VMware (VMW 95.15, -2.25) has slid 2.3% despite beating earnings and revenue expectations and raising its guidance. Despite today's decline, the stock is still up more than 20.0% year-to-date, matching the performance of the top-weighted technology sector.
The provider of cloud and virtualization software reported above-consensus first quarter earnings of $0.99 per share on a 9.3% year-over-year increase in revenue to $1.74 billion, which was also ahead of expectations.
License revenue grew 6.6% to $610 million while Services revenue increased 10.7% to $1.13 billion.
Total revenue plus sequential change in total unearned revenue increased 10.0% year-over-year. Excluding the impact on unearned revenue from the sale of vCloud Air, total revenue plus sequential change in total unearned revenue increased 12.0% year-over-year.
License revenue plus sequential change in unearned license revenue increased 7.0% year-over-year. Excluding the impact on unearned revenue from the sale of vCloud Air, license revenue plus sequential change in unearned license revenue increased 10.0% year-over-year.
VMware's sources of revenue shifted modestly, as U.S. operations generated 49.5% of total sales ($860 million) while International operations provided the remaining 50.5% ($876 million). One year ago, International revenue made up 49.6% of sales while U.S. revenue accounted for 50.4% of sales.
The company expanded some of its partnerships during the first quarter, aiming to ensure full compatibility with third-party devices, applications, and endpoints. Agreements announced during the quarter include plans to deploy VMware Horizon Cloud to Microsoft's Azure platform, efforts to accelerate the adoption of Chromebooks, and a partnership expansion with Samsung to unify mobile and desktop experiences to benefit business users with devices like Galaxy S8 and Workspace ONE.
VMware issued above-consensus second quarter guidance for earnings between $1.11 and $1.14 per share and raised its guidance for full year earnings to $4.91 per share from $4.87 per share. Revenue for the full year is expected to come in at $7.60 billion, up from previous guidance for $7.57 billion.