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VMware credits mega-deals, international sales for record Q1

Five mega transactions worth $10 million or more each powered VMware revenue for its first quarter, the company said Tuesday night.

Wall Street analysts closely questioned VMware CEO Paul Maritz and CFO Mark Peek about whether strong Q1 revenues resulted from “spillover” from deferred deals in the fourth quarter, as well as whether there was any common denominator to the large deals. The answer to both these questions was ‘no’. 

Peek credited the big deals to customers increasingly virtualizing more mission-critical applications. “Virtualization is mainstream in data centers,” he said.

“The IT continents really are shifting,” and more users are beginning to build private clouds in addition to increasing their use of virtualization, according to Maritz. There were a few other tidbits thrown out on the call about the large deals — Peek said the five included a hosting company, a large multinational corporation, and in one case, an expansion from limited use of vSphere to widespread use at a higher licensing level.

Officials also said the big deals were spearheaded by enterprise virtual infrastructure products, vSphere, vShield, vCloud Director and vCenter Operations. Going forward, VMware CEO Paul Maritz said the company sees these four “anchor products” continuing to drive most of its growth, especially vCenter Operations, though specific numbers on growth rates and earnings for each of the products were not given. Maritz did say generally that vSphere continues to be the dominant product for the company, and said of vCenter Operations,  “we’re still starting, and growing off a small base, so there’s still a lot to do.” 

The company also recognized a majority of its reported revenue (53%) from international markets for the first time. This was also an area scrutinized by financial analysts, but Maritz said the increase was the expected fruition of a multi-year plan to better market its products internationally.

“Rather than something unusual, you’re seeing is us taking on more of the profile you’d expect out of a significant enterprise software vendor,” he said. “We’ve disproportionately invested in international geographies in the last two years, and we kept that investment going right through the recession. We’re now seeing the results of that.”

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