After its torrid advance cooled off on Wednesday and Thursday, shares of cloud software firm VMware (VMW 122.89, +2.78 +2.31%) resume the move higher following the Q3 earnings beat and moderately better than expected guidance from the conference call.
Specifically, VMW’s Q3 earnings came in at $1.34 per share. Additionally, revenues seem to be about in-line with market expectations, albeit just so, with growth of about 11% compared to last year to about $1.98 billion.
Breaking that result down a little bit, VMW reported License revenue growth of 14% to $785 million. The company also noted that Hybrid cloud and SaaS represented more than 8% of its total Q3 revenue, with its VMware Cloud Provider program, which was formally known as vCloud Air network, once again grew 30%. Further, Silver Support and Subscription bookings growth was also strong in Q3, as the business benefited from continued high renewal rates, in addition to the support services attached to new license bookings. Also, VMW’s NSX Network Virtualization and Security Platform saw license bookings grow more than 100% on a year-over-year basis in Q3.
Management further commented that vSAN license bookings grew more than 150% year-over-year, driven by strong performance for both vSAN and hyper-converged storage software offerings, including VxRail. The company's End-user Computing license bookings for the quarter were up more than 40%, driven by growth in the mobile businesses, including Workspace ONE, which securely delivers and manages any application on any device.
On the whole, management noted total compute bookings were up 11%, with compute license bookings up in the mid-single digits year-over-year. Total cloud management bookings were flat, with cloud management license bookings down in the low single-digits year-over-year, a result of less management software tied to specific large deals in this quarter versus a strong Q3 last year.
Turning to guidance, VMW sees total revenue for FY2018 to be $7.875 billion on License revenue growth of 13% to $3.155 billion. Non-GAAP EPS for FY2018 is expected to be about $5.13 with a diluted share count of 412 million shares. Further, with the strong bookings performance for FY2018, the company also raises guidance for cash flow from operations for FY2018 to $3.1 billion from $3 billion previously. As such, for Q4 VMW expects total revenues of $2.263 billion and License revenues of $1.028 billion. Also, the company sees non-GAAP operating margin of 36.9% for Q4 and expect non-GAAP EPS to be $1.62 on a diluted share count of 409 million shares.
And lastly, for FY2019 VMW expects the continuation of the strength the company has seen this year and are planning on total revenue growth of about 10% year-over-year. The company also expects non-GAAP operating margin to be about 32.5%.