VMware, Inc. (NYSE:VMW) stock rose 3.78% (As on Nov 24, 11:14:18 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the third quarter of FY 22. Net income rose 3% from a year ago, to $725 million. Subscription and software-as-a-service annual recurring revenue, which has been a key indicator of VMware’s transition from a product to a service provider, increased 25% to $3.31 billion. That’s better than the 23% growth the company reported in its previous quarter, a surprise slowdown that knocked the stock back 6% in one day. However, quarterly subscription and SaaS revenue came in below expectations at $820 million, compared with analysts’ consensus of $828 million. Operating cash flow for the third quarter was $1.09 billion. Free cash flow for the third quarter was $984 million. RPO for the third quarter totaled $11.12 billion, up 9% year-over-year.

VMW in the third quarter of FY 22 has reported the adjusted earnings per share of $1.72, beating the analysts’ estimates for the adjusted earnings per share of $1.54, ccording to figures compiled by Thomson Reuters. The company had reported the adjusted revenue growth of 11 percent to $3.19 billion in the third quarter of FY 22, beating the analysts’ estimates for revenue of $3.12 billion. Non-GAAP operating income for the third quarter was $935 million, an increase of 5% from the third quarter of fiscal 2021.

VMware increased its forecast for 2022 revenues to $12.82 billion, up 9% from this year. It said fourth-quarter revenue should come in at $3.51 billion, up 7% from last year, with a profit of $1.96 a share. The revenue forecast was below Wall Street consensus estimates of $3.59 billion, although the profit beat analysts’ $1.89-a-share estimates.

For the full year, VMware is expecting a 12% growth in subscription, software-as-a-service and license revenue, to $6.3 billion. Raghuram said the subscription business generates a flywheel effect, in which greater adoption leads to more subscription sales. The company also raised full-year margin guidance to 30% and earnings per share to $7.19. It said it expects full-year 2023 revenue to grow in the high single digits.

Meanwhile, VMware Cloud on AWS GovCloud (US) achieved FedRAMP Agency Authority to Operate at the High Impact Level. FedRAMP is a mandatory U.S. government-wide program that provides a standardized approach and baseline requirements for security assessment, authorization and monitoring of cloud products.