VMware 2007 Annual Report Download - page 45

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Table of Contents
Sales and marketing expenses . Our sales and marketing expenses include the costs of the personnel and related overhead associated with
the sale and marketing of our license and service offerings, as well as the cost of certain specific marketing initiatives, including our annual
VMworld conference.
General and administrative expenses . Our general and administrative expenses include the personnel and related overhead costs of
supporting the overall business. These expenses include the costs associated with our finance, facilities, human resources, IT infrastructure and
legal departments.
Results of Operations
Revenues
Our revenues for the years ended 2007, 2006 and 2005 are as follows (table in millions):
Total revenues were $1,325.8 in 2007, $703.9 in 2006 and $387.1 in 2005, representing year-over-
year increases of $621.9 or 88% in 2007
and $316.8 or 82% in 2006. The growth in revenues in 2007 reflected an increase of $413.5 in license revenue and an increase of $208.4 in
services revenue as compared to 2006. The growth in revenues in 2006 reflected an increase of $204.9 in license revenue and an increase of
$111.9 in services revenue as compared to 2005. We market and sell our products largely through a network of channel partners, which includes
distributors, resellers, x86 system vendors and systems integrators. One distributor accounted for 23%, 29% and 30% of revenues in 2007, 2006
and 2005, respectively. Additionally, another distributor and a channel partner accounted for 12% and 11% of revenues in 2007, respectively.
International revenue as a percentage of total revenue was 46% in 2007, 44% in 2006 and 46% in 2005.
Our revenue contracts with international customers are denominated in U.S. dollars.
License Revenues . Software license revenues were $905.4 in 2007, $491.9 in 2006 and $287.0 in 2005, representing year-over-year
increases of $413.5 or 84% in 2007 and $204.9 or 71% in 2006. We believe a significant majority of the revenue growth in 2007 compared to
2006, as well as 2006 compared to 2005, is the result of increased sales volumes, driven largely by greater demand for our virtualization product
offerings attributable to wider market acceptance of virtualization as part of organizations’ IT infrastructure, a broadened product portfolio and
expansion of our network of indirect channel partners. Although we expect our license
41
For the Year Ended December 31,
2007
2006
2005
Revenues:
License
$
905.4
$
491.9
$
287.0
Services
420.4
212.0
100.1
$
1,325.8
$
703.9
$
387.1
Percentage of revenues:
License
68.3
%
69.9
%
74.1
%
Services
31.7
%
30.1
%
25.9
%
100.0
%
100.0
%
100.0
%
Revenues:
United States
$
720.6
$
391.6
$
209.6
International
605.2
312.3
177.5
$
1,325.8
$
703.9
$
387.1
Percentage of revenues:
United States
54.4
%
55.6
%
54.1
%
International
45.6
%
44.4
%
45.9
%
100.0
%
100.0
%
100.0
%