VMware Inc., the biggest maker of software that lets computers run multiple operating systems, reported second-quarter sales and profit that exceeded analysts’ projections as customers renewed software licenses.
Profit before certain items was 79 cents a share, VMware said Tuesday in a statement. That topped the 77-cent average estimate of analysts, according to data compiled by Bloomberg. Revenue rose 11 percent to $1.24 billion, compared with the $1.23 billion average prediction. The shares of VMware, which is majority-owned by EMC Corp., jumped as much as 12 percent.
The better-than-projected sales and profit, as well as a forecast for third-quarter revenue that was in line with estimates, may help reassure shareholders that customers are renewing multiyear contracts and that spending won’t deteriorate further this year. The stock has dropped 20 percent in the past year as sales growth slowed, hurt by reduced technology budgets at U.S. companies and federal agencies.
“The enterprise license-agreement renewal cycle has probably started to kick in,” said Abhey Lamba, an analyst at Mizuho Securities USA Inc. who recommends buying the shares. Bookings, a measure of future revenue, were $1.45 billion, he said. Analysts on average had estimated $1.25 billion, he said.
Second-quarter net income rose 27 percent to $244.1 million, or 57 cents a share, from $191.7 million, or 44 cents, a year earlier, VMware said.
Sales in the current period will increase to $1.27 billion to $1.3 billion, the Palo Alto, California-based company said, compared with an average analyst estimate of $1.28 billion. In last year’s third quarter, sales were $1.13 billion. Annual revenue will be $5.12 billion to $5.26 billion. Analysts on average projected $5.17 billion, compared with $4.61 billion in 2012.
VMware shares rose as high as $79.84 following the report, after rising 2 percent to $71.28 at the close in New York.
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