VMware, Inc. (NYSE: VMW) stock lost over 0.5% in the pre-market session of August 28th, 2020 (Source: Google finance) despite decent second quarter of FY21 update. Number of on-premises projects in Americas was hurt due to pandemic. This had an impact on their core SDDC and vSAN product bookings each down in the low single digits year-over-year, as well as NSX product bookings, which were hurt in mid-single digits.
The firm derived 20% of revenue from subscription and SaaS product offerings which is >40% rise on a yoy basis and forecasts bullish momentum to continue. Overall revenue rose 9.2% yoy to $2.875 billion with subscription and SaaS and licensed revenue rising 11.4% to $1.350 billion. Major revenue contributors for subscription and SaaS, are VCPP, modern applications, EUC and Carbon Black.
VMware Cloud on AWS performance rose in triple digits year-over-year with Amazon reseller channel performing very well during the second quarter of 2020. However, On-premises perpetual license revenue fell 7% yoy to $719 million.
But, RPO, which is non-cancelable future revenue rose 17% yoy to $10.3 billion, while Total backlog was $36 million, and License backlog reaching $8 million. Total revenue reported sequential 2% yoy rise in unearned revenue.
Annual contracts for EUC led to ACV growth of over 35% yoy for EUC SaaS bookings during the second quarter While total EUC product bookings including on-premises license bookings and TCV SaaS bookings were hurt in the high single digits. Carbon Black had solid product bookings, as customer count rose to over 20,000.
For the third quarter of 2020, the overall revenue rose 5.4% yoy to $2.8 billion, driven by subscription and SaaS and licensed revenue rose 5.6% yoy to be $1.265 billion. The firm sees non-GAAP operating margin to be 27.5% with non-GAAP earnings per share of $1.42 on the diluted share count of 423 million shares. For fiscal ’21 the firm expects 7% yoy rise to $11.6 billion with Combined subscription and SaaS and licensed revenues expected to be over $5.5 billion for fiscal ’21, a rise of over 9% year-over-year, with over 45% of this total generated from subscription and SaaS.