QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
☑ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | Smaller reporting company | ||
Emerging growth company |
Page | ||
PART I – FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II – OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
Three Months Ended | Nine Months Ended | ||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||
2020 | 2019(1) | 2020 | 2019(1) | ||||||||||||
Revenue(2)(3): | |||||||||||||||
License | $ | $ | $ | $ | |||||||||||
Subscription and SaaS | |||||||||||||||
Services | |||||||||||||||
Total revenue | |||||||||||||||
Operating expenses(2)(4): | |||||||||||||||
Cost of license revenue | |||||||||||||||
Cost of subscription and SaaS revenue | |||||||||||||||
Cost of services revenue | |||||||||||||||
Research and development | |||||||||||||||
Sales and marketing | |||||||||||||||
General and administrative | |||||||||||||||
Realignment | |||||||||||||||
Operating income | |||||||||||||||
Investment income | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other income (expense), net | |||||||||||||||
Income before income tax | |||||||||||||||
Income tax provision (benefit) | ( | ) | ( | ) | |||||||||||
Net income | |||||||||||||||
Less: Net loss attributable to non-controlling interests | ( | ) | ( | ) | |||||||||||
Net income attributable to VMware, Inc. | $ | $ | $ | $ | |||||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic for Classes A and B | $ | $ | $ | $ | |||||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B | $ | $ | $ | $ | |||||||||||
Weighted-average shares, basic for Classes A and B | |||||||||||||||
Weighted-average shares, diluted for Classes A and B | |||||||||||||||
__________ | |||||||||||||||
(1) Adjusted to reflect the recast of prior period information due to the Pivotal Software, Inc. (“Pivotal”) acquisition in fiscal 2020, which was accounted for as a transaction between entities under common control (refer to Note A). | |||||||||||||||
(2) Effective the fourth quarter of fiscal 2020, revenue recognized from subscription and SaaS offerings, as well as the related cost of subscription and SaaS revenue, are being presented separately (refer to Note A). | |||||||||||||||
(3) Includes related party revenue as follows (refer to Note C): | |||||||||||||||
License | $ | $ | $ | $ | |||||||||||
Subscription and SaaS | |||||||||||||||
Services | |||||||||||||||
(4) Includes stock-based compensation as follows: | |||||||||||||||
Cost of license revenue | $ | $ | $ | $ | |||||||||||
Cost of subscription and SaaS revenue | |||||||||||||||
Cost of services revenue | |||||||||||||||
Research and development | |||||||||||||||
Sales and marketing | |||||||||||||||
General and administrative |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||
2020 | 2019(1) | 2020 | 2019(1) | ||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive income (loss): | |||||||||||||||
Changes in fair value of effective foreign currency forward contracts: | |||||||||||||||
Unrealized gains (losses), net of tax provision (benefit) of $— for all periods | ( | ) | ( | ) | |||||||||||
Reclassification of (gains) losses realized during the period, net of tax (provision) benefit of $— for all periods | ( | ) | ( | ) | |||||||||||
Net change in fair value of effective foreign currency forward contracts | ( | ) | ( | ) | |||||||||||
Total other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||
Comprehensive income, net of taxes | |||||||||||||||
Less: Net loss attributable to the non-controlling interests | ( | ) | ( | ) | |||||||||||
Comprehensive income attributable to VMware, Inc. | $ | $ | $ | $ | |||||||||||
__________ | |||||||||||||||
(1) Adjusted to reflect the recast of prior period information due to the Pivotal acquisition in fiscal 2020, which was accounted for as a transaction between entities under common control (refer to Note A). |
October 30, | January 31, | ||||||
2020 | 2020 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable, net of allowance for doubtful accounts of $6 and $7 | |||||||
Due from related parties, net | |||||||
Other current assets | |||||||
Total current assets | |||||||
Property and equipment, net | |||||||
Other assets | |||||||
Deferred tax assets | |||||||
Intangible assets, net | |||||||
Goodwill | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | $ | |||||
Accrued expenses and other | |||||||
Current portion of long-term debt and other borrowings | |||||||
Unearned revenue | |||||||
Total current liabilities | |||||||
Note payable to Dell | |||||||
Long-term debt | |||||||
Unearned revenue | |||||||
Income tax payable | |||||||
Operating lease liabilities | |||||||
Other liabilities | |||||||
Total liabilities | |||||||
Contingencies (refer to Note D) | |||||||
Stockholders’ equity: | |||||||
Class A common stock, par value $0.01; authorized 2,500,000 shares; issued and outstanding 113,300 and 110,484 shares | |||||||
Class B convertible common stock, par value $0.01; authorized 1,000,000 shares; issued and outstanding 307,222 shares | |||||||
Additional paid-in capital | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Retained earnings | |||||||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
Nine Months Ended | |||||||
October 30, | November 1, | ||||||
2020 | 2019(1) | ||||||
Operating activities: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Stock-based compensation | |||||||
Deferred income taxes, net | ( | ) | ( | ) | |||
Unrealized (gain) loss on equity securities, net | ( | ) | ( | ) | |||
(Gain) loss on disposition of assets, revaluation and impairment, net | ( | ) | |||||
Loss on extinguishment of debt | |||||||
Other | |||||||
Changes in assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | |||||||
Other current assets and other assets | ( | ) | ( | ) | |||
Due to/from related parties, net | |||||||
Accounts payable | ( | ) | |||||
Accrued expenses and other liabilities | ( | ) | |||||
Income taxes payable | ( | ) | |||||
Unearned revenue | ( | ) | |||||
Net cash provided by operating activities | |||||||
Investing activities: | |||||||
Additions to property and equipment | ( | ) | ( | ) | |||
Purchases of strategic investments | ( | ) | ( | ) | |||
Proceeds from disposition of assets | |||||||
Business combinations, net of cash acquired, and purchases of intangible assets | ( | ) | ( | ) | |||
Net cash paid on disposition of a business | ( | ) | |||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Financing activities: | |||||||
Proceeds from issuance of common stock | |||||||
Net proceeds from issuance of long-term debt | |||||||
Borrowings under term loan, net of issuance costs | |||||||
Repayment of term loan | ( | ) | ( | ) | |||
Repayment of current portion of long-term debt | ( | ) | |||||
Repurchase of common stock | ( | ) | ( | ) | |||
Shares repurchased for tax withholdings on vesting of restricted stock | ( | ) | ( | ) | |||
Payment to acquire non-controlling interests | ( | ) | |||||
Contribution from Dell | |||||||
Principal payments on finance lease obligations | ( | ) | ( | ) | |||
Net cash used in financing activities | ( | ) | ( | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash at beginning of the period | |||||||
Cash, cash equivalents and restricted cash at end of the period | $ | $ | |||||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for interest | $ | $ | |||||
Cash paid for taxes, net | |||||||
Non-cash items: | |||||||
Changes in capital additions, accrued but not paid | $ | ( | ) | $ | |||
Changes in tax withholdings on vesting of restricted stock, accrued but not paid | ( | ) | |||||
__________ | |||||||
(1) Adjusted to reflect the recast of prior period information due to the Pivotal acquisition in fiscal 2020, which was accounted for as a transaction between entities under common control (refer to Note A). |
Three Months Ended October 30, 2020 | |||||||||||||||||||||||||||||
Class A Common Stock | Class B Convertible Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | ||||||||||||||||||||||||||
Balance, July 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
Proceeds from issuance of common stock | — | — | — | — | — | ||||||||||||||||||||||||
Repurchase and retirement of common stock | ( | ) | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Issuance of restricted stock | — | — | — | — | — | — | |||||||||||||||||||||||
Shares withheld for tax withholdings on vesting of restricted stock | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||
Amount due from tax sharing arrangement | — | — | — | — | — | — | |||||||||||||||||||||||
Total other comprehensive income (loss) | — | — | — | — | — | — | |||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||
Balance, October 30, 2020 | $ | $ | $ | $ | $ | ( | ) | $ |
Nine Months Ended October 30, 2020 | |||||||||||||||||||||||||||||
Class A Common Stock | Class B Convertible Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | ||||||||||||||||||||||||||
Balance, January 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
Proceeds from issuance of common stock | — | — | — | — | — | ||||||||||||||||||||||||
Repurchase and retirement of common stock | ( | ) | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Issuance of restricted stock | — | — | — | — | — | — | |||||||||||||||||||||||
Shares withheld for tax withholdings on vesting of restricted stock | ( | ) | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||
Amount due from tax sharing arrangement | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||
Total other comprehensive income (loss) | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||
Balance, October 30, 2020 | $ | $ | $ | $ | $ | ( | ) | $ |
Three Months Ended November 1, 2019(1) | |||||||||||||||||||||||||||||||||
Class A Common Stock | Class B Convertible Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interests | Stockholders’ Equity | |||||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | ||||||||||||||||||||||||||||||
Balance, August 2, 2019 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
Proceeds from issuance of common stock | — | — | — | — | — | — | |||||||||||||||||||||||||||
Issuance of stock-based awards in acquisition | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Repurchase and retirement of common stock | ( | ) | — | — | — | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Issuance of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Shares withheld for tax withholdings on vesting of restricted stock | — | — | — | — | ( | ) | — | — | — | ( | ) | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||
Investment from Dell, net | — | — | — | — | — | — | |||||||||||||||||||||||||||
Total other comprehensive income (loss) | — | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
Transactions with Pivotal’s non-controlling stockholders | — | — | — | — | ( | ) | — | — | |||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | ( | ) | |||||||||||||||||||||||||
Balance, November 1, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | $ |
Nine Months Ended November 1, 2019(1) | |||||||||||||||||||||||||||||||||
Class A Common Stock | Class B Convertible Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interests | Stockholders’ Equity | |||||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | ||||||||||||||||||||||||||||||
Balance, February 1, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||
Cumulative effect of adoption of new accounting pronouncements | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Proceeds from issuance of common stock | — | — | — | — | — | — | |||||||||||||||||||||||||||
Issuance of stock-based awards in acquisition | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Repurchase and retirement of common stock | ( | ) | — | — | — | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Issuance of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Shares withheld for tax withholdings on vesting of restricted stock | ( | ) | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||
Credit from tax sharing arrangement | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Investment from Dell, net | — | — | — | — | — | — | |||||||||||||||||||||||||||
Total other comprehensive income (loss) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Transactions with Pivotal’s non-controlling stockholders | — | — | — | — | ( | ) | — | — | |||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | ( | ) | |||||||||||||||||||||||||
Balance, November 1, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||||
(1) Adjusted to reflect the recast of prior period information due to the Pivotal acquisition in fiscal 2020, which was accounted for as a transaction between entities under common control (refer to Note A). |
Three Months Ended | |||||||||||||||
November 1, 2019 | |||||||||||||||
As Previously Reported | Reclassification For New Revenue Line | Pivotal Adjustments(1) | As Adjusted | ||||||||||||
Revenue: | |||||||||||||||
License | $ | $ | ( | ) | $ | $ | |||||||||
Subscription and SaaS | |||||||||||||||
Services | ( | ) | |||||||||||||
Operating expenses: | |||||||||||||||
Cost of license revenue | ( | ) | |||||||||||||
Cost of subscription and SaaS revenue | |||||||||||||||
Cost of services revenue | ( | ) |
Nine Months Ended | |||||||||||||||
November 1, 2019 | |||||||||||||||
As Previously Reported | Reclassification For New Revenue Line | Pivotal Adjustments(1) | As Adjusted | ||||||||||||
Revenue: | |||||||||||||||
License | $ | $ | ( | ) | $ | $ | |||||||||
Subscription and SaaS | |||||||||||||||
Services | ( | ) | |||||||||||||
Operating expenses: | |||||||||||||||
Cost of license revenue | ( | ) | |||||||||||||
Cost of subscription and SaaS revenue | |||||||||||||||
Cost of services revenue | ( | ) |
October 30, | January 31, | ||||||
2020 | 2020 | ||||||
Unearned license revenue | $ | $ | |||||
Unearned subscription and SaaS revenue | |||||||
Unearned software maintenance revenue | |||||||
Unearned professional services revenue | |||||||
Total unearned revenue | $ | $ |
• | Pursuant to original equipment manufacturer (“OEM”) and reseller arrangements, Dell integrates or bundles VMware’s products and services with Dell’s products and sells them to end users. Dell also acts as a distributor, purchasing VMware’s standalone products and services for resale to end-user customers through VMware-authorized resellers. Revenue under these arrangements is presented net of related marketing development funds and rebates paid to Dell. In addition, VMware provides professional services to end users based upon contractual agreements with Dell. |
• | Dell purchases products and services from VMware for its internal use. |
• | From time to time, VMware and Dell enter into agreements to collaborate on technology projects, and Dell pays VMware for services or reimburses VMware for costs incurred by VMware, in connection with such projects. |
Revenue and Receipts | Unearned Revenue | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | As of | |||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | October 30, | January 31, | ||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2020 | ||||||||||||||||||
Reseller revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Internal-use revenue | |||||||||||||||||||||||
Collaborative technology project receipts | n/a | n/a |
• | VMware purchases and leases products and purchases services from Dell. |
• | From time to time, VMware and Dell enter into agreements to collaborate on technology projects, and VMware pays Dell for services provided to VMware by Dell related to such projects. |
• | In certain geographic regions where VMware does not have an established legal entity, VMware contracts with Dell subsidiaries for support services and support from Dell personnel who are managed by VMware. The costs incurred by Dell on VMware’s behalf related to these employees are charged to VMware with a mark-up intended to approximate costs that would have been incurred had VMware contracted for such services with an unrelated third party. These costs are included as expenses on VMware’s condensed consolidated statements of income and primarily include salaries, benefits, travel and occupancy expenses. Dell also incurs certain administrative costs on VMware’s behalf in the United States (“U.S.”) that are recorded as expenses on VMware’s condensed consolidated statements of income. |
• | In certain geographic regions, Dell files a consolidated indirect tax return, which includes value added taxes and other indirect taxes collected by VMware from its customers. VMware remits the indirect taxes to Dell, and Dell remits the tax payment to the foreign governments on VMware’s behalf. |
• | From time to time, VMware invoices end users on behalf of Dell for certain services rendered by Dell. Cash related to these services is collected from the end user by VMware and remitted to Dell. |
• | From time to time, VMware enters into agency arrangements with Dell that enable VMware to sell its subscriptions and services, leveraging the Dell enterprise relationships and end customer contracts. |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Purchases and leases of products and purchases of services(1) | $ | $ | $ | $ | |||||||||||
Dell subsidiary support and administrative costs |
October 30, | January 31, | ||||||
2020 | 2020 | ||||||
Due from related parties, current | $ | $ | |||||
Due to related parties, current(1) | |||||||
Due from related parties, net, current | $ | $ |
October 30, 2020 | |||||||||||||
Weighted-Average Useful Lives (in years) | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||
Purchased technology | $ | $ | ( | ) | $ | ||||||||
Customer relationships and customer lists | ( | ) | |||||||||||
Trademarks and tradenames | ( | ) | |||||||||||
Other | ( | ) | |||||||||||
Total definite-lived intangible assets | $ | $ | ( | ) | $ |
January 31, 2020 | |||||||||||||
Weighted-Average Useful Lives (in years) | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||
Purchased technology | $ | $ | ( | ) | $ | ||||||||
Customer relationships and customer lists | ( | ) | |||||||||||
Trademarks and tradenames | ( | ) | |||||||||||
Other | ( | ) | |||||||||||
Total definite-lived intangible assets | $ | $ | ( | ) | $ |
Remainder of 2021 | $ | ||
2022 | |||
2023 | |||
2024 | |||
2025 | |||
Thereafter | |||
Total | $ |
Balance, January 31, 2020 | $ | ||
Increase in goodwill due to business combinations and related adjustments | |||
Balance, October 30, 2020 | $ |
For the Nine Months Ended October 30, 2020 | |||||||||||||||
Balance as of January 31, 2020 | Realignment Expense | Utilization | Balance as of October 30, 2020 | ||||||||||||
Severance-related costs | $ | $ | $ | ( | ) | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income attributable to VMware, Inc. | $ | $ | $ | $ | |||||||||||
Weighted-average shares, basic for Classes A and B | |||||||||||||||
Effect of other dilutive securities | |||||||||||||||
Weighted-average shares, diluted for Classes A and B | |||||||||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic for Classes A and B | $ | $ | $ | $ | |||||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
Anti-dilutive securities: | |||||||||||
Employee stock options | |||||||||||
Restricted stock units | |||||||||||
Total |
October 30, | January 31, | ||||||
2020 | 2020 | ||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash within other current assets | |||||||
Restricted cash within other assets | |||||||
Total cash, cash equivalents and restricted cash | $ | $ |
October 30, | January 31, | Effective Interest Rate | |||||||
2020 | 2020 | ||||||||
Senior Notes issued August 21, 2017: | |||||||||
2.30% Senior Note Due August 21, 2020 | $ | $ | |||||||
2.95% Senior Note Due August 21, 2022 | |||||||||
3.90% Senior Note Due August 21, 2027 | |||||||||
Senior Notes issued April 7, 2020: | |||||||||
4.50% Senior Note Due May 15, 2025 | |||||||||
4.65% Senior Note Due May 15, 2027 | |||||||||
4.70% Senior Note Due May 15, 2030 | |||||||||
Total principal amount | |||||||||
Less: unamortized discount | ( | ) | ( | ) | |||||
Less: unamortized debt issuance costs | ( | ) | ( | ) | |||||
Net carrying amount | |||||||||
Current portion of long-term debt | |||||||||
Long-term debt | $ | $ |
• | Level 1 - Quoted prices in active markets for identical assets or liabilities; |
• | Level 2 - Inputs other than Level 1 inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and |
• | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
October 30, 2020 | |||||||||||
Level 1 | Level 2 | Total | |||||||||
Cash equivalents: | |||||||||||
Money-market funds | $ | $ | $ | ||||||||
Time deposits(1) | |||||||||||
Total cash equivalents | $ | $ | $ |
January 31, 2020 | |||||||||||
Level 1 | Level 2 | Total | |||||||||
Cash equivalents: | |||||||||||
Money-market funds | $ | $ | $ | ||||||||
Time deposits(1) | |||||||||||
Total cash equivalents | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Operating lease expense | $ | $ | $ | $ | |||||||||||
Finance lease expense: | |||||||||||||||
Amortization of ROU assets | $ | $ | $ | $ | |||||||||||
Interest on lease liabilities | |||||||||||||||
Total finance lease expense | $ | $ | $ | $ | |||||||||||
Short-term lease expense | $ | $ | $ | $ | |||||||||||
Variable lease expense | $ | $ | $ | $ | |||||||||||
Total lease expense | $ | $ | $ | $ |
Nine Months Ended | |||||||
October 30, | November 1, | ||||||
2020 | 2019 | ||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||
Operating cash flows from operating leases | $ | $ | |||||
Operating cash flows from finance leases | |||||||
Financing cash flows from finance leases | |||||||
ROU assets obtained in exchange for lease liabilities: | |||||||
Operating leases | $ | $ | |||||
Finance leases |
October 30, 2020 | |||||||
Operating Leases | Finance Leases | ||||||
ROU assets, non-current(1) | $ | $ | |||||
Lease liabilities, current(2) | $ | $ | |||||
Lease liabilities, non-current(3) | |||||||
Total lease liabilities | $ | $ |
January 31, 2020 | |||||||
Operating Leases | Finance Leases | ||||||
ROU assets, non-current(1) | $ | $ | |||||
Lease liabilities, current(2) | $ | $ | |||||
Lease liabilities, non-current(3) | |||||||
Total lease liabilities | $ | $ |
October 30, | January 31, | ||||
2020 | 2020 | ||||
Weighted-average remaining lease term (in years) | |||||
Operating leases | |||||
Finance leases | |||||
Weighted-average discount rate | |||||
Operating leases | % | % | |||
Finance leases | % | % |
October 30, 2020 | |||||||
Operating Leases | Finance Leases | ||||||
Remainder of 2021 | $ | $ | |||||
2022 | |||||||
2023 | |||||||
2024 | |||||||
2025 | |||||||
Thereafter | |||||||
Total future minimum lease payments | |||||||
Less: Imputed interest | ( | ) | ( | ) | |||
Total lease liabilities(1) | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Aggregate purchase price(1) | $ | $ | $ | $ | |||||||||||
Class A common stock repurchased | |||||||||||||||
Weighted-average price per share | $ | $ | $ | $ |
Number of Units | Weighted-Average Grant Date Fair Value (per unit) | |||||
Outstanding, January 31, 2020 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Forfeited | ( | ) | ||||
Outstanding, October 30, 2020 |
Unrealized Gain (Loss) on Forward Contracts | Foreign Currency Translation Adjustments | Total | |||||||||
Balance, January 31, 2020 | $ | $ | ( | ) | $ | ( | ) | ||||
Unrealized gains (losses), net of tax provision (benefit) of $—, $—, and $— | ( | ) | ( | ) | |||||||
Other comprehensive income (loss), net | ( | ) | ( | ) | |||||||
Balance, October 30, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Unrealized Gain (Loss) on Forward Contracts | Foreign Currency Translation Adjustment | Total | |||||||||
Balance, February 1, 2019 | $ | $ | ( | ) | $ | ( | ) | ||||
Unrealized gains (losses), net of tax provision (benefit) of $—, $— and $— | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) to the condensed consolidated statements of income (loss), net of tax (provision) benefit of $—, $— and $— | ( | ) | ( | ) | |||||||
Other comprehensive income (loss), net | |||||||||||
Balance, November 1, 2019 | $ | $ | ( | ) | $ | ( | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenue: | |||||||||||||||
License | $ | $ | $ | $ | |||||||||||
Subscription and SaaS | |||||||||||||||
Total license and subscription and SaaS | |||||||||||||||
Services: | |||||||||||||||
Software maintenance | |||||||||||||||
Professional services | |||||||||||||||
Total services | |||||||||||||||
Total revenue | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
United States | $ | $ | $ | $ | |||||||||||
International | |||||||||||||||
Total | $ | $ | $ | $ |
October 30, | January 31, | ||||||
2020 | 2020 | ||||||
United States | $ | $ | |||||
International | |||||||
Total | $ | $ |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||
License | $ | 639 | $ | 728 | $ | (88 | ) | (12 | )% | $ | 2,019 | $ | 2,147 | $ | (128 | ) | (6 | )% | |||||||||||
Subscription and SaaS | 676 | 470 | 206 | 44 | 1,880 | 1,320 | 560 | 42 | |||||||||||||||||||||
Total license and subscription and SaaS | 1,315 | 1,198 | 118 | 10 | 3,899 | 3,467 | 431 | 12 | |||||||||||||||||||||
Services: | |||||||||||||||||||||||||||||
Software maintenance | 1,282 | 1,200 | 82 | 7 | 3,797 | 3,519 | 278 | 8 | |||||||||||||||||||||
Professional services | 267 | 258 | 8 | 3 | 777 | 752 | 25 | 3 | |||||||||||||||||||||
Total services | 1,549 | 1,458 | 90 | 6 | 4,574 | 4,271 | 303 | 7 | |||||||||||||||||||||
Total revenue | $ | 2,864 | $ | 2,656 | $ | 208 | 8 | $ | 8,473 | $ | 7,738 | $ | 735 | 9 | |||||||||||||||
Revenue: | |||||||||||||||||||||||||||||
United States | $ | 1,466 | $ | 1,323 | $ | 143 | 11 | % | $ | 4,268 | $ | 3,835 | $ | 433 | 11 | % | |||||||||||||
International | 1,398 | 1,333 | 65 | 5 | 4,205 | 3,903 | 302 | 8 | |||||||||||||||||||||
Total revenue | $ | 2,864 | $ | 2,656 | $ | 208 | 8 | $ | 8,473 | $ | 7,738 | $ | 735 | 9 |
October 30, | January 31, | ||||||
2020 | 2020 | ||||||
Unearned license revenue | $ | 11 | $ | 19 | |||
Unearned subscription and SaaS revenue | 1,596 | 1,534 | |||||
Unearned software maintenance revenue | 6,574 | 6,700 | |||||
Unearned professional services revenue | 1,054 | 1,015 | |||||
Total unearned revenue | $ | 9,235 | $ | 9,268 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
Cost of license revenue | $ | 44 | $ | 42 | $ | 2 | 6 | % | $ | 118 | $ | 115 | $ | 3 | 2 | % | |||||||||||||
Stock-based compensation | — | — | — | 10 | 1 | 1 | — | 1 | |||||||||||||||||||||
Total expenses | $ | 44 | $ | 42 | $ | 2 | 6 | $ | 119 | $ | 116 | $ | 3 | 2 | |||||||||||||||
% of License revenue | 7 | % | 6 | % | 6 | % | 5 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
Cost of subscription and SaaS revenue | $ | 138 | $ | 100 | $ | 38 | 39 | % | $ | 387 | $ | 284 | $ | 103 | 36 | % | |||||||||||||
Stock-based compensation | 4 | 3 | 1 | 30 | 13 | 10 | 3 | 34 | |||||||||||||||||||||
Total expenses | $ | 142 | $ | 103 | $ | 39 | 38 | $ | 400 | $ | 294 | $ | 106 | 36 | |||||||||||||||
% of Subscription and SaaS revenue | 21 | % | 22 | % | 21 | % | 22 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
Cost of services revenue | $ | 305 | $ | 291 | $ | 14 | 5 | % | $ | 895 | $ | 858 | $ | 38 | 4 | % | |||||||||||||
Stock-based compensation | 25 | 20 | 5 | 24 | 74 | 58 | 15 | 27 | |||||||||||||||||||||
Total expenses | $ | 330 | $ | 311 | $ | 19 | 6 | $ | 969 | $ | 916 | $ | 53 | 6 | |||||||||||||||
% of Services revenue | 21 | % | 21 | % | 21 | % | 21 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
Research and development | $ | 574 | $ | 524 | $ | 50 | 10 | % | $ | 1,661 | $ | 1,518 | $ | 144 | 9 | % | |||||||||||||
Stock-based compensation | 140 | 118 | 22 | 19 | 397 | 328 | 68 | 21 | |||||||||||||||||||||
Total expenses | $ | 714 | $ | 642 | $ | 72 | 11 | $ | 2,058 | $ | 1,846 | $ | 212 | 11 | |||||||||||||||
% of Total revenue | 25 | % | 24 | % | 24 | % | 24 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
Sales and marketing | $ | 827 | $ | 842 | $ | (16 | ) | (2 | )% | $ | 2,484 | $ | 2,470 | $ | 12 | — | % | ||||||||||||
Stock-based compensation | 85 | 76 | 9 | 12 | 243 | 204 | 39 | 19 | |||||||||||||||||||||
Total expenses | $ | 912 | $ | 918 | $ | (7 | ) | (1 | ) | $ | 2,727 | $ | 2,674 | $ | 51 | 2 | |||||||||||||
% of Total revenue | 32 | % | 35 | % | 32 | % | 35 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
General and administrative | $ | 200 | $ | 230 | $ | (29 | ) | (13 | )% | $ | 632 | $ | 597 | $ | 34 | 6 | % | ||||||||||||
Stock-based compensation | 50 | 39 | 10 | 27 | 141 | 104 | 37 | 36 | |||||||||||||||||||||
Total expenses | $ | 250 | $ | 269 | $ | (19 | ) | (7 | ) | $ | 773 | $ | 701 | $ | 72 | 10 | |||||||||||||
% of Total revenue | 9 | % | 10 | % | 9 | % | 9 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
Realignment | $ | 44 | $ | — | $ | 44 | 100 | % | $ | 47 | $ | — | $ | 47 | 100 | % | |||||||||||||
% of Total revenue | 2 | % | — | % | 1 | % | — | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
Interest expense | $ | 52 | $ | 40 | $ | 12 | 30 | % | $ | 156 | $ | 108 | $ | 48 | 44 | % | |||||||||||||
% of Total revenue | 2 | % | 2 | % | 2 | % | 1 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
Other income (expense), net | $ | 177 | $ | 17 | $ | 160 | 943 | % | $ | 186 | $ | 75 | $ | 111 | 148 | % | |||||||||||||
% of Total revenue | 6 | % | 1 | % | 2 | % | 1 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Income tax provision (benefit) | $ | 120 | $ | (30 | ) | $ | 150 | $ | (4,842 | ) | |||||
Effective income tax rate | 21.6 | % | N/M | 10.6 | % | N/M | |||||||||
N/M - Effective tax rate is not considered meaningful. |
• | Pursuant to OEM and reseller arrangements, Dell integrates or bundles our products and services with Dell’s products and sells them to end users. Dell also acts as a distributor, purchasing our standalone products and services for resale to end-user customers through VMware-authorized resellers. Revenue under these arrangements is presented net of related marketing development funds and rebates paid to Dell. In addition, we provide professional services to end users based upon contractual agreements with Dell. |
• | Dell purchases products and services from us for its internal use. |
• | From time to time, we and Dell enter into agreements to collaborate on technology projects, and Dell pays us for services or reimburses us for costs incurred by us, in connection with such projects. |
Revenue and Receipts | Unearned Revenue | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | As of | |||||||||||||||||||||
October 30, | November 1, | October 30, | November 1, | October 30, | January 31, | ||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2020 | ||||||||||||||||||
Reseller revenue | $ | 927 | $ | 780 | $ | 2,738 | $ | 2,223 | $ | 4,159 | $ | 3,787 | |||||||||||
Internal-use revenue | 16 | 37 | 50 | 60 | 28 | 57 | |||||||||||||||||
Collaborative technology project receipts | 4 | 2 | 9 | 7 | n/a | n/a |
• | We purchase and lease products and purchase services from Dell. |
• | From time to time, we and Dell enter into agreements to collaborate on technology projects, and we pay Dell for services provided to us by Dell related to such projects. |
• | In certain geographic regions where we do not have an established legal entity, we contract with Dell subsidiaries for support services and support from Dell personnel who are managed by us. The costs incurred by Dell on our behalf related to these employees are charged to us with a mark-up intended to approximate costs that would have been incurred had we contracted for such services with an unrelated third party. These costs are included as expenses on our condensed consolidated statements of income and primarily include salaries, benefits, travel and occupancy expenses. Dell also incurs certain administrative costs on our behalf in the U.S. that are recorded as expenses on our condensed consolidated statements of income. |
• | In certain geographic regions, Dell files a consolidated indirect tax return, which includes value added taxes and other indirect taxes collected by us from our customers. We remit the indirect taxes to Dell, and Dell remits the tax payment to the foreign governments on our behalf. |
• | From time to time, we invoice end users on behalf of Dell for certain services rendered by Dell. Cash related to these services is collected from the end user by us and remitted to Dell. |
• | From time to time, we enter into agency arrangements with Dell that enable us to sell our subscriptions and services, leveraging the Dell enterprise relationships and end customer contracts. |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 30, | November 1, | October 30, | November 1, | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Purchases and leases of products and purchases of services(1) | $ | 49 | $ | 61 | $ | 138 | $ | 196 | |||||||
Dell subsidiary support and administrative costs | 12 | 27 | 54 | 91 |
October 30, | January 31, | ||||||
2020 | 2020 | ||||||
Due from related parties, current | $ | 771 | $ | 1,618 | |||
Due to related parties, current(1) | 99 | 161 | |||||
Due from related parties, net, current | $ | 672 | $ | 1,457 |
October 30, | January 31, | ||||||
2020 | 2020 | ||||||
Cash and cash equivalents | $ | 3,898 | $ | 2,915 |
Nine Months Ended | |||||||
October 30, | November 1, | ||||||
2020 | 2019 | ||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 3,085 | $ | 2,787 | |||
Investing activities | (632 | ) | (2,652 | ) | |||
Financing activities | (1,493 | ) | (759 | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 960 | $ | (624 | ) |
Senior Notes issued August 21, 2017: | |||
2.95% Senior Note Due August 21, 2022 | $ | 1,500 | |
3.90% Senior Note Due August 21, 2027 | 1,250 | ||
Senior Notes issued April 7, 2020: | |||
4.50% Senior Note Due May 15, 2025 | 750 | ||
4.65% Senior Note Due May 15, 2027 | 500 | ||
4.70% Senior Note Due May 15, 2030 | 750 | ||
Total principal amount | $ | 4,750 |
• | our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission (“SEC”); |
• | announcements of investor conferences, speeches and events at which our executives discuss our products, services and competitive strategies; |
• | webcasts of our quarterly earnings calls and links to webcasts of investor conferences at which our executives appear (archives of these events are also available for a limited time); |
• | additional information on financial metrics, including reconciliations of non-GAAP financial measures discussed in our presentations to the nearest comparable GAAP measure; |
• | press releases on quarterly earnings, product and service announcements, legal developments and international news; |
• | corporate governance information including our certificate of incorporation, bylaws, corporate governance guidelines, board committee charters, business conduct guidelines (which constitutes our code of business conduct and ethics) and other governance-related policies; |
• | other news, blogs and announcements that we may post from time to time that investors might find useful or interesting; and |
• | opportunities to sign up for email alerts and RSS feeds to have information pushed in real time. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
• | Certain industry events that we sponsor or at which we present and certain customer events have been canceled, postponed or moved to virtual-only experiences, including our annual United States (“U.S.”) and regional VMworld trade shows, which have historically been our most significant marketing and customer outreach events where we annually make important new product announcements, and which have been changed to virtual-only events, and we may deem it advisable to similarly alter, postpone or cancel entirely additional customer, employee or industry events in the future; and |
• | In addition, substantially all of our employees worldwide have worked remotely for an extended period of time, and while we have re-opened some of our facilities and we expect to gradually re-open additional facilities with appropriate social distancing and health practices when and as permitted by local governmental authorities, we are allowing most employees to work from home for the foreseeable future until they feel it is safe to return to their workplaces. |
• | sensitive data regarding our business, including intellectual property and other proprietary data, could be stolen; |
• | our electronic communications systems, including email and other methods, could be disrupted, and our ability to conduct our business operations could be seriously damaged until such systems can be restored and secured; |
• | our ability to process customer orders and electronically deliver products and services could be degraded, and our distribution channels could be disrupted, resulting in delays in revenue recognition; |
• | defects and security vulnerabilities could be exploited or introduced into our software products or our subscription and SaaS offerings and impair or disrupt their availability, thereby damaging the reputation and perceived reliability and security of our products and services and potentially making the data systems of our customers vulnerable to further data loss and cyber incidents; and |
• | personally identifiable or confidential data of our customers, employees and business partners could be stolen or lost. |
• | fluctuations in demand, adoption rates, sales cycles and pricing levels for our products and services; |
• | variations in customer choices among our on-premises and subscription and SaaS offerings, which can impact our rates of total revenue and license revenue growth; |
• | changes in customers’ budgets for information technology purchases and in the timing of their purchasing decisions; |
• | the timing of announcements or releases of new or upgraded products and services by us or by our competitors; |
• | the timing and size of business realignment plans and restructuring charges; |
• | our ability to maintain scalable internal systems for reporting, order processing, license fulfillment, product delivery, purchasing, billing and general accounting, among other functions; |
• | our ability to control costs, including our operating expenses; |
• | the credit risks associated with our distributors, who account for a significant portion of our product revenue and accounts receivable, and our customers; |
• | the timing of when sales orders are processed, which can cause fluctuations in our backlog and impact our bookings and timing of revenue recognition; |
• | seasonal factors such as the end of fiscal period budget expenditures by our customers and the timing of holiday and vacation periods; |
• | renewal rates and the amounts of the renewals for EAs as original EA terms expire; |
• | the timing and amount of internally developed software development costs that may be capitalized; |
• | unplanned events that could affect market perception of the quality or cost-effectiveness of our products and solutions; |
• | increased volatility in the provision for income taxes in periods in which transfers of intellectual property between our legal entities occur; |
• | fluctuations in the severity and duration of the COVID-19 pandemic and resulting restrictions on business activity which may vary significantly by region; and |
• | our ability to accurately predict the degree to which customers will elect to purchase our subscription-based offerings in place of licenses to our on-premises offerings. |
• | disrupting our ongoing operations and diverting management from day-to-day responsibilities; |
• | increasing our expenses, and adversely impacting our business, financial condition and operating results, including, for example, the dilutive impact on our operating margin and earnings per share that we expect from our acquisitions of Carbon Black and Pivotal; |
• | the costs of integrating business operations and on-boarding personnel, particularly for larger acquisitions such as Carbon Black and Pivotal; |
• | failure of an acquired business to further our business strategy; |
• | uncertainties in achieving the expected benefits of an acquisition or disposition, including enhanced revenue, technology, human resources, cost savings, operating efficiencies and other synergies; |
• | reducing cash available for operations, stock repurchase programs and other uses and resulting in potentially dilutive issuances of equity securities or the incurrence of additional debt; |
• | incurring amortization expense related to identifiable intangible assets acquired that could impact our operating results; |
• | difficulty integrating the operations, systems, technologies, products and personnel of acquired businesses effectively; |
• | the need to provide transition services in connection with a disposition that may result in the diversion of resources and focus; |
• | difficulty achieving expected business results due to a lack of experience in new markets, products or technologies or the initial dependence on unfamiliar distribution partners or vendors; |
• | retaining and motivating key personnel from acquired companies; |
• | declining employee morale and retention issues affecting employees of businesses that we acquire or dispose of, which may result from changes in compensation, or changes in management, reporting relationships, future prospects or the direction of the acquired or disposed business; |
• | assuming the liabilities of an acquired business, including acquired litigation-related liabilities and regulatory compliance issues, and potential litigation or regulatory action arising from a proposed or completed acquisition; |
• | lawsuits resulting from an acquisition or disposition; |
• | maintaining good relationships with customers or business partners of an acquired business or our own customers as a result of any integration of operations or the divestiture of a business upon which our customers rely; |
• | unidentified issues not discovered during the diligence process, including issues with the acquired or divested business’s intellectual property, product quality, security, privacy practices, accounting practices, regulatory compliance or legal contingencies; |
• | maintaining or establishing acceptable standards, controls, procedures or policies with respect to an acquired business; |
• | risks relating to the challenges and costs of closing a transaction; |
• | the accounting consequences of certain acquisitions, which may vary by deal structure; and |
• | the need to later divest acquired assets at a loss if an acquisition does not meet our expectations. |
• | difficulties in enforcing contracts and collecting accounts receivable and longer payment cycles, especially in emerging markets; |
• | difficulties in delivering support, training and documentation in certain foreign markets; |
• | tariffs and trade barriers, which could increase due to the current geopolitical climate, and other regulatory or contractual limitations on our ability to sell or develop our products and services in certain foreign markets; |
• | changes and instability in government policies and international trade arrangements that could adversely affect the ability of U.S.-based companies to conduct business in non-U.S. markets; |
• | economic or political instability and security concerns in countries that are important to our international sales and operations; |
• | difficulties in transferring funds from certain countries; |
• | increased compliance risks, particularly in emerging markets; and |
• | difficulties in maintaining appropriate controls relating to revenue recognition practices. |
• | requiring the dedication of a portion of our expected cash flow from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures and acquisitions; and |
• | limiting our flexibility in planning for, or reacting to, changes in our business and our industry. |
• | pay significant damages; |
• | stop distributing our products that contain the open source software; |
• | revise or modify our product code to remove alleged infringing code; |
• | release the source code of our proprietary software; or |
• | take other steps to avoid or remedy an alleged infringement. |
• | Dell is able to control matters requiring our stockholders’ approval, including the election of a majority of our directors as described in the risk factors below. |
• | Dell could implement changes to our business, including changing our commercial relationship with Dell or taking other corporate actions, such as participating in business combinations, that our other stockholders may not view as beneficial. |
• | We have arrangements with a number of companies that compete with Dell, and our relationship with Dell could adversely affect our relationships with these companies or other customers, suppliers and partners. |
• | Since the Dell Acquisition, the portion of our bookings that are realized through Dell sales channels has grown more rapidly than our sales through non-Dell resellers and distributors, and we expect this trend to continue. To the extent that we find ourselves relying more heavily upon Dell for our channel sales, Dell’s leverage over our sales and marketing efforts may increase and our ability to negotiate favorable go-to-market arrangements with Dell and with other channel partners may decline. During the nine months ended October 30, 2020, revenue from Dell, including purchases of products and services directly from us, as well as through our channel partners, accounted for 33% of our consolidated revenue, which included revenue from Dell selling joint solutions as an OEM, acting as a distributor to other non-Dell resellers, reselling products and services as a reseller or purchasing products and services for its own internal use. On certain transactions, Dell Financial Services also provided financing to our end users at our end users’ discretion. |
• | Dell has a right to approve certain matters under our certificate of incorporation, including acquisitions or investments in excess of $100 million, and Dell may choose not to consent to matters that our board of directors believes are in the best interests of VMware. |
• | Synergies and benefits that we expect from our relationship with Dell may not be realized. |
• | Dell is highly leveraged and commits a substantial portion of its cash flows to servicing its indebtedness. Dell’s significant debt could create the perception that Dell may exercise its control over us to limit our growth in favor of its other businesses or cause us to transfer cash to Dell and incur additional indebtedness. In addition, if Dell defaults, or appears in danger of defaulting, on its indebtedness, uncertainty as to the impact of such a default on VMware could disrupt our business. |
• | Investor perceptions of Dell’s performance, future plans and prospects could contribute to volatility in the price of our Class A common stock. |
• | Some of our products compete directly with products sold or distributed by Dell, which could result in reduced sales. |
• | that a majority of our board of directors consists of independent directors; |
• | that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; |
• | that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and |
• | for an annual performance evaluation of the nominating and governance committee and compensation committee. |
• | the division of our board of directors into three classes, with each class serving for a staggered three-year term, which prevents stockholders from electing an entirely new board of directors at any annual meeting; |
• | the right of the board of directors to elect a director to fill a vacancy created by the expansion of the board of directors; |
• | following a 355 Distribution of Class B common stock by Dell to its stockholders, the restriction that a beneficial owner of 10% or more of our Class B common stock may not vote in any election of directors unless such person or group also owns at least an equivalent percentage of Class A common stock or obtains approval of our board of directors prior to acquiring beneficial ownership of at least 5% of Class B common stock; |
• | the prohibition of cumulative voting in the election of directors or any other matters, which would otherwise allow less than a majority of stockholders to elect director candidates; |
• | the requirement for advance notice for nominations for election to the board of directors or for proposing matters that can be acted upon at a stockholders’ meeting; |
• | the ability of the board of directors to issue, without stockholder approval, up to 100,000,000 shares of preferred stock with terms set by the board of directors, which rights could be senior to those of common stock; and |
• | in the event that Dell or its successor-in-interest no longer owns shares of our common stock representing at least a majority of the votes entitled to be cast in the election of directors, stockholders may not act by written consent and may not call special meetings of the stockholders. |
Total Number of Shares Purchased | Average Price Paid Per Share(1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plans or Programs(2) | ||||||||||
August 1 – August 28, 2020 | 460,667 | $ | 140.57 | 460,667 | $ | 1,625,080,456 | |||||||
August 29 – September 25, 2020 | 469,738 | 141.48 | 469,738 | 1,558,623,579 | |||||||||
September 26 – October 30, 2020 | 840,000 | 147.85 | 840,000 | 1,434,426,734 | |||||||||
1,770,405 | $ | 144.27 | 1,770,405 | 1,434,426,734 |
(1) | The average price paid per share excludes commissions. |
ITEM 6. | EXHIBITS |
Incorporated by Reference | |||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Exhibit | Filing Date | ||||||
3.1 | 10-Q | 001-33622 | 3.1 | 6/9/17 | |||||||
3.2 | 8-K | 001-33622 | 3.1 | 2/23/17 | |||||||
31.1* | |||||||||||
31.2* | |||||||||||
32.1ǂ | |||||||||||
32.2ǂ | |||||||||||
101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema | ||||||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase | ||||||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase | ||||||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase | ||||||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase | ||||||||||
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101) |
VMWARE, INC. | |||
Dated: | December 7, 2020 | By: | /s/ J. Andrew Munk |
J. Andrew Munk Chief Accounting Officer (Principal Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of VMware, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | December 7, 2020 | By: | /s/ Patrick Gelsinger | |
Patrick Gelsinger Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of VMware, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | December 7, 2020 | By: | /s/ Zane Rowe | |
Zane Rowe Chief Financial Officer and Executive Vice President (Principal Financial Officer) |
Date: | December 7, 2020 | By: | /s/ Patrick Gelsinger | |
Patrick Gelsinger Chief Executive Officer (Principal Executive Officer) |
Date: | December 7, 2020 | By: | /s/ Zane Rowe | |
Zane Rowe Chief Financial Officer and Executive Vice President (Principal Financial Officer) |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Millions |
3 Months Ended | 9 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|||||||||||
Revenue: | ||||||||||||||
Revenue | [1],[2] | $ 2,864 | $ 2,656 | [3] | $ 8,473 | $ 7,738 | [3] | |||||||
Operating expenses: | ||||||||||||||
Research and development | [1],[4] | 714 | 642 | [3] | 2,058 | 1,846 | [3] | |||||||
Sales and marketing | [1],[4] | 912 | 918 | [3] | 2,727 | 2,674 | [3] | |||||||
General and administrative | [1],[4] | 250 | 269 | [3] | 773 | 701 | [3] | |||||||
Realignment | [1],[3] | 44 | 0 | [4] | 47 | 0 | [4] | |||||||
Operating income | 428 | 371 | [3] | 1,380 | 1,191 | [3] | ||||||||
Investment income | 1 | 12 | [3] | 7 | 40 | [3] | ||||||||
Interest expense | (52) | (40) | [3] | (156) | (108) | [3] | ||||||||
Other income (expense), net | 177 | 17 | [3] | 186 | 75 | [3] | ||||||||
Total income before income tax | 554 | 360 | [3] | 1,417 | 1,198 | [3] | ||||||||
Income tax provision (benefit) | 120 | (30) | [3] | 150 | (4,842) | [3] | ||||||||
Net income | 434 | 390 | [3] | 1,267 | 6,040 | [3] | ||||||||
Less: Net loss attributable to non-controlling interests | 0 | (17) | [3] | 0 | (50) | [3] | ||||||||
Net income attributable to VMware, Inc. | $ 434 | $ 407 | [3] | $ 1,267 | $ 6,090 | [3] | ||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic for Classes A and B (in USD per share) | $ 1.03 | $ 0.98 | [3] | $ 3.02 | $ 14.60 | [3] | ||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B (in USD per share) | $ 1.02 | $ 0.96 | [3] | $ 3.00 | $ 14.32 | [3] | ||||||||
Weighted-average shares, basic for Classes A and B (in shares) | 420,857 | 416,387 | [3] | 419,758 | 417,002 | [3] | ||||||||
Weighted-average shares, diluted for Classes A and B (in shares) | 423,400 | 423,035 | [3] | 423,093 | 425,366 | [3] | ||||||||
Cost of license revenue | ||||||||||||||
Operating expenses: | ||||||||||||||
Stock-based compensation | $ 0 | $ 0 | $ 1 | $ 1 | ||||||||||
Cost of subscription and SaaS revenue | ||||||||||||||
Operating expenses: | ||||||||||||||
Stock-based compensation | 4 | 3 | 13 | 10 | ||||||||||
Cost of services revenue | ||||||||||||||
Operating expenses: | ||||||||||||||
Stock-based compensation | 25 | 20 | 74 | 58 | ||||||||||
Research and development | ||||||||||||||
Operating expenses: | ||||||||||||||
Stock-based compensation | 140 | 118 | 397 | 328 | ||||||||||
Sales and marketing | ||||||||||||||
Operating expenses: | ||||||||||||||
Stock-based compensation | 85 | 76 | 243 | 204 | ||||||||||
General and administrative | ||||||||||||||
Operating expenses: | ||||||||||||||
Stock-based compensation | 50 | 39 | 141 | 104 | ||||||||||
License | ||||||||||||||
Revenue: | ||||||||||||||
Revenue | [1],[2] | 639 | 728 | [3] | 2,019 | 2,147 | [3] | |||||||
Operating expenses: | ||||||||||||||
Cost of revenue | [1],[4] | 44 | 42 | [3] | 119 | 116 | [3] | |||||||
License | Dell | ||||||||||||||
Revenue: | ||||||||||||||
Revenue | 289 | 353 | 976 | 992 | ||||||||||
Subscription and SaaS | ||||||||||||||
Revenue: | ||||||||||||||
Revenue | [1],[2] | 676 | 470 | [3] | 1,880 | 1,320 | [3] | |||||||
Operating expenses: | ||||||||||||||
Cost of revenue | [1],[4] | 142 | 103 | [3] | 400 | 294 | [3] | |||||||
Subscription and SaaS | Dell | ||||||||||||||
Revenue: | ||||||||||||||
Revenue | 136 | 88 | 373 | 239 | ||||||||||
Services | ||||||||||||||
Revenue: | ||||||||||||||
Revenue | [1],[2] | 1,549 | 1,458 | [3] | 4,574 | 4,271 | [3] | |||||||
Operating expenses: | ||||||||||||||
Cost of revenue | [1],[4] | 330 | 311 | [3] | 969 | 916 | [3] | |||||||
Services | Dell | ||||||||||||||
Revenue: | ||||||||||||||
Revenue | $ 518 | $ 376 | $ 1,439 | $ 1,052 | ||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parentheticals) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||||
Tax provision (benefit) on unrealized gains (losses) on effective foreign currency forward contracts | $ 0 | $ 0 | $ 0 | $ 0 |
Tax (provision) benefit on reclassification of (gains) losses realized on effective foreign currency forward contracts | $ 0 | $ 0 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions |
Oct. 30, 2020 |
Jan. 31, 2020 |
---|---|---|
Current assets: | ||
Cash and cash equivalents | $ 3,898 | $ 2,915 |
Accounts receivable, net of allowance for doubtful accounts of $6 and $7 | 1,789 | 1,883 |
Due from related parties, net | 672 | 1,457 |
Other current assets | 473 | 436 |
Total current assets | 6,832 | 6,691 |
Property and equipment, net | 1,311 | 1,280 |
Other assets | 2,698 | 2,266 |
Deferred tax assets | 5,865 | 5,556 |
Intangible assets, net | 1,059 | 1,172 |
Goodwill | 9,559 | 9,329 |
Total assets | 27,324 | 26,294 |
Current liabilities: | ||
Accounts payable | 190 | 208 |
Accrued expenses and other | 2,232 | 2,151 |
Current portion of long-term debt and other borrowings | 0 | 2,747 |
Unearned revenue | 5,205 | 5,218 |
Total current liabilities | 7,627 | 10,324 |
Note payable to Dell | 270 | 270 |
Long-term debt | 4,715 | 2,731 |
Unearned revenue | 4,030 | 4,050 |
Income tax payable | 790 | 817 |
Operating lease liabilities | 904 | 746 |
Other liabilities | 512 | 347 |
Total liabilities | 18,848 | 19,285 |
Contingencies (refer to Note D) | ||
Stockholders’ equity: | ||
Additional paid-in capital | 2,201 | 2,000 |
Accumulated other comprehensive loss | (5) | (4) |
Retained earnings | 6,276 | 5,009 |
Total stockholders’ equity | 8,476 | 7,009 |
Total liabilities and stockholders’ equity | 27,324 | 26,294 |
Class A Common Stock | ||
Stockholders’ equity: | ||
Common stock | 1 | 1 |
Class B Convertible Common Stock | ||
Stockholders’ equity: | ||
Common stock | $ 3 | $ 3 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Millions |
Oct. 30, 2020 |
Jan. 31, 2020 |
---|---|---|
Allowance for doubtful accounts | $ 6 | $ 7 |
Class A Common Stock | ||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 2,500,000,000 | 2,500,000,000 |
Common stock, shares issued (in shares) | 113,300,000 | 110,484,000 |
Common stock, shares outstanding (in shares) | 113,300,000 | 110,484,000 |
Class B Convertible Common Stock | ||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 307,222,000 | 307,222,000 |
Common stock, shares outstanding (in shares) | 307,222,000 | 307,222,000 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions |
9 Months Ended | ||||
---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
[1] | |||
Operating activities: | |||||
Net income | $ 1,267 | $ 6,040 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation and amortization | 757 | 626 | |||
Stock-based compensation | 869 | 705 | |||
Deferred income taxes, net | (177) | (5,138) | |||
Unrealized (gain) loss on equity securities, net | (197) | (30) | |||
(Gain) loss on disposition of assets, revaluation and impairment, net | 22 | (4) | |||
Loss on extinguishment of debt | 8 | 0 | |||
Other | 0 | 4 | |||
Changes in assets and liabilities, net of acquisitions: | |||||
Accounts receivable | 102 | 164 | |||
Other current assets and other assets | (622) | (444) | |||
Due to/from related parties, net | 785 | 299 | |||
Accounts payable | (4) | 14 | |||
Accrued expenses and other liabilities | 393 | (82) | |||
Income taxes payable | (53) | 15 | |||
Unearned revenue | (65) | 618 | |||
Net cash provided by operating activities | 3,085 | 2,787 | |||
Investing activities: | |||||
Additions to property and equipment | (247) | (215) | |||
Purchases of strategic investments | (16) | (18) | |||
Proceeds from disposition of assets | 21 | 22 | |||
Business combinations, net of cash acquired, and purchases of intangible assets | (390) | (2,437) | |||
Net cash paid on disposition of a business | 0 | (4) | |||
Net cash used in investing activities | (632) | (2,652) | |||
Financing activities: | |||||
Proceeds from issuance of common stock | 264 | 294 | |||
Net proceeds from issuance of long-term debt | 1,979 | 0 | |||
Borrowings under term loan, net of issuance costs | 0 | 1,993 | |||
Repayment of term loan | (1,500) | (1,400) | |||
Repayment of current portion of long-term debt | (1,257) | 0 | |||
Repurchase of common stock | (566) | (1,279) | |||
Shares repurchased for tax withholdings on vesting of restricted stock | (319) | (393) | |||
Payment to acquire non-controlling interests | (91) | 0 | |||
Contribution from Dell | 0 | 27 | |||
Principal payments on finance lease obligations | (3) | (1) | |||
Net cash used in financing activities | (1,493) | (759) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | 960 | (624) | |||
Cash, cash equivalents and restricted cash at beginning of the period | 3,031 | 3,596 | |||
Cash, cash equivalents and restricted cash at end of the period | 3,991 | 2,972 | |||
Supplemental disclosures of cash flow information: | |||||
Cash paid for interest | 142 | 131 | |||
Cash paid for taxes, net | 393 | 283 | |||
Non-cash items: | |||||
Changes in capital additions, accrued but not paid | (18) | 5 | |||
Changes in tax withholdings on vesting of restricted stock, accrued but not paid | $ (4) | $ 49 | |||
|
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Millions |
Total |
Class A Common Stock |
Class B Convertible Common Stock |
Common Stock
Class A Common Stock
|
Common Stock
Class B Convertible Common Stock
|
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Non-controlling Interests |
Cumulative Effect, Period of Adoption, Adjustment |
Cumulative Effect, Period of Adoption, Adjustment
Retained Earnings
|
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance (in shares) at Feb. 01, 2019 | [1] | 111,000 | 300,000 | ||||||||||||||
Balance at Feb. 01, 2019 | [1] | $ 2,891 | $ 1 | $ 3 | $ 2,959 | $ (1,096) | $ (2) | $ 1,026 | $ 2 | $ 2 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Proceeds from issuance of common stock (in shares) | [1] | 1,000 | |||||||||||||||
Proceeds from issuance of common stock | [1] | 200 | 200 | ||||||||||||||
Issuance of stock-based awards in acquisition | [1] | 12 | 12 | ||||||||||||||
Repurchase and retirement of common stock (in shares) | (7,333) | (7,000) | [1] | ||||||||||||||
Repurchase and retirement of common stock | (1,279) | [1] | $ (1,279) | (972) | [1] | (307) | [1] | ||||||||||
Issuance of restricted stock (in shares) | [1] | 7,000 | |||||||||||||||
Issuance of restricted stock | [1] | 0 | |||||||||||||||
Shares withheld for tax withholdings on vesting of restricted stock (in shares) | [1] | (2,000) | |||||||||||||||
Shares withheld for tax withholdings on vesting of restricted stock | [1] | (442) | (442) | ||||||||||||||
Stock-based compensation | [1] | 705 | 632 | 73 | |||||||||||||
Amount due from tax sharing arrangement | [1] | 85 | 85 | ||||||||||||||
Investment from Dell, net | [1] | 29 | 17 | 12 | |||||||||||||
Total other comprehensive income (loss) | [1] | 1 | 1 | ||||||||||||||
Transactions with Pivotal’s non-controlling stockholders | [1] | 84 | (11) | 95 | |||||||||||||
Net income (loss) | [1] | 6,040 | 6,090 | (50) | |||||||||||||
Balance (in shares) at Nov. 01, 2019 | [1] | 110,000 | 300,000 | ||||||||||||||
Balance at Nov. 01, 2019 | [1] | 8,328 | $ 1 | $ 3 | 2,480 | 4,689 | (1) | 1,156 | |||||||||
Balance (in shares) at Aug. 02, 2019 | [1] | 109,000 | 300,000 | ||||||||||||||
Balance at Aug. 02, 2019 | [1] | 7,871 | $ 1 | $ 3 | 2,437 | 4,330 | 3 | 1,097 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Proceeds from issuance of common stock (in shares) | [1] | 1,000 | |||||||||||||||
Proceeds from issuance of common stock | [1] | 94 | 94 | ||||||||||||||
Issuance of stock-based awards in acquisition | [1] | 10 | 10 | ||||||||||||||
Repurchase and retirement of common stock (in shares) | (1,638) | (2,000) | [1] | ||||||||||||||
Repurchase and retirement of common stock | (242) | [1] | $ (242) | (194) | [1] | (48) | [1] | ||||||||||
Issuance of restricted stock (in shares) | [1] | 2,000 | |||||||||||||||
Issuance of restricted stock | [1] | 0 | |||||||||||||||
Shares withheld for tax withholdings on vesting of restricted stock | [1] | (94) | (94) | ||||||||||||||
Stock-based compensation | [1] | 256 | 230 | 26 | |||||||||||||
Investment from Dell, net | [1] | 2 | 1 | 1 | |||||||||||||
Total other comprehensive income (loss) | [1] | (4) | (4) | ||||||||||||||
Transactions with Pivotal’s non-controlling stockholders | [1] | 45 | (4) | 49 | |||||||||||||
Net income (loss) | [1] | 390 | 407 | (17) | |||||||||||||
Balance (in shares) at Nov. 01, 2019 | [1] | 110,000 | 300,000 | ||||||||||||||
Balance at Nov. 01, 2019 | [1] | 8,328 | $ 1 | $ 3 | 2,480 | 4,689 | (1) | $ 1,156 | |||||||||
Balance (in shares) at Jan. 31, 2020 | 110,484 | 307,222 | 110,000 | 307,000 | |||||||||||||
Balance at Jan. 31, 2020 | 7,009 | $ 1 | $ 3 | 2,000 | 5,009 | (4) | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Proceeds from issuance of common stock (in shares) | 3,000 | ||||||||||||||||
Proceeds from issuance of common stock | 264 | 264 | |||||||||||||||
Repurchase and retirement of common stock (in shares) | (4,229) | (4,000) | |||||||||||||||
Repurchase and retirement of common stock | (566) | $ (566) | (566) | ||||||||||||||
Issuance of restricted stock (in shares) | 6,000 | ||||||||||||||||
Issuance of restricted stock | 0 | ||||||||||||||||
Shares withheld for tax withholdings on vesting of restricted stock (in shares) | (2,000) | ||||||||||||||||
Shares withheld for tax withholdings on vesting of restricted stock | (315) | (315) | |||||||||||||||
Stock-based compensation | 863 | 863 | |||||||||||||||
Amount due from tax sharing arrangement | (45) | (45) | |||||||||||||||
Total other comprehensive income (loss) | (1) | (1) | |||||||||||||||
Net income (loss) | 1,267 | 1,267 | |||||||||||||||
Balance (in shares) at Oct. 30, 2020 | 113,300 | 307,222 | 113,000 | 307,000 | |||||||||||||
Balance at Oct. 30, 2020 | 8,476 | $ 1 | $ 3 | 2,201 | 6,276 | (5) | |||||||||||
Balance (in shares) at Jul. 31, 2020 | 113,000 | 307,000 | |||||||||||||||
Balance at Jul. 31, 2020 | 7,907 | $ 1 | $ 3 | 2,070 | 5,842 | (9) | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Proceeds from issuance of common stock (in shares) | 1,000 | ||||||||||||||||
Proceeds from issuance of common stock | 122 | 122 | |||||||||||||||
Repurchase and retirement of common stock (in shares) | (1,770) | (2,000) | |||||||||||||||
Repurchase and retirement of common stock | (255) | $ (255) | (255) | ||||||||||||||
Issuance of restricted stock (in shares) | 1,000 | ||||||||||||||||
Issuance of restricted stock | 0 | ||||||||||||||||
Shares withheld for tax withholdings on vesting of restricted stock | (39) | (39) | |||||||||||||||
Stock-based compensation | 303 | 303 | |||||||||||||||
Amount due from tax sharing arrangement | 0 | 0 | |||||||||||||||
Total other comprehensive income (loss) | 4 | 4 | |||||||||||||||
Net income (loss) | 434 | 434 | |||||||||||||||
Balance (in shares) at Oct. 30, 2020 | 113,300 | 307,222 | 113,000 | 307,000 | |||||||||||||
Balance at Oct. 30, 2020 | $ 8,476 | $ 1 | $ 3 | $ 2,201 | $ 6,276 | $ (5) | |||||||||||
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Overview and Basis of Presentation |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Overview and Basis of Presentation | Overview and Basis of Presentation Company and Background VMware, Inc. (“VMware” or the “Company”) originally pioneered the development and application of virtualization technologies with x86 server-based computing, separating application software from the underlying hardware. Information technology (“IT”) driven innovation continues to disrupt markets and industries. Technologies emerge faster than organizations can absorb, creating increasingly complex environments. IT is working at an accelerated pace to harness new technologies, platforms and cloud models, ultimately guiding businesses through a digital transformation. To take on these challenges, VMware is working with customers in the areas of hybrid and multi-cloud, modern applications, networking, security and digital workspaces. VMware’s software provides a flexible digital foundation to enable customers in their digital transformations. Accounting Principles The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Retrospective Combination of Historical Financial Statements In December 2019, VMware completed the acquisition of Pivotal, which was, at the time, a subsidiary of VMware’s parent company, Dell Technologies Inc. (“Dell”). The purchase of the controlling interest in Pivotal from Dell was accounted for as a transaction between entities under common control in accordance with Accounting Standards Codification 805-50, Business Combination - Related Issues, which requires retrospective combination of entities for all periods presented, as if the combination had been in effect since the inception of common control. The condensed consolidated financial statements of VMware and notes thereto are presented on a combined basis, as both VMware and Pivotal were under common control for all periods presented. Of the total amount of consideration for the acquisition of the non-controlling interest in Pivotal, $155 million was recognized in accrued expenses and other on the condensed consolidated balance sheet as of January 31, 2020 for amounts potentially owed to dissenting stockholders. During the second quarter of fiscal 2021, VMware paid $91 million to dissenting stockholders of Pivotal, representing a portion of the amount accrued as of January 31, 2020. Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments and accruals, for a fair statement of VMware’s condensed consolidated results of operations, financial position and cash flows for the periods presented. Results of operations are not necessarily indicative of the results that may be expected for the full fiscal year 2021. Certain information and footnote disclosures typically included in annual consolidated financial statements have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in VMware’s Annual Report on Form 10-K filed on March 26, 2020. Effective September 7, 2016, Dell (formerly Denali Holding Inc.) acquired EMC Corporation (“EMC”), VMware’s parent company, including EMC’s majority control of VMware. As of October 30, 2020, Dell controlled 80.4% of VMware’s outstanding common stock and 97.4% of the combined voting power of VMware’s outstanding common stock, including 31 million shares of VMware’s Class A common stock and all of VMware’s Class B common stock. As VMware is a majority-owned and controlled subsidiary of Dell, its results of operations and financial position are consolidated with Dell’s financial statements. Management believes the assumptions underlying the condensed consolidated financial statements are reasonable. However, the amounts recorded for VMware’s related party transactions with Dell and its consolidated subsidiaries may not be considered arm’s length with an unrelated third party. Therefore, the condensed consolidated financial statements included herein may not necessarily reflect the results of operations, financial position and cash flows had VMware engaged in such transactions with an unrelated third party during all periods presented. Accordingly, VMware’s historical financial information is not necessarily indicative of what the Company’s results of operations, financial position and cash flows will be in the future, if and when VMware contracts at arm’s length with unrelated third parties for products and services the Company receives from and provides to Dell. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of VMware and subsidiaries in which VMware has a controlling financial interest. The portion of results of operations attributable to the non-controlling interests for Pivotal prior to the acquisition was included in net loss attributable to non-controlling interests on the condensed consolidated statements of income for the periods presented. As part of the acquisition of Pivotal, VMware acquired the non-controlling interests in Pivotal from the holders of Pivotal Class A common stock, and has held 100% of the controlling financial interest in Pivotal since December 2019. The cumulative portion of the results of operations and changes in the net assets of Pivotal attributable to the non-controlling interests through the acquisition date were reclassified to additional paid-in capital on the condensed consolidated balance sheet as of January 31, 2020. All intercompany transactions and account balances between VMware and its subsidiaries have been eliminated in consolidation. Transactions with Dell and its consolidated subsidiaries are generally settled in cash and are classified on the condensed consolidated statements of cash flows based upon the nature of the underlying transaction. Use of Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenue and expenses during the reporting periods, and the disclosure of contingent liabilities at the date of the financial statements. Estimates are used for, but not limited to, trade receivable valuation, marketing development funds, expected period of benefit for deferred commissions, useful lives assigned to fixed assets and intangible assets, valuation of goodwill and definite-lived intangibles, income taxes, stock-based compensation and contingencies. Actual results could differ from those estimates. As the impact of the COVID-19 pandemic continues to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment. These estimates and assumptions may change in future periods and will be recognized in the condensed consolidated financial statements as new events occur and additional information becomes known. To the extent the Company’s actual results differ materially from those estimates and assumptions, VMware’s future financial statements could be affected. Income Taxes VMware’s quarterly effective income tax rate is based on the Company’s estimated annual income tax rate forecast and discrete tax items recognized in the period. During the first quarter of fiscal 2021, the Company completed an intra-group transfer of certain of Pivotal’s intellectual property rights (the “IP”) to the Company’s Irish subsidiary, resulting in a discrete tax benefit of $59 million recognized with a deferred tax asset. This deferred tax asset was recognized as a result of the book and tax basis difference on the IP transferred and was based on the IP’s current fair value. During the second quarter of fiscal 2020, a discrete tax benefit of $4.9 billion was recognized with a deferred tax asset due to an intra-group transfer of certain of the Company’s intellectual property rights to its Irish subsidiary. During the third quarter of fiscal 2020, certain statutes of limitations expired, which resulted in a reduction of unrecognized tax benefits of $53 million. Subscription and SaaS Revenue Effective with the fourth quarter of fiscal 2020, VMware is presenting new revenue and cost of revenue line items entitled “subscription and SaaS revenue” and “cost of subscription and SaaS revenue.” Previously, subscription and software-as-a-service (“SaaS”) revenue was referred to as “hybrid cloud subscription and SaaS revenue” and was allocated between license revenue and services revenue in the condensed consolidated statements of income. In light of the Company’s recent acquisitions, management decided to separately present revenue recognized from subscription and SaaS offerings as management believes it provides a more meaningful representation of the nature of its revenue. Revenue and related costs from prior periods were reclassified to conform to the current presentation. The following table summarizes the prior period reclassifications for revenue and the corresponding costs resulting from the presentation of the new revenue line item (amounts in millions):
(1) Includes adjustments related to the recast of prior periods resulting from the acquisition of Pivotal. Recently Adopted Accounting Standards Effective February 1, 2020, VMware adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires the measurement and recognition of current expected credit losses for financial assets. The standard did not have a material impact on the Company’s condensed consolidated financial statements. New Accounting Pronouncement In August 2020, the Financial Accounting Standards Board issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, simplifying the accounting for convertible instruments and contracts in an entity’s own equity and amending the diluted earnings per share guidance for greater consistency within the standard. With the exception of the impact to the Company’s diluted net income per share, which is not expected to be material, the updated standard is not expected to have any other impact on the Company’s financial statements. The updated standard is effective for interim and annual periods beginning after December 15, 2021, but may be early adopted. VMware plans to adopt this updated standard during the first quarter of fiscal 2022 on a modified retrospective basis.
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Revenue, Unearned Revenue and Remaining Performance Obligations |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, Unearned Revenue and Remaining Performance Obligations | Revenue, Unearned Revenue and Remaining Performance Obligations Revenue Contract Assets A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. Contract assets include fixed fee professional services where transfer of services has occurred in advance of the Company’s right to invoice. Contract assets are classified as accounts receivables upon invoicing. Contract assets are included in other current assets on the condensed consolidated balance sheets. Contract assets were $46 million and $26 million as of October 30, 2020 and January 31, 2020, respectively. Contract asset balances will fluctuate based upon the timing of the transfer of services, billings and customers’ acceptance of contractual milestones. Contract Liabilities Contract liabilities consist of unearned revenue, which is generally recorded when VMware has the right to invoice or payments have been received for undelivered products or services. Customer Deposits Customer deposits include prepayments from customers related to amounts received for contracts that include certain cancellation rights. Purchased credits eligible for redemption of VMware’s hosted services (“cloud credits”) are included in customer deposits until the cloud credit is consumed or is contractually committed to a specific hosted service. Cloud credits are redeemable by the customer for the gross value of the hosted offering. Upon contractual commitment for a hosted service, the net value of the cloud credits that are expected to be recognized as revenue when the obligation is fulfilled will be classified as unearned revenue. As of October 30, 2020, customer deposits related to customer prepayments and cloud credits of $275 million were included in accrued expenses and other, and $152 million were included in other liabilities on the condensed consolidated balance sheets. As of January 31, 2020, customer deposits related to customer prepayments and cloud credits of $247 million were included in accrued expenses and other, and $143 million were included in other liabilities on the condensed consolidated balance sheets. Deferred Commissions Deferred commissions are classified as current or non-current based on the duration of the expected period of benefit. Deferred commissions, including the employer portion of payroll taxes, included in other current assets as of October 30, 2020 and January 31, 2020 were $27 million and $13 million, respectively. Deferred commissions included in other assets were $1.0 billion and $938 million as of October 30, 2020 and January 31, 2020, respectively. Amortization expense for deferred commissions was included in sales and marketing on the condensed consolidated statements of income and was $113 million and $319 million during the three and nine months ended October 30, 2020, respectively, and $93 million and $270 million during the three and nine months ended November 1, 2019, respectively. Unearned Revenue Unearned revenue as of the periods presented consisted of the following (table in millions):
Unearned subscription and SaaS revenue is generally recognized over time as customers consume the services or ratably over the term of the subscription, commencing upon provisioning of the service. Unearned software maintenance revenue is attributable to VMware’s maintenance contracts and is generally recognized over time on a ratable basis over the contract duration. The weighted-average remaining contractual term as of October 30, 2020 was approximately two years. Unearned professional services revenue results primarily from prepaid professional services and is generally recognized as the services are performed. Total billings and revenue recognized during the three months ended October 30, 2020 were $1.7 billion and $1.9 billion, respectively, and did not include amounts for performance obligations that were fully satisfied upon delivery, such as on-premises licenses. Total billings and revenue recognized during the nine months ended October 30, 2020 were $5.4 billion and $5.5 billion, respectively, and did not include amounts for performance obligations that were fully satisfied upon delivery, such as on-premises licenses. During the nine months ended October 30, 2020, VMware also acquired $33 million in unearned revenue in connection with business combinations. Revenue recognized during the three and nine months ended November 1, 2019 was $1.6 billion and $4.7 billion, respectively, and did not include amounts for performance obligations that were fully satisfied upon delivery, such as on-premises licenses. Remaining Performance Obligations Remaining performance obligations represent the aggregate amount of the transaction price in contracts allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations include unearned revenue, multi-year contracts with future installment payments and certain unfulfilled orders against accepted customer contracts at the end of any given period. As of October 30, 2020, the aggregate transaction price allocated to remaining performance obligations was $10.2 billion, of which approximately 55% is expected to be recognized as revenue over the next twelve months and the remainder thereafter. As of January 31, 2020, the aggregate transaction price allocated to remaining performance obligations was $10.3 billion, of which approximately 54% was expected to be recognized as revenue during fiscal 2021, and the remainder thereafter.
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Related Parties |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Parties | Related Parties The information provided below includes a summary of transactions with Dell and Dell’s consolidated subsidiaries (collectively, “Dell”). Transactions with Dell VMware and Dell engaged in the following ongoing related party transactions, which resulted in revenue and receipts, and unearned revenue for VMware:
During each of the three and nine months ended October 30, 2020, revenue from Dell accounted for 33% of VMware’s consolidated revenue. During the three and nine months ended October 30, 2020, revenue recognized on transactions where Dell acted as an OEM accounted for 13% and 12%, respectively, of revenue from Dell, or 4% of VMware’s consolidated revenue. During the three and nine months ended November 1, 2019, revenue from Dell accounted for 31% and 30% of VMware’s consolidated revenue, respectively. During the three and nine months ended November 1, 2019, revenue recognized on transactions where Dell acted as an OEM accounted for 11% and 12%, respectively, of revenue from Dell, or 3% of VMware’s consolidated revenue. Dell purchases VMware products and services directly from VMware, as well as through VMware’s channel partners. Information about VMware’s revenue and receipts, and unearned revenue from such arrangements, for the periods presented consisted of the following (table in millions):
Customer deposits resulting from transactions with Dell were $209 million and $194 million as of October 30, 2020 and January 31, 2020, respectively. VMware and Dell engaged in the following ongoing related party transactions, which resulted in costs to VMware:
Information about VMware’s payments for such arrangements during the periods presented consisted of the following (table in millions):
(1) Amount includes indirect taxes that were remitted to Dell during the periods presented. VMware also purchases Dell products through Dell’s channel partners. Purchases of Dell products through Dell’s channel partners were not significant during the periods presented. From time to time, VMware and Dell also enter into joint marketing, sales, branding and product development arrangements, for which both parties may incur costs. Dell Financial Services (“DFS”) DFS provided financing to certain of VMware’s end users at the end users’ discretion. Upon acceptance of the financing arrangement by both VMware’s end users and DFS, amounts classified as trade accounts receivable are reclassified to due from related parties, net on the condensed consolidated balance sheets. Revenue recognized on transactions financed through DFS was recorded net of financing fees. Financing fees on arrangements accepted by both parties were $12 million and $43 million during the three and nine months ended October 30, 2020, respectively, and $34 million during the nine months ended November 1, 2019. Financing fees during the three months ended November 1, 2019 were not significant. Tax Sharing Agreement with Dell Payments made to Dell pursuant to the tax sharing agreement were $54 million and $221 million during the three and nine months ended October 30, 2020, respectively, and $43 million and $132 million during the three and nine months ended November 1, 2019, respectively. Payments from VMware to Dell under the tax sharing agreement relate to VMware’s portion of federal income taxes on Dell’s consolidated tax return as well as state tax payments for combined states. The timing of the tax payments due to and from related parties is governed by the tax sharing agreement. VMware’s portion of the mandatory one-time transition tax on accumulated earnings of foreign subsidiaries (the “Transition Tax”) is governed by a letter agreement between Dell, EMC and VMware executed during the first quarter of fiscal 2020 (the “Letter Agreement”). In December 2019, VMware amended the tax sharing agreement with Dell in connection with, and effective as of, the Pivotal acquisition. The tax sharing agreement with Dell, as amended and subject to certain exceptions, generally limits VMware’s maximum annual tax liability to Dell to the amount VMware would owe on a separate tax return basis. Subject to this cap for periods following the Pivotal acquisition, the amounts that VMware pays to Dell for its portion of federal income taxes on Dell’s consolidated tax return differ from the amounts VMware would owe on a separate tax return basis and the difference is recognized as a component of additional paid-in capital, generally in the period in which the consolidated tax return is filed. The difference between the amount of tax calculated on a separate tax return basis and the amount of tax calculated pursuant to the tax sharing agreement recorded in additional paid-in capital during the nine months ended October 30, 2020 was $45 million. The amount recognized in additional paid-in capital during the nine months ended November 1, 2019 was $85 million, primarily due to a reduction in Transition Tax liability based on the terms of the Letter Agreement and certain tax attribute determinations made by Dell. The amounts recognized in additional paid-in capital during the three months ended October 30, 2020 and November 1, 2019 were not significant. As a result of the activity under the tax sharing agreement with Dell, amounts due to Dell were $499 million and $529 million as of October 30, 2020 and January 31, 2020, respectively, primarily related to VMware’s estimated tax obligation resulting from the Transition Tax. The Company expects to pay the remainder of its Transition Tax over a period of five years. Pivotal Tax Sharing Agreement with Dell Pivotal continues to file its separate tax return for U.S. federal income tax purposes, as it left the Dell consolidated tax group at the time of Pivotal’s initial public offering (“IPO”) in April 2018. This has reduced the amount of benefit or expense received by Pivotal since the IPO to the amount of benefit or expense Dell realizes from Pivotal’s inclusion on unitary state tax returns. Pursuant to a tax sharing agreement, Pivotal historically received payments from Dell for the tax benefits derived from the inclusion of its losses in certain Dell U.S. federal and state group returns. Payments received from Dell were recognized as a component of additional paid-in capital. In April 2019, Pivotal and Dell amended their tax sharing agreement with regard to the treatment of certain U.S. Tax Cuts and Jobs Act implications not explicitly covered by the original terms of the tax sharing agreement. The amendment resulted in a one-time payment of $27 million by Dell to Pivotal in August 2019. During the nine months ended November 1, 2019, $24 million was recognized as a component of additional paid-in capital related to Pivotal’s tax sharing agreement with Dell and it was not material during the three months ended November 1, 2019. Due To/From Related Parties, Net Amounts due to and from related parties, net as of the periods presented consisted of the following (table in millions):
(1) Includes an immaterial amount related to the Company’s current operating lease liabilities due to related parties. The Company also recognized an immaterial amount related to non-current operating lease liabilities due to related parties. This amount has been included in operating lease liabilities on the condensed consolidated balance sheets as of October 30, 2020 and January 31, 2020. Amounts in due from related parties, net, excluding DFS and tax obligations, include the current portion of amounts due to and due from related parties. Amounts included in due from related parties, net are generally settled in cash within 60 days of each quarter-end. Notes Payable to Dell As of October 30, 2020 and January 31, 2020, VMware had an outstanding promissory note payable to Dell in the principal amount of $270 million due December 1, 2022. The note may be prepaid without penalty or premium. Interest is payable quarterly in arrears at the annual rate of 1.75%. During each of the three and nine months ended October 30, 2020 and November 1, 2019, interest expense on the notes payable to Dell was not significant.
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Commitments and Contingencies |
9 Months Ended |
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Oct. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation On June 4, 2020, purported Pivotal stockholder Kenia Lopez filed a lawsuit in the Delaware Chancery Court against Dell, VMware, Michael Dell, Robert Mee and Cynthia Gaylor. The claims include breach of fiduciary duty and aiding and abetting, all tied to VMware’s acquisition of Pivotal. On July 16, 2020, purported Pivotal stockholder Stephanie Howarth filed a similar lawsuit in the Delaware Chancery Court against the same defendants asserting the same types of claims. These matters have been consolidated, and VMware filed a motion to dismiss on September 23, 2020. The Company is unable at this time to assess whether or to what extent it may be found liable and, if found liable, what the damages may be, and believes a loss is not probable and reasonably estimable. The Company intends to vigorously defend against these securities class actions. On April 25, 2019, Cirba Inc. (“Cirba”) filed a lawsuit against VMware in the United States District Court for the District of Delaware (the “Delaware Court”), alleging two patent infringement claims and three trademark infringement-related claims. On May 6, 2019, Cirba filed a motion seeking a preliminary injunction tied to one of the two patents it alleges VMware infringes. Following a hearing on August 6, 2019, the Delaware Court denied Cirba’s preliminary injunction motion and set the case for trial in mid-January 2020. On August 20, 2019, VMware filed counterclaims against Cirba, asserting among other claims that Cirba is infringing four VMware patents. The Delaware Court severed those claims from the January 2020 trial on Cirba’s claims, and the trial on VMware’s patent claims is currently set for September 2021. The trial on Cirba’s claims in the Delaware Court was completed on January 23, 2020, and on January 24, 2020, the jury returned a verdict finding that VMware willfully infringed the two asserted patents and awarding approximately $237 million in damages. The jury further found that VMware was not liable on Cirba’s trademark infringement-related claims. A total of $237 million has been accrued for the Delaware action, which reflects the estimated losses that are considered both probable and reasonably estimable at this time. The parties filed post-trial motions in which VMware moved to set aside the verdict and reduce the damages award, and Cirba moved for a permanent injunction, enhanced damages, to set an ongoing royalty rate, and for an award of pre-judgment and post-judgment interest and supplemental damages. The parties held a hearing with the Delaware Court on those motions on May 15, 2020, and the Delaware Court has taken those motions under advisement. The Company intends to vigorously defend itself in this matter, including, if necessary, via an appeal. Final resolution of this matter could be materially different from the amount accrued. The amount accrued for this matter is included in accrued expenses and other on the condensed consolidated balance sheet as of October 30, 2020 and January 31, 2020, and the charge was included in general and administrative on the condensed consolidated statement of income for the year ended January 31, 2020. On October 22, 2019, VMware filed a separate patent infringement lawsuit against Cirba in the United States District Court for the Eastern District of Virginia, asserting that Cirba infringes an additional four patents. The court in that action transferred the case to the District of Delaware. On March 23, 2020, Cirba filed a counterclaim asserting one additional patent against VMware. Overall, the Company is unable at this time to assess whether or to what extent it may be found liable on the new patent claim and, if found liable, what the damages may be, and believes a loss is not probable and reasonably estimable. The Company intends to vigorously defend against this matter. On August 10, 2015, the Company received a subpoena from the California Attorney General’s office (“California AG”), following the Company’s settlement with the Department of Justice and the General Services Administration during June 2015, which stemmed from a qui tam complaint filed by Relator Dane Smith (“Relator”) under seal titled State of California et al. Ex rel. Smith v. VMware, Inc. et al., in the Superior Court of California, Sacramento County, alleging claims under the California False Claims Act. Following the filing of that lawsuit, the Company received two subpoenas from the California AG. The Company cooperated fully with the California AG in connection with its investigation regarding VMware’s state and local government sales practices covering the period between 2006 and 2013. On October 21, 2020, the parties entered into a settlement agreement pursuant to which the Company agreed to pay an immaterial amount to the State of California to resolve the matter. In the settlement agreement, the Company denied the allegations and denied that it violated any laws. The Company will separately resolve Relator's attorneys’ fees claim, which is not material. In December 2019, the staff of the Enforcement Division of the SEC requested documents and information related to VMware’s backlog and associated accounting and disclosures. VMware is fully cooperating with the SEC’s investigation and is unable to predict the outcome of this matter at this time. While VMware believes that it has valid defenses against each of the above legal matters, given the unpredictable nature of legal proceedings, an unfavorable resolution of one or more legal proceedings, claims, or investigations could have a material adverse effect on VMware’s condensed consolidated financial statements. VMware accrues for a liability when a determination has been made that a loss is both probable and the amount of the loss can be reasonably estimated. If only a range can be estimated and no amount within the range is a better estimate than any other amount, an accrual is recorded for the minimum amount in the range. Significant judgment is required in both the determination that the occurrence of a loss is probable and is reasonably estimable. In making such judgments, VMware considers the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs are generally recognized as expense when incurred. VMware is also subject to other legal, administrative and regulatory proceedings, claims, demands and investigations in the ordinary course of business or in connection with business mergers and acquisitions, including claims with respect to commercial, contracting and sales practices, product liability, intellectual property, employment, corporate and securities law, class action, whistleblower and other matters. From time to time, VMware also receives inquiries from and has discussions with government entities and stockholders on various matters. As of October 30, 2020, other than the Cirba litigation, amounts accrued relating to these other matters arising as part of the ordinary course of business were considered not material. VMware does not believe that any liability from any reasonably possible disposition of such claims and litigation, individually or in the aggregate, would have a material adverse effect on its condensed consolidated financial statements. Contractual Commitments From time to time, VMware enters into arrangements with minimum purchase commitments in the ordinary course of business. New material purchase commitments in fiscal 2021 have totaled $1.2 billion. Minimum payments under these new commitments are $250 million for fiscal 2022, $250 million for fiscal 2023 and $700 million prior to the end of fiscal 2024.
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Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill |
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Business Combinations, Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill | Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill Business Combinations Acquisition of SaltStack, Inc. During the third quarter of fiscal 2021, VMware completed the acquisition of SaltStack, Inc., a developer of intelligent, event-driven automation software, to broaden VMware’s Cloud Management capabilities from infrastructure to applications. The total purchase price, net of cash acquired, was $51 million. The purchase price primarily included $29 million of identifiable intangible assets and $24 million of goodwill that is not expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of three years. Acquisition of Datrium, Inc. During the second quarter of fiscal 2021, VMware completed the acquisition of Datrium, Inc., a provider of cloud-native disaster recovery solutions, to broaden the VMware Site Recovery Disaster Recovery as a Service offerings. The total purchase price, net of cash acquired, was $137 million. The purchase price primarily included $25 million of identifiable intangible assets and $91 million of goodwill that is not expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of three years to five years. Acquisition of Lastline, Inc. During the second quarter of fiscal 2021, VMware completed the acquisition of Lastline, Inc., a provider of network-based security breach detection products and services, to enhance capabilities for network detection and threat analysis on VMware NSX and SD-WAN offerings. The total purchase price, net of cash acquired, was $114 million. The purchase price primarily included $29 million of identifiable intangible assets and $86 million of goodwill that is not expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of one year to four years. Acquisition of Nyansa, Inc. During the first quarter of fiscal 2021, VMware completed the acquisition of Nyansa, Inc., a developer of artificial intelligence-based network analytics, to accelerate the delivery of end-to-end monitoring and troubleshooting capacities within VMware SD-WAN by VeloCloud. The total purchase price, net of cash acquired, was $38 million. The purchase price primarily included $14 million of identifiable intangible assets and $24 million of goodwill that is not expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of one year to four years. Other Fiscal 2021 Acquisitions During the nine months ended October 30, 2020, VMware completed three other acquisitions, which were not material individually to the condensed consolidated financial statements. VMware expects these acquisitions to enhance its product features and capabilities for its VMware Carbon Black Cloud and vRealize Operations offerings. The aggregate purchase price for these three acquisitions, net of cash acquired, was $44 million and primarily included $35 million of identifiable intangible assets and $16 million of goodwill, of which $24 million is expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of one year to five years. For each of the acquisitions completed during fiscal 2021, the excess of the purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill, which management believes represents synergies expected from combining the technologies of VMware with those of the acquired businesses. The estimated fair value assigned to the tangible assets, identifiable intangible assets, and assumed liabilities were based on management's estimates and assumptions. The initial allocation of the purchase price was based on preliminary valuations and assumptions and is subject to change within the measurement period. VMware expects to finalize the allocation of the purchase price within the measurement period. The pro forma financial information assuming these fiscal 2021 acquisitions had occurred as of the beginning of the fiscal year prior to the fiscal year of acquisition, as well as the revenue and earnings generated during the current fiscal year, were not material for disclosure purposes. Definite-Lived Intangible Assets, Net As of the periods presented, definite-lived intangible assets consisted of the following (amounts in tables in millions):
Amortization expense on definite-lived intangible assets was $83 million and $244 million during the three and nine months ended October 30, 2020, respectively, and $74 million and $213 million during the three and nine months ended November 1, 2019, respectively. Based on intangible assets recorded as of October 30, 2020 and assuming no subsequent additions, dispositions or impairment of underlying assets, the remaining estimated annual amortization expense over the next five fiscal years and thereafter is expected to be as follows (table in millions):
Goodwill The following table summarizes the changes in the carrying amount of goodwill during the nine months ended October 30, 2020 (table in millions):
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Realignment |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realignment | Realignment During the third quarter of fiscal 2021, VMware approved a plan to streamline its operations and align resources with its business priorities. As a result of this action, approximately 330 positions were eliminated during the third quarter of fiscal 2021. VMware recognized $44 million and $47 million of severance-related realignment expenses during the three and nine months ended October 30, 2020, respectively, on the condensed consolidated statements of income. Actions associated with this plan are expected to be substantially complete by the end of fiscal 2021. During the fourth quarter of fiscal 2020, VMware approved a plan to streamline its operations, with plans to better align business priorities and shift positions to lower cost locations. As a result of these actions, $74 million was recognized in accrued expenses and other on the condensed consolidated balance sheet as of January 31, 2020. Actions associated with this plan will be completed in fiscal 2021. The following table summarizes the activity for the accrued realignment expenses for the nine months ended October 30, 2020 (table in millions):
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Net Income Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Share | Net Income Per Share Basic net income per share is computed by dividing net income by the weighted-average number of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of common stock outstanding and potentially dilutive securities outstanding during the period, as calculated using the treasury stock method. Potentially dilutive securities primarily include unvested restricted stock units (“RSUs”), including performance stock unit (“PSU”) awards, and stock options, including purchase options under VMware’s employee stock purchase plan, which included Pivotal’s employee stock purchase plan through the date of acquisition. Securities are excluded from the computation of diluted net income per share if their effect would be anti-dilutive. VMware uses the two-class method to calculate net income per share as both classes share the same rights in dividends; therefore, basic and diluted earnings per share are the same for both classes. The following table sets forth the computations of basic and diluted net income per share during the periods presented (table in millions, except per share amounts and shares in thousands):
The following table sets forth the weighted-average common share equivalents of Class A common stock that were excluded from the diluted net income per share calculations during the periods presented because their effect would have been anti-dilutive (shares in thousands):
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Cash, Cash Equivalents, and Restricted Cash |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash Cash and Cash Equivalents Cash and cash equivalents totaled $3.9 billion and $2.9 billion as of October 30, 2020 and January 31, 2020, respectively. Cash equivalents were $3.2 billion as of October 30, 2020 and consisted of money-market funds of $3.1 billion and time deposits of $55 million. Cash equivalents were $2.3 billion as of January 31, 2020 and consisted of money-market funds of $2.2 billion and time deposits of $102 million. Restricted Cash The following table provides a reconciliation of the Company’s cash and cash equivalents, and current and non-current portion of restricted cash reported on the condensed consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash as of October 30, 2020 and January 31, 2020 (table in millions):
Amounts included in restricted cash primarily relate to certain employee-related benefits, as well as amounts related to installment payments to certain employees as part of acquisitions, subject to the achievement of specified future employment conditions.
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Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Unsecured Senior Notes On April 7, 2020, VMware issued three series of unsecured senior notes pursuant to a public debt offering. The proceeds from the issuance were $2.0 billion, net of debt discount of $3 million and debt issuance costs of $17 million. VMware also has three series of unsecured senior notes issued on August 21, 2017 (collectively with the notes issued April 7, 2020, the “Senior Notes”). The carrying value of the Senior Notes as of the periods presented was as follows (amounts in millions):
On May 11, 2020, VMware exercised a make-whole call and redeemed the $1.3 billion unsecured senior note due August 21, 2020 at a premium. The loss on extinguishment of debt was not material during the nine months ended October 30, 2020 and was recognized in other income (expense), net on the condensed consolidated statements of income. Interest on the Senior Notes issued on April 7, 2020 is payable semiannually in arrears, on May 15 and November 15 of each year, beginning November 15, 2020. The interest rate on each note issued on April 7, 2020 is subject to adjustment based on certain rating events. Interest on the Senior Notes issued on August 21, 2017 is payable semiannually in arrears, on February 21 and August 21 of each year. Interest expense was $48 million and $135 million during the three and nine months ended October 30, 2020, respectively, and $32 million and $97 million during the three and nine months ended November 1, 2019, respectively. Interest expense, which included amortization of discount and issuance costs, was recognized on the condensed consolidated statements of income. The discount and issuance costs are amortized over the term of the Senior Notes on a straight-line basis, which approximates the effective interest method. The Senior Notes are redeemable in whole at any time or in part from time to time at VMware’s option, subject to a make-whole premium. In addition, upon the occurrence of certain change-of-control triggering events and certain downgrades of the ratings on the Senior Notes, VMware may be required to repurchase the notes at a repurchase price equal to 101% of the aggregate principal plus any accrued and unpaid interest on the date of repurchase. The Senior Notes rank equally in right of payment with VMware’s other unsecured and unsubordinated indebtedness. The Senior Notes contain restrictive covenants that, in certain circumstances, limit VMware’s ability to create certain liens, to enter into certain sale and leaseback transactions and to consolidate, merge, sell or otherwise dispose of all or substantially all of VMware’s assets. Refer to Note C for disclosure regarding the note payable to Dell. Revolving Credit Facility On September 12, 2017, VMware entered into an unsecured credit agreement establishing a revolving credit facility with a syndicate of lenders that provides the Company with a borrowing capacity of up to $1.0 billion, for general corporate purposes. Commitments under the revolving credit facility are available for a period of five years, which may be extended, subject to the satisfaction of certain conditions, by up to two one-year periods. As of October 30, 2020 and January 31, 2020, there was no outstanding borrowing under the revolving credit facility. The credit agreement contains certain representations, warranties and covenants. Commitment fees, interest rates and other terms of borrowing under the revolving credit facility may vary based on VMware’s external credit ratings. The amount paid in connection with the ongoing commitment fee, which is payable quarterly in arrears, was not significant during each of the three and nine months ended October 30, 2020 and November 1, 2019. Senior Unsecured Term Loan Facility On September 26, 2019, VMware entered into a senior unsecured term loan facility (the “Term Loan”) with a syndicate of lenders that provided the Company with a borrowing capacity of up to $2.0 billion through February 7, 2020, for general corporate purposes. During the third quarter of fiscal 2021, VMware repaid the outstanding balance of $1.5 billion on the Term Loan. As of January 31, 2020, the outstanding balance on the Term Loan of $1.5 billion, net of unamortized debt issuance costs, was included in current portion of long-term debt and other borrowings on the condensed consolidated balance sheets. Interest expense for the Term Loan, including amortization of issuance costs, was not significant during the three months ended October 30, 2020 and was $17 million during the nine months ended October 30, 2020. Interest expense was not significant during each of the three and nine months ended November 1, 2019.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis Certain financial assets and liabilities are measured at fair value on a recurring basis. VMware determines fair value using the following hierarchy:
VMware did not have any significant assets or liabilities that were classified as Level 3 of the fair value hierarchy for the periods presented, and there have been no transfers between fair value measurement levels during the periods presented. The following tables set forth the fair value hierarchy of VMware’s cash equivalents that were required to be measured at fair value as of the periods presented (tables in millions):
(1) Time deposits were valued at amortized cost, which approximated fair value. The note payable to Dell, the Senior Notes and the Term Loan were not adjusted to fair value. The fair value of the note payable to Dell was approximately $275 million and $269 million as of October 30, 2020 and January 31, 2020, respectively. The fair value of the Senior Notes was approximately $5.3 billion and $4.1 billion as of October 30, 2020 and January 31, 2020, respectively. The fair value of the Term Loan approximated its carrying value as of January 31, 2020 due to its short-term nature. Fair value for the note payable to Dell, the Senior Notes and the Term Loan was estimated primarily based on observable market interest rates (Level 2 inputs). VMware offers a deferred compensation plan for eligible employees, which allows participants to defer payment for part or all of their compensation. There is no net impact to the condensed consolidated statements of income since changes in the fair value of the assets offset changes in the fair value of the liabilities. As such, assets and liabilities associated with this plan have not been included in the above tables. Assets associated with this plan were the same as the liabilities at $125 million and $106 million as of October 30, 2020 and January 31, 2020, respectively, and were included in other assets and other liabilities on the condensed consolidated balance sheets, respectively. Equity Securities With a Readily Determinable Fair Value VMware’s equity securities include an investment in a company that completed its initial public offering during the third quarter of fiscal 2021. As a result of the initial public offering, VMware’s investment was adjusted to its fair value of $214 million using quoted prices for identical assets in an active market (Level 1), and VMware recognized an unrealized gain of $189 million in other income (expense), net on the condensed consolidated statements of income. The investment was included in other assets on the condensed consolidated balance sheets. VMware also recognized a discrete tax expense of $62 million related to its book and tax basis difference on this investment. Equity Securities Without a Readily Determinable Fair Value VMware’s equity securities also include investments in privately held companies, which do not have a readily determinable fair value. As of October 30, 2020 and January 31, 2020, investments in privately held companies, which consisted primarily of equity securities, had a carrying value of $122 million and $159 million, respectively, and were included in other assets on the condensed consolidated balance sheets. During each of the three and nine months ended October 30, 2020, VMware recognized an unrealized loss of $15 million on these securities. The unrealized gains recognized during the three and nine months ended November 1, 2019 were $12 million and $35 million, respectively. All gains and losses on these securities, whether realized or unrealized, are recognized in other income (expense), net on the condensed consolidated statements of income.
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Derivatives and Hedging Activities |
9 Months Ended |
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Oct. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | Derivatives and Hedging Activities VMware conducts business on a global basis in multiple foreign currencies, subjecting the Company to foreign currency risk. To mitigate a portion of this risk, VMware utilizes hedging contracts as described below, which potentially expose the Company to credit risk to the extent that the counterparties may be unable to meet the terms of the agreements. VMware manages counterparty risk by seeking counterparties of high credit quality and by monitoring credit ratings, credit spreads and other relevant public information about its counterparties. VMware does not, and does not intend to, use derivative instruments for trading or speculative purposes. Cash Flow Hedges To mitigate its exposure to foreign currency fluctuations resulting from certain operating expenses denominated in certain foreign currencies, VMware enters into forward contracts that are designated as cash flow hedging instruments as the accounting criteria for such designation are met. Therefore, the effective portion of gains or losses resulting from changes in the fair value of these instruments is initially reported in accumulated other comprehensive loss on the condensed consolidated balance sheets and is subsequently reclassified to the related operating expense line item on the condensed consolidated statements of income in the same period that the underlying expenses are incurred. During each of the three and nine months ended October 30, 2020 and November 1, 2019, the effective portion of gains or losses reclassified to the condensed consolidated statements of income was not significant. Interest charges or forward points on VMware’s forward contracts were excluded from the assessment of hedge effectiveness and were recorded to the related operating expense line item on the condensed consolidated statements of income in the same period that the interest charges are incurred. These forward contracts have contractual maturities of twelve months or less, and as of October 30, 2020 and January 31, 2020, outstanding forward contracts had a total notional value of $130 million and $480 million, respectively. The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract. The fair value of these forward contracts was not significant as of October 30, 2020 and January 31, 2020. During the three and nine months ended October 30, 2020 and November 1, 2019, all cash flow hedges were considered effective. Forward Contracts Not Designated as Hedges VMware has established a program that utilizes forward contracts to offset the foreign currency risk associated with net outstanding monetary asset and liability positions. These forward contracts are not designated as hedging instruments under applicable accounting guidance, and therefore all changes in the fair value of the forward contracts are reported in other income (expense), net on the condensed consolidated statements of income. These forward contracts generally have a contractual maturity of one month, and as of October 30, 2020 and January 31, 2020, outstanding forward contracts had a total notional value of $2.8 billion and $1.1 billion, respectively. The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract. The fair value of these forward contracts was not significant as of October 30, 2020 and January 31, 2020. During the nine months ended October 30, 2020 and November 1, 2019, VMware recognized a loss of $34 million and a gain of $46 million, respectively, related to the settlement of forward contracts. The losses recognized during each of the three months ended October 30, 2020 and November 1, 2019 were not significant. Gains and losses are recorded in other income (expense), net on the condensed consolidated statements of income. The combined gains and losses related to the settlement of forward contracts and the underlying foreign currency denominated assets and liabilities during the nine months ended October 30, 2020 and November 1, 2019 resulted in net gains of $14 million and $20 million, respectively. Net gains and losses were not significant during each of the three months ended October 30, 2020 and November 1, 2019. Net gains and losses are recorded in other income (expense), net on the condensed consolidated statements of income.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases VMware has operating and finance leases primarily related to office facilities and equipment, which have remaining lease terms of one month to 26 years. Lease expense recorded in the condensed consolidated statements of income was $57 million and $167 million during the three and nine months ended October 30, 2020, respectively, and $53 million and $151 million during the three and nine months ended November 1, 2019, respectively. The components of lease expense during the periods presented were as follows (table in millions):
From time to time, VMware enters into lease arrangements with Dell. Lease expense incurred for arrangements with Dell was not significant during the periods presented. The Company subleases certain leased office space to third parties when it determines there is excess leased capacity. Sublease income was $15 million and $16 million during the nine months ended October 30, 2020 and November 1, 2019, respectively, and was not significant during each of the three months ended October 30, 2020 and November 1, 2019. Supplemental cash flow information related to operating and finance leases during the period presented was as follows (table in millions):
Supplemental balance sheet information related to operating and finance leases as of the period presented was as follows (table in millions):
(1) ROU assets for operating leases are included in other assets and ROU assets for finance leases are included in property and equipment, net on the condensed consolidated balance sheets. (2) Current lease liabilities are included primarily in accrued expenses and other on the condensed consolidated balance sheets. An immaterial amount is presented in due from related parties, net on the condensed consolidated balance sheets. (3) Non-current operating lease liabilities are presented as operating lease liabilities on the condensed consolidated balance sheets. Non-current finance lease liabilities are included in other liabilities on the condensed consolidated balance sheets. Lease term and discount rate related to operating and finance leases as of the period presented were as follows:
The following represents VMware’s future minimum lease payments under non-cancellable operating and finance leases as of the period presented (table in millions):
(1) Total lease liabilities as of October 30, 2020 excluded legally binding lease payments for leases signed but not yet commenced of $81 million.
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Leases | Leases VMware has operating and finance leases primarily related to office facilities and equipment, which have remaining lease terms of one month to 26 years. Lease expense recorded in the condensed consolidated statements of income was $57 million and $167 million during the three and nine months ended October 30, 2020, respectively, and $53 million and $151 million during the three and nine months ended November 1, 2019, respectively. The components of lease expense during the periods presented were as follows (table in millions):
From time to time, VMware enters into lease arrangements with Dell. Lease expense incurred for arrangements with Dell was not significant during the periods presented. The Company subleases certain leased office space to third parties when it determines there is excess leased capacity. Sublease income was $15 million and $16 million during the nine months ended October 30, 2020 and November 1, 2019, respectively, and was not significant during each of the three months ended October 30, 2020 and November 1, 2019. Supplemental cash flow information related to operating and finance leases during the period presented was as follows (table in millions):
Supplemental balance sheet information related to operating and finance leases as of the period presented was as follows (table in millions):
(1) ROU assets for operating leases are included in other assets and ROU assets for finance leases are included in property and equipment, net on the condensed consolidated balance sheets. (2) Current lease liabilities are included primarily in accrued expenses and other on the condensed consolidated balance sheets. An immaterial amount is presented in due from related parties, net on the condensed consolidated balance sheets. (3) Non-current operating lease liabilities are presented as operating lease liabilities on the condensed consolidated balance sheets. Non-current finance lease liabilities are included in other liabilities on the condensed consolidated balance sheets. Lease term and discount rate related to operating and finance leases as of the period presented were as follows:
The following represents VMware’s future minimum lease payments under non-cancellable operating and finance leases as of the period presented (table in millions):
(1) Total lease liabilities as of October 30, 2020 excluded legally binding lease payments for leases signed but not yet commenced of $81 million.
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Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity VMware Stock Repurchases VMware purchases stock from time to time in open market transactions, subject to market conditions. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including VMware’s stock price, cash requirements for operations and business combinations, corporate, legal and regulatory requirements and other market and economic conditions. VMware is not obligated to purchase any shares under its stock repurchase programs. Purchases may be discontinued at any time VMware believes additional purchases are not warranted. From time to time, VMware also purchases stock in private transactions, such as those with Dell. All shares repurchased under VMware’s stock repurchase programs are retired. During May 2019, VMware’s board of directors authorized the repurchase of up to $1.5 billion of Class A common stock through January 29, 2021. During July 2020, VMware’s board of directors extended authorization of the existing stock repurchase program through January 28, 2022 and authorized the repurchase of up to an additional $1.0 billion of Class A common stock through January 28, 2022. As of October 30, 2020, the cumulative authorized amount remaining for stock repurchases was $1.4 billion. The following table summarizes stock repurchase activity during the periods presented (aggregate purchase price in millions, shares in thousands):
(1) The aggregate purchase price of repurchased shares is classified as a reduction to additional paid-in capital until the balance is reduced to zero and the excess is recorded as a reduction to retained earnings. VMware Restricted Stock VMware’s restricted stock primarily consists of RSU awards granted to employees. The value of an RSU grant is based on VMware’s stock price on the date of the grant. The shares underlying the RSU awards are not issued until the RSUs vest. Upon vesting, each RSU converts into one share of VMware’s Class A common stock. VMware’s restricted stock also includes PSU awards granted to certain VMware executives and employees. PSU awards have performance conditions and, in certain cases, a time-based or market-based vesting component. Upon vesting, PSU awards convert into VMware’s Class A common stock at various ratios ranging from 0.1 to 2.0 shares per PSU, depending upon the degree of achievement of the performance or market-based target designated by each award. If minimum performance thresholds are not achieved, then no shares are issued. The following table summarizes restricted stock activity since January 31, 2020 (units in thousands):
The aggregate vesting date fair value of VMware’s restricted stock that vested during the nine months ended October 30, 2020, was $861 million. As of October 30, 2020, restricted stock representing 19.4 million shares of VMware’s Class A common stock were outstanding, with an aggregate intrinsic value of $2.5 billion based on VMware’s closing stock price as of October 30, 2020. Net Excess Tax Benefits Net excess tax benefits recognized in connection with stock-based awards are included in income tax benefit on the condensed consolidated statements of income. Net excess tax benefits recognized during the nine months ended October 30, 2020 were $32 million and were not significant during the three months ended October 30, 2020. During the three and nine months ended November 1, 2019, net excess tax benefits recognized were $30 million and $147 million, respectively. Accumulated Other Comprehensive Income (Loss) The changes in components of accumulated other comprehensive income (loss) during the periods presented were as follows (tables in millions):
The effective portion of gains or losses resulting from changes in the fair value of forward contracts designated as cash flow hedging instruments is reclassified to its related operating expense line item on the condensed consolidated statements of income in the same period that the underlying expenses are incurred. The amounts recorded to the related operating expense functional line items on the condensed consolidated statements of income were not significant to the individual functional line items during the periods presented.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information VMware operates in one reportable operating segment; thus, all required financial segment information is included in the condensed consolidated financial statements. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker in order to allocate resources and assess performance. VMware’s chief operating decision maker allocates resources and assesses performance based upon discrete financial information at the consolidated level. Revenue by type during the periods presented was as follows (table in millions):
Revenue by geographic area during the periods presented was as follows (table in millions):
Revenue by geographic area is based on the ship-to addresses of VMware’s customers. No individual country other than the U.S. accounted for 10% or more of revenue during each of the three and nine months ended October 30, 2020 and November 1, 2019. Long-lived assets by geographic area, which primarily include property and equipment, net, as of the periods presented were as follows (table in millions):
As of October 30, 2020, the U.S. and India accounted for 80% and 10% of these assets, respectively. No individual country other than the U.S. accounted for 10% or more of these assets as of January 31, 2020.
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Overview and Basis of Presentation (Policies) |
9 Months Ended |
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Oct. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accounting Principles, Retrospective Combination of Historical Financial Statements and Unaudited Interim Financial Information | Accounting Principles The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Retrospective Combination of Historical Financial Statements In December 2019, VMware completed the acquisition of Pivotal, which was, at the time, a subsidiary of VMware’s parent company, Dell Technologies Inc. (“Dell”). The purchase of the controlling interest in Pivotal from Dell was accounted for as a transaction between entities under common control in accordance with Accounting Standards Codification 805-50, Business Combination - Related Issues, which requires retrospective combination of entities for all periods presented, as if the combination had been in effect since the inception of common control. The condensed consolidated financial statements of VMware and notes thereto are presented on a combined basis, as both VMware and Pivotal were under common control for all periods presented. Of the total amount of consideration for the acquisition of the non-controlling interest in Pivotal, $155 million was recognized in accrued expenses and other on the condensed consolidated balance sheet as of January 31, 2020 for amounts potentially owed to dissenting stockholders. During the second quarter of fiscal 2021, VMware paid $91 million to dissenting stockholders of Pivotal, representing a portion of the amount accrued as of January 31, 2020. Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments and accruals, for a fair statement of VMware’s condensed consolidated results of operations, financial position and cash flows for the periods presented. Results of operations are not necessarily indicative of the results that may be expected for the full fiscal year 2021. Certain information and footnote disclosures typically included in annual consolidated financial statements have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in VMware’s Annual Report on Form 10-K filed on March 26, 2020. Effective September 7, 2016, Dell (formerly Denali Holding Inc.) acquired EMC Corporation (“EMC”), VMware’s parent company, including EMC’s majority control of VMware. As of October 30, 2020, Dell controlled 80.4% of VMware’s outstanding common stock and 97.4% of the combined voting power of VMware’s outstanding common stock, including 31 million shares of VMware’s Class A common stock and all of VMware’s Class B common stock. As VMware is a majority-owned and controlled subsidiary of Dell, its results of operations and financial position are consolidated with Dell’s financial statements. Management believes the assumptions underlying the condensed consolidated financial statements are reasonable. However, the amounts recorded for VMware’s related party transactions with Dell and its consolidated subsidiaries may not be considered arm’s length with an unrelated third party. Therefore, the condensed consolidated financial statements included herein may not necessarily reflect the results of operations, financial position and cash flows had VMware engaged in such transactions with an unrelated third party during all periods presented. Accordingly, VMware’s historical financial information is not necessarily indicative of what the Company’s results of operations, financial position and cash flows will be in the future, if and when VMware contracts at arm’s length with unrelated third parties for products and services the Company receives from and provides to Dell.
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Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of VMware and subsidiaries in which VMware has a controlling financial interest. The portion of results of operations attributable to the non-controlling interests for Pivotal prior to the acquisition was included in net loss attributable to non-controlling interests on the condensed consolidated statements of income for the periods presented. As part of the acquisition of Pivotal, VMware acquired the non-controlling interests in Pivotal from the holders of Pivotal Class A common stock, and has held 100% of the controlling financial interest in Pivotal since December 2019. The cumulative portion of the results of operations and changes in the net assets of Pivotal attributable to the non-controlling interests through the acquisition date were reclassified to additional paid-in capital on the condensed consolidated balance sheet as of January 31, 2020. All intercompany transactions and account balances between VMware and its subsidiaries have been eliminated in consolidation. Transactions with Dell and its consolidated subsidiaries are generally settled in cash and are classified on the condensed consolidated statements of cash flows based upon the nature of the underlying transaction.
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Use of Accounting Estimates | Use of Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenue and expenses during the reporting periods, and the disclosure of contingent liabilities at the date of the financial statements. Estimates are used for, but not limited to, trade receivable valuation, marketing development funds, expected period of benefit for deferred commissions, useful lives assigned to fixed assets and intangible assets, valuation of goodwill and definite-lived intangibles, income taxes, stock-based compensation and contingencies. Actual results could differ from those estimates. As the impact of the COVID-19 pandemic continues to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment. These estimates and assumptions may change in future periods and will be recognized in the condensed consolidated financial statements as new events occur and additional information becomes known. To the extent the Company’s actual results differ materially from those estimates and assumptions, VMware’s future financial statements could be affected.
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Subscription and SaaS Revenue | Subscription and SaaS Revenue Effective with the fourth quarter of fiscal 2020, VMware is presenting new revenue and cost of revenue line items entitled “subscription and SaaS revenue” and “cost of subscription and SaaS revenue.” Previously, subscription and software-as-a-service (“SaaS”) revenue was referred to as “hybrid cloud subscription and SaaS revenue” and was allocated between license revenue and services revenue in the condensed consolidated statements of income. In light of the Company’s recent acquisitions, management decided to separately present revenue recognized from subscription and SaaS offerings as management believes it provides a more meaningful representation of the nature of its revenue. Revenue and related costs from prior periods were reclassified to conform to the current presentation.
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Recently Adopted Accounting Standards | Recently Adopted Accounting Standards Effective February 1, 2020, VMware adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires the measurement and recognition of current expected credit losses for financial assets. The standard did not have a material impact on the Company’s condensed consolidated financial statements. New Accounting Pronouncement In August 2020, the Financial Accounting Standards Board issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, simplifying the accounting for convertible instruments and contracts in an entity’s own equity and amending the diluted earnings per share guidance for greater consistency within the standard. With the exception of the impact to the Company’s diluted net income per share, which is not expected to be material, the updated standard is not expected to have any other impact on the Company’s financial statements. The updated standard is effective for interim and annual periods beginning after December 15, 2021, but may be early adopted. VMware plans to adopt this updated standard during the first quarter of fiscal 2022 on a modified retrospective basis.
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Derivatives and Hedging Activities | VMware conducts business on a global basis in multiple foreign currencies, subjecting the Company to foreign currency risk. To mitigate a portion of this risk, VMware utilizes hedging contracts as described below, which potentially expose the Company to credit risk to the extent that the counterparties may be unable to meet the terms of the agreements. VMware manages counterparty risk by seeking counterparties of high credit quality and by monitoring credit ratings, credit spreads and other relevant public information about its counterparties. VMware does not, and does not intend to, use derivative instruments for trading or speculative purposes.
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Overview and Basis of Presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prior Period Reclassifications for Revenue | The following table summarizes the prior period reclassifications for revenue and the corresponding costs resulting from the presentation of the new revenue line item (amounts in millions):
(1) Includes adjustments related to the recast of prior periods resulting from the acquisition of Pivotal.
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Revenue, Unearned Revenue and Remaining Performance Obligations (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Unearned Revenue | Unearned revenue as of the periods presented consisted of the following (table in millions):
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Related Parties (Tables) |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | Amounts due to and from related parties, net as of the periods presented consisted of the following (table in millions):
(1) Includes an immaterial amount related to the Company’s current operating lease liabilities due to related parties. Information about VMware’s revenue and receipts, and unearned revenue from such arrangements, for the periods presented consisted of the following (table in millions):
Information about VMware’s payments for such arrangements during the periods presented consisted of the following (table in millions):
(1) Amount includes indirect taxes that were remitted to Dell during the periods presented.
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Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Tables) |
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Business Combinations, Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | As of the periods presented, definite-lived intangible assets consisted of the following (amounts in tables in millions):
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Schedule of Future Amortization Expense | Based on intangible assets recorded as of October 30, 2020 and assuming no subsequent additions, dispositions or impairment of underlying assets, the remaining estimated annual amortization expense over the next five fiscal years and thereafter is expected to be as follows (table in millions):
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Schedule of Goodwill | The following table summarizes the changes in the carrying amount of goodwill during the nine months ended October 30, 2020 (table in millions):
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Realignment (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accrued Realignment Charges | The following table summarizes the activity for the accrued realignment expenses for the nine months ended October 30, 2020 (table in millions):
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Net Income Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computations of Basic and Diluted Net Income per Share | The following table sets forth the computations of basic and diluted net income per share during the periods presented (table in millions, except per share amounts and shares in thousands):
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Antidilutive Securities Excluded from Computation of Net Income per Share | The following table sets forth the weighted-average common share equivalents of Class A common stock that were excluded from the diluted net income per share calculations during the periods presented because their effect would have been anti-dilutive (shares in thousands):
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Cash, Cash Equivalents, and Restricted Cash (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents, Restricted Cash | The following table provides a reconciliation of the Company’s cash and cash equivalents, and current and non-current portion of restricted cash reported on the condensed consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash as of October 30, 2020 and January 31, 2020 (table in millions):
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Debt (Tables) |
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Carrying Value of Senior Notes | The carrying value of the Senior Notes as of the periods presented was as follows (amounts in millions):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Hierarchy | The following tables set forth the fair value hierarchy of VMware’s cash equivalents that were required to be measured at fair value as of the periods presented (tables in millions):
(1) Time deposits were valued at amortized cost, which approximated fair value.
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Leases (Tables) |
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Oct. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Cost, Cash Flow, Term and Discount Rate | The components of lease expense during the periods presented were as follows (table in millions):
Lease term and discount rate related to operating and finance leases as of the period presented were as follows:
Supplemental cash flow information related to operating and finance leases during the period presented was as follows (table in millions):
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Lease Assets and Liabilities | Supplemental balance sheet information related to operating and finance leases as of the period presented was as follows (table in millions):
(1) ROU assets for operating leases are included in other assets and ROU assets for finance leases are included in property and equipment, net on the condensed consolidated balance sheets. (2) Current lease liabilities are included primarily in accrued expenses and other on the condensed consolidated balance sheets. An immaterial amount is presented in due from related parties, net on the condensed consolidated balance sheets. (3) Non-current operating lease liabilities are presented as operating lease liabilities on the condensed consolidated balance sheets. Non-current finance lease liabilities are included in other liabilities on the condensed consolidated balance sheets.
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Operating Lease Liability Maturity | The following represents VMware’s future minimum lease payments under non-cancellable operating and finance leases as of the period presented (table in millions):
(1) Total lease liabilities as of October 30, 2020 excluded legally binding lease payments for leases signed but not yet commenced of $81 million.
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Finance Lease Liability Maturity | The following represents VMware’s future minimum lease payments under non-cancellable operating and finance leases as of the period presented (table in millions):
(1) Total lease liabilities as of October 30, 2020 excluded legally binding lease payments for leases signed but not yet commenced of $81 million.
|
Stockholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Repurchase Program | The following table summarizes stock repurchase activity during the periods presented (aggregate purchase price in millions, shares in thousands):
(1) The aggregate purchase price of repurchased shares is classified as a reduction to additional paid-in capital until the balance is reduced to zero and the excess is recorded as a reduction to retained earnings.
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Summary of Restricted Stock Activity | The following table summarizes restricted stock activity since January 31, 2020 (units in thousands):
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Schedule of Accumulated Other Comprehensive Income (Loss) | The changes in components of accumulated other comprehensive income (loss) during the periods presented were as follows (tables in millions):
|
Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue by Type | Revenue by type during the periods presented was as follows (table in millions):
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Schedule of Revenue by Geographic Area | Revenue by geographic area during the periods presented was as follows (table in millions):
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Schedule of Long-Lived Assets by Geographic Area | Long-lived assets by geographic area, which primarily include property and equipment, net, as of the periods presented were as follows (table in millions):
|
Overview and Basis of Presentation (Retrospective Combination of Historical Financial Statements) (Details) - Pivotal - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jan. 31, 2020 |
|
Business Acquisition [Line Items] | ||
Accrual for amounts owed to dissenting shareholders | $ 155 | |
Payments to dissenting stockholders | $ 91 |
Overview and Basis of Presentation (Basis of Presentation and Principles of Consolidation) (Details) shares in Millions |
Oct. 30, 2020
shares
|
---|---|
Pivotal | |
Overview and Basis of Presentation [Line Items] | |
Percentage of controlling financial interest | 100.00% |
VMware | Dell Technologies Inc. | |
Overview and Basis of Presentation [Line Items] | |
Outstanding ownership percentage of VMware controlled by Dell | 80.40% |
Combined voting power of outstanding stock (as a percentage) | 97.40% |
VMware | Dell Technologies Inc. | Class A Common Stock | |
Overview and Basis of Presentation [Line Items] | |
VMware's outstanding common stock controlled by Dell (in shares) | 31 |
Overview and Basis of Presentation (Income Taxes) (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Nov. 01, 2019 |
May 01, 2020 |
Aug. 02, 2019 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Deferred tax asset, intra-entity transfer other than inventory | $ 59 | $ 4,900 | |
Reduction in unrecognized tax benefits resulting from expiration of certain statutes of limitations | $ 53 |
Overview and Basis of Presentation (Schedule of Prior Period Reclassifications for Revenue) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | [1],[2] | $ 2,864 | $ 2,656 | [3] | $ 8,473 | $ 7,738 | [3] | |||||||
License | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | [1],[2] | 639 | 728 | [3] | 2,019 | 2,147 | [3] | |||||||
Operating expenses | [1],[4] | 44 | 42 | [3] | 119 | 116 | [3] | |||||||
License | Pivotal | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | 0 | 0 | ||||||||||||
Operating expenses | 0 | 0 | ||||||||||||
License | Previously Reported | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | 974 | 2,853 | ||||||||||||
Operating expenses | 59 | 160 | ||||||||||||
License | Restatement Adjustment | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | (246) | (706) | ||||||||||||
Operating expenses | (17) | (44) | ||||||||||||
Subscription and SaaS | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | [1],[2] | 676 | 470 | [3] | 1,880 | 1,320 | [3] | |||||||
Operating expenses | [1],[4] | 142 | 103 | [3] | 400 | 294 | [3] | |||||||
Subscription and SaaS | Pivotal | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | 140 | 399 | ||||||||||||
Operating expenses | 26 | 75 | ||||||||||||
Subscription and SaaS | Previously Reported | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | 0 | 0 | ||||||||||||
Operating expenses | 0 | 0 | ||||||||||||
Subscription and SaaS | Restatement Adjustment | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | 330 | 921 | ||||||||||||
Operating expenses | 77 | 219 | ||||||||||||
Services | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | [1],[2] | 1,549 | 1,458 | [3] | 4,574 | 4,271 | [3] | |||||||
Operating expenses | [1],[4] | $ 330 | 311 | [3] | $ 969 | 916 | [3] | |||||||
Services | Pivotal | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | 60 | 178 | ||||||||||||
Operating expenses | 52 | 155 | ||||||||||||
Services | Previously Reported | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | 1,482 | 4,308 | ||||||||||||
Operating expenses | 319 | 936 | ||||||||||||
Services | Restatement Adjustment | ||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||
Revenue | (84) | (215) | ||||||||||||
Operating expenses | $ (60) | $ (175) | ||||||||||||
|
Revenue, Unearned Revenue and Remaining Performance Obligations (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
Jan. 31, 2020 |
|
Revenue from Contract with Customer [Abstract] | |||||
Contract assets | $ 46 | $ 46 | $ 26 | ||
Deferred commissions, current | 27 | 27 | 13 | ||
Deferred commissions, non-current | 1,000 | 1,000 | 938 | ||
Amortization of deferred commissions | 113 | $ 93 | $ 319 | $ 270 | |
Remaining weighted average contractual duration | 2 years | ||||
Current period billings | 1,700 | $ 5,400 | |||
Revenue recognized from amounts previously classified as unearned revenue | 1,900 | $ 1,600 | 5,500 | $ 4,700 | |
Unearned revenue acquired with business combinations | 33 | ||||
Disaggregation of Revenue [Line Items] | |||||
Accrued expenses and other | 2,232 | 2,232 | 2,151 | ||
Other liabilities | 512 | 512 | 347 | ||
Customer Deposits | |||||
Disaggregation of Revenue [Line Items] | |||||
Accrued expenses and other | 275 | 275 | 247 | ||
Other liabilities | $ 152 | $ 152 | $ 143 |
Revenue, Unearned Revenue and Remaining Performance Obligations (Summary of Unearned Revenue) (Details) - USD ($) $ in Millions |
Oct. 30, 2020 |
Jan. 31, 2020 |
---|---|---|
Disaggregation of Revenue [Line Items] | ||
Unearned Revenue | $ 9,235 | $ 9,268 |
Unearned license revenue | ||
Disaggregation of Revenue [Line Items] | ||
Unearned Revenue | 11 | 19 |
Subscription and SaaS | ||
Disaggregation of Revenue [Line Items] | ||
Unearned Revenue | 1,596 | 1,534 |
Unearned software maintenance revenue | ||
Disaggregation of Revenue [Line Items] | ||
Unearned Revenue | 6,574 | 6,700 |
Unearned professional services revenue | ||
Disaggregation of Revenue [Line Items] | ||
Unearned Revenue | $ 1,054 | $ 1,015 |
Revenue, Unearned Revenue and Remaining Performance Obligations (Remaining Performance Obligations) (Details) - USD ($) $ in Billions |
Oct. 30, 2020 |
Jan. 31, 2020 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Remaining performance obligation | $ 10.2 | $ 10.3 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation percentage | 54.00% | |
Remaining performance obligation period | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-31 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation percentage | 55.00% | |
Remaining performance obligation period | 12 months |
Related Parties (Transactions with Dell) (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|
Dell acting as OEM | ||||
Related Party Transaction [Line Items] | ||||
Percentage of revenues | 4.00% | 3.00% | 4.00% | 3.00% |
Dell | OEM Revenue | ||||
Related Party Transaction [Line Items] | ||||
Percentage of revenues | 13.00% | 11.00% | 12.00% | 12.00% |
Majority Shareholder | Dell | Revenue Benchmark | ||||
Related Party Transaction [Line Items] | ||||
Concentration risk, percentage | 33.00% | 31.00% | 33.00% | 30.00% |
Related Parties (Schedule of Related Party Transactions) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
Jan. 31, 2020 |
|
Related Party Transaction [Line Items] | |||||
Unearned Revenue | $ 9,235 | $ 9,235 | $ 9,268 | ||
Dell | |||||
Related Party Transaction [Line Items] | |||||
Customer deposits | 209 | 209 | 194 | ||
Dell | Reseller revenue | |||||
Related Party Transaction [Line Items] | |||||
Revenue and Receipts | 927 | $ 780 | 2,738 | $ 2,223 | |
Unearned Revenue | 4,159 | 4,159 | 3,787 | ||
Dell | Internal-use revenue | |||||
Related Party Transaction [Line Items] | |||||
Revenue and Receipts | 16 | 37 | 50 | 60 | |
Unearned Revenue | 28 | 28 | $ 57 | ||
Dell | Collaborative technology project receipts | |||||
Related Party Transaction [Line Items] | |||||
Revenue and Receipts | 4 | 2 | 9 | 7 | |
Dell | Purchases and leases of products and purchases of services | |||||
Related Party Transaction [Line Items] | |||||
Related party costs | 49 | 61 | 138 | 196 | |
Dell | Dell subsidiary support and administrative costs | |||||
Related Party Transaction [Line Items] | |||||
Related party costs | $ 12 | $ 27 | $ 54 | $ 91 |
Related Parties (Dell Financial Services) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Oct. 30, 2020 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|
Dell | Financial Services | |||
Related Party Transaction [Line Items] | |||
Financing fees | $ 12 | $ 43 | $ 34 |
Related Parties (Tax Sharing Agreement With Dell) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
Jan. 31, 2020 |
||||
Related Party Transaction [Line Items] | ||||||||
Payments from VMware to Dell, net | $ 393 | $ 283 | [1] | |||||
Amount due from tax sharing arrangement | $ 0 | $ (45) | 85 | [1] | ||||
Transition tax, payment period | 5 years | |||||||
Dell | Tax sharing agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Payments from VMware to Dell, net | 54 | $ 43 | $ 221 | 132 | ||||
Amount due from tax sharing arrangement | 45 | $ 85 | ||||||
Income tax due to related parties, non-current | $ 499 | $ 499 | $ 529 | |||||
|
Related Parties (Pivotal Tax Sharing Agreement with Dell) (Details) - USD ($) $ in Millions |
1 Months Ended | 9 Months Ended |
---|---|---|
Aug. 31, 2019 |
Nov. 01, 2019 |
|
Pivotal | Dell | Tax sharing agreement | ||
Related Party Transaction [Line Items] | ||
Increase (decrease) to stockholders' equity from tax sharing agreement | $ 27 | $ 24 |
Related Parties (Due To/From Related Parties, Net) (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Oct. 30, 2020 |
Jan. 31, 2020 |
|
Related Party Transaction [Line Items] | ||
Due from related parties, net cash settlement period | 60 days | |
Dell | ||
Related Party Transaction [Line Items] | ||
Due from related parties, current | $ 771 | $ 1,618 |
Due to related parties, current | 99 | 161 |
Due from related parties, net, current | $ 672 | $ 1,457 |
Related Parties (Note Payable to Dell) (Details) - Note, December 2022 - Notes payable - Dell - USD ($) |
Oct. 30, 2020 |
Jan. 31, 2020 |
---|---|---|
Related Party Transaction [Line Items] | ||
Principal amount | $ 270,000,000 | $ 270,000,000 |
Interest rate | 1.75% |
Commitments and Contingencies (Details) $ in Millions |
Jan. 24, 2020
USD ($)
patent
|
Oct. 22, 2019
patent
|
Aug. 20, 2019
patent
|
Apr. 25, 2019
claim
patent
|
Aug. 10, 2015
subpoena
|
Oct. 30, 2020
USD ($)
|
---|---|---|---|---|---|---|
Loss Contingencies [Line Items] | ||||||
New material purchase commitments | $ 1,200 | |||||
Minimum payments under commitments, fiscal 2022 | 250 | |||||
Minimum payments under commitments, fiscal 2023 | 250 | |||||
Minimum payments under commitments, prior to the end of fiscal 2024 | $ 700 | |||||
Cirba Inc. Vs. VMware | ||||||
Loss Contingencies [Line Items] | ||||||
Patent infringement claims | patent | 2 | |||||
Trademark infringement claims | claim | 3 | |||||
Number of patents allegedly infringed upon | patent | 4 | 4 | ||||
Number of patents willfully infringed upon | patent | 2 | |||||
Damages awarded | $ 237 | |||||
California AG | ||||||
Loss Contingencies [Line Items] | ||||||
Number of subpoenas received | subpoena | 2 |
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Business Combination) (Details) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 30, 2020
USD ($)
|
Jul. 31, 2020
USD ($)
|
May 01, 2020
USD ($)
|
Oct. 30, 2020
USD ($)
acquisition
|
Jan. 31, 2020
USD ($)
|
|
Business Acquisition [Line Items] | |||||
Goodwill | $ 9,559,000,000 | $ 9,559,000,000 | $ 9,329,000,000 | ||
SaltStack, Inc. | |||||
Business Acquisition [Line Items] | |||||
Total purchase price | 51,000,000 | ||||
Intangible assets | 29,000,000 | 29,000,000 | |||
Goodwill | 24,000,000 | 24,000,000 | |||
Goodwill expected to be deductible for tax purposes | $ 0 | $ 0 | |||
SaltStack, Inc. | Completed Technology | |||||
Business Acquisition [Line Items] | |||||
Useful lives (in years) | 3 years | ||||
Datrium, Inc. | |||||
Business Acquisition [Line Items] | |||||
Total purchase price | $ 137,000,000 | ||||
Intangible assets | 25,000,000 | ||||
Goodwill | 91,000,000 | ||||
Goodwill expected to be deductible for tax purposes | $ 0 | ||||
Datrium, Inc. | Completed Technology | Minimum | |||||
Business Acquisition [Line Items] | |||||
Useful lives (in years) | 3 years | ||||
Datrium, Inc. | Completed Technology | Maximum | |||||
Business Acquisition [Line Items] | |||||
Useful lives (in years) | 5 years | ||||
Lastline, Inc. | |||||
Business Acquisition [Line Items] | |||||
Total purchase price | $ 114,000,000 | ||||
Intangible assets | 29,000,000 | ||||
Goodwill | 86,000,000 | ||||
Goodwill expected to be deductible for tax purposes | $ 0 | ||||
Lastline, Inc. | Completed Technology | Minimum | |||||
Business Acquisition [Line Items] | |||||
Useful lives (in years) | 1 year | ||||
Lastline, Inc. | Completed Technology | Maximum | |||||
Business Acquisition [Line Items] | |||||
Useful lives (in years) | 4 years | ||||
Nyansa, Inc. | |||||
Business Acquisition [Line Items] | |||||
Total purchase price | $ 38,000,000 | ||||
Intangible assets | 14,000,000 | ||||
Goodwill | 24,000,000 | ||||
Goodwill expected to be deductible for tax purposes | $ 0 | ||||
Nyansa, Inc. | Completed Technology | Minimum | |||||
Business Acquisition [Line Items] | |||||
Useful lives (in years) | 1 year | ||||
Nyansa, Inc. | Completed Technology | Maximum | |||||
Business Acquisition [Line Items] | |||||
Useful lives (in years) | 4 years | ||||
Series of Individually Immaterial Business Acquisitions | |||||
Business Acquisition [Line Items] | |||||
Total purchase price | $ 44,000,000 | ||||
Intangible assets | 35,000,000 | ||||
Goodwill | 16,000,000 | ||||
Goodwill expected to be deductible for tax purposes | $ 24,000,000 | ||||
Number of other acquisitions | acquisition | 3 | ||||
Series of Individually Immaterial Business Acquisitions | Completed Technology | Minimum | |||||
Business Acquisition [Line Items] | |||||
Useful lives (in years) | 1 year | ||||
Series of Individually Immaterial Business Acquisitions | Completed Technology | Maximum | |||||
Business Acquisition [Line Items] | |||||
Useful lives (in years) | 5 years |
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Intangible Assets Detail) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
Jan. 31, 2020 |
|
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | $ 1,864 | $ 1,864 | $ 1,922 | ||
Accumulated Amortization | (805) | (805) | (750) | ||
Net Book Value | 1,059 | 1,059 | 1,172 | ||
Amortization expense | 83 | $ 74 | 244 | $ 213 | |
Purchased technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 978 | 978 | 1,030 | ||
Accumulated Amortization | (461) | (461) | (488) | ||
Net Book Value | 517 | 517 | 542 | ||
Customer relationships and customer lists | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 733 | 733 | 739 | ||
Accumulated Amortization | (259) | (259) | (200) | ||
Net Book Value | 474 | 474 | 539 | ||
Trademarks and tradenames | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 132 | 132 | 131 | ||
Accumulated Amortization | (73) | (73) | (58) | ||
Net Book Value | 59 | 59 | 73 | ||
Other | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 21 | 21 | 22 | ||
Accumulated Amortization | (12) | (12) | (4) | ||
Net Book Value | $ 9 | $ 9 | $ 18 | ||
Weighted Average | Purchased technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 5 years 4 months 24 days | 5 years 8 months 12 days | |||
Weighted Average | Customer relationships and customer lists | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 11 years 4 months 24 days | 11 years 4 months 24 days | |||
Weighted Average | Trademarks and tradenames | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 7 years 7 months 6 days | 7 years 7 months 6 days | |||
Weighted Average | Other | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 2 years | 2 years |
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Amortization of Intangible Assets) (Details) - USD ($) $ in Millions |
Oct. 30, 2020 |
Jan. 31, 2020 |
---|---|---|
Business Combinations, Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2021 | $ 83 | |
2022 | 296 | |
2023 | 245 | |
2024 | 193 | |
2025 | 101 | |
Thereafter | 141 | |
Net Book Value | $ 1,059 | $ 1,172 |
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Changes in Carrying Amount of Goodwill) (Details) $ in Millions |
9 Months Ended |
---|---|
Oct. 30, 2020
USD ($)
| |
Goodwill [Roll Forward] | |
Balance, January 31, 2020 | $ 9,329 |
Increase in goodwill due to business combinations and related adjustments | 230 |
Balance, October 30, 2020 | $ 9,559 |
Realignment (Narrative) (Details) $ in Millions |
3 Months Ended | 9 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 30, 2020
USD ($)
position
|
Nov. 01, 2019
USD ($)
|
[3] |
Oct. 30, 2020
USD ($)
|
Nov. 01, 2019
USD ($)
|
[3] |
Jan. 31, 2020
USD ($)
|
|||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Number of positions eliminated | position | 330 | ||||||||||||
Realignment Expense | [1],[2] | $ 44 | $ 0 | $ 47 | $ 0 | ||||||||
Severance-related costs | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Realignment Expense | 44 | 47 | |||||||||||
Restructuring reserve | $ 25 | $ 25 | $ 74 | ||||||||||
|
Realignment (Schedule of Restructuring Reserve) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
[3] | Oct. 30, 2020 |
Nov. 01, 2019 |
[3] | |||||||
Restructuring Reserve [Roll Forward] | ||||||||||||
Realignment Expense | [1],[2] | $ 44 | $ 0 | $ 47 | $ 0 | |||||||
Severance-related costs | ||||||||||||
Restructuring Reserve [Roll Forward] | ||||||||||||
Balance as of January 31, 2020 | 74 | |||||||||||
Realignment Expense | 44 | 47 | ||||||||||
Utilization | (96) | |||||||||||
Balance as of October 30, 2020 | $ 25 | $ 25 | ||||||||||
|
Net Income Per Share (Computations of Basic and Diluted Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|||||
Earnings Per Share [Abstract] | ||||||||
Net income attributable to VMware | $ 434 | $ 407 | [1] | $ 1,267 | $ 6,090 | [1] | ||
Weighted-average shares, basic for Classes A and B (in shares) | 420,857 | 416,387 | [1] | 419,758 | 417,002 | [1] | ||
Effect of dilutive securities (in shares) | 2,543 | 6,648 | 3,335 | 8,364 | ||||
Weighted-average shares, diluted for Classes A and B (in shares) | 423,400 | 423,035 | [1] | 423,093 | 425,366 | [1] | ||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic for Classes A and B (in USD per share) | $ 1.03 | $ 0.98 | [1] | $ 3.02 | $ 14.60 | [1] | ||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B (in USD per share) | $ 1.02 | $ 0.96 | [1] | $ 3.00 | $ 14.32 | [1] | ||
|
Net Income Per Share (Anti-Dilutive Shares Excluded From Net Income) (Details) - Class A Common Stock - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities, amount (in shares) | 3,108 | 4,379 | 4,898 | 373 |
Employee stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities, amount (in shares) | 140 | 159 | 202 | 10 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities, amount (in shares) | 2,968 | 4,220 | 4,696 | 363 |
Cash, Cash Equivalents, and Restricted Cash (Cash and Cash Equivalents) (Details) - USD ($) $ in Millions |
Oct. 30, 2020 |
Jan. 31, 2020 |
---|---|---|
Cash equivalents: | ||
Cash and cash equivalents | $ 3,898 | $ 2,915 |
Cash equivalents | 3,200 | 2,300 |
Money-market funds | ||
Cash equivalents: | ||
Cash equivalents | 3,100 | 2,200 |
Time deposits | ||
Cash equivalents: | ||
Cash equivalents | $ 55 | $ 102 |
Cash, Cash Equivalents, and Restricted Cash (Restricted Cash) (Details) - USD ($) $ in Millions |
Oct. 30, 2020 |
Jan. 31, 2020 |
Nov. 01, 2019 |
[1] | Feb. 01, 2019 |
[1] | ||
---|---|---|---|---|---|---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||||||||
Cash and cash equivalents | $ 3,898 | $ 2,915 | ||||||
Restricted cash within other current assets | 67 | 83 | ||||||
Restricted cash within other assets | 26 | 33 | ||||||
Total cash, cash equivalents and restricted cash | $ 3,991 | $ 3,031 | $ 2,972 | $ 3,596 | ||||
|
Debt (Narrative) (Details) |
3 Months Ended | 9 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 11, 2020
USD ($)
|
Apr. 07, 2020
USD ($)
|
Sep. 12, 2017
USD ($)
extension
|
Oct. 30, 2020
USD ($)
|
Nov. 01, 2019
USD ($)
|
Oct. 30, 2020
USD ($)
|
Nov. 01, 2019
USD ($)
|
Jan. 31, 2020
USD ($)
|
Sep. 26, 2019
USD ($)
|
|||||
Debt Instrument [Line Items] | |||||||||||||
Interest expense | $ 52,000,000 | $ 40,000,000 | [1] | $ 156,000,000 | $ 108,000,000 | [1] | |||||||
Long-term debt | 4,715,000,000 | 4,715,000,000 | $ 2,731,000,000 | ||||||||||
Repayments of Short-term Debt | 1,500,000,000 | 1,400,000,000 | [1] | ||||||||||
Unsecured Debt | Term Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest expense | 17,000,000 | ||||||||||||
Term loan maximum borrowing capacity | $ 2,000,000,000.0 | ||||||||||||
Repayments of Short-term Debt | 1,500,000,000 | ||||||||||||
Short-term debt | 1,500,000,000 | ||||||||||||
Senior Notes | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Proceeds from debt issuance | $ 2,000,000,000.0 | ||||||||||||
Debt discount | 3,000,000 | 7,000,000 | 7,000,000 | 5,000,000 | |||||||||
Debt issuance costs | $ 17,000,000 | ||||||||||||
Interest expense | 48,000,000 | $ 32,000,000 | $ 135,000,000 | $ 97,000,000 | |||||||||
Repurchase price as percent of principal | 101.00% | ||||||||||||
Long-term debt | 4,715,000,000 | $ 4,715,000,000 | 3,979,000,000 | ||||||||||
Senior Notes | Note Due August 2020 | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term debt | $ 1,300,000,000 | ||||||||||||
Line of Credit | Revolving Credit Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Credit facility maximum borrowing capacity | $ 1,000,000,000.0 | ||||||||||||
Line of credit term | 5 years | ||||||||||||
Number of line of credit term extensions | extension | 2 | ||||||||||||
Line of credit term extension duration | 1 year | ||||||||||||
Long-term debt | $ 0 | $ 0 | $ 0 | ||||||||||
|
Debt (Carrying Value of Senior Notes) (Details) - USD ($) $ in Millions |
Oct. 30, 2020 |
Apr. 07, 2020 |
Jan. 31, 2020 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Net carrying amount | $ 4,715 | $ 2,731 | |
Senior Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | 4,750 | 4,000 | |
Less: unamortized discount | (7) | $ (3) | (5) |
Less: unamortized debt issuance costs | (28) | (16) | |
Net carrying amount | 4,715 | 3,979 | |
Current portion of long-term debt | 0 | 1,248 | |
Long-term debt | 4,715 | 2,731 | |
Senior Notes | 2.30% Senior Note Due August 21, 2020 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | 1,250 | |
Effective Interest Rate | 2.56% | ||
Interest rate | 2.30% | ||
Senior Notes | 2.95% Senior Note Due August 21, 2022 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 1,500 | 1,500 | |
Effective Interest Rate | 3.17% | ||
Interest rate | 2.95% | ||
Senior Notes | 3.90% Senior Note Due August 21, 2027 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 1,250 | 1,250 | |
Effective Interest Rate | 4.05% | ||
Interest rate | 3.90% | ||
Senior Notes | 4.50% Senior Note Due May 15, 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 750 | 0 | |
Effective Interest Rate | 4.70% | ||
Interest rate | 4.50% | ||
Senior Notes | 4.65% Senior Note Due May 15, 2027 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 500 | 0 | |
Effective Interest Rate | 4.80% | ||
Interest rate | 4.65% | ||
Senior Notes | 4.70% Senior Note Due May 15, 2030 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 750 | $ 0 | |
Effective Interest Rate | 4.86% | ||
Interest rate | 4.70% |
Fair Value Measurements (Fair Value Hierarchy) (Details) - Cash and Cash Equivalents - USD ($) $ in Millions |
Oct. 30, 2020 |
Jan. 31, 2020 |
---|---|---|
Total cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | $ 3,201 | $ 2,260 |
Total cash equivalents | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 3,146 | 2,158 |
Total cash equivalents | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 55 | 102 |
Money-market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 3,146 | 2,158 |
Money-market funds | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 3,146 | 2,158 |
Money-market funds | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 0 | 0 |
Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 55 | 102 |
Time deposits | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 0 | 0 |
Time deposits | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | $ 55 | $ 102 |
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
Jan. 31, 2020 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Deferred compensation plan assets | $ 125 | $ 125 | $ 106 | ||
Discrete tax impact related to adjustment of investment at fair value | 62 | ||||
Deferred compensation plan liabilities | 125 | 125 | 106 | ||
Securities without readily determinable fair value | 122 | 122 | 159 | ||
Unrealized gain (loss) on equity securities without readily determinable fair value | (15) | $ 12 | (15) | $ 35 | |
Level 2 | Notes payable | Dell | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Fair value of debt | 275 | 275 | 269 | ||
Level 2 | Senior Notes | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Fair value of debt | 5,300 | 5,300 | $ 4,100 | ||
Level 1 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment at fair value | 214 | $ 214 | |||
Unrealized gain on adjustment of investments to fair value | $ 189 |
Derivatives and Hedging Activities (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Jan. 31, 2020 |
|
Derivative [Line Items] | |||
Combined gain (loss) on settlement of forward contracts and the underlying foreign currency denominated assets and liabilities | $ 14 | $ 20 | |
Foreign Exchange Forward | |||
Derivative [Line Items] | |||
Gain (loss) on forward contracts not designated as hedging instruments | $ (34) | $ 46 | |
Foreign Exchange Forward | Not Designated As Hedging Instrument | |||
Derivative [Line Items] | |||
Forward contract maturity | 1 month | ||
Notional amount | $ 2,800 | $ 1,100 | |
Cash Flow Hedging | Foreign Exchange Forward | Designated As Hedging Instrument | |||
Derivative [Line Items] | |||
Notional amount | $ 130 | $ 480 | |
Cash Flow Hedging | Foreign Exchange Forward | Designated As Hedging Instrument | Maximum | |||
Derivative [Line Items] | |||
Forward contract maturity | 12 months |
Leases (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|
Lessee, Lease, Description [Line Items] | ||||
Lease expense | $ 57 | $ 53 | $ 167 | $ 151 |
Sublease income | $ 15 | $ 16 | ||
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Term of lease contract | 1 month | |||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Term of lease contract | 26 years |
Leases (Lease Cost) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|
Leases [Abstract] | ||||
Operating lease expense | $ 47 | $ 42 | $ 137 | $ 122 |
Finance lease expense: | ||||
Amortization of ROU assets | 2 | 2 | 5 | 3 |
Interest on lease liabilities | 0 | 0 | 1 | 0 |
Total finance lease expense | 2 | 2 | 6 | 3 |
Short-term lease expense | 1 | 1 | 2 | 2 |
Variable lease expense | 7 | 8 | 22 | 24 |
Total lease expense | $ 57 | $ 53 | $ 167 | $ 151 |
Leases (Lease Cash Flow) (Details) - USD ($) $ in Millions |
9 Months Ended | ||||
---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||
Operating cash flows from operating leases | $ 124 | $ 124 | |||
Operating cash flows from finance leases | 1 | 1 | |||
Financing cash flows from finance leases | 3 | 1 | [1] | ||
ROU assets obtained in exchange for lease liabilities: | |||||
Operating leases | 256 | 205 | |||
Finance leases | $ 1 | $ 63 | |||
|
Leases (Lease Assets and Liabilities) (Details) - USD ($) $ in Millions |
Oct. 30, 2020 |
Jan. 31, 2020 |
---|---|---|
Operating Leases | ||
ROU assets, non-current | $ 1,026 | $ 886 |
Lease liabilities, current | 109 | 109 |
Lease liabilities, non-current | 904 | 746 |
Total lease liabilities | 1,013 | 855 |
Finance Leases | ||
ROU assets, non-current | 54 | 58 |
Lease liabilities, current | 5 | 4 |
Lease liabilities, non-current | 50 | 55 |
Total lease liabilities | $ 55 | $ 59 |
Leases (Lease Term and Discount Rate) (Details) |
Oct. 30, 2020 |
Jan. 31, 2020 |
---|---|---|
Weighted-average remaining lease term (in years) | ||
Operating leases | 12 years 7 months 6 days | 13 years 3 months 18 days |
Finance leases | 8 years 6 months | 9 years 2 months 12 days |
Weighted-average discount rate | ||
Operating leases | 3.50% | 3.80% |
Finance leases | 2.90% | 3.10% |
Leases (Lease Liability Maturity) (Details) - USD ($) $ in Millions |
Oct. 30, 2020 |
Jan. 31, 2020 |
---|---|---|
Operating Leases | ||
2021 | $ 28 | |
2022 | 153 | |
2023 | 162 | |
2024 | 132 | |
2025 | 104 | |
Thereafter | 728 | |
Total future minimum lease payments | 1,307 | |
Less: Imputed interest | (294) | |
Total lease liabilities | 1,013 | $ 855 |
Finance Leases | ||
2021 | 2 | |
2022 | 6 | |
2023 | 7 | |
2024 | 7 | |
2025 | 6 | |
Thereafter | 34 | |
Total future minimum lease payments | 62 | |
Less: Imputed interest | (7) | |
Total lease liabilities | 55 | $ 59 |
Legally binding minimum lease payments for leases signed but not yet commenced | $ 81 |
Stockholders' Equity (Stock Repurchase Program) (Details) - USD ($) $ / shares in Units, shares in Thousands |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
May 31, 2019 |
|||||
Class of Stock [Line Items] | |||||||||
Aggregate purchase price | $ 255,000,000 | $ 242,000,000 | [1] | $ 566,000,000 | $ 1,279,000,000 | [1] | |||
Class A Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Authorized repurchase amount under stock repurchase program | 1,000,000,000.0 | 1,000,000,000.0 | $ 1,500,000,000 | ||||||
Remaining authorized repurchase amount | 1,400,000,000 | 1,400,000,000 | |||||||
Aggregate purchase price | $ 255,000,000 | $ 242,000,000 | $ 566,000,000 | $ 1,279,000,000 | |||||
Class A common shares repurchased (in shares) | 1,770 | 1,638 | 4,229 | 7,333 | |||||
Weighted-average price per share (in USD per share) | $ 144.28 | $ 147.65 | $ 133.83 | $ 174.37 | |||||
|
Stockholders' Equity (Summary of Restricted Stock Activity) (Details) - Class A Common Stock $ / shares in Units, $ in Millions |
9 Months Ended |
---|---|
Oct. 30, 2020
USD ($)
$ / shares
shares
| |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Restricted stock unit conversion into common stock (in shares) | 1 |
Fair value of restricted stock-based awards, vested | $ | $ 861 |
Aggregate intrinsic value, nonvested | $ | $ 2,500 |
Number of Units | |
Outstanding (in shares) | 19,400,000 |
Restricted Stock | VMware RSUs | |
Number of Units | |
Outstanding (in shares) | 17,474,000 |
Granted (in shares) | 10,075,000 |
Vested (in shares) | (6,270,000) |
Forfeited (in shares) | (1,833,000) |
Outstanding (in shares) | 19,446,000 |
Weighted-Average Grant Date Fair Value | |
Outstanding, weighted-average grant date fair value (in USD per share) | $ / shares | $ 128.38 |
Granted, weighted-average grant date fair value (in USD per share) | $ / shares | 150.54 |
Vested, weighted-average grant date fair value (in USD per share) | $ / shares | 112.24 |
Forfeited, weighted-average grant date fair value (in USD per share) | $ / shares | 133.94 |
Outstanding, weighted-average grant date fair value (in USD per share) | $ / shares | $ 144.45 |
Performance Stock Units (PSUs) | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Conversion ratio or awards upon acquisition | 0.1 |
Performance Stock Units (PSUs) | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Conversion ratio or awards upon acquisition | 2.0 |
Stockholders' Equity (Net Excess Tax Benefits) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|
Stockholders' Equity Note [Abstract] | |||
Net excess tax benefits | $ 30 | $ 32 | $ 147 |
Stockholders' Equity (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Balance | $ 7,009 | |||||||
Unrealized gains (losses), net of tax provision (benefit) | (1) | $ 3 | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) to the condensed consolidated statements of income (loss), net of tax (provision) benefit of $—, $— and $— | (2) | |||||||
Total other comprehensive income (loss) | $ 4 | $ (4) | [1] | (1) | 1 | [1] | ||
Balance | 8,476 | 8,476 | ||||||
Total | ||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Balance | (4) | (2) | ||||||
Total other comprehensive income (loss) | 4 | (4) | [1] | (1) | 1 | [1] | ||
Balance | (5) | (1) | (5) | (1) | ||||
Tax provision (benefit) on OCI before reclass | 0 | 0 | ||||||
Tax (provision) benefit on amounts reclassified from AOCI | 0 | |||||||
Unrealized Gain (Loss) on Forward Contracts | ||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Balance | 0 | 2 | ||||||
Unrealized gains (losses), net of tax provision (benefit) | (1) | 3 | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) to the condensed consolidated statements of income (loss), net of tax (provision) benefit of $—, $— and $— | (2) | |||||||
Total other comprehensive income (loss) | (1) | 1 | ||||||
Balance | (1) | 3 | (1) | 3 | ||||
Tax provision (benefit) on OCI before reclass | 0 | 0 | ||||||
Tax (provision) benefit on amounts reclassified from AOCI | 0 | |||||||
Foreign Currency Translation Adjustments | ||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Balance | (4) | (4) | ||||||
Unrealized gains (losses), net of tax provision (benefit) | 0 | 0 | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) to the condensed consolidated statements of income (loss), net of tax (provision) benefit of $—, $— and $— | 0 | |||||||
Total other comprehensive income (loss) | 0 | 0 | ||||||
Balance | $ (4) | $ (4) | (4) | (4) | ||||
Tax provision (benefit) on OCI before reclass | $ 0 | 0 | ||||||
Tax (provision) benefit on amounts reclassified from AOCI | $ 0 | |||||||
|
Segment Information (Schedule of Revenue by Type) (Details) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 30, 2020
USD ($)
|
Nov. 01, 2019
USD ($)
|
Oct. 30, 2020
USD ($)
segment
|
Nov. 01, 2019
USD ($)
|
|||||||||
Segment Reporting [Abstract] | ||||||||||||
Number of reportable segments | segment | 1 | |||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | [1],[2] | $ 2,864 | $ 2,656 | [3] | $ 8,473 | $ 7,738 | [3] | |||||
Total license and subscription and SaaS | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 1,315 | 1,198 | 3,899 | 3,467 | ||||||||
License | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | [1],[2] | 639 | 728 | [3] | 2,019 | 2,147 | [3] | |||||
Subscription and SaaS | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | [1],[2] | 676 | 470 | [3] | 1,880 | 1,320 | [3] | |||||
Total services | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | [1],[2] | 1,549 | 1,458 | [3] | 4,574 | 4,271 | [3] | |||||
Software maintenance | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 1,282 | 1,200 | 3,797 | 3,519 | ||||||||
Professional services | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | $ 267 | $ 258 | $ 777 | $ 752 | ||||||||
|
Segment Information (Schedule of Revenue by Geographic Area) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 30, 2020 |
Nov. 01, 2019 |
Oct. 30, 2020 |
Nov. 01, 2019 |
|||||||||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||||||||||||
Revenue | [1],[2] | $ 2,864 | $ 2,656 | [3] | $ 8,473 | $ 7,738 | [3] | |||||
United States | ||||||||||||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||||||||||||
Revenue | 1,466 | 1,323 | 4,268 | 3,835 | ||||||||
International | ||||||||||||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||||||||||||
Revenue | $ 1,398 | $ 1,333 | $ 4,205 | $ 3,903 | ||||||||
|
Segment Information (Schedule of Long-Lived Assets by Geographic Area) (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Oct. 30, 2020 |
Jan. 31, 2020 |
|
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Long-lived assets by geographic area | $ 1,090 | $ 1,069 |
United States | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Long-lived assets by geographic area | $ 860 | 860 |
United States | Assets Benchmark | Geographic Concentration Risk | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 80.00% | |
International | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Long-lived assets by geographic area | $ 230 | $ 209 |
India | Assets Benchmark | Geographic Concentration Risk | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 10.00% |
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