VMware (VMW) to Report Q2 Earnings: What's in the Cards?
VMware VMW is slated to release second-quarter fiscal 2021 results on Aug 27.
For the quarter, total revenues are expected to be $2.80 billion, suggesting 6% year-over-year growth. Non-GAAP earnings are expected to be $1.44 per share.
The Zacks Consensus Estimate for quarterly earnings has been steady over the past 30 days at $1.45 per share, suggesting a decline of 9.4% from the year-ago period’s reported figure.
Further, the Zacks Consensus Estimate for revenues is pegged at $2.80 billion, indicating a 14.9% rise from the year-ago reported number.
The company’s earnings beat the Zacks Consensus Estimate in three of the past four quarters, missing the same in one, the average earnings surprise being 7.7%.
VMware, Inc. Price and EPS Surprise
VMware, Inc. price-eps-surprise | VMware, Inc. Quote
Let’s see how things shaped up prior to this announcement.
Key Factors to Note
VMware’s expanding product portfolio is likely to have driven its top line in second-quarter fiscal 2021. Solid adoption of cloud, NSX, vSAN, EUC and security solutions is expected to have driven top-line growth.
The Zacks Rank #3 (Hold) company is benefiting from the ongoing cloud-based digital transformation. Markedly, the company’s strategy to build strong partnerships with the likes of International Business Machines IBM, Amazon’s AMZN cloud-computing arm Amazon Web Services (AWS) and Microsoft MSFT is helping it expand customer base in the cloud space. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The momentum is expected to have continued in the to-be-reported quarter. Moreover, strong demand for VMware Cloud on AWS solution is likely to have aided top-line growth.
Notably, VMware Cloud on AWS is a jointly engineered service that brings VMware Cloud Foundation to AWS, with optimized access to AWS services. The solution is available across 17 AWS regions, globally. As of June 2020, total VMs were up 3.5 times and total number of hosts was up 2.5 times year over year.
Furthermore, acquisitions of Pivotal Software and Carbon Black are expected to have been instrumental in driving VMware’s revenues during the period under consideration.
Nevertheless, VMware’s second-quarter fiscal 2021 results are expected to bear the brunt of declining IT spending and a sluggish demand environment due to the coronavirus outbreak.
Key Q2 Developments
During the quarter, VMware announced its plans to acquire Octarine, an early-stage startup. Octarine’s innovative security platform for Kubernetes applications helps simplify DevSecOps and enables cloud-native environments to be intrinsically secure from development through runtime.
Moreover, the company acquired Datrium to expand its VMware Site Recovery disaster-recovery-as-a-service offering.
The company alsoannounced the general availability of vRealize Automation Cloud Service in Singapore. Further, VMware introduced an integrated feature in vSphere 7 that will enable enterprises to deliver elastic infrastructure on-demand for AI and machine learning applications.
Further, VMware announced the expansion of its VMware Ready for Telco Cloud program, formerly known as the VMware Ready for NFV program. The enhanced certification program enables VMware partners to test the interoperability and readiness of their Virtual Network Functions and Cloud-Native Network Functions with the VMware Telco Cloud platform. It also enables VMware partners to accelerate onboarding and deployment of their 5G-ready services on the VMware Telco Cloud platform.
Additionally, VMware was selected as the cloud platform by DISH Network to deploy its 5G, cloud-native Open Radio Access Network on Jul 31.
Dell Intents to Spin-off VMware Stake
On Jul 15, Dell Technologies announced that it is planning to spin off its 81% equity-ownership interest at VMware. The deal is expected to not materialize before September 2021.
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