VMware's quarterly revenue fell $600 million in its first full quarter under Broadcom ownership, according to its recent second-quarter 2024 earnings call, but the company has assured customers it's not a serious problem.
During the earnings call, Broadcom CEO Hock Tan confirmed that VMware's revenue had fallen to $2.7 billion, down from $3.28 billion in the previous quarter.
However, Tan indicated that the quarterly results were nothing to worry about, acknowledging the challenges the business faced in recent months but sharing positive thoughts about VMware's future.
VMware revenue plummets
Tan emphasized the transition of VMware products to subscription-based models, with 3,000 of VMware's largest 10,000 customers signing multi-year deals.
Annualized reserve values, which reflect commitment to long-term contracts, increased from $1.2 billion last quarter to $1.9 billion over the past three months.
After months of significant policy and pricing changes, and a restructuring of VMware's broader portfolio, dissatisfied customers took to the Internet to complain about Broadcom. A handful of company executives even took to the web in an attempt to appease customers.
Although the frustration seems to continue, the reality is that many VMware customers are willing to stay with Broadcom, as a study by CloudBolt Software illustrates.
This week it was also confirmed that Dell had walked away from its contract with VMware after terminating a distribution agreement it had with the virtualization giant in the early days of its acquisition of Broadcom.
More generally, VMware appears to be in good hands. California-based Broadcom reported quarterly revenue of $12.5 billion, a staggering 43% year-over-year increase.
Tan summarized: “Broadcom's second-quarter results were once again driven by demand for AI and VMware.”
