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VMware Q4 Revenue, Profit Beat Estimates

Capitalizing on the growth of the cloud.

Virtualization software maker VMware reported better-than-expected quarterly revenue and profit on strong demand for its products that help cut the cost of moving data to the cloud.

The company’s shares rose almost 2 percent in extended trading after the company also doubled its share buyback program to $2 billion.

VMware, like rival Citrix Systems Inc, makes software that enables the creation of a virtual machine that act like a real computer with an operating system, helping clients use server and storage space more efficiently.

VMware’s total revenue rose 14.8 percent to $1.70 billion in the fourth quarter ended Dec. 31, as income from both licenses and services rose.

Services revenue rose 16.3 percent to $926 million. Contracts for software maintenance and support made up more than 54 percent of total revenue.

But net income fell to $326 million, or 75 cents per share, from $335 million, or 77 cents per share. Excluding items, the company earned $1.08 per share.

Analysts on average had expected profit of $1.06 per share on revenue of $1.69 billion, according to Thomson Reuters I/B/E/S.

VMware’s parent EMC said earlier this month it had reached a standstill agreement with activist investor Elliott Management, prohibiting the hedge fund from publicly pushing EMC to spin off VMware or pursue other merger opportunities until September.

Paul Singer-controlled Elliott has a 2.2 percent stake in EMC.

(Reporting By Sai Sachin R in Bengaluru; Editing by Ted Kerr and Savio D’Souza)

This article originally appeared on Recode.net.