VMware Reports Fourth Quarter and Fiscal Year 2021 Results

FY21 revenue of $11.8 billion; growth of 9% year-over-year

Subscription and SaaS revenue of $2.6 billion; 22% of total revenue for FY21

PALO ALTO, Calif.–(BUSINESS WIRE)–$VMW #earnings–VMware, Inc. (NYSE: VMW), a leading innovator in enterprise software, today announced financial results for the fourth quarter and full fiscal year 2021:

Quarterly Review

Revenue for the fourth quarter was $3.3 billion, an increase of 7% from the fourth quarter of fiscal 2020.
The combination of Subscription and SaaS and license revenue was $1.7 billion, an increase of 8% from the fourth quarter of fiscal 2020.
Subscription and SaaS revenue for the fourth quarter was $707 million, an increase of 27% year-over-year.
GAAP net income for the fourth quarter was $791 million, or $1.87 per diluted share, compared to $321 million, or $0.76 per diluted share, for the fourth quarter of fiscal 2020. Non-GAAP net income for the fourth quarter was $936 million, or $2.21 per diluted share, up 8% per diluted share compared to $868 million, or $2.05 per diluted share, for the fourth quarter of fiscal 2020.
GAAP operating income for the fourth quarter was $1.0 billion, an increase of 303% from the fourth quarter of fiscal 2020. Non-GAAP operating income for the fourth quarter was $1.1 billion, an increase of 7% from the fourth quarter of fiscal 2020.
Operating cash flow for the fourth quarter was $1.3 billion. Free cash flow for the fourth quarter was $1.2 billion.
RPO for the fourth quarter totaled $11.3 billion, up 10% year-over-year.
Total revenue plus sequential change in total unearned revenue grew 6% year-over-year.
The combination of Subscription and SaaS and license revenue plus sequential change in unearned Subscription and SaaS and license revenue grew 10% year-over-year.

Annual Review

Revenue for fiscal year 2021 was $11.8 billion, an increase of 9% from fiscal 2020.
The combination of Subscription and SaaS and license revenue for fiscal 2021 was $5.6 billion, an increase of 11% from fiscal year 2020.
Subscription and SaaS revenue for fiscal year 2021 was $2.6 billion, an increase of 38% from fiscal year 2020.
GAAP net income for fiscal year 2021 was $2.1 billion, or $4.86 per diluted share, compared to $6.4 billion, or $15.08 per diluted share, for fiscal 2020. Non-GAAP net income for fiscal year 2021 was $3.0 billion, or $7.20 per diluted share, up 15% per diluted share compared to $2.7 billion, or $6.24 per diluted share, for fiscal 2020.
GAAP operating income for fiscal year 2021 was $2.4 billion, an increase of 66% from fiscal 2020. Non-GAAP operating income for fiscal year 2021 was $3.8 billion, an increase of 16% from fiscal 2020.
Operating cash flow for fiscal year 2021 was $4.4 billion. Free cash flow for fiscal year 2021 was $4.1 billion.
Cash was $4.7 billion, and unearned revenue was $10.3 billion, as of January 29, 2021.

“We are pleased with our fourth quarter financial performance and it was a good finish to the fiscal year. Our results reinforce that customers continue to choose VMware technologies and solutions to drive their digital foundation for today and for the future,” said Zane Rowe, CFO and Interim CEO, VMware. “We continue to build and scale our Subscription and SaaS business, bringing customers flexibility in consumption choices, as well as delivering new offerings to market.”

Business Highlights & Strategic Announcements

VMware Workspace ONE Access achieved FedRAMP℠ Moderate Authorization, allowing the public sector and other regulated industries to rapidly adopt SaaS solutions for mission-enabling, more secure and cost-effective cloud-based IT.
VMware announced a partnership with Dell Technologies and SK Telecom to develop a multi-access edge computing (MEC) solution that brings together private 5G and edge computing capabilities.
VMware announced the commercial availability of VMware Blockchain, an extensible and scalable enterprise-grade platform to build business networks and deploy business-critical decentralized applications. With VMware Blockchain, customers can unlock data silos and free up data to flow more securely, privately and instantaneously.
VMware announced the company’s 2030 Agenda, a 10-year commitment to reaching 30 goals by 2030 for creating a more equitable, sustainable and resilient world. These goals, which will be integrated into VMware’s business, are focused on three outcomes: trust, equity and sustainability.
VMware achieved a number of recognitions for strong environmental, social and governance (ESG) performance in the area of sustainability:
- The company has been included on the 2020 Dow Jones Sustainability Indices (DJSI), one of the world’s leading ESG benchmarks. VMware ranked in the 94^th percentile in the software category for its leadership in corporate sustainability.
- VMware was recognized on CDP’s 2020 Climate A List¹, which recognizes companies committed to reducing carbon emissions and managing climate change risk.
- VMware was acknowledged by the 2020 Carbon Clean 200™, which ranks publicly traded companies based on their green energy revenues.
In November, Forrester named VMware a leader in The Forrester Wave™: Hybrid Cloud Management, Q4 2020².
VMware once again was named a Leader in the December 2020 Gartner Magic Quadrant for Hyperconverged Infrastructure Software, December 2020³.
Also in January, VMware was positioned as a leader in three IDC MarketScape reports related to the End-User Computing space:
- IDC MarketScape: Worldwide Unified Endpoint Management Software 2021 Vendor Assessment (doc #US46957820, January 2021)⁴
- IDC MarketScape: Worldwide Unified Endpoint Management Software for Apple Devices 2021 Vendor Assessment (doc #US46965620, January 2021)⁵
- IDC MarketScape: Worldwide Unified Endpoint Management Software for Ruggedized/Internet of Things Deployment 2021 Vendor Assessment (doc #US46957920, January 2021)⁶

The company will host a conference call today at 1:30 p.m. PT/ 4:30 p.m. ET to review financial results and business outlook. A live web broadcast of the event will be available on the VMware investor relations website at http://ir.vmware.com. Slides will accompany the web broadcast. The replay of the webcast and slides will be available on the website for two months. In addition, six quarters of historical data for unearned revenue will also be made available at http://ir.vmware.com in conjunction with the conference call.

¹ CDP. The A List 2020. Available at: https://www.cdp.net/en/companies/companies-scores
² Forrester Research, Inc., The Forrester Wave(tm): Hybrid Cloud Management, Q4 2020, authored by Tracy Woo, November 30th, 2020

³ Gartner, Magic Quadrant for Hyperconverged Infrastructure Software, 7 December 2020, Jeffrey Hewitt, Philip Dawson, Julia Palmer, Tony Harvey

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

⁴ IDC, IDC MarketScape: Worldwide Unified Endpoint Management Software 2021 Vendor Assessment, January 2021, #US46957820

⁵ IDC, IDC MarketScape: Worldwide Unified Endpoint Management Software for Apple Devices 2021 Vendor Assessment, January 2021, #US46965620

⁶ IDC, IDC MarketScape: Worldwide Unified Endpoint Management Software for Ruggedized/Internet of Things Deployment 2021 Vendor Assessment, January 2021, #US46957920

About VMware

VMware software powers the world’s complex digital infrastructure. The company’s cloud, app modernization, networking, security, and digital workspace offerings help customers deliver any application on any cloud across any device. Headquartered in Palo Alto, California, VMware is committed to being a force for good, from its breakthrough technology innovations to its global impact. For more information, please visit https://www.vmware.com/company.html

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 VMware, all of which is made available free of charge. The additional information includes: materials that VMware files with the SEC; announcements of investor conferences, speeches and events at which its executives talk about its products, services and competitive strategies; webcasts of its quarterly earnings calls, investor conferences and events (archives of which are also available for a limited time); additional information on its financial metrics, including reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures; press releases on quarterly earnings, product and service announcements, legal developments and international news; corporate governance information; other news, blogs and announcements that VMware may post from time to time that investors may find useful or interesting; and opportunities to sign up for email alerts and RSS feeds to have information pushed in real time.

VMware, Workspace ONE, and VMware Blockchain are registered trademarks or trademarks of VMware, Inc. or its subsidiaries in the United States and other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective organizations.

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 customers continuing to choose VMware technologies and solutions for the future; VMware continuing to build and scale its Subscription and SaaS business and to deliver new offerings; VMware reaching the goals in its 2030 Agenda; and the expected benefits to customers of partnerships, and products, solutions and services, including in areas of VMware Blockchain and VMware Workspace ONE. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (1) the impact of the COVID-19 pandemic on our operations, financial condition, our customers, the business environment and the global and regional economies; (2) adverse changes in general economic or market conditions; (3) delays or reductions in consumer, government and information technology spending; (4) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into the virtualization software and cloud, end user and mobile computing, and security industries, as well as new product and marketing initiatives by VMware’s competitors; (5) the ability to successfully integrate into VMware acquired companies and assets and smoothly transition services related to divested assets from VMware; (6) rapid technological changes in the virtualization software and cloud, end user, security and mobile computing industries; (7) VMware’s customers’ ability to transition to new products, platforms, services, solutions and computing strategies in such areas as containerization, modern applications, intrinsic security and networking, cloud, digital workspaces, virtualization and the software defined data center, and the uncertainty of their acceptance of emerging technology; (8) VMware’s ability to enter into, maintain and extend strategically effective partnerships, collaborations and alliances; (9) the continued risk of litigation and regulatory actions; (10) VMware’s ability to protect its proprietary technology; (11) changes to product and service development timelines; (12) VMware’s relationship with Dell Technologies and Dell’s ability to control matters requiring stockholder approval, including the election of VMware’s board members and matters relating to Dell’s investment in VMware; (13) the potential impact of Dell’s investigation of strategic alternatives with respect to its interest in VMware, including a potential spinoff and related special cash dividend; (14) VMware’s ability to attract and retain highly qualified employees; (15) the ability of VMware to utilize our relationship with Dell to leverage go-to-market and product development activities; (16) risks associated with cyber-attacks, information security and data privacy; (17) disruptions resulting from key management changes; (18) risks associated with international sales such as fluctuating currency exchange rates and increased trade barriers; (19) changes in VMware’s financial condition; (20) geopolitical changes such as Brexit and increased tariffs and trade barriers that could adversely impact our non-U.S. sales; (21) geopolitical, macroeconomic and global environmental changes that may impact our 2030 Agenda; and (22) other business effects, including those related to industry, market, economic, political, regulatory and global health conditions. These forward-looking statements are made as of the date of this press release, are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including VMware’s most recent reports on Form 10-K and Form 10-Q and current reports on Form 8- K that we may file from time to time, which could cause actual results to vary from expectations. VMware assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

VMware, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(amounts in millions, except per share amounts, and shares in thousands)
(unaudited)

	Three Months Ended						Twelve Months Ended
	January 29,			January 31,			January 29,			January 31,
	2021			2020			2021			2020
Revenue:
License	$	1,014		$	1,034		$	3,033		$	3,181
Subscription and SaaS		707			556			2,587			1,877
Services		1,573			1,483			6,147			5,753
Total revenue		3,294			3,073			11,767			10,811
Operating expenses⁽¹⁾:
Cost of license revenue		45			50			163			166
Cost of subscription and SaaS revenue		187			106			588			400
Cost of services revenue		322			317			1,292			1,233
Research and development		757			676			2,816			2,522
Sales and marketing		987			1,003			3,711			3,677
General and administrative⁽²⁾		(6	)		592			767			1,293
Realignment		(5	)		79			42			79
Operating income		1,007			250			2,388			1,441
Investment income		—			20			7			60
Interest expense		(49	)		(41	)		(204	)		(149	)
Other income (expense), net		7			10			191			86
Income before income tax		965			239			2,382			1,438
Income tax provision (benefit)		174			(76	)		324			(4,918	)
Net income		791			315			2,058			6,356
Less: Net loss attributable to non-controlling interests		—			(6	)		—			(56	)
Net income attributable to VMware, Inc.	$	791		$	321		$	2,058		$	6,412
Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic for Classes A and B	$	1.88		$	0.77		$	4.90		$	15.37
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B	$	1.87		$	0.76		$	4.86		$	15.08
Weighted-average shares, basic for Classes A and B		420,090			417,225			419,841			417,058
Weighted-average shares, diluted for Classes A and B		422,813			424,007			423,240			425,235
__________
⁽¹⁾ Includes stock-based compensation as follows:
Cost of license revenue	$	—		$	—		$	1		$	1
Cost of subscription and SaaS revenue		6			3			19			13
Cost of services revenue		25			24			99			83
Research and development		127			130			524			459
Sales and marketing		79			91			322			293
General and administrative		16			64			157			168
⁽²⁾ General and administrative expenses for the fourth quarter of fiscal 2021 included derecognition of a previously accrued litigation loss of $237 million.

VMware, Inc.
CONSOLIDATED BALANCE SHEETS
(amounts in millions, except per share amounts, and shares in thousands)
(unaudited)

	January 29,			January 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	4,692		$	2,915
Short-term investments		23			—
Accounts receivable, net of allowance for doubtful accounts of $5 and $7		1,929			1,883
Due from related parties, net		1,438			1,457
Other current assets		530			436
Total current assets		8,612			6,691
Property and equipment, net		1,334			1,280
Other assets		2,697			2,266
Deferred tax assets		5,781			5,556
Intangible assets, net		993			1,172
Goodwill		9,599			9,329
Total assets	$	29,016		$	26,294
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	131		$	208
Accrued expenses and other		2,382			2,151
Current portion of long-term debt and other borrowings		—			2,747
Unearned revenue		5,873			5,218
Total current liabilities		8,386			10,324
Note payable to Dell		270			270
Long-term debt		4,717			2,731
Unearned revenue		4,441			4,050
Income tax payable		805			817
Operating lease liabilities		891			746
Other liabilities		455			347
Total liabilities		19,965			19,285
Contingencies
Stockholders’ equity:
Class A common stock, par value $0.01; authorized 2,500,000 shares; issued and outstanding 112,082 and 110,484 shares		1			1
Class B convertible common stock, par value $0.01; authorized 1,000,000 shares; issued and outstanding 307,222 shares		3			3
Additional paid-in capital		1,985			2,000
Accumulated other comprehensive loss		(5	)		(4	)
Retained earnings		7,067			5,009
Total stockholders’ equity		9,051			7,009
Total liabilities and stockholders’ equity	$	29,016		$	26,294

VMware, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)

	Three Months Ended						Twelve Months Ended
	January 29,			January 31,			January 29,			January 31,
	2021			2020			2021			2020
Operating activities:
Net income	$	791		$	315		$	2,058		$	6,356
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		268			247			1,025			873
Stock-based compensation		253			312			1,122			1,017
Deferred income taxes, net		25			(146	)		(152	)		(5,284	)
Unrealized (gain) loss on equity securities, net		24			(1	)		(172	)		(31	)
(Gain) loss on disposition of assets, revaluation and impairment, net		2			—			24			(4	)
Loss on extinguishment of debt		—			—			8			—
Other		(1	)		6			(1	)		9
Changes in assets and liabilities, net of acquisitions:
Accounts receivable		(139	)		(283	)		(37	)		(119	)
Other current assets and other assets		(258	)		(224	)		(879	)		(668	)
Due to/from related parties, net		(765	)		(673	)		19			(374	)
Accounts payable		(65	)		21			(69	)		35
Accrued expenses and other liabilities		125			499			518			417
Income taxes payable		(15	)		(38	)		(68	)		(23	)
Unearned revenue		1,079			1,050			1,013			1,668
Net cash provided by operating activities		1,324			1,085			4,409			3,872
Investing activities:
Additions to property and equipment		(82	)		(64	)		(329	)		(279	)
Sales of available-for-sale securities		26			—			26			—
Purchases of strategic investments		(13	)		(12	)		(29	)		(30	)
Proceeds from disposition of assets		7			—			28			22
Business combinations, net of cash acquired, and purchases of intangible assets		(19	)		—			(409	)		(2,437	)
Net cash paid on disposition of a business		—			—			—			(4	)
Net cash used in investing activities		(81	)		(76	)		(713	)		(2,728	)

Financing activities:
Proceeds from issuance of common stock		9			14			273			308
Net proceeds from issuance of long-term debt		—			—			1,979			—
Borrowings under term loan, net of issuance costs		—			1,400			—			3,393
Repayment of term loan		—			(500	)		(1,500	)		(1,900	)
Repayment of current portion of long-term debt		—			—			(1,257	)		—
Repurchase of common stock		(379	)		(55	)		(945	)		(1,334	)
Shares repurchased for tax withholdings on vesting of restricted stock		(93	)		(141	)		(412	)		(534	)
Payment to acquire non-controlling interests		—			(1,666	)		(91	)		(1,666	)
Contribution from Dell		—			—			—			27
Principal payments on finance lease obligations		(1	)		—			(4	)		(1	)
Net cash used in financing activities		(464	)		(948	)		(1,957	)		(1,707	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		—			(2	)		—			(2	)
Net increase (decrease) in cash, cash equivalents and restricted cash		779			59			1,739			(565	)
Cash, cash equivalents and restricted cash at beginning of the period		3,991			2,972			3,031			3,596
Cash, cash equivalents and restricted cash at end of the period	$	4,770		$	3,031		$	4,770		$	3,031
Supplemental disclosures of cash flow information:
Issuance of VMware Class B common shares for Pivotal Class B common shares held by Dell	$	—		$	1,101		$	—		$	1,101
Cash paid for interest		58			3			200			134
Cash paid for taxes, net		150			86			543			369
Non-cash items:
Changes in capital additions, accrued but not paid	$	8		$	13		$	(10	)	$	18
Changes in tax withholdings on vesting of restricted stock, accrued but not paid		5			(62	)		1			(13	)

VMware, Inc.
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
	January 29,			January 31,
	2021			2020
Total revenue, as reported	$	3,294		$	3,073
Sequential change in unearned revenue⁽¹⁾		1,079			1,051
Total revenue plus sequential change in unearned revenue	$	4,373		$	4,124
Change (%) over prior year, as reported		6	%

Growth in License and Subscription and SaaS Revenue Plus Sequential Change in Unearned License and Subscription and SaaS Revenue

	Three Months Ended
	January 29,			January 31,
	2021			2020
Total license and subscription and SaaS revenue, as reported	$	1,721		$	1,590
Sequential change in unearned license and subscription and SaaS revenue⁽²⁾		406			335
Total license and subscription and SaaS revenue plus sequential change in unearned license and subscription and SaaS revenue	$	2,127		$	1,925
Change (%) over prior year, as reported		10	%
__________
⁽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 consolidated balance sheets.
⁽²⁾ Consists of the change in unearned license and subscription and SaaS revenue from the preceding quarter.

Contacts

Paul Ziots

VMware Investor Relations

pziots@vmware.com
650-427-3267

Michael Thacker

VMware Global PR

mthacker@vmware.com
650-427-4454

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