Vmware (VMW) 27 Aug 212022 Q2 Earnings call transcript

Good day, everyone, and welcome to the VMware Second Quarter Fiscal Year 2022 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Paul Ziots, Vice President of Investor Relations. Please go ahead, sir.

Thank you. welcome earnings second conference and XXXX fiscal everyone, [XXXX] (sic) call. afternoon, to quarter VMware's year Good

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

remarks, we questions. Following their will prepared take

webcast obligation remarks Our are conclusion can forward-looking statements and posted ir.vmware.com. press conjunction result intend currently be to make described Actual We X-Ks from call being will viewed on any to market uncertainties. update risk which with of Slides live this to is no results simultaneously where in release various differ webcast. that call after in and website forward-looking and accompany a this subject as of do files statements. the risks and XX-Qs SEC. today, issued is VMware materially not was and the downloaded close such at our this On XX-Ks, factors may with webcast we the of assume

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

tax GAAP measures as well of as of exclude non-GAAP tax matters other items on transactions, litigation rate. and GAAP our the intangible acquisition, effect discrete compensation, stock Our impacting amortization assets, employee stock-based results acquired and payroll employer disposition, our certain items

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

at over quiet Raghu. Thursday, quarter period of it With XXXX. the third business, Our to that, I'll turn 'XX close fiscal XX, October begins

lot I'm per Paul, non-GAAP as our to as partners opportunities and energized of of day today of billion XXXth a and the talking $X.XX even and fiscal been and today today. time and them spending and with and $X.X the how the help concentrated thank my everyone challenges I earnings for with QX in future. innovate pleased industry you, performance more with you share. VMware's customers excited us CEO. can I'm we navigate joining XXXX approach revenue I've Thank about

the the last Over private the and of the picking cloud evolving the clouds. using and accelerated cloud. the means the their philosophy including these primary adoption and cloud are and they during of clouds few app strategy smart best Customers their right choosing are and is that customers years of cloud-first workload, a today, And performance. enterprises pandemic, reasons: one the especially from services need a right as are services but even for to the most technical our their on cloud default capabilities where cloud to have strategy multiple Multi-cloud by digital based the just they experiences customers location deliver for not First, emerging on edge.

being avoid to result, better and into single flexibility, locked need and they cost as business achieve lower control, Second, a a cloud.

portfolio services, hybrid to Number any portfolio. about across This multi them our and where the cloud one need is Management they workloads addressed modernization enterprise as clouds are control workloads And clouds. are component the using to management. Cloud VMware customers sovereignty, and for is and and experience which and needs data key with ability distributed are empower we Number is with these comprehensive with edge platform a our more customers Cloud, migrating trust which Tanzu critical to drive public across run is customer These Workspace have including innovate solutions X security, cloud in Cloud infrastructure and all ONE. centers. multi-cloud built of provides cloud-agnostic enable defined major to clouds. their workforce build, across networking, their our X agility running private public and Black secure which flexibility Carbon Third, cloud a all manage the developer application our clouds. Number resides. clouds, data where is that a at all cloud-native software our zero of are of a Tanzu operations consistent Customers provide and offering, platform to across

to manufacturing manufacturers adopted center, example, locations data an a across world's As a run number of cloud edge. the the portfolio of at manage container large the one tire their Azure largest Tanzu time and

are customers integrated complete our cloud building Tanzu private platform across public can and with cloud to as extend cost needed. who portfolio. continuing hybrid modern We stack applications are full agility to run that stack for their adopting application provides our This and their to effectiveness applications build enterprise also see clouds, environment

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flexibility usage a our expand capabilities In and engineering we with customers AWS their providing to region. customers. expansion, VMware AWS partners as cloud continue new on our key delivered more QX, and Milan We for see Cloud footprint to continued momentum choice including

solution our deliver cloud-native vRealize as to to go-to-market policy, as no to offer companies unveiled including the better help at SASE, customers are VMware a Solution products with and network single cloud security AWS AWS, where VMware shop that secure in In employees, model the additional service the includes with and for and strengthen a Cloud to of services edge the unified also resale the key VMware Anywhere more matter Carbon they such world. It ONE and Black a experiences designed relationship edge. component Workspace serves is we via monitoring. provides ability business manage place which configuration the is SASE channel. April, one-stop Workspace Cloud VMware a continued and scalable We and also to their VMware

to We Zoom quarter Zoom for more the interoperability with enabling experience work and to VMware better drive secure the platform, Workspace collaboration environments. Anywhere work hybrid and Video during a communications continued between

also may new cloud. innovations with We in to to make the it added to on-premises VMware deployments IT Horizon they for or new easier wherever capabilities manage be,

been few garnered consecutive the recognized Quadrant year. months, from VMware for Over fourth the VMware a tools unified the XXXX as industry-leading Gartner for past August management analysts. in leader endpoint has recognition Magic

in Endpoint And emissions to on ESG intensity in IDC peers ranked positioned Women a #X versus the was Scorecard efforts Service XXXX. as In XXXX. ISS a ranking Security and Employers Additionally, in Best as the and XXXX. List Best VMware top industry in our market of leader Forbes the for QX as as year XXXX recognized Forrester including X% is for Software compute Inclusion in Climate also Work for the to IT Disability XXXX QX, fiscal ranking management automation #X was received software-defined support XXXX VMware named share. share, worldwide we for the in recognition of well VMware Place VMware as market the Wave in configuration

I and engaging breakthrough and VMworld, virtual both build to VMworld will in to looking about be conversations software peers. you place apps the these Spring look SpringOne technological app I fall, DevOps again will more. technical more X modernization developers, spin leaders for X events. September optimized to at remain X, to and on a year. strategy pros event takes place in content November scalable XXX hear framework, online the October while more over forward and off Kubernetes, learn educational multi-cloud of and look which you through horizon. SpringOne We X with about networking and are into epicenter sessions seeing connecting connecting X, takes of events track Dell These on while innovations. from the are offerings, this seeing where and head early is we our and As also forward and attendees and peers. with industry

a strategic, as and and well increased I'll the flexibility Zane over and now both business company, longstanding to VMware. it will turn benefit standalone while with as on our to continue performance. Dell, financial strengthening we our will customers a to drive operational also strategic Dell partnership relationship growth VMware's As for detail we partners strategy our have expect more

year-over-year was our expectations with exceeded of year-over-year, ARR nearly revenue the in and revenue to XX% XX% We're billion. QX which SaaS Raghu. pleased million. above for $X.X 'XX fiscal our growth grew and with you, our $X.X was $X.X subscription of to first and Thank billion, for combined year-over-year half of license revenue growth QX X% quarter. performance. License up revenue with Total XX% $XXX SaaS to and with Subscription billion, QX financial expectations

and made We QX that continue our good progress and to developing and accelerating focus subscription portfolio in on towards SaaS goal.

SaaS Carbon modern VMware Cloud nearly year-over-year. VCPP, largest XX% on grew Our revenue which applications, sub and contributors were EUC, Black to AWS, and

driving continue flexibility well agreements from licenses and as momentum offerings. We sales. as certain and also we as can to slightly offerings. cloud with Direct market, perpetual longer as solutions bookings as Cloud adopt our important in length they revenue of VMware in customers take customers larger-than-expected of We're becoming such a this with for to slightly hyperscaler-led for VMware choice product With saw And time prioritize our QX, licenses to are EUC. mix scaling areas our the an route continued be channel term compared

SaaS including cloud and quarter quarter Compute of that improved deployments, cash benefiting per embracing more were driven control year-over-year, received was quarter of million, digits held businesses great bookings on share growth Cloud year-over-year, over Universal XX% in Non-GAAP growth and and unified cash strong NSX process. unearned Cloud increasing and for now with entire grew due operating and in current million, year Core pleased stronger also of validation commercial customers $XXX XX% on-prem, our of last versus was bookings product a equivalents in was XX% We and Growth their vSAN our the RPO of thanks was million earnings business cash, saw subscription both was of orders shares. million. and strong up to in which product in cash flow hybrid Management with year-over-year short-term both managing approach Applications of environments. over expected, end double Total was diluted License we Compute over vRealize and partners; quarter our bookings in and revenue in cloud-based orders backlog at were applications lower-than-expected offerings. RPO in share the categories, and single up growth shipped in was by quarter multi-cloud for not and day multi-cloud XXX ONE. as by in for QX and XX%. public $XX.X investments. multi-cloud Cloud revenue strategy, Horizon operations low $X.XX strength X% to EUC our $X.X a continued increased billion, and business, all by million product non-GAAP from with our Our up major manage the the than environment, strong up a last and was income our free Cloud the as with $X.X the on-prem driven backlog digits bookings with and service ended an QX quarter. performance and Cloud consisted edge subscription in was for backdrop; that Adoption modern ACV from We're in We Modern had billion year-over-year. on of million. EUC to continued bookings $XX export $XX Black Universal, SDDC digits to economic in $XXX billion, substantially Management offerings. the our SaaS grew XX.X%, driven their double the non-GAAP Carbon SaaS enables overall operating year-over-year, billion both business Workspace a $XXX our and the flow vRealize expenses. grow strong count and margin customers and including QX clouds. EUC. continue year-over-year. Subscription well multi-cloud was also product multi-cloud the is bookings $XX.X growth our product part as higher

repurchased at bond market billion. early support customers with employees open working workers current from hybrid share. X.X in of payout employees in planned $X.X essential they the offering to year. continued in at in stockholders workers. leveraging spin-off work November of successfully We QX, or In $X anywhere this special VMware's office billion the knowledge Dell dividend to and shares an offerings we As environments, Workspace from we utilized per our Through completed frontline price to back a employees Technologies home end associated million $XXX of have average in QX, all $X.X are billion from a of preparation repurchase authorization our for the

does from cash QX this the offering. not bond Our balance reflect proceeds

We our to capital will organically and business, continue repurchases. through shareholders both to share inorganically in return growing excess invest and

use also following planned We credit our committed and to primarily to investment-grade we flow Dell. expect free to an delever remain spin-off rating. profile And from cash

guidance to Turning fiscal for 'XX.

We are revenue approximately of our a expectation reiterating for year-over-year. $XX.XX billion, rate of total X% growth

full combination per XXX We're count to billion, and to year includes estimated of which We're earnings in $X.XX maintaining this maintaining million $X.XX XX.X%, spin-off. expect guidance on costs diluted license million an increasing subscription of flow with planned We billion. operations and a $X.X for SaaS operating nearly shares. the with approximately now from to the debt and revenue And XX.X% increase of of cash flow our costs guidance share cash associated non-GAAP guidance $X.XX also of free the of non-GAAP we're and generate issuance billion and share margin from subscription SaaS. XX% amount for or approximately $XXX from

and Additional the expense, accompanying FY such details deck income 'XX, for contained call. other as this are slide in

rate expect we a of $X.XX or growth revenue X% total QX, year-over-year. For billion of approximately

subscription billion in with and SaaS. or QX amount and increase year-over-year, We from XX% $X.XX expect XX% license nearly of of subscription this an from and approximately revenue SaaS and

shares. with margin XX% to count diluted non-GAAP for million $X.XX share We per earnings of share QX, be XXX a operating on non-GAAP of expect

of to Additional and second call. good and our and expense contained our this are other guidance thank for VMware partners a QX, details such as for want customers, deck half 'XX. quarter entire the slide closing, the income accompanying first in I In fiscal team

later leverage our environments. the our multi-cloud look this head for forward energized trusted we And many spin-off we're see software half foundation second year, As we into we and the opportunities by help customers to seeing in VMworld the at our notify to I'll it be held you now in conjunction the of with and Paul time back Analyst of for day you in We'll coming to turn to Q&A. Meeting early weeks. October. Virtual their

Thanks, Zane.

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

to we'll [Operator Mark go Instructions]. JPMorgan. And first, Murphy from

to where think so growth. growth Zane, perpetual mix term. imprint of and kind When and you kind equilibrium versus this that another of this you piece? versus bounce is the Raghu the that, slightly it's the you and more have and cloud on-prem back more it's a SaaS But quarter back went do do it's think you how strong ARR manifesting? that think hybrid is altering term about CRPO and that's step of of the and of temporary of deployments kind a pandemic perpetual Or strong in

thoughts. let Raghu and start I'll Zane. weigh is then in this Mark, Hey, with his

with in it's don't mentioned, point the sub businesses was good growing pleased as the you quite marketplace. actually driven or revenue. SaaS fundamentally, in And it anything us and As think quarter necessarily with a for XX% our by ARR. XX% you I out, COVID we're

expecting a to, For around part between SaaS for did pointed customers to X chose related our which few product, choice of out the of sub and in margin the and portfolio on the that impact term remarks, they license. it us, on-prem. SaaS we our the sub into variety to reasons, as prepared a I with and and candidly, And split term, Horizon versus actually lean particular, of were being in one my more trends

seeing we're a which performance product. quarter, So we're an and pleased than us. a was little that's business EUC for performance then the important hyperscalers, we that with bit of that shifted on this the term become call I those to just that, very And what about we're that expected within products It's will, we route-to-market remarkable year-over-year. mix, had with originally. top actually have you with if excited more the

those. We effort going products a multiple to than lot have go-to-market direct and just relates sell work the as of on VMC-type little with a takes a on it That lot of innovation longer hyperscalers.

we're think think, to what's where customers those we here another is a area little that, on timing So then coming fruition getting out, then early more and about across probably good and board. And I pointed as opportunistic I just portfolio. we've seen lastly, the strength

product VCPP really were compares. tough Our

on, from second year-over-year year-over-year a accelerating at started basis. quarter look a you the If basis, on VCPP

for you if at of by X/X So that is VCPP, look about it's impacted category, that actually that category. instance,

the than Raghu And and trends side, missed. categories. market a strong are other our I'll few of say the across it's SaaS sub on portion. because size it that, elements sure I'd So significant turn I've there a generally all are I'm

Zane. Thanks, Yes.

customers certain our the flexibility what this is And subscription business consume Zane And whichever we customers model prefer in in with said, Horizon turns geographies verticals, and and they certain Mark, and So choice, software are as SaaS business license to out approach Zane it. provide, especially in the that choice in way quarter, given how that very And consume you it saw our happy, referred that's to. offerings. model. over

recent recall, move our journey, We flexibility on-premise. offerings. their the Cloud And cloud a they about or using to is to year they've market most subscription innovations, we you and and a But if use that provide of time, term many license. before. they customers SaaS which good that and mine, so, was over With overall come look journey business if step focus also And a their continue. and cloud, Cloud are provide as start of at back next bit them off SaaS our cloud Universal, big on we you the actually I've as saw they're about and our This bullish with start. all subscription of and very -- subscription if out little our talked products choice the with will Universal we if with a portfolio. a you and at look And to you model,

of In is that license them addition, And SaaS a our available vSphere, like line and we are in products making as existing NSX. our well also model. that subscription and work includes taking and underway, software as products business perpetual product HCI all

will we cetera. SaaS like that, As with we Universal, subscription more and strengthening our mechanisms programs do be even et go-to-market

expect subscription to SaaS -- and next to over year, actually I our So business the growth accelerate.

to from we'll go Next, Barclays. Raimo Lenschow

ask to last items about but wanted talked that, about cetera, product quarters, that I these you NSX were doing of that not into and deals. at the accelerated. And few deals if go in Visa the of kind hopeful transformational type will up. pick Like look some like the all they it I of people you were that et

a bit bigger you're talk more about start what deals about about appetite you So some to can thinking little transformational seeing customers' again?

Yes.

to hand seeing So Zane back -- he's as what I'll we start and are about or talk the customers. with well it what to Sumit

gradual especially our expanded talked et advanced networking about is these are security environment for additional In NSX, exciting we of et in the certainly with with days the cetera, the thing year. sure. cetera. east-west ransomware, have our last and And the protect traffic NSX, we these that a to compared with economic benefit improvement the security NSX, offerings that and seeing So past of the saw you case portfolio,

become big traffic deal. a east-west protecting has So

wins And load some capabilities advantage TCO are an conventional security there is our handed big with pickup over a in tremendous balancing, increased over load seeing software-based products so our balancers. quarter. we Also this with

our our to this have strong case growth. the VxRail contributing product was business we of past networking that storage, So line, and vSAN commercial grew. In quarter, all also pretty seen of

all Sumit? those so of And the some factors. contributing are

if Raimo, business just the success I I good I'll -- the anything, the the This saw help quarter. is in. of think out of commercial in that just surprise. about you think called was jump you that really to If On Zane. second the -- part sort size,

with sort as mix, over had customers which XX%, deals, which had back some -- larger million episodic, we take mark versus will, proxy that with and a of you our as were rough with If customers agreement XX approximately as than last the We mix The same $XX those deal, larger within well. number, last were look we consistent large at $XX of proxy if a a at we as good smaller was and million, actually the that you usually were enterprise mix a year some that for wasn't some consistent smaller. step year. and use greater a of for was quite actually

we're more quarter. with deals, that have we So we'll that large, large moderation pleased and trend SaaS, we're think for trend. seeing pleased our be sub We as in the more but with

Yes.

this would -- on is think Sumit. have transformation, I that transformation. we the to be is traditionally The would now, only engine that customers which that add different of is you I have thing thought what helping than

deals, you our to solution, transformation if they brand-new for as Tanzu look well them how as application a many our at for are have of platform enabling a going significant which in adopt Now is top customers multi-cloud. them our

our And our which business So deals, helping mentioned, pleased that great investments as with volume is Zane like commercial we're leading then well. is front the very in just of to trend.

from to Moerdler Research. Bernstein Mark Next, we'll go

Look, and of a on related questions to the I'd subscription to to as the SaaS, company and is better now like ask more try transition. focusing understand couple more

you would shifting the a and should But deal think or to First The versus term with obviously, licenses term we this new this Saas? new maintenance -- multiple some how revenue get either Saas? over off, things in is license workloads? is when here. second moving about is, time license are there's either lift existing over there's more Or maintenance traditional customers seeing of what or we comparing predominantly part products

in. again, and start of both. it's then say good a mix I'll let jump I'd Raghu Sure.

management our what our flexibility, where offer customers we're that we're maintenance say, pleased at that renewal taking seeing that we with If you some side as have side there's of side. and well pivoting and they opportunistically, We products now seen particular, the as quite advantage for on our on customers. our have rethink number it, that over. ourselves on and S&S EUC look in cases, and remain of mentioned in there, we've of portfolio both with a side, success the the I'd products we're in with their value the customers rates, to we high, Universal believe the years and for

If there's opportunity SaaS you pivot, we And about with to there's both of an the upgrading, more and ourselves. think them cases, When it. just sub for the to nature that value premium do usually opportunity business, set. see in an make more with many we with our associated and it's a product

to do that appreciate expect to and looking sub- versus installed moving on-prem. we that are existing over base at the the revenues So time, even and today over we they you were would base installed more fact if of see with a just increase portfolio SaaS-centric where

solutions enter in at addition we that, So and greenfield new is if the to with more importantly, the looked believe But there. opportunities more that. into to opportunity just you and opportunities

with we So long tremendous with their both portfolio, here journey. work allowing parts to but the us the benefits for customers see on of run in

deploy of uptake think et on-premise our where the also they of them because offerings, than software easily license cross-selling larger SaaS and to install easier cetera. bit a especially would little SaaS a more, portfolio portion see and convert offerings, of customer possibility when increased And more it, SaaS customer -- of our uptake subscription customers crossing is we to add Yes. I and upselling just the

goes also use of so of of our individual SaaS value and is them to only and a customer getting when to us good. And selling not the lifetime more the a equal is possibilities portfolio the very product good,

to we'll from Hedberg next, Markets. Matt go Capital RBC And

you out Great. I'm Raghu, is curious, that future. I'm been wondering I people conversations? And forward, really level faster think COVID last if I'm as back that this still in IT in -- the And of looking Pat at importantly, that even I used is you philosophical year. if say IT days market while, moving of here. sort mean and to reflect, conversation, underlying way. mean, to customer the after you're you the the XXX play back over a more seat you've that just sit the for curious trend mentioned reflect kind I now, of think executives sort of in

I customers already thinking the Suddenly, Yes. accelerated suddenly that were pandemic you about. mentioned, things think, as the

data. actually, the As just and to in going they're opening clear cloud-first, they the big evolving the applications factors to on a last whether or public cloud, set feedback any by own nearly remarks, customers. that their individual it's over going assets get cost, live Sumit customers spoken at is factors, And business -- the consistent. into on I’ve XXX I've to said probably from cloud desire or upon that the based looking customers customers technical one consideration, are now particular sovereignty their overwhelmingly strategy and application factors, XX over put the days, their And my hand, number cloud is XXX IT not and are of cloud of we being a being not What vendor and feedback his where in is deciding smart. being mean and and having but locked which applications to done private cloud

result So mono-cloud is also gone customers, of by customers, from but becoming evolution which portfolio in conversations, IT. from the portfolio customers. what with is we the partly say pivoting I we overwhelming the of their is platform as feedback our age of to propelled to these propelled are by is our certainly seeing doing are of a customers positioning our XXX have or multi-cloud. for the often become pandemic, And partly the future And state the this the multi-cloud. are age multi-cloud the our cloud what we

market, Tanzu the cloud clouds are the in complexity execute cloud are the ways. cloud. Tanzu our using them one to the by caused partnerships firmly right? to the increased fundamental state, enterprise vendors, cloud aspect by the are right in our are the infrastructure our enabling with SASE the we their going not getting all their us putting is them applications only all And across portfolio. then interest. lot We age getting given of a which are of but is We on cloud. this all across all to strategic deliver course, And not -- distributed we And remote has master of platform, their that Workspace doing change the help is in especially Workspace momentum, One to take pull workforce, the of of application opportunity the doing an bring our modernization also transformation pandemic, them the X the ONE is cloud to Anywhere a in of solution solution choice forming back integrated we where cloud this and other with workforce infrastructure of SASE and application with least, to last the clouds, helping to and public pre-pandemic our

becoming the benefiting growth the such decade. is together, of workforce to long-winded at distributed next caused answer underway, amongst want distributed, IT all pillar. So step your the what their is another to is how is over maturity is third were back but would and pillar, firmly And it's and that accelerated customers question I they are And pillar, such look put IT take edge also the run the pandemic that. one corresponding a multi-cloud say, the we a trends some from to more

Fish Piper James Sandler. from Next, we'll to go

and Raghu, wanted solutions especially really VMware commentary the in you those offers What as side? bit security Carbon back rather SD-WAN side been because we think and competitive it environment, update? it's VMware to the partners got an go are point adoption how the of of any terms about at pertains and growth the Black about And consolidated seeing fully unified since further this to color on your than to a on SASE. to

Yes.

you So up of sub-parts X question, bit. little and it a had I'll the break

network X extension zero-trust is, the One the underway. to you security you place. architecture re-architecture momentum if in about that that's our fundamental architect aspects aspect are the area out, And think pointed So we SASE, of are putting it's like of seeing. as a are that pure SASE customers a wide there

market what to solution. becoming us. those the a refer is it, workforce that for happening few extension We for of all and here you very minutes enterprise SD-WAN are ago, marketplace, call the a said do are SD-WAN, more with as interesting thing to about SASE natural the remote of just and continues adopting more part work I And customers VeloCloud workforce enterprise -- leader that's now structure. well But a the the of I'll standard our our Solution strategic in as a

secure remote of their increasingly customers and solution, looking so is SASE of in And the component important manage see not that And component an workforce? we how would the the context, solution. are to but only

from of is need things we because experience we The is all on home, think Team and the network fantastic you what I we working are that you or If calls thing first need? day Zoom long.

Then network. corporate from VeloCloud course, And be from untrusted might that. network we the so solution home, accessing accessing provides the of it an

at homes, solution becomes the super -- their how But our And important. Black SASE we at manage important. becomes same ONE becomes and do how IT super does important. Carbon time, then Workspace provision super things users So like

think will So is of Anywhere we also selling point sale larger a part there of it. are on One there be SASE we goes there. as Solution. platform the selling platform the Anywhere is Workspace to SASE, will part are -- this components motion, as always From see motion have but X And we differentiated solution, in our time very, very and industry. as that Workspace

leverage where, things we of So control Black looking solution. is One Black -- is you Black. Cloud cut from is integrating are Carbon getting Black so access also you Black we're with X on Carbon at protection of I'll the Carbon short, well. Carbon what But what our me with executing now And solution. for Carbon last Cloud year endpoint been and And what We or are about to we've strengthening so, Carbon portfolio, many VDI quarter, one more like asked had that's short Ziots good for Carbon my it answer did part we for talking X me this of Mac about Paul the us. Workload a rest the Black example, there. sorry, the Black and the here. new features. device is Part keep is added of Cloud asked the interesting the integration thing

are by our vSphere We Black it Workload solution. introducing integrating Carbon with

now get our Carbon able are and cloud you Black what So able are to workload -- security, our security. with endpoint customers across network is integration security, security our

strategy that's there. So the

person Fish. a do in because we of people questions. queue. question X Great to I to you, Thank try sure to have we good per wanted keep be amount just

from go to Raymond James. Next, we'll Leopold Simon

that contrast prior phase position like virtualization I of competitive the see for compare And customers see your in of of if today when seems much the wave environment that the evolution. company's of phase position you'd contrast your and you competitive a wanted in you're than your your company's in a to multi-cloud how maybe and frame versus in life? more I want were It big on-prem. could to just sort positioning earlier versus you compare was

Yes.

is as think about like pointed virtualization to And running And of hundreds their for of And trusted was which VMware the server into the our applications of very us, evolution and you core software-defined right, use data by you processes chapter we today, tools the well X thousands that of X VMware center, all if that out, a also their really a are foundation, and So for IT chapter technology Chapter number company, teams, number run customers; to has the and or for did us. as mission-critical that X as X, trusted gone environment of we private we and company. technologies from X, all customers applications. center, are combination indeed cloud their was teams expand our X the compute well. the so and infrastructure. of of all of customers' data

#X. here, for trust following the X of X very, the and multi-cloud comprehensive strategic with a a has and one over else. I is presence customer is #X that point the major are And well partnerships well for very hyperscalers customers' our with and with That's vendor to is the and portfolio been reason: customer of we is we point broader Point only and anybody chapter. the multi-cloud say that is technologies fact, as #X, in very clouds than decades. positioned, the position and last sovereign the our in familiarity the differentiated world. them large chapter tools presence around very And all delivering application we've would the very all as then, Now the the the of strategic all base are us of we have

So infrastructure. it starts with into application modernization. It on multi-cloud goes

name manage of to customers' able Google you or or or AWS VMS whether or using are or regardless are right? able we And then or We portfolio containers serverless Azure they're portfolio, it our of building to top can out connect all well. security portfolio. help we edge the of our with on them as together network the we are and On our networking it, it,

So in if position, are is all And industry-neutral. really, multi-cloud. that that about of think has elements finally, it, there needed we vendor no you you our then portfolio about are other if think these

to to smart, customers they look at also the the help want great as neutral and we uniquely we to Switzerland -- to set want industry. -- we that. which cloud when where, to player industry do be go what are We set with of spin, are cloud strengthened of And them partners, up cloud an our want have figure out become not gets applications select they a but that position

all really, for portfolio, is our and good, the trust competitive of we these the really partnerships of the think reasons, position. customers, our industry position So the

to Citi Bank. Radke from go we Next, Tyler

for This is Tyler on Kim Radke.

R&D we with and OpEx in that have agreements you implications spin-off of the margin place Dell? and consummating, to of the With go-to-market close how about should think the commercial

Yes, about time way. I been in now. I'd separate same for operating the entities it X we've mean, some as think

partnership have with and new been But this a If terrific I that incentives the we've continuing think is we've a for I good think agreements them. and the CFA We on have anything, we in to more established look Together, signed, forward arm's years. there Dell. X-plus with length relationship. working partnership are

and partnership see continue we significant expect grow will that to that while I to have So our to changes. with Dell. ecosystem, expect expand expect don't to partnership we

anything, with If strengths we've any expect P&L you and the just related part. on partners. arm's I already, significant spin-off, think as of see I don't our the that to about agreement and been If length I think growth the we've changes mentioned, to expect would continued the codified

from Brad America. to Bank go we Next, of Sills

It's Adam on for Brad.

dig a kind of right little in And multi-cloud just guys I is deeper. now. you mentioned to big wanted that of a So chunk kind

follow-up, a are there. But R&D segments more lot else the of this what guys as bright spot I then multi-cloud. in are You specific trying a been what addressing of to guys mentioned that has being NSX in just -- a within else product kind you know to wanted address customer and And there's opportunity? wise quick driven like conversations investing

Yes.

me where customer not paraphrase investing we are something, know. your multi-cloud? make and secondly, our going I'm clearly. let of did interested question across question for unfortunately, And in. I is missed if -- portfolio that sure So to in come which The was, aspects

answer right is if let and me. question, the correct me it, that not, So if

So...

perfect. that's Yes,

Okay. Yes.

trying multi-cloud ensure And they're the customers what you in if context to for are manage applications, that digital control modernize to execute phenomenon and think then to they're the trying transformation customers So their their about right? of the at able do, it, cost. scale,

freedom, words, environment they full on in end-to-end. hand, the get while -- to control provide to over So one want other the the to they developers enterprises want they want have

we are heavily. So that pretty are that investments with given resonating that the customers making context,

modernization is application first The our with Tanzu one portfolio.

numerous only cloud, across public it and edge. the all applications their and about it value that across delivers in locations and the it is that spoke prepared in accelerate but manufacturer proposition value helps the deploying and data the of on in modernization customers' remarks, their they the we the proposition So Tanzu not of for across centers in Tanzu Tanzu the growing momentum as choice. on-premise any Azure. single edge And delivers clouds talked tire global is We cloud of fact and seeing their our public

example. So that's one

with We is to Google, with multi-cloud partnered if basis started out on we that extended infrastructure and of the it with because turns all to mechanism. which other the infrastructure majority that -- Foundation that's you use Cloud, half clouds. the time create using the cloud-agnostic VMware any clouds the on-premise, subsequently that to can enterprises Cloud Cloud are of is private AWS to and the across VMware that and second you the then cost half The a present VMware the move to or with the Customers half in cloud are Microsoft move deploying. which cloud

So innovation clouds. same time, another the the all at the of And in one. that's access

pillar of the second our core multi-cloud strategy. that's So

customers third Control strategy say, a to these is our deploy applications of management is clouds, factor. portfolio when management a helps. is all start our I factor, is is And multi-cloud a big networking is of big a factor. and would big because factor. cost across The pillar security. big the and Governance the Compliance last,

areas our is to portfolio where very the So these all customers. are relevant

BMO. from Bachman Keith to go we'll Next,

your In that, to if at And you to that I revenues was you define up and you of hoping last subscription. think the call, about Raghu, on revenues. that XX% for it. call the subscription. will perspective I reiterated think just total to just you. XX% on QX, your you that you've accelerate want how or suggest for move should this is If quarter total of and look pace reported, guidance I of that you were movement the SaaS this could SaaS And indicated

look fiscal So of next go you accelerate of any in Just move total? through year, pricing? we try does up percentage should about we way other any you it that the kind at be to year the the words, quantification thinking features through Is next versus on in on and SaaS of And that? B, and functions? calibration terms A, it way subscription points? how Is -- calendar that if X

Yes.

how any. it. accelerating with the are start Zane we have I'll quantification, if And then So on comment I'll

on recent in So of in allows is because One fundamentally, area we I'm our ways. cloud products think the that services recent that will And or Carbon the then Cloud, SaaS model are innovate very acquisitions faster of this behalf this and it, an subscription-oriented. and focused I'm And most of cetera, a Cloud. products Black on, want have X is customers some that this. is very the think market and are us how VMware we are terms to examples by we to bringing on that get-go et some cloud like Tanzu, are portfolio excited from that cetera. our continue that -- we about accelerating we et The customer of

So cloud continue these in services and to are And new products all this new examples. innovate bring about we model to as well.

which So category grow. category by that's will one this

got is subscription in an business vSphere, portfolio over of extensive sold we like model, those The that portfolio products over standouts are our model. time. and time And of on-premise our of majority including a making today we have SaaS software the second and license all HCI NSX a products products, are available those

pretty a As also able they be both really license using growth through partners model. consume, be will model our be want business whichever channel will we like to our go-to-market our And and Universal have SaaS strengthen we and aspects whether and all or and mechanisms this directly other as how the programs this, customer major business it's much happens, in of subscription this a portfolio -- then to to form license available of of a a our happens, drive resellers.

So increase And our the me percentages to some together, for subscription SaaS to subscription when percentages, growth that, percentage more. a Zane add of in more total and it SaaS turn you also let see put to of over sizable. and become as I expect all that

Keith. Yes,

would you number it you in just XX%, that as quarter. we the pointed exceed for perpetual would by impacted increase year, is out, is think to a quarter-by-quarter, I has at as basis. expect obviously caution business, on a a which seasonal strong year-over-year you which the see that this somewhat fourth I it nice look dynamic

XX% over just -- XX-point average. the will be the So

part in the as call a on this our done and be into that a 'XX, expect look what typically SaaS a see We'll you sense updates as revenue giving area. up think little quarter, it I this as we start have sub both sense ARR, the the area in like for nice this you're past, we'll area. will seeing which deeper area where of tremendous you bit we've of be Undoubtedly, you with saw total momentum at next you in bump things higher. to on focus well without to in portfolio. doubt, some As when the helps give the FY more give you But

but not with we're of mentioned, only is the amount enhancing significant choice. area, portfolio As our significantly a in providing Raghu also customers this

ultimately to across will set, decide it So by encouraged customers part very that we're we're of the how be portfolio. seeing consume product but whole trends actually our

Markets. Capital go we'll Nehal Next, to from Northland Chokshi

Yes. would can thought geos a going SaaS beat And little deeper and we horse verticals perpetual? of to a bit dead go the are customers But you certain dig subscription here. into I'm what that or staying

Yes.

talk So let me actually have Sumit to that.

Yes.

adoption Zealand. SaaS and the would and largely U.S. starting UK and and the in business is subscription, portfolio the where would cloud in general, is with and growing you subscription XX the And our the higher. our Europe expect consider of typically, SaaS countries Australia where you top the just New cloud what think -- adoption in I available countries and is

North pretty business. take in the consistent. obviously, It's typically countries subscription our no there's American significant SaaS So And differences. the lead

Thank you, Nehal.

more question. one for time have we'll think I

this So make let's the question. last

from Moskowitz go Gregg We'll to Mizuho.

revenue while 'XX, for your your you have assumptions Can one risen. assumptions for as license outlook you on you've Okay. the revenue and QX? that Zane, as to guidance. subscription just lowered for reiterated your any maintenance SaaS, have for finer both a fiscal expectations subscription point if for presumably you and well made I SaaS your specifically, on changes not mistaken, put Zane, I'm and total whereas QX maybe

Greg. Sure, Yes.

As change year to as full we out, it guide. slight you relates a have point in our mix

We're of there on mix seeing encouraged guide with that $XX.X the year. biggest good hyperscaler customer that mentioned it's remainder actually as mentioned by elements the of the trends at -- reasons earlier, impact growth as business, bit well for mix That's it that little the that's the still then, I the I And timing billion. you're is the more seeing. the there's as that choice held seeing very we've the driven and for as the we're Now we're consumption sub we've you're touched on and shift and seeing choice. as obviously, SaaS by customer on and a side,

license pure guide good actually then, you forecast as just have look We throughout reflect the element to PSO And the of at increased of that. had our the we've strength year. maintenance, license course, also some in

$XX.X guide still So encouraged the billion think on We We're highlighting components about a that think and trends put the this beyond guide. still we combination we've about the I is of it's as growth good think it. year-on-year the we think by talked worth already nothing out there. warrants we've call, that

of So model same tweaks just to the the a you couple place. gets that to

Gregg. you, Thank

think Raghu comment. final a has I conclude, before we

Thank digital for I applications, all enabling online platform the and seeing control this and will In hear enterprise need and to where all forward our offerings Paul. innovation innovations you. multi-cloud well multi-cloud Thanks, VMware closing, to new you the is to world. deliver accelerate that look SpringOne business. about for customers their for positioned VMworld,

for And your that Thank does our conclude call today. for you participation.

You may now disconnect.