CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
January 28, | January 29, | January 28, | January 29, | |||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
License | $ | 1,035 | $ | 1,014 | $ | 3,128 | $ | 3,033 | ||||||||||||||||||
Subscription and SaaS | 868 | 707 | 3,205 | 2,587 | ||||||||||||||||||||||
Services | 1,628 | 1,573 | 6,518 | 6,147 | ||||||||||||||||||||||
Total revenue | 3,531 | 3,294 | 12,851 | 11,767 | ||||||||||||||||||||||
Operating expenses(1): | ||||||||||||||||||||||||||
Cost of license revenue | 41 | 45 | 152 | 163 | ||||||||||||||||||||||
Cost of subscription and SaaS revenue | 188 | 187 | 690 | 588 | ||||||||||||||||||||||
Cost of services revenue | 378 | 322 | 1,429 | 1,292 | ||||||||||||||||||||||
Research and development | 806 | 757 | 3,057 | 2,816 | ||||||||||||||||||||||
Sales and marketing | 1,075 | 987 | 4,067 | 3,711 | ||||||||||||||||||||||
General and administrative(2) | 260 | (6) | 1,068 | 767 | ||||||||||||||||||||||
Realignment | — | (5) | 1 | 42 | ||||||||||||||||||||||
Operating income | 783 | 1,007 | 2,387 | 2,388 | ||||||||||||||||||||||
Investment income | — | — | 2 | 7 | ||||||||||||||||||||||
Interest expense | (80) | (49) | (252) | (204) | ||||||||||||||||||||||
Other income (expense), net | (41) | 7 | (52) | 191 | ||||||||||||||||||||||
Income before income tax | 662 | 965 | 2,085 | 2,382 | ||||||||||||||||||||||
Income tax provision | 76 | 174 | 265 | 324 | ||||||||||||||||||||||
Net income | $ | 586 | $ | 791 | $ | 1,820 | $ | 2,058 | ||||||||||||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic(3) | $ | 1.39 | $ | 1.88 | $ | 4.34 | $ | 4.90 | ||||||||||||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted(3) | $ | 1.39 | $ | 1.87 | $ | 4.31 | $ | 4.86 | ||||||||||||||||||
Weighted-average shares of common stock, basic | 420,089 | 420,090 | 419,504 | 419,841 | ||||||||||||||||||||||
Weighted-average shares of common stock, diluted | 422,976 | 422,813 | 422,394 | 423,240 | ||||||||||||||||||||||
__________ | ||||||||||||||||||||||||||
(1) Includes stock-based compensation as follows: | ||||||||||||||||||||||||||
Cost of license revenue | $ | — | $ | — | $ | 1 | $ | 1 | ||||||||||||||||||
Cost of subscription and SaaS revenue | 5 | 6 | 21 | 19 | ||||||||||||||||||||||
Cost of services revenue | 22 | 25 | 92 | 99 | ||||||||||||||||||||||
Research and development | 126 | 127 | 528 | 524 | ||||||||||||||||||||||
Sales and marketing | 75 | 79 | 302 | 322 | ||||||||||||||||||||||
General and administrative | 34 | 16 | 131 | 157 | ||||||||||||||||||||||
(2) General and administrative expenses for the fourth quarter of fiscal 2021 included derecognition of a previously accrued litigation loss of $237 million. | ||||||||||||||||||||||||||
(3) Automatically as a result of VMware’s spin-off from Dell on November 1, 2021 (the "Spin-Off"), each share of Class B convertible common stock converted into one fully paid and non-assessable share of Class A common stock. Subsequent to the Spin-Off, net income per weighted-average share was attributable to VMware Class A common stockholders. Prior to the Spin-Off, net income per weighted-average share was attributable to VMware Class A and Class B common stockholders. |
CONSOLIDATED BALANCE SHEETS | |||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | |||||||||||
(unaudited) | |||||||||||
January 28, | January 29, | ||||||||||
2022 | 2021 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 3,614 | $ | 4,692 | |||||||
Short-term investments | 19 | 23 | |||||||||
Accounts receivable, net of allowance of $10 and $5 | 2,297 | 1,929 | |||||||||
Due from related parties(1) | 1,438 | 1,438 | |||||||||
Other current assets | 598 | 530 | |||||||||
Total current assets | 7,966 | 8,612 | |||||||||
Property and equipment, net | 1,461 | 1,334 | |||||||||
Deferred tax assets | 5,906 | 5,781 | |||||||||
Intangible assets, net | 714 | 993 | |||||||||
Goodwill | 9,598 | 9,599 | |||||||||
Due from related parties | 199 | — | |||||||||
Other assets | 2,832 | 2,697 | |||||||||
Total assets | $ | 28,676 | $ | 29,016 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 234 | $ | 131 | |||||||
Accrued expenses and other | 2,806 | 2,382 | |||||||||
Unearned revenue | 6,479 | 5,873 | |||||||||
Due to related parties(1) | 132 | — | |||||||||
Total current liabilities | 9,651 | 8,386 | |||||||||
Note payable to Dell | — | 270 | |||||||||
Long-term debt | 12,671 | 4,717 | |||||||||
Unearned revenue | 4,743 | 4,441 | |||||||||
Income tax payable | 242 | 805 | |||||||||
Operating lease liabilities | 927 | 891 | |||||||||
Due to related parties | 909 | — | |||||||||
Other liabilities | 409 | 455 | |||||||||
Total liabilities | 29,552 | 19,965 | |||||||||
Contingencies | |||||||||||
Stockholders’ equity (deficit): | |||||||||||
Class A common stock, par value $0.01; authorized 2,500,000 shares; issued and outstanding 418,808 and 112,082 shares | 4 | 1 | |||||||||
Class B convertible common stock, par value $0.01; authorized none and 1,000,000 shares; issued and outstanding none and 307,222 shares | — | 3 | |||||||||
Additional paid-in capital | — | 1,985 | |||||||||
Accumulated other comprehensive loss | (5) | (5) | |||||||||
Retained earnings (accumulated deficit) | (875) | 7,067 | |||||||||
Total stockholders’ equity (deficit) | (876) | 9,051 | |||||||||
Total liabilities and stockholders’ equity (deficit) | $ | 28,676 | $ | 29,016 | |||||||
__________ | |||||||||||
(1) As of January 28, 2022, due from related parties and due to related parties were presented separately, as a right of setoff no longer exists subsequent to the Spin-Off. As of January 29, 2021, due from related parties was presented net of due to related parties. | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
January 28, | January 29, | January 28, | January 29, | ||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Operating activities: | |||||||||||||||||||||||
Net income | $ | 586 | $ | 791 | $ | 1,820 | $ | 2,058 | |||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||
Depreciation and amortization | 284 | 268 | 1,110 | 1,025 | |||||||||||||||||||
Stock-based compensation | 262 | 253 | 1,075 | 1,122 | |||||||||||||||||||
Deferred income taxes, net | 12 | 25 | (80) | (152) | |||||||||||||||||||
(Gain) loss on equity securities and disposition of assets, net | 5 | 26 | 33 | (148) | |||||||||||||||||||
Loss on extinguishment of debt | 21 | — | 21 | 8 | |||||||||||||||||||
Other | 4 | (1) | 10 | (1) | |||||||||||||||||||
Changes in assets and liabilities, net of acquisitions: | |||||||||||||||||||||||
Accounts receivable | (626) | (139) | (379) | (37) | |||||||||||||||||||
Other current assets and other assets | (385) | (258) | (852) | (879) | |||||||||||||||||||
Due from related parties(1) | (683) | (765) | 95 | 19 | |||||||||||||||||||
Accounts payable | 11 | (65) | 98 | (69) | |||||||||||||||||||
Accrued expenses and other liabilities | 668 | 125 | 487 | 518 | |||||||||||||||||||
Income taxes payable | 5 | (15) | 28 | (68) | |||||||||||||||||||
Unearned revenue | 990 | 1,079 | 908 | 1,013 | |||||||||||||||||||
Due to related parties(1) | (17) | — | (17) | — | |||||||||||||||||||
Net cash provided by operating activities | 1,137 | 1,324 | 4,357 | 4,409 | |||||||||||||||||||
Investing activities: | |||||||||||||||||||||||
Additions to property and equipment | (123) | (82) | (386) | (329) | |||||||||||||||||||
Sales of investments in equity securities | 9 | 26 | 77 | 26 | |||||||||||||||||||
Purchases of strategic investments | (5) | (13) | (11) | (29) | |||||||||||||||||||
Proceeds from disposition of assets | 9 | 7 | 14 | 28 | |||||||||||||||||||
Business combinations, net of cash acquired, and purchases of intangible assets | (7) | (19) | (23) | (409) | |||||||||||||||||||
Net cash used in investing activities | (117) | (81) | (329) | (713) | |||||||||||||||||||
Financing activities: | |||||||||||||||||||||||
Proceeds from issuance of common stock | 3 | 9 | 270 | 273 | |||||||||||||||||||
Proceeds from issuance of senior notes, net of issuance costs | — | — | 5,944 | 1,979 | |||||||||||||||||||
Borrowings under term loan, net of issuance costs | 3,998 | — | 3,998 | — | |||||||||||||||||||
Repayment of term loan | (500) | — | (500) | (1,500) | |||||||||||||||||||
Repayment of current portion of senior notes | (1,519) | — | (1,519) | (1,257) | |||||||||||||||||||
Repayment of note payable to Dell | — | — | (270) | — | |||||||||||||||||||
Repurchase of common stock | (297) | (379) | (1,169) | (945) | |||||||||||||||||||
Shares repurchased for tax withholdings on vesting of restricted stock | (95) | (93) | (385) | (412) | |||||||||||||||||||
Payment for Special Dividend | (11,499) | — | (11,499) | — | |||||||||||||||||||
Payment to acquire non-controlling interests | — | — | — | (91) | |||||||||||||||||||
Principal payments on finance lease obligations | (1) | (1) | (5) | (4) | |||||||||||||||||||
Net cash used in financing activities | (9,910) | (464) | (5,135) | (1,957) | |||||||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (8,890) | 779 | (1,107) | 1,739 | |||||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of the period | 12,553 | 3,991 | 4,770 | 3,031 | |||||||||||||||||||
Cash, cash equivalents and restricted cash at end of the period | $ | 3,663 | $ | 4,770 | $ | 3,663 | $ | 4,770 | |||||||||||||||
Supplemental disclosures of cash flow information: | |||||||||||||||||||||||
Cash paid for interest | $ | 54 | $ | 58 | $ | 200 | $ | 200 | |||||||||||||||
Cash paid for taxes, net | 55 | 150 | 331 | 543 | |||||||||||||||||||
Non-cash items: | |||||||||||||||||||||||
Changes in capital additions, accrued but not paid | $ | (5) | $ | 8 | $ | 4 | $ | (10) | |||||||||||||||
__________ | |||||||||||||||||||||||
(1) Subsequent to the Spin-off, due from related parties and due to related parties were presented separately, as a right of setoff no longer exists. Prior to the Spin-Off, due from related parties was presented net of due to related parties. |
GROWTH IN REVENUE PLUS SEQUENTIAL CHANGE IN UNEARNED REVENUE | |||||||||||
(in millions) | |||||||||||
(unaudited) | |||||||||||
Growth in Total Revenue Plus Sequential Change in Unearned Revenue | |||||||||||
Three Months Ended | |||||||||||
January 28, | January 29, | ||||||||||
2022 | 2021 | ||||||||||
Total revenue, as reported | $ | 3,531 | $ | 3,294 | |||||||
Sequential change in unearned revenue(1) | 989 | 1,079 | |||||||||
Total revenue plus sequential change in unearned revenue | $ | 4,520 | $ | 4,373 | |||||||
Change (%) over prior year, as reported | 3 | % | |||||||||
Growth in License and Subscription and SaaS Revenue Plus Sequential Change in Unearned License and Subscription and SaaS Revenue | |||||||||||
Three Months Ended | |||||||||||
January 28, | January 29, | ||||||||||
2022 | 2021 | ||||||||||
Total license and subscription and SaaS revenue, as reported | $ | 1,903 | $ | 1,721 | |||||||
Sequential change in unearned license and subscription and SaaS revenue(2) | 433 | 406 | |||||||||
Total license and subscription and SaaS revenue plus sequential change in unearned license and subscription and SaaS revenue | $ | 2,336 | $ | 2,127 | |||||||
Change (%) over prior year, as reported | 10 | % | |||||||||
__________ | |||||||||||
(1) Consists of the change in total unearned revenue from the preceding quarter. Total unearned revenue consists of current and non-current unearned revenue amounts presented in the consolidated balance sheets. | |||||||||||
(2) Consists of the change in unearned license and subscription and SaaS revenue from the preceding quarter. | |||||||||||
REMAINING PERFORMANCE OBLIGATIONS | |||||||||||
(in millions) | |||||||||||
(unaudited) | |||||||||||
Growth in Remaining Performance Obligations | |||||||||||
January 28, | January 29, | ||||||||||
2022 | 2021 | ||||||||||
Remaining performance obligations(3) | $ | 11,996 | $ | 11,304 | |||||||
Change (%) over prior year | 6 | % | |||||||||
Remaining performance obligations, current(4) | $ | 6,793 | $ | 6,243 | |||||||
Change (%) over prior year | 9 | % | |||||||||
__________ | |||||||||||
(3) Remaining performance obligations represent the aggregate amount of the transaction price in contracts allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations include unearned revenue, multi-year contracts with future installment payments and certain unfulfilled orders against accepted customer contracts at the end of any given period. | |||||||||||
(4) Current remaining performance obligations represent the amount expected to be recognized as revenue over the next twelve months. |
SUPPLEMENTAL UNEARNED REVENUE SCHEDULE | |||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||
January 28, | October 29, | July 30, | April 30, | January 29, | October 30, | ||||||||||||||||||||||||||||||
2022 | 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||||||||||||||||||||||
Unearned revenue as reported: | |||||||||||||||||||||||||||||||||||
License | $ | 19 | $ | 17 | $ | 20 | $ | 16 | $ | 15 | $ | 11 | |||||||||||||||||||||||
Subscription and SaaS | 2,669 | 2,238 | 2,208 | 2,064 | 1,998 | 1,596 | |||||||||||||||||||||||||||||
Services | |||||||||||||||||||||||||||||||||||
Software maintenance | 7,208 | 6,773 | 6,916 | 6,957 | 7,092 | 6,574 | |||||||||||||||||||||||||||||
Professional services | 1,326 | 1,205 | 1,194 | 1,163 | 1,209 | 1,054 | |||||||||||||||||||||||||||||
Total unearned revenue | $ | 11,222 | $ | 10,233 | $ | 10,338 | $ | 10,200 | $ | 10,314 | $ | 9,235 | |||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA | |||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended January 28, 2022 | |||||||||||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | |||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||
GAAP | Stock-Based Compensation | Employer Payroll Taxes on Employee Stock Transactions | Intangible Amortization | Acquisition, Disposition and Other Items | Tax Adjustment(1) | Non-GAAP As Adjusted(2) | |||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||
Cost of license revenue | $ | 41 | — | — | (9) | — | — | $ | 32 | ||||||||||||||||||||||||||||||||
Cost of subscription and SaaS revenue | $ | 188 | (5) | — | (43) | — | — | $ | 140 | ||||||||||||||||||||||||||||||||
Cost of services revenue | $ | 378 | (22) | — | — | — | — | $ | 355 | ||||||||||||||||||||||||||||||||
Research and development | $ | 806 | (126) | — | (2) | — | — | $ | 678 | ||||||||||||||||||||||||||||||||
Sales and marketing | $ | 1,075 | (75) | (3) | (20) | — | — | $ | 979 | ||||||||||||||||||||||||||||||||
General and administrative | $ | 260 | (34) | — | — | (16) | — | $ | 210 | ||||||||||||||||||||||||||||||||
Operating income | $ | 783 | 262 | 3 | 74 | 16 | — | $ | 1,137 | ||||||||||||||||||||||||||||||||
Operating margin(2) | 22.2 | % | 7.4 | % | 0.1 | % | 2.1 | % | 0.4 | % | — | 32.2 | % | ||||||||||||||||||||||||||||
Other income (expense), net(3) | $ | (41) | — | — | — | 3 | — | $ | (39) | ||||||||||||||||||||||||||||||||
Income before income tax | $ | 662 | 262 | 3 | 74 | 19 | — | $ | 1,018 | ||||||||||||||||||||||||||||||||
Income tax provision | $ | 76 | 87 | $ | 163 | ||||||||||||||||||||||||||||||||||||
Tax rate(2) | 11.4 | % | 16.0 | % | |||||||||||||||||||||||||||||||||||||
Net income | $ | 586 | 262 | 3 | 74 | 19 | (87) | $ | 855 | ||||||||||||||||||||||||||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted(2)(4) | $ | 1.39 | $ | 0.62 | $ | 0.01 | $ | 0.17 | $ | 0.04 | $ | (0.21) | $ | 2.02 | |||||||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. | |||||||||||||||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. | |||||||||||||||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. | |||||||||||||||||||||||||||||||||||||||||
(4) Calculated based upon 422,976 diluted weighted-average shares of common stock. | |||||||||||||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA | |||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended January 29, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP | Stock-Based Compensation | Employer Payroll Taxes on Employee Stock Transactions | Intangible Amortization | Realignment Charges | Acquisition, Disposition and Other Items | Certain Litigation and Other Contingencies(5) | Tax Adjustment(1) | Non-GAAP As Adjusted(2) | |||||||||||||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of license revenue | $ | 45 | — | — | (11) | — | — | — | — | $ | 33 | ||||||||||||||||||||||||||||||||||||||||||
Cost of subscription and SaaS revenue | $ | 187 | (6) | — | (48) | — | — | — | — | $ | 133 | ||||||||||||||||||||||||||||||||||||||||||
Cost of services revenue | $ | 322 | (25) | — | — | — | — | — | — | $ | 296 | ||||||||||||||||||||||||||||||||||||||||||
Research and development | $ | 757 | (127) | (1) | (1) | — | — | — | — | $ | 628 | ||||||||||||||||||||||||||||||||||||||||||
Sales and marketing | $ | 987 | (79) | (2) | (24) | — | — | — | — | $ | 884 | ||||||||||||||||||||||||||||||||||||||||||
General and administrative | $ | (6) | (16) | — | — | — | (27) | 237 | — | $ | 187 | ||||||||||||||||||||||||||||||||||||||||||
Realignment | $ | (5) | — | — | — | 5 | — | — | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||
Operating income | $ | 1,007 | 253 | 3 | 84 | (5) | 27 | (237) | — | $ | 1,133 | ||||||||||||||||||||||||||||||||||||||||||
Operating margin(2) | 30.6 | % | 7.7 | % | 0.1 | % | 2.5 | % | (0.1) | % | 0.8 | % | (7.2) | % | — | 34.4 | % | ||||||||||||||||||||||||||||||||||||
Other income (expense), net(3) | $ | 7 | — | — | — | — | 25 | — | — | $ | 30 | ||||||||||||||||||||||||||||||||||||||||||
Income before income tax | $ | 965 | 253 | 3 | 84 | (5) | 52 | (237) | — | $ | 1,114 | ||||||||||||||||||||||||||||||||||||||||||
Income tax provision | $ | 174 | 5 | $ | 178 | ||||||||||||||||||||||||||||||||||||||||||||||||
Tax rate(2) | 18.0 | % | 16.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 791 | 253 | 3 | 84 | (5) | 52 | (237) | (5) | $ | 936 | ||||||||||||||||||||||||||||||||||||||||||
Net income per weighted-average share, diluted for Classes A and B(2)(4) | $ | 1.87 | $ | 0.60 | $ | 0.01 | $ | 0.20 | $ | (0.01) | $ | 0.12 | $ | (0.56) | $ | (0.01) | $ | 2.21 | |||||||||||||||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) Calculated based upon 422,813 diluted weighted-average shares for Classes A and B. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(5) Reflects derecognition of a $237 million previously accrued litigation loss as a result of a jury verdict in January 2020 against VMware in a patent litigation matter brought by plaintiffs Cirba Inc and Cirba, IP. Inc. On December 21, 2020, the United States District Court of the District of Delaware set aside the jury verdict and ordered a new trial. |
RECONCILIATION OF GAAP TO NON-GAAP DATA | |||||||||||||||||||||||||||||||||||||||||||||||
For the Twelve Months Ended January 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
GAAP | Stock-Based Compensation | Employer Payroll Taxes on Employee Stock Transactions | Intangible Amortization | Realignment Charges | Acquisition, Disposition and Other Items | Tax Adjustment(1) | Non-GAAP As Adjusted(2) | ||||||||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Cost of license revenue | $ | 152 | (1) | — | (39) | — | — | — | $ | 112 | |||||||||||||||||||||||||||||||||||||
Cost of subscription and SaaS revenue | $ | 690 | (21) | — | (171) | — | — | — | $ | 498 | |||||||||||||||||||||||||||||||||||||
Cost of services revenue | $ | 1,429 | (92) | (1) | — | — | — | — | $ | 1,334 | |||||||||||||||||||||||||||||||||||||
Research and development | $ | 3,057 | (528) | (2) | (8) | — | — | — | $ | 2,519 | |||||||||||||||||||||||||||||||||||||
Sales and marketing | $ | 4,067 | (302) | (7) | (85) | — | — | — | $ | 3,676 | |||||||||||||||||||||||||||||||||||||
General and administrative | $ | 1,068 | (131) | (1) | — | — | (142) | — | $ | 794 | |||||||||||||||||||||||||||||||||||||
Realignment | $ | 1 | — | — | — | (1) | — | — | $ | — | |||||||||||||||||||||||||||||||||||||
Operating income | $ | 2,387 | 1,075 | 11 | 303 | 1 | 142 | — | $ | 3,918 | |||||||||||||||||||||||||||||||||||||
Operating margin(2) | 18.6 | % | 8.4 | % | 0.1 | % | 2.4 | % | — | % | 1.1 | % | — | 30.5 | % | ||||||||||||||||||||||||||||||||
Other income (expense), net(3) | $ | (52) | — | — | — | — | 31 | — | $ | (21) | |||||||||||||||||||||||||||||||||||||
Income before income tax | $ | 2,085 | 1,075 | 11 | 303 | 1 | 173 | — | $ | 3,647 | |||||||||||||||||||||||||||||||||||||
Income tax provision | $ | 265 | 318 | $ | 583 | ||||||||||||||||||||||||||||||||||||||||||
Tax rate(2) | 12.7 | % | 16.0 | % | |||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 1,820 | 1,075 | 11 | 303 | 1 | 173 | (318) | $ | 3,064 | |||||||||||||||||||||||||||||||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted(2)(4) | $ | 4.31 | $ | 2.54 | $ | 0.03 | $ | 0.72 | $ | — | $ | 0.41 | $ | (0.75) | $ | 7.25 | |||||||||||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. | |||||||||||||||||||||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. | |||||||||||||||||||||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. | |||||||||||||||||||||||||||||||||||||||||||||||
(4) Calculated based upon 422,394 diluted weighted-average shares of common stock. | |||||||||||||||||||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA | |||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Twelve Months Ended January 29, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP | Stock-Based Compensation | Employer Payroll Taxes on Employee Stock Transactions | Intangible Amortization | Realignment Charges | Acquisition, Disposition and Other Items | Certain Litigation and Other Contingencies(5) | Tax Adjustment(1) | Non-GAAP As Adjusted(2) | |||||||||||||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of license revenue | $ | 163 | (1) | — | (44) | — | — | — | — | $ | 118 | ||||||||||||||||||||||||||||||||||||||||||
Cost of subscription and SaaS revenue | $ | 588 | (19) | — | (186) | — | — | — | — | $ | 383 | ||||||||||||||||||||||||||||||||||||||||||
Cost of services revenue | $ | 1,292 | (99) | (1) | (1) | — | — | — | — | $ | 1,190 | ||||||||||||||||||||||||||||||||||||||||||
Research and development | $ | 2,816 | (524) | (1) | (3) | — | (1) | — | — | $ | 2,286 | ||||||||||||||||||||||||||||||||||||||||||
Sales and marketing | $ | 3,711 | (322) | (8) | (94) | — | (2) | — | — | $ | 3,288 | ||||||||||||||||||||||||||||||||||||||||||
General and administrative | $ | 767 | (157) | (1) | — | — | (132) | 237 | — | $ | 713 | ||||||||||||||||||||||||||||||||||||||||||
Realignment | $ | 42 | — | — | — | (42) | — | — | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||
Operating income | $ | 2,388 | 1,122 | 11 | 328 | 42 | 135 | (237) | — | $ | 3,789 | ||||||||||||||||||||||||||||||||||||||||||
Operating margin(2) | 20.3 | % | 9.5 | % | 0.1 | % | 2.8 | % | 0.4 | % | 1.1 | % | (2.0) | % | — | 32.2 | % | ||||||||||||||||||||||||||||||||||||
Other income (expense), net(3) | $ | 191 | — | — | — | — | (157) | — | — | $ | 34 | ||||||||||||||||||||||||||||||||||||||||||
Income before income tax | $ | 2,382 | 1,122 | 11 | 328 | 42 | (22) | (237) | — | $ | 3,626 | ||||||||||||||||||||||||||||||||||||||||||
Income tax provision | $ | 324 | 256 | $ | 580 | ||||||||||||||||||||||||||||||||||||||||||||||||
Tax rate(2) | 13.6 | % | 16.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 2,058 | 1,122 | 11 | 328 | 42 | (22) | (237) | (256) | $ | 3,046 | ||||||||||||||||||||||||||||||||||||||||||
Net income per weighted-average share, diluted for Classes A and B(2)(4) | $ | 4.86 | $ | 2.65 | $ | 0.03 | $ | 0.77 | $ | 0.10 | $ | (0.05) | $ | (0.56) | $ | (0.61) | $ | 7.20 | |||||||||||||||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) Calculated based upon 423,240 diluted weighted-average shares for Classes A and B. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(5) Reflects derecognition of a $237 million previously accrued litigation loss as a result of a jury verdict in January 2020 against VMware in a patent litigation matter brought by plaintiffs Cirba Inc and Cirba, IP. Inc. On December 21, 2020, the United States District Court of the District of Delaware set aside the jury verdict and ordered a new trial. |
REVENUE BY TYPE | ||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
January 28, | January 29, | January 28, | January 29, | |||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
License | $ | 1,035 | $ | 1,014 | $ | 3,128 | $ | 3,033 | ||||||||||||||||||
Subscription and SaaS | 868 | 707 | 3,205 | 2,587 | ||||||||||||||||||||||
Total license and subscription and SaaS | 1,903 | 1,721 | 6,333 | 5,620 | ||||||||||||||||||||||
Services: | ||||||||||||||||||||||||||
Software maintenance | 1,346 | 1,307 | 5,356 | 5,105 | ||||||||||||||||||||||
Professional services | 282 | 266 | 1,162 | 1,042 | ||||||||||||||||||||||
Total services | 1,628 | 1,573 | 6,518 | 6,147 | ||||||||||||||||||||||
Total revenue | $ | 3,531 | $ | 3,294 | $ | 12,851 | $ | 11,767 | ||||||||||||||||||
Percentage of revenue: | ||||||||||||||||||||||||||
License | 29.3 | % | 30.8 | % | 24.3 | % | 25.8 | % | ||||||||||||||||||
Subscription and SaaS | 24.6 | % | 21.5 | % | 25.0 | % | 22.0 | % | ||||||||||||||||||
Total license and subscription and SaaS | 53.9 | % | 52.3 | % | 49.3 | % | 47.8 | % | ||||||||||||||||||
Services: | ||||||||||||||||||||||||||
Software maintenance | 38.1 | % | 39.7 | % | 41.7 | % | 43.4 | % | ||||||||||||||||||
Professional services | 8.0 | % | 8.0 | % | 9.0 | % | 8.8 | % | ||||||||||||||||||
Total services | 46.1 | % | 47.7 | % | 50.7 | % | 52.2 | % | ||||||||||||||||||
Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||
REVENUE BY GEOGRAPHY | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
January 28, | January 29, | January 28, | January 29, | ||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
United States | $ | 1,645 | $ | 1,610 | $ | 6,232 | $ | 5,878 | |||||||||||||||
International | 1,886 | 1,684 | 6,619 | 5,889 | |||||||||||||||||||
Total revenue | $ | 3,531 | $ | 3,294 | $ | 12,851 | $ | 11,767 | |||||||||||||||
Percentage of revenue: | |||||||||||||||||||||||
United States | 46.6 | % | 48.9 | % | 48.5 | % | 50.0 | % | |||||||||||||||
International | 53.4 | % | 51.1 | % | 51.5 | % | 50.0 | % | |||||||||||||||
Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
RECONCILIATION OF GAAP CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||||||||
TO FREE CASH FLOWS | |||||||||||||||||||||||
(A NON-GAAP FINANCIAL MEASURE) | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
January 28, | January 29, | January 28, | January 29, | ||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
GAAP cash flows from operating activities | $ | 1,137 | $ | 1,324 | $ | 4,357 | $ | 4,409 | |||||||||||||||
Capital expenditures | (123) | (82) | (386) | (329) | |||||||||||||||||||
Free cash flows | $ | 1,014 | $ | 1,242 | $ | 3,971 | $ | 4,080 | |||||||||||||||