VMware posted an 11% year-over-year jump in revenue to $3.19 billion for the third quarter of its 2022 fiscal year, driven by strong growth in subscription and software-as-a-service sales numbers, the company announced Tuesday afternoon.
Subscription and SaaS revenue for the third quarter was $820 million, an increase of 21% year-over-year. Meanwhile, the quarter’s annual recurring revenue, or the amount of revenue VMware can expect annually from subscriptions and SaaS, was measured at $3.31 billion, an increase of 25% year-over-year.
Also, combined revenue from licenses, subscriptions and SaaS amounted to $1.53 billion, up about 16% from the same quarter last year. The company is in the process of migrating more of its term license customers to the subscription model.
These numbers set VMware up well as it strikes out on its own as an independent public company. The earnings report was VMware’s first since Dell spun off its 81% stake in the company earlier this month.
“As a stand-alone company, 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 partner even more deeply with all the cloud and on-premise infrastructure companies to create a better foundation that drives results for our customers.”
RELATED: VMware talks life after Dell as spin off nears completion
For the fourth quarter, Vmware said it expects total revenue of about $3.51 billion, below the consensus estimate of $3.56 billion. But company officials said they are still building up 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 fiscal year 2022.
Within the last couple of months, VMware has made several technology announcements, including the unveiling of a RAN Intelligent Controller and new telco cloud capabilities at MWC LA last month. The company also announced new multi-cloud efforts, edge products and SASE capabilities at its own VMWorld conference.