Analyst Note| Mark Cash |
We are maintaining our $202 fair value estimate after narrow-moat VMware’s first quarter, and believe shares offer upside. Overall results were mainly in line with our expectations although we anticipated higher contribution from subscriptions and SaaS and worse results from license. Nonetheless, we expect VMware to continue focusing on expanding its recurring revenue from subscriptions and SaaS, and for those solutions to fuel the overall growth trajectory. In our view, VMware is positioned as the common layer between any networking environment and alleviates complexities with managing various cloud, edge, and on-premises infrastructures. Coupled with the diversification into the developer and security arenas, we anticipate VMware locking customers into its ecosystem for the long-term.