Thank you for standing by. Welcome to VMware's Q1 FY 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Mr. Paul Ziots, Vice President of Investor Relations. Thank you. Please go ahead. Thank you. Good afternoon, everyone, and welcome to VMware's first quarter fiscal year 2021 earnings conference call. On the call, we have Zane Rowe, CFO and interim CEO. Following Zane's prepared remarks, we will take questions. Our press release was issued after close of market and is posted on our website, where this call is being simultaneously webcast. Slides which accompany this webcast can be viewed in conjunction with live remarks and downloaded at the conclusion of the webcast from ir.vmware.com. On this call today, we will make forward-looking statements that are subject to risks and uncertainties. Actual results may differ materially as a result of various risk factors described in the 10-Ks, 10-Qs, 8-Ks VMware files with the SEC. We assume no obligation to and do not currently intend to update any such forward-looking statements. In addition, during today's call, we will discuss certain non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of VMware's performance, should be considered in addition to, not as a substitute for or in isolation from GAAP measures. Our non-GAAP measures exclude the effect on our GAAP results of stock-based compensation, amortization of acquired intangible assets, employer payroll tax on employee stock transactions, acquisition, disposition, certain litigation matters, and other items, as well as discrete items impacting our GAAP tax rate. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP measures in the press release and on our investor relations website. The webcast replay of this call will be available for the next 60 days on our company website under the investor relations link. Our second quarter fiscal 2022 quiet period begins at the close of business Thursday, July 15, 2021. With that, I'll turn it over to Zane. Thank you, Paul, and thank you to everyone joining us today. Before we move into Q1 results, earlier this month, we announced Raghu Raghuram as the next CEO of VMware, effective June 1st. Raghu is the architect of our future, an industry thought leader, and has successfully steered the company's strategy and technology evolution across our rich history. This is an exciting milestone for VMware, which, along with the Dell spin-off plan, marks the company's transition into its next chapter. Raghu will say a few words following our Q1 results overview. Also, on behalf of the company, I'd like to thank Sanjay Poonen for his years of service, his passion, and his leadership. We wish him well on his next endeavor. We're pleased with our Q1 financial performance. Q1 total revenue was $3 billion, an increase of 9% from the first quarter of FY 2021, with non-GAAP EPS of $1.76 per share, up 16% year-over-year. We continue to see customers utilize a combination of our solutions, ranging from modern apps and cloud infrastructure to networking and our Digital Workspace offerings. We're also seeing momentum with our subscription and SaaS portfolio and are on track to make most of our major product offerings available as subscription and SaaS by the end of this year. Customers remain focused on building out hybrid and multi-cloud environments and are changing how they consume technology, asking for more flexibility and choice. Recently, we introduced VMware Cloud Universal, a program that provides customers like Western Union, who has subscribed in Q1, with flexibility in utilizing VMware hybrid cloud offerings as they progress on their cloud journeys. With VMware Cloud Universal, customers can deploy applications on their choice of three VMware technology-based infrastructure stacks: VMware Cloud Foundation, VMware Cloud on AWS, or VMware Cloud on Dell EMC. VMware Cloud Universal joins our product-specific universal offerings such as VMware vRealize Cloud Universal and VMware Horizon Service Universal. In conjunction with these universal offerings, we continue to drive innovation around three key customer priorities: cloud, app modernization, and enabling a distributed workforce. In Q1, we announced updates to the VMware vRealize Cloud Management and CloudHealth portfolio, expanding our support for Amazon Web Services, Google Cloud, Microsoft Azure, and VMware Cloud on AWS. These new and enhanced capabilities enable customers to manage and govern their hybrid and multi-cloud environments more securely. This past quarter, we secured a deal with Pirelli, helping them with consistent infrastructure and management capabilities. In Q1, VMware Cloud on AWS achieved PCI DSS certification at the highest level available for a cloud provider, expanding our ability to support customers that require PCI for cardholder payments processing e-commerce applications. In the modern app space, customers are embracing Tanzu, our comprehensive portfolio of products and services, to modernize their existing applications and build new modern apps. We recently unveiled expanded cloud workload protection capabilities to deliver better security for containers and Kubernetes, helping customers with increased visibility and compliance. In Q1, we saw customer momentum with our Tanzu platform across key verticals, including financial services, and also secured a key win with Telecom Italia, where we helped them deliver better digital experience and modernize their operating infrastructure. We also recently announced that VMware Tanzu has been selected by U.S. Army Futures Command to enable a software factory where they can use modern cloud-native development practices. We're helping customers run their modern apps with new releases of vSphere 7 and vSAN 7, which are developer and AI-ready, scale without compromise, boost infrastructure and data security, and simplify operations. This includes the next step in our collaboration with NVIDIA to deliver an AI-ready enterprise platform that combines the industry-leading compute virtualization software of VMware vSphere and the innovation of NVIDIA AI Enterprise suite. We also continue to see momentum with our Dell Technologies partnership. A new example of our collaboration includes plans to build a simplified, more secure, high-performing edge platform using VMware Cloud Foundation on Dell VxRail that can consolidate a variety of edge workloads and use cases. Additionally, VMware and Dell continue to help unleash the potential of 5G as an accelerator at the edge, enabling customers to derive real-time insights out of that data wherever it lives. VMware and Dell also continue to collaborate on solutions such as VMware Cloud on Dell EMC, VeloCloud SD-WAN, Digital Workspace, and security, helping joint customers in their digital transformation journeys. Over the past year, companies have seen the benefits of remote work and want to become truly distributed businesses where their employees can work from anywhere. We recently unveiled VMware Anywhere Workspace, a solution designed to help customers manage multimodal employee experiences, secure the distributed edge, and automate their workspace. VMware Anywhere Workspace brings together three innovative solutions, VMware Workspace ONE, VMware Carbon Black Cloud, and VMware SASE. This is built on our SD-WAN technology, which was recently recognized by IDC as a leading offering in 2020. Additionally, VMware Carbon Black was recognized as a visionary in the 2021 Gartner Magic Quadrant for Endpoint Protection Platforms and recognized as a leader in the Forrester Wave Endpoint Security Software as a Service Q2 2021. Our commitment to ESG continues to be a priority across the company. As part of our 2030 agenda, we took meaningful steps towards our sustainability goals with the recent launch of our Zero Carbon Committed Cloud Partner program, designed to accelerate the transition to zero carbon clouds by 2030 through VMware Cloud Partner data centers that are powered by renewable energy sources. We are also proud to have been recognized on Forbes Best Employers for Diversity 2021 list, having made significant gains in our position over the last year. Now let's move to more detail on our business performance as well as our forecast. We had good performance overall in the quarter, including relative strength in our commercial business, which benefited from increased focus on partner collaboration and sales coverage. In Q1, the combination of subscription and SaaS and license revenue grew 12% year-over-year to $1.387 billion. Subscription and SaaS revenue increased 29% year-over-year, with the largest revenue contributions coming from VCPP, modern applications, end-user computing, Carbon Black, and VMware Cloud on AWS, which grew over 80% in Q1. We're pleased with the growth and progress of our subscription and SaaS portfolio in Q1, and we'll continue to focus on our product development and go-to-market efforts on making subscription and SaaS a larger part of our business. ARR for subscription and SaaS was $3 billion, an increase of 30% year-over-year. While we continue to drive growth in our subscription and SaaS portfolio, license revenue exceeded our expectations, declining 2% year-over-year to $646 million. Our better-than-expected total revenue growth was the primary contributor to strength in non-GAAP operating income, which increased 13% year-over-year in Q1 to $923 million. Non-GAAP operating margin for the quarter was 30.8%, with non-GAAP earnings per share of $1.76 on a share count of 422 million diluted shares. We ended the quarter with $10.2 billion in unearned revenue and $5.7 billion in cash equivalents, and short-term investments. Q1 cash flow from operations was $1.266 billion, and free cash flow was $1.196 billion. For Q1, RPO was $11 billion, up 9% year-over-year, and current RPO was $6.2 billion, up 12% year-over-year. Total backlog was $52 million, substantially all of which consisted of orders received on the last day of the quarter that were not shipped and orders held due to our export control process. License backlog at quarter end was $14 million. We're pleased with our product portfolio performance in Q1. Core SDDC product bookings increased over 20% year-over-year, with compute increasing over 20% and cloud management up in the high teens. Compute growth was strong for both on-prem deployments and subscription and SaaS offerings, such as VCPP and VMC on AWS. Cloud management growth was driven by vRealize subscription and SaaS, which enables customers to manage both on-prem and multi-cloud environments in a consistent manner. While large transformative projects are starting to show signs of recovery after a slow year, NSX and vSAN product bookings were still impacted in Q1, resulting in single-digit year-over-year declines. Subscription and SaaS ACV bookings for EUC, which constituted approximately 3/4 of total EUC product bookings, grew over 30% in Q1, primarily driven by Horizon. Total EUC product bookings increased in the mid-teens year-over-year. We continue to focus on integrating Carbon Black and Tanzu into our product development and go-to-market selling motions. Tanzu was included in five of our top 10 deals in Q1. In Q1, we repurchased 2.5 million shares in the open market at an average price of $148 per share. As of the end of Q1, we utilized $1.8 billion from our current repurchase authorization of $2.5 billion. VMware remains committed to maintaining an investment-grade profile and credit rating. To that end, we expect to use free cash flow primarily to de-lever following our planned spin-off from Dell. In addition, we will continue to invest in growing our business, both organically and inorganically, and return excess capital to shareholders through share repurchases. We'll provide further updates to our capital allocation plans as we near the planned spin-off this fall. Turning to guidance for fiscal 2022. We're increasing full-year guidance to incorporate stronger than expected performance in Q1. We now expect total revenue of approximately $12.8 billion, or a growth rate of approximately 9% year-over-year. We expect to generate approximately $6.33 billion from the combination of subscription and SaaS and license revenue, or an increase of approximately 12.5%, with approximately 53% of this amount from subscription and SaaS. We're increasing guidance for non-GAAP operating margin for the full year to 28.5%, and non-GAAP earnings per share to $6.88 on the diluted share count of 423 million shares. We're also increasing our cash flow from operations guidance to $3.9 billion and increasing free cash flow expectations to $3.52 billion. FY 2022 guidance does not include the impact of incremental debt we expect to incur in conjunction with the planned spin-off from Dell later this year. For Q2, we expect total revenue of approximately $3.1 billion, or a growth rate of approximately 8% year-over-year. We expect approximately $1.485 billion from combined subscription and SaaS and license revenue in Q2, or an increase of 10% year-over-year, with approximately 53% of this amount from subscription and SaaS. We expect non-GAAP operating margin of 28% for Q2, with non-GAAP earnings per share of $1.62 on a diluted share count of 423 million shares. In summary, we're pleased with our progress in Q1 and the momentum we're building with our subscription and SaaS portfolio. My thanks to the VMware team and our customers and partners for a good start to the year. I'm looking forward to working with Raghu to accelerate our progress towards being the company that leads our customers to the multi-cloud computing era, creating value for them, our partners, and our stockholders. I'll now turn it over to Raghu to make a few comments before we open it up for Q&A. First off, I'd like to thank my friend Zane Rowe for leading VMware through this interim period and keeping us focused on our FY 2022 priorities. I look forward to the continued partnership with both Zane Rowe and Sumit Dhawan in his new role as President leading our go-to-market teams. I joined VMware when we were a small independent startup as the product manager for our core hypervisor. I have been fortunate to lead many of our efforts in creating new product categories and building new businesses that have made VMware one of the most influential and successful companies in our industry. We have an exceptional team, great culture, values, and strong products. Most importantly, hundreds of thousands of our customers trust our software as the foundation for their most critical applications. I am humbled, excited, and honored to have been chosen to lead this great company in its next phase of growth. This is an exciting time in the industry. All organizations, enterprises, and governments alike, are in a transformational shift to become digital. To power the shift, customers are leveraging multiple public clouds, data centers, and increasingly the edge to transform the experiences of their customers and their workforce. Enterprise architectures are becoming distributed again. We are at the dawn of this multi-cloud era of computing, where enterprises have the sovereignty to deploy their digital assets where it best fits their business. In this new era, our mission is to provide the foundational platforms for accelerating digital business. We provide an ubiquitous, consistent software platform across clouds, data centers, and edge with which customers can rapidly build and modernize their applications. We empower them to operate their entire distributed environment with optimal cost, security, and governance while leveraging their existing investments in our technology and skills to go faster to the future. Post-spin, we will be the only standalone cloud company that has the necessary strategic partnerships with all the major cloud companies and all the leading infrastructure companies to deliver on a truly customer-centered multi-cloud vision. In summary, we deliver to our customers their digital future faster, with lower cost, and with the flexibility and freedom to build their applications on the platforms that best suit their needs, and with confidence that their workloads will be resilient, more secure, and efficient wherever they're deployed. Going forward, you'll be hearing from me more about the key areas that drive stockholder value that I'm passionate about, such as accelerating our innovation to drive the industry-leading multi-cloud computing portfolio that best serves our customers, and accelerating our business model to support our customers' preference for subscription and SaaS. As we make progress in these areas, I'm confident that we will seize the tremendous opportunity in multi-cloud platforms that will power an exciting new phase of growth. I've been privileged to have been with VMware for 18 years. Let me share with you that I'm as excited about our future today as I was the day I walked in the door. I will now hand it back to Paul for Q&A. Thanks, Raghu. Before we begin the Q&A, I'll ask you to limit yourselves to one question consisting of one part, so we can get to as many people as possible. Operator, let's get started. Yes, sir. As a reminder, to ask a question you will need to press star one on your telephone keypad. Please stand by while we compile the Q&A roster. Your first question comes from the line of Matt Hedberg. Your line is open. Oh, hey, guys. Thanks for taking my question. First of all, Raghu, congrats on your new role, and congrats to the team on a strong Q1. You know, I wanted to talk a little bit about life post the Dell spin. Maybe, you know, you've had a little bit more time to reflect on it. I'm sort of curious, you know, how do you think it affects not only the growth algorithm on a go-forward basis, but even obviously there's going to be a de-leveraging period here, but how does profitability then change, too, in a world, as from an independent VMware perspective? Sure, Matt. I'm happy to start, then let Raghu talk a little bit more about the strategy. You know, obviously we're excited about the benefits of the spin which we articulated, you know, some time ago, thinking about the, you know, the outcome for both stockholders as well as for customers. You know, having established VMware as a standalone company enhances our ability to extend our ecosystem in support of our vision of creating this ubiquitous software and SaaS platform across all clouds and infrastructure. As we think about that in financial terms, you'll hear a lot more through the year as to what that portfolio will look like and how we plan on leaning in even more with sub and SaaS, and in particular with the multi-cloud work that Raghu and the team are developing. We're encouraged by what that landscape looks like. We're encouraged by the future, and you see with the first quarter performance here, we feel like we've got a lot of momentum in the multi-cloud categories, in particular with Core and with VMC and what we're seeing with VCPP. We expect that to continue, and we'll continue to have a strong relationship with Dell, but allow us to use that ecosystem more broadly. Raghu, I'll let you talk a little bit more about the strategy. Sure. Thanks, Matt. I'm excited about the impending spin-off. Like Zane said, it allows us to execute on our multi-cloud vision and our multi-cloud strategy, partnering with all the leading cloud companies and all the infrastructure companies. The customers that I've spoken to, they are positive, based upon the increased flexibility that we're going to have in our partnering strategy. At the same time, we have been working really well with Dell over a long period of time, and we have codified our business partnership and technical partnership in the form of a commercial agreement, and that will continue very, very strongly. We think post-spin we'll have the best of both worlds. The partnership with Dell is today clearly around a bunch of technology areas that we have spoken to you about, such as VxRail, VMware Cloud on Dell, VeloCloud, et cetera, SD-WAN, et cetera, et cetera. Going forward, we have 15 statements of work on fundamental areas of differentiation, where together we can deliver a powerful solution for our customers, and that's going to be backed by our commercial agreement to work together in the field in service of our customers. All in all, I'm very excited about the impending spin. Thank you, Matt. Next questi on please. Next question comes from the line of Mark Murphy. Your line is open. Yes. Thank you very much. Raghu, I will add my congrats as well. Very exciting. You have spoken about turbocharging and accelerating the multi-cloud computing strategy of VMware, and you're coming from a position of strength with that. Can you help us understand which products or levers you want to accelerate? For instance, does it mean working perhaps a bit more with Azure and Google and others? Does it mean more subscription in SaaS? Does it mean pushing Tanzu even faster, or are you referring to something else? Yeah, thanks, Mark. Let's approach it from the customer perspective. As we have talked about and so many in the industry have talked about, the top priorities for customer is to accelerate their digital transformation. What that means typically is that they're modernizing their application portfolio, they're moving to one or more clouds as it turns out, and they're increasingly deploying applications in the data center at the edge. It is this distributed enterprise architecture that's taking shape. In order to help customers accelerate this, you have to solve multiple problems, and that's what our software platform does. You have to help customers build modern applications faster on the cloud of their choice, and that is Tanzu. Tanzu today, 30%, at least a third of the Tanzu business is, deployments are on public clouds. That's the first aspect of the strategy. The second, of course, is the multi-cloud infrastructure. We have spoken to you about 75million-85 million workloads on vSphere platforms today in the data center. As customers think about deploying them in the clouds or on the edge or wherever they want to deploy them, the presence of our stack on AWS, which is our preferred partner, on AVS, sorry, on Microsoft through the AVS solution, on Google through the GCVE solution, on O racle, on IBM, Alibaba, et cetera, et cetera, provides customers with a significant choice on where to go deploy that workload. Once you've deployed the work, built the workload, modernized the workload, deployed it, then you want to manage it. Our management portfolio with vRealize suite of products is geared for multi-cloud management, where a significant portion of our customers, as I said, might be on vSphere, and a significant portion might be on non-vSphere. Of course, one of the common most important things that happens once you have deployed applications everywhere is you got to connect them together and ensure common network policy, and then ensure common security policy. All these parts of our portfolio are inherently and natively multi-cloud, and they all need to come together in a credible platform. That really is what we want to accelerate. What I'm really excited about is there is no other industry player in the market that can bring all of these together into a coherent platform. We are very unique in that regard. The second reason we are very unique is the starting point for customers is the set of VMware technologies and tools they are already using, so we can help them get to the future state faster than anybody else. Last but not the least, the third reason we are unique is post-spin, we will be the only cloud company that has all these strategic relationships with all of these major cloud players, and of course, all of the major infrastructure players, to truly deliver this platform end to end. That's really what I mean when I say accelerate. It's a lot of work to do, but super exciting. We are in a very strong position to begin with. As you know, we have a history of innovating in each of these categories, and I'm looking forward to the days and weeks ahead. Thank you for the incremental color and looking forward to see that come together. Thanks. Thank you, Mark. Next qu estion, please. Next question comes from the line of Raimo Lenschow. Your line is open. Thank you, and congrats from me as well, Raghu. Can you talk about the strength in compute that was kind of really amazing this quarter, and you called out some of the partner kind of work there. How much of that is kind of underlying recovery and how much of that is like kind of one-off stuff versus kind of fundamental changes to the business? Because that's really exciting. Thank you. Yeah, Raimo, I'll start. You know, as you point out, the compute business continued its recovery now that we've cycled one year since the initial impact of COVID. We had solid year-over-year growth, you know, granted on a softer Q1 compare, but still solid growth in excess of 20% on a year-over-year basis. It is contributed by our multi-cloud offerings such as VCPP, VMC on AWS, and just all of the grouping in aggregate contributed to compute growth. We're really pleased with the solid performance of the category. The commercial sector in particular, which was hit hard initially, saw a nice turnaround this quarter. We would expect that to continue to gradually recover over the course of the year. It's really, you know, the fundamental strength that we're seeing in the business. We started to see some of this in Q4, and it's continued into Q1, I think bodes well for the rest of the year. I'll maybe let Raghu touch on a little bit more on what we're seeing with some of the performance in compute and some of the areas we're working on. Thanks, Raimo, and thanks, Zane. on compute, as Zane said, we've seen strength because compute is such an integral part of our multi-cloud, portfolio. as offerings like VMware Cloud on AWS or, cloud offerings on Azure and Google, et cetera, et cetera, start to build up, we see all of that strength being reflected back into the compute business. Of course, VCPP has been, for a long, time, been driving, contributor to driving the strength of our compute business overall. then across the board in the enterprise and in the commercial sector, we have seen, strength in, the compute business. then if you look at the product portfolio, what, you may have observed is we have actually accelerated, our innovation in core compute with not just vSphere 7, but, the vSphere 7 updates. Zane talked about the NVIDIA partnership, which brings critical elements of the NVIDIA AI portfolio on top of vSphere and makes vSphere the go-to platform for enterprise AI. We have talked previously about our strength in telco, et cetera, et cetera. Our compute business, we continue to innovate around it in many different ways, and you're seeing some of the results. Thanks, Raimo. Thank you. Next questi on, please. Next question comes from the line of Mark Moerdler. Your line is open. Thank you very much, and congratulations both on the quarter and Raghu on taking the helm, and we're looking for great things from that. I want to follow up a little more on this increasing focus on cloud and subscription. You've been making more and more of your offerings available as cloud or subscription, but you've not really actively driven how the client purchases or what the client purchases. With the launch of VMware Cloud Universal, you added a lot more flexibility for deploy and move. Do you see the firm taking a more aggressive approach specifically to drive the transition via pricing, differentiated functionality, sales commission, or something else to shift the client to it, shift the business, you know, much, much faster to a recurring business? Thanks. Thanks, Mark. Yes, the short answer is yes, but we've got Sumit Dhawan, our new President of Go-To-Market, here on the call with us, and Universal in many ways is his baby, so I'll let him elaborate. Thanks, Raghu, and thanks, Mark. I think as you mentioned, Universal programs are designed for customers to really give them flexibility to embrace our cloud services at their own pace, okay? That's how we have designed the program. We launched the program in Q1, and we had good initial success. The program is designed as a flexible subscription that simplifies the purchase and consumption of our entire multi-cloud infrastructure and management services. The customers get the benefit of having choice and flexibility, where they buy once, and they can deploy any eligible service at any time during the contract and truly be able to convert and apply anything that's unused on their on-premise technologies deployments towards the VMware Cloud on AWS. That's a completely unique offering in the industry and has been a welcome for our customers. We are starting to see growth in our customer interest as well as just pipeline. We have launched incentives to our teams, which are, you know, driving the appropriate behavior in our go-to-market teams. As we go into the following semester, as we do our go-to-market planning, we'll continue to make it so that teams lead with the appropriate offerings, encouraging our customers to embrace our Universal offers. Makes sense. Thanks, Mark. I appreciate it. Thanks. Thank you. Next question, please. Next question from the line of Tyler Radke. Your line is open. Yeah. Hi. Thanks very much for taking the question. I wanted to ask you about what you're seeing on the NSX and vSAN. I think you talked about product bookings were still impacted in Q1, but wanted to understand, you know, how you expect those bookings trends to trend throughout the rest of the year and, you know, if this is just kind of a function of some of the strategic projects being on hold. Just some color on what drove that in the quarter and how you expect that to recover throughout the rest of the year. Thanks. Sure, Tyler. Yeah, I'll start and then hand it over to Raghu. You know, as you point out, as we mentioned in my prepared remarks, NSX and vSAN product bookings were down single digits on a year-over-year basis. I'll also point out that if you look at the compare, both of those products were up over 20% for the same quarter last year, so they hadn't seen the impact of the slowdown at this point in time last year. As you mentioned, there are those large transformative projects that are starting to show signs of improvement, which were slow through the course of last year. We do expect to see those projects improve and to see more volumes of those projects. If you take a look at our top 10 deals, eight out of 10 included both NSX and vSAN. We're actually pleased with the technology. It's also, you know, a key element and part of our VMC as well as VCPP offerings. We're seeing it embedded in the rest of our product portfolio. While it's off on a year-over-year basis, we're encouraged by the general outlook we're seeing through the year. I'll have Raghu touch on a little bit more on what we're doing there. Yeah. To echo what Zane just said, NSX and vSAN are the core part of our multi-cloud offerings as well as a core part of our on-premise VMware Cloud Foundation stack. We continue to expand leadership in both those products and the segments they participate in. As VMware Cloud on AWS and VMware Cloud on these other hyperscalers and VCPP continues to grow, we expect that to benefit the NSX and the vSAN business as well. Specifically on NSX, we have continued to expand the product portfolio to address even greater number of use cases. We now have the full layer two to layer seven stack with fantastic load balancing offering, east-west firewall, IDS, IP S offerings, et cetera, all of which are tremendously differentiated and offer significant economic benefit to the customers over other alternatives. Of course, we have included our SD-WAN VeloCloud solution, which is also part of the networking portfolio into our Anywhere Workspace offering for customers. Similarly, vSAN is a core part of our VMware Cloud Foundation stack, as well as our multi-cloud infrastructure stack. We have seen good performance there as well. Specifically, we saw good performance in VxRail, and we continue to be an industry leader in HCI and continue to innovate around it. We recently introduced an innovation where customers are able to scale the compute separately from storage, and that increases the addressable set of use cases and opportunities for vSAN. Thank you, Tyler. Next question, please. Your next question comes from the line of Karl Keirstead. Your line is open. Thank you. Maybe this question is for Raghu and maybe Zane. I think everybody on the line has heard countless anecdotes from corporate CTOs about their plans to pretty aggressively accelerate their migration of workloads into AWS, Azure, GCP, and I think it's created a concern, I've shared it, that perhaps those CTOs would therefore be less inclined to upgrade their on-premise data centers as a result. Yet I'm looking at your results, where the CRPO growth was 12%, revenue growth 9%, core compute 20%. That seems to sort of refute that concern, and I'm wondering if you could offer your thoughts. Maybe the general thesis is incorrect, but be great for you to help us square that. Thank you. Thanks. The general thesis is like we, like I said in the start of my remarks, we are at the dawn of a multi-cloud computing era. What that means is that customers are increasingly deploying applications across multiple clouds. They are deploying applications in the data center. They are deploying applications at the edge. As a result, customers are looking for an end-to-end software platform that allows them to deploy their applications in the locations that best fit their business needs. They're looking to deploy, and the developers are looking to build on the platforms that best suits their application needs. CIO and IT teams have to be able to manage it all and keep everything resilient and secure in a cost-efficient manner. That really is the macro trend that we're addressing, with our product solutions, with our solutions in our portfolio. If you think about our portfolio, our modern application modernization portfolio, which is Tanzu, has done very well. Tanzu solves the problem for a developer that is wanting to accelerate application modernization on the cloud of their choice, and Tanzu addresses that problem. In fact, at least a third of last year's Tanzu deployments have been in public clouds. If a customer is looking to take their existing workloads and move them to the cloud, VMware Cloud infrastructure addresses that problem. If a customer is looking to rationalize and consolidate data centers or optimize their existing environments, VMware Cloud Foundation addresses that problem. If a customer is looking to build out their edge portfolio and put applications forth because they're revamping their stores or manufacturing facilities, et cetera, our hyper-converged infrastructure stack addresses that problem. What you see in the strength of compute is the fact that there are new applications being deployed across all of these places, and all of these are being deployed on a fundamental VMware foundation because that is the consistent foundation that gives them the manageability, the security, and the cost efficiency and so on and so forth. That is how that is why you see all these trend lines, and that's the connecting chart across all of these trend lines, if you will. That's helpful, Raghu. Thank you for that. Thank you, Karl. Next question, please. Next question from Ittai Kidron. Your line is open. thanks, and my congrats as well, Raghu, and good luck in the new role. I did want to ask about RPO. It's the fifth quarter in a row where it's down significantly on a year-over-year basis. Zane, can you get into a little bit into the dynamics and the mechanics of this, and what should we expect out of RPO growth going forward? Yeah, sure, Ittai. you know, what we focus more on is the CRPO, and if you look over the last number of quarters, it's actually been fairly consistent. If you look more broadly at RPO, obviously we had some favorable compares with some of the acquisitions over, you know, multiple quarters. If you take a look at CRPO growing 12% on a year-over-year basis, it's somewhat consistent with what we've seen over the last few quarters. you know, we're very pleased with that. We think with our focus on ACV, and especially as we spend more time on sub and SaaS, that tends to be the metric that we're more focused on, and we're quite pleased with the 12% growth there. I'll also point out that, you know, we've highlighted all along the tremendous growth we've seen in VCPP, and of course, that's not typically captured in an RPO metric because of the utility model that it represents, and it's been very favorable on a year-over-year basis for the last number of quarters, starting in the second quarter of last year. We're quite pleased with the growth we're seeing overall on both, I'd say RPO and most particularly on CRPO. Very good. Thank you. Sure. Thank you. Thank you, Ittai. Next question, please. Next question from Brad Reback. Your line is open. Great. Thanks very much. Zane, as we look towards the VMware Cloud Universal product and the deployment flexibility that it gives customers. As it grows bigger, how should we think about the impact of rev rec and cash flow from that flexibility? Thanks. Yeah, Brad, it's a great question. I mean, obviously it provides some flexibility at the onset, and then customers, depending on which, you know, which path they choose to go down, you know, will be engaging in the products in that regard. You know, the program's design probably favoring a little bit more of, you know, the sub and SaaS type model and sub and SaaS products, obviously giving our customers that choice and flexibility. You know, as we've seen, we still have a number of customers that will choose perpetual as well. With that flexibility, obviously we've factored that into our guidance and, you know, we're pleased to move our guidance up this year as you saw with the strength that we saw in the first quarter. As Universal comes along, we'll learn more and more about what customers are choosing to deploy, and have that flexibility on, and we'll account for that accordingly. You know, we're expecting for it to be, you know, a fair amount of that, rolled up ratably, that's embedded in our forecast and candidly in our optimism for future years. Thank you, Brad. Perfect. Thanks very much. Sure. Thank you. Next question, please. Next question from the line of Jim Fish. Your line is open. Hey, guys. Thanks for the question, and Raghu, congrats on the promotion, of course. you know, not to beat a dead horse, outside of the easy compare, it does sound like the core business is returning. Any more color on the impact you're seeing more specifically from private cloud investments, data center consolidation, other items impacting the core? Obviously you're a software company, are the supply chain shortages actually playing a role on the business from a push or pull dynamic at all? Thanks, guys. Sure. I'll start on the macro and then let Raghu touch on it as well. You know, I think just in general, as I pointed out earlier, we saw some of this building up in Q4, and I think there's just this general sense of optimism and clearly improved spend that we're observing and that's coming back in our core products, and we couldn't be more pleased, as you said with the dead horse that we continue to beat on compute and management. We're happy with over 20% growth. We'll just keep beating that for as long as we can. Generally speaking, we're pleased. I think it's the integration of the multi-cloud portfolio and what we're seeing with our customers. Thankfully, as you know, we hopefully are starting to see the light at the end of the tunnel here with regard to the impact of the pandemic on a number of our customers, in particular those in the commercial space. With our partners, we're encouraged by some of the trends we're seeing there as well. Raghu, I'll let you add to that. Absolutely. Thanks, Jim. To add to what Zane said, fundamentally what we are providing to enterprises is the ability and the power for them to choose where they put their application, and we are able to help them wherever they want to either build a new application or modernize an existing application or just modernize the infrastructure underneath the application. It so turns out that there is a lot of that still happening in the private cloud, especially amongst the very, very large companies. For example, we are working very closely with some of the largest banks that are continuing to build out the private cloud, even as they invest in a public cloud. Similarly, we are continuing to work with some of the very large telcos that are continuing to build out their network infrastructure, and even as they think about their multi-cloud strategy. I was speaking with a CTO yesterday, and what that person told us is that they're investing in the modernizing of their existing infrastructure to generate savings that they can then reinvest in modernizing their applications. We are seeing all of these dynamics play out at the same time, which is why I think the answer is not simple as something decreases in A and shows up in B. Thank you. Thank you, Fish. Next question, please. Next question from the line of Brent Thill. Your line is open. Raghu, after 18 years, you've seen a lot. I guess as you look forward, what is the top priority for you taking over? Anything that you're changing that perhaps, you know, wasn't on the approach that you want to take? Thank you. Yeah. I mean, I think, thanks, first, Brent. I alluded to two things in my prepared remarks. Let me sort of elaborate on that. I think, if I look at the customer trends, you and I have spoken many times before, and we look at the world from the customer end, customers are accelerating their use of multiple infrastructures. In many ways, the industry goes through this pendulum of centralization to decentralization to centralization and back again. I think we are in such a pendulum swing again. If you think about the last 10 years, it was all about centralizing to a cloud, and everybody thought all applications in the world was going to run in three clouds, right? The actual customer behavior is turning out to be the other way. Customers are deploying applications across multiple places, and it's not just VMware that's observing it. Microsoft CEO made the same observation at a recent conference. The world is becoming distributed again, and the question is who, which of the IT vendors that our customers depend upon can do a credible and great job at helping them in this new distributed world. We think there is a tremendous opportunity here that plays to our strengths, and that is what I'm focusing on. When I say we want to accelerate the innovation in our multi-cloud portfolio, that's exactly what I mean, providing an end-to-end software platform, and not just the compute but the networking, the connectivity, the management, the storage, everything put together. That's point number one. Point number two, our customers are expressing a preference towards subscription and SaaS models. We have to accelerate our business model evolution to subscription and SaaS. We are doing two things in that regard. One, obviously, as we focus our energies on application modernization, multi-cloud, and enabling the workforce of our customers to work from anywhere, all of those tend to be SaaS offerings. As we have previously talked about, we are also taking all of our existing on-premise offerings and either enabling them to be controlled from the cloud or delivered from the cloud. As a result, our entire portfolio is going to be positioned to be available in a subscription and SaaS business model, and we're going to accelerate that. As Sumit talked about, we are introducing offerings like Universal that makes it much easier for the customers to go along this journey. We're going to look hard at what kind of sales incentives and so on we can put in place so that it makes it extraordinarily easy for customers to go on this journey. Thank you, Brent. Next question please. Next question from the line of Kirk Materne. Your line is open. Yeah, thanks very much. I'll add my congrats to Raghu on the new position. I don't know if this is for Zane or Raghu, but I was just kind of curious what you all are hearing in terms or seeing, frankly, you know, in terms of customers using multiple clouds in parallel with one another, using you as the infrastructure to sort of move applications around. It seems like customers are still sort of majoring in one and maybe minoring in the other versus having sort of parallel paths on two or three. I was just kind of curious about how what you're seeing out there and how you're also helping them, I think, fill what is a pretty big skills gap in terms of being able to understand, you know, clouds that are getting, frankly, bigger and more complex as we go forward. Thanks. Absolutely. I'll start and then Zane can perhaps add or Sumit. Thank you, Kirk. What we are seeing, and this is by the way, the data that we see, but I'm going to use an external vendor stat for a second, analyst stat. A prominent analyst has estimated that 80% of customers are using two or more clouds, and we see the same pattern. There are two, I would say, potentially two major reasons for this. One is customers have always been about selecting the infrastructure that best suits the application they want to deploy. For turns out they prefer one set of clouds or one cloud, and for certain other applications they prefer a second one. As multiple clouds have become mature and viable with customers, we see customers selecting to put applications, different applications in different clouds. That's one reason we see this. The second reason we see it is most large companies especially are distributed organizations with the different buying centers and different technology preferences, and they pick different clouds. Whatever be the underlying reason, the reality is that customers are using multiple clouds. To your point, it is fairly early in this process, so the mix will shift. On top of that, all of our customers are investing in private clouds as well. In earlier conversations, I've talked about a 2 + 1 or a 2 + 2 phenomenon where they're using at least two public clouds, their private cloud, in many cases building an edge cloud. This is what we mean when we talk about multi-cloud. We don't just mean two clouds or two or more public clouds. Does that provide you with a sense of the market around this? Yeah, that was helpful. Thanks very much. Thank you, Kirk. Next question please. Next question from the line of Shannon Cross. Your line is open. Thank you very much. Hi Raghu and Zane. Just one for me. I'm curious about security and, you know, as obviously moving to more of a multi-cloud platform, you know, what are you hearing from customers in terms of their concern about security? You know, are there areas that you think you need to expand on to address some of their concerns? you know, is it the first thing people talk about, or, you know, how are you addressing it? Thank you. Yes. Thanks, Shannon. In fact, we had our security council, customer advisory council yesterday, we had a great discussion. High security is high on every CIO's priority list, as you can imagine, the cloud phenomenon makes it go even higher. Let me give you a couple of examples that are tied to multi-cloud actually. One major bank that was in the, in our customer advisory board, the security architect for that said they analyzed. They have 900 applications running on public clouds, and they analyzed all 900 applications. They found all 900 of them were multi-cloud in the sense they had components in the public cloud, in the private cloud, and in some other clouds. These applications by themselves are distributed. The problem they are trying to solve is, how do I secure an application that's spread out like this, right? If you step back, the second problem that they are all asking themselves is, now that our application assets, which are the most important digital assets and the data that is associated with that, how do we protect and secure them when they are so distributed? Multi-cloud suddenly puts security even more to the forefront. Thank you. Thank you, Shannon. We have five minutes left. We're going to try to get as many in as we can in the time remaining. Next question, please. Next question from the line of Keith Bachman. Your line is open. Hi, thank you very much. Congrats, Raghu. I wanted to ask Zane and Raghu, if you could talk about Tanzu adoption. It seems that this is an important beacon for the durability of the overall portfolio, so I hope you could speak on adoption trends broadly. I know you mentioned five of the top 10 deals included it. How are you getting paid in those deals for Tanzu? More broadly, Is there any kind of metrics you can give us on number of developers, downloads, anything that would give a broader indication on where Tanzu sits today versus, say, a year ago, and how you think that may unfold 12 months from now? Thank you. Let me start. The Tanzu portfolio is pretty comprehensive, and it's growing even broader by the day. The central problem that Tanzu portfolio-wise we are trying to solve with Tanzu is helping our customers' developers modernize their applications in the clouds of their choice, where the cloud could be the private or any public cloud that they chose to be in. That really is the value proposition of Tanzu. Given the importance of application modernization and digital initiatives at all of our customers, you can say Tanzu's becoming more and more central to what we talk about with a lot of our customers. The momentum, Zane talked about it being present in five of our top 10 deals. Before I get to the second part of your question about metrics, let me briefly talk about the elements of the portfolio. One of them is the core Kubernetes aspect of it, which is emerging as the modern substrate on which modern applications live. The second is the management of these applications running on Kubernetes. The third is what developers are using, the tools the developers are using to build their applications. Just to take one data point on that, Spring, which is a modern developer, it's been a developer framework that's been very popular in enterprises. We have over 5 million developers that are registered use developers of Spring. Spring Boot, which is how, which is the technology Spring developers use to modernize, we are seeing 32 starts of Spring Boot applications every minute, and that's an amazing number. In terms of our application marketplace, our Bitnami open source application marketplace, we have over 2 million developers registered for that. We have quietly built quite a significant population of developers that are using Tanzu technologies to modernize their applications. Thank you, Keith. We're going to take two extra minutes here to try to get a few more questions in. Next question, please. Next question on the line of Nehal Chokshi. Your line is open. Yeah. Thank you. Thank you for taking my question. Cong rats, Raghu. Looking forward to seeing what you can do here, which I think will be fantastic. Look, seems like the environment is improving. Strong results. Your fiscal year 2022 guidance is raised by about $100 million versus the first quarter beat of about $85 million. That represents only about a $15 million for-forward raise. Given the context I just talked about, why not, you know, a much larger raise here? Hey, Nehal. You know, we feel obviously about our performance in Q1. The outperformance, as you've heard through the course of this call, was primarily on the license element of the business. While we're pleased with the sub and SaaS performance, we recognize with the ratable revenue recognition that we'll continue to push that through the course of the year. We feel good about, obviously, our performance in Q1. We feel good about Q2 and as well as the raise and the guide for the full year. Obviously, we continue to focus on sub and SaaS, which will be, you know, something that we'll talk more about on the booking side. You would expect to see a lot of that revenue, recognized not only towards the tail end of this year, but well into next year as well. We feel good about the forecast, and we think the, $100 million was a good, beat and raise. Thank you, Nehal. Next question, please. Next question from the line of Kash Rangan. Your line is open. Mr. Kash Rangan, your line is open. Okay. Why don't we take one last question then? Please go to the next question. Our last question from the line of Keith Weiss. Your line is open. Hey, guys, this is Chris on for Keith. Thanks for taking the question. Just quick one from me. We've been hearing in our checks that the VMware and Azure relationship picking up pretty good traction. Just wondering how that partnership is different from the VMC on AWS, you know, flagship partnership you have, and any expectations you have for how the Azure partnership can scale, especially now that you have the VMware Cloud Universal product out. Thanks. Yes. VMware Cloud on AWS is the service that we own and operate. AWS is our preferred partner. Having said that, the offering on the Azure platform is built and run by Microsoft, but it has the essential VMware Cloud Foundation stack. A customer that's running on-premise can move to that stack with a lot of the similar benefits that they get from the VMware Cloud on AWS stack. In fact, one of the Microsoft team members that we collaborate with said this is the fast path for Microsoft workloads to go to Azure. We are seeing a significant amount of customer interest in that platform, and we have already started seeing some early reference wins, like American Airlines that's moving their desktop virtualization population there. Suncorp, a large bank in APJ, doing their data center evacuation on top of Azure. We are seeing some good early momentum. Thank you, Chris. Before we finish, Zane, here's some concluding comments. Sure. Thanks, Paul. You know, as you've heard, Q1 was a good start to the fiscal year, and we're pleased with our progress and the momentum we're building with our subscription and SaaS portfolio. We're excited about our next chapter as a standalone company with Raghu as our CEO and look forward to updating you again next quarter. Thank you very much, everyone. This concludes today's conference call. Thank You all for participating. You may now disconnect.