Vmware (VMW) 26 Nov 192020 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to today's VMware Third Quarter Fiscal Year 2020 Earnings Call.

As a reminder, today’s conference is being recorded.

And at this time, I’d like to turn the conference over to Mr. Paul Ziots, Vice President of Investor Relations.

Thank you. welcome third and earnings fiscal everyone, call. conference afternoon, to quarter VMware XXXX Good

we Gelsinger, Financial have and call, the On Pat Executive President Zane Chief Vice and Chief Officer. Rowe, Officer; Executive

we will Following their prepared take questions. remarks,

webcast remarks Our conclusion can and posted ir.vmware.com. market conjunction be from call being viewed on close which of Slides, live this is simultaneously where in press webcast. was and website accompany release the after is of the downloaded issued at our this with webcast

On Pivotal and statements forward-looking acquisitions to regarding this various may will that statements of factors, make proposed result results risk call today, well to uncertainties. statements. such we the with including do differ to are subject consummate a related materially planned, the of VMware’s not include as risks Pivotal. to Actual in described forward-looking currently to as obligation These as any statements risks We XX-Qs risks ability and forward-looking VMware as XX-Ks, intend and assume no our the X-Ks additional SEC. files acquisition update

financial during non-GAAP will considered of performance, addition for substitute be today’s we as non-GAAP or are not These as a discuss to, call, GAAP VMware’s should measures, certain isolation in measures from in addition, used financial In which measures. measures.

exclude gains the and tax rate. tax employee including GAAP stock and on GAAP measures results disposition acquired payroll employer other items of losses the items discrete our non-GAAP effect on our Pivotal of transactions, Our assets, stock-based compensation, impacting intangible amortization or and Software acquisition,

Relations comparable next on the be this release webcast GAAP disclosures available Relations replay will Investor regarding these of link. in under our and You for website. measures, press Investor non-GAAP reconciliations additional the the website days can with The including company XX find on call our measures

XX, fiscal quarter period business, quiet of XXXX. fourth Thursday, close at XXXX begins the January Our

it turn Pat. over I’ll that, With to

with you, our quarter Paul. pleased we're VMware for results. solid Thank another and QX was

momentum any delivered customer deliver that vision see in cloud to support architecture of traction any a We to in software device. any continue to enables on VMware's app

year-over-year share earnings per total QX, $X.XX revenue share. increased XX% In per with non-GAAP of

Black the We family the acquisition by of remain to fiscal the welcome the on are of year. thrilled to track we end Pivotal close to and Carbon VMware

acquisitions have affirmed them We strategy. momentum value in offer our XXXX tremendous resoundingly Customers customers, hosted that partners with demonstrating both events, we our and and will at over digital of help influencers as XX,XXX recently transformations. vFORUM their VMworld support strong

interest execution for for globally. of all us fragmented recently, offering been enormous the these customer market disruption. that industry traveled customers, and team's is Having ripe regions and our I've potential our have failed strong security through by security solutions today solutions delighted our a bespoke The

across endpoint, Carbon Black making efforts accelerates security intrinsic of of family, network, With the simplifying it we're key a identity points our by here. analytics, and workload, control Black VMware now part the and Carbon

our Black we offerings. With micro-segmentation, the approximately business view to a carbon year. together apps and represents Carbon common an leadership new driven as value-add thread aggregate Black, business devices. security from Carbon of compute for our security Morley including modern end role cloud, new the launched billion Black this Patrick us offerings CEO, AppDefense security Carbon computing, Black, of of user General $X With Manager. as essential under leadership networking throughout former and this modern security and multi-cloud VMware acquisition, in unit with the a is offerings for poised in take We age and significant our with now

fundamentally the and making enhanced to preferred commercial believe of new combination Black Since Black solutions bring for the customers. Cloud, Carbon partnership with solution the the announced security close We Cloud acquisition, a Carbon of security Carbon new endpoint we Dell the an paradigm Black Dell multiple industry. VMware and will

of way of portfolio and transform build products highlight services and manage was run the designed the the to a Another enterprises Tanzu, of software unveiling quarter on Kubernetes.

of to We vSphere their containers investments tools of for infrastructure, VMs Kubernetes' and the platform vSphere into VMware re-architecture to and on operation and also existing Pacific. common began and enterprises environments, applications of Project which continuing seamlessly take and vSphere advantage a technology platform announced accelerate Kubernetes modern This will transform breakthrough apps native skillsets. customer operate to will existing beta enable add development while in

customers step from deliver native most each Pivotal, and VMware both Kubernetes-based cloud positioned modern journey. be comprehensive VMware the to helping will innovations utilizing of to at their By succeed for applications, enterprise-grade portfolio

to our globally continue customers of partnerships drive execute Cloud available to now bringing choice and cloud available the Stockholm is number years. our AWS VMware in expand and to and against flexibility. the our we We multi-cloud total five on two as regions in over in region Europe strategy just to global offer XX

stage IHS on strategy us VMworld and Japan the Samsung vFORUM and of including seeing cloud they're to Market, testimonials delighted our SDS was with offerings Cloud including have VMware our I Airlines, AWS. firms across provide events success and Europe to join and

Microsoft We greater customers data impact with and our client across expanded to also initiatives. to deliver cloud further partnership

migration with enable geographies. modern the introduction to and VMware with the Windows new with SD-WAN new Azure The ability momentum for Microsoft and addition VMware industries VeloCloud. the cloud included VMware HCX edge by of VMware Manager to Workspace News capabilities management ONE of extend and branch Solutions Endpoint for XX Azure to

the Chase, commit see institutions investments We We're world's one financial increased companies some particular the having largest in the seeing VMware the continue VMware to financial technology. in including their strength in solutions. largest enterprise-grade Europe of of to sector, JPMorgan

VMware VMware during regions spans and portfolio infrastructure China collaborations QX cloud strategic offerings. multiple countries including at and includes hyper-converged the investment across Lenovo's and including

DOCOMO. service NTT and In of personally the provider, announce and partnership telco T-Systems Telecom I, Deutsche space with IT our and to including expanded further was thrilled communications our also offerings multi-cloud provider service telco adoption Millicom

their looking transition. critical of we in key to are customers interest enablers XG solutions increasing this see as buildout, As VMware

role over announce the call and of company making the want since I contributions President to VMware, strategic ago. has end of hand many XX he the him made his the of a great transitioning will at Sales company the continue impact thank I Maurizio Zane, VMware company the in to year. significant And on on for is behalf Maurizio his Executive that be want Carli, I Vice years with serving a Before nearly Maurizio Services fiscal joined as will to adviser. it today. Worldwide

the and year XXXX. currently beginning role global has of years who Brulard also team sales assume the start been fiscal will leadership for Jean-Pierre the company with sales VMware's EMEA XX leads at

for Black QX quarter very proud VMware In of Pivotal. with later another year VMware. with results I expansion with solid Carbon pleased these meaningful am team our portfolio this then the was the of for closing, and

much. very let hand you Thank it me over And Zane. to

this in Thank of and revenue total XX% of revenue which year-over-year. you, Pat. XX% growth resulted financial We're growth and pleased execution quarter, performance with our license

Our over revenue hybrid the year-over-year of and in quarter. revenue total XX% represented cloud subscription and grew SaaS XX% recurring approximately

influence We increase in revenue. developer Pivotal SaaS Carbon accelerate and invest our our will in communities, cloud fast-growing security impact our and continue including that to as as our and further businesses we portfolio meaningfully with Black well cloud and Tanzu along hybrid the subscription expect

XXX was $XXX We quarter non-GAAP per share in billion resulting operating $X.XX count and of a the of diluted revenue in in income with ended total million cash. Non-GAAP million QX was on margin unearned a $X operating non-GAAP shares. share billion $X.X XX.X%. earnings

assumed unearned the Growth in revenue increase or year-over-year revenue revenue XX% unearned excluding quarter plus the of in the of for Black. acquisition sequential in an change Carbon XX% was the

license was excluding change in license Growth XX% assumed unearned revenue acquisition. of revenue unearned an the plus increase in or year-over-year in sequential the revenue XX%

The Carbon We over revenue million. from was $XX Carbon Black the in acquisition. revenue the on beginning balance quarter acquisition $XXX October the closed Black million total unearned post acquisition in Xth. contributed

consists well Foundation million backlog data the and This QX customers the our includes end, partner RPO, and of center private was our clouds. with Cloud quarter $XX non-cancelable clouds, backlog across as $X.X as portfolio had software-defined on full committed stack total is of XX six quarter clouds, VMware We stack. million. platform top we offered Solutions our a solution solutions had in managed public which strong purchasing and At revenue, product of license future $XX and billion. of

over quarter. Core this in bookings up vSAN with XX%. bookings license up license digits. year-over-year in digits license mid-single core the well bookings continued bookings core perform were up EUC and SDDC bookings XX% up to XX% single the were year-over-year NSX SDDC total increased over again license and high SDDC once

billion Compute license with low the XX% the remaining single extends end our XXXX. year-over-year. million compute mid-single total the grew in year-over-year. bookings authorization $XXX bookings digits bookings total license In quarter mid-teens a ended repurchase with up little FY $X stock in up through with increased digits QX, and over in repurchased Management bookings which in current the of management we the under

guidance. to Turning

the projecting addition revenue For accounts year financial's the for largest XX.X% $XX.X includes an Carbon full we increase close of in the portion revenue are billion, of post up which This year-over-year. to Black's the total increase.

$X.XXX of for FY XXXX, revenue XX% license year-over-year. billion expect We up

on non-GAAP non-GAAP share XXX operating expect of year. count a We million for expect of to margin earnings shares diluted fiscal and per the share be $X.XX XX%

acquisition impact approximately integration from updated announcements. related to the $XXX operations of been and has million flow acquisition recent costs most include Cash to of our

be $X.XXX is billion. As a result cash operations flow to from expected

XXXX. fiscal free We flow billion for $X.XXX cash expect of

QX XX.X% to revenue to is expected our billion, year-over-year license increase is an $X.XXX total guidance, revenue billion $X.XXX year-over-year. be Moving XX% be to expected and of up

of shares. per of We share expect and margin $X.XX EPS operating non-GAAP diluted million count non-GAAP XXX of a on share XX.X%

our proposed impact year year-end update quarter the we on expect acquisition before and call. to on close the its the fiscal and next upcoming will you We of Pivotal on fiscal

for call, recast control the include the in website on of accompanying call. Pivotal. last historical our contained to we the this the year common VMware's slide rules on upon and close Detailed acquisition our QX will mentioned I guidance is deck As financials full due accounting to

in we to from total as digits, the seeing expecting the to a the double fiscal rate continue. not we're next XXXX planning look Now for strength fiscal currently year, proposed impact we're in low growth Pivotal the including Preliminarily, business our the acquisition. revenue we're

We hybrid in drive percentage and the mix to total and much significant show increase cloud of its a future subscription SaaS the expect business also of revenue. of growth

SaaS portfolio. cloud and in FY XXXX, invest fast-growing we In continue hybrid will incrementally to subscription our

expect investments income we X these including will expansion, Black. percentage next up by While operating drive year's will impact margin Carbon incremental to points they operating

of are QX strength the we performance closing, and pleased financial In our ongoing the business. with

results. our Our customers on and assist using digital this their and solutions transformation us journeys in product we're financial our multi-cloud broad portfolio seeing and to are depending navigating them

we before in performance the Q& will I'll businesses for to The SaaS and and begin it subscription investments the back sustained cloud growing with us. strength drive hybrid growth we Paul making are of our and turn A.

Zane. Thanks

Before let's as of can started. you we begin to ask many limit Q&A, question possible. to yourselves get I'll get so to Operator we one the part, people consisting one as

we [Operator first Phil Instructions] from Fargo, And have Wells Winslow.

Thanks, taking quarter. Great. question guys congrats for and on another my strong

strong trends that rates. vSAN of strong Gartner question is, at weak and high relatively still growth between seen sort Thanks. seen growth been from have for a vendors. mean, on your the results then call side Really that the bookings Just team. what's compute your we've gap, is that and and question the But mixed and numbers it of if high-growth we've that simulated IDC storage hardware, the shipment the seeing? look I networking delta obviously driving from VMware NSX, server I level

we continued and quarter pleased Phil thanks, with Hey, performance. the are and good the

spend look tend gap, just business a the nature. we've seen correlation comment just said past, -- more and just which on between and cyclical as in to we strong cycles at our we not be hardware lot a historically As the the your we've in

cloud any driven SDDC in depth workload they And has compelling the private even see revenue customer environment center and of very offerings Increasingly, of of growth we'd also our Also and very breadth and much as well. is ROI that and at the now beyond and largely seeing SaaS increasingly component the it, the economic just cloud we approximately SDDC XX% say, public hybrid a that see XX%. growth substantial or and TCL. by growth growing hybrid data into portfolio, the as pretty we're the cloud

Hey, is I'll just add. Zane. Phil. This

$X.X year. have And billion, you about guide we the grown business. ongoing a third the As also in was saw point strength for booking good the solid strengths of RPO, rest the we reflecting out, quarter. year-over-year talked which has for the nicely I really of the which quarter

pipeline QX. So yes, good about the We into we feel guide. feel about good our heading

Phil. Thanks,

please? question, Next

RBC with Hedberg Matt Capital have we Next Markets.

on bit again developers it’s quarter. on what this about and Kubernetes Thanks Tanzu. HyperCloud you the question. of my more level, a at really a question timing means Project for bit Pacific? I little the maybe guys. more for have on taking Congrats a Hey, high know, you product architecture Pat Can a in built on talk for a

really Yes. between really Thanks, Tanzu. world to bridge the anytime this We're anxious as the together. see those. this that say excited and between coming and playing we Matt the and would about bridge operations get critical about capabilities talk, and developer this Kubernetes And is I we

speed gives a customers as from the as development. of working VMs to the years now Kubernetes. ability I've VM world a said, best workload scalability, Project and and combine for containers compliance, maybe We've security, seen this see we containers since and agility And on a the really we've operating or not new consistent in been itself important Java, for environment as Pacific technology several

Tanzu together that the the expect But building Heptio the can. how intrinsically offerings. one this allow Also which excited unique the centric offering, multi-cloud we into are worlds. to and building portfolio with making core VSphere of from between automated is two Heptio, public and private will no to this offerings layer pick really those developer and customers on and to assets as portfolio comprehensive on of pivotal Control Tanzu going and embrace operationalized be this to focused infrastructure offering Kubernetes, portfolio brings this is and the PKS we're available be our Mission Kubernetes us Tanzu else the also PaaS In next then bring will bridge

in overall, seen well been which positive We've with as Tanzu. extremely from beta market has So, on we've response now customers, Mission oversubscribed. the Pacific, both, the Control seen are as

version So we're we've next capabilities. lot customer to a these including in of quite this looking major vSphere seen of forward and the interest

you, Thank Matt.

Next question, please.

Rangan from of be with And will next Bank question Kash America.

speak yet this every of six And survey on Congratulations months, virtualization. nice to Pat, quarter. guys. Hey, was one priorities time surprisingly three very top we another a do we people. the server

take, the we world? all given world you the likely and a performance. the the of get effect, and pursuing to side between own to shipments makes that look more so on the your server Are beginning curious old you especially that strategic the technology of less new we I'm as halo gap were at look your see like initiatives

DevOps so market? VMware are but companies, your here. plans also Not big lot base into this attack some mouth, Thank really you of to cloud you bets put installed words in where just broadly a have VMware's cloud much. fits curious do you of you world a have that could how strategic Because significant monitoring management What and companies. to

to seeing in quite self Yes. cloud want our multi-cloud Thank you, Kash. they And cloud, the what migrate to And in this see as world we hybrid a uniquely positioned. the really hybrid cloud. do we're is world, customers

But It is do strategies. cloud that their applications. really And their save this this migration that, wall migrate, cloud offering. Cloud run how just like brick efficient do you'll they about allows hear for the And easy them many cases process, those replatform create money talk hybrid them in to cloud the of they VMware the stories hybrid or are into cloud-first some that highly button. AWS in success and of environment our on VMware to the

right, give business in your done that refactor well enable justifies the to as they've say your modernize. as for them, you to needs, then, also applications, But you you business and now, we to rebuild them, We we as doing those ability are Tanzu latest embracing describing, satisfy invest very technology. And was cloud to transformation really the in them that objectives. button your and do developer the easy a that the manner, digital native for as just I that capabilities, for

response to a going that from really the as with future seeing see ability to and efficiently. as vendor able to VMware we're do their do to start So it so positive be and this no is as it we cloud faster into things multi-cloud. just other migrate as do of they modernize, benefits is, to positioned those and and very hybrid understand customers as well

Thank you, Kash.

question, please. Next

Next is Walter Citi. Pritchard from with

relates Poonen SaaS coming the the next Black Carbon you driven it play talking to update got of into a how sort I there magnitude look performance, an because about like the for that revenue if guess, Maybe Pivotal on bookings as year. on as you're and other I'm in, the Sanjay and of VMC maybe as Thanks. Maybe most and, Hi. comment that stream, well. that's wondering, call. the how especially hybrid, you've he's into being year, does are VMC growth of that in question next any of order Zane, streams size by

always in on to one. that see hear continued AWS generally, start offering. I'll Yes. momentum from And to VMC on we've our good Walter, you.

we customer I region quarter now at world-class we're names announced Pfizer, are said, XX Japan their really at are have references viewing vFORUM like we this expanded the saw with As and strategy. VMworld global of and footprint these this and the market, IHS as good that region part just Samsung, a as next critical the a Airlines, Stockholm

as the and commenting last we VCPP On And partners ecosystem, the seen really way out efficient in being multi-cloud their part on they for to to well. seeing hybrid ability look question, I tool really of this powerful our a customers partners migrate competency Zane? future. the is to as now reselling as their and offerings highly expanded cloud We're a our as cloud this making ISVs. begin was rolled just

subscription strength is VMC that that into year. just increase category Yes, cloud outlook continue a to increase The this you the next we Walter, anticipate which of SaaS part. in XX% expect an material gave point we important does quarter, out add saw and the as hybrid I'll we well

And not frankly all many that we also along, but others that are as only products our VCF including said helps helps with within VMC and quite well. of all as category, on-prem

halo and health increase and there's many a one when So, between the look VMC into subscription opportunity have see VMC areas VeloCloud next hybrid grow we nicely SaaS and growth effect as think it's of definitely in cloud to our the about we we year.

you. Thank

Walter. you, Thank

Next please? question

Mark we Next have JPMorgan. with Murphy

JEDI Pat, any you contract of thank of than government you. a VMware awarded you're Congrats. in being can in was role my Department is add since billion Defense's or I'll the optimistic And you could hybrid that cloud now offer rather critical wondering the which Amazon? three if $XX Yes, that for Microsoft to public contract thoughts the on play of as I major are platforms? other U.S. projects all partner

process. Yes. just And Thank And event looking you outcome the you, many eventual we'll we're appeals JEDI forward that we're the as getting Mark. of are I'm overall of the as following well. sure say closely to to

We'd much, and government we'll thriving and that opportunities out just itself that represents well-positioned right? with offerings. government. also is business, both have those as piece in of this many, JEDI the hybrid had well point Overall, expect cloud much vehicle a partnerships in the we're we through do And partnerships set one broader of as our current cloud we a that contract on-premise of a have as

Q&A seen commenting in for the CIOs this huge high the As to we've you value in cloud share the note, was I -- in very they really the government, is interest uniquely market see from valuable our discussed And extremely to this cloud in as to we've hybrid session. as earlier customers. government the as given migrate ability government past, our high

future. government in in So, that with offerings in cloud great space we our we the have government opportunity hybrid really see the the and

you. Thank

Thank you, Mark.

Next question please.

we Deutsche Karl Next with Bank. Keirstead have

for question Zane. Thank you. is My

your clarify Black Just in of that guidance. to inclusion impact is the Carbon the having

on fourth the is $X.XX of that Black's? of is where entirely words license and from the side guided billion, other quarter for guidance a is $X.XX to the In change rep implied So, for billion prior you guidance reaffirm? revs total QX the Carbon

organic? low that guided then X% to to assume growth. to X%, to where way is is the of you for And right Black XXXX, Carbon kind fiscal double-digit into back Safe

And lastly, to your due be operating entirely operating that hit. to X% Is is margins then you. Black? Or a margins going organic down? Carbon Thank

Karl. Hey,

that So question multi-part question. take I'll one

rest a well. fourth the a strength small It's we're with the in starting based quarter. reaffirm and the So, as the of seeing on business increase

fourth we've addition say full well. is revenue the quarter, increase obviously although XX.X in of for a that I'd by as got to So the there in amounts the total primarily which bit little driven the there's year, Carbon for Black more

a is increase. to Black contributor Carbon So big the

some you based on second half again recall we're the that what the said quarter. But highlighted for last the of growth also if of anticipating the guide year we

the for good the So fourth solid the guide pipeline heading we about quarter into year. feel and really the

a As points our FY about Black we I'll year-over-year those preliminary Carbon XXXX. to of restatement move is we've the large a call. combination on being offering of more part -- a and is this recast be the of both attributed Pivotal, again on The that approximately guidance and lot combination FY to next Black of XXXX, our Carbon two two talked actually view basis. Pivotal with the points

calling Black. the you're basis think correct year-over-year Car being business a you to the So big out of growth on excluding Carbon growth Black a if organic contributor about portion the the in

the saw – some as businesses attributable the a organic that areas year-over-year basis. cloud rolling two and look in on SaaS of I'd financials acquisitions. like we at you one that given -- unquote, this our XX% points that the And then for you portion is the then when part vast quarter. the health VMC we've Carbon both Black to businesses, hybrid even continue being make businesses operating and with VeloCloud, contributing to into And cloud combination other to guide growth two, are subscription the, we split incremental margin, quote our investments of the high-growth the in

into a strength this gives at next. high level least that that hopefully about So the we're a sense we're for you moving thinking year at general seeing how

Thank you Karl.

question Next please?

you. Sure. Thank

Barclays. with Raimo have we Lenschow Next

like Now from Black et Thanks want they expecting you? Just closed see ask space? have has to in to question. had firewall, Carbon terms customer some the just from I time how of solution base like you talk comprehensive security? reception broad around your customers my endpoint you virtual and customers like, Pat a was are taking of the that with for what you that so in cetera a how the Can or

Yeah. somewhat enhance to the number The it security AirWatch a and ago, our Black, we've that into into we going desktop further some high Carbon with the strategy with we resonated -- really ONE management and Black of enthusiasm of idea it We're for it said years bit to Carbon it build directly is mobile strategy going has NSX were when well. space bring bring and Workspace going very into just going we to bring microsegmentation, security reinforce together together. to laid as and intrinsic client security that build we're and And been build to build to we're a Workspace on into out ONE. the this infrastructure, doing we're going but vSphere,

Well we're very category security set And We're the People that together redefine resonated with that’s going tie cloud client together comprehensive we're offering going and laid well. of to as a strategy management an to end-to-end bring we've analytics. into going to that again. to have out. and

me, stand and absolutely, security up getting just is heads everybody's bringing how nods this started the immediately the describe when we're Now help I obviously offerings people right into in marketplace. the journey. The broken, their first We're just say this regard. industry strategy on

that the positive. So response to good. we'll customers from early The strategy really the is very is see response

of you've seen like And unified is preferred key workspace this capabilities saying, even Dell our part offering. a

it's to the So well. But see days. strategy partners respond starting to that we're as early

work blocks broken a redefine obviously but formation VMware, starting to exciting business do, unit, of but to the Patrick an new in we just new lot not we off industry. are deliver race our capabilities think Carbon And security with Black a Morley be got well exciting to of couldn't the team, pleased. I more We've and the

Thank you, Raimo.

please? question Next

Next we with have Jefferies. Brent Thill

attached afternoon. XX% you talk the you're portfolio? Good deal just wondering kind what And seeing in Zane alluded to I of growth NSX. rest the the if had of and in Pat was could sizes to with

were Yes. of VeloCloud the platform, by being super NSX. deals XX inclusion Avi obviously NSX and of the into Overall the growth included and we happy accelerated VeloCloud. X our And top is with

security networking becoming the and intrinsic. of reinforces the of vision further security point This last

new also product IPS, IDS quarter platform. had Intelligence, for a launch NSX the We and of the balancing and capabilities announcement great into integration Avi of the load

of And than described hardware XX% that reduction strategy the VMworld, at this are into customers as are I that to software. think that it's time and networking, buying CapEx in OpEx demonstrable with I marketplace. results now And really quarter the is the replace in residence. And greater that clearly in resonating great

Thank you, Brent.

Next question please?

Keith have we Next Weiss with Morgan Stanley.

trajectory of out about kind in SaaS should a think well in Is a really growing How the and A sort of at we business guys. part of better is you revenue the of overall margins. there and part of particularly -- when margins, light terms should hybrid a impacts Thank the operating about longer-term operating those follow-on kind to on an future in kind mix? on the bottoming normalize? question earlier becoming we bigger of bigger think some of point of

at Keith Yes. hybrid and business, from you've the businesses perpetual cloud top seen the We're businesses. value margins SaaS had -- company, out base, initially as be this we as but the see expect, would grow there's think the and both lower the the is tremendous why to to perpetual Zane. they the Obviously, and balance in SaaS both as both. historically well be line and in no the growing of couldn't cloud reason hybrid that and get ultimately we businesses bottom we you line the

our got growing of with where the and SaaS company examples up that levels cloud And mature businesses. hybrid of we've to portfolio within those they're more

Obviously, take as as So the we've as couple tremendous in that. lines the we you operating already. see line well higher seeing expect, as income would areas grow, growth in value take value acquisitions higher the invest we we as We category. we of with company in on off of see reaching margin the as in continue that we're as -- well we'll operating the to that include points a grow as high-growth the and taken we top, some growing

in You've category. got growth XX% the

we the that that. the investments of growth So view strategy all a take and behind long-term in

like in and the we profile will margins operating individually an about those the grow have those that business. on getting return areas. feel -- in we the profile So to feel very on of impact But and good broader continue we're growth investment obviously

Keith. Thank you,

Next question, please?

Sachs, from Heather have we Next Goldman Bellini.

Great. Thank all. Happy very you much. to you Thanksgiving

Just Pat. a ask to wanted question,

done the always spending when a worse. IT been have read on it's out getting getting when it's better, it and called been You've environment great

You next are And Thank a out year? seeing what kind versus good calendar I portfolio. you. this the -- given IT spending your breadth just of in close if in could up the of record you with of obviously share what's we're XXXX? end thinking was to us, terms just year’s you are as rate product calendar going what you wondering track really have we growth what seeing

quarter. really from my last Yes. view what Thanks, we changed Heather. hasn't discussed And

view of interest great concern, centrus we to see out positiveness. there's as look I'd take the to by continue areas And And to customers. those pretty future. areas say, continue of a digital We transformation of we into

three have believe VMworld I'll them last the many transformation result. been the of U.S. basis. is to in on just a VMware global great our that well. geos. Customers say, key And alive future. air digital to miles continue performance was QX it's their we all think offerings I to a a in and as And between Since resonance Asia and too great but globally Europe, And I've getting representation spoke

feel we outlook. solid So that very about

Thank you, Heather.

please? question, Next

Kirk Materne Next Evercore ISI. we with have

I much. GCP you the Pat with there's Thanks. with thoughts maybe particular whether helps Cloud not we a that from now or Yes, you. last resources takeaways Simple very sort by that if firm. that any just front. on accelerate heard about it's just days incremental acquisition behind on thanks talk that And time But was realized that some partnership your maybe wondering just of obviously more early lot Google the I little could since partnership bit. a

feel that. offering good soon Yes. come in of to overall, marketplace. Thank for Obviously, solid partnerships. the There's overall portfolio interest to I'd that And the Google, our cloud offering. about we say, you is

a no do simple the VMware verified customers. to support have acquisition accelerate cloud their see a in for good partner of pipeline as capabilities. And move VMware's there's good marketplace. simple cloud as We the them a of cloud in We change

the interest offering their Google And a really of as aggressive clearly for by seen global of their we've that driving Google does great customers more resonance enterprise have customers. of is capabilities part mutual Cloud. VMware And as build-out

complete to partnership, forward context most Google, of is So we're the the Azure, always Oracle, IBM But this in Cloud partners looking VMware it of the worldwide. having put marketplace, set X,XXX the in the simple Amazon, good. while we planet, partners on

we're partners Now And verified community. XXX VMware's unrivaled that industry. hybrid the strategy almost clearly, seeing and multi-cloud in cloud in and cloud is strength global

Thank you.

Kirk. you Thank

please? question, Next

with Zelnick Credit Brad have Suisse. we Next

laid for showing a much finer margins, you cloud prior to to scenarios mixes so put point the two acquisition, on differing the taking question revenue around you out proxy in the operating and question. Zane, a margins SaaS. for filed and Great. Pivotal hybrid Thank of just

included it be Black around those to this. are Pivotal not somewhere as in accretive appreciate should out and I business that transitions, trough in XX% the being Carbon in year be acquisitions proxy? two, the margins was as laid Thanks. that should And But model it fair that in is say

the read what I you of purposes. obviously Hey, mean, with for typically variety Brad. of are a I assumptions number a guess, done some proxy embedded forecast color, in

into wouldn't like I what you in quarter, what's we year. the the is heading. current a typically then in do guidance. where know, as third what you for sense versus And And we are for I'd to at give offer there things you So read give least

stand dynamic hybrid tremendous very is there's and where believe, businesses. Everything opportunity and cloud today, subscription SaaS those we we in

be So me I out. we what think would point for of, it at premature say, bottom to sort

for always that we're top margin conviction long-term trade-off between that we where fact looking the around and operating shareholders. line and at Given value growth have

still So that continuing in businesses now point where the opportunity Pivotal acquisition, and dynamics, a we in and Carbon that and businesses, those to at as invest we're It we in continue are invest just SaaS why going those hybrid Black to benefit see happen manage the into tremendous right addition the our fact to year. those happens, I which to fast growing. be we're cloud to so is next to alluded

taking Black company. the element the into essentially it layering in is and Carbon The P&L carbon of black we it while integrate

operating impact of that So see, on to the margin we've out business. points that's part up the called as you dynamic of X

to will that. go business candidly, got that point did than when because a our -- essentially to continue with want much growing that financials I you've want Pivotal further recasting wouldn't it will into just be feed Pivotal. we XX%, you out And to that's be I

to would margin as and to impact year-over-year expect of impact see the well change both that acquisition the to you impact pivotal revenue, Pivotal relates history operating as will our that it So our related acquisition. as

in filing. in Again, a you've little you color we're proxy I gives the that the more thinking hopefully, that bit acquisitions. from into the how opportunity observed So, what about separate would

Very much. fair. Thank so you

Thank you Brad.

Next please? question,

Sure.

Next we Raymond with James. have Michael Turits

Hey. much. you order you come they're Pat, just whether cases? to Can or in VMC, are, whether And leadership, you same they're if around as anything, channel use what it's those back go-to-market us expanding? been the Thank the if they've anything are on changing again. VMC, expand let's it's use doing cases in update to very

Yes.

the the right? a that use extension, center I'm say, are data before, DR of is cases evacuation want VDI. data terms right, quarter I that continuing center new for a customers where a data me capacity, they're as a them In I center this build run way think right, center best out and use the saying to commented location one was I I'll on cases, described to making out to getting case we've of last data use VDI, more choice

to people will that ability layering start on opportunities that where do into my will we're VMware hybrid being and Kubernetes new will or or very into to expect Cloud -- to we unique cloud and be begin increasing that saying as my new effective. have cloud the VMware actually new well environment a announcement land with our those going have start that new foundation also developer we our Tanzu focus particularly Now, offering as hybrid application build development

from customers those this sort seeing people to get comfortable of now is resonate those. to my we're going So, the seeing good cases. this and Maybe I'm going to center We're saying, a I'm is the and maturing have centers two offering to availability zones. becomes are as And strategy use in third two in. data for start me marketplace, just data more three layering the

becomes it third or So, my my fourth.

So, the I become more resilient in process.

a case. fifth cloud three joke, which XX% DR I essentially right. utilization data before maybe capacity, center my aggressively in customers private use to and is reduction aggregate can things priority the we've many like cases elastic this terms XX% as private cost an ever utilization introducing the in XX% I get as I'm or more they or of done, seen who And the of footprint. total make right, were to XX% drive in going the clouds more has my have CIOs top I'm on from run And center Since driving their efficient in data the result, than

So, you're just thing that always trying catch-up. to this

operational an far is hybrid DR environment have more you environment capable if ever cloud now that before. Well, than -- active

those would be VMC. we're for of potatoes seeing meat some that So, and the use cases

today and as strategy also that and some the seen see this cloud target out. already I've They've VMware environment to development some access of customers we've say the everything I'll from are their of ability some new a into now of your But key cloud laid enable as as like multi-cloud seen to our because viewing comprehensive Overall, this on-premise they piece the that we're services with of about VMC where hybrid they're say manage now starting services multi-cloud the the Amazon well offerings strategy. excited Dimension well. we're cloud going to

Thank Michael. you,

please? Next question

we Next Bank Montreal. have of with Keith Bachman

Hi, much very taking thank you question. for the

Zane you. may we that EUC ask Carbon bookings thinking some I XX%. over as -- both about Black, you the and should license Could category For FY Thank the to addition boost? get or standalone over you revisit of look had how be about how EUC XXXX? course wanted of we the with Pat, increase And

in lot redefining that with that agents that we're XX and with now their Gartner We've customers and to I mess performance. is Forrester help resonates walk idea on overall, transformation XX, clean finding again. employee of become clients. And from going category super really and call, security and historical see great XX, the and that the our they're into earlier sometimes it's workplace continued the And like strategy. really response Black experience. EUC Well, We've Carbon to management It's with EUC bloatware. going pleased Yes. with resonating we're includes just even we see mobility which to And digital because platform have up continue idea digital category our outdated to they from as that having. of a redefined running desktop-into-one, this said they're

is going growth to share. double-digit accelerant. we're that strategy we're and resonating. we racking Carbon good see are And you quickly XX% us this just people strategy coming overall is for gaining consistent the rates So quarter-by-quarter that resonating meaningful that Customers into Black a while solution their shows as don't replace workspace be up believe with

And of aspect Windows Black really their Workspace other PC launched on Carbon been Microsoft, focus has environment. offerings The the replacement recently our just we've XX antivirus. more ONE of for

that element really this to So a strategy. key of the is accelerate aspect

also that with expanded You well terms Microsoft partnership management announced ONE. now saw integrated with an we endpoint being of in window Workspace

of gives very offering overall of those coming all think us a together, cohesion the nice pieces marketplace. in the we So

it's guide continue it XXXX general level the Black two called at there of more the many out could those, year. growth detail our next as obviously Keith, where between the I get of would say we'll out company for Carbon into call on attributable integrate as EUC think in included and on But we've we highest you and points just combination to I'd Pat over FY my about the are the how add as to as points the the so with rest of upcoming Carbon synergies well Black.

gentlemen. Thanks, Okay.

Keith. you Thank

please? Next question

Blair. William with Ader Jason is Next

If Wouldn't Project would I apps? to why play of platform? same layer just for in advocate and running add guys. complexity my that want a could containers devil's Pacific, VMs I the integrate on Hi, containerized management

these you're management environment this of And two applications so Oh, the And those have some Are or process to bring containerized manage a Why doing to have workloads, I my would no and imagine those incremental right? and right? existing going can a right? big just you you I together right make a through the get maybe worlds it? in a seamlessly that modern do stateful idea that in application application? wanting stand of environment that put ever you I two in development that decade Kubernetes made unique I have new environment virtual and new right machines from oh, now much not to containers, up with together probably And container it that but versus a for management work value case. might right?

a most bridge go Kubernetes on to is this here land enabled powerful literally that that's you. a as we're operate together has our them those operations thrilled magic tomorrow worlds. realizes or seamlessly and And dial worlds. modern DevOps today I've are the can we environment that people tone intermix and to challenge to compliant infrastructure those called between it ability CIO get just the a present of a got every say Kubernetes industry Also upstream ability force the and going bring I in two to a And DevOps two and compatible planet to is And bridging now Kubernetes workloads your now two he accelerant. the with a to like developer we highly environment between those This now Kubernetes powerful and becoming is environments that VMware dev millions efficient world. the This world way. us see and the teams

two detriment. demonstrated we've as it not a And is worlds. those between bridge a not project Pacific, powerful only is in This

In fact Linux-only environment over because faster built into run or we've metals environment efficiencies the that huge containers we VMware of than the bare time.

enthusiasm DevOps bridging this I I I management. as get we environment get vForum’s. powerful. is development get the And out consistency. to and extraordinary operational marketplace I this modern VMworld now saw between why worlds, the most get world's So at that's security, roll two we these

Thank you Jason.

been favorite that today. question think may I have Pat's

Let's appreciate it.

have one in We queue. more person

So question this please. the last will be

be will Moskowitz that And with right. Gregg Mizuho. All

and Thank afternoon right. you Perhaps All good of would question day. be guys. the favorite Zane's

QX to previously as I you or of that Zane from it for So just the shift And a FY had wondering a mix relates either referenced was headwind whole? SaaS. to bit on estimate XXXX growth you revenue an as if a

as seen good we've more generally the Yes, candidly a side. revenue in we it third strength with it's not quarter, was on revenue. And in sure, done total quarter, pronounced But as Pat's. I'm both as categories. it's the we third the license in called as you great out, question. called And towards is what the we've out more steered

in revenue subscription contemplating third cloud period hybrid and revenue thinking that's the the hybrid while when were you the as you're the mean quarter. of cloud know that's that now, sort SaaS we extended And of versus balance time. balance sort nuance between the subscription over I the recognize we license we an of about bookings sets get

mentioned we through that continue guide with saw year. we And the strength, the

percent in a think revenue they're as there's out on of that the headwind, specifically essentially especially as you about slightly So when -- the all always curve. think growing different all it of a points little those differently. we as maturity recognize We bit I just you're businesses because our wouldn't call far because

We've considering a but with versus we're good aggregate, model guide. the SaaS next year. perpetual model, heading But about always comfortable balance feel into We there's trajectory you're that balance. the the when right annual you're maintained in that

Thank Okay. you.

thank conclude we before And -- Gregg. you,

Before I a have think final you we comment. conclude, may Pat

as very in team about applications. portfolio accelerating part security solid enterprise-grade great VMware. just really our comprehensive we're of the positioned very as which We're modern customers. to excited helps QX a us deliver efforts I'll I'm And another Black the Yes. to for Pivotal of -- for be of most say to closing VMware. result simplify to proud for anticipated our Carbon Kubernetes delivering now have It's our for quarter based

updating forward looking we're you Thanksgiving. next wish on Thank a on and our with you family the we call progress friends. happy all finally very and Enjoy And you. to of the time your

conference. again does and And participation. ladies your Thank once conclude you that for today's gentlemen

You may now disconnect.