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“An incredible secular trend towards digital” — VMware, Dell, Salesforce, Zscaler, HP earnings wrap.

A bumper crop of quarterly earnings reports landed late Thursday (February 26). They captured what Salesforce’s CFO Bret Taylor referred to as a “just incredible secular trend towards digital. CEOs… did in a year what might have taken a decade before in terms of adoption of digital technology.”

From tight air freight to a wafer crunch, customer visibility to app modernisation, here’s what The Stack noted in our earnings roundup.

VMware: AWS, Tanzu offerings surge.

VMware reported Q4 revenues of $3.3 billion, up 7% on-year. GAAP net income was $791 million, compared to $321 million in Q4 the previous year. Full year revenue for what it reports as its fiscal 2021 was $11.8 billion.

Zane Rowe, CFO and interim CEO led the call, following CEO Pat Gelsinger’s return to Intel as its new CEO. The company is “making progress” on a potential spinoff of VMware from Dell, it noted: “While our special committee of Independent Directors continues to evaluate the spin-off, we believe that it could be value-enhancing to VMware and its stockholders.”

A standout was large enterprise demand strength throughout the quarter, which allowed VMware to close a record 35 deals over $10 million. VMC on AWS, which lets customers take VMware vSphere-based environments to the AWS Cloud running on EC2 also nearly doubled year-on-year.

“In Q4, we closed deals with significant aerospace and telco customers and saw particular strength in the financial sector, including wins with HSBC and Wells Fargo”, Rowe said. The company also saw Accenture launch a dedicated VMware business unit earlier this month, and expanded its resell program with AWS to include additional VMware technologies and services such as VMware Cloud, Disaster Recovery and vRealize.”

VMware’s containerised Tanzu portfolio also performed strongly: important for the company as it doubles down on a proposition that lets customers run applications in containers rather than its traditional sweet spot of VMs.

The company took its “Tanzu Advanced” offering GA in January 2021. An application modernisation and containerised build platform, it lets developers — after they have written custom apps in a language of choice — used Tanzu Advanced to automatically build the containers the app will run in, taking care of dependencies and continuous maintenance.

Salesforce: To “Hyperforce” and beyond

Salesforce reported record Q4 revenues of $5.82 Billion, up 20% on-year. Net income for the quarter was $267 million. Annual revenue for its fiscal 2021 was $21.25 billion, as industries pivoted heavily to digital sales engagements and pushed for a more 360 customer view.

The company meanwhile plans to double-down on its December 2020 announcement of a shift that will let customers run Salesforce on hyperscaler cloud providers. “Salesforce Hyperforce” will take customers’ 2.6 billion daily marketing messages, four million leads and 19.7 million customer service conversations to major public clouds. C

EO Marc Benioff said: “That allows our customers to choose where they want to manage their data. That’s allowed us to open incredible new data centers in India and Germany, and we’re planning to support another 10 new additional countries this year.”

Talking about the company’s $27.7 billion Slack acquisition (pending regulatory approval), Benioff said: “Slack can be the central nervous system for any company connecting its people and data across systems apps and devices from anywhere”, pledging to create “the most open and interoperable ecosystem of apps and workflow and enterprise software.”

CEO Marc Benioff said: “Based on this strong fiscal year 2021 results, we’re raising our fiscal year 2022 guidance to $25.75 billion… There’s never been a software company over $20 billion in revenue growing as fast as we are.”

Dell: Record units shipped (but watch the air freight…)

Dell reported Q4 revenues of $26.1 billion, up 9% on-year, with quarterly net income hitting $1.34 billion. The company generated record revenue of $94.2 billion for its fiscal 2021. Dell ended the fiscal year with cash and investments of $15.8 billion and paid down $5.5 billion in debt.

Servers and networking revenue was $4.4 billion – up 3%. Storage revenue was $4.4 billion, down 2%, The company’s Client Solutions Group, which includes desktop PCs, laptops, printers and peripherals shipped a record 50.3 million units during the 2020 calendar year.

(Orders for commercial notebooks were up 46% on a unit basis).

CFO Tom Sweet said: “[Coming] widespread 5G connectivity is driving real-time, automated, and intelligent outcomes at the edge. This will drive an estimated $700 billion in cumulative spend on edge IT infrastructure and data centers within the decade.”

COO Jeff Clarke added: “This work-from-home and do-from-anywhere environment, we don’t believe slows down post pandemic or post-people going back to the office. So we’re going to continue to see an environment where people will do more and more work more and more of their activities away from the office, driving demand for PCs which has become essential in this type of work environment, this type of consumer environment.”

With regard to business operations, Clarke added on an earnings call: “f I was to call out one specific thing, which we’re keeping our eye on is freight costs. Freight costs continue to be a challenge for us. So that’s not exactly component or commodity cost that part of our supply chain transformation. And while rates have, I think eased a little bit, the fact is the industry is using and we are using more air, we’re expediting more and the air network is tight.”

Touching on a high-profile semiconductor capacity crunch, Dell executives noted: “There’s been a number of substrate issues that have disrupted the supply that is impacted particularly the 8-inch network. The 8-inch network makes a lot of the basic components that we all need in the industry from T-com, the driver ICs to power ICs to microcontrollers, card readers, Codex you name it. Those are the types of issues we are working through as an industry. Certainly Dell is working through that. I think we’ve shown the ability to be resilient and responsive. At this point of pride, we shipped the most PCs, we’ve ever shipped in Q3. We followed that up in Q4 by shipping the most PCs we’ve ever shipped in Q4.”

“We think our long-term relationship with our supply base helps us here”

Zscaler: Growth-first.

Cybersecurity firm Zscaler, which listed in March 2018, reported $157 million in revenue for its fiscal Q2: up 55% on-year. Losses widened with GAAP net loss for the quarter of $67.5 million, up from $29.2 million in fiscal Q2 2020. Quarterly triumphs included it being recognised as the only Leader in the Gartner Magic Quadrant for Secure Web Gateways.

Sales and marketing expense increased 19% sequentially and 57% year-over-year to $76.5 million, as the company aggressively grew. CMO Remo Cannesa said: “We plan to continue to hire aggressively throughout the back half of the year. We’ve talked about putting growth ahead of profitability. We’ll be mindful of profitability… But this is such a big opportunity, that we feel that we want to take advantage of it, and we’re going to invest in it, and we’re going to try to capture it.”

CEO Jay Chaudhry, noted: “The recent SolarWinds security incident has further elevated the need for a true Zero Trust platform like Zscaler. During such sophisticated attacks, our proxy-based architecture would prevent loss of sensitive data and our application level segmentation eliminates that whole set movement. We provide users access to applications, not the network, which is fundamentally different from firewalls and legacy network security architecture.”

Major wins included a Fortune 500 chemical company “that was using ZIA [an internet and web gateway delivered from the cloud] for a subset of its workforce [purchased licenses] for all 45,000 employees. In addition, they bought two of our recently announced ZCP solutions. They purchased workload communications to secure server traffic out to the Internet from 200 plants, and workload segmentation for 7,000 servers to secure East West traffic in the public cloud and data center.”

HP

HP reported revenues of $15.6 for its fiscal Q1, with GAAP net income of $1.1 billion, up 58% on-year as a turnaround plan delivered performance improvements to the bottom line. A day earlier, the company also announced its buyout of gaming headset provider. HyperX

“It was an exceptional start to the year with strong revenue, profit, and EPS growth. The strength of our portfolio and diversity of our businesses is driving our performance and positioning HP well for the future,” said Enrique Lores, HP President and CEO. “Simply put, we are doing what we said we would do – and our strategy is working.”

The company reduced headcount by 400 during the quarter as it continued to trim staff and real estate costs. New CFO Marie Myers said the company would be investing however, with Lores noting that the company saw huge opportunity in gaming: “Gaming is a very attractive opportunity for us both on the hardware side, where we have been growing significantly during the last quarter. More and more people are using gaming at their main entertainment and this is driving growth today and will continue to drive growth in the future.”

He added: “A gamer spends about 15, 16 more money on accessories than a normal PC user. And when we think about that opportunity the acquisition of Hyperx makes us really excited about the opportunity of really capturing that.”

“We remain supply constrained, particularly in consumer printer, hardware and supplies”, he admitted on an earnings call, however. “While the COVID-19 related impacts on our manufacturing and supply chain have diminished, we anticipate these constraints to continue into the third quarter.

Personal Systems net revenue was $10.6 billion, up 7% year over year (up 6% in constant currency) with a 7.1% operating margin. Consumer net revenue increased 34% and Commercial net revenue decreased 6%. Total units were up 15% with notebooks units up 33%. Printing net revenue was $5.0 billion, up 7% year over year with a 19.8% operating margin. Total hardware units were up 16% with Consumer hardware units up 18% and Commercial hardware units flat.

Conclusion?

Ultimately, if one theme shone through it was this — in CFO’s words: “I would say is the digital imperative is now a CEO priority. That’s the overriding theme that we’ve seen over the last nine months.

“Previously, it might have been delegated down into the business, but it has become so important and so urgent that the CEO wants to take direct control over it.”

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