VMware, Inc. (NYSE: VMW), the global leader in virtualization solutions from the desktop through the datacenter to the cloud, today announced financial results for the second quarter 2010:

• Revenues for the second quarter were $674 million, an increase of 48% from the second quarter of 2009.
• GAAP operating income for the second quarter was $101 million, an increase of 166% from the second quarter of 2009.  Non-GAAP operating income for the second quarter was $187 million, an increase of 94% from the second quarter of 2009.
• GAAP net income for the second quarter was $75 million, or $0.18 per diluted share, compared to $33 million, or $0.08 per diluted share, for the second quarter of 2009. 
  Non-GAAP net income for the second quarter was $142 million, or $0.34 per diluted share, compared to $80 million, or $0.20 per diluted share, for the second quarter of 2009.  
• Cash, cash equivalents and short-term investments as of June 30, 2010 were $2.8 billion, an increase of 21% compared to a year ago. Total deferred revenues were $1.5 billion, an increase of 58% from the same period a year ago.
• For the trailing twelve months ended June 30, 2010, operating cash flows were $1.1 billion, an increase of 3% from the same period a year ago.  Trailing twelve month free cash flows were $1.0 billion, an increase of 33% from the same period a year ago.

US revenues for the second quarter increased 43% to $334 million from the second quarter of 2009.  International revenues for the second quarter grew 53% to $340 million from the second quarter of 2009.

License revenues were $324 million, an increase of 42% from the second quarter of 2009. Services revenues, which include software maintenance and professional services, were $350 million, an increase of 54% from the second quarter of 2009. 

“Our strong second quarter results were driven by demand across all products and regions,” said Mark Peek, chief financial officer.  “For the third quarter, we expect license revenues to be flat sequentially and total revenues to increase to a range of $680 and $705 million.  For our 2010 annual revenues, we are raising our guidance to be in the range of $2.725 and $2.8 billion, an increase of 35% to 38% from 2009.”

“We are gratified that customers continue to recognize the value that VMware provides in modernizing infrastructures and providing a pragmatic path to cloud computing,” said Paul Maritz, president and chief executive officer.  “As customers continue on this path, they are looking for a strategic partner to help move them forward, and VMware will continue to invest to deliver solutions that enable IT-as-a-service.”

Recent Highlights & Strategic Announcements

• On July 13, 2010, VMware announced VMware vSphere 4.1, an updated version of VMware’s flagship virtualization and cloud infrastructure platform.  With VMware vSphere 4.1, VMware once again sets the bar in virtualization, coupling dramatic scalability and performance enhancements with new management capabilities to deliver the most powerful foundation for cloud computing.  The announcement included additions to VMware’s vCenter Family of management products and new packaging for the SMB market.
• In the second quarter 2010, VMware announced a series of moves to further its Open Platform-as-a-Service (Open PaaS) offerings and enable application portability across private and public cloud environments. The announcements included the acquisition of Gemstone, which introduces sophisticated data-caching capabilities; a new partnership with Salesforce.com, whereby Java and Spring framework developers will be able to deploy new applications into a cloud and leverage Salesforce.com capabilities; and a partnership with Google, whereby the Spring framework will be integrated with Google’s App Engine.
• On June 10, 2010, VMware announced it is positioned by Gartner, Inc. in the Leaders Quadrant of the Gartner Magic Quadrant for x86 Server Virtualization Infrastructure.  According to the report: “The x86 Server Virtualization Infrastructure market is a foundation for two extremely important market trends - infrastructure modernization and cloud computing.” 
• On June 9, 2010, VMware and Novell announced an expansion to their partnership with an original equipment manufacturer (OEM) agreement through which VMware will distribute and support the SUSE® Linux Enterprise Server operating system at no additional cost to vSphere customers.   With this agreement, customers can more easily and cost-effectively virtualize Linux applications, accelerate their evolution to a fully virtualized datacenter and simplify portability of their applications to cloud environments. 

VMware plans to host a conference call today to review its second quarter results and to discuss its financial outlook.  The call is scheduled to begin at 2:00 p.m. PT/ 5:00 p.m. ET and can be accessed via the Web at http://ir.vmware.com. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 30 days.