VMware had an 11% year-over-year increase in revenue to $ 3.19 billion for the third quarter of fiscal year 2022, driven by strong growth in subscriptions and software-as-a-service sales figures, the company announced Tuesday afternoon.
Subscription and SaaS revenue for the third quarter was $ 820 million, an increase of 21% over the previous year. Meanwhile, the quarter’s annual recurring revenue, or the amount of revenue VMware can expect annually from subscriptions and SaaS, measured at $ 3.31 billion, was a 25% year-over-year increase.
Also, total revenue from licenses, subscriptions and SaaS amounted to $ 1.53 billion, an increase of about 16% from the same quarter last year. The company is in the process of migrating several of its term license customers to the subscription model.
These numbers set VMware up well as it stands out on its own as an independent public company. The earnings report was VMware’s first since Dell unbundled its 81% stake in the company earlier this month.
“As a standalone business, we have more strategic and financial flexibility to deliver on our multi-cloud strategy,” said VMware CEO Raghu Raguram, according to the Motley Fool earnings call transcript. “We are also able to enter into even deeper partnerships with all cloud and on-premise infrastructure companies to create a better foundation that drives results for our customers.”
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For the fourth quarter, VMware said it expects total revenue of around $ 3.51 billion, below the consensus estimate of $ 3.56 billion. But company officials said they are still building subscription and SaaS efforts, and that annual recurring revenue from these areas will continue to grow, with the growth rate in 2023 likely to exceed that of the 2022 fiscal year.
Within the last few months, VMware has made several technology announcements, including the unveiling of a RAN Intelligent Controller and new telco-cloud features at MWC LA last month. The company also announced new multi-cloud efforts, edge products and SASE features at its own VMWorld conference.