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Here's What to Expect Ahead of VMware's (VMW) Q3 Earnings

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·4 min read
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  • VMW
  • DELL

VMware VMW is scheduled to release third-quarter fiscal 2022 results on Nov 23.

For the quarter, the company expects total revenues to be $3.12 billion and non-GAAP earnings to be $1.53 per share.

The Zacks Consensus Estimate for quarterly earnings is pegged at $1.54, unchanged in the past 30 days. The estimate suggests a 7.2% decline from the figure reported in the year-ago quarter.

The consensus mark for revenues is pegged at $3.12 billion, indicating a 9.1% increase from the year-ago quarter’s number.

Its earnings beat the Zacks Consensus Estimate in all the last four quarters. VMware has a trailing four-quarter earnings surprise of 8.3%, on average.

VMware, Inc. Price and EPS Surprise

VMware, Inc. Price and EPS Surprise
VMware, Inc. Price and EPS Surprise

VMware, Inc. price-eps-surprise | VMware, Inc. Quote

Let’s see how things have shaped up prior to this announcement.

Key Factors to Note

Strength in VMware’s product portfolio along with robust uptake of cloud and security solutions is expected to have driven the top line in third-quarter fiscal 2022. Continued momentum in the company’s Tanzu platform across key verticals like financial services are likely to have acted as a tailwind.

Synergies from the buyouts of Pivotal Software, Carbon Black and SaltStack are expected to have positively impacted the top line for this Zacks Rank #3 (Hold) stock.

The company is gaining from the ongoing cloud-based digital transformation, and increasing traction witnessed for subscription and software as a service (SaaS) offerings. The subscription and SaaS business is being driven by the robust uptake of modern applications, VMware Cloud Provider Program (VCPP), End-User Computing or EUC, Carbon Black and VMware Cloud on Amazon Web Services (“AWS”).

VMware expects Subscription, SaaS and license revenues to be $1.47 billion in the fiscal third quarter, indicating 12% year-over-year growth.

Healthy uptick in VMware SASE solution bodes well. In April 2021, the company rolled out VMware SASE, which is a cloud-native offering designed to help enterprises manage security and network services at the edge. Incremental gains from the uptake of VMware Cloud Universal subscription service are likely to have driven performance in the to-be-reported quarter.

Continuation of work from home and the adoption of hybrid work innovation are likely to have driven demand for its latest VMware Anywhere Workspace solution.

The new solution helps clients manage multi-modal employee experiences and safeguarding the distributed edge network. VMware Anywhere Workspace combines VMware Workspace ONE, VMware Carbon Black Cloud and VMware SASE offerings.

In August 2021, VMWare rolled out new features to enable IT teams to seamlessly manage VMware Horizon deployments across on-premises and cloud environments. VMware Horizon is part of the company’s VMware Workspace ONE solution.

Major Q3 Highlights

In November 2021, VMware announced that the spin-off from Dell Technologies DELL was complete and that each of the company’s shareholders (as of close of business on Oct 29, 2021) received dividend of $27.40 per share on Nov 1. The spin-off from Dell Technologies will help VMware to boost its multi-cloud strategy.

On Oct 5, at VMworld 2021 event, VMWare rolled out VMware Edge product portfolio to help enterprises deploy, manage and safeguard edge-native apps across several cloud environments at edge and far edge locations.

On the same day, VMware debuted VMware Cross-Cloud services to facilitate customers with the ability to build, run and extend tight security to apps across multiple cloud locations with ample flexibility. The company also announced the addition of new functionalities to its Tanzu Platform.

Stocks to Consider

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat estimates in their upcoming releases:

Lululemon Athletica LULU has an Earnings ESP of +1.44% and sports a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Costco Wholesale COST has an Earnings ESP of +1.00% and flaunts a Zacks Rank of 2, currently.

Price Movement

Shares of Costco have returned 38.9% in the past year compared with Zacks Retail Discount Stores industry’s surge of 30.3%.

Shares of Lululemon Athletica have returned 36.9% in the past year compared with Zacks Textile Apparel industry’s gain of 32.4%.

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VMware, Inc. (VMW) : Free Stock Analysis Report

Dell Technologies Inc. (DELL) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

lululemon athletica inc. (LULU) : Free Stock Analysis Report

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