About Vmware, Inc.
VMware develops software used to create and manage virtual machines -- computer functions spread across multiple systems. Companies use its cloud-based and on-premise applications to more efficiently integrate and manage server, storage, and networking functions, which reduces their IT costs. VMware also offers software maintenance and support, training, consulting services, and hosted services. The company has marketing relationships with top computer hardware vendors, including Hewlett Packard Enterprise, IBM, and Cisco Systems. VMware has strong geographic distribution, with international customers accounting for more than half of its sales. Dell Technologies holds a controlling stake in VMware through its acquisition of EMC.
VMware's virtualization products produce real money driving revenue some $2.4 billion higher from 2015 to 2019 (ended February). The company's net income fluctuated over the same time, but leaped in 2019 from 2018.
In 2019, VMware posted a 14% revenue increase to reach $8.9 billion, up about $1.1 billion from 2018. License revenue (40% of overall sales) rose 18% year over year with help from the company's Hybrid Cloud Computing and SaaS offerings. Service revenue was 11% higher in 2019 from 2018 due to existing contracts and contracts added though license sales during the year.
VMware recorded net income of $2.2 billion in 2019 compared to $659 million in 2018. The 2019 profit was lifted by higher revenue, income from the company's interest in Pivotal Software (which had an IPO in fiscal 2019), and lower income taxes.
Cash in VMware's coffers totaled $2.9 billion in 2019 compared to $6 billion the year before. Operations generated $3.6 billion in 2018, investing activities provided $4.4 billion, and financing activities used $11.1 billion (due to payment of a special dividend).
VMware has about $4 billion in debt, which could require the company to devote cash flow to debt service instead of investments related to growth. A lack of cash could limit VMware's flexibility in responding to opportunities and crises. The company has a $1 billion unsecured revolving credit facility that it has yet to use.
Although VMware is part of Dell Technologies, that hasn't stopped the company from doing deals with Dell competitors. The company has agreements with IBM and Amazon Web Services (AWS) that help customers manage their private clouds and public clouds (running on IBM or AWS) using VMware software. The arrangements provide customers more flexibility with their cloud environments.
For products to run on those systems, VMware has assembled a group of software-as-a-service and cloud technologies through in-house R&D and acquisitions, including Heptio, CloudHealth Technologies Inc., and VeloCloud Networks Inc.
Sales of VMware's network virtualization product NSX have continued to grow since it was introduced in 2013. Sold as part of other VMware products, NSX allows networking hardware like routers and switches to be reconfigured and managed by software. NSX has been a hit for the company, producing about $1.3 billion in revenue in 2019 (it's used by about 10,000 customers).
Part of VMware's strategy is to pack its customers with as many of its products as it can. An increasing number of customers have gone with the company's full VMware Cloud Foundation or its full VMware Cloud on AWS offering, generating bigger deals.
VMware relies on sales to distributors Arrow Electronics and Tech Data Corp. for more than 25% of sales. Sales to parent Dell Technologies accounts for another 25% of revenue.
Mergers and Acquisitions
In 2019 VMware agreed to spend about $4.8 billion to buy companies that broaden its cloud offerings and strengthen its security capabilities. The company said it would buy Pivotal Software for about $2.7 billion to build out its software for cloud computing environments and buy CarbonBlack for about $2.1 billion to beef up security throughout its products. The deals are to close by the end of VMware's 2020 fiscal year in January 2020. Like VMware, Pivotal is partly owned by Dell Technologies.
VMware in 2019 acquired Intrinsic, a cybersecurity company, as part of its focus on the public cloud. Intrinsic's products allow software developers to securely access serverless computing by setting policies on how the systems work when certain conditions are met. The deal contributes to the expansion of VMware's AppDefense platform into the public cloud.
In 2019 VMware agreed to acquire Uhana, which develops technology to help telecom carriers automate and improve network operations amid carriers' transition from 4G to 5G networks and the increasing need for reduced latency. Uhana's real-time deep learning engine operates in the operator private cloud or public cloud infrastructure. VMware intends to add Uhana’s to its Telco Cloud and Edge Cloud portfolio and provide intelligence and analytics for VMware Smart Assurance and VMware Smart Experience products.
VMware agreed to buy Bitfusion, which develops technology to make cloud computing workloads more efficient using artificial intelligence, in 2019. VMware intends to integrate Bitfusion's tools into its vSphere platform. Bitfusion's technology allows cloud software to access computing power on individual CPUs no matter what server they're sitting on.
In another 2019 deal VMware agreed to buy Avi Networks, a developer of multi-cloud application delivery services. Avi's technology is to help VMware to bring benefits of a public cloud experience to the entire data center, making the process automated, scalable, and more secure for its customers. The deal was expected to close bu August 2020.
Also in 2019 VMware agreed to acquire Bitnami, a developer of application packaging for cloud and Kubernetes environments. With Bitnami's technologies, VMware customers would be able to deploy application packages on any cloud in the appropriate format. The deal is expected to close by the end of the 2019 second quarter.
Founded in 1998, VMware was acquired by EMC for about $625 million in cash in 2004. Looking to unlock some of the value in its subsidiary, EMC sold some of its stake in VMware in a 2007 IPO. In 2016, Dell bought EMC, including VMware, for more than $60 billion.
3401 HILLVIEW AVE
Palo Alto, CA 94304-1383
Phone: 1 (650) 427-5000
Employer Type: Publicly Owned
Stock Symbol: VMW
Stock Exchange: , NYSE
Chairman: Michael S. Dell
CEO and Director: Patrick P. Gelsinger
COO, Customer Operations: Sanjay Poonen
Employees (This Location): 148
Employees (All Locations): 24,200