VMware’s SaaS Sales Surge As Broadcom Deal Nears

‘We look forward to the merger with Broadcom, expected to close in Broadcom’s current fiscal year, as our combined solutions will enable customers greater choice and flexibility to build, run, manage, connect and protect their applications at scale,’ VMware CEO Raghu Raghurman said in a statement reporting the company’s annual and fourth-quarter earnings.

VMware sales grew 4 percent last fiscal year, including in the closely watched Software-as-a-Service and subscription arenas where annual recurring revenue was up 30 percent over a year ago to $4.6 billion.

VMware CEO Raghu Raghuram reported the company’s annual and fourth-quarter earnings in a press release Thursday after the market closed. Palo Alto, Calif.-based VMware has not hosted a public earnings call since Broadcom Software announced its planned takeover of the company May 26.

“These results reflect consistent customer appetite for our multi-cloud offerings and our ability to help companies with a cloud-smart approach,” Raghuram’s statement read. “We look forward to the merger with Broadcom, expected to close in Broadcom’s current fiscal year, as our combined solutions will enable customers greater choice and flexibility to build, run, manage, connect and protect their applications at scale.”

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Sales for VMware’s fiscal year 2023 were $13.35 billion, up 4 percent from a year ago, which was in line with expectations.

Subscription and SaaS revenue now make up 30 percent of the company’s total revenue. Last year SaaS and subscription revenue comprised 25 percent of VMware’s $12.85 billion in annual sales.

VMware has previously stated in filings that it plans to convert 46 percent of its revenue to SaaS and subscription by fiscal year 2025.

Broadcom CEO Plans To Grow Subscription Revenue

Broadcom CEO Hock Tan has said from the day the acquisition was announced that he plans to grow subscription revenue at the virtualization leader as part of his three-year profitability plan should the deal pass regulators.

VMware’s sales reached $3.71 billion for the fourth quarter ended Feb. 3, up 5 percent from a year ago. Meanwhile, net income for the fourth quarter was $494 million, or $1.15 per share, down 17 percent compared with the fourth quarter of fiscal 2022.

New Partnership With HPE Greenlake

VMware also said in the release that in its first year of its independence from Dell Technologies it has forged a partnership with Hewlett Packard Enterprise to bring together HPE GreenLake and VMware Cloud to deliver a fully integrated product inside a pay-as-you-go hybrid cloud consumption model. HPE President and CEO Antonio Neri called this “the next step in expanding the partner system of HPE GreenLake.”

Dell spun out VMware as a stand-alone company in November 2021. Since then VMware has been talking with several OEMs about doing business with the company, including Lenovo, NEC, Fujitsu and Hitatchi.