VMware 2012 Annual Report Download - page 45

Table of Contents
Revenues
Our revenues in the years ended 2012 , 2011 and 2010 were as follows:
In both 2012 and 2011 , we saw growth in license and services revenues, and growth in the United States and internationally, as compared
with their respective prior years.
License Revenues
License revenues in both 2012 and 2011 increased due to continued demand for our product offerings. The increases in license revenues
year
-over year were primarily due to growth in our Cloud Infrastructure and Management product group, which increased 13.4% in 2012 and
31.9% in 2011 . The Cloud Infrastructure and Management product group is based upon our flagship virtualization platform, vSphere, and also
encompasses our vCloud Suite and various Cloud Management solutions, which are optimized to work with vSphere environments. Despite the
year
-over-year increases in license revenues, we are noting a slowing in the rate of license revenue growth both in 2012 and anticipated into
2013. We attribute this to a variety of factors, including challenges in the macroeconomic environment, both across the U.S. and internationally
in Europe, as well as a slowing in the number of ELAs greater than $10 that were closed towards the end of 2012 and are expected in the first
half of 2013.
Services Revenues
In 2012 and 2011, software maintenance revenues benefited from strong renewals, multi-year software maintenance contracts sold in
previous periods, and additional maintenance contracts sold in conjunction with new software license sales. In each year presented, customers
bought, on average, more than 24 months of support and maintenance with each new license purchased, which we believe illustrates our
customers’ commitment to VMware as a core element of their data center architecture and hybrid cloud strategy.
In 2012 and 2011, professional services revenues increased as growth in our license sales and installed-
base 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, we do not expect our professional services revenues to constitute an
increasing component of our revenue mix. As a result of this strategy, our professional services revenue can vary based on the delivery channels
used in any given period as well as the timing of engagements.
Revenue Growth in Constant Currency
We invoice and collect in the Euro, the British Pound, the Japanese Yen and the Australian Dollar in their respective regions. As a result,
our total revenues are affected by changes in the value of the U.S. Dollar against these currencies. In order to provide a comparable framework
for assessing how our business performed excluding the effect of foreign currency fluctuations, management analyzes year-over-year revenue
growth on a constant currency basis. Since we operate with the U.S. Dollar as our functional currency, unearned revenues for orders booked in
currencies other than the U.S. Dollar are converted into U.S. Dollars at the exchange rate in effect for the month in which each order is booked
and remain at their historical rate when recognized into revenue. We calculate constant currency on license revenues recognized during the
current period that were originally booked in currencies other than U.S. Dollars by comparing the exchange rates used to recognize
43
For the Year Ended
December 31,
2012 vs. 2011 2011 vs. 2010
2012
2011 2010 $ Change % Change $ Change % Change
Revenues:
License
$
2,087.0
$
1,841.2
$
1,401.4
$
245.8
13
%
$
439.8
31
%
Services:
Software maintenance
2,153.0
1,640.4
1,217.0
512.6
31
423.4
35
Professional services
365.0
285.5
238.9
79.5
28
46.6
20
Total services
2,518.0
1,925.9
1,455.9
592.1
31
470.0
32
Total revenues
$
4,605.0
$
3,767.1
$
2,857.3
$
837.9
22
$
909.8
32
Revenues:
United States
$
2,228.6
$
1,824.2
$
1,452.7
$
404.4
22
%
$
371.5
26
%
International
2,376.4
1,942.9
1,404.6
433.5
22
538.3
38
Total revenues
$
4,605.0
$
3,767.1
$
2,857.3
$
837.9
22
$
909.8
32