VMware stock wavered late Tuesday as earnings and revenue for the October quarter topped analyst estimates despite weakness in its on-premise business during the coronavirus pandemic. The enterprise software maker also raised fiscal 2021 guidance.
VMware (VMW) said adjusted earnings were $1.66 a share, up 17% from a year ago, with revenue rising 8% to $2.86 billion. A year earlier, VMware earnings were $1.49 a share on sales of $2.46 billion.
Analysts expected VMware earnings of $1.43 a share on sales of $2.81 billion for the period ended Oct. 31.
Heading into the VMware earnings report, the software stock had a Relative Strength Rating of only 35 out of a possible 99, according to IBD Stock Checkup. However, VMware stock has forged a possibly bullish double-bottom base, with an entry point of 157.58.
VMware said subscription revenue rose 44% to $676 million in the October quarter vs. estimates of $638 million. Subscription revenue topped on-premise license revenue for the first time, the company said.
For fiscal 2021, VMware raised its revenue outlook to $11.7 billion vs. estimates of $11.62 billion.
VMware’s virtualization software is widely used in corporate data centers. The software enables computer servers to run different operating systems and apps, and share workloads.
However, on-premise sales have slowed as companies spend more on cloud services to support remote work. As a result, VMware stock has underperformed most software companies during the Covid-19 crisis.
VMware has been transitioning to a cloud-computing business model. Its cloud partners include Amazon Web Services, part of Amazon.com (AMZN).
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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