VMware, Inc.

Reported Q4 revenue was $3.53 billion, up 7% year over year; Zane Rowe also cited total Q4 revenue of $3.5 billion. FY22 revenue was $12.85 billion, up 9% year over year. Q4 subscription and SaaS revenue was $868 million, up 23% year over year; combined subscription/SaaS and license revenue was $1.9 billion, up 11%. Q4 license revenue was $1.035 billion, up 2%; services revenue was $1.628 billion, up about 3.5%; software maintenance revenue was $1.346 billion, up 3%. Non-GAAP operating income was $1.137 billion, non-GAAP operating margin was 32.2%, and non-GAAP EPS was $2.02. FY22 subscription and SaaS revenue was $3.2 billion and subscription/SaaS ARR was $3.6 billion, up 24% year over year. Cash flow from operations was $4.4 billion for FY22; Q4 cash flow from operations was $1.137 billion and free cash flow was $1.014 billion. VMware ended Q4 with $11.2 billion in unearned revenue and $3.6 billion in cash, cash equivalents and short-term investments. For FY23, management guided to total revenue of $13.750 billion, subscription/SaaS revenue of $4.040 billion, combined subscription/SaaS and license revenue of $7.020 billion, non-GAAP operating margin of 28%, non-GAAP EPS of $6.97, cash flow from operations of $4.2 billion, and free cash flow of $3.75 billion. For Q1 FY23, management guided to revenue of $3.185 billion, subscription/SaaS revenue of $910 million, combined subscription/SaaS and license revenue of $1.555 billion, non-GAAP operating margin of 27%, and non-GAAP EPS of $1.56.

Raghu Raghuram framed the quarter as a solid finish to a good fiscal year and said VMware is in the middle of a transformation toward a multi-cloud, subscription-led company. He emphasized three strategic priorities: accelerating multi-cloud innovation, accelerating subscription and SaaS, and completing the separation from Dell. His tone was confident and forward-looking, repeatedly saying FY23 is an important year that should position VMware for accelerated growth in FY24 and beyond.

Zane Rowe highlighted that Q4 results were stronger than expected, driven by higher revenue and lower-than-expected expense growth. He cited Q4 non-GAAP operating income of $1.137 billion, margin of 32.2%, and EPS of $2.02, plus FY22 operating cash flow of $4.4 billion and year-end cash of $3.6 billion. He said FY23 guidance assumes continued shift toward subscription/SaaS, with revenue of $13.750 billion, operating margin of 28%, EPS of $6.97, and free cash flow of $3.75 billion, while noting the FCF step-down reflects investment in back-office systems and capitalized R&D tied to the transformation.

Analysts focused on the subscription/SaaS rollout, whether license remains available, and how VMware will steer customers toward SaaS. Management said subscription will get greater go-to-market focus, but license will still be sold for customers that prefer it; they also described sales comp changes, partner incentives, and consumption programs as levers to support the shift. Other questions covered Omicron and Ukraine-related disruption, with management saying they did not see meaningful Omicron impact and had already taken most macro uncertainty into account. Analysts also pressed on bookings deceleration, term-license growth, and vSAN softness; management said the bookings trend was still comfortable, term is mostly a bridge from installed-base maintenance and on-prem use cases, and vSAN is increasingly sold as part of broader full-stack or appliance solutions rather than as stand-alone software.