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VMware, Inc. (VMW)
Q2 2009 Earnings Call
July 22, 2009 5:00 pm ET
Michael Haase - Vice President of Investor Relations
Paul Maritz - President and Chief Executive Officer
Tod Neilsen - Chief Operating Officer
Mark S. Peek – Chief Financial Officer
John Difucci - JP Morgan
Adam Holt - Morgan Stanley
Kash Rangan - Merrill Lynch
Brent Thill - Citi
Walter Pritchard - Cowen and Company
Keith Bachman – Bank of Montreal
Aaron Schwartz - Ladenburg Thalmann & Co.
Scott Zeller - Needham & Company
Previous Statements by VMW
» VMware, Inc. Q3 2009 (Qtr End 9/30/09) Earnings Call Transcript
» VMware, Inc. Q1 2009 Earnings Call Transcript
» VMware, Inc. Q4 2008 Earnings Call Transcript
At this time I would like to turn the call over to Mr. Mike Haase, Vice President of Investor Relations.
Thank you. Good afternoon, everyone, and welcome to VMware’s second quarter 2009 earnings call. With us today are Paul Maritz, President and CEO, Tod Neilsen, our COO, and Mark Peek, our CFO. Following our prepared remarks we will take your questions.
Please note that this call is being simultaneously webcast on our Investor Relations website. Our press release was issued today after the close of market and is also posted on the website.
I’d like to remind you that statements made in today’s discussion that are not statements of historical fact are forward-looking statements subject to the Safe Harbor provisions under Federal securities laws. This includes statements with the words will, believes, expects, continues, and similar phrases that denote future expectation or intent. This includes but is not limited to statements regarding our financial outlook, future product offerings, and projected demand.
These statements are based on current expectations as of the date of this call 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 our annual report on Form 10-Q for the period ending March 31, 2009 that may cause actual results to differ materially from those set forth in our statements.
In addition, during today’s call we will discuss certain non-GAAP financial measures. These non-GAAP financial measures which are used as measures of VMware’s performance should be considered in addition to, not as a substitute for or in isolation from, measures of VMware’s financial performance prepared in accordance with GAAP.
Our non-GAAP financial measures differ from GAAP in that they exclude stock-based compensation, amortization of intangible assets, the write off of in-process research and development, employer payroll tax on employee stock transactions, and the net effect of the amortization and capitalization of software under statement of financial accounting standards number 86.
You can find additional disclosures regarding these non-GAAP measures including reconciliations with comparable GAAP measures in our earnings release for the period ended June 30, 2009 and on the Investor Relations page of our website.
The webcast replay of this call will be available for the next 30 days on our company website under the Investor Relations link.
For your planning purposes, VMworld will be held in San Francisco August 31 through September 3 and we’ll be mailing the registration information within the next couple of days.
Our third quarter quiet period begins at the close of business September 16, 2009. Also, unless otherwise stated, all financial comparisons in this call will be in reference to our results for the comparable period of 2008.
With that, let me hand it over to Mark.
Mark S. Peek
Thanks, Mike. Good afternoon everyone and welcome to our second quarter earnings call. VMware delivered a solid quarter in what continues to be a challenging economic environment. The highlight of the quarter was the general availability and release of vSphere on May 21. With vSphere, we once again demonstrated that no enterprise software company in the world can compare with VMware’s quality and the tremendous value we deliver to our customers. Tod will cover the vSphere launch in more detail in a few minutes.
Let me first walk you through some of the financial highlights before going into the details. Non-GAAP operating cash flows for the quarter were $233 million, an increase of 19% from the second quarter of 2008. Our trailing 12 months non-GAAP operating cash flows were $910 million. We now have $2.3 billion in cash and cash equivalent and $934 million in deferred revenue.
Revenues for the second quarter were $456 million at the high end of our planning estimates when we reported to you three months ago. Non-GAAP operating margins came in at 21%. Our non-GAAP diluted EPS was $0.20 per share.
I’ll now provide a bit more detail on the quarter. Revenues for the second quarter were $456 million, flat from a year ago. We’re quite pleased with our results given this tough environment and the relation to our expectations a quarter ago. Last quarter I noted several variables that could impact our near term business. These included reduced capital spending for new IT projects, difficult comparables to Q1 due to our seasonal OEM business, and the two very large ELAs that closed in the first quarter. Finally, the uncertainty with respect to the impact of the vSphere launch would have on our sales cycle.
Our second quarter results reflect the continued uncertainty in IT spending. License revenue for the quarter was $228 million and ELAs as a percentage of total bookings were approximately 15% compared to approximately 20% a year ago.