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Edited Transcript of VMW earnings conference call or presentation 27-Feb-20 9:30pm GMT

Q4 2020 VMware Inc Earnings Call Read More...

Q4 2020 VMware Inc Earnings Call

PALO ALTO Mar 9, 2020 (Thomson StreetEvents) — Edited Transcript of VMware Inc earnings conference call or presentation Thursday, February 27, 2020 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Patrick P. Gelsinger

VMware, Inc. – CEO & Director

* Paul Ziots

VMware, Inc. – VP of IR

* Zane C. Rowe

VMware, Inc. – CFO & Executive VP

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Conference Call Participants

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* Brad Alan Zelnick

Crédit Suisse AG, Research Division – MD

* Brent John Thill

Jefferies LLC, Research Division – Equity Analyst

* Heather Anne Bellini

Goldman Sachs Group Inc., Research Division – MD & Analyst

* Kasthuri Gopalan Rangan

BofA Merrill Lynch, Research Division – MD and Head of Software

* Keith Weiss

Morgan Stanley, Research Division – Equity Analyst

* Keith Frances Bachman

BMO Capital Markets Equity Research – MD & Senior Research Analyst

* Mark L. Moerdler

Sanford C. Bernstein & Co., LLC., Research Division – Senior Research Analyst

* Matthew George Hedberg

RBC Capital Markets, Research Division – Analyst

* Michael Turits

Raymond James & Associates, Inc., Research Division – MD of Equity Research & Infrastructure Software Analyst

* Philip Alan Winslow

Wells Fargo Securities, LLC, Research Division – Senior Analyst

* Raimo Lenschow

Barclays Bank PLC, Research Division – MD & Analyst

* Stewart Kirk Materne

Evercore ISI Institutional Equities, Research Division – Senior MD & Fundamental Research Analyst

* Walter H Pritchard

Citigroup Inc, Research Division – MD and U.S. Software Analyst

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Presentation

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Operator [1]

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Good day and welcome to the Q4 and fiscal year 2020 conference call. Today’s conference is being recorded.

At this time, I would like to turn the conference over to Mr. Paul Ziots, Vice President, Investor Relations. Please go ahead, sir.

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Paul Ziots, VMware, Inc. – VP of IR [2]

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Thank you. Good afternoon, everyone, and welcome to VMware’s Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. On the call, we have Pat Gelsinger, Chief Executive Officer; and Zane Rowe, Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will take questions.

Our press release was issued after close of market and is posted on our website where this call is being simultaneously webcast. Slides which accompany this webcast can be viewed in conjunction with live remarks and downloaded at the conclusion of the webcast from ir.vmware.com.

On this call today, we will make forward-looking statements that are subject to risks and uncertainties. Actual results may differ materially as a result of various risk factors described in the 10-Ks, 10-Qs and 8-Ks VMware files with the SEC. We assume no obligation to and currently do not intend to update any such forward-looking statements.

In addition, during today’s call, we will discuss certain non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of VMware’s performance, should be considered in addition to, not as a substitution for, or in isolation from GAAP measures. Our non-GAAP measures exclude the effect on our GAAP results of stock-based compensation, amortization of acquired intangible assets, employer payroll tax on employee stock transactions, acquisition, disposition, certain litigation matters and other items as well as discrete items impacting our GAAP tax rate. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP measures, in the press release and on our Investor Relations website. Unless otherwise indicated, all financial metrics provided on this call are for the consolidated VMware entity, including Pivotal. Growth rates compare our Q4 and full fiscal year 2020 results with the recast of prior period financial information to include Pivotal due to the Pivotal acquisition, which was accounted for as a transaction by entities under common control in accordance with GAAP.

Also, VMware is presenting a new revenue line item titled Subscription and SaaS Revenue. Accordingly, reported revenue consists of the following 3 components: license, subscription and SaaS, and services. Previously, subscription and SaaS revenue was referred to as hybrid cloud subscription and SaaS revenue and was allocated between license and services revenue.

Accordingly, beginning this quarter, we will use the term product bookings to refer to the combination of subscription and SaaS and license bookings for particular product groups. This term is equivalent to license bookings, which has been used in prior quarters.

The webcast replay of this call will be available for the next 60 days on our company website under the Investor Relations link. Our first quarter fiscal ’21 quiet period begins at the close of business, Thursday, April 16, 2020.

With that, I’ll turn it over to Pat.

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [3]

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Thank you, Paul, and thank you to everyone joining us today. It was a good finish to a record fiscal year. We are thrilled to deliver more than $10 billion in revenue for full fiscal year ’20 with double-digit top line growth, a significant milestone for VMware. In Q4, total revenue increased 11% year-over-year with non-GAAP earnings of $2.05 per share. For fiscal year ’20, total revenue increased 12% year-over-year with non-GAAP earnings of $6.24 per share.

Although we had good bookings performance for the quarter and year, revenue came in a bit short of expectations due to a higher mix of subscription and SaaS as well as linked quarter deal execution challenges, in particular, with regard to the volume of deals at the end of the quarter. We continue to see large global brands betting their future on VMware. In Q4, we had 2 major financial services customers closed deals above $100 million. Within the last 2 fiscal years, more than half of the top 30 global banks have made major commitments to VMware to modernize their IT infrastructure.

More broadly, we closed a record 31 deals over $10 million in Q4 across many industries. This compares with 23 deals and a very strong Q4 last year. Customers continue to choose VMware to help deliver the digital foundation to power their app services and experiences.

We are thrilled to welcome Pivotal to the VMware family. Customers have resoundingly affirmed that both Pivotal and Carbon Black acquisitions offer tremendous value as we help customers with their digital transformations. Fiscal year ’20 was a year of momentous strategic importance with our app modernization strategy in Pivotal, our multi-cloud strategy across the hyperscalers and our security strategy with Carbon Black all taking form. I’m extremely proud of what we have accomplished over the last 12 months and I am energized by the tremendous opportunities ahead.

Our vision continues to resonate with customers as we help them build, run, manage, connect and protect any application on any cloud, across any device. And as companies build their digital foundation, CIO priorities in 2020 play to our strengths with app modernization, multi-cloud and security sitting at the top of their list.

With our recent portfolio expansions, we not only address each of their top priorities, we also now touch almost every portion of the CIO’s budget.

With the completion of the Pivotal acquisition, we are well positioned to empower developers who are building enterprise-ready, cloud-native modern applications. The Heptio and Pivotal acquisitions, combined with the VMware Cloud-native offerings, make up the recently announced Tanzu, a portfolio of products and services designed to transform the way enterprises build, run and manage application software and simplify the use of Kubernetes in a multi-cloud environment.

We will soon be shipping initial Tanzu offerings as well as unveiling the highly anticipated first Project Pacific release. Project Pacific will help transform VMware vSphere into a Kubernetes-native platform, enabling enterprises to seamlessly add Kubernetes to their existing environments, applications, operations and skill sets. I’m looking forward to provide more detail on these innovations imminently.

We continue to execute against our multi-cloud strategy as we drive and expand our cloud partnerships to offer our customers choice and flexibility. With VMware Cloud and AWS, we’re seeing a balanced distribution in use cases across: One, data center expansion; two, disaster recovery; and three, application-specific cloud migration. We are seeing the AWS channel accelerate, and the overall node count has increased more than 4x in the past year.

We continue to expand market presence and capabilities to reach more customers, including customers like Vanguard. In addition, we announced beta programs for VMware Cloud on AWS Outposts, bringing the VMware managed model for AWS infrastructure on premises.

We are seeing customers also turn to Azure VMware solutions. One of the world’s largest global wealth management firms recently chose Azure VMware Solution powered by VMware Cloud Foundation to expand their existing data center capacity with the specific requirements of using existing skills, tool sets and processes.

VMware Cloud Foundation is the integrated cloud infrastructure offering that customers, including many of the world’s largest brands, are standardizing on for both private and public clouds.

With Carbon Black now part of the VMware family, VMware is poised to take a significant leadership role in the security for the new age of multi-cloud, modern apps and modern devices. We view security as an essential and common thread throughout our offerings as we simplify security by making it an intrinsic element of our customers’ operations.

This past quarter, we have also seen early success of the enhanced partnership with Dell making Carbon Black cloud the preferred end point security solution for Dell commercial customers. We have added more than 5,000 new customers, doubling the total customer count of Carbon Black to well over 10,000.

Yesterday, Sanjay Poonen presented a keynote at the RSA conference alongside Carrie Mills, who is the Head of Threat Intelligence and Response of Southwest Airlines. Together, they talked about the sophistication of today’s cybersecurity exploits and the role of intrinsic security to help solve those challenges.

The NSX portfolio is now comprehensive across key networking requirements and use cases and is a crucial component in VMware Solutions, including VMware Cloud Foundation and app modernization and security. This quarter, we were particularly strong in selling our NSX Advanced Load Balancer solution. In addition, customers with particular strength in large retail brands are deploying the VMware SD-WAN platform at scale, achieving better real-time application performance, saving significantly on network costs and driving digital transformation in their organizations.

This month, VMware announced the acquisition of Nyansa, which will enable VMware to deliver an end-to-end network visibility, monitoring and remediation solution within VMware SD-WAN. This addition of Nyansa AI/ML capabilities to VMware’s existing network and security portfolio will further VMware’s ability to enable self-healing networks.

We experienced very strong Q4 execution across the end-user computing business. One of the largest institutions in the U.K. chose our Workspace ONE solution to transform their employee experience and modernize the management across a base of more than 200,000 devices.

Wells Fargo & Company, a diversified, community-based financial services company, has committed to our Workspace ONE and virtual platforms for significant workforce transformation by quadrupling the size of their virtual desktops to provide agility and resilience. And in the fourth quarter, VMware’s end-user computing technology received further recognition from industry analysts. VMware was positioned as a leader in The Forrester Wave: Unified Endpoint Management Q4 2019, which evaluated 13 unified endpoint management vendors. VMware’s intelligence-driven digital workspace platform, VMware Workspace ONE, was top-ranked in the current offering and strategy categories. VMware was also positioned as a leader in 3 recent IDC markets reports related to the end-user computing space.

We continue to experience customer and partner momentum with our telco cloud offerings. Just yesterday, we jointly announced a reference design collaboration with British Telecom and Intel. This collaboration built on an open and intelligent O-RAN-compliant platform will bring the power of virtualization, for the first time ever, to radio access networks for both existing LTE and future 5G networks. We believe this effort is a key milestone in transforming the telecom industry towards a software-defined approach.

We’re pleased to be working with Rogers, a leading Canadian technology and media company, to help enable their core network expansion and automation efforts. Using VMware’s telco cloud solution, Rogers will accelerate their innovation and time-to-market for new service offerings.

We are excited about the opportunity ahead of us as we continue to enable our customers’ digital transformations. We are well underway in building the portfolio and services offerings required as a foundation for the next phase of our growth, one that will set us up well for the next decade. We are committed to executing at scale as we continue to build our subscription and SaaS business and invest in our growth while we deliver technologies and solutions now to help our customers with their digital transformations.

I want to thank all our VMware customers, partners, and, of course, team VMware employees for milestone fiscal year 2020.

I’ll now turn it over to Zane to talk more about our business performance.

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Zane C. Rowe, VMware, Inc. – CFO & Executive VP [4]

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Thank you, Pat.

Q4 concluded a strong fiscal ’20 with significant expansion in our broad product and solutions portfolio, including the successful closing of Carbon Black and Pivotal in Q3 and Q4, respectively, all of which continue to resonate well with our customers.

In Q4, we had good bookings growth overall and saw continued strength in EMEA and the Americas. Our Asia Pacific region had a strong year. However, we saw some weakness on a year-over-year basis in the quarter due to a tough compare with 40% growth in Q4 last year.

While total bookings performance for the quarter and full year came close to our expectations, license revenue in the quarter fell short. This was primarily due to 3 reasons. On the product side, our EUC product booking strength of over 30% growth year-over-year in Q4 had a far greater SaaS mix than expected, which is recognized as revenue ratably.

Second, we saw a stronger-than-expected mix of subscription and SaaS in our larger deals for the quarter. For example, our top 10 deals had 2x the mix of subscription and SaaS than we saw in Q4 last year, which also exceeded our expectations.

And third, as Pat mentioned, we believe we could have executed better against our sales pipeline and closing on transactions, especially towards the end of the quarter, which is historically where we’ve seen strong close rates.

As we previously reported, for example, in Q4 last year, we had very high close rates, which we didn’t accomplish this year as well as strong backlog that we were able to utilize.

We are, however, pleased that we completed a record number of deals above $10 million in Q4, and the increased demand for our subscription and SaaS offerings demonstrates the value we’re delivering to our largest and most strategic customer base.

Our focus on subscription and SaaS has delivered significant bookings growth over the last number of quarters, and we expect this trend to continue.

Before moving to financial metrics for the quarter and the year, we’ve made a couple of key changes in the way we report that I’d like to highlight. As we mentioned on the Q2 and Q3 calls, financial statements for the combined entity of VMware and Pivotal have been recast for prior periods and presented as if the entities were consolidated, as required by GAAP.

We are now presenting a new revenue line titled Subscription and SaaS, following the acquisitions of Pivotal and Carbon Black. Previously, we had referred to this category as hybrid cloud subscription and SaaS in earnings remarks. It was not a separate revenue line item on the income statement, and revenue for these offerings was historically allocated between license and services.

Recast financial statements for the prior 2 years, including the additional revenue line for subscription and SaaS, are included in the slide deck accompanying this webcast as well as with the Q4 press release financial statements on our website.

Metrics I discuss on this call are based on the recast financial statements, which include Pivotal, as well as the new revenue line item for subscription and Saas, unless I indicate otherwise.

In Q4, total revenue grew 11.4% year-over-year to $3.073 billion. Excluding Pivotal, total revenue growth was 10.9% year-over-year. The combination of subscription and SaaS and license revenue grew 14.1% year-over-year to $1.590 billion. Excluding Pivotal, revenue for the combination of subscription and SaaS and license grew 12.1% year-over-year.

We’ll now be reporting on, and providing guidance, for the aggregate of these 2 revenue line items as it reflects how we’re managing the combination of offerings across our portfolio. Subscription and SaaS revenue for Q4 rose 52% year-over-year to $556 million or 18% of total revenue. License revenue, which now represents on-premises perpetual license revenue, increased 1% year-over-year. This on-premises license revenue line item is expected to have a slower growth rate than it has historically now that our fast-growing cloud offerings are captured in the subscription and SaaS revenue line.

We also expect on-premises license revenue to fluctuate more on a quarter-by-quarter basis than what we’ve seen previously. This is driven by a higher percent of subscription and SaaS being sold as well as the variability of large deals between quarters that have historically had a large license revenue impact.

Q4 non-GAAP operating income rose 12.1% to $1.054 billion. Non-GAAP operating margin was 34.3%, up 20 basis points versus Q4 ’19, and non-GAAP earnings per share was $2.05 on a share count of 424 million diluted shares.

We ended the quarter with $9.3 billion in unearned revenue and $2.9 billion in cash. Cash flow from operations for fiscal ’20 was $3.872 billion and free cash flow was $3.593 billion.

In the slide deck that accompanies this call, we’ve also included Q4 and FY ’20 results to compare with our prior guidance provided on the Q3 call, which excluded Pivotal.

The Q4 growth in total revenue, plus sequential change in unearned revenue, was 11.4% year-over-year. We grew 17% year-over-year in Q4 for subscription and SaaS and license revenue plus the sequential change in unearned subscription and SaaS and license revenue. Excluding Pivotal revenue, to level-set with how we forecasted revenue growth for the quarter, growth in total revenue plus sequential change in unearned revenue was 12.3% year-over-year for Q4. Reflecting our prior definition of license revenue and excluding Pivotal, growth in license revenue plus the sequential change in unearned license revenue was 11.9% year-over-year for Q4.

At the end of Q4, RPO, which includes our committed and noncancelable future revenue, was $10.3 billion. Total backlog was $18 million, which consisted primarily of orders held due to export requirements. License backlog at quarter end was $5 million.

Turning to bookings for product groups. Q4 NSX product bookings, which includes both on-premises license and SaaS bookings, grew over 20% year-over-year for Q4 and over 30% for the full year fiscal ’20. vSAN product bookings grew in the mid-teens year-over-year for Q4 and over 30% for the full year.

As we mentioned previously, we added SKUs at multiple price points to cover more market segments. We’ve also enabled customers to utilize previously purchased licenses which has had a near-term impact on vSAN growth. We believe this strategy will drive long-term growth and customer adoption.

EUC product bookings increased over 30% for the quarter and over 20% for the full year as customers continue to increase their SaaS purchases of Workspace ONE. More than 2/3 of EUC product bookings were sold as SaaS in Q4.

Core SDDC product bookings for Q4, which includes compute and management combined, decreased in the low single digits year-over-year and increased in the mid-single digits for the full year fiscal ’20. Total core SDDC bookings were flat for Q4 and up mid-single digits for fiscal ’20. Additional details for product bookings are contained in the slide deck accompanying this call.

In Q4, we repurchased $55 million in stock and ended the quarter with $1 billion remaining under our current repurchase authorization, which extends through the end of fiscal ’21.

Turning to guidance for fiscal ’21. We expect total revenue of approximately $12.050 billion, for a growth rate of 11.5% which is consistent with the outlook we provided on our last call. This forecast includes the Pivotal acquisition, which does not have a material impact on our expected growth rate for fiscal ’21. Pivotal is in the process of creating a PaaS version for Kubernetes in fiscal ’21, and we expect Pivotal’s contribution to VMware’s growth will increase in future years as it becomes part of our applications business.

Based on the visibility we have in the business, our current view that is incorporated into our guidance includes an impact from COVID-19 on our Asia Pacific results in Q1. We’re monitoring the situation closely and have not included any further impact for Q1 or for the full year at this time.

We currently expect to generate approximately $5.860 billion from the combination of subscription and SaaS and license revenue in fiscal ’21 or an increase of 15.9% versus fiscal ’20 with over 40% of this amount from subscription and Saas. We expect non-GAAP operating margin of 28.8% for fiscal ’21 with non-GAAP earnings per share of $6.55 on the diluted share count of 422 million shares.

For full year fiscal ’21, we expect cash flow from operations of $4.1 billion, up 6% versus fiscal ’20, and we expect free cash flow of $3.76 billion.

For Q1, we expect total revenue of approximately $2.730 billion or a growth rate of 11.4%. As I mentioned earlier, this factors in the preliminary estimate for COVID-19 in our Asia Pacific region for Q1. We expect approximately $1.225 billion from combined subscription and SaaS and license revenue in Q1 or an increase of 15.9% year-over-year with over 45% of this amount from subscription and Saas. We expect non-GAAP operating margin of 25.1% for Q1 with non-GAAP earnings per share of $1.27 on a diluted share count of 423 million shares.

In conclusion, Q4 was a good ending to a successful fiscal year for VMware. We’re pleased to now have Pivotal, along with Carbon Black, as part of VMware, which strengthens our strategic positioning in our applications and security franchise platforms.

Our subscription and SaaS offerings have been a significant contributor to overall company performance in fiscal ’20 and are expected to continue to perform well throughout fiscal ’21.

With that, I’ll turn it back to Paul.

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Paul Ziots, VMware, Inc. – VP of IR [5]

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Thanks, Zane. (Operator Instructions) Operator, let’s get started.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we will go first to Kash Rangan of Bank of America.

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Kasthuri Gopalan Rangan, BofA Merrill Lynch, Research Division – MD and Head of Software [2]

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Nice finish to the year. Pat, I was wondering if you could talk about what is the action plan for execution. Is it just a company product portfolio as rich and deep as it is? It’s probably grown a little bit too much that you have to contend with making tweaks to the go-to-market strategy as you go into the next fiscal year.

And also, if you could give us a little bit more depth into the partnerships with Amazon, other cloud providers. I know you’ve been calling out a certain percentage of the business that would embed the revenues of business pertinent to these cloud partnerships. So I’m curious if you can drill a little bit more, talk about any key customer wins that give — should give us more conviction as the Amazon partnership progresses to the next level as does the other cloud providers as well.

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [3]

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Okay. Thank you, Kash. And maybe I’ll just start by framing that — our vision, strategy, consistent, unchanged. But what we’ve seen is that as we’ve added new capabilities to the portfolio, we do have a lot of products now. And as a result of that, we have laid out our — what I call, our 5-pillar strategy, which has the VMware Cloud, VMware Cloud offerings as well as VMware Cloud Foundation. On top of that is Tanzu, the portfolio of our developer offerings, plus the 3 other capabilities that we have, our virtual cloud network with NSX, our digital workspace, and now, the Intrinsic Security platform with Carbon Black cloud.

And these 5, we’re just focusing all our attention on, right? And this is how we’re going to reach the market. We’re going to increasingly view these as the franchise offerings to simplify the portfolio of VMware and drive more efficiency, execution through our sales and go-to-market.

As you mentioned, we didn’t have as good execution at the finish of the quarter. And as we saw, we had a — we have simply too many deals to get done as we finished the quarter. And while we had an extraordinary number of big deals, 31 over $10 million, and that was compared to 23 deals a year ago, which was an exceptional quarter, we simply had too much to get done at the end of the quarter. And Sanjay with Jean-Pierre are taking steps to improve our deal timing and execution. We simply had too much to get done. And one deal, in particular, just a very large deal came in an hour after our bookings cutoff. And those are the kind of things we just can’t allow to have happen to our execution. Sanjay and Jean-Pierre are well underway on executing improvement plans to get better execution timelines and linearity of our business over the quarter.

You also asked a bit about the cloud and the cloud partnerships. I mentioned that we’re seeing acceleration 4x the number of nodes in our Amazon cloud year-on-year. And we really — as you’ve heard me say before, Kash, any new major enterprise offering need about 2 years to get mature. So customers can really start betting on it. And we crossed that 2-year milestone in Q4 of last year. We’re seeing the acceleration of the relationship. Amazon as a reseller, is gaining traction. I mentioned Vanguard, a great customer example, a great brand who’s betting on us for a couple of data center evacuations, but their plans are to do a much bigger hybrid deployment of — with VMware if we well execute in the near term. So we’re seeing that momentum pick up. We’ve seen our first major deal with the Azure VMware services, a major financial services institution. So overall, the momentum of our multi-cloud strategy that we have with the key partnerships, Amazon is our preferred partner, now Microsoft, the Google, Oracle, Alibaba, IBM offerings, all of those gaining momentum. So we feel like our strategy is exactly where the market wants to head into the future.

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Paul Ziots, VMware, Inc. – VP of IR [4]

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Thank you, Kash.

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Operator [5]

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And we’ll go to Matt Hedberg of RBC Capital Markets.

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Matthew George Hedberg, RBC Capital Markets, Research Division – Analyst [6]

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Pat, I wanted to start with you. You always have such a great perspective on the overall demand environment. It sounds like what happened at the end of your Q4 is maybe more sort of your own closed process. I’m sort of curious, though, your view on the overall market. Obviously, I think the competitive positioning is strong. But sort of, how does the buying environment feel? Zane mentioned, there was a small impact, I think, to your Q1 guide for COVID-19. But are you seeing anything impacting demand thus far a month into the quarter?

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [7]

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Yes. Let’s say, the bigger picture — and thanks for the question, Matt. The bigger picture, we would say, is unchanged, right? The view of technology, digital transformation, and as you’ve heard me say before, I think we’re like year 3 in a 10-year cycle of digital transformation. And with the digital transformation, it’s not an IT priority. It’s a company priority. And as a result, it’s become a central theme of every CEO and every C-suite’s activity. And as a result, we expect to see tech spend well exceed GDP. And we expect software and enterprise software to well exceed overall tech spend. So overall, we continue to see that scenario and lasting for several years into the future.

And obviously, COVID-19, too early to tell its ultimate impact and probably have some effect of moderation overall for the year. But that’s against a robust view of IT and tech spend as a core digital transformation agenda for years into the future.

And overall, even though we didn’t completely execute our business as we finished the year, we saw major brands and customers making huge commitments to VMware. And we mentioned Wells Fargo as one of the examples. We saw the particular strength we highlighted with financial services now. Major — essentially half of the top 30 banks in the world have made major commitments to us.

Just got back from Europe meeting numerous customers. It was sort of like Mobile World Congress on tour, met with many of the top service providers and other major brands there. Again, strong affirmation for the portfolio. And we continue to believe that our long-term growth and value creation and the value we bring to our customers is quite tremendous.

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Zane C. Rowe, VMware, Inc. – CFO & Executive VP [8]

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Matt, this is Zane. I’ll just add. As Pat pointed out, obviously, we’re monitoring COVID-19 very closely. Within our guide, we did mention that we have expected a moderate impact at this time to our APJ region. We haven’t extended that beyond that. So that’s taken into account for the first quarter and that element into the full year as well. But obviously, we’re monitoring closely, and it’s early in our quarter and then potentially early days for the virus as well.

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Paul Ziots, VMware, Inc. – VP of IR [9]

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Thank you, Matt.

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Operator [10]

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And we’ll move to Walter Pritchard of Citi.

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Walter H Pritchard, Citigroup Inc, Research Division – MD and U.S. Software Analyst [11]

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Pat, wanted to ask you and Zane about — it looks like the impact of growth from Pivotal, our understanding it’s included in the year ago, but the overall business growing about the same as VMware, and I think they were growing roughly twice the rate. If we think about sort of what has to happen from a product perspective, you went into with a little bit of detail, maybe you could help us understand what’s holding that product line back and when do you expect that we start to see between that Tanzu and Pacific, the container strategy really start to help to be accretive to revenue?

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [12]

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Yes. So let me frame the strategy, and I’ll ask Zane to help on some of the specific financial impacts. But overall here, we’re very happy to get the acquisition closed, which we did just before the end of the year. And this idea of being able to augment the infrastructure portfolio, VMware, with the developer platform, and this is what the Tanzu portfolio and the imminent launch of that portfolio is all about. And we really believe this gives us a tremendous position to help customers with their modern applications in Kubernetes, one of the most important shifts in enterprise architecture since the cloud. And there’s good anticipation for the launch of Pacific as well.

The Q4 performance of Pivotal was in line with our expectations. We are in the process of integrating and operationalizing it into VMware as well as accelerating its move to a common Kubernetes framework and really building it as a key component of the overall Tanzu portfolio. So this year is really a transition year for the business in our fiscal year ’21 as we get it to that point that it really is a complete set of Kubernetes services well integrated with VMware and a key component of the overall Tanzu portfolio.

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Zane C. Rowe, VMware, Inc. – CFO & Executive VP [13]

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And along with that, Walter, as you highlighted, we do expect the performance to be a slight headwind on our financials this year as it has been recast and is obviously part of the base. And you’re exactly right. As you think about that trajectory, we do believe, beyond FY ’21, as we roll out the elements of PaaS that Pat articulated, we think it’ll add significantly to our bookings and to this portion of our business. So we’re excited about the long-term prospects and have work to do short term.

We do think that the strength in the renewal business will continue, however. So we’re pleased to see that strength continue for Pivotal.

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Paul Ziots, VMware, Inc. – VP of IR [14]

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Thank you, Walter.

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Operator [15]

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And we’ll go next to Raimo Lenschow of Barclays.

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Raimo Lenschow, Barclays Bank PLC, Research Division – MD & Analyst [16]

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It’s fine to see what the CEO lifting up the whole company had a bit of a smarter step there. The question I had was like, you talked about the issues that you had on the quarter, but you also said there was more subscription, more SaaS in the mix. Can you help us understand what part was — which part was more important?

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Zane C. Rowe, VMware, Inc. – CFO & Executive VP [17]

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Yes. I’ll start. We were very pleased with the subscription-SaaS mix. I mean over 50% growth on a year-over-year basis. And as you think about those elements, we touched on it a few quarters ago with our go-to-market efforts, obviously, seeing a nice balance with that Saas. It just so happened in the case of the fourth quarter, we saw more of that, in particular with our EUC business, which had a remarkable shift to SaaS, which we’re very pleased with. But as I pointed out in my prepared remarks, we get that revenue ratably.

And if you look at EUC, total product bookings grew over 30%, and yet license bookings were actually off 17%. So when you think about that license line item, which now doesn’t include any element of the subscription and SaaS component, we’re stripping that out. So you do see the net decline in the license line item, in particular, with those products that could shift towards a SaaS module or otherwise a SaaS go-to-market or otherwise be perpetual. So we’re actually generally pleased with the overall growth we’ve seen, in particular with these larger deals. As I mentioned, for the top 10 deals, we had 2x the amount of subscription and SaaS that we’ve seen historically, and that was unexpected as well.

So generally speaking, we’re comfortable with where the bookings are. Obviously, disappointed in our ability to execute. We still had license revenue where we had it in the guide, so we’re disappointed by that element. But generally speaking, we like the trends we’re seeing with subscription and SaaS.

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Paul Ziots, VMware, Inc. – VP of IR [18]

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Thank you, Raimo.

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Operator [19]

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And our next question comes from Phil Winslow of Wells Fargo.

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Philip Alan Winslow, Wells Fargo Securities, LLC, Research Division – Senior Analyst [20]

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Just wanted to focus in on the SDDC bookings. Obviously, you called them out as — on the product side as negative this quarter, definitely a deviation in trend from what we’ve been seeing in the prior few quarters.

Wondering if you can just focus in on that? Obviously, still good for the — and very strong for the full year, but definitely a deviation in Q4? And then maybe some color on that. Then how are you thinking about sort of just that — the SDDC bookings sort of over the course of this coming fiscal year?

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [21]

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Yes. And overall, we continue to see customers making major commitments to the VMware platform. And obviously, that’s a combination of what they’re doing on-premises as well as what’s happening with their cloud offerings. And in particular, like if we look at VMware Cloud Foundation, our marquee offering in the space, we’re just very excited to see the customers. And we doubled — year-on-year, doubled the number of logos that are now running it as a platform, mentioned major customers last quarter was JPMorgan, a major commitment to the platform. And this idea is becoming more and more powerful that people are saying, “I want to standardize the VMware platform for my data center transformation.” And that same software stack is exactly what we’re running on VMware Cloud and what we’re seeing for our Azure, Oracle, Google and Alibaba offerings.

We also see that there’s a great excitement in the launch of vSphere 7 that’s imminent. And with that, a major refresh that we build more of the security capabilities, and most importantly, Project Pacific. And that is this new capability around making Kubernetes and containers exactly equal and operated as part of the VM infrastructure that customers has today. A lot of excitement for that.

So we do see that overall that there is some variability quarter-to-quarter, large deals and the growth rate that we see and, obviously, the restatement of the way we’re now breaking out the revenue and communicating that. I’ll let Zane add our view of how that plays out over the coming year as well.

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Zane C. Rowe, VMware, Inc. – CFO & Executive VP [22]

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Yes. I mean, as Pat pointed out, even in this category, we’re very pleased with what we expect to see on the VMC booking side. And then VCPP, which historically was in license and now is in subscription and SaaS, is having an element in those growth rates as well. So we’re pleased. We haven’t changed our outlook in this category at all as we think about the midterm.

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Paul Ziots, VMware, Inc. – VP of IR [23]

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Thank you, Phil.

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Operator [24]

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And we go to Brent Thill of Jefferies Group.

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Brent John Thill, Jefferies LLC, Research Division – Equity Analyst [25]

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And Pat, you had mentioned that one of the deals had closed subsequent to the quarter end. I’m just curious if you could give a little more color about — it sounds like these deals are still in the pipeline. They haven’t been lost. It’s just a matter of time, or did anything else happen to those deals that slipped?

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [26]

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Yes. And thanks, Brent. And we just said that a lot of deals, too many of them late in the quarter, a lot going on with the acquisition closures, acceleration of the large number of deals. And simply put, we should have executed it better. As I mentioned, one of the deals, we got literally a major deal closes an hour after our bookings cutoff. Unacceptable. And taking steps to get more linearity, driving those harder. Obviously, this is a key part of Jean-Pierre and Sanjay’s focus as we drive that execution. But overall, we had enough business in the pipeline to meet our financial goals, and we simply didn’t get it done.

We do feel that as we look at Q1, again, we have enough pipeline to go execute the business, and it’s now our opportunity to go well execute that as we look out to Q1. And it’s part of our guidance that Zane has presented for us, and we’re well underway. The deals we had in the pipeline, as we finish the year, where over half the deal value is already completed for us. We always have more pipeline than you would expect to be able to close at any point in time, but we’re well underway in Q1 of getting major deals and major partners announced. So we do feel good about what we’ve communicated so far today.

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Zane C. Rowe, VMware, Inc. – CFO & Executive VP [27]

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Brent, some of what I touched on earlier can also be highlighted in our RPO and deferred revenue numbers, which are up nicely on a year-over-year basis as we think about that shift to subscription, even with some of these larger deals that is captured in the deferred line, which we expect to see through the course of the year and beyond.

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [28]

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Yes. And maybe just one other point to add, no losses. It’s not like any of these deals have gone away, right? We didn’t lose to any competitors. It’s just really about us executing a pipeline that has some of the world’s biggest brands, betting on us now in very strategic and broad ways.

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Paul Ziots, VMware, Inc. – VP of IR [29]

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Thank you, Brent.

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Operator [30]

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Our next question is from Mark Moerdler of Bernstein Research.

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Mark L. Moerdler, Sanford C. Bernstein & Co., LLC., Research Division – Senior Research Analyst [31]

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Thank you for the additional details and the breaking out of SaaS and subscription in the numbers. I think it’ll help people.

You recast the financials for the full year, including Pivotal, was a 30.2% operating margins. Can you help us understand the individual moving parts that are bringing the margins next year down? So your estimated 28.8%, is this due to a bigger impact from Carbon Black? Is it due to the mix of a higher percentage of subscription and cloud? Can you give us any color? It would be appreciated.

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Zane C. Rowe, VMware, Inc. – CFO & Executive VP [32]

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Sure. Yes, mark, you’re actually on the right track. We — when we mentioned the acquisitions, we highlighted there’d be a couple of points, so 2 points impact just with the recast of Pivotal.

As you look at the fourth quarter, you see that there are actually some improvements on the Pivotal line on a year-over-year basis, so we’re pleased to see the trend positive, albeit 2 points that did impact our results.

We also mentioned that Carbon Black would have an impact on the year, and we’ve seen good progress on the Carbon Black side as well, but it also has an impact as well as our continued investments in some of the key areas of the subscription and SaaS businesses, much like VMC and some of the other growth areas. Velox cloud and CloudHealth are all consuming some of those investments on a year-over-year basis.

We’re very pleased, as you can tell, with the trajectory we’re seeing on the top line for the areas where we are investing, and we expect to see continued returns. And the trajectory in a number of those businesses is positive, albeit, obviously, on a weighted average, having an impact on the aggregate company operating margin. But we’re in line with where we thought we’d be. And if anything, seeing a little more progress than was earlier expected in the broader category.

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [33]

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Yes. And overall, we’d say we’re managing carefully the long-term value creation that we’re driving for. We see this being the combination of accelerating growth rate, right, as well as balancing the margin that we had trade off as we’re building the business. We’re very happy to see SaaS and subscription accelerated. Over 50% growth this quarter, and that’s something we’ve been talking about for quite a few quarters now as that’s been building up and seeing good growth. So yet another quarter of very good growth in that area we think strategically sets the company up for the longer term very well. And Zane and I manage carefully the margin versus growth profile of the company for the best long-term outcome for our customers and value creation for our shareholders.

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Paul Ziots, VMware, Inc. – VP of IR [34]

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Thank you, Mark.

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Operator [35]

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We’ll hear from Keith Weiss from Morgan Stanley.

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Keith Weiss, Morgan Stanley, Research Division – Equity Analyst [36]

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I was hoping maybe we could extend on that margin discussion a little bit on a forward-looking basis?

Zane, is there any help you could give us in kind of understanding when margins are going to bottom out? I understand there’s acquisition impacts from Carbon Black and Pivotal. I understand subscription, if you’re going to continue to place some pressure on it. But is there any kind of revenue breakeven levels or cloud unit economics? Or like anything that could give us some kind of indication of where those operating margin, even from the level or a time frame perspective of when that starts to bottom out and perhaps start to head upwards?

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Zane C. Rowe, VMware, Inc. – CFO & Executive VP [37]

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Yes. Keith, I’d say in general, we’re — we track it very closely. And as Pat mentioned, in aggregate, we’re always trading off between revenue growth and margin and thinking about that and quite disciplined about the aggregate. What I will tell you is there are obviously a number of businesses within VMware that are at different levels of maturity when you think about that margin profile, in particular, on the subscription and SaaS side. So we’ve been talking about Pivotal and where we are with the Pivotal economics. We’re very pleased that the majority of these businesses are on the right trajectory. But what I wouldn’t want to do is optimize around the haul and then starve them for capital and investment dollars internally because we’re trying to optimize around that margin level.

As an example even, when you think about the EUC business, which is one that, candidly, is putting a little bit of headwind on our revenue growth. If I wanted to just optimize around margin, we wouldn’t have leaned into the SaaS element of that portfolio as we have. And we’re very pleased with the long-term value we see in EUC, but it is generating probably about 1 point or even more of headwind if you were to compare apples-to-apples. So a quick way to get that margin improving would be to pull the lever on perpetual versus SaaS, which we think is the longer-term answer.

So I recognize it’s a long way of saying we’re not going to get ahead of ourselves on the margin profile. What I will say is that in a number of these key businesses, the margin trajectory is on the right side, and the growth elements are actually producing the levels we expected, if not more. And we’re balancing that very thoughtfully, and we’ll update you as the year progresses on how to think about that for the upcoming years.

It’s just too early to tell given where we are with the consolidated acquisitions of Pivotal and Carbon Black and where we are in growing the SaaS portfolio. I wouldn’t want to start it with growth by pulling back investment dollars at this time.

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Paul Ziots, VMware, Inc. – VP of IR [38]

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Thank you, Keith.

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Operator [39]

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And we’ll go next to Keith Bachman of Bank of Montreal.

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Keith Frances Bachman, BMO Capital Markets Equity Research – MD & Senior Research Analyst [40]

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Pat, I wanted to revisit on EUC. You did mention some activities surrounding RSA, and it does seem like there’s some opportunities there in security within the context of EUC. But could you just flesh out a little bit what Zane was speaking on, how should we be thinking about EUC growth over the next 12 to 18 months?

Product bookings looked really good in the quarter, even with some of those transitions. But if you could just revisit on EUC, including in some of the comments around security and how we, as investors, should be thinking about the growth potential there.

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [41]

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Yes, thank you. I’m just really delighted with the EUC team’s execution in Q4. A 30% growth rate in that category was really quite exceptional. And as Zane indicated, a number of those major deals, like Wells Fargo, that I called out in the script was an acceleration of SaaS and subscription. So we’ve seen that business in particular, and we offer both perpetual and subscription to customers in that area. So that business in particular has seen the characteristics that we’re describing of customers going to more of a SaaS offering. And we do feel very good with the EUC strategy overall.

I’d also point out with — even in today’s coronavirus, right, customers are anxious, saying, “How can I have more resilience for a work-at-home environment?” And again, that even accelerates today’s offering of EUC.

But what we talked about at the RSA conference is entirely consistent with our Intrinsic Security strategy where it isn’t about end-user computing, it’s about secure end-user computing. And we’re going to redefine the category and really bring management and security into a singular, integrated set of solutions for customers. And this idea of, right, the security industry today is highly bespoke, highly fragmented, way too many products, complexity for customers to manage and validating and putting these pieces together, this has to come to an end. And that’s really the strategy that we’ve laid out is to bring security intrinsically into the core platforms, redefine these categories, minimize the space that customers need to test, validate, operationalize by making it part of the environments that they’re already running.

The other piece of Q4 that was really quite exceptional was the early success of the Dell channel. And as we said, over 5,000 customers added to the Carbon Black cloud, quite exceptional, doubled the number of customers approximately that we have on that platform. And this idea of bringing management security with the client was most acutely seen by the Dell channel, and we’re really quite excited about the benefits. And the resonance — and Sanjay had just a tremendous outcome at the RSA conference with his keynote and the joining together with Southwest Airlines and this idea of simplifying the security strategy was quite well received by customers there.

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Paul Ziots, VMware, Inc. – VP of IR [42]

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Thank you, Keith.

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Operator [43]

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And we’ll hear next from Heather Bellini of Goldman Sachs.

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Heather Anne Bellini, Goldman Sachs Group Inc., Research Division – MD & Analyst [44]

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Great. I just wanted to ask a little bit about Carbon Black. And I know you made some early comments in your prepared remarks about it. But — and I obviously know it’s obviously early since it closed. But just wondering if, especially when you saw kind of Q4 conversations and renewal conversations happen, was that factored into anybody’s deal — deals in the quarter? And kind of what’s the feedback? And who are you being compared to most often in the market when clients are choosing you guys or telling you that they’re taking a look? Kind of how are they stacking up what you’re offering on an integrated basis versus the competition?

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [45]

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Yes. Thank you. A lot in that question, Heather. And overall, we feel very good about Carbon Black. And what we laid out in the deal case that we laid out is absolutely coming true. The team itself is integrating into VMware very quickly. And as I said, probably within 2 quarters, but it seemed like they were always part of us. So the values, culture, focus opportunity, everything is being realized quickly. They had about 100% growth in the ARR of Carbon Black in Q4. So very good business performance. Obviously, that business isn’t so large to sort of affect the overall numbers dramatically. That still is performing very nicely, and it’s early days. Huge customer momentum. And these 3 big integrations that we talked about, Workspace ONE that I just covered in the last conversation; vSphere and NSX are well underway; and then the Dell channel, as we mentioned, is going quite well.

In terms of competition, it really is the 2 new guys, CrowdStrike and Carbon Black versus the old guys. And in that, it very much is how fast can customers move to a modern EDR environment. That’s going very rapidly. But the VMware strategy, as we’ve laid out, is so much bigger than just replacing old virus with new EDR. It’s about building an intrinsic platform. And that message is very rapidly resonating with customers. And they might have said, “Ooh, Carbon Black, CrowdStrike. Oh, it’s VMware in the platform?” And we’re seeing a great appeal to that strategy. We’re executing it nicely. I feel quite good about how our sales teams plus Carbon Black, plus Dell are coming together. So we feel very good about this piece of our strategy.

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Paul Ziots, VMware, Inc. – VP of IR [46]

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Thank you, Heather.

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Operator [47]

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Next we’ll hear from Michael Turits of Raymond James.

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Michael Turits, Raymond James & Associates, Inc., Research Division – MD of Equity Research & Infrastructure Software Analyst [48]

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Okay. Zane, I’m not sure if you had already answered this with Keith. What is the impact of the subscription and SaaS mix on revenues, on margins and on cash flow in fiscal ’21?

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Zane C. Rowe, VMware, Inc. – CFO & Executive VP [49]

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Yes. We haven’t broken it out specifically. I mean the best example to use is probably the EUC example where I say it’s having roughly a 1 point headwind on our revenues. And that — because that’s the product that is most easily sort of shifted either towards perpetual or otherwise towards SaaS. We’re still very pleased with what the subscription and SaaS bucket is doing with the significant growth we’ve seen year-over-year.

And then what we’re doing to help guide the combination in light of the fact that we’ve got a good component of both is aggregating the license, the on-prem license portion with the subscription and SaaS portion, which as we indicated for the year, we expect to be just shy of 16% growth. So we’re very pleased with the aggregate. Subscription and SaaS is entering new markets. It’s a new growth opportunity, so it’s difficult to sort of say what you would have done overall versus what you are doing if you think about some of the products that could go towards a cloud environment versus the perpetual environment.

VCPP is an example of one that has shifted from license now to be categorized as subscription and SaaS, and we’ve seen tremendous growth in that bucket overall. VMC is another one that will continue to grow. So we see it more of a net add overall than sort of an impact on the business or taking sort of one element from another.

The same, I’d say, for when I talk to Keith about margins. I mean it’s all incorporated with the portfolio of products that we have. So we’re pleased with the investments we’re making. We’re pleased with the returns we’re seeing within that portfolio, and that’s incorporated in our guide for the year.

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Paul Ziots, VMware, Inc. – VP of IR [50]

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Thank you, Michael.

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Operator [51]

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We’ll go to Brad Zelnick of Crédit Suisse.

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Brad Alan Zelnick, Crédit Suisse AG, Research Division – MD [52]

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Great. As you continue to integrate Carbon Black and Pivotal, can you talk about how these sales organizations are all coming together and getting them to all sing from the same song sheet? Does this at all account for the Q4 execution commentary, Pat, that you talked about earlier?

And as well, with the portfolio shifting to more subscription and SaaS, how should we think about the sales incentive for selling one versus the other? And is that changing at all from last year into this year?

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [53]

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Yes. Thank you, Brad. The — clearly, as we’ve laid out, these 5 pillars represent the core of the solution value propositions that we’re presenting to customers. And with that, there’s going to be a dedicated singular sales force dedicated to the security portfolio. And we’ve brought together the pieces of the security portfolio. In particular, AppDefense is now being integrated directly into our security BU and a dedicated sales force focused on that area as a specialty sales force.

Similarly, we’ve integrated the sales teams of Pivotal with that of Heptio, with that of what we were doing from a cloud-native perspective, bringing all those solutions together into a single sales force. So under Sanjay, we now have these focused sales force on each of these particular areas. And then they each operate a specialty sales team, so the global sales team and the account specialists of VMware globally. So that model is now well underway as we’re bringing these teams together.

And with respect to subscription and SaaS, we’ve gone to split quotas where the teams have specific SaaS quotas as well as specific license quotas that they’re needing to execute. And that’s now represented across every seller of VMware. And we believe this model was one that will further accentuate the need for us to take both sides of our business, but we’ll also give incentive for everybody to be driving this move to subscription and SaaS, where the puck is going. And as you saw, Q4 saw exceptional performance in that area of the business.

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Paul Ziots, VMware, Inc. – VP of IR [54]

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Thank you, Brad. I think we’ll have time now for one last question. So the next question will be the last.

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Operator [55]

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And we’ll go to our last question from Kirk Materne of Evercore ISI.

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Stewart Kirk Materne, Evercore ISI Institutional Equities, Research Division – Senior MD & Fundamental Research Analyst [56]

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Pat, I was wondering if you could just talk a little bit about the bigger deals you’re seeing in terms of sort of the platform deals? And is most of the funding for those type of engagements coming away? Or are you taking share from other vendors and sort of the 10 gentle areas that you’re now able to sort of reach? I’m just trying to get a sense on how much of this is being fueled by the fact that people have incremental dollars to spend versus sort of your ability to consistently sort of take market share from other competitors in those parts of the market.

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Patrick P. Gelsinger, VMware, Inc. – CEO & Director [57]

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Yes. Thank you. And overall, we’d say, in many cases, what we’re seeing is that we’re able to build a business case, and this might be data center consolidation where they have scattered data centers and they’re consolidating many of those. Clearly, some of that is share gain, where when they move to VMware Cloud Foundation. We’ve gone from having vSphere and management to the complete portfolio, including networking and storage. So clearly, we’re sort of gaining share, right, in the infrastructure bucket. Also, with the acceleration of VMware Cloud offerings, we’re gaining a portion of the cloud budget.

And overall, as we’ve seen now, that we’re having hundreds of customers who’ve gone down this pathway with us, we’ve now seen that we’re consistently producing savings in the 30% to 60% range from operations. Capital savings. You saw that 6 of 10 of our largest deals this quarter had VMware Cloud Foundation. All of them had NSX and vSAN as part of them, all of them had management. So we’re clearly seeing our big deals.

These brands are just fabulous. And you’ve heard us talk over the last couple of quarters about Comcast, JPMorgan, Bank of America, Wells Fargo this quarter. These are enormous brands who are betting on us in very significant ways. And in some cases, yes, we’re definitely gaining share. Other cases, we gained wallet share of the IT budget, and always it’s coming with major ROI and return on those investments in very short periods of time.

Clearly, this quarter, we also saw some of the success of telco and major announcements of telco. Huge momentum with people like Vodafone, who’s become a very strategic partner, but also key announcements like we just saw this week with Deutsche Telekom, Telia, expansions of our relationship with Singtel and Telstra. These again are some of the most important customers in the entire telecommunications space. So overall, great execution, great momentum, some of the largest brands in the world. So overall, an exciting phase of VMware where these brands are betting on us at scale. So thank you for that last question.

And in closing, I’ll just say, we’re excited and motivated by the opportunities in front of us. I’m proud of the role our software is playing in powering the world’s digital infrastructure transformation. Our progress demonstrates the power of this broad-based portfolio, and our strategy is resonating with some of these customers that we’ve just discussed, right, at scale that’s unimaginable.

Thank you again to our customers, partners and in particular, team VMware in helping us close what is truly a milestone year for the company. Thank you very much.

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Operator [58]

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And that does conclude this call. We would like to thank everyone for your participation. You may now disconnect.

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