VMware boosts fiscal 2022 guidance, talks post spin-off strategy

Raghu Raghuram
Incoming CEO Raghu Raghuram outlined several strategic areas of focus the business aims to pursue once its spin off from Dell Technologies is complete. (VMware)

VMware increased its guidance for its fiscal 2022 following strong Q1 performance that yielded double-digit growth in net income.

On an earnings call, CFO and interim CEO Zane Rowe said it was now expecting total revenue of $12.8 billion for a growth rate of approximately 9% year on year, up from a previous forecast of $12.7 billion in revenue and 8% growth. The revised forecast includes $6.33 billion in combined revenue from its Subscription and SaaS and License businesses.

The guidance boost came after VMware posted a 10% increase in net revenue to $425 million in its fiscal Q1 2022 (three months ended April 30, 2021), and revenue which grew 9% to $2.99 billion. The latter figure was consistent with a partial earnings preview VMware provided earlier in May when it named current COO for Products and Cloud Services Raghu Raghuram as its new CEO. Subscription and SaaS revenue jumped 29% to $741 million, with Services revenue up 7% to $1.6 billion. However, License revenue fell around 2% to $646 million.

For its fiscal Q2, VMware forecast revenue of approximately $3.1 billion, with combined Subscription and SaaS and License revenue of $1.49 billion.

Post spin off strategy

During the earnings call, Raghuram said he was “very excited” about VMware’s impending spin off from Dell Technologies, noting the separation will give it more flexibility in what companies it partners with to deliver solutions. The spin off was announced in April and is expected to close in calendar Q4 2021. Raghuram is set to assume the CEO role June 1.

RELATED: Dell Technologies spins off VMware for more than $11B

“It allows us to execute on our multi-cloud vision and our multi-cloud strategy, partnering with all the leading cloud companies and all the infrastructure companies,” he said, according to a transcript. “At the same time, we have been working really well with Dell over a long period of time, and we have codified our business partnership and technical partnership in the form of a commercial agreement. And that will continue very, very strongly. So we think post spin, we'll have the best of both worlds.”

In terms of strategic areas of focus, Raghuram pointed toward enhancing and accelerating VMware’s ability to help customers build applications for the cloud of their choice, deploy and manage these in multi-cloud environments and ensure consistent security policy across these.

“All these parts of our portfolio are inherently and natively multi-cloud, and they all need to come together in a credible platform. That really is what we want to accelerate,” he explained. “We will be the only cloud company that has all these strategic relationships with all of these major cloud players and, of course, all of the major infrastructure players to truly deliver this platform end-to-end.”