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VMware, Inc. (VMW)
Q1 2019 Earnings Conference Call
May 31, 2018 17:00 ET
Paul Ziots - VP, Investor Relations
Pat Gelsinger - Chief Executive Officer
Zane Rowe - EVP and Chief Financial Officer
Kash Rangan - Bank of America/Merrill Lynch
Mark Murphy - JPMorgan
Karl Keirstead - Deutsche Bank
Raimo Lenschow - Barclays
Matt Hedberg - RBC Capital Markets
Walter Pritchard - Citi
Heather Bellini - Goldman Sachs
Phil Winslow - Wells Fargo
Jason Ader - William Blair
Mark Moerdler - Bernstein Research
Michael Turits - Raymond James
Sanjit Singh - Morgan Stanley
Gregg Moskowitz - Cowen & Company
Brad Zelnick - Credit Suisse
Adam Holt - MoffettNathanson
Previous Statements by VMW
» VMware (VMW) Q4 2018 Results - Earnings Call Transcript
» VMware's (VMW) CEO Pat Gelsinger on Q3 2018 Results - Earnings Call Transcript
» VMware's (VMW) CEO Pat Gelsinger on Q2 2018 Results - Earnings Call Transcript
Thank you. Good afternoon, everyone and welcome to VMware’s first quarter fiscal 2019 earnings conference call. On the call we have Pat Gelsinger, Chief Executive Officer and Zane Rowe, Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will take questions. Our press release was issued after the close of market and is posted on our website where this call is being simultaneously webcast. Slides which accompany this webcast can be viewed in conjunction with live remarks and can also be downloaded at the conclusion of the webcast from ir.vmware.com.
On this call today, we will make forward-looking statements that are subject to risks and uncertainties. Actual results may differ materially as a result of various risk factors, including those described in the 10-Ks, 10-Qs and 8-Ks VMware files with the SEC. We assume no obligation to and do not currently intend to update any such forward-looking 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 GAAP measures.
Our non-GAAP measures exclude the effect on our GAAP results of stock-based compensation, amortization of acquired intangible assets, employer payroll tax on employee stock transactions, acquisition, divestitures and other related items, including the gain on Pivotal Software’s IPO and non-GAAP tax rate adjustments. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP measures in the press release and on our Investor Relations website.
The webcast replay of this call will be available for the next 60 days on our company website under the Investor Relations link. Our second quarter fiscal 2019 quiet period begins at the close of business Thursday, July 19, 2018. In addition, VMware adopted ASC 606 on a full retrospective basis effective February 3, 2018. Accordingly, the financial results for the first quarter of fiscal 2019 presented in our press release and discussed on this call have been prepared under ASC 606. Additionally, in order to provide meaningful comparisons to prior periods, VMware has provided financial statements for the first quarter of fiscal 2018 and supplemental financial information for each quarter of fiscal 2018 as well as the full fiscal years 2018 and 2016 adjusted for ASC 606 in our press release and slide deck accompanying this call. All year-over-year comparisons discussed on this call, including both first quarter fiscal 2019 results and our forward-looking guidance are comparisons to the corresponding periods of fiscal 2018 as adjusted for ASC 606.
With that, I will turn it over to Pat.
Thank you, Paul. Before discussing our strong start to fiscal 2019, we want to once again acknowledge Schedule 13D filing made by Dell in February concerning a number of business opportunities they are considering and the further 8-K filing made by Dell in mid-May. Our February 2 press release in response to the 13D filing which outlines our sound governance practices, including that the VMware Board is committed to taking actions that are in the best interest of all stockholders can found in our website. We do not have any further update at this time.
Moving on to our business performance, Q1 was a strong start to the year and we are pleased with our results which continued to be driven by broad-based strength across our diverse products and services portfolio and in all three geographies. Q1 total revenue grew 14% year-over-year with non-GAAP earnings per share growth of 18% to $1.26 per share. Three primary factors continued to contribute to our ongoing strength in Q1. We continued to see the market respond positively through all aspects of the VMware strategy. The second factor is our strong and consistent global execution. And the third factor is the continuing positive market environment for well-positioned enterprise companies such as VMware. We remain confident and pleased with our outlook and growth opportunities.
Turning to business highlights, this quarter, we articulated a powerful networking strategy as we unveiled our expanded vision for the future of networking, the virtual cloud network, and delivered on that vision with an expanded networking portfolio. The virtual cloud network will enable organizations to create a digital business fabric for connecting and securing apps data and users in a hyper distributed world. The expanded VMware NSX networking portfolio will enable consistent pervasive connectivity and intrinsic security from the software-defined data center to the branch cloud and telco environments. The expanded VMware NSX portfolio now includes NSX data center now supporting containerized cloud native and bare-metal applications and higher performance for telco NFV applications; NSX SD-WAN by VeloCloud for branch to data center and cloud conductivity now integrated with VMware NSX data center; NSX cloud now adding support for applications running in Microsoft Azure; NSX hybrid connect to migrate workloads across environments legacy to modern and across private and public clouds using the VMware platform; and AppDefense to secure and protect applications. To execute on this vision and expanded NSX portfolio, we are delighted that longtime industry leader, Tom Gillis has joined us as Senior Vice President and General Manager of the Networking and Security business unit.