VMware to grow by 4% in 2023 and is ‘eager’ for a merger with Broadcom

Vmware released its fourth quarter and fiscal 2023 financial results while it waited for Broadcom’s approval to take over the Broadcom $61.2 billion business. Nearly 18 years after the Dell split, a deteriorating business environment and fears about mergers have hampered its growth. Fiscal year 2023 revenues were $13.35 Billion, an increase of 4% over fiscal year 2022’s 9%. The plus side is that subscription and SaaS revenue grew by 25%, and now account for a quarter of its revenue.

VMware receives a calendar boost for its quarterly accounts as its fourth quarter 2023 has one week more than 2022. On an annualized basis, revenue was $3.71 trillion, which is a 5% increase. However, net income was $17% lower at $494 million (or $2.13 per share) than it was a year before. VMware beat analysts’ expectations for revenue at $3.66 billion and earnings per share of $1.96.

Combining quarterly subscription, SaaS license revenue and quarterly subscription revenue, the combined total of $2 billion grew by 7%. Subscriptions and SaaS accounted for 32% total revenue in the quarter. They grew 36% to $1.18billion. Broadcom CEO Hock Tang stressed the importance of increasing this metric during the acquisition. VMware recently stated that it aims to achieve 46% of its revenue through subscriptions and SaaS by fiscal 2020.

VMware did not host a conference call with analysts, as has been the practice since the acquisition was announced.

“These results reflect our customers’ continued interest in our multi-cloud offerings, and our ability to assist enterprises with an intelligent cloud approach.”However Raghu Raghuram CEO of VMware commented on the matter. “We look forward the Broadcom merger, which is expected close in the current financial year. Our combined solutions will give customers greater choice and flexibility to create, run, manage and connect large-scale applications..

It remains to be seen if the competition authorities will agree with this view. The European Union is expected to make its decision on May 11.

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