00011246102/32023Q2FALSE Includes related party revenue as follows (refer to Note D):
License$436 $374 $690 $661 
Subscription and SaaS259 195 514 368 
Services633 606 1,274 1,194 
Includes stock-based compensation as follows:
Cost of license revenue$— $— $$
Cost of subscription and SaaS revenue11 11 
Cost of services revenue25 24 48 49 
Research and development146 150 278 277 
Sales and marketing93 81 174 153 
General and administrative41 33 81 64 
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 29, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to
Commission File Number 001-33622
_______________________________________________________

VMWARE, INC.
(Exact name of registrant as specified in its charter)
_______________________________________________________
Delaware94-3292913
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
3401 Hillview Avenue
Palo Alto,
CA
94304
(Address of principal executive offices)(Zip Code)
(650) 427-5000
(Registrant’s telephone number, including area code)
_____________________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stockVMWNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of August 26, 2022, the number of shares of Class A common stock, par value $0.01 per share, of the registrant outstanding was 423,024,854.


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VMware, Pivotal, Tanzu, Workspace ONE, Carbon Black, CloudHealth, VeloCloud, vRealize, vSphere, NSX and Nyansa are registered trademarks or trademarks of VMware, Inc. or its subsidiaries in the United States and other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective organizations.
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PART I
FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
VMware, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in millions, except per share amounts, and shares in thousands)
(unaudited)
Three Months EndedSix Months Ended
 July 29,July 30,July 29,July 30,
 2022202120222021
Revenue(1):
License$796 $738 $1,369 $1,384 
Subscription and SaaS943 776 1,842 1,516 
Services1,597 1,624 3,213 3,232 
Total revenue3,336 3,138 6,424 6,132 
Operating expenses(2):
Cost of license revenue39 37 74 75 
Cost of subscription and SaaS revenue196 170 387 327 
Cost of services revenue369 352 744 689 
Research and development803 775 1,577 1,483 
Sales and marketing1,080 1,023 2,134 1,981 
General and administrative276 256 527 492 
Realignment— 
Operating income566 525 974 1,084 
Investment income
Interest expense(74)(49)(145)(99)
Other income (expense), net(20)(30)(19)
Income before income tax479 480 807 967 
Income tax provision132 69 218 131 
Net income$347 $411 $589 $836 
Net income per weighted-average share, basic$0.82 $0.98 $1.40 $1.99 
Net income per weighted-average share, diluted$0.82 $0.97 $1.39 $1.98 
Weighted-average shares, basic422,002 419,355 421,294 419,235 
Weighted-average shares, diluted424,125 422,802 423,561 422,419 
__________
(1)   Includes related party revenue as follows (refer to Note C):
License$436 $374 $690 $661 
Subscription and SaaS259 195 514 368 
Services633 606 1,274 1,194 
(2)   Includes stock-based compensation as follows:
Cost of license revenue$— $— $$
Cost of subscription and SaaS revenue11 11 
Cost of services revenue25 24 48 49 
Research and development146 150 278 277 
Sales and marketing93 81 174 153 
General and administrative41 33 81 64 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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VMware, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
Three Months EndedSix Months Ended
July 29,July 30,July 29,July 30,
 2022202120222021
Net income$347 $411 $589 $836 
Other comprehensive income (loss):
Changes in fair value of effective foreign currency forward contracts:
Unrealized gains (losses), net of tax provision (benefit) of $(1), $—, $(1) and $—
(6)(9)
Reclassification of (gains) losses realized during the period, net of tax (provision) benefit of $—, $—, $— and $—
(1)— 
Total other comprehensive income (loss)(4)— (8)
Comprehensive income, net of taxes$343 $411 $581 $838 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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VMware, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in millions, except per share amounts, and shares in thousands)
(unaudited)
July 29,January 28,
20222022
ASSETS
Current assets:
Cash and cash equivalents$3,242 $3,614 
Short-term investments— 19 
Accounts receivable, net of allowance of $9 and $10
2,073 2,297 
Due from related parties1,267 1,438 
Other current assets636 598 
Total current assets7,218 7,966 
Property and equipment, net1,550 1,461 
Deferred tax assets5,986 5,906 
Intangible assets, net589 714 
Goodwill9,598 9,598 
Due from related parties189 199 
Other assets2,863 2,832 
Total assets$27,993 $28,676 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable$208 $234 
Accrued expenses and other2,683 2,806 
Unearned revenue6,388 6,479 
Due to related parties202 132 
Total current liabilities9,481 9,651 
Long-term debt11,181 12,671 
Unearned revenue4,843 4,743 
Income tax payable253 242 
Operating lease liabilities889 927 
Due to related parties802 909 
Other liabilities404 409 
Total liabilities27,853 29,552 
Contingencies (refer to Note D)
Stockholders’ equity (deficit):
Class A common stock, par value $0.01; authorized 2,500,000 shares; issued and outstanding 422,622 and 418,808 shares
Additional paid-in capital435 — 
Accumulated other comprehensive loss(13)(5)
Accumulated deficit(286)(875)
Total stockholders’ equity (deficit)140 (876)
Total liabilities and stockholders’ equity (deficit)$27,993 $28,676 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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VMware, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Six Months Ended
 July 29,July 30,
 20222021
Operating activities:
Net income$589 $836 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization590 544 
Stock-based compensation593 555 
Deferred income taxes, net(80)(31)
(Gain) loss on equity securities and disposition of assets, net(12)37 
Other
Changes in assets and liabilities, net of acquisitions:
Accounts receivable222 206 
Other current assets and other assets(418)(390)
Due from related parties180 522 
Accounts payable(31)70 
Accrued expenses and other liabilities(319)(218)
Income taxes payable114 (29)
Unearned revenue24 
Due to related parties(38)— 
Net cash provided by operating activities1,402 2,130 
Investing activities:
Additions to property and equipment(219)(157)
Sales of investments in equity securities20 34 
Purchases of strategic investments(8)(7)
Proceeds from disposition of assets90 
Business combinations, net of cash acquired, and purchases of intangible assets(4)(15)
Net cash used in investing activities(121)(144)
Financing activities:
Proceeds from issuance of common stock124 139 
Repayment of term loan(1,500)— 
Repurchase of common stock(89)(729)
Shares repurchased for tax withholdings on vesting of restricted stock(205)(242)
Principal payments on finance lease obligations(2)(2)
Net cash used in financing activities(1,672)(834)
Net increase (decrease) in cash, cash equivalents and restricted cash(391)1,152 
Cash, cash equivalents and restricted cash at beginning of the period3,663 4,770 
Cash, cash equivalents and restricted cash at end of the period$3,272 $5,922 
Supplemental disclosures of cash flow information:
Cash paid for interest$140 $97 
Cash paid for taxes, net184 204 
Non-cash items:
Changes in capital additions, accrued but not paid$$11 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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VMware, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(in millions)
(unaudited)
Three Months Ended July 29, 2022
Class A
Common Stock
Additional
Paid-in
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Stockholders’ Equity
(Deficit)
SharesPar Value
Balance, April 29, 2022421 $$227 $(633)$(9)$(411)
Proceeds from issuance of common stock— — — — 
Issuance of restricted stock— — — — — 
Shares withheld for tax withholdings on vesting of restricted stock(1)— (115)— — (115)
Stock-based compensation— — 318 — — 318 
Total other comprehensive loss— — — — (4)(4)
Net income— — — 347 — 347 
Balance, July 29, 2022423 $$435 $(286)$(13)$140 
Six Months Ended July 29, 2022
Class A
Common Stock
Additional
Paid-in
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Stockholders’ Equity
(Deficit)
SharesPar Value
Balance, January 28, 2022419 $$— $(875)$(5)$(876)
Proceeds from issuance of common stock— 124 — — 124 
Repurchase and retirement of common stock(1)— (89)— — (89)
Issuance of restricted stock— — — — — 
Shares withheld for tax withholdings on vesting of restricted stock(1)— (208)— — (208)
Stock-based compensation— — 608 — — 608 
Total other comprehensive loss— — — — (8)(8)
Net income— — — 589 — 589 
Balance, July 29, 2022423 $$435 $(286)$(13)$140 
Three Months Ended July 30, 2021
Class A
Common Stock
Class B
Convertible
Common Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Stockholders’
Equity
SharesPar ValueSharesPar Value
Balance, April 30, 2021111 $307 $$1,960 $7,492 $(3)$9,453 
Proceeds from issuance of common stock— — — — — — 
Repurchase and retirement of common stock(2)— — — (358)— — (358)
Issuance of restricted stock— — — — — — — 
Shares withheld for tax withholdings on vesting of restricted stock(1)— — — (191)— — (191)
Stock-based compensation— — — — 297 — — 297 
Net income— — — — — 411 — 411 
Balance, July 30, 2021112 $307 $$1,716 $7,903 $(3)$9,620 
Six Months Ended July 30, 2021
Class A
Common Stock
Class B
Convertible
Common Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive Loss
Stockholders’
Equity
SharesPar ValueSharesPar Value
Balance, January 29, 2021112 $307 $$1,985 $7,067 $(5)$9,051 
Proceeds from issuance of common stock— — — 139 — — 139 
Repurchase and retirement of common stock(5)— — — (729)— — (729)
Issuance of restricted stock— — — — — — — 
Shares withheld for tax withholdings on vesting of restricted stock(1)— — — (243)— — (243)
Stock-based compensation— — — — 564 — — 564 
Total other comprehensive income— — — — — — 
Net income— — — — — 836 — 836 
Balance, July 30, 2021112 $307 $$1,716 $7,903 $(3)$9,620 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A. Overview and Basis of Presentation
Company and Background
VMware, Inc. (“VMware”) originally pioneered the development and application of virtualization technologies with x86 server-based computing, separating application software from the underlying hardware, and then evolved to become the private cloud and mobility management leader. Building upon that leadership, VMware is focused on becoming the multi-cloud leader. Information technology (“IT”) driven innovation continues to disrupt markets and industries. Technologies emerge faster than organizations can absorb, creating increasingly complex environments. Organizations’ IT departments and corporate divisions are working at an accelerated pace to harness new technologies, platforms and cloud models, ultimately guiding businesses and their product teams through a digital transformation. To take on these challenges, the Company is helping customers drive their multi-cloud strategy by providing the multi-cloud platform for all applications, enabling digital innovation and enterprise control.
Basis of Presentation
The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The fiscal year for VMware is the 52 or 53 weeks ending on the Friday nearest to January 31 of each year. Fiscal 2023 is a 53-week fiscal year, in which the first three quarters each has 13 weeks while the fourth quarter has 14 weeks. Fiscal 2022 was a 52-week fiscal year.
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments and accruals, for a fair statement of VMware’s condensed consolidated results of operations, financial position and cash flows for the periods presented. Results of operations are not necessarily indicative of the results that may be expected for the full fiscal year 2023. Certain information and footnote disclosures typically included in annual consolidated financial statements have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in VMware’s Annual Report on Form 10-K filed on March 24, 2022.
On November 1, 2021, VMware’s spin-off from Dell Technologies Inc. (“Dell”) was completed (the “Spin-Off”). As a result of the Spin-Off, VMware became a standalone company and entities affiliated with Michael Dell (the “MSD Stockholders”), who serves as VMware’s Chairman of the Board and chairman and chief executive officer of Dell, and entities affiliated with Silver Lake Partners (the “SLP Stockholders”), of which Egon Durban, a VMware director, is a managing partner, became owners of direct interests in VMware representing 40.1% and 9.9%, respectively, of VMware’s outstanding stock, based on the shares outstanding as of July 29, 2022. Due to the MSD Stockholders’ and SLP Stockholders’ direct ownership in both VMware and Dell, as well as Mr. Dell’s executive position with Dell, transactions with Dell continue to be considered related party transactions following the Spin-Off.
Management believes the assumptions underlying the condensed consolidated financial statements are reasonable. However, the amounts recorded for VMware’s related party transactions with Dell and its consolidated subsidiaries may not be considered arm’s length with an unrelated third party. Therefore, the condensed consolidated financial statements included herein may not necessarily reflect the results of operations, financial position and cash flows had VMware engaged in such transactions with an unrelated third party during all periods presented. Accordingly, VMware’s historical financial information is not necessarily indicative of what the Company’s results of operations, financial position and cash flows will be in the future, if and when VMware contracts at arm’s length with unrelated third parties for products and services the Company receives from and provides to Dell.
Broadcom Merger Agreement
On May 26, 2022, VMware entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Broadcom Inc. (“Broadcom”). Under the terms of the Merger Agreement, each share of Class A common stock, par value $0.01 per share, of the Company (“Common Stock”) issued and outstanding immediately prior to the effective time of the transaction will be indirectly converted into the right to receive, at the election of the holder of such share of Common Stock, and subject to proration in accordance with the Merger Agreement as described below: (i) $142.50 per share in cash, without interest (the
8

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
“Cash Consideration”), or (ii) 0.25200 (the “Exchange Ratio”) shares of common stock, par value $0.001 per share, of Broadcom (“Broadcom Common Stock”, and such consideration, the “Stock Consideration”). The stockholder election will be subject to a proration mechanism, such that the total number of shares of Common Stock entitled to receive the Cash Consideration and the total number of shares of Common Stock entitled to receive the Stock Consideration will, in each case, be equal to 50% of the aggregate number of shares of Common Stock issued and outstanding immediately prior to the consummation of the transaction. Holders of Common Stock that do not make an election will be treated as having elected to receive the Cash Consideration or the Stock Consideration in accordance with the proration methodology in the Merger Agreement.
The Merger Agreement contains customary representations, warranties and covenants. The Merger Agreement also contains termination rights for either or each of Broadcom and the Company. If the consummation of the transaction does not occur on or before February 26, 2023 by either party, subject to three extensions of three months each (at either Broadcom’s or the Company’s election) if on such date all of the closing conditions except those relating to regulatory approvals have been satisfied or waived, Broadcom would be required to pay the Company a termination fee of $1.5 billion. Upon termination of the Merger Agreement under certain specified circumstances, including by the Company to enter into a definitive agreement with respect to a superior proposal in accordance with the terms of the Merger Agreement, the Company would be required to pay Broadcom a termination fee in the amount of $1.5 billion.
The MSD Stockholders and the SLP Stockholders have signed voting agreements to vote in favor of the transaction, so long as the VMware Board continues to recommend the proposed transaction with Broadcom. Each such voting agreement will also terminate upon the termination of the Merger Agreement in accordance with its terms.
The transaction, which is expected to be consummated in Broadcom’s fiscal year 2023, is subject to the receipt of regulatory approvals and other customary closing conditions, including approval by VMware shareholders. If the transaction is consummated, the Common Stock will be delisted from the New York Stock Exchange and deregistered under the Securities Exchange Act of 1934, as amended.
Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of VMware and subsidiaries in which VMware has a controlling financial interest. All intercompany transactions and account balances between VMware and its subsidiaries have been eliminated in consolidation. Transactions with Dell and its consolidated subsidiaries are generally settled in cash and are classified on the condensed consolidated statements of cash flows based upon the nature of the underlying transaction. Amounts included in the current portion of due from related parties on the condensed consolidated balance sheets that are unrelated to Dell Financial Services and tax obligations are generally settled in cash within 60 days of each quarter-end.
Use of Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenue and expenses during the reporting periods, and the disclosure of contingent liabilities at the date of the financial statements. Estimates are used for, but not limited to, trade receivable valuation, marketing development funds, expected period of benefit for deferred commissions, useful lives assigned to fixed assets and intangible assets, valuation of goodwill and definite-lived intangibles, income taxes, stock-based compensation and contingencies. Actual results could differ from those estimates. To the extent the Company’s actual results differ materially from those estimates and assumptions, VMware’s future financial statements could be affected. 
New Accounting Pronouncement
In November 2021, the Financial Accounting Standards Board issued an accounting standards update (“ASU”) 2021-10, Government Assistance (Topic 832), requiring annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The new standard is effective for annual periods beginning after December 15, 2021 but may be early adopted. The Company does not expect the adoption of the ASU to have a material impact on the Company’s condensed consolidated financial statements and plans to adopt the standard during fiscal 2023 on a prospective basis.
B. Revenue, Unearned Revenue and Remaining Performance Obligations
Revenue
Contract Assets
A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. Contract assets include fixed-fee professional services where transfer of services has occurred in advance of the Company’s
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VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
right to invoice. Contract assets are classified as accounts receivables upon invoicing. Contract assets are included in other current assets on the condensed consolidated balance sheets. Contract assets were $41 million and $36 million as of July 29, 2022 and January 28, 2022, respectively. Contract asset balances will fluctuate based upon the timing of the transfer of services, billings and customers’ acceptance of contractual milestones.
Contract Liabilities
Contract liabilities consist of unearned revenue, which is generally recorded when VMware has the right to invoice or payments have been received for undelivered products or services.
Customer Deposits
Purchased credits eligible for redemption of VMware’s hosted services (“cloud credits”) are included in customer deposits until the cloud credit is consumed or is contractually committed to a specific hosted service. Cloud credits are redeemable by the customer for the gross value of the hosted offering. Upon contractual commitment for a hosted service, the net value of the cloud credits that are expected to be recognized as revenue when the obligation is fulfilled will be classified as unearned revenue. Customer deposits also include prepayments from customers related to amounts received for contracts that include certain cancellation rights.
As of July 29, 2022, customer deposits related to customer prepayments and cloud credits of $593 million were included in accrued expenses and other, and $168 million were included in other liabilities on the condensed consolidated balance sheets. As of January 28, 2022, customer deposits related to customer prepayments and cloud credits of $470 million were included in accrued expenses and other, and $166 million were included in other liabilities on the condensed consolidated balance sheets.
Deferred Commissions
Deferred commissions are classified as current or non-current based on the duration of the expected period of benefit. Deferred commissions, including the employer portion of payroll taxes, included in other current assets as of July 29, 2022 and January 28, 2022 were $31 million and $17 million, respectively. Deferred commissions included in other assets were $1.3 billion and $1.2 billion as of July 29, 2022 and January 28, 2022, respectively.
Amortization expense for deferred commissions was included in sales and marketing on the condensed consolidated statements of income and was $158 million and $301 million during the three and six months ended July 29, 2022, respectively, and $128 million and $253 million during the three and six months ended July 30, 2021, respectively.
Unearned Revenue
Unearned revenue as of the periods presented consisted of the following (table in millions):
July 29,January 28,
20222022
Unearned license revenue$20 $19 
Unearned subscription and software-as-a-service (“SaaS”) revenue2,952 2,669 
Unearned software maintenance revenue6,903 7,208 
Unearned professional services revenue1,356 1,326 
Total unearned revenue$11,231 $11,222 
Unearned subscription and SaaS revenue is generally recognized over time as customers consume the services or ratably over the term of the subscription, commencing upon provisioning of the service.
Unearned software maintenance revenue is attributable to VMware’s maintenance contracts and is generally recognized ratably over the contract duration. The weighted-average remaining contractual term as of July 29, 2022 was approximately two years. Unearned professional services revenue results primarily from prepaid professional services and is generally recognized as the services are performed.
Total billings and revenue recognized during the three months ended July 29, 2022 were $2.5 billion and $2.2 billion, respectively, and did not include amounts for performance obligations that were fully satisfied upon delivery, such as on-premises licenses. Total billings and revenue recognized during the six months ended July 29, 2022 were each $4.3 billion and did not include amounts for performance obligations that were fully satisfied upon delivery, such as on-premises licenses.
Revenue recognized during the three and six months ended July 30, 2021 was $2.0 billion and $4.0 billion, respectively, and did not include amounts for performance obligations that were fully satisfied upon delivery, such as on-premises licenses.
10

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Remaining Performance Obligations
Remaining performance obligations represent the aggregate amount of the transaction price in contracts allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations include unearned revenue, multi-year contracts with future installment payments and certain unfulfilled orders against accepted non-cancellable customer contracts at the end of any given period.
As of July 29, 2022, the aggregate transaction price allocated to remaining performance obligations was $12.1 billion, of which approximately 56% is expected to be recognized as revenue over the next twelve months and the remainder thereafter. As of January 28, 2022, the aggregate transaction price allocated to remaining performance obligations was $12.0 billion, of which approximately 57% was expected to be recognized as revenue during fiscal 2023 and the remainder thereafter.
C. Related Parties
Transactions with Dell continue to be considered related party transactions following the Spin-Off due to the MSD Stockholders’ and SLP Stockholders’ direct ownership in both VMware and Dell, as well as Mr. Dell’s executive position with Dell.
On November 1, 2021, in connection with the Spin-Off, VMware and Dell entered into the Commercial Framework Agreement to provide a framework under which the Company and Dell will continue their strategic commercial relationship, particularly with respect to projects mutually agreed by the parties as having the potential to accelerate the growth of an industry, product, service or platform that may provide the parties with a strategic opportunity. The Commercial Framework Agreement has an initial term of five years, with automatic one-year renewals occurring annually thereafter, subject to certain terms and conditions.
The information provided below includes a summary of transactions with Dell.
Transactions with Dell
VMware and Dell engaged in the following ongoing related party transactions, which resulted in revenue and receipts, and unearned revenue for VMware:
Pursuant to original equipment manufacturer (“OEM”) and reseller arrangements, Dell integrates or bundles VMware’s products and services with Dell’s products and sells them to end users. Dell also acts as a distributor, purchasing VMware’s standalone products and services for resale to end-user customers through VMware-authorized resellers. Revenue under these arrangements is presented net of related marketing development funds and rebates paid to Dell. In addition, VMware provides professional services to end users based upon contractual agreements with Dell.
Dell purchases products and services from VMware for its internal use.
From time to time, VMware and Dell enter into agreements to collaborate on technology projects, in connection with which Dell pays VMware for services or reimburses VMware for costs incurred by VMware.
During the three and six months ended July 29, 2022, revenue from Dell accounted for 40% and 39% of VMware’s consolidated revenue, respectively. During each of the three and six months ended July 29, 2022, revenue recognized on transactions where Dell acted as an OEM accounted for 13% of total revenue from Dell, and 5% of VMware’s consolidated revenue.
During the three and six months ended July 30, 2021, revenue from Dell accounted for 37% and 36% of VMware’s consolidated revenue, respectively. During the three and six months ended July 30, 2021, revenue recognized on transactions where Dell acted as an OEM accounted for 12% and 13% of total revenue from Dell, respectively, and, for each period, 5% of VMware’s consolidated revenue.
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VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Dell purchases VMware products and services directly from VMware, as well as through VMware’s channel partners. Information about VMware’s revenue and receipts, and unearned revenue from such arrangements, for the periods presented consisted of the following (table in millions):
Revenue and ReceiptsUnearned Revenue
Three Months EndedSix Months EndedAs of
July 29,July 30,July 29,July 30,July 29,January 28,
202220212022202120222022
Reseller revenue$1,313 $1,162 $2,451 $2,198 $5,481 $5,550 
Internal-use revenue15 13 27 25 26 39 
Customer deposits resulting from transactions with Dell were $359 million and $298 million as of July 29, 2022 and January 28, 2022, respectively.
VMware and Dell engaged in the following ongoing related party transactions, which resulted in costs to VMware:
VMware purchases and leases products and purchases services from Dell.
From time to time, VMware and Dell enter into agreements to collaborate on technology projects, in connection with which VMware pays Dell for services provided to VMware by Dell.
In certain geographic regions where VMware does not have an established legal entity, VMware contracts with Dell subsidiaries for support services and support from Dell personnel who are managed by VMware. The costs incurred by Dell on VMware’s behalf related to these employees are charged to VMware with a mark-up intended to approximate costs that would have been incurred had VMware contracted for such services with an unrelated third party. These costs are included as expenses on VMware’s condensed consolidated statements of income and primarily include salaries, benefits, travel and occupancy expenses.
Prior to the Spin-Off, in certain geographic regions, Dell filed a consolidated indirect tax return, which included value added taxes and other indirect taxes collected by VMware from its customers. VMware remitted the indirect taxes to Dell, and Dell remitted the tax payment to the foreign governments on VMware’s behalf.
From time to time, VMware enters into agency arrangements with Dell that enable VMware to sell its subscriptions and services, leveraging the Dell enterprise relationships and end customer contracts.
Information about VMware’s payments for such arrangements during the periods presented consisted of the following (table in millions):
Three Months EndedSix Months Ended
July 29,July 30,July 29,July 30,
2022202120222021
Purchases and leases of products and purchases of services(1)
$53 $61 $95 $107 
Dell subsidiary support and administrative costs10 24 
(1) Amount includes indirect taxes that were remitted to Dell during the periods presented.
VMware also purchases Dell products through Dell’s channel partners, however such amounts were not material during the periods presented.
From time to time, VMware and Dell also enter into joint marketing, sales, branding and product development arrangements, for which both parties may incur costs.
Dell Financial Services (“DFS”)
DFS provides financing to certain of VMware’s end users at the end users’ discretion. Upon acceptance of the financing arrangement by both VMware’s end users and DFS, amounts classified as trade accounts receivable are reclassified to the current portion of due from related parties on the condensed consolidated balance sheets. Revenue recognized on transactions financed through DFS was recorded net of financing fees. Financing fees on arrangements accepted by both parties were $17 million and $15 million during the six months ended July 29, 2022 and July 30, 2021, respectively, and were not material during each of the three months ended July 29, 2022 and July 30, 2021.
12

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Tax Agreements with Dell
Pursuant to the Tax Matters Agreement, effective April 14, 2021 (the “Tax Matters Agreement”), VMware and Dell agreed to terminate the former tax sharing agreement as amended on December 30, 2019 (the “Tax Sharing Agreement”, together with the Tax Matters Agreement and the Letter Agreement (as defined below), the “Tax Agreements”). The Tax Matters Agreement governs the Company’s and Dell’s respective rights and obligations, both for pre- and post-Spin-Off periods, regarding income and other taxes, and related matters, including tax liabilities and benefits, attributes and returns.
As a result of the Spin-Off, VMware is no longer a member of the Dell consolidated tax group, and the Company’s U.S. federal income tax will be reported separately from that of the Dell consolidated tax group. VMware and Dell have agreed to indemnify one another, pursuant to the Tax Matters Agreement, for certain tax liabilities or tax benefits relating to periods prior to the Spin-Off. Certain adjustments to these amounts that will be recognized in future periods will be recorded with an offset to other income (expense), net on the condensed consolidated statements of income. The actual amount that VMware may receive from or pay to Dell could vary depending on the outcome of tax matters arising from Dell’s future tax audits, which may not be resolved for several years.
As of the periods presented, amounts due to and due from Dell pursuant to the Tax Matters Agreement consisted of the following (table in millions):
July 29,January 28,
20222022
Due from related parties:
Current$— $
Non-current189 199
Due to related parties:
Current$115 $61 
Non-current802 909 
Amounts due to Dell pursuant to the Tax Matters Agreement primarily related to VMware’s estimated tax obligation resulting from the mandatory, one-time transition tax on accumulated earnings of foreign subsidiaries (“Transition Tax”) of $445 million and $504 million as of July 29, 2022 and January 28, 2022, respectively. The U.S. Tax Cuts and Jobs Act enacted on December 22, 2017 (the “2017 Tax Act”) included a deferral election for an eight-year installment payment method on the Transition Tax. The Company expects to pay the remainder of its Transition Tax as of July 29, 2022 over a period of three years. In addition, amounts due to Dell included uncertain tax positions of $279 million and $276 million as of July 29, 2022 and January 28, 2022, respectively.
During the three and six months ended July 29, 2022, payments received from Dell pursuant to the Tax Agreements were not material, and payments made to Dell were $59 million. Payments made to Dell pursuant to the Tax Agreements were $73 million and $86 million, respectively, during the three and six months ended July 30, 2021. Payments received from Dell pursuant to the Tax Agreements were $45 million during the six months ended July 30, 2021.
Payments from VMware to Dell under the Tax Agreements relate to VMware’s portion of federal income taxes on Dell’s consolidated tax return, state tax payments for combined states and the estimated tax obligation resulting from the Transition Tax. The timing of the tax payments due to and from Dell is governed by the Tax Agreements. VMware’s portion of the Transition Tax is governed by a letter agreement between Dell, EMC and VMware executed on April 1, 2019 (the “Letter Agreement”).
D. Commitments and Contingencies
Litigation
On March 5, 2020, two purported Pivotal stockholders filed a petition for appraisal in the Delaware Court of Chancery (the “Court”) seeking a judicial determination of the fair value of an aggregate total of 10,000,100 Pivotal shares (the “Appraisal Action”). Separately, on June 4, 2020, purported Pivotal stockholder Kenia Lopez filed a lawsuit in the Court against Dell, VMware, Michael Dell, Robert Mee and Cynthia Gaylor (the “Lopez Action”), which alleges breach of fiduciary duty and aiding and abetting, all tied to VMware’s acquisition of Pivotal. On July 16, 2020, purported Pivotal stockholder Stephanie Howarth filed a similar lawsuit against the same defendants asserting similar claims (the “Howarth Action”). On August 14, 2020, the Court entered an order consolidating the Appraisal Action, the Lopez Action and the Howarth Action into a single action (the “Consolidated Action”) for all purposes including pretrial discovery and trial. On June 23, 2020, the Company made
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VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
a payment of $91 million to the petitioners in the Appraisal Action, which reduces the Company’s exposure to accumulating interest. On May 2, 2022, parties in the Lopez Action agreed to a settlement term sheet, which—if ultimately approved by the court—includes a $43 million settlement payment that will be fully funded by insurance. Accordingly, as of April 29, 2022, an estimated loss accrual of $43 million was recorded to accrued expenses and other on the condensed consolidated balance sheet, with a corresponding asset recorded to other current assets for the amount to be paid by insurance. A trial for the Appraisal Action took place July 6 through July 12, 2022. A post-trial hearing is currently set for December 13, 2022. The Company is unable at this time to assess whether or to what extent it may be found liable in the Appraisal Action and, if found liable, what the damages may be and believes a loss is not probable and reasonably estimable. The Company intends to vigorously defend itself in connection with this matter.
On April 25, 2019, Cirba Inc. and Cirba IP, Inc. (collectively, “Cirba”) sued VMware in the United States District Court for the District of Delaware (the “Delaware Court”) for allegedly infringing two patents and three trademarks. On October 22, 2019, VMware filed a separate lawsuit against Cirba Inc. in the United States District Court for the Eastern District of Virginia for infringing four additional VMware patents, and Cirba filed a counterclaim alleging infringement of an additional Cirba patent. On January 24, 2020, a jury returned a verdict that VMware had willfully infringed Cirba’s two patents and awarded approximately $237 million in damages. VMware accrued a total of $237 million as of January 31, 2020, which reflected the estimated losses that were considered both probable and reasonably estimable at that time. The amount accrued for this matter was included in accrued expenses and other on the consolidated balance sheet as of January 31, 2020 and the charge was included in general and administrative expense on the consolidated statements of income during the year ended January 31, 2020. On December 21, 2020, the Delaware Court granted VMware’s request for a new trial and set aside the verdict and damages award (“Post-Trial Order”). Thereafter, all claims and counterclaims were consolidated into a single action for all purposes, including four patents and three trademark claims asserted by Cirba and eight patents asserted by VMware. The parties are currently in the expert discovery phase of the litigation, with trial currently set for April 2023. Separately, VMware filed challenges with the U.S. Patent and Trademark Office against each of the four patents that are the subject of Cirba’s allegations. All of the challenges were granted and the status of the reviews are as follows: (i) one patent survived the ex parte reexam with all challenged claims remaining valid; (ii) one patent remains under ex parte reexam review; (iii) one patent was found invalid via an inter partes review via a Final Written Decision (which remains subject to appeal) issued by the Patent Trial and Appeal Board; and (iv) one patent is undergoing a post-grant review. As of January 29, 2021, the Company reassessed its estimated loss accrual based on the Post-Trial Order and determined that a loss was no longer probable and reasonably estimable with respect to the consolidated action. Accordingly, the estimated loss accrual of $237 million recorded on the consolidated balance sheets was derecognized, with the credit included in general and administrative expense on the consolidated statements of income during the year ended January 29, 2021. The Company is unable at this time to assess whether, or to what extent, it may be found liable and, if found liable, what the damages may be. The Company intends to vigorously defend against this matter.
In December 2019, the staff of the Enforcement Division of the SEC requested documents and information related to VMware’s backlog and associated accounting and disclosures. VMware is fully cooperating with the SEC and is engaged in discussions with the SEC about a potential resolution. VMware is unable to predict the outcome of this matter at this time.
While VMware believes that it has valid defenses against each of the above legal matters, given the unpredictable nature of legal proceedings, an unfavorable resolution of one or more legal proceedings, claims, or investigations could have a material adverse effect on VMware’s consolidated financial statements.
VMware accrues for a liability when a determination has been made that a loss is both probable and the amount of the loss can be reasonably estimated. If only a range can be estimated and no amount within the range is a better estimate than any other amount, an accrual is recorded for the minimum amount in the range. Significant judgment is required in both the determination that the occurrence of a loss is probable and is reasonably estimable. In making such judgments, VMware considers the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs are generally recognized as expense when incurred.
VMware is also subject to other legal, administrative and regulatory proceedings, claims, demands and investigations in the ordinary course of business or in connection with business mergers and acquisitions, including claims with respect to commercial, contracting and sales practices, product liability, intellectual property, employment, corporate and securities law, class action, whistleblower and other matters. From time to time, VMware also receives inquiries from and has discussions with government entities and stockholders on various matters. As of July 29, 2022, amounts accrued relating to these other matters arising as part of the ordinary course of business were considered not material. VMware does not believe that any liability from any reasonably possible disposition of such claims and litigation, individually or in the aggregate, would have a material adverse effect on its consolidated financial statements.
14

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
E. Definite-Lived Intangible Assets, Net
As of the periods presented, definite-lived intangible assets consisted of the following (amounts in tables in millions):
July 29, 2022
Weighted-Average Useful Lives
(in years)
Gross Carrying AmountAccumulated AmortizationNet Book Value
Purchased technology5.3$810 $(550)$260 
Customer relationships and customer lists11.9641 (339)302 
Trademarks and tradenames7.689 (62)27 
Total definite-lived intangible assets$1,540 $(951)$589 
January 28, 2022
Weighted-Average Useful Lives
(in years)
Gross Carrying AmountAccumulated AmortizationNet Book Value
Purchased technology5.3$836 $(501)$335 
Customer relationships and customer lists11.5721 (376)345 
Trademarks and tradenames7.7131 (97)34 
Total definite-lived intangible assets$1,688 $(974)$714 
Amortization expense on definite-lived intangible assets was $63 million and $129 million during the three and six months ended July 29, 2022, respectively, and $77 million and $154 million during the three and six months ended July 30, 2021, respectively.
Based on intangible assets recorded as of July 29, 2022, and assuming no subsequent additions, dispositions or impairment of underlying assets, the remaining estimated annual amortization expense over the next five fiscal years and thereafter is expected to be as follows (table in millions):
Remainder of 2023$125 
2024202 
2025109 
202669 
202739 
Thereafter45 
Total$589 
F. Net Income Per Share
Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding and potentially dilutive securities outstanding during the period, as calculated using the treasury stock method. Potentially dilutive securities primarily include unvested restricted stock, which includes restricted stock unit (“RSU”) and performance stock unit (“PSU”) awards, and stock options, including purchase options under VMware’s employee stock purchase plan. Securities are excluded from the computation of diluted net income per share if their effect would be anti-dilutive.
15

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table sets forth the computations of basic and diluted net income per share during the periods presented (table in millions, except per share amounts and shares in thousands):
Three Months EndedSix Months Ended
 July 29,July 30,July 29,July 30,
 2022202120222021
Net income$347 $411 $589 $836 
Weighted-average shares, basic422,002 419,355 421,294 419,235 
Effect of other dilutive securities2,123 3,447 2,267 3,184 
Weighted-average shares, diluted424,125 422,802 423,561 422,419 
Net income per weighted-average share, basic$0.82 $0.98 $1.40 $1.99 
Net income per weighted-average share, diluted$0.82 $0.97 $1.39 $1.98 
The following table sets forth the weighted-average common share equivalents of Common Stock that were excluded from the diluted net income per share calculations during the periods presented because their effect would have been anti-dilutive (shares in thousands):
Three Months EndedSix Months Ended
July 29,July 30,July 29,July 30,
2022202120222021
Anti-dilutive securities:
Employee stock options159 126 22 
RSUs876 237 679 375 
Total1,035 240 805 397 
G. Realignment
During the second quarter of fiscal 2023, in response to Russian military actions in Ukraine, VMware approved a plan to cease business operations in Russia. As a result of this action, approximately 80 positions were eliminated during the second quarter of fiscal 2023. Related realignment expenses recognized on the condensed consolidated statements of income during the three and six months ended July 29, 2022 were not significant and primarily included severance-related costs. Actions associated with this plan are expected to be substantially complete by the end of fiscal 2023.
H. Cash, Cash Equivalents, Restricted Cash and Short-Term Investments
Cash and Cash Equivalents
Cash and cash equivalents totaled $3.2 billion and $3.6 billion as of July 29, 2022 and January 28, 2022, respectively. Cash equivalents were $2.5 billion as of July 29, 2022 and consisted of money-market funds of $2.5 billion and time deposits of $43 million. Cash equivalents were $3.0 billion as of January 28, 2022 and consisted of money-market funds of $3.0 billion and time deposits of $34 million.
Restricted Cash
The following table provides a reconciliation of the Company’s cash and cash equivalents, and current and non-current portion of restricted cash reported on the condensed consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash as of the periods presented (table in millions):
July 29,January 28,
20222022
Cash and cash equivalents$3,242 $3,614 
Restricted cash within other current assets26 43 
Restricted cash within other assets
Total cash, cash equivalents and restricted cash$3,272 $3,663 
16

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Amounts included in restricted cash primarily relate to certain employee-related benefits, as well as amounts related to installment payments to certain employees as part of acquisitions, subject to the achievement of specified future employment conditions.
Short-Term Investments
As of January 28, 2022, short-term investments totaled $19 million and consisted of marketable equity securities. These short-term investments were sold during the three months ended April 29, 2022. Refer to Note J for more information regarding the Company’s marketable equity securities.
I. Debt
Unsecured Senior Notes
On August 2, 2021, VMware issued five series of unsecured senior notes pursuant to a public debt offering (the “2021 Senior Notes”). The proceeds from the 2021 Senior Notes were $5.9 billion, net of the debt discount of $11 million and debt issuance costs of $47 million.
VMware also issued unsecured senior notes on April 7, 2020 (the “2020 Senior Notes”) and on August 21, 2017 (the “2017 Senior Notes”, collectively with the 2020 Senior Notes and 2021 Senior Notes, the “Senior Notes”).
The carrying value of the Senior Notes as of the periods presented was as follows (amounts in millions):
July 29,January 28,Effective Interest Rate
20222022
2017 Senior Notes:
3.90% Senior Note Due August 21, 2027
$1,250 $1,250 4.05%
2020 Senior Notes:
4.50% Senior Note Due May 15, 2025
750 750 4.70%
4.65% Senior Note Due May 15, 2027
500 500 4.80%
4.70% Senior Note Due May 15, 2030
750 750 4.86%
2021 Senior Notes:
0.60% Senior Note Due August 15, 2023
1,000 1,000 0.95%
1.00% Senior Note Due August 15, 2024
1,250 1,250 1.23%
1.40% Senior Note Due August 15, 2026
1,500 1,500 1.61%
1.80% Senior Note Due August 15, 2028
750 750 2.01%
2.20% Senior Note Due August 15, 2031
1,500 1,500 2.32%
Total principal amount9,250 9,250 
Less: unamortized discount(14)(15)
Less: unamortized debt issuance costs(53)(61)
Long-term debt$9,183 $9,174 
Beginning on February 15, 2022, interest on the 2021 Senior Notes became payable semiannually in arrears, on February 15 and August 15 of each year. Beginning on November 15, 2020, interest on the 2020 Senior Notes became payable semiannually in arrears, on May 15 and November 15 of each year. The interest rate on the 2020 Senior Notes is subject to adjustment based on certain rating events. Beginning on February 21, 2018, interest on the 2017 Senior Notes became payable semiannually in arrears, on February 21 and August 21 of each year. Interest expense was $61 million and $123 million during the three and six months ended July 29, 2022, respectively, and $48 million and $97 million during the three and six months ended July 30, 2021, respectively. Interest expense, which included amortization of discount and issuance costs, was recognized on the condensed consolidated statements of income. The discount and issuance costs are amortized over the term of the Senior Notes on a straight-line basis, which approximates the effective interest method.
The Senior Notes are redeemable in whole at any time or in part from time to time at VMware’s option and may be subject to a make-whole premium. In addition, upon the occurrence of certain change-of-control triggering events and certain downgrades of the ratings on the Senior Notes, VMware may be required to repurchase the notes at a repurchase price equal to 101% of the aggregate principal plus any accrued and unpaid interest on the date of repurchase. The Senior Notes rank equally in right of payment with VMware’s other unsecured and unsubordinated indebtedness and contain restrictive covenants that, in
17

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
certain circumstances, limit VMware’s ability to create certain liens, to enter into certain sale and leaseback transactions and to consolidate, merge, sell or otherwise dispose of all or substantially all of VMware’s assets.
The future principal payments for the Senior Notes as of July 29, 2022 were as follows (amounts in millions):
Remainder of 2023$— 
20241,000 
20251,250 
2026750 
20271,500 
Thereafter4,750 
Total$9,250 
Senior Unsecured Term Loan Facility
On September 2, 2021, VMware received commitments from financial institutions for a three-year senior unsecured term loan facility and a five-year senior unsecured term loan facility that provided the Company with a one-time aggregate borrowing capacity of up to $4.0 billion (the “2021 Term Loan”). The Company drew down an aggregate of $4 billion on November 1, 2021 and has since repaid $750 million on July 6, 2022, $750 million on April 4, 2022 and $500 million on January 25, 2022. As of July 29, 2022 and January 28, 2022, the outstanding balance on the 2021 Term Loan of $2.0 billion and $3.5 billion, net of unamortized debt issuance costs, respectively, was included in long-term debt on the condensed consolidated balance sheets. As of July 29, 2022, the weighted-average interest rate on the outstanding 2021 Term Loan was 2.68%.
The 2021 Term Loan contains certain representations, warranties and covenants. Interest expense for the 2021 Term Loan, including amortization of issuance costs, was $22 million during the six months ended July 29, 2022 and was not significant during the three months ended July 29, 2022.
Revolving Credit Facility
On September 2, 2021, VMware entered into an unsecured credit agreement establishing a revolving credit facility with a syndicate of lenders that provides the Company with a borrowing capacity of up to $1.5 billion for general corporate purposes (the “2021 Revolving Credit Facility”). Commitments under the 2021 Revolving Credit Facility are available for a period of five years, which may be extended, subject to the satisfaction of certain conditions, by up to two one-year periods. As of July 29, 2022, there was no outstanding borrowing under the 2021 Revolving Credit Facility. The 2021 Revolving Credit Facility contains certain representations, warranties and covenants. Commitment fees, interest rates and other terms of borrowing under the 2021 Revolving Credit Facility may vary based on VMware’s external credit ratings. The amount incurred in connection with the ongoing commitment fee, which is payable quarterly in arrears, was not significant during the three and six months ended July 29, 2022.
J. Fair Value Measurements
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
Certain financial assets and liabilities are measured at fair value on a recurring basis. VMware determines fair value using the following hierarchy:
Level 1 - Quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than Level 1 inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
VMware did not have any significant assets or liabilities that were classified as Level 3 of the fair value hierarchy for the periods presented, and there have been no transfers between fair value measurement levels during the periods presented.
18

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following tables set forth the fair value hierarchy of VMware’s cash equivalents and short-term investments that were required to be measured at fair value as of the periods presented (tables in millions):
 July 29, 2022
 Level 1Level 2Total
Cash equivalents:
Money-market funds$2,498 $— $2,498 
Time deposits(1)
— 43 43 
Total cash equivalents$2,498 $43 $2,541 
 January 28, 2022
 Level 1Level 2Total
Cash equivalents:
Money-market funds$2,998 $— $2,998 
Time deposits(1)
— 34 34 
Total cash equivalents$2,998 $34 $3,032 
Short-term investments:
Marketable equity securities$19 $— $19 
Total short-term investments$19 $— $19 
(1) Time deposits were valued at amortized cost, which approximated fair value.
The Senior Notes and the 2021 Term Loan were not recorded at fair value. The fair value of the Senior Notes was approximately $8.6 billion and $9.3 billion as of July 29, 2022 and January 28, 2022, respectively. The fair value of the 2021 Term Loan approximated its carrying value as of July 29, 2022 and January 28, 2022. Fair value for each of the Senior Notes and the 2021 Term Loan was estimated primarily based on observable market interest rates (Level 2 inputs).
VMware offers a non-qualified deferred compensation plan (the “NQDC Program”) for eligible employees, which allows participants to defer payment of part or all of their compensation. There is no net impact to the condensed consolidated statements of income under the NQDC Program since changes in the fair value of the assets offset changes in the fair value of the liabilities. As such, assets and liabilities associated with the NQDC Program have not been included in the above tables. Assets associated with the NQDC Program were the same as the liabilities at $165 million and $162 million as of July 29, 2022 and January 28, 2022, respectively, and were included in other assets on the condensed consolidated balance sheets. Liabilities associated with the NQDC Program were included in accrued expenses and other of $16 million and in other liabilities of $149 million on the condensed consolidated balance sheets as of July 29, 2022. Liabilities associated with the NQDC Program were included in accrued expenses and other of $16 million and in other liabilities of $146 million on the condensed consolidated balance sheets as of January 28, 2022.
Equity Securities With a Readily Determinable Fair Value
VMware’s equity securities included an investment in a company that completed its initial public offering during the third quarter of fiscal 2021. The fair value of the investment was based on quoted prices for identical assets in an active market (Level 1). As of January 28, 2022, the fair value of the investment was $19 million and was included in short-term investments on the condensed consolidated balance sheets. During the three months ended April 29, 2022, VMware sold the entire investment which had a carrying value of $19 million at the time of sale.
The carrying value at the time of sale for the investment sold during the three and six months ended July 30, 2021 was $28 million and $37 million, respectively. The gain or loss recognized on the investments sold during the three months ended July 30, 2021, as well as the six months ended July 29, 2022 and July 30, 2021, was not significant. During the three and six months ended July 30, 2021, VMware recognized unrealized losses of $10 million and $35 million, respectively, on the investment still held as of July 30, 2021. All gains and losses on the investment, whether realized or unrealized, are recognized in other income (expense), net on the condensed consolidated statements of income.
19

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Equity Securities Without a Readily Determinable Fair Value
VMware’s equity securities also include investments in privately held companies, which do not have a readily determinable fair value. The carrying value of investments in privately held companies is measured at cost, less impairment, if any, adjusted upward or downward for observable price changes in orderly transactions for the identical or a similar security of the same issuer. As of July 29, 2022 and January 28, 2022, investments in privately held companies, which consisted primarily of equity securities, had a carrying value of $92 million and $163 million, respectively, and were included in other assets on the condensed consolidated balance sheets.
During the three and six months ended July 29, 2022, VMware sold certain investments in privately held companies which had an aggregate carrying value at the time of sale of $82 million and $88 million, respectively. The loss recognized on the investments sold during the three and six months ended July 29, 2022 was not significant. During the three and six months ended July 29, 2022, gross upward and downward adjustments recognized on securities still held as of July 29, 2022 were not significant. During the three and six months ended July 30, 2021, gross upward adjustments recognized on securities still held as of July 30, 2021 were $11 million.
Unrealized gains, net recognized on securities still held as of July 29, 2022 and July 30, 2021 were not significant during the three and six months ended July 29, 2022 and July 30, 2021, respectively. All gains and losses on these securities, whether realized or unrealized, were recognized in other income (expense), net on the condensed consolidated statements of income.
K. Derivatives and Hedging Activities
VMware conducts business on a global basis in multiple foreign currencies, subjecting the Company to foreign currency risk. To mitigate a portion of this risk, VMware utilizes hedging contracts as described below, which potentially expose the Company to credit risk to the extent that the counterparties may be unable to meet the terms of the agreements. VMware manages counterparty risk by seeking counterparties of high credit quality and by monitoring credit ratings, credit spreads and other relevant public information about its counterparties. VMware does not, and does not intend to, use derivative instruments for trading or speculative purposes.
Cash Flow Hedges
To mitigate its exposure to foreign currency fluctuations resulting from certain operating expenses denominated in certain foreign currencies, VMware enters into forward contracts that are designated as cash flow hedging instruments as the accounting criteria for such designation are met. Therefore, the effective portion of gains or losses resulting from changes in the fair value of these instruments is initially reported in accumulated other comprehensive loss on the condensed consolidated balance sheets and is subsequently reclassified to the related operating expense line item on the condensed consolidated statements of income in the same period that the underlying expenses are incurred. During the three and six months ended July 29, 2022 and July 30, 2021, the effective portion of gains or losses reclassified to the condensed consolidated statements of income was not significant to each of the individual functional line items, as well as in aggregate. Interest charges or forward points on VMware’s forward contracts were excluded from the assessment of hedge effectiveness and were recorded to the related operating expense line item on the condensed consolidated statements of income in the same period that the interest charges are incurred.
These forward contracts have maturities of fourteen months or less, and as of July 29, 2022 and January 28, 2022, outstanding forward contracts had a total notional value of $339 million and $642 million, respectively. The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract. The fair value of these forward contracts was not significant as of July 29, 2022 and January 28, 2022.
During the three and six months ended July 29, 2022 and July 30, 2021, all cash flow hedges were considered effective.
Forward Contracts Not Designated as Hedges
VMware has established a program that utilizes forward contracts to offset the foreign currency risk associated with net outstanding monetary asset and liability positions. These forward contracts are not designated as hedging instruments under applicable accounting guidance, and therefore, all changes in the fair value of the forward contracts are reported in other income (expense), net on the condensed consolidated statements of income.
These forward contracts generally have a maturity of one month, and as of July 29, 2022 and January 28, 2022, outstanding forward contracts had a total notional value of $1.1 billion and $1.5 billion, respectively. The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract. The fair value of these forward contracts was not significant as of July 29, 2022 and January 28, 2022.
20

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Gains related to the settlement of forward contracts were not significant and $56 million during the three and six months ended July 29, 2022, respectively. Gains related to the settlement of forward contracts were $11 million and $15 million during the three and six months ended July 30, 2021, respectively. Gains and losses are recorded in other income (expense), net on the condensed consolidated statements of income.
The combined gains and losses related to the settlement of forward contracts and the underlying foreign currency denominated assets and liabilities resulted in net losses of $20 million and $29 million during the three and six months ended July 29, 2022, respectively, and were not significant during the three and six months ended July 30, 2021. Net gains and losses are recorded in other income (expense), net on the condensed consolidated statements of income.
L. Leases
VMware has operating and finance leases primarily related to office facilities and equipment, which have remaining lease terms of one month to 24 years.
The components of lease expense during the periods presented were as follows (table in millions):
Three Months EndedSix Months Ended
July 29,July 30,July 29,July 30,
2022202120222021
Operating lease expense$48 $48 $99 $96 
Finance lease expense:
Amortization of right-of-use (“ROU”) assets
Interest on lease liabilities— — 
 Total finance lease expense
Short-term lease expense— — — 
Variable lease expense15 15 
 Total lease expense$59 $58 $118 $116 
Lease expense incurred for arrangements with Dell was not significant during the periods presented.
The Company subleases certain of its leased office space to third parties when it determines there is excess leased capacity. Sublease income was not significant during each of the three months ended July 29, 2022 and July 30, 2021, and was not significant and $11 million during the six months ended July 29, 2022 and July 30, 2021, respectively.
Supplemental cash flow information related to operating and finance leases during the periods presented was as follows (table in millions):
Six Months Ended
July 29,July 30,
20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$86 $86 
Operating cash flows from finance leases
Financing cash flows from finance leases
ROU assets obtained in exchange for lease liabilities:
Operating leases$53 $112 
21

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Supplemental balance sheet information related to operating and finance leases as of the periods presented was as follows (table in millions):
July 29, 2022
Operating LeasesFinance Leases
ROU assets, non-current(1)
$1,034 $43 
Lease liabilities, current(2)
$143 $
Lease liabilities, non-current(3)
889 37 
Total lease liabilities$1,032 $43 
January 28, 2022
Operating LeasesFinance Leases
ROU assets, non-current(1)
$1,062 $46 
Lease liabilities, current(2)
$145 $
Lease liabilities, non-current(3)
927 43 
Total lease liabilities$1,072 $48 
(1) ROU assets for operating leases are included in other assets, and ROU assets for finance leases are included in property and equipment, net, on the condensed consolidated balance sheets.
(2) Current lease liabilities are included primarily in accrued expenses and other on the condensed consolidated balance sheets.
(3) Non-current operating lease liabilities are presented as operating lease liabilities on the condensed consolidated balance sheets. Non-current finance lease liabilities are included in other liabilities on the condensed consolidated balance sheets.
Lease term and discount rate related to operating and finance leases as of the periods presented were as follows:
July 29,January 28,
20222022
Weighted-average remaining lease term (in years)
Operating leases11.911.9
Finance leases6.87.3
Weighted-average discount rate
Operating leases3.4 %3.2 %
Finance leases2.9 %2.9 %
22

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following represents VMware’s future minimum lease payments under non-cancellable operating and finance leases as of July 29, 2022 (table in millions):
Operating LeasesFinance Leases
Remainder of 2023$89 $
2024168 
2025126 
2026124 
2027106 
Thereafter689 18 
Total future minimum lease payments1,302 48 
Less: Imputed interest(270)(5)
Total lease liabilities(1)
$1,032 $43 
(1) Total lease liabilities as of July 29, 2022 excluded legally binding lease payments for leases signed but not yet commenced of $52 million.
The amount of the future operating lease commitments after fiscal 2027 primarily consists of the ground leases on VMware’s Palo Alto, California headquarter facilities, which expire in fiscal 2047. As several of VMware’s operating leases are payable in foreign currencies, the operating lease payments may fluctuate in response to changes in the exchange rate between the U.S. dollar and the foreign currencies in which the commitments are payable.
M. Stockholders’ Equity
VMware Stock Repurchases
VMware purchases stock from time to time in open market transactions, subject to market conditions. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including VMware’s stock price, cash requirements for operations and business combinations, corporate, legal and regulatory requirements and other market and economic conditions. VMware is not obligated to purchase any shares under its stock repurchase programs. Purchases may be discontinued at any time VMware believes additional purchases are not warranted. All shares repurchased under VMware’s stock repurchase programs are retired.
On October 7, 2021, VMware authorized a new repurchase program of up to $2.0 billion of Common Stock through the end of fiscal 2024, effective on November 1, 2021. As of July 29, 2022, the cumulative authorized amount remaining for stock repurchases was $1.6 billion. In connection with its entry into the Merger Agreement, VMware suspended its stock repurchase program and did not repurchase Common Stock during the three months ended July 29, 2022.
The following table summarizes stock repurchase activity during the periods presented (aggregate purchase price in millions, shares in thousands):
Three Months Ended
Six Months Ended
July 29,July 30,July 29,July 30,
2022202120222021
Aggregate purchase price$— $358 $89 $729 
Common Stock repurchased— 2,243 803 4,743 
Weighted-average price per share$— $159.73 $111.33 $153.77 
VMware Restricted Stock
VMware’s restricted stock primarily consists of RSU awards granted to employees. The value of an RSU grant is based on VMware’s stock price on the date of the grant. The shares underlying the RSU awards are not issued until the RSUs vest. Upon vesting, each RSU converts into one share of VMware’s Common Stock.
VMware’s restricted stock also includes PSU awards granted to certain VMware executives and employees. PSU awards have performance conditions and, in certain cases, a time- or market-based vesting component. Upon vesting, PSU awards convert into VMware’s Common Stock at various ratios ranging from 0.1 to 2.0 shares per PSU, depending upon the degree of
23

VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
achievement of the performance- or market-based target designated by each award. If minimum performance thresholds are not achieved, then no shares are issued.
The following table summarizes restricted stock activity since January 28, 2022 (units in thousands):
Number of UnitsWeighted-Average Grant Date Fair Value
(per unit)
Outstanding, January 28, 2022
23,002 $123.06 
Granted10,458 114.74 
Vested(5,002)124.22 
Forfeited(2,013)124.59 
Outstanding, July 29, 2022
26,445 119.41 
The aggregate vesting date fair value of VMware’s restricted stock that vested during the six months ended July 29, 2022 was $597 million. As of July 29, 2022, restricted stock representing 26.4 million shares of VMware’s Common Stock were outstanding, with an aggregate intrinsic value of $3.1 billion based on VMware’s closing stock price as of July 29, 2022.
VMware Employee Stock Purchase Plan
In connection with its entry into the Merger Agreement, VMware suspended its 2007 Employee Stock Purchase Plan effective September 1, 2022.
Net Excess Tax Benefits and Tax Deficiencies
Net excess tax benefits and tax deficiencies recognized in connection with stock-based awards are included in income tax provision on the condensed consolidated statements of income. Net tax deficiencies recognized during the three and six months ended July 29, 2022 were not significant. During the three and six months ended July 30, 2021, net excess tax benefits were $13 million and $17 million, respectively.
N. Segment Information
VMware operates in one reportable operating segment; thus, all required financial segment information is included in the condensed consolidated financial statements. An operating segment is defined as the components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker in order to allocate resources and assess performance. VMware’s chief operating decision maker allocates resources and assesses performance based upon discrete financial information at the consolidated level.
Revenue by type during the periods presented was as follows (table in millions):
Three Months EndedSix Months Ended
July 29,July 30,July 29,July 30,
 2022202120222021
Revenue:
License$796 $738 $1,369 $1,384 
Subscription and SaaS943 776 1,842 1,516 
Total license and subscription and SaaS1,739 1,514 3,211 2,900 
Services:
Software maintenance1,299 1,336 2,609 2,657 
Professional services298 288 604 575 
Total services1,597 1,624 3,213 3,232 
Total revenue$3,336 $3,138 $6,424 $6,132 
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VMware, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Revenue by geographic area during the periods presented was as follows (table in millions):
Three Months EndedSix Months Ended
July 29,July 30,July 29,July 30,
 2022202120222021
United States$1,648 $1,539 $3,166 $3,005 
International1,688 1,599 3,258 3,127 
Total$3,336 $3,138 $6,424 $6,132 
Revenue by geographic area is based on the ship-to addresses of VMware’s customers. No individual country other than the U.S. accounted for 10% or more of revenue during the three and six months ended July 29, 2022 and July 30, 2021.
Long-lived assets by geographic area, which primarily include property and equipment, net, as of the periods presented were as follows (table in millions):
July 29,January 28,
20222022
United States$872 $882 
International246 241 
Total$1,118 $1,123 
As of July 29, 2022, the U.S. and India each accounted for more than 10% of these assets, with India accounting for 11% of these assets. No individual country other than the U.S. accounted for 10% or more of these assets as of January 28, 2022.
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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management’s discussion and analysis is provided in addition to the accompanying condensed consolidated financial statements and notes to assist in understanding our results of operations and financial condition. Financial information as of July 29, 2022 should be read in conjunction with our consolidated financial statements for the year ended January 28, 2022 contained in our Annual Report on Form 10-K filed on March 24, 2022.
Our fiscal year is the 52 or 53 weeks ending on the Friday nearest to January 31 of each year. We refer to our fiscal years ending February 2, 2024 and February 3, 2023, and fiscal year ended January 28, 2022 as “fiscal 2024,” “fiscal 2023” and “fiscal 2022,” respectively. Fiscal 2023 is a 53-week fiscal year, in which the first three quarters each has 13 weeks while the fourth quarter has 14 weeks. Fiscal 2024 and fiscal 2022 are each 52-week fiscal years.
Period-over-period changes are calculated based upon the respective underlying non-rounded data. Unless the context requires otherwise, we are referring to VMware, Inc. and its consolidated subsidiaries when we use the terms “VMware,” the “Company,” “we,” “our” or “us.”
Overview
We originally pioneered the development and application of virtualization technologies with x86 server-based computing, separating application software from the underlying hardware, and then evolved to become the private cloud and mobility management leader. Building upon that leadership, we are focused on becoming the multi-cloud leader. Information technology (“IT”) driven innovation continues to disrupt markets and industries. Technologies emerge faster than organizations can absorb, creating increasingly complex environments. Organizations’ IT departments and corporate divisions are working at an accelerated pace to harness new technologies, platforms and cloud models, ultimately guiding businesses and their product teams through a digital transformation. To take on these challenges, we are helping customers drive their multi-cloud strategy by providing the multi-cloud platform for all applications, enabling digital innovation and enterprise control.
Our portfolio supports and addresses our customers’ key priorities, including modernizing their applications, managing multi-cloud environments, accelerating their cloud journey, modernizing the network using commodity hardware, embracing zero-trust security and empowering anywhere workspaces. We enable digital transformations of customers’ applications, infrastructure and operations for their constantly evolving business and employee needs.
End users can purchase the full breadth of our subscription, software-as-a-service (“SaaS”), license and services portfolio through discrete purchases or through enterprise agreements (“EAs”). EAs are sold to our direct customers and through channel partners and can include our license, multi-year maintenance and support, subscription and SaaS offerings.
During the six months ended July 29, 2022, we continued to see an increase in the portion of our sales occurring through our subscription and SaaS offerings compared to the portion of our on-premises solutions sold as perpetual licenses. We expect this trend to continue, and as a result, a greater portion of our revenue will be recognized over time as subscription and SaaS revenue rather than license revenue, which is typically recognized in the fiscal period in which sales occur. As this trend continues, the rate of growth in our license revenue, which has historically been viewed as a leading indicator of our business performance, has and will likely continue to be less relevant on a standalone basis, and we believe that the overall growth rate of our combined license and subscription and SaaS revenue and annual recurring revenue for subscription and SaaS, as well as the growth in the current portion of our remaining performance obligations, will become better indicators of our future growth prospects. In addition, we expect our operating margin to be negatively impacted in fiscal 2023 as a result of our incremental investment in our subscription and SaaS portfolio.
Broadcom Merger Agreement
On May 26, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Broadcom Inc. (“Broadcom”). Under the terms of the Merger Agreement, each share of our Class A common stock (“Common Stock”), par value $0.01 per share, issued and outstanding immediately prior to the effective time of the transaction will be indirectly converted into the right to receive, at the election of the holder of such share of Common Stock, and subject to proration in accordance with the Merger Agreement as described below: (i) $142.50 per share in cash, without interest (the “Cash Consideration”), or (ii) 0.25200 (the “Exchange Ratio”) shares of common stock, par value $0.001 per share, of Broadcom (“Broadcom Common Stock”, and such consideration, the “Stock Consideration”). The stockholder election will be subject to a proration mechanism, such that the total number of shares of Common Stock entitled to receive the Cash Consideration, and the total number of shares of Common Stock entitled to receive the Stock Consideration, will, in each case, be equal to 50% of the aggregate number of shares of Common Stock issued and outstanding immediately prior to the consummation of the transaction. Holders of Common Stock that do not make an election will be treated as having elected to receive the Cash Consideration or the Stock Consideration in accordance with the proration methodology in the Merger Agreement.
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Table of Contents
Entities affiliated with Michael Dell (the “MSD Stockholders”) and entities affiliated with Silver Lake Partners (the “SLP Stockholders”), which own 40.1% and 9.9%, as of July 29, 2022, of our shares outstanding, respectively, have signed voting agreements to vote in favor of the transaction, so long as our Board continues to recommend the proposed transaction with Broadcom. Each such voting agreement will also terminate upon the termination of the Merger Agreement in accordance with its terms.
The transaction, which is expected to be consummated in Broadcom’s fiscal year 2023, is subject to the receipt of regulatory approvals and other customary closing conditions, including approval by our shareholders. If the transaction is consummated, the Common Stock will be delisted from the New York Stock Exchange and deregistered under the Securities Exchange Act of 1934, as amended.
Business Operations in Russia
In response to Russian military actions in Ukraine, we suspended sales and services in Russia and Belarus, including support on existing contracts and professional services in the first quarter of fiscal 2023. Furthermore, the United States (“U.S.”) and other countries have imposed sanctions on Russia that have impacted our future revenue streams from affected customers. During the second quarter of fiscal 2023 we ceased our business operations in Russia entirely.
The impact of these events on our condensed consolidated financial statements during the first half of fiscal 2023 was not material as a percentage of total consolidated revenue, and we do not expect the impact to be material in future periods. We do not expect the cessation of business operations will have an impact on our existing contracts with customers in Russia and Belarus if U.S. and international restrictions and sanctions are lifted. We continue to closely monitor the ongoing situation in Russia and Belarus.
Results of Operations
Approximately 70% of our sales are denominated in the U.S. dollar. In certain countries, however, we also invoice and collect in various foreign currencies, principally euro, British pound, Japanese yen, Australian dollar and Chinese renminbi. In addition, we incur and pay operating expenses in currencies other than the U.S. dollar. As a result, our financial statements, including our revenue, operating expenses, unearned revenue and the resulting cash flows derived from the U.S. dollar equivalent of foreign currency transactions, are affected by foreign exchange fluctuations.
Revenue
Our revenue during the periods presented was as follows (dollars in millions): 
Three Months EndedSix Months Ended
July 29,July 30,July 29,July 30,
 20222021$ Change% Change20222021$ Change% Change
Revenue:
License$796 $738 $58 %$1,369 $1,384 $(15)(1)%
Subscription and SaaS943 776 167 22 1,842 1,516 326 21 
Total license and subscription and SaaS1,739 1,514 225 15 3,211 2,900 311 11 
Services:
Software maintenance1,299 1,336 (37)(3)2,609 2,657 (48)(2)
Professional services298 288 604 575 30 
Total services1,597 1,624 (28)(2)3,213 3,232 (18)(1)
Total revenue$3,336 $3,138 $198 $6,424 $6,132 $292 
Revenue:
United States$1,648 $1,539 $109 %$3,166 $3,005 $161 %
International1,688 1,599 89 3,258 3,127 131 
Total revenue$3,336 $3,138 $198