VMware 2014 Annual Report Download - page 47

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Table of Contents
Revenues
Our revenues during the years ended 2014 , 2013 and 2012 were as follows:
License Revenues
License revenues were up 14% in 2014 and 9% in 2013. Our license revenue growth rate was favorably impacted during 2014 compared to
2013 as a result of increased sales of our integrated product suites, including VMware vCloud Suite and vSphere with Operations Management.
Our customers continue transitioning to purchasing our suite solutions rather than products such as vSphere that are sold on a standalone basis.
Our integrated product suites include various product offerings and are generally sold at a higher price than our products that are sold on an
individual basis. Additionally, revenue from our network virtualization solution, VMware NSX, as well as our end-user computing products,
including AirWatch mobile solutions, also contributed to the increase in license revenues. We expect that sales of our non-standalone vSphere
products will continue to increase as a percentage of total revenues.
Revenues from AirWatch include revenues recognized from our software-as-a-service (“SaaS”) offerings. SaaS revenues are included in
both license and software maintenance revenues, and while the amounts have not been material for all periods presented, we expect these
revenues and those from our hybrid cloud offerings to form an increasing percentage of our revenues in future periods. The anticipated revenue
growth of our hybrid cloud and SaaS revenues are expected to adversely impact the growth rate of our license revenues in 2015 as we will
recognize less revenue up-front than we would otherwise recognize as part of a multi-year license arrangement. Additionally, changes in foreign
currency are also expected to have an impact on our license revenues. Refer to our Foreign Currency discussion below for further information.
Our revenues for 2013 increased due to overall increased global sales volumes in all major geographies, slightly offset by the disposition of
certain business lines under our realignment plan and the contribution to Pivotal. License revenues related to Pivotal and all dispositions under
our realignment plan were $18 in 2013 as compared to $56 in 2012.
Services Revenues
In 2014 and 2013, software maintenance revenues benefited from renewals, multi-year software maintenance contracts sold in previous
periods, and additional maintenance contracts sold in conjunction with new software license sales. In each period presented, customers bought,
on average, more than 24 months of support and maintenance with each new license purchased, which we believe demonstrates our customers’
commitment to our SDDC strategy.
In 2013, our services revenue growth rate was negatively impacted by the contribution to Pivotal and the disposition of other net assets
under our realignment plan. Service revenues related to Pivotal and all dispositions under our realignment plan were $37 in 2013 as compared to
$143 in 2012.
In 2014 and 2013, professional services revenues increased as growth in our license sales and increased complexity of our product suite led
to additional demand for our professional services. As we continue to invest in our partners and expand our ecosystem of third-party
professionals with expertise in our solutions to independently provide professional services to our customers, our professional services revenue
will vary based on the delivery channels used in any given period as well as the timing of engagements.
44
For the Year Ended December 31,
2014 vs. 2013
2013 vs. 2012
2014
2013
2012
$ Change
% Change
$ Change
% Change
Revenues:
License
$
2,591
$
2,270
$
2,087
$
321
14
%
$
183
9
%
Services:
Software maintenance
3,022
2,563
2,153
459
18
410
19
Professional services
422
374
365
49
13
9
2
Total services
3,444
2,937
2,518
508
17
419
17
Total revenues
$
6,035
$
5,207
$
4,605
$
829
16
$
602
13
Revenues:
United States
$
2,912
$
2,485
$
2,229
$
427
17
%
$
256
11
%
International
3,123
2,722
2,376
401
15
345
15
Total revenues
$
6,035
$
5,207
$
4,605
$
829
16
$
602
13