(Reuters) - VMware Inc (VMW.N), with which Dell Technologies Inc is considering a reverse-merger to be a public company, forecast on Thursday upbeat full-year revenue and profit after it sold more licenses for its software products in the fourth quarter.
The company, in which Dell owns 80 percent stake, forecast fiscal 2019 profit of $6.02 per share and revenue of $8.73 billion. Analysts were expecting a profit of $5.59 per share and revenue of $8.64 billion.
VMware’s fourth-quarter results also came in above Wall Street targets as licensing revenue rose 20 percent to $1.07 billion.
The company’s services revenue, which accounts for more than half of its total revenue, rose 8.4 percent to $1.24 billion.
VMware is witnessing strong demand for its virtualization software that allows a computer or server to perform the work of multiple machines by emulating them, helping businesses boost efficiency and cut costs.
“We’re seeing increasing momentum for our integrated cloud platform,” Chief Executive Officer Patrick Gelsinger said on a post earnings call, adding that the company’s business with Dell Technologies resulted in $400 million in synergies at the end of the fiscal year.
Earlier in the day, CNBC reported Chief Executive Officer of Dell, Michael Dell, and his advisers were working on the details of combining the world’s largest privately held technology company with VMware.
“I think the Dell’s relationship with VMware is positive for the company overall,” Shannon Cross, analyst at Cross Research told Reuters as the fundamentals of VMware’s business is solid.
The company’s net loss was $440 million, or $1.09 per share, in the quarter ended Feb. 2, compared with a profit of $441 million, or $1.04 per share, a year earlier, mainly due to a tax charge of $970 million.
Excluding one-time items, the Palo Alto, California-based company earned $1.68 per share, while total revenue rose 13.6 percent to $2.31 billion.
Analysts had expected a profit of $1.62 cents per share and revenue of $2.26 billion, according to Thomson Reuters I/B/E/S.
Shares of VMware were marginally down at $122.85 in volatile trading after the bell.
Reporting by Laharee Chatterjee in Bengaluru; Editing by Arun Koyyur