATION OF GAAP CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||||||
TO FREE CASH FLOWS |
||||||||||||||||
(A NON-GAAP FINANCIAL MEASURE) |
||||||||||||||||
(in millions) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
GAAP cash flows from operating activities |
$ |
992 |
|
|
$ |
751 |
|
|
$ |
3,085 |
|
|
$ |
2,787 |
|
|
Capital expenditures |
|
(84 |
) |
|
|
(52 |
) |
|
|
(247 |
) |
|
|
(215 |
) |
|
Free cash flows |
$ |
908 |
|
|
$ |
699 |
|
|
$ |
2,838 |
|
|
$ |
2,572 |
|
|
||||
RECONCILIATION OF GAAP TO NON-GAAP DATA |
||||
FISCAL 2021 NET INCOME PER DILUTED SHARE GUIDANCE |
||||
(in millions) |
||||
(unaudited) |
||||
|
|
|||
|
Full Year Fiscal 2021 (Projected) |
|||
|
Current Guidance |
|||
GAAP Net income per diluted share |
|
|
Projected |
|
Stock-based compensation |
2.75 |
|
Estimated |
|
Employer Payroll Tax on Employee Stock Transactions |
0.02 |
|
Estimated |
|
Intangible Amortization |
0.78 |
|
Estimated |
|
Acquisition, Disposition and Other Related Items(2) |
— |
|
Estimated |
|
Tax adjustment(3) |
(0.76) |
|
Estimated |
|
Non-GAAP Net income per diluted share |
|
|
Projected |
|
__________ |
|
|
|
|
(1) Values of items excluded from GAAP net income per diluted share are estimates. While the aggregate of estimates may not foot, in total we expect GAAP net income per share to be |
||||
(2) Current guidance includes gains or losses on investments in equity securities, whether realized or unrealized, during the nine months ended |
||||
(3) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. |
About Non-GAAP Financial Measures
To provide investors and others with additional information regarding VMware’s results,
VMware’s management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, to calculate bonus payments and to evaluate VMware’s financial performance, the performance of its individual functional groups and the ability of operations to generate cash. Management believes these non-GAAP financial measures reflect VMware’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in VMware’s business, as they exclude charges and gains that are not reflective of ongoing operating results. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating VMware’s operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. Additionally, management believes information regarding free cash flow provides investors and others with an important perspective on the cash available to make strategic acquisitions and investments, to repurchase shares, to fund ongoing operations and to fund other capital expenditures.
Management believes these non-GAAP financial measures are useful to investors and others in assessing VMware’s operating performance due to the following factors:
-
Stock-based compensation. Stock-based compensation is generally fixed at the time the stock-based instrument is granted and amortized over a period of several years. Although stock-based compensation is an important aspect of the compensation of VMware’s employees and executives, the expense for the fair value of the stock-based instruments
VMware utilizes may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of VMware’s core business. - Employer payroll taxes on employee stock transactions. The amount of employer payroll taxes on stock-based compensation is dependent on VMware’s stock price and other factors that are beyond VMware’s control and do not correlate to the operation of the business.
-
Amortization of acquired intangible assets. A portion of the purchase price of VMware’s acquisitions is generally allocated to intangible assets, such as intellectual property, and is subject to amortization. However,
VMware does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition’s purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition. Therefore,VMware believes that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods. - Realignment charges. Realignment charges include workforce reductions, asset impairments, losses on asset disposals and costs to exit facilities. VMware’s management believes it is useful to exclude these items, when significant, as they are not reflective of VMware’s core business and operating results.
-
Acquisition, disposition and other items. As
VMware does not acquire or dispose of businesses on a predictable cycle and the terms of each transaction can vary significantly and are unique to each transaction,VMware believes it is useful to exclude acquisition, disposition and other items when looking for a consistent basis for comparison across accounting periods. These items include:– Direct costs of acquisitions and dispositions, such as transaction and advisory fees.
– Costs associated with integrating acquired businesses.
– Accruals for the portion of merger consideration payable in installments that may be paid in cash or
VMware stock, at the option ofVMware .– Gains or losses on investments in equity securities, whether realized or unrealized.
– Charges recognized for non-recoverable strategic investments or gains recognized on the disposition of strategic investments.
– Gains or losses on sale or disposal of distinct lines of business or product offerings, or transactions with features similar to discontinued operations, including recoveries or charges recognized to adjust the fair value of assets that qualify as “held for sale.”
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Tax adjustment. Non-GAAP financial information for the quarter is adjusted for a tax rate equal to VMware’s annual estimated tax rate on non-GAAP income. This rate is based on VMware’s estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating VMware’s non-GAAP income as well as significant tax adjustments. VMware’s estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that
VMware management believes materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to VMware’s estimated annual tax rates as described above, the estimated tax rate on non-GAAP income may differ from the GAAP tax rate and from VMware’s actual tax liabilities.
Additionally, VMware’s management believes that the non-GAAP financial measure of free cash flow is meaningful to investors because management reviews cash flow generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered to be a necessary component of ongoing operations.
The use of non-GAAP financial measures has certain limitations because they do not reflect all items of income and expense that affect VMware’s operations. Specifically, in the case of stock-based compensation, if
Management encourages investors and others to review VMware’s financial information in its entirety and not rely on a single financial measure.
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VMware Investor Relations
pziots@vmware.com
650-427-3267
VMware Global PR
mthacker@vmware.com
650-427-4454
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