Vmware (VMW) 24 Nov 212022 Q3 Earnings call transcript

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

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

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

remarks, we questions. Following their will prepared take

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

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

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

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

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

diluted share. earnings the performance per spin-off Earlier QX Dell our Thanks, pleased we successfully XXXX and $X.X billion non-GAAP am fiscal Paul. month, revenue of of completed in year strong I from continued $X.XX with with Technologies. this

more have and deliver our As on multi-cloud strategic to flexibility financial a we stand-alone strategy. company,

recently accelerate and their application part It's to ability and of the set their has Education next to offerings management. continuity as VMware automation. of able build cities Customers portfolio information all on-premise needs edge partner a of customers. in for these applications the migrate that a across also deliver the for innovation, cloud-native for meet in to center as two, respond infrastructure to student Leveraging of model and results their an largest and business and in needs to to security ever-changing app business creating now will for are world; our cloud-agnostic our public create this multi-cloud their a In continue to advance improved digital at horizontal VMware are drives three These choose it. their environment the one the to foundation clear better platform more to across expand ways: We cloud enterprise while innovation we with XX and continue the One, of building pace our project. foundation Department VMware deeply applications. companies dynamic of on of customer and Tanzu, app America's optimize resiliency marketplace, students, secure provided faculty built that be and protecting their trusted families modern to vibrant out cloud-first the digital is is focus modern even and three, relentless. innovation space, workspace the the a a infrastructure; to and accelerate networking, for we areas years applications three edge-native with

will which the in offerings Application cloud. secure drive Platform, and simpler any it productivity on make and One beta of more in developers our fashion velocity new is a easier space to for Tanzu the

the now most the is one for industry portfolio Tanzu comprehensive Our and both in of developer Kubernetes experience. operations

unveiled Kubernetes for a and as Control solution users, multi-cloud, and also easy-to-manage freely Kubernetes available multi-cluster platform Tanzu Edition, SaaS Mission Tanzu available, a learners We recently management Starter, Community service. a

leveraging our desktop secure are Cloud scalable firm cloud pleased on a and officers center environment. stories to fully in leading support agents in some automated We customer share the VMware a financial Cloud provide hyperscalers. loan to AWS on a work-from-anywhere services more of virtual across services VMware PennyMac, Horizon and call is VMware

VMware public infrastructure. We also advancements their VMware the worked who provider. solution VMware only preferred workloads for the we with University to their and computing Azure new Cloud, Recently, industry's of cloud looked support cloud-agnostic the on first to Miami, announced

management, Arctic burst capabilities Project of unveiled customers and vSphere cloud deployments. to hundreds of Customers around life as customers on-premises. of management enable VMware vSphere from cycle power the will will cloud It running recovery able to cloud of bring and benefit vSphere be deployments world. an disaster their Newly cloud-based for the extension vSphere will thousands

Arctic We a next portfolio step Project subscription making in will bring our in SaaS the and next year as to available market form factor.

regulated Sovereign VMware VMware initiative, across where Cloud are we Cloud partnering providers a services digital to to customers cloud our infrastructure announced also sovereign industries. on in deliver We

Software Edge stores recently Vendors. costs, countries international we to Continues VMware decade-old In a wholesaler right-sized applications, and solution Edge, bringing VMware XXX to their for offering Project is exciting IDC September Growth Stack its titled set across apps report that is together environment. as single the providing ROI It Management multiple public technology, again Shares, the number introduced an in-store resilient customers modern cloud comprehensive System platform. Compute refresh The serving both business. automation manage with one Market an XX platform the helped the Top performance existing for area now we for of XXXX: Ensemble. a was tech the clouds, a and Lastly, once in is designed XXXX Cloud new capabilities ranked public security, Worldwide for of a and preview management of Service across

multi-cloud delivery the applications combined As organizations and security manage our a anywhere. helping design Tanzu, offer architecture, across a use at better we that applications VMware trust We VMware face a security software, that's delivering distributed their recently Anywhere secure threats today. customers Edge edge-native their introduced commitment clouds environment. is run, easier for Edge, the all power Edge, for Workspace to scaled-out customers space, our specifically to Together, VMware to across will In VMware of of a and better Cloud, zero built multiple solutions cloud model product principles customers use. for with portfolio a solution continued the and enable

about SASE, a Access now Secure especially distributed Edge, in as continuing many businesses We our Services innovation are workforce. are excited working as

and a the We edge In the third XXXX. Zero The as New quarter, security edge, at industry's positioned center Access application or enables cloud Forrester the infrastructure which security also flex was announced networking the traffic to VMware and adjust leader data first QX Wave: as changes. elastic Network app in Trust

Quadrant firms, VMware deliver quarter, On industry work its Tools. selection as core Vodafone single leader virtualization named as Unified the running selected analyst Endpoint all and once VMware a August In Infrastructure recent orchestrate automate with additional again for previous VMware to Europe, stand-alone. Management third on to the front, platform network the from Telco This a in recognition telco Gartner being received XG functions Cloud starting platform. builds its networks Magic Vodafone's recently workloads of across on leading XXXX

Gartner VMware Additionally, again once for XXXX Infrastructure. leader a the in WAN was named September Magic Edge Quadrant

look partnerships programs we these and attracted Japan the innovation new Our to the to forward features, China offerings, many in engine bought registrants. beta VMware is We XXXX, and which coming XXX,XXX VMware weeks. hosting thriving of forefront during as VMware approximately

ESG critical to VMware by and recognition included Indices, our received and Our to by business operations; our agenda broad it By In our culture. to strategic ESG forecast. our having being foundation social portfolio customers multi-cloud Zane multi-cloud. to very a summary, governance by performance important required strive consecutive the I'll our to year. in for environmental, one three Jones on of of benchmarks of for to well trusted unique potential a solutions being their more in over now to as best-of-breed, set business the most be vision; for the as leadership full second world's fulfill we and continues of the the unlock detail serve Dow ways: for innovative Sustainability best-in-class us their partnerships leading offering core turn

Thank you, Raghu.

year. We total of on have was our billion. exceeded was a revenue are strategy. million pleased which our solid $X.X continued Subscription Combined ahead seen performance billion, saw financial Subscription our grew demand and execute was XX% line we of expectations, year-over-year performance, We for initial billion, guidance. ARR revenue with QX. $XXX to XX% in QX up SaaS $X.X quarter for revenue QX in XX% $X.X subscription license and is our in and the all and revenue the and XX% Total quarter. expectations SaaS representing good the of up of multi-cloud with continuation SaaS year-over-year our year-over-year, totaling and

strength as base revenue SaaS VMware strong Cloud in in for XX% quarter the mission-critical The our which contributors License grew workloads. EUC, we the due customers us and ally and million. $XXX largest saw revenue to that trusted and was installed on to QX year-over-year ARR. subscription in Black Our see Tanzu, VCPP, good saw execution broad of their to were AWS, and double-digit Carbon growth year-over-year

is customers investments who longer with our their multi-cloud can resonating are strategy environments. term leveraged that Our in be the over confident

backlog million. cash, dividend our to and Non-GAAP on were X of XX.X% Total income November which with of The was of of $XX.X additional performance fund in with from billion, well XXX of held was billion. shares. and was process. as was orders was available License RPO operating in a our Dell expenses. year-over-year. a term not share and proceeds cash spin-off diluted $X of $XXX was special of count on free stockholders QX $XX.X quarter the last October XX% $XXX XX flow Technologies. X% from current the was $XXX quarter and $X.X flow special shipped due $X,XXX operations our the at all million on up hand to unearned our in $XX billion dividend on to million operating lower-than-expected as other all ended issuance revenue days non-GAAP of on The earnings was the quarter consisted conjunction by driven record $XX.X borrowings million. end control the RPO bond substantially $X billion, cash We quarter orders margin for three export per in bond growth million, million received non-GAAP short-term of share and includes billion from revenue billion and quarter paid from year-over-year, commitments $XX.X up with cash Our issuance. that was $X.XX with backlog loan equivalents used for which billion proceeds was cash investments, together

We offerings. increased and product low bookings Cloud, were Compute which product of our QX scale as growth up to Cloud hyperscalers includes strong was offerings. such are and up over continue saw in Microsoft, Core and digits strong subscription by bookings overall as year-over-year momentum multi-cloud SaaS year-over-year. pleased double We digits, in Management helped and Both Amazon, with VMware double performance We subscription major product we Oracle. these SaaS saw bookings our SDDC Google year-over-year. XX% was in the categories.

QX drive well the balance to we grew shares versus platforms. bookings and an as last NSX up high year-over-year. X year-over-year. average our vSAN billion double of teens offerings of $X digits as ACV EUC bookings through prior approximately remaining our Sub were million Carbon early also product QX, in in the the low new product and on Black $XXX repurchased up Board SaaS at Tanzu in in continue the the and year, double small stock market which We October, increased Directors FYXXXX, replaced authorized Cloud strong digits across our per innovation repurchases open share. price of authorization. In to In relatively in

organically and growing capital capital framework, allocation debt plan our returning to cash to our use of inorganically, both balance excess in As shareholders down paying and through and business a our generation sheet to we share invest repurchases. part

are to we an addition, investment-grade In maintaining and credit committed profile rating.

Turning to fiscal XXXX. guidance for

expectation our $XX,XXX to a growth increasing of revenue approximately X% We are million, rate year-over-year. total for

SaaS. year-over-year. and $X,XXX be XX% to this amount subscription We an combination and of is and million, of revenue of expected approximately SaaS license the increase total Approximately XX.X% to subscription expect

and are diluted margin the We non-GAAP earnings for XX% $X.XX increasing guidance operating shares. on non-GAAP per share to of for share XXX to count million a full-year

to $X.X combined outlook billion $X.X our free with FYXXXX. are flow cash to guidance reflects This QX cash from performance billion. We operations also in and increasing for flow our expectations increasing our

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

SaaS approximately $X,XXX from pace in revenue and from subscription an adoption million SaaS, and subscription of expect QX We increase $XXX the with X% current license million of and our and reflecting year-over-year SaaS of nearly or offerings. subscription

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

FYXXXX Additional upcoming some typically this fiscal provide the in this are guidance on QX call. contained details deck We our for and year time. accompanying color at slide

digits expect our We while are portfolio. progressively Consistent out revenue presented outlook SaaS FYXXXX and portfolio, Meeting currently subscription Analyst the total grow as and to SaaS at innovation making we and the driving available SaaS. Financial across with in and our build to our last subscription subscription products framework scaling high-single we continue the offerings month, the we

growing sub revenue FYXXXX growth rate and on SaaS ARR total nearly revenue planning our are exceeding FYXXXX's. to our with of exiting We XX%

we XX%, initial with our for to operating non-GAAP and in progress normalized multi-cloud and in pleased making is performance this the margin quarter expect We the as of are for of we our reflecting on and customers. more In investments outlook reflected support outlook FYXXXX. our level we are of which in SaaS our and as FYXXXX, FYXXXX T&E continued approximately strategy closing, resumption similar our subscription

journey our turn stand-alone leader. As for are a multi-cloud positioned we become customers' company, back now to the to well Paul enable Q&A. multi-cloud it I'll and

Zane. Thanks,

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

take And Matt ahead. you. Capital Thank our RBC from Please we [Operator will Instructions] question with first go Hedberg Markets.

Great. Thanks. guys. Hey,

we the the all. results you. completing first I than congrats spin License thought. bit know, of better a for First, was on revenue maybe don't and Zane

into help your just was You I'm could drove guys what accelerating talked script, incentives we about And little wondering, doing, a there about trends on lighter fiscal subscription like more little bit in us that subscription maybe that or incentives mix? to SaaS? XXXX, SaaS sales but and think partner you sort a drive tad and you of thought. that color subscription a are as are with lighter, we than and SaaS things

more to QX as next for Matt, Yes. and to And we happy little a I'll about looking then where the thanks over talk question. are start as Raghu year. obviously to into bit hand well

framework I'd First analyst that say, this meeting at was within we discussed last the the off, well month.

the the really So company we're pleased with outperformance that we in for whole saw QX.

much of stronger. SaaS highlighted, And sub quarter. that you in $XX performance number came in the line. expectation over As in, our came in our We had deals license million a and exceeded

there. So increase seen with basis, we're year-over-year healthy that pleased I nice a We actually mentioned, year-over-year. had, ARR we've the a on XX% as increase

you where we trend like in are if license where of on over want expectations offerings, development see We've we it continue the those for products. we the highlighted of the full-year SaaS Maybe, So choosing We quarter develop sub about sub as both heading from everything the course to according was going just plan Horizon, term But different the SaaS. the and how QX the think our in those and to product the the license to and we're Raghu of year. some relates to saw that but products term third versus we next of our seeing Raghu, that same along segments in we've into. some nothing and pleased. QX. made some into of will and highlighted We're get the the of QX touch generally, the that in increases trends some improvements customers

Yes. Definitely.

as us. the laying portfolio product it for is about out We are very excited

have product and subscription SaaS look is as that and talked before we the So One at portfolio buckets. side on our the SaaS three we offerings, subscription subscription. and in SaaS XXX% pure

fashion. We scale our expect start much growth bigger in reach to start to to them and a impact even

that primarily products this offerings that year. customers products Arctic, Cloud Project we factor. and today available and And a are products us. contribute progressively the coming to thirdly, making licensed, subscription a with be will form the in choose or the have growing meaning announced SaaS next as And customer set well our perpetual basically then as factor includes like that them subscription term in And choice, core a which for those really we'll SDDC a they first form are get our or we Management, Secondly, in of we believe can we to call the start of license well. years

product not of and so be and the and these And these incentives of drive SaaS our but our shifts. then the including to drive to will growth. least, tailoring and all combination its drive So subscription sales so portfolio we'll programs, forth more go-to-market even three product on the and place last

Thanks, Matt.

Next question, please.

We'll with hear Murphy JPMorgan. you. Thank next from Mark

Yes. excitement a Thank manifesting how can upbeat on to they're spin-off performance. my but sense bulk next wondering, Maybe in congrats partners the so perhaps at personnel? shown early fiscal on that year. positive staff to from And is and understanding Zane, up you. lean on mobilizing co-marketing, is and up stage? And regarding Dell. I co-selling stage, it's will planning clearly partner VMware-certified very add ecosystem nice your this we've Raghu that very you or I'm

any there's give be might next indicators during a sense of sometime leading year. a fiscal Just curious if developing that that you tailwind

Yes.

said of exactly you month have one seeing are a So pretty the partners. from is early. it's company. you pointed being stand-alone in the said and still that, we lot Having what what as of out, spin We're a

partners or expertise. to are There are from up on and that a to We are staff partners. planning VMware seeing starting sense excitement of their possibility the already

them we further what to partners markets we talking about help have joint could the to in are where other solutions. could We do

happening, these different upon et et these all conversations have So cetera, go-to-market cetera. involve time collaboration have joint technical and line are they or depending purely solutions, started all whether and they

So post-spin I our may of it. not do results benefits see tell the over employees, the next us Like you'll look expect for day some certainly internal to but that you of course will see year. very XXX, start start I the to different, day one

are. And where so we that's

you, Thank Mark.

Next question, please.

hear Lenschow Thank from Raimo We'll next with Barclays. you.

your of bit, As the for terms of as what subscription year part? see taking I change taking one from to getting back and the a the little incentives in think appreciation choice as the sales question, well. talk your you Because but congrats with that's incentives, the you Thanks thing for go Can you bit of do also pragmatics? feels in about my and offering me Matt's focusing on, credit you clients' the SaaS license in question that everyone Hey. is little as understanding a terms license like clients, it don't of and part. around versus more much next

So think coming Or of to where out can that are about it? well? more clients their to of do pandemic kind you. How how more we Thank focus is you do have the as again? influence license

add start can Raimo. color then as I'll Thanks, and additional Yes. Sumit well.

So it One what category is couple I that are of our product would a on view, factors. say point we talking about. of customers' from the depends

consuming as definite think a decided there about SaaS For Cloud if example, is you management shift service. industry Management, towards

offerings management So very our offerings seeing grow we and of are that's subscription we – SaaS for reason part seeing are why nicely. the

designed core help our to on the which to about the that infrastructure, customers is offering, their universal cloud. think you journey is If for

intend end-user And So third which over give then And it customer add terms time, are the the it they a Sumit the starting of to shift period color. on big let in to depends of to computing, cloud. segment. licensed And me they over with very software. often, on-premise is more the bucket, to then

Yes. are you? Hi, Raimo. How

Sumit. Hey,

Hey.

do as First our QX front offerings. and customers talked of for great of all from their looking many cloud own with as because that in their that, and Zane strategies control new Tanzu – is at the all, becomes was Cloud customer build key software, whether how introducing Management And infrastructure of the on partner And multi-cloud I quarter VMworld with our through through event, for forward. well so. in to us their multi-cloud, say that for them it's to engaging as customers addition a their multi-cloud, VMware going about it's they're that right clear would momentum be cloud front served results solutions our they platform gives on Raghu VMware great of plane, the to terms

that and we customers best towards at very, And are them they're solution, and programs they're ready both So and and sort own double using to our our and offers They continuing spend flexibility cloud subscription subscription SaaS very and at pay. they the SaaS to universal on-premise and adopt have and now if see choice universal speed. start solutions to gradually our can adopt and to their to costs, they may, pace gives double to multi-cloud and cloud at where not own of from pace. going offerings universal arrive as our run strong solutions adopting where transition interest pull you having can the their offers, cloud using cloud our just

you. Thank

Thank you, Raimo.

Next please. question,

next Bernstein Thank question you. our take from Mark Research. Moerdler We'll with

the and both quarter. you much, in the very Thank congrats spin-out on

coming much term those license of better is the revenue seeing licenses a subscription or impact, from breakdown before, as the but could using that term the SaaS. give us us can is Thank not VMware of discussed some you're cloud, convert and we're SaaS? bridge To subscription revenue over from and the maintenance you. including you quarter to how help we've licenses to is in in the As that understand

Yes. Mark, I'm with that. happy start to

be to many, not our step see As with Horizon and sub SaaS. all if you alluded for to customers in of to, licenses, term our particular that offering we the

our pleased them flexibility in there transition. So with with seen we're we've customers that allowing very offering the and performance

the license quarter. you the about term our amount, think If license were quantifying it's roughly to for XX.X% of

our point included qualified increase others, bucket. our total outlined number it's to this of We as $XXX you unlike just under So of And years, license we've out, necessarily is in significantly expect the that least we sort today. term. at over in don't a as as million strategy

this it step then sub and more for number. their we SaaS. our this ultimately, we in if and as some SaaS sub products, journey all you, that not will And of moderate color to many, as around So highlighted see we And customers as natural our for Mark. think rotate in Hopefully, adds well. a will

Yes, and happy, Thank it And have very holidays much Thanksgiving appreciate. does. I do healthy really everyone. you to and a

Of you. course, thank

too. You

Thank you, Mark.

Next question, please.

Thank you. We'll hear next from Phil Winslow with Credit Suisse.

Hi. my Thanks question, congrats on guys and taking quarter. for a strong

focus of questions you here Just sort about you and And and using in core X, why two particular, vSphere on they're with hearing adoption Obviously, native customers that what you vSphere together. vSphere vSphere, support Tanzu. containers. a X wanted to update of in release, of with Kind within had vSphere give with Tanzu? us VMware? from Could X an are Kubernetes of

Yes.

So can add and Yes. I'll perhaps Sumit, more. start you

customers forth, especially, in so containers and so the offering. developer to infrastructure build or offering What make while, it successful terms core private have very cloud their it. and as of as of out why as market are ability on-premise latest tend and been a the has seen part become Infrastructure-as-a-Code to a moving containers that seeing, we customers necessary on compelling and X is public cloud adopt of agility it. platform a a for besides vSphere run through they to the adoption the the is reason Tanzu we in key And So greatest, and

now that with are seeing what our VMs we a customers. So happen on containers are the that And on were vSphere. running lot being traditionally workloads are converted these mission-critical that's into workloads and run of

that might benchmark that as The containers can on products. finding thing running on bare the using as it on Xx of to are we our alternative running well get sites is compared published you they as metal noticed density other have customers vSphere

as the appealing cost natively significant in we are density a results on not them, X, benefit, obviously because savings to supporting are manageability vSphere So tremendous containers only benefits you're which well. getting now

it reasons Sumit. it. why some of me are the adoption about excited customers terms some of in patterns, to hand So these are let customer And over

Hey, journey interest, vSphere all, and looking of as excited they're the the adoption. Yes. about both VMs kind they're of platform high early as this at holistically. Kubernetes, containers expanding and of they're manage using Phil. where first interest of high And they innings can in Customers containers X but

adoption early stage. I are technologies, interest, both say, So VMs really from still using a how X But and containers adoption customers those would customer vSphere huge perspective, two and together, good.

we at Tanzu which also solution well full-stack at the addition, to complements to eight of six our VMworld use In weeks. we course customers introduced last really distribution. cloud adoption Kubernetes VMworld, over public has Kubernetes also that Edition stack with with been introduced And Community works and Tanzu entire wanting our of Tanzu the stellar Edition

us great in for as Tanzu Community Edition, So gives time. adoption, well promise tons I'd say X vSphere growth portfolio potential customer even though stage, early the over which of interest Tanzu both in as

Thank you, Phil.

please. question, Next

Simon next We'll Thank with you. hear Leopold James. from Raymond

I'm headwind unable for to in this customers these talk on VMware Thank the perhaps – bit taking you about please curious Simon. is industry Mauricio my This Can in a the from are potential sales? the could about VMware and supply question. shortages of how get you impact for systems some that that runs – on.

with software, from you. Thank shortages the impact that these your that you seeing sales? be limiting So any are could understanding you hardware sell

Yes.

as are note, are of chip the you that portions there significant So economy. impacting shortages

And impact business one existing fact, and our cases all so have have far. our hardware, cloud, of this We infrastructure. are even the significantly the shortages. where where they to like it seen run the out, And in clouds. our have point in is, they're putting not – customers those reported we we on benefits business, in in and they're – on not new lot you software on as then their in even a solution the seen well our across And being new software as of the available cases software of not the

Thank you, Maurice.

please. question, Next

Stifel. our Brad Thank take Reback question from next with We'll you.

some about of the Zane, Great. and I in quarter? you this you hyperscaler-led would rec. would to SaaS line. Thanks rev And very the longer that of Did subscription think that assume be leading business any much. quarter, talked I see last

Hey, Zane. Brad. Yes, this is

with the see see to traction prepared area, we're mentioned on between traction. growth that not the but see does see great now and that and in only growth continue seeing. recognize create To the the little to remarks, point, of your pleased when then a revenue. really all the we bookings ultimately in consumption hyperscalers, that We you're bit the bookings my starting side, we the that across we're delay I

I'd to speaking, for impressed another been seeing. that's tremendous opportunity partnerships the it's us see question continued and opportunities. the the say, partnerships, on generally demand on our we're we with multi-cloud but where we're So earlier consistent, back interest, area interest And with

on all question, front. good Brad. Thanks for the So that

Thanks.

Brad. Thanks,

Next question, please.

we'll take with next our Tyler Radke question So Citi. from

license afternoon. ask to fully good taking the QX like Hey, Thanks you upside I wanted for guidance. my the the side, about It on question. looked through. didn't flow

of just fiscal QX overall, unusual Just And you. whether any curious just with if some for then saw flush there you and what pull-forward? typical kind year-end, you're activity of QX, in comments was activity? type Thank expecting budget

question. good a It's Tyler. Sure, Yes.

good pleased obviously of year. pull point really QX what the all as quite growth we're second is momentum take well mean view the the obviously, you the saw into of but the across our we as in supporting here, we across commentary total out, portfolio. in encouraged guide, we company, clearly heard our the I We're we're with increased in As QX. didn't – the building and the with as And macro prepared of you half remarks

QX. we looks by ability execute it, We at to second encouraged think in looked half we good. were as So our our

a been in we execution believe there is the with pleased that have QX either may few with the deals correspondingly landed in So the saw QX, Board have or we but that and guide. demand the We're there. QX may across

see leave that, provided And for by the I encouraged of high-level it obviously, seeing year momentum at into heading continuing us. the some we're new I'll obviously, with we're we fiscal So for QX. into comments that but what FYXXXX,

Thank you, Tyler.

please. Next question,

Weiss Thank We’ll Morgan from you. next hear Keith Stanley. with

you about of if environment changes on quarter. environment is us environment, years? some you're these shift the taking when could towards going how in and when to maybe how start any should go be solutions what subscription an that guidelines of for the nice you that back they not longer-term subscription? cloud on-premise impacts relative Excellent. couple of I aware of think question of wondering Arctic. Thank from SDDC that transition out garnering and we're in and pricing the you, for Project start terms to we give making the relatedly, was gross have of customer any can And kind that margins in And a forecasting to a cloud that they a as to but making guys

Yes.

software cloud on-premise, very some general, managing we in expect So cloud-delivered this are something Project had, that be service, piece disclose from and a to of and anything premium early and we management yet are cloud pricing the still the the a days, is nature that there that service of present. have we nor because overall, the we to Arctic, would the shipping with yet. is In product we don't because cloud-managed I any – deliver when not usually, shipping

aspect that we to things able be offerings of recovery security important as it also those so like would that upsell, are part allows better Arctic. and forth. disaster of The on and weave so are And additional this Project of part and in today as us to Arctic is priced capabilities

management capabilities insuring expect give the cost perspective, actual a we your not again, solution existing have So of from to that their this operating And is gross And did lower be customer, have costs, of VMware don't to around gross before, allow us we cetera. business. experience lower them will it security, a a their net-net, for et yet, out expect win-win then to customers. these them the Arctic to also helping question aspect margin margin, value – second this deliver operating we healthy not but more be because they

Thank Keith. you,

Next question, please.

with Fish James hear Thank from Sandler. Piper you. We'll next

is update for to Maybe tech we guys. of acquisitions deal? transformational? This Jim. a type to valuations look team still team's larger, a today more a push little opportunities Or at Thank more tuck-in bit the you. there on little do Quinton our could on appetite something get for this for Hey, taking just at an point? for Thanks the us, Are question.

Yes.

So Zane start and I'll can add more.

had as adjacency. acquisitions. vast And or with respect segment, category product we classified significantly into then what occasionally, new we acquisitions. do a we or consistent when do which expand what we a call from By platform VMware large, level acquisitions, enter do product-level new perspective, to a we product philosophy into always tuck-ins the a and majority fairly So be we've of would

that of we've acquisitions, the – only XX, of that In fact, XX over doing have over $X we done four about were nature, whatever, that last, years billion. been

So that to expect continue. pattern I

ago, know, two are of business years the well major bringing our driving mainstream product and nature we of a still you into for areas those As us. we that growth and couple acquisitions of them did

pattern continue So the to well. as I expect current forward going

me... let So

taken on at would organically add, capital that past, as we even we operate debt have as alluded Raghu flexibility to the And special tremendous our dividend, and as just of growing M&A got believe I obviously, on Yes. we look continue the both inorganically. with we've allocation, to. part in we've front the and and the

So we're positioning our with very there. comfortable

Thank Quinton. you,

please. question, Next

from hear America of Thank We'll you. next Bank Securities. with Sills Brad

a guess, wanted the Analyst I potential time? here, to some launches there. innovation of there's Day here. some Great. you Community ask of Edition, lot adoption you where open-source on driving of should users over some develop guys at see application Mesh Thank Tanzu the a that from upgrade activity Service Edition. outlined Community a Advanced taking and the here, that see for for the for question real bottoms-up could Edition, deliverables I you. in a think particular, platform Thanks as you I the question we community guess

big Yes, over had for as people available, seen have to five that of community Kubernetes Tanzu farming. we first nice Edition it had top want on goal sure. the well to We've have And weeks is that for coming in build it. to for Community A we fact, developers four a as that are new over downloads. XX,XXX

the very we well management encouraged by And at which provides so Mission that level. Control Edition, entry as capabilities as Tanzu an Starter are

is be – is of developer when the aspect more and those we that get that operator platform VMware growth, initiatives. is more our one and of start product-led critical aspect focus business one would and this of So

Thank you, Brad.

please. question, Next

Deutsche Thank you. Brad from with We'll hear Bank. next Zelnick

so Great. row for versus Thank EUC now it's quarters opt Sumit. is subscription a had customers two for Sumit, you licenses where much fitting you've me question particular in. happening there My would for product that within within term to more believe in specific or recommitting self-managed something VMware this? perhaps Or is line that within are and Is infrastructure? for reason explain that any SaaS. there to customers

Hi. Yes.

is this little choice. reflection as a both a think of as timing of I well bit

choice opportunity the up as their As window oftentimes they intent up their terms usually are when that we to get stated move the And as renewal that for get time they cloud. with their come customers for products these the the desktops signing for the to And license, to And that is plans each and are sign with with start up the takes is them for I have for customers cloud. over up in and And sorry, window they and when they to their of I've term-based the moving own of it term. to signing past all the the think desktop term adopting to them cloud. the we plan when and the given SaaS duration time just and cloud flexibility they're Horizon, desktops cloud-based own we – timing have ready. subscription virtual at them

the to best to not you by of about lack think So customers business. There's way for cloud. the desire sort the of that's desktops really intent their to take or

Brad. you, Thank

Next question, please.

Thank you.

hear Thill We'll Jefferies. from with you. next Brent Thank

Hey, taking for our question. guys. This for on Thanks is Bill Brent.

around EUC Thanks. the what a noise to terms any wanted the if there's in just been and at of change just previous off going Just rates get there? seeing margin on win the you're question, of Citrix, sense recently given of some and

Yes. add. I'll start and Raghu, you can

that all, with we Citrix. only see virtual that's tremendous really customers interest of solution, First desktop category and our the in compete for we

implementations end-user end-user VMware's than portfolio, had computing of desktops. offers. Our But implementations broader much virtual what oftentimes, portfolio, is Citrix computing who for including not customers first and all, Citrix broader have

desktop and end-user are they customers portfolio certainly when who, standardizing computing in seeing are looking deployments, VMware. at cloud-based their interest broader with We workspace on

do looking more see Horizon from be we now much to who powerful. see end-user in have VMware and customers Citrix used innovation stronger we So looking at to enterprises computing past larger continue at and solutions. And VMware now the

you. Thank Go ahead, Raghu.

also we especially this that significant And combines part has live a that – world obviously post-pandemic the solution and manage in the network get either the pretty remote ability choosing of Workspace provision in become our these the an I access desktops secure have to but a to center of we solutions. or the through applications. when Anywhere in, consideration work of cloud, in run course, the and SASE solutions, introduced ability them and data couple

a about. Sumit much more that the it's solution So talked cloud option fuller with

from Citrix. So very that's differentiated

please. question, Next

We'll Thank Goldman with our Rangan next from Sachs. question you. take Kash

ask – deals congrats. right and your what going just the strategically important Hi. strategically you path? wanted and up that Thank you pipeline cloud your I Thank but expand coming my Tanzu terms week I'll as two Obviously, of is the certainly the touch AWS truly pivotal on the and concerned? as far big next upon in that any could. not is the the partnership so to drivers pivotal to Reinvent particular, And with with that you much there for in is much. headed are One is give well. you you congratulations you do that transformative partnership are Tanzu pipeline progressing company. if conviction provider Tanzu, very or how SaaS, as add Wanted perspective subscription deals pivotal, if you could in AWS, see also, so, visibility comments, in particular. On ahead? the

Yes.

pipeline. me So let start Sumit the can about talk and

as AWS, a items partner, are they with and them. engineering in collaboration continue we've some we our to of and Kash, So deep got you number preferred with know do do And planned our roadmap. that, we

Over our the be using or addressable will expand of that served months so, set further the joint can solution. that next workloads

are And well. to with working pipeline, and we very you is trying if connect Tanzu, them. the things. help cloud before or is turn Tanzu team modern teams in application of to cloud-native a that modern for private well, briefly environment, their been two the do Yes, them with it let I what So upon have the solutions we Sumit them are public going the operations do trying One environment, very comprehensive cloud to me in about and the touch set to the trying provide think of we're over two question. sets secure partnership their a manage application that's

buy them like Tanzu Tanzu comprehensive as very Mission a Service seen of Tanzu all Mesh, course, serve Observability, And we customers it. portfolio. have So into together of products put Control, our

buy into of it is this key portfolio. One reasons the they breadth of

we regardless buy second of they their And got The wins to application reason number of wins is cloud is available network the into it on them number a Azure. where have running. is of that on fact AWS. We've a this got data

we is to still part have there wins is But yet. announce Tanzu second don't on excited of which portfolio we as transformative reception then developer the vSphere That top public well. wins Application Of of beta, on are course, the super on choice. as Platform, got the about their we've to both. the cloud And productivity the Sumit? of accelerates so

off Kash, on I'd cloud add – with I'll start providers.

of to we and on target expansion sort portfolio on of of the across zones last introduced where such about integrated Tanzu VMware the VMware on services all Cloud First us larger of service during now excited of Cloud that Outposts. base as VMware sort the available expand federal as that Cloud sort well expansion newer AWS is have as customer hyperscalers, Certifications did I'm we front quarter. services all, on to AWS

are of able we opportunity cases leads new to that and tremendous that to use So all serve.

looking without at our are cloud trying scaled and officers, as out services our solution. them that environment. of of loan picture – that And to to financial firm services, fully sort provide what I story give do talent is why all would a with touched. that center predominant you Raghu modernization Cloud their reason seeing in were of in provide that's going of we our for you they're that winning their our where now predominant own VMware a infrastructure all required which automated time, to cloud neither And our looking now sort of cloud wins that how and through gives infrastructure full call a win to Now the a already at is terms solution. customers the all cloud best agents, of are providers of we – our think have as have use would And possible a cloud Tanzu, across I are then service

start about applications we module time Kubernetes with platforms a modern talked Raghu seeing customers very from in across are multi-cloud, full at either For of or this point using one easy-to-adopt very, that fashion adopt our Tanzu.

Thank Kash. you,

Next question, please.

Thank you, Raghu and Sumit. Thanks so much.

with you. hear from Keirstead next Thank Karl UBS. We'll

of higher revenue bit acceleration your transition larger what despite license fiscal little as X% in upfront growth than wouldn't pressing some your rate from guide little That's mind pressures year actually was a scale, impressive, XXXX. an I bit sure maintenance growth Zane, I subscription. you for from I'm single-digit this high for XQ on are despite modeling. exit a Great. to It's

could unpack a Thank you it's two might secondary see little whether and So where half bit you. weighted more second whether confidence comes you ask be I if confirm to that organic? if that just from questions, wanted might and it entirely

a so high obviously we it. give off, appreciate commentary Karl. I level, Sure, I'll you, first tell it on the at

into a of teams, will first your have we you, side growth heading our an particular, the we the we're and strong across that mix of we portion portfolio half. side confident license And second really of of our the only continue then, conjunction message the customers momentum I that get side, the message marketplace, growth that's sub ARR tell products sales you've and and as to drive believe that of all to seeing, second that continue the deals FYXXXX, in bookings pipeline as ARR drive breakout look sub the we the Sumit's and negotiating we're it's have, of the and and our you for to to point, third confidence performance. that, on-prem heard continue the obviously, us we and but on in multi-cloud be and we that Raghu to to than portion revenue at product combination saw into it on next half. for with detail go-to-market resonating And at growth that not and deliver here the portfolio balance now the expect on-prem I the right we stronger into will reasons recognized going – that seeing new performance the portfolio, with element mentioned as the in year year. a of the lot look see our resonating are not that already quarter, is can the the will the the and on performance sort which had – this in between year. with we continuing the then or the I'm SaaS And that we're a then team year, mentioned. at When as on that each SaaS the operating be see So the portfolio. to

the next the for question. obviously, come and of our next lot against the to execute more a So the gives backdrop that that to we for fiscal But outlook us thanks believe we'll year, call. on

Zane. you, Thank Okay.

Thank you, Karl.

We have question. time one for more

last please. the be would this So question,

take We'll you. our BMO. from Thank with Keith next question Bachman

rates, applications. growth that applications I I your management, very growth or running to it terms on that or rates growth to management applications. does hear And over characterization see the ARR and wanted XX% of versus a changing but the and/or cloud of like contribution in XX% applications of of of existing cloud on to – get next And I ability has want this but feedback is in your of the apps wanted some continues invert. are two to In about Good on direct Thank on-premise, new over talked think a of begins the VMware's that attach not new What new if about you. you I – cloud, could would the as lot year for And that begins you mature? particular? existing to, VMware Tanzu Raghu, past to win transitioning the to to would much. to to applications how today time evening. look is running try

Yes.

So public as we see Meeting, I've spoken about in respect an growth age with Financial and applications. data well. in Analyst to And explosive the cloud, of the in we in at clouds obviously, growing, are and edge the applications as centers the increasingly private

out three higher, I the of are in depending applications a to new in. analyst think industry two little which on cloud analysts some by public believe applications are estimates, –

Tanzu the we've then with set top go applications we to the the the VMware as see given private Application are into edge, providers, make well. last, applications Similarly, new to platform of significant task build on center, clearly, on and not we capabilities to large we our use that into data of are and But there's pretty edge, a applications our on going And public the new clouds Tanzu offerings our recently et they as Kubernetes on easier. on of applications because at Tanzu cloud preponderance Cloud public customers got but platform that on infrastructure. on there And cetera, as then just use to land portfolio, we they start those as added center providers' cloud, to to and gains capability well. top like least, to out the of offerings. starting those our presence for the the invariably data infrastructure platform. align seeing applications more as well Platform, we tend in So land well cloud applications a start introduce maturity are as the new landing applications The Tanzu cloud, as the VMware building tend as cloud applications the our public – the the

new getting see the share to expect we well. of as out, those cloud a build good applications we as on public So

you the applications. on to whole, are public if a data new look we at chunk cloud capture edge, center well good positioned of So the

Keith. Thank you,

Before I we conclude, had to Raghu, you concluding a make. think comment

Absolutely. Thanks, Paul.

our Q&A, distributed navigate What customers the the they for I us. wanted to VMware summary, providing for say and to is platform spending to in for thanks the era. and as So hour multi-cloud with an committed software thanks ubiquitous

serves we especially least, but We have portfolio have requirements. and have a and the strong fantastic a team, great growing a customer ecosystem. we And last that not our critical post-spin,

have well positioned really today, succeed. to great for we a So Thanksgiving. are and joining Thanks us

thank Thank you. conclude today's your And you may do you for now and We disconnect. that does participation all conference.