SaaS and Subscription Soars 44%, Eclipses On-Premise Licenses

For its third fiscal quarter, VMware generated $676 million in SaaS and subscription revenue, up a whopping 44 percent compared to $470 million one year ago. VMware’s SaaS and subscription sales now make up 24 percent of the company’s total revenue, a figure that continues to climb quarter after quarter.

“Subscription and SaaS revenue increased 44 percent year-over-year in Q3 and surpassed license revenue for the first time,” said Zane Rowe, VMware’s CFO and executive vice president, during the company’s recent third quarter earnings report. “VMware will continue to invest in and focus on further expanding our Subscription and SaaS portfolio, which we believe will drive company growth, customer satisfaction and shareholder value.”

VMware captured $639 million in on-premise license revenue in the third quarter, down 12 percent year over year.

“We are on track to make most of our major product offerings available as subscription and SaaS in the next calendar year, providing a broader set of consumption choices for our customers with the flexibility they need,” Gelsinger said.

The VMware businesses generating subscription and SaaS sales includes VMware Cloud on AWS, Wavefront, Heptio, Pivotal Software, Carbon Black, VeloCloud, AppDefense and some end-user computing (EUC) sales, to name a few.