VMware posts strong 2019 financial results citing AWS partnership and ‘tech breaking out of tech’

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VMware has closed off its 2019 fiscal year with record annual revenues, solid upticks across the board and considerable strength on its partnership with Amazon Web Services (AWS).

Revenue was $2.59 billion (£1.96bn) across the quarter, at a 16% uptick on this time last year, while for the fiscal year it was $8.97bn, a yearly increase of 14%. License revenues were at $1.2bn, or 47.5% of overall quarterly revenues, compared with 52.5% for service revenues. For the fiscal year, ‘services’ comprised 57% of total revenues, a slight dip from the previous year’s 59%.

“We were very pleased with this terrific quarter and fiscal 2019,” said VMware CEO Pat Gelsinger in an earnings call following publication of the results. “At VMware, we believe that software has the power to transform business and humanity. We understand that our products, operations and people collectively have an impact in the world, and we strive to generate positive global impact through all that we do.

“Customers look to VMware for solutions across hybrid cloud, multi-cloud, modern apps, networking and security and digital workspace to help enable their digital transformations,” Gelsinger added. “We demonstrated good Q4 results across our hybrid cloud and SaaS portfolio as we strategically focused on expanding that offering.

“We’ve remained committed to growing this business as customers continue to turn to us for the best solutions that span private and public clouds.”

With that statement in mind, one of the key highlights of the quarter focused around VMware’s continued partnership with AWS. The companies keep cropping up in each other’s events; AWS CEO Andy Jassy took to the stage at VMworld in Las Vegas back in August, while Gelsinger returned the favour at re:Invent in November to all but bring the house down with the announcement of AWS Outposts.

Outposts, AWS said at the time, aims to deliver a ‘truly consistent hybrid experience’ by bringing AWS services, infrastructure and operating models to ‘virtually any’ on-premises facility. VMware’s partnership is a key part of making this happen. According to RightScale’s 2019 State of the Cloud report, issued earlier this week, 12% of organisations polled said they were using Outposts right out of the gate, with a further 29% interested in deploying.

Gelsinger said the most recent quarter saw a $20 million deal brokered with VMware Cloud on AWS, with new customers including Freddie Mac, Nant Media Holdings and the United States Air Force Field Enterprise Data Center.

The other major news VMware issued over the past three months was the planned acquisition of Kubernetes provider Heptio. At the time, Heptio co-founder Craig McLuckie said the two companies’ visions were ‘uncanny’, with VMware seeing the deal as an opportunity to build a cloud-independent Kubernetes control plane for customers. “We will accelerate efforts to make Kubernetes the standard for customers building and running their applications across clouds, and continue to drive the open source community’s development of this critical platform,” added Gelsinger.

Gelsinger described the state of the industry currently as ‘tech breaking out of tech’ in response to an analyst question around divergence between various infrastructure providers. This is a theme which this publication has covered frequently, both in the rise of multi-cloud projects organisations are taking on as well as exploring the next wave of cloud services, whether they be serverless and containers, or quantum and machine learning.

“There’s going to be winners and losers,” Gelsinger explained. “We’ll continue to see lots of questions on cloud, private and public cloud, and how hybrid cloud transitions. We clearly are going to see these normal cycles of over[supply] and undersupply as people are building up rapidly in different geos. We’re no longer dependent on any geo or any individual product, but the real breadth of our portfolio is nicely rewarding us across the broad landscape of, we believe, a good tech market [that] is going to continue well into the future.

“There will be winners and losers inside of that because there is so much change going on in the marketplace with these powerful trends,” Gelsinger added. “I’ve talked about the superpowers: cloud, mobility, AI and edge and IoT, and all of those will have different effects of who’s going to be the winners and losers inside of it.”

You can read the full VMware fourth quarter and fiscal year 2019 results here.

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