Vmware (VMW) 25 Feb 222022 Q4 Earnings call transcript

Good day and welcome to the VMware Fourth Quarter Fiscal Year 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Paul Ziots. Please go ahead.

Good afternoon, everyone, and welcome to VMware's Fourth Quarter and Fiscal Year 2022 Earnings Conference Call.

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

their will we prepared Following take questions. remarks,

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

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

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

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

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

from $XX.XX and an fiscal an a fourth the end you X% Revenue for $X.XX X% increase Thanks, quarter was billion, a increase fiscal for afternoon Paul. good 'XX. fiscal fiscal year of us. billion, the QX year of to 'XX was of Good Revenue joining was fourth 'XX. year. quarter thank solid for year from

to exciting This explosive as organizations enabling and and enterprises. next consumers run is we from and to characterized our We emerging large transformation by are digital organizations devices. modernize data in delivered applications and smart on in the transform diverse secure is vendor it new their become and the to this be multi-cloud new of software-based business era, transformation. what edge powering aspire their enterprise centers platform world from This an multi-cloud, at an cloud, small phase experiences growth digital the of the is to and the distributed leading employees of applications We and from build, industry computing time technology. and call businesses

have progress drive that are to innovations start We the year the over At areas made help opportunity. customers' to focus our past XXXX, with the of shareholders. and fiscal for highlighted pleased the XX this we our value continue months we drive will capture the

VMware innovation of faster a deliver a multi-cloud have smarter which accelerating and delivery is begun to and on first The offerings, the path through to customers Cross-Cloud integrated focus of the our designed offerings a cloud. we SaaS set Services,

on focus a is and Second accelerating subscription SaaS offerings. our

'XX, and subscription Universal. of fiscal At year Cloud the our made from revenue our of SaaS VMware XX% end We launches of Universal vRealize have overall progress revenue. rose to offerings and including the here, strong Cloud

year 'XX an The Fiscal accelerated year make year from us our 'XX become fiscal spin-off multi-cloud Technologies Dell position this a beyond. will year completion to progress well new drive of stand-alone in this positioning and of our company, important to a become transformation. the successful us will is to Third is growth Switzerland we in industry.

During achieve 'XX, offerings. we as to major subscription or fiscal our all SaaS products available goal year making of our of expect

offerings available our software, further Specifically, model offerings transformation. will our accelerate joining become SaaS SDDC will as our all security Tanzu, cloud-delivered business and help of and cloud end-user management,

I'm are making is we about are in portfolio. across we the efforts this specifically go-to-market our to capabilities The secure on second offerings drive application with our multi-cloud X order their area providing and our to focusing One progress product manage innovation, excited our multi-cloud app is customers' help and by modern platform big on workloads them customer management and and capabilities accelerating solution clouds areas. DevSecOps transformation accelerating build, a modernize customers' and management the cloud all delivery the is edge And their this Two hyperscalers, future. any clouds, Tanzu and private apps cloud. major accelerating workforce for modern Cloud Workspace VMware is enterprise to built of with and migrate solution. to vSphere, of vSAN. ability on today form three the distributed and the core sovereign Anywhere of the an In NSX

securely new consumer VMware By a utilizing they consumer-centric experiences. and the who's portfolio Horizon experience next-generation QX management cloud our space complete new The digital available. technology accomplishment into partnering company accelerate attracting customers solution. build are and developer application easily Tanzu platform more application platform, was solutions Kubernetes for foundation. by transform Customers health their offerings them Carbon including, Tanzu Tanzu our Kubernetes deploy through Tanzu SASE, VMware making and of Workspace on development can of leading Our acquiring build see application any operations generally solutions services this ONE and customers. our accelerates helping innovation existing key Tanzu their applications more care and with environment customer example, to Black and evolutionary delivery VMware We offering, operate for providing new this and in them journey while leaning cloud. A any VMware opportunities an a differentiated in

organizations consistent management As multi-cloud operations. establish and looking also to are we help modernization, infrastructure VMware to customers app offerings accelerate application for

the a gap control plane across and any apps Cloud VMware central the clouds. cloud as Our cloud. using customers' bridge their customers a play are cloud required our and Foundation, available the in the enterprise offerings in both modernize at and VMware digital VMware's clouds, on our public the and hybrid to management Built center, telcos across that infrastructure modern everywhere: hyperscaler now capabilities Cloud foundation. key trusted role modern on security cloud is Cloud data edge. private VMware is in sovereign management and infrastructure operational infrastructure delivers on clouds, resiliency,

cloud. speed adopting VMware Our to customers and benefits their the using applications and with are pleased get they by when the cost deploying

establish example, more for For workwear brand critical workloads an deliver cloud reliable The and e-commerce solution environments. digital company, premium workspaces. exceptional apparel Azure VMware production American Carhartt, a infrastructure to easy-to-manage, secure and global use

hyperscaler stack in component infrastructure which continues for our to leader to is again VMware Gartner infrastructure cloud software a being the vSAN, recognition, receive hyperconverged November year, and Quadrant even This to key our running in Magic including flexibility look advancing Another named with support greater XXXX. new releases differentiation and our workloads we for software choice modern of for forward offerings. with vSphere

to for see continue customers. We providing hyperscale our momentum partners, choice with more our of flexibility cloud more and all

also our with preferred providers system relationships We customers' their and support integrators.

app Kyndryl expansion reinvention, organizations our For with services. example, global business to partnership an strategic IT we of on and multi-cloud modernization recently announced help focused accelerate and

consistent X-rays from comprehensive the A with and This remotely pandemic. that these tasks. opportunities we friction Their Their up access and advanced now researchers offering networking bandwidth-intensive have including and researcher our security of in This SASE security. networking data management, anywhere. critical Anderson has the and Cloud freed well the time physicians trust Cancer powerful key security is focus has ability work-from-anywhere Anywhere VMware SD-WAN, across more work example use their researchers and cloud MD endpoint of component during Workspace, to and SASE, customers helping most Center. edge, patient all to distributed experiences care security a Workspace services security multi-cloud as employees. and NSX enabled have Carbon in creates broader through sensitive which by our Anywhere include on exist better all visibility connectivity, of SaaS user the powers as services, services, like removing IT effective zero between services Across and set fronts. employee and can today's Our as Black workforce of systems a to providing built networking,

we We reduction. XXX, comprehensive environmental fifth and consecutive recently overall in a was in into year. to the all continue for and ranked This year, VMware the performance, our category, social everything ESG stakeholder commitment companies in Just embedding the governance pollution of #X ranking and recognized environmental, leading products do. we sustainable

opportunities on Additionally, with on among and in fiscal of Places named the Campaigns equality. In 'XX the summary, our was Foundation's Rights we our LGBTQ for work the year pleased Index in places named about Human to social the by 'XX. and and impact Best XXXX are fiscal to Equality Work XXX% year excited Corporate achieved one best progress front, Glassdoor VMware

on customers' digital innovation We focus next providing and our mission our phase business on of software model expect trusted as of to the the our accelerate make unleash foundation to transformation. product to we significant expect progress we innovation,

fiscal 'XX to all for and you drive look fiscal as partners, to 'XX. stakeholders. our team value to close progress for our helping accelerate forward successful continue Our year 'XX our we a year fiscal year position us and will in to in the great Thank 'XX of a customers, VMware

$X.X Total given billion, Raghu. year financial 'XX us Thank our for revenue FY We're XX% and have billion. full results, and license with pleased positioned well and combined you, the long-term beyond subscription quarter SaaS our $X.X revenue and for to financial year-over-year which model. grew was QX fiscal 'XX and attractive

of subscription $XXX QX million year-over-year. and XX% SaaS Our revenue grew

subscription us billion on and revenue and totaled the which 'XX. 'XX, revenue, full year XX% SaaS to For billion for surpass $X.X and total track of revenue puts in fiscal subscription to SaaS fiscal increased $X

Horizon, million cloud revenue grew License for X% in was to moving X% license term million, $X.XXX $XX This maintenance $XXX year-over-year customers year-over-year, billion. was Term up million revenue in revenue $X.XXX comprised an of VMware Cloud in infrastructure license revenue XX% $X.XXX due 'XX, revenue revenue for user the includes and AWS comprised for surpassed Our up End the FY FY and expanding SASE other QX billion, end VMware QX, edge for million $XXX license infrastructure up such QX. platforms. product our ARR edge. and subscription and revenue increase our Cloud increased user offerings time. and ONE, SaaS VMware and FY as Cloud first SD-WAN. includes FY in software Cloud to billion portfolio was to growth and Carbon year-over-year $XXX such cloud with $X.X and management, and on VMware solution QX areas: full license 'XX. customer offerings, Term Black from from license billion. subscription 'XX secure X Tanzu and Services Total to of was from on-prem new as and XX.X% of subscription revenue in year secure 'XX. hyperscaler VCPP, approximately on X.X% SaaS year, the to And up offerings. versus and full offerings, Workspace SaaS is

provides base installed to enabling as an SaaS, delivering large subscription additional innovation continuous opportunity recurring and opportunities. to customers Our well streams software convert by upsell driving cross-sell and incremental as value to maintenance

stronger early included per in our RPO over operating billion, X% Total share earlier. Non-GAAP count quarter flow on bond diluted August cash consisting cash, operations as dividend of QX, operating margin was cash 'XX of This $XX XXXX. year-over-year, November revenue was result cash the for of due in income XXXX. due last billion due payments billion of due billion. with all down to $XX.X due $X.X in $XX XX% referenced income billion, up XXX non-GAAP the loss and was higher QX was SaaS non-GAAP and FY $X.X $X.XXX billion million. free $X.X $X.XXX In with FY $X.X orders total $XX.X current subscription growth QX bookings that the performance quarter and for of the strength of and both QX the stronger-than-expected was and of share X% leading XX.X% billion, equivalents million debt, flow We of the term on which million making well and quarter for in expenses. our in of flow X, consisted which $X.X this as I We $XXX of billion Cash $XX paid of to on bookings, bookings the Our progress received short-term revenue a $X.XX shares. was to Subscription indicator backlog was we backlog in billion cash cash was of obligation lower-than-expected investments. $XX and earnings from License we're at QX than bond orders the In August in other quarter was $X expense Other our the operations multi-cloud and QX PSO. of in billion repayment SaaS of at beginning ended billion, unearned were year-over-year. the to days special timing export with the from P&L for tax of $X.XXX the that million, substantially billion. 'XX, not and end control solutions. shipped increased up year and our million expenses. process. quarter loan was excluding commitments held are RPO was and paid in X expected

double million in year-over-year. driven and our double and grew generally bookings and and at infrastructure, In includes the cloud mid-single grew product bookings per year-over-year subscription area, & repurchased platform, new market low in QX solutions license compute, compute grew average digits. the such Cloud. QX application the digits we application digits, share. in QX. $XXX from our quarter. platform bookings vCloud X.X strong in bookings, networking, QX, of the high were Suite open price In as management VMware which in up growth include NSX also and product double-digit strong in teens had product was the Tanzu an available SaaS the approximately EUC We by vSAN shares cloud contributions VCPP, In customer in year-over-year to with cloud Turning management bookings. interest became our product storage pleased which the which in

of Our billion. framework remaining use capital $X existing excess our unchanged QX, and At paying billion the sheet and to our to capital our repurchases. invest shareholders generation share end balance on in we had debt through authorization business, allocation as approximately to plan of cash growing remains repurchase down $X.X we returning up to

Turning to guidance 'XX. for fiscal

the to preliminary be October as revenue well billion, consistent total with outlook for versus 'XX. year laid the 'XX our at increase the fiscal call. framework is Our QX outlook as of expected out long-term FY 'XX provided our on meeting last analyst is $XX.XXX X% FY an

top previously, increasing SaaS license approximately for of SaaS $X.XXX believe subscription versus revenue ARR reach FY SaaS subscription discussed we growth on we and fiscal and billion, combination help development exceed to value. product and growth 'XX. and nearly we've and up subscription 'XX. line for subscription go-to-market offerings, total of XX%, product to we're SaaS our and We which plan focus SaaS for and future As XX% be an and expect $X.XXX rate to revenue ARR growth our lifetime of forecast XX% will the accelerate and FY and We customer revenue billion, SaaS 'XX of subscription increase subscription rate for fiscal our with 'XX,

$X.XX We share our count share of the of shares. for which expect expanding XXX to per we a on year XX%, expect non-GAAP operating non-GAAP million of margin support be investments subscription full SaaS offerings. And in and earnings reflects diluted

of to outperformance on forecast the we due of year 'XX. portion flow cash resulted the a strong by we million. from over us QX, free operations cash FY timing, As I $XXX impact, from flow in that which cash cash and in operations exceeding expected our guidance $X.XX in flow upcoming earlier, of has billion into $X.X flow Taking billion currently mentioned account had

with approximately of of be X.X% For and $X.XXX we license SaaS million, combination XX% of QX, or increase rate a up subscription and year-over-year. subscription XX%, to expect the revenue SaaS billion revenue billion, approximately of growth $X.XXX year-over-year. total revenue forecast an and of $XXX We

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

for as details well this in are FY considerations as call. including accompanying to related deck guidance slide tax rate, 'XX, QX Additional contained the

VMware's results us Our we the the multi-cloud across consistent drive our as platform, further strategy QX innovation quarter and performance helping financial accelerate another mission-critical FY This customers SaaS to metrics. subscription given becoming multi-cloud their scale delivered Closing 'XX performance year, of cloud. marked customer we towards our key company journey out continued progress to a enables portfolio deep of and relationships.

expansion Our shareholders and for subscription SaaS I'll value continue turn Paul deliver business. our grow Q&A. for the and to portfolio will we it back customers as to

Thanks, Zane.

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

Markets. Instructions] come with And will Matt Hedberg [Operator RBC our Capital first question from

strong the year. close on Congrats to the

the roll to you're bit you Can SMS an fiscal to perpetual reacceleration how in that go-forward about incentives and it being a was SaaS. talk great plan license all, you guess as And of Are in on the basis? available And how option subscription of more all sort 'XX. I any see offering I of do conjunction sales contemplating? you think we about products First think about option, there the out? that a that, license talked with

Matt, Raghu. this is

Before answer really of let comment obviously for And the in as our the larger all turning impacted, all customers those cease are necessary conflict global preparations all of our FY supplier, course, are back in as Matt, question, And everybody we that, very your with And as for my yes, and critical affected well. partners employees those of that's 'XX. happening been about us soon. And news. sincerely are excited the and business take and thoughts made with the including on are our we for Obviously, and have to news, is we infrastructure response your a the continuity region. the all and our the a hope hostilities I have impact that much to today's scope minute me question, horrible Ukraine involved. watching seriousness, events

accelerating this excited times process year. as our this set finished last both type is and them 'XX. key SaaS very occasions, multi-cloud X with about to on begin call FY around to second opportunity, of pleased up objectives was other the and before transformation. many And of have out progress X And innovation the spoken goals very we're on our are for on make. progress year: a We subscription are we of last key we one and We made how we year, accelerating the about we significant going

our you nicely product up we've at accelerating for look set multi-cloud the innovation. very If ourselves portfolio,

nicely. Our to Tanzu mature operations continues Kubernetes very

GA-ed was a security it that cloud, a on accelerating from our in all have applications the capabilities Our or And Cloud in going all lot strong Tanzu they're by are year that these and platforms home. our of the make problem the to the course, VMware platform our lot attacks having customers on building to terms And quarter, of from this helping very this a and portfolio second customers enterprise employees of in is, their helping customers part the the then, cost. makes fourth received sorry. interest for year, application that, of available facing platform cloud premier new of enterprise on of application applications. a top we majority available because -- applications has last work that of the more course, are of we're new path and take their to resiliency, customers of production -- And when the made

products that experience portion on A subscription, be about lot of So talked so of security, are previously for compute of better respect other is and we year, as complete doing. the bringing with employees. firewalling these the of to the course, as innovation SDDC our forth our X achieving what these Project availability with job this things part second general are to us and planned, respect subscription and And respect available having All Arctic in that of we're of that excited available. our will and happens, all and web about, we so portfolio the cloud the of have NSX. This availability of taken very And with that significant innovations initial then, combination question as All specifically so these is QX, And with in are year, and excited efforts part years. year. that in making of Anywhere digital that areas. multi-cloud-oriented, your them bringing we'll I'm of our SaaS. all milestone to very that, we the Workspace each SASE and to that are the this about vSAN

and a On rates towards and side, the the initiatives definitely offerings thrive so are terms to and the are with coming lot capacity, sales that subscription-oriented knowledge capacity in Equally of we we the importantly, marketing on. the folks our model. business our adding in sales SaaS with pivoting a of in subscription and sell are how new gates of and

arming our right We are of also partners set the with certifications.

alone, our -- got and partners and year Anywhere solutions. cloud Workspace over our around certifications last the in Just Tanzu XX,XXX infrastructure partners individuals

our are -- our integrators. We accelerating in partnerships with our reinvesting global systems

environment. just Tanzu, on cloud-native Not is example. kind seen a growth in seeing as deals running running BXC we about Seeing have applications as forward this points, similarly, Kyndryl, of and call entire subscription out very our significant as that in we and announcement in because saw top be of one classify pipeline deals in a year we in in volume would SaaS midsized customer and to and Tanzu might releases to we with the technology points customers of our that's points customers on of a of our publications it well is up such website global that And also even the You put enterprise put but that now We that as And coming really carry global a needs the talked as we other proof environment are well. their a significant so expect the on lot integrators. our QX, emphasis on and that the around. mission-critical right? mid-market. advanced that commercial our publisher -- proof system not global just classic proof press And

across of examples seen every have one these. We

seeing encouraging points So proof customers. in are we

preparing are our channel. We

our preparing force. We sales are

our subscription We the product importantly, then to that portfolio most side. incentives And SaaS. towards multi-cloud innovation towards turning tilting and is and are

'XX. you of does all excited our are Meeting. section personally it talked we buy It large -- customers, it customers that put for growth, Financial Analyst future regulated revving license like our are FY very industries, especially at feels et we if So about about the together, prefer engines am telcos that mean I and to licensed products. for like What cetera,

So and customer the license organization from license business reflected our subscription type to us. what upon are we to greater is guide. receive But focus in important depending you And preference very go-to-market general, is is, year, your what either expect, or of our in will subscription. I and sell all a this that them

with mentioned, our the what Matt, Obviously, to more sub into October. outlined I'll Financial is Meeting Analyst just framework and with and last we you aligned add. even SaaS, we're at which others leaning Raghu

mentioned, SaaS XX% we're and So as I as up have encouraged and a saw in we we'll FY in billion, by to we 'XX, of sub look fourth revenue on quarter the $X basis. momentum the excess year-over-year

revenue the call. that commentary 'XX QX be has So in out as will framework well -- I the well aligns laid our macro, as with been into as guide our had incorporated last FY year as for we incorporated ratable the which

by 'XX very encouraged ahead, with we're So and FY even the beyond. and excited opportunities

with Lenschow Raimo from comes question next Barclays. Our

at that of will terms doing these are in et kind looking of of in also of you Congrats are pandemic behavior now from there? few now, and a coming cetera, terms product this you broader I've decisions more and asking are Are out bigger incorporate you see you're what of more the as coming out bigger as What quarters comfortable been to you customer do question it's help seeing to me again? strategic decisions, appetite? What seeing for around set? they care in kind and well.

a I'll add start Sumit some as and from well. Raimo. customer perspective can Thanks,

are a in significant employees digital accelerating accelerating certainly and productive and digital remote work we matter making applications better strategic making to be cloud, more enterprise their cyber course, and all of delivering their experience. transformation, a in seeing So customers the context of -- move the from towards having moves

as are general more the we well primarily as we industry. strategic these bets are seeing areas every make the in And So in areas company. as with customers a X focused these one that in of us on are

wins So that's the pandemic, design we to that seeing. this that point seeing respect are cloud-first. enterprise just what saw we Tanzu, out pretty are cloud, direction. being we cloud-smart. to some looking becoming increasingly With see applications Coming In we about It's not the in moving of accelerated. significant They're customers well and new their going they're at which they as the And how portfolio which the this application completely, to to set of sort set the rewrite applications applications want center. of which applications on. and going on write AI deciding use so addition edge cloud, in of they're to deploy to data

spread portfolio we out. seeing application the are So

to approach approach given want of a to cloud-smart Which developer like or I it cloud? a strong to these having And areas sort are from specific portfolio and a do which environment, want distributed as it parts plan that says, particular having in in be customers a look, so-called a of so the emerging there where interest is the common. of a to it they security having or be want do control common, things management experience be I parts

So applications see large you on a I'll example just where initially Sumit that AWS Cloud bets. VMware give handing our is to business One to Tanzu publisher for this we their on before of of the to the with set And cloud-native AWS. having a on in quarter, bring new us a last did applications. portions then you they cloud-native strategic is used enterprise

one example. is So that

more and examples like more this. more, and are hope we to a so we seeing lot And see

Yes.

seeing the on applications enterprise taking is global in we Raghu these to of business of touched banks, and thing are been they're are hardcore those the And you are architectures enterprises when involved any cloud, industries have large Raghu, core other using enterprise at who telcos, big I their consulting not been only regulated large solutions business part. they're that cloud-smart have think, their path large add like firms, I our government their a adopt functions running the interested in cloud-smart applications whether mentioned. now core to besides would that viable looking agencies. manufacturers, sort with enterprise, Raimo,

that's So again we extremely 'XX. going great are FY QX, a in and in wins encouraging. We of into few saw that demand interest seeing

comes Murphy from Mark JPMorgan. next Our with question

I'll my add congrats.

Omicron December out is some quarter tangible effect just the mention to interested pulled some uncertainties of into that? its results, you January. since you variant, first of did of the are any to sense with very And Raghu, it January guidance of any you So the in into software pushed companies I'm and for one maybe reporting Ukraine the be the since from whether or disruption VMware kind either related end business conflict kind perhaps the embedding -- ramifications,

Mark, I'd the then see add. this any been start quarter. pleased namely Raghu regarding the if strong, the very we've were within the that Omnicon obviously, parts areas has I'll anything subscription impacting Again, we're linearity Zane. on, business. very SaaS particular, quarter. we're that of say and with throughout our even focusing appreciable we not Bookings quarter movement is making the progress in to or and the did the

it account. bulk relates And by and internally. taken, of at of that. that, more -- the I'd let broadly day expectations and But again, are things how the here. as on So all weigh it I'll sort we're than it say, we'll we take very regarding day with to into obviously, Raghu obviously, very pleased account I'd look take obviously, it we've of macro, of we our see the macro year. the broader sort as say dynamic, But exceeded into we

Yes.

-- clearly about think I Just account tend to just thinking tie changed And all digital the and advantage of new themes course, business learning X it December, that, is what expect their be building Raimo's to don't last and the trends point, we will couple years. taking said December year it want takes written to of adjust. years, a these day. are over data, back secular. a more capabilities things X, things last customers machine application fairly as of strategically to when trends those out around over honestly, cyber, it, the the do and that you to time. it into where in years, changed workforce, about portfolio, our right, our it these the have and And the next And evolve, But view in day edge, next I quite planning and to supporting the more we done remote during not is cloud January and in not X, transforming like to have our of better having becoming company, change -- every have every and appropriate, November, point add in -- of of a the that, see X but world they

their that at are all are If these themes to you tend getting the be budgets, budget CIO more look They of allocation. software.

turn spend of outstripping spend, And which spend. Software GDP IT is these in trends been macro. outstripping overall have the regardless is

Research. Moerdler from come Mark Bernstein next Our with will question

of from how expect with and that new are region. you cloud? sales now going forward? versus much cloud review and maintenance? And how seeing going when workloads thoughts subscription you to our of you're to do they and and forward to you expect lift and move Zane, questions quarter, as subscription the separately you. How the And X the can those is have change a on existing revenue this impacted in Congratulations move for much I coming related Ukraine

impact good I'd then fourth here, ourselves. we and out million. Sure. that and that at There's approximately that annual were mentioned in call say we're as comes That obviously if converts what the, them to impact was of software the we SaaS. a we $XXX take a but as what value quarter, significant customer side, in I stream is coming of my believe the piece that's maintenance the which convert remarks annualize our seeing to sub be a prepared through would premium, the well offering to that's normally Obviously, conversion lift it we

was for the the be It successful program. a fourth number very So quarter. continues that to

entire the As percentages, XX% for our installed our bookings of quarter. the sub continue total about with we revenue think opportunity we the look more base broadly, being we to to and that and see growing highlighted SaaS

for with, it was So we're for the bit a the year, quarter. least little at pleased very higher

not opportunity driving. the some with the installed the into value Raghu cloud-native with but even we're cloud-native. applications pleased sell products So of mentioned, only base, we're we're the candidly, able where with to

It's than with into So installed beyond customers. more and existing FY extending base. the we see, that obviously, just broad I'd say base. And it's beyond and that installed 'XX benefit lot a new of

Raymond to Simon on with James. Leopold moving And

tough maybe talk if just basically the It you could you've the looks in to in want deceleration got change to revenue really a see comparison. I like plus bookings, RPO.

good unpack as wouldn't us very you single as understand had wanted just see is that could you growth. point. from But maybe trend this to data whether the deceleration. if current you Help a extrapolate bookings or So sequential that well

Simon. is quarter. external sequential the if less quarter sort you third of you beyond highlighted, the in as Sure, bookings, phenomenon purely relevant look to at a quarter-to-quarter fourth Yes, part that, there's of

It navigate and what pleased towards So been. quite that. we've was is tend little which to we bit more with where number, CRPO X%, was under a we're the

a mentioned, the we between doesn't versus convert even that, it you We're or on premium to still tied categories bookings, and consider of a to show on on and impact getting about I of those other the that term have of an saw up but to acceleration does and number in deferred. conversions you some sub sub Mark's SaaS-type because bookings you when deferred less with and the that And when -- nice necessarily our even SaaS. when that you some with SaaS trade-offs tend talked just it of question, in on-prem up conversion. RPO side booking areas don't because As balance sub an booking, of the show some sheet I have

If well a deferred so part year-over-year take that sub deferred see you on you XX% of of RPO, you'd were isolate just just SaaS the over to basis. up portion account, that the and

that we're don't hyperscalers typically trend look the either. have products basis, been I'd AWS with comfortable tremendously them. with those like on at those very outside we associated any lines, with as and So of also growing have a deferred a point have them and lot year-over-year VCPP we out

bookings, comfortable that numbers booking is which mentioned, I I why over the as the at portfolio. very the called total with looked we're out as total So we

with pleased So seeing, trends into 'XX see the extend we're FY that you and we're and beyond.

And that question Weiss will Morgan come Keith with Stanley. from

that would markets wondering maybe Singh types Sanjit software I valuations, how for capital guess of I that question team's we've thinking. good that how you changed in the may or sort the months that is M&A the has drawdown consider the seen sale. of was the wanted couple last sizes -- just are not thinking the -- This over given on on in lot be, assets potential a the see that how I valuations my may that potentially change and and to the correction there's given Keith. how on the And of of team's

Yes.

our M&A largely So has unchanged. strategy been

that new also already occasionally, present. look to our And in. it's categories customers tuck-ins play you perceive If as mostly might adjacencies as would need our are, we into to always we category. gaps where at what by move then we do be M&A, of the logical history we every product often, And categorize so a we what driven the tend in

may our what best some what about looking strategy valuations we so evolution then look We valuation. first where decide at fit, And to and is we then once then buy. we and the our product deciding and need external thinking, And should opposed think foremost, drives first and companies. our we as to buy at

So our capital portfolio. the the to our is around markets answer does observed question necessarily so not the The long -- that's in your short the in valuations the reduction answer. short planning affect

from Garrett comes question that And Hinds with Macquarie.

use -- connectivity -- we going most excited help hear and XG more to your is about love I more connectivity with enter that. ubiquitous VMware as what you're how cases would what to

I'm the I not could question. sorry, hear

Sorry.

Oh, and your XG that? going how VMware enable sorry. I to is favorite love to would hear use case help

Yes.

XG were So focus in has parts, in our X I if been elaborate. to

helping modern build very disruptive industry idea using And is it network. capabilities right? XG. number called network is really software, providers part number open first and operate builds it's network entire you commodity is, or need fundamentally -- helps a an XG is ORAN practically what delivering standard hardware, ready-access build right, XG providers one; two, The based that service that running of based standards, There an and all on in architect open on on the service software and a

start focus, we've our been So that's -- successful off really there. to we're very the very of first and aspect a

building on technology. the cloud-native announced is which We it entirely is and the using network nationwide first have our that DISH previously XG building built network, technologies, using software

And that's so doing. really what we're

these just because their won at turn those since then global other of have lots use excited and XG so enterprise, on companies by XG and cases into We are very customers and beginning. full The are well, enterprise as serve POCs production is things will they of all rollouts. reason the

that in concurrent edge. a is needed concurrent of manufacturing providers -- is the then lot a which, low XG use potential on. the in sorry, service campus, cases, the we access in WiFi XG, right? helping in and even and So lot -- to wireless then is enterprise of revamping places has where First one replace are many of the private an in And and foremost, common area that latency

we We applications not to XG the those other are applications. deploy environment are on because providers build those edge, lot just and with in service low need examples another are the providing that's to our needed but compute service so at with not gaming -- just customers XG with the also providers a network, latency where the the environment like portfolio. new that and of working a there part Building operate

manufacturing, applications enterprise retail as well horizontal So and, across it's of telco the connectivity. applications of course, of spread a categories as

our next from with question And comes Fatima Boolani Citi.

quarter. for This Congratulations is Mark the on Fatima. on

to and With place continuing are changes sales deck know vSphere a in for bit little that be the sales or customers of just guardrails helpful. at for limit factors, sort terms on all? comp then of this year, to So SaaS follow-up side, to on delve strategy. want what offerings? What to we one. but mechanisms guys really be capacity maybe the SDDC lot license should into on in disruptions anything opt I incentive and consumptions incentive a to and perpetual And expect, form these would you just mentioned a go-to-market comp if deeper delivered

this is Sumit. Mark,

sort we done. about things of stores that are excited have X what's we're coming of So in and vSAN, vSphere, sort for there

programs adopt Firstly, them building importantly, computing end-user -- with purchase adopt when plans so management universal our when and at them. determined can customers through and portfolio, journey consumption and their they consume but our more that and guardrails the we have clear transaction, they includes sub time offers, them, they mechanism appropriate can that our of a SaaS consumption

portfolio we sub have results computing our with our the intend management universal cloud And well. far, with been very end-user encouraging to SaaS and programs. of it as becomes as through portfolio so our and those And leverage rest the

continuing compensation and Secondly, that's we of for dependent X sales in business. on seller's growth our the are our are to that adjust becomes turn and call -- we SaaS we the continue mechanisms and work We as to portfolio well determine for in metrics them using that of in we -- 'XX. of now sub both And gates know as designed the within and comp sub -- as dial favor direction have we FY VMware. incentives those and we'll models weights FY quite them, And turn right and in -- the them to to SaaS and key our the gates: the that 'XX, percentage sort weights done subscription more accelerators. of SaaS and that's and more continue

'XX we through vSphere those to are for those of sub rolled FY we've SaaS. incentives we launch and are of that the provides -- some SaaS up Those to we to and adopt offerings drive our of and customers addition customers and X, vSAN. out, now scale In catch will incentives to will anticipate partners partner -- volume program that consumption already Raghu in our those transitioning as mentioned, sub about to

So that sub becomes how much in FY of part employ as X-legged SaaS we our portfolio strategy will a and broader 'XX. is

question will Fish Piper James Sandler. with from next come Our

to towards bit. to want like in the some actually and It And consume license these been of seems last willing little it more as you've fiscal NSX and financial talked one of confident Are also business government, end-user makes actual some license? since a services about. bookings SaaS, to of of on sizes you given the customers as vSAN. give you SaaS a rather these actually what it's some term increase Tier want bit, off with we big term I trying I Zane, like your update products just like build at than to as verticals X an you're another lines underlying guess especially got the move the that was year-end?

we we of portfolio over give mentioned into as quarter, Sure. view sizing of FY as first believe relevant. business, which years Raghu the the you portfolio if we changed say, about that that more a are the the the I’ll the broader tackle on earlier, thinking well. laying maybe, as the view -- the Well, and we'll way portfolio 'XX, think the piece we'll broader having let's get want of highlight. touch We is term about of Sumit, elements. you out And those next to in we'll

the we pieces we how believe, as will actually -- SaaS more term about business is towards we as the going. both these which is the parts stepping a see reason And and be, of of in business on-prem and new more helpful stone. we're they as roll So migrating think part categories where well the as the why sub into it

update quarter. to next at intent the our that you is on So

is from the to their your are is vCloud Suite, products becoming, and but in the term. there perspective -- business, portfolio term computing, the cloud, predominantly compute end-user suite being a accounting business bringing okay, ends vCloud where is management sort Suite our in which as on-premise, running of treated question Horizon answer on Jim, part VDI the of customers And percentage they're up of that up of term

because just in not are they capital keeping they have that them. see we in to reasons, interested. the much the they are from their cases, including for getting the in interested investments multiple very just value customers on-premise both workload not they leverage want the infrastructure, in made interested So like -- They're cloud. They're they have,

So and introduce in workload sub across keep convert their renewal, opportunity SaaS. have the as both the capabilities enable comes of in SaaS, those, for but get cloud term customers actually to on-premise for -- an capabilities that as then we them the to we additional SaaS to up

the our in time. strategy, our part business at point And predominant and that's so term that's of this

UBS. question comes And our Kierstead next with Karl from

guide love billion. by in fiscal the million. for down in row I'd on zero second That would 'XX year a free to about of and $X.XX flow be $XXX cash Zane,

weighing I’m could particular. be accompanied important So what's that more little that even about inflation expense understand perhaps on maybe and sure be And there's transition flow? on the I in the to side. and interest on, And you margins, extent be cash compression of a it's little second, be in as a could importantly, to wage One, increase talked whether cash wanted ask with But going spending bit you model average bit any sub/SaaS, seeing I the cash well. think issues team by on you the then flow? investment to might maybe that might hence, duration about weighing call have invoicing flow X that this on which and to and

Yes. Karl. Sure,

top mentioned flow if And of OCF OCF, with were business in for side, at came we exceeded the very we billion the bookings start operating strength my at We expected $X.X 'XX's look in prepared just we our as expectation. the you 'XX. remarks, in and growth when cash only with results. well we and out So the that FY I what but over not the line billings QX, pleased of FY saw the ahead well

that for of FY our areas FY into timing in transition a guide that was from that 'XX. number of Some does 'XX impact

$X.XX $X.X consistency actually on the OCF 'XX, for an on we FY billion think, 'XX. billion, between So into there basis, if guide FY will, see we our you heading of

that that flow a primarily and increase an increase back-office our is SaaS and support driven capitalized of of to lot over of the lot is years. R&D we SaaS that of and these you between is number a well some platforms highlighted as by growth efforts difference there's we're there. tied areas. business you're need sub systems cash the X that capitalization on seeing some drive that the to the sub that So and transformation free One seeing The this consistency and there gets in as a

the as CapEx, free It term. see in last driven you you this 'XX we if are believe one increase do at short question will, that But to cash the looks the point 'XX like on our business. So so you be positive very more time will question, least the those from flow, have impact out, for FY on FY obviously, please. by X we is factors

last Northland question Markets. Our will from Chokshi Capital Nehal with come

I guess SaaS providing an ARR and the metric on subscription revenue?

did. we Yes,

year, past the For billion. $X.X

that growth? year-over-year what's And

-- year-over-year. XX% XX was That

XX%.

Okay.

guiding you're that further here, to So acceleration that's correct? the confidence partially what in underpins the

mean good I call-out. right. a That's Yes. that's

As mentioned entire to that point would well. did of at ARR further in Obviously, growth. feel the and FY heading as us were into conviction for with $X.X I We positioned billion company to that sub we're ARR FY the we I earlier, end the allows by that very the the from 'XX. SaaS side. driven 'XX pleased side, the out well product focus go-to-market like have expect we increase see

the So for was as over revenue the sub focus we're SaaS that confident year, and $X well and guide on in which billion. as the

Why vSAN a digits mid-single quarter? I decelerate growth different did this Great. have year-over-year quickly. question real from to mid-teens

Yes.

-- think VMware So of Cloud it's it HCI Cloud increasingly a stack if -- and sell solutions. overall will. with VMware which our OEMs vSAN, converged go-to-market, AWS solutions, part second you -- model, HCI are through appliance and well. if we about One VCPP-type infrastructure you is our part in we is as partnership and part a of Dell by is infrastructure vSAN the And do of Foundation, with full as go-to-market for other hyperconverged that the

as our of the they And software And growth business vSAN the what's find solution. drives that less vSAN appliance the and we something driving our what are customers is solution vSAN want these full want business. a full off, HCI forward. going of and that's really both stand-alone category So

time. Okay. We're our hit -- we've

that before you final had conclude, comment we you think make. I wanted Raghu, a to

the you, you, joining call and Yes. today. Thank Paul, thank everybody, for

growth I'm 'XX, FY excited ahead of begin by we opportunities the As very us.

the very innovation the clearly team on business resonating and around I'm transformation strategy multi-cloud product side the on 'XX with will go-to-market our Meeting collectively, we customers. another Financial long-term be how happy with that FY Our last is the we And side. the in goals side, laid make that -- And September. towards executing on we is Analyst progress model year out

thank updating look to very you So much, forward the next and you I quarter.

And for thank participation. do conference. Well, We you that you. today's Have your does conclude an excellent day. thank