VMware, Inc. (VMW): history, ownership, mission, how it works & makes money

A Brief History of VMware, Inc.

VMware, Inc., founded in 1998, has established itself as a leader in cloud infrastructure and digital workspace technology. The company went public in 2007, and its stock is listed on the New York Stock Exchange under the ticker symbol VMW. VMware has continually evolved its offerings, transitioning from traditional virtualization solutions to a comprehensive suite of cloud services and software as a service (SaaS) solutions.

Recent Financial Performance

As of August 4, 2023, VMware reported a total revenue of $3.4 billion for the quarter, representing an increase from $3.3 billion in the same quarter of the previous year. For the six months ended August 4, 2023, total revenue was $6.7 billion, compared to $6.4 billion for the same period in 2022.

Stock Performance

VMware's stock has shown resilience in the market. As of August 4, 2023, VMware's stock price was approximately $157.39, reflecting a year-to-date increase of about 22%. The company has a market capitalization of approximately $67 billion.

Debt and Liabilities

As of August 4, 2023, VMware reported total liabilities of $29.7 billion, which includes long-term debt of $9.4 billion. The company’s debt structure is primarily composed of unsecured senior notes with maturities extending to 2031.

Subscription and SaaS Revenue Growth

VMware's subscription and SaaS revenue has been a significant growth driver, reported at $1.3 billion for Q2 2023, up from $943 million in Q2 2022. This reflects a strategic shift towards recurring revenue models, which now constitute over 36% of total revenue.

Future Outlook

Looking forward, VMware aims to leverage its strong cash position and growing SaaS revenues to expand its market share in the cloud services sector. The company has identified key areas for investment, including AI and multi-cloud solutions, positioning itself for sustained growth.

A Who Owns VMware, Inc. (VMW)

Major Shareholders

As of 2024, VMware, Inc. (VMW) has several key shareholders, including institutional investors and individual stakeholders. The largest shareholders are as follows:

Insider Ownership

Insider ownership at VMware includes executives and board members. As of 2024, the following executives hold significant shares:

Market Capitalization and Stock Performance

The market capitalization of VMware, Inc. as of early 2024 is approximately $43 billion. The stock price has shown the following performance metrics:

Related Party Transactions

VMware has ongoing relationships and transactions with Dell Technologies, which continues to be a significant partner:

• Revenue from Dell accounted for approximately 37% of VMware’s consolidated revenue in Q2 2024.
• Transactions with Dell include OEM agreements and collaboration on technology projects.
• As of August 4, 2023, VMware recognized $1.2 billion in revenue from Dell for the three months ended.

Financial Overview

VMware's financial performance highlights significant revenue streams and growth opportunities:

As of August 4, 2023, VMware reported total liabilities of approximately $29.7 billion, including long-term debt of $9.4 billion. The company continues to navigate its relationship with Dell while pursuing growth in subscription and SaaS offerings, which are increasingly becoming predominant in its revenue mix.

VMware, Inc. (VMW) Mission Statement

Mission Statement Overview

VMware, Inc. is focused on becoming the leader in multi-cloud environments, enabling customers to drive their digital transformation through innovative technologies. The company aims to provide the multi-cloud platform for all applications, facilitating digital innovation and enterprise control.

Core Values and Objectives

• Customer Focus: VMware prioritizes customer needs by offering solutions that enhance their cloud strategies.
• Innovation: The company invests significantly in research and development to stay at the forefront of technological advancements.
• Collaboration: VMware emphasizes partnerships, notably with Dell Technologies, to enhance service delivery and market reach.
• Sustainability: VMware is committed to sustainable business practices and reducing its carbon footprint.

Financial Performance

As of August 4, 2023, VMware reported a total revenue of $6.685 billion for the first six months of fiscal 2024, representing a 4% increase compared to the same period in fiscal 2023. The breakdown of revenue sources is as follows:

Market Position and Strategy

VMware is strategically positioned in the multi-cloud market, focusing on the following areas:

• Cloud Infrastructure: Enhancing cloud services to support hybrid and multi-cloud environments.
• Workforce Mobility: Providing solutions that enable remote work and enhance employee productivity.
• Security: Implementing zero-trust security models to protect customer data and applications.

Recent Developments

In August 2023, VMware announced a partnership with Broadcom, aimed at integrating VMware's virtualization technology with Broadcom's infrastructure software solutions. This merger is expected to accelerate VMware's growth and enhance its service offerings.

Financial Highlights

Key financial metrics as of August 4, 2023, include:

• Net Income: $701 million for the first six months of fiscal 2024.
• Cash and Cash Equivalents: $6.8 billion.
• Long-term Debt: $9.2 billion, with a weighted average interest rate of 6.23% on the outstanding 2021 Term Loan.

Future Outlook

Looking ahead, VMware plans to continue its focus on subscription and SaaS models, which are expected to drive future revenue growth. The company aims to enhance its portfolio with innovative solutions tailored to meet evolving customer demands in a multi-cloud landscape.

How VMware, Inc. (VMW) Works

Company Overview

VMware, Inc. is a leading provider of multi-cloud services and virtualization technologies. VMware aims to help organizations accelerate their digital transformation by providing a multi-cloud platform for all applications.

Financial Performance

As of August 4, 2023, VMware reported the following key financial metrics:

Revenue Breakdown

The revenue for VMware for the six months ended August 4, 2023, is detailed below:

Geographic Revenue Distribution

VMware's revenue is generated from various regions, as shown below:

Remaining Performance Obligations

As of August 4, 2023, VMware reported remaining performance obligations of $12.9 billion, with approximately 55% expected to be recognized as revenue over the next twelve months.

Debt Overview

VMware's total principal amount of unsecured senior notes is $9.25 billion, with a net carrying amount of $9.2 billion as of August 4, 2023.

Stockholder Equity

As of August 4, 2023, VMware has an authorized repurchase program with a remaining cumulative amount of $1.6 billion.

Related Party Transactions

During the three and six months ended August 4, 2023, revenue from Dell accounted for 37% and 36% of VMware’s consolidated revenue, respectively.

Legal Proceedings

VMware is currently involved in a legal case with Cirba Inc., with a jury awarding damages of $85 million due to patent infringement.

Stock Activity

As of August 4, 2023, VMware's restricted stock activity included 24.4 million shares outstanding, with an intrinsic value of $3.9 billion.

How VMware, Inc. (VMW) Makes Money

Revenue Streams

VMware generates revenue through various streams, primarily categorized into license revenue, subscription and Software-as-a-Service (SaaS) revenue, and services revenue.

License Revenue

License revenue has decreased as VMware transitions from perpetual licensing to subscription and SaaS models. In Q2 2024, license revenue was $619 million, down from $796 million in Q2 2023, reflecting a 22% decline.

Subscription and SaaS Revenue

Subscription and SaaS revenue has seen significant growth, increasing by 34% from $943 million in Q2 2023 to $1,259 million in Q2 2024. The growth is attributed to VMware's offerings such as VMware Aria, VMware Cloud Provider Program (VCPP), and VMware Tanzu.

Services Revenue

Services revenue, which includes software maintenance and professional services, totaled $1,530 million in Q2 2024, slightly down from $1,597 million in Q2 2023. This reflects a 4% decrease, largely due to reduced demand for software maintenance as customers shift towards subscriptions.

Geographic Revenue Distribution

VMware's revenue is also segmented geographically, with the following performance:

Annual Recurring Revenue (ARR)

As of August 4, 2023, VMware reported an ARR of $5.3 billion, up from $3.9 billion a year earlier, indicating strong growth in subscription and SaaS offerings.

Cost Structure

VMware's cost of revenue includes costs associated with license revenue, subscription and SaaS revenue, and services revenue. The breakdown is as follows:

Net Income

For Q2 2024, VMware reported a net income of $477 million, compared to $347 million in Q2 2023, representing a 37% increase.

Debt and Cash Position

As of August 4, 2023, VMware's long-term debt stood at $9.4 billion. The company held cash and cash equivalents of $6.8 billion, up from $5.1 billion at the start of the year.

Related Party Transactions

During Q2 2024, revenue from Dell accounted for 37% of VMware's total revenue. This included OEM transactions that represented 5% of overall revenue.

Future Performance Obligations

As of August 4, 2023, VMware had remaining performance obligations totaling $12.9 billion, with approximately 55% expected to be recognized as revenue over the next twelve months.

Summary of Financial Performance (Q2 2024)