According to a recent report published by Market Research Future, the global server virtualization market is estimated to grow 7% annually through to the year 2023. Another report published by Computer Profile last year pegs VMWare (NYSE: VMW) as the market leader with over 75% market share, with Microsoft at a distant second with 17% market share. VMWare has been in the news recently due to Dell’s interest in the organization. But first, the financials.
VMWare’s Financials
Second quarter revenues grew 13% over the year to $2.17 billion. The Street was looking for revenues of $2.14 billion for the quarter. It ended the quarter with non-GAAP earnings of $1.54 per share, which was also ahead of the Street’s forecast of $1.49. It reported a net income of $644 million or $1.56 per share.
By segment, license revenues grew 19% over the year to $900 million, and services segment generated $1.2 billion for the quarter.
For the current quarter, analysts expect revenues of $2.16 billion with an EPS of $1.49. VMWare forecast revenues of $2.17 billion with an EPS of $1.50 for the quarter.
VMWare’s Acquisitions and Partnerships
VMWare has been expanding its reach through several acquisitions and partnerships. In August this year, it announced the acquisition of CloudHealth Technologies for an estimated $500 million. Boston-based CloudHealth was founded in 2012 to deliver cloud service management for enterprises to effectively optimize cost, usage, performance, and security. CloudHealth’s platform works with multiple cloud providers including AWS, Microsoft Azure, and Google Cloud and allows its users to manage their cloud environment from a single tool. Prior to the acquisition, CloudHealth had raised $87 million at an undisclosed valuation. The acquisition is expected to help VMware improve its capabilities to address multi-cloud environment-related problems for its customers.
More recently, VMWare announced the acquisition of Heptio, a Seattle-based Kubernetes player. Founded in 2016, Heptio was set up by the founders of the Kubernetes project to support and advance the open Kubernetes ecosystem. It provides professional services for organizations that are using or planning to use Kubernetes. The acquisition will help VMware expand its market reach into the Kubernetes segment. Prior to the acquisition, Heptio had raised $33.5 million in funding with its last funding round valuing it at $117 million. The terms of the acquisition were not disclosed.
