Cover Page
Cover Page - USD ($) $ in Billions | 12 Months Ended | ||
Jan. 29, 2021 | Mar. 16, 2021 | Jul. 31, 2020 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Jan. 29, 2021 | ||
Current Fiscal Year End Date | --01-29 | ||
Document Transition Report | false | ||
Entity File Number | 001-33622 | ||
Entity Registrant Name | VMWARE, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 94-3292913 | ||
Entity Address, Address Line One | 3401 Hillview Avenue | ||
Entity Address, City or Town | Palo Alto, | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 94304 | ||
City Area Code | 650 | ||
Local Phone Number | 427-5000 | ||
Title of 12(b) Security | Class A common stock | ||
Trading Symbol | VMW | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 11.4 | ||
Entity Central Index Key | 0001124610 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE Information required in response to Part III of Form 10-K (Items 10, 11, 12, 13 and 14) is hereby incorporated by reference to portions of the registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held in 2021. The Proxy Statement will be filed by the registrant with the Securities and Exchange Commission no later than 120 days after the end of the registrant’s fiscal year ended January 29, 2021. | ||
Class A Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 112,011,150 | ||
Class B Convertible Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 307,221,836 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | |||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | ||
Revenue: | ||||
Revenue | [1] | $ 11,767 | $ 10,811 | $ 9,613 |
Operating expenses: | ||||
Research and development | [2] | 2,816 | 2,522 | 2,173 |
Sales and marketing | [2] | 3,711 | 3,677 | 3,230 |
General and administrative | [2] | 767 | 1,293 | 846 |
Realignment | [2] | 42 | 79 | 9 |
Operating income | 2,388 | 1,441 | 1,803 | |
Investment income | 7 | 60 | 161 | |
Interest expense | (204) | (149) | (134) | |
Other income (expense), net | 191 | 86 | (1) | |
Total income before income tax | 2,382 | 1,438 | 1,829 | |
Income tax provision (benefit) | 324 | (4,918) | 239 | |
Net income | 2,058 | 6,356 | 1,590 | |
Less: Net loss attributable to non-controlling interests | 0 | (56) | (60) | |
Net income attributable to VMware, Inc. | $ 2,058 | $ 6,412 | $ 1,650 | |
Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic for Classes A and B (in USD per share) | $ 4.90 | $ 15.37 | $ 3.99 | |
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B (in USD per share) | $ 4.86 | $ 15.08 | $ 3.92 | |
Weighted-average shares, basic for Classes A and B (in shares) | 419,841 | 417,058 | 413,769 | |
Weighted-average shares, diluted for Classes A and B (in shares) | 423,240 | 425,235 | 421,131 | |
License | ||||
Revenue: | ||||
Revenue | [1] | $ 3,033 | $ 3,181 | $ 3,042 |
Operating expenses: | ||||
Cost of revenue | [2] | 163 | 166 | 150 |
Subscription and SaaS | ||||
Revenue: | ||||
Revenue | [1] | 2,587 | 1,877 | 1,303 |
Operating expenses: | ||||
Cost of revenue | [2] | 588 | 400 | 280 |
Services | ||||
Revenue: | ||||
Revenue | [1] | 6,147 | 5,753 | 5,268 |
Operating expenses: | ||||
Cost of revenue | [2] | $ 1,292 | $ 1,233 | $ 1,122 |
[1] | Includes related party revenue as follows (refer to Note D): License $ 1,598 $ 1,569 $ 1,176 Subscription and SaaS 524 342 217 Services 1,994 1,459 1,003 | |||
[2] | Includes stock-based compensation as follows: Cost of license revenue $ 1 $ 1 $ 1 Cost of subscription and SaaS revenue 19 13 7 Cost of services revenue 99 83 58 Research and development 524 459 391 Sales and marketing 322 293 226 General and administrative 157 168 117 |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | |||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | ||
Revenue | [1] | $ 11,767 | $ 10,811 | $ 9,613 |
Stock-based compensation | 1,122 | 1,017 | 800 | |
Cost of license revenue | ||||
Stock-based compensation | 1 | 1 | 1 | |
Cost of subscription and SaaS revenue | ||||
Stock-based compensation | 19 | 13 | 7 | |
Cost of services revenue | ||||
Stock-based compensation | 99 | 83 | 58 | |
Research and development | ||||
Stock-based compensation | 524 | 459 | 391 | |
Sales and marketing | ||||
Stock-based compensation | 322 | 293 | 226 | |
General and administrative | ||||
Stock-based compensation | 157 | 168 | 117 | |
License | ||||
Revenue | [1] | 3,033 | 3,181 | 3,042 |
License | Dell | ||||
Revenue | 1,598 | 1,569 | 1,176 | |
Subscription and SaaS | ||||
Revenue | [1] | 2,587 | 1,877 | 1,303 |
Subscription and SaaS | Dell | ||||
Revenue | 524 | 342 | 217 | |
Services | ||||
Revenue | [1] | 6,147 | 5,753 | 5,268 |
Services | Dell | ||||
Revenue | $ 1,994 | $ 1,459 | $ 1,003 | |
[1] | Includes related party revenue as follows (refer to Note D): License $ 1,598 $ 1,569 $ 1,176 Subscription and SaaS 524 342 217 Services 1,994 1,459 1,003 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 2,058 | $ 6,356 | $ 1,590 |
Changes in fair value of available-for-sale securities: | |||
Reclassification of (gains) losses realized during the period, net of tax (provision) benefit of $—, $— and $10 | 0 | 0 | 30 |
Net change in fair value of available-for-sale securities | 0 | 0 | 30 |
Changes in fair value of effective foreign currency forward contracts: | |||
Unrealized gains (losses), net of tax provision (benefit) of $— for all periods | (1) | 0 | 2 |
Reclassification of (gains) losses realized during the period, net of tax (provision) benefit of $— for all periods | 0 | (2) | 0 |
Net change in fair value of effective foreign currency forward contracts | (1) | (2) | 2 |
Foreign currency translation adjustments | 0 | 0 | (26) |
Total other comprehensive income (loss) | (1) | (2) | 6 |
Comprehensive income, net of taxes | 2,057 | 6,354 | 1,596 |
Less: Net loss attributable to non-controlling interests | 0 | (56) | (60) |
Less: Other comprehensive income (loss) attributable to non-controlling interests | 0 | 0 | 4 |
Comprehensive income attributable to VMware, Inc. | $ 2,057 | $ 6,410 | $ 1,652 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parentheticals) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Tax (provision) benefit on reclassification of (gains) losses realized on available-for-sale securities | $ 0 | $ 0 | $ 10 |
Tax provision (benefit) on unrealized gains (losses) on derivatives | 0 | 0 | 0 |
Tax (provision) benefit on reclassification of gains (losses) realized on derivatives | $ 0 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 4,692 | $ 2,915 |
Short-term investments | 23 | 0 |
Accounts receivable, net of allowance of $5 and $7 | 1,929 | 1,883 |
Due from related parties, net | 1,438 | 1,457 |
Other current assets | 530 | 436 |
Total current assets | 8,612 | 6,691 |
Property and equipment, net | 1,334 | 1,280 |
Other assets | 2,697 | 2,266 |
Deferred tax assets | 5,781 | 5,556 |
Intangible assets, net | 993 | 1,172 |
Goodwill | 9,599 | 9,329 |
Total assets | 29,016 | 26,294 |
Current liabilities: | ||
Accounts payable | 131 | 208 |
Accrued expenses and other | 2,382 | 2,151 |
Current portion of long-term debt and other borrowings | 0 | 2,747 |
Unearned revenue | 5,873 | 5,218 |
Total current liabilities | 8,386 | 10,324 |
Note payable to Dell | 270 | 270 |
Long-term debt | 4,717 | 2,731 |
Unearned revenue | 4,441 | 4,050 |
Income tax payable | 805 | 817 |
Operating lease liabilities | 891 | 746 |
Other liabilities | 455 | 347 |
Total liabilities | 19,965 | 19,285 |
Contingencies (refer to Note E) | ||
Stockholders’ equity: | ||
Additional paid-in capital | 1,985 | 2,000 |
Accumulated other comprehensive loss | (5) | (4) |
Retained earnings | 7,067 | 5,009 |
Total stockholders’ equity | 9,051 | 7,009 |
Total liabilities and stockholders’ equity | 29,016 | 26,294 |
Class A Common Stock | ||
Stockholders’ equity: | ||
Common stock | 1 | 1 |
Class B Convertible Common Stock | ||
Stockholders’ equity: | ||
Common stock | $ 3 | $ 3 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Allowance for credit loss | $ 5 | $ 7 |
Class A Common Stock | ||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 2,500,000,000 | 2,500,000,000 |
Common stock, shares issued (in shares) | 112,082,000 | 110,484,000 |
Common stock, shares outstanding (in shares) | 112,082,000 | 110,484,000 |
Class B Convertible Common Stock | ||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 307,222,000 | 307,222,000 |
Common stock, shares outstanding (in shares) | 307,222,000 | 307,222,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Operating activities: | |||
Net income | $ 2,058 | $ 6,356 | $ 1,590 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 1,025 | 873 | 727 |
Stock-based compensation | 1,122 | 1,017 | 800 |
Deferred income taxes, net | (152) | (5,284) | (110) |
Unrealized (gain) loss on equity securities, net | (172) | (31) | 14 |
Loss on disposition | 0 | 0 | 7 |
(Gain) loss on disposition of assets, revaluation and impairment, net | 24 | (4) | 2 |
Loss on extinguishment of debt | 8 | 0 | 0 |
Other | (1) | 9 | 11 |
Changes in assets and liabilities, net of acquisitions: | |||
Accounts receivable | (37) | (119) | (214) |
Other current assets and other assets | (879) | (668) | (347) |
Due to/from related parties, net | 19 | (374) | (480) |
Accounts payable | (69) | 35 | 105 |
Accrued expenses and other liabilities | 518 | 417 | 290 |
Income taxes payable | (68) | (23) | (40) |
Unearned revenue | 1,013 | 1,668 | 1,302 |
Net cash provided by operating activities | 4,409 | 3,872 | 3,657 |
Investing activities: | |||
Additions to property and equipment | (329) | (279) | (254) |
Purchases of available-for-sale securities | 0 | 0 | (780) |
Sales of available-for-sale securities | 26 | 0 | 3,999 |
Maturities of available-for-sale securities | 0 | 0 | 2,393 |
Purchases of strategic investments | (29) | (30) | (8) |
Proceeds from disposition of assets | 28 | 22 | 41 |
Business combinations, net of cash acquired, and purchases of intangible assets | (409) | (2,437) | (938) |
Net cash paid on disposition of a business | 0 | (4) | (11) |
Net cash provided by (used in) investing activities | (713) | (2,728) | 4,442 |
Financing activities: | |||
Proceeds from the initial public offering of Pivotal, net of issuance costs paid | 0 | 0 | 544 |
Proceeds from issuance of common stock | 273 | 308 | 259 |
Net proceeds from issuance of long-term debt | 1,979 | 0 | 0 |
Borrowings under term loan, net of issuance costs | 0 | 3,393 | 0 |
Borrowings on credit facility, net of debt issuance costs | 0 | 0 | 15 |
Repayment of term loan | (1,500) | (1,900) | 0 |
Repayment of current portion of long-term debt | (1,257) | 0 | 0 |
Repayments on credit facility | 0 | 0 | (35) |
Repurchase of common stock | (945) | (1,334) | (42) |
Shares repurchased for tax withholdings on vesting of restricted stock | (412) | (534) | (357) |
Payment for Special Dividend | 0 | 0 | (11,000) |
Payment to acquire non-controlling interests | (91) | (1,666) | 0 |
Contribution from Dell | 0 | 27 | 44 |
Payment for common control transaction with Dell | 0 | 0 | (8) |
Principal payments on finance lease obligations | (4) | (1) | 0 |
Net cash used in financing activities | (1,957) | (1,707) | (10,580) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0 | (2) | 1 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 1,739 | (565) | (2,480) |
Cash, cash equivalents and restricted cash at beginning of the period | 3,031 | 3,596 | 6,076 |
Cash, cash equivalents and restricted cash at end of the period | 4,770 | 3,031 | 3,596 |
Supplemental disclosures of cash flow information: | |||
Issuance of VMware Class B common stock for Pivotal Class B common stock held by Dell | 0 | 1,101 | 0 |
Cash paid for interest | 200 | 134 | 129 |
Cash paid for taxes, net | 543 | 369 | 399 |
Non-cash items: | |||
Changes in capital additions, accrued but not paid | (10) | 18 | 9 |
Changes in tax withholdings on vesting of restricted stock, accrued but not paid | $ 1 | $ (13) | $ 17 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Millions | Total | Cumulative effect of adoption of new accounting pronouncements | Class A Common Stock | Class B Convertible Common Stock | Common StockClass A Common Stock | Common StockClass B Convertible Common Stock | Additional Paid-in Capital | Retained Earnings | Retained EarningsCumulative effect of adoption of new accounting pronouncements | Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss)Cumulative effect of adoption of new accounting pronouncements | Non-controlling Interests |
Balance (in shares) at Feb. 02, 2018 | 104,000 | 300,000 | ||||||||||
Balance at Feb. 02, 2018 | $ 11,190 | $ (30) | $ 1 | $ 3 | $ 3,171 | $ 7,453 | $ (15) | $ 11 | $ (15) | $ 551 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Proceeds from issuance of common stock (in shares) | 3,000 | |||||||||||
Proceeds from issuance of common stock | 188 | 188 | ||||||||||
Issuance of stock-based awards in acquisition | 3 | 3 | ||||||||||
Repurchase and retirement of common stock (in shares) | (286,000) | |||||||||||
Repurchase and retirement of common stock | (42) | $ (42) | (42) | |||||||||
Issuance of restricted stock (in shares) | 7,000 | |||||||||||
Shares withheld for tax withholdings on vesting of restricted stock (in shares) | (2,600) | (3,000) | ||||||||||
Shares withheld for tax withholdings on vesting of restricted stock | (373) | $ (373) | (373) | |||||||||
Stock-based compensation | 800 | 731 | 69 | |||||||||
Credit from tax sharing arrangement | 2 | 2 | ||||||||||
Investment from Dell, net | (52) | (53) | 1 | |||||||||
Total other comprehensive income (loss) | 6 | 2 | 4 | |||||||||
Transactions with Pivotal’s non-controlling stockholders | 615 | 154 | 461 | |||||||||
Common control transaction with Dell | (6) | (6) | ||||||||||
Special Dividend | (11,000) | (822) | (10,178) | |||||||||
Net income (loss) | 1,590 | 1,650 | (60) | |||||||||
Balance (in shares) at Feb. 01, 2019 | 111,000 | 300,000 | ||||||||||
Balance at Feb. 01, 2019 | 2,891 | $ 3 | $ 1 | $ 3 | 2,959 | (1,096) | $ 3 | (2) | 1,026 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Proceeds from issuance of common stock (in shares) | 2,000 | |||||||||||
Proceeds from issuance of common stock | 203 | 203 | ||||||||||
Issuance of stock-based awards in acquisition | 13 | 13 | ||||||||||
Repurchase and retirement of common stock (in shares) | (7,664) | (8,000) | ||||||||||
Repurchase and retirement of common stock | (1,334) | $ (1,334) | (1,024) | (310) | ||||||||
Issuance of restricted stock (in shares) | 8,000 | |||||||||||
Shares withheld for tax withholdings on vesting of restricted stock (in shares) | (3,000) | (3,000) | ||||||||||
Shares withheld for tax withholdings on vesting of restricted stock | (521) | $ (521) | (521) | |||||||||
Stock-based compensation | 1,017 | 921 | 96 | |||||||||
Credit from tax sharing arrangement | 85 | 85 | ||||||||||
Investment from Dell, net | 22 | 13 | 9 | |||||||||
Total other comprehensive income (loss) | (2) | (2) | ||||||||||
Transactions with Pivotal’s non-controlling stockholders | (1,724) | (649) | (1,075) | |||||||||
Issuance of VMware’s Class B common stock issued to Dell (in shares) | 7,000 | |||||||||||
Net income (loss) | 6,356 | 6,412 | (56) | |||||||||
Balance (in shares) at Jan. 31, 2020 | 110,484 | 307,222 | 110,000 | 307,000 | ||||||||
Balance at Jan. 31, 2020 | 7,009 | $ 1 | $ 3 | 2,000 | 5,009 | (4) | 0 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Proceeds from issuance of common stock (in shares) | 3,000 | |||||||||||
Proceeds from issuance of common stock | 273 | 273 | ||||||||||
Repurchase and retirement of common stock (in shares) | (6,944) | (7,000) | ||||||||||
Repurchase and retirement of common stock | (945) | $ (945) | (945) | |||||||||
Issuance of restricted stock (in shares) | 9,000 | |||||||||||
Shares withheld for tax withholdings on vesting of restricted stock (in shares) | (3,000) | (3,000) | ||||||||||
Shares withheld for tax withholdings on vesting of restricted stock | (413) | $ (413) | (413) | |||||||||
Stock-based compensation | 1,116 | 1,116 | ||||||||||
Credit from tax sharing arrangement | (46) | (46) | ||||||||||
Total other comprehensive income (loss) | (1) | (1) | ||||||||||
Net income (loss) | 2,058 | 2,058 | ||||||||||
Balance (in shares) at Jan. 29, 2021 | 112,082 | 307,222 | 112,000 | 307,000 | ||||||||
Balance at Jan. 29, 2021 | $ 9,051 | $ 1 | $ 3 | $ 1,985 | $ 7,067 | $ (5) | $ 0 |
Overview and Basis of Presentat
Overview and Basis of Presentation | 12 Months Ended |
Jan. 29, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Overview and Basis of Presentation | Overview and Basis of Presentation Company and Background VMware, Inc. (“VMware” or the “Company”) originally pioneered the development and application of virtualization technologies with x86 server-based computing, separating application software from the underlying hardware. Information technology (“IT”) driven innovation continues to disrupt markets and industries. Technologies emerge faster than organizations can absorb, creating increasingly complex environments. IT is working at an accelerated pace to harness new technologies, platforms and cloud models, ultimately guiding businesses through a digital transformation. To take on these challenges, VMware is working with customers in the areas of hybrid and multi-cloud, modern applications, networking, security and digital workspaces. VMware’s software provides a flexible digital foundation to enable customers in their digital transformations. Retrospective Combination of Historical Financial Statements In December 2019, VMware completed the acquisition of Pivotal, which was, at the time, a subsidiary of VMware’s parent company, Dell Technologies Inc. (“Dell”). The purchase of the controlling interest in Pivotal from Dell was accounted for as a transaction between entities under common control in accordance with Accounting Standards Codification 805-50, Business Combination - Related Issues, which requires retrospective combination of entities for all periods presented, as if the combination had been in effect since the inception of common control. The consolidated financial statements of VMware and notes thereto are presented on a combined basis, as both VMware and Pivotal were under common control for all periods presented. Refer to Note B for more information on VMware’s acquisition of Pivotal. Basis of Pre sentation The consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for annual financial reporting. Effective September 7, 2016, Dell (formerly Denali Holding Inc.) acquired EMC Corporation (“EMC”), VMware’s parent company, including EMC’s majority control of VMware. As of January 29, 2021, Dell controlled 80.6% of VMware’s outstanding common stock and 97.4% of the combined voting power of VMware’s outstanding common stock, including 31 million shares of VMware’s Class A common stock and all of VMware’s Class B common stock. As VMware is a majority-owned and controlled subsidiary of Dell, its results of operations and financial position are consolidated with Dell’s financial statements. Management believes the assumptions underlying the 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 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. Principles of Consolidation The consolidated financial statements include the accounts of VMware and subsidiaries in which VMware has a controlling financial interest. The portion of results of operations attributable to the non-controlling interests for Pivotal prior to the acquisition was included in net loss attributable to non-controlling interests on the consolidated statements of income for the periods presented. As part of the acquisition of Pivotal, VMware acquired the non-controlling interests in Pivotal from the holders of Pivotal Class A common stock and has held 100% of the controlling financial interest in Pivotal since December 2019. The cumulative portion of the results of operations and changes in the net assets of Pivotal attributable to the non-controlling interests through the acquisition date were reclassified to additional paid-in capital on the consolidated balance sheet as of January 31, 2020. 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 consolidated statements of cash flows based upon the nature of the underlying transaction. 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. As the impact of the COVID-19 pandemic continues to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment. These estimates and assumptions may change in future periods and will be recognized in the consolidated financial statements as new events occur and additional information becomes known. To the extent the Company’s actual results differ materially from those estimates and assumptions, VMware’s future financial statements could be affected. Revenue Recognition VMware derives revenue primarily from licensing software under perpetual licenses or consumption-based contracts and related software maintenance and support, subscriptions, hosted services, training and consulting services. VMware accounts for a contract with a customer if all criteria defined by ASC 606, Revenue from Contracts with Customers are met, including that collectibility of consideration is probable. At inception of a contract with a customer, the Company evaluates whether the promised products and services represent distinct performance obligations within the context of the contract. Performance obligations that are both capable of being distinct on their own and distinct within the context of the contract are recognized on their own as distinct performance obligations. Performance obligations under which both of these two criteria are not met are recognized as a combined, single performance obligation. Determining whether the Company’s licenses, subscriptions and services are considered distinct performance obligations that should be accounted for separately or together often involves assumptions and significant judgments that can have a significant impact on the timing and amount of revenue recognized. Revenue is recognized upon transfer of control of licenses, subscriptions or services to the customer in an amount that reflects the consideration VMware expects to receive in exchange for those licenses, services or subscriptions. Control of a promised license, subscription or service may be transferred to a customer either at a point in time or over time, which affects the timing of revenue recognition. VMware’s contracts with customers may include a combination of licenses, subscriptions and services that are accounted for as distinct performance obligations. Licenses that represent distinct performance obligations are recognized at a point in time when the software license keys have been made available to the customer. Licenses sold as part of the Company’s subscriptions that do not represent distinct performance obligations are recognized over time along with the associated services that form a combined performance obligation with the software. Management assesses relevant contractual terms in contracts with customers and applies significant judgment in identifying and accounting for all terms and conditions in certain contracts. Certain contracts include third-party offerings and revenue that may be recognized net of the third-party costs, based upon an assessment as to whether VMware had control of the underlying third-party offering. Revenue is recognized net of any taxes invoiced to customers, which are subsequently remitted to governmental authorities. From time to time, VMware may enter into revenue and purchase contracts with the same customer within a short period of time. VMware evaluates the underlying economics and fair value of the consideration payable to the customer to determine if any portion of the consideration payable to the customer exceeds the fair value of the goods and services received and should be accounted for as a reduction of the transaction price of the revenue contract. License Revenue VMware generally sells its license software through distributors, resellers, system vendors, systems integrators and its direct sales force. Performance obligations related to license revenue, including the license portion of term licenses, represent functional intellectual property under which a customer has the legal right to the on-premises license. The license provides significant standalone functionality and is a separate performance obligation from the maintenance and support and professional services sold by VMware. On-premises license revenue is recognized at a point in time, upon delivery and transfer of control of the underlying license to the customer. License revenue from on-premises license software sold to original equipment manufacturers (“OEMs”) is recognized when the sale to the end user occurs. Revenue is recognized upon reporting by the OEMs of their sales, and for the period where information of the underlying sales has not been made available, revenue is recognized based upon estimated sales. Subscription and SaaS Revenue VMware’s subscription and SaaS revenue consists of hosted services, license usage fees from the Company’s VCPP, and perpetual or subscription license sales of its software platform with open source licenses or offerings under which licenses and services are accounted for as combined performance obligations. VMware’s hosted services consist of certain software offerings sold as a service-based technology without the customer’s ability to take possession of the software over the subscription term. Hosted services are recognized as SaaS revenue over time as customers consume the services or ratably over the term of the subscription, commencing upon provisioning of the service. VCPP partners license on-premises software from VMware on a monthly basis under a usage-based model. Generally, contracts with VCPP partners include cancellation rights. Revenue recognition is based on fees associated with reported license consumption by the VCPP partners and includes estimates for the period when consumption information has not been made available. Subscription license sales of the Company’s software platform offering provides customers with a term-based license to its platform, which includes, among other items, open-source software, support, enhancements, upgrades and compatibility to certified systems, all of which are offered on an if-and-when available basis. Subscription revenue is recognized ratably over the contract term beginning on the date that the Company’s platform is made available to the customer. Subscription sales also include offerings sold on a perpetual and term basis where licenses provide customers with access to and the right to utilize the threat intelligence capabilities and ongoing support. VMware considers the software license and access to critical threat intelligence capabilities to be a single performance obligation. Subscription revenue is recognized ratably over the contract term beginning on the date the software is delivered to the customer. Subscription licenses sold on a term-basis are generally over a one Services Revenue VMware’s services revenue generally consists of software maintenance and support and professional services. Software maintenance and support offerings entitle customers to receive major and minor product upgrades, on a when-and-if-available basis, and technical support. Maintenance and support services are comprised of multiple performance obligations including updates, upgrades to licenses and technical support. While separate performance obligations are identified within maintenance and support services, the underlying performance obligations generally have a consistent continuous pattern of transfer to a customer during the term of a contract. Maintenance and support services revenue is recognized ratably over the contract duration. Professional services include design, implementation, training and consulting services. Professional services performed by VMware represent distinct performance obligations as they do not modify or customize licenses sold. These services are not highly interdependent or highly interrelated to licenses sold such that a customer would not be able to use the licenses without the professional services. Revenue from fixed fee professional services engagements is recognized based on progress made toward the total project effort, which can be reasonably estimated. As a practical expedient, VMware recognizes revenue from professional services engagements invoiced on a time and materials basis as the hours are incurred based on VMware’s right to invoice amounts for performance completed to date. Contracts with Multiple Performance Obligations VMware enters into revenue contracts with multiple performance obligations in which a customer may purchase combinations of licenses, maintenance and support, subscriptions, hosted services, training, consulting services, and rights to future products and services. For contracts with multiple performance obligations, VMware allocates total transaction value to the identified underlying performance obligations based on relative standalone selling price (“SSP”). VMware typically estimates SSP of services based on observable transactions when the services are sold on a standalone basis and those prices fall within a reasonable range. VMware utilizes the residual approach to estimate SSP for products or services sold to customers due to highly variable pricing. Rebates and Marketing Development Funds Rebates, which are offered to certain channel partners and represent a form of variable consideration, are accounted for as a reduction to the transaction price on eligible contracts. Rebates are determined based on eligible sales during the quarter or based on actual achievement to quarterly target sales. The reduction of the aggregate transaction price against eligible contracts is allocated to the applicable performance obligations. The difference between the estimated rebates recognized and the actual amounts paid has not been material to date. Certain channel partners are also reimbursed for direct costs related to marketing or other services that are defined under the terms of the marketing development programs. Estimated reimbursements for marketing development funds are accounted for as consideration payable to a customer, reducing the transaction price of the underlying contracts. The most likely amount method is used to estimate the marketing fund reimbursements at the end of the quarter and the reduction of transaction price is allocated to the applicable performance obligations. The difference between the estimated reimbursement and the actual amount paid to channel partners has not been material to date. Returns Reserves With limited exceptions, VMware’s return policy does not allow product returns for a refund. VMware estimates and records reserves for product returns at the time of sale based on historical return rates. Amounts are recorded as a reduction of revenue or unearned revenue. Returns reserves were not material for all periods presented. Deferred Commissions Sales commissions, including the employer portion of payroll taxes, earned by VMware’s sales force are considered incremental and recoverable costs of obtaining a contract, and are deferred and generally amortized on a straight-line basis over the expected period of benefit. The expected period of benefit is generally determined using the contract term or underlying technology life, if renewals are expected and the renewal commissions are not commensurate with the initial commissions. Sales commissions related to software maintenance and support renewals are deferred and amortized on a straight-line basis over the contractual renewal period. Foreign Currency Remeasurement and Translation The United States (“U.S.”) dollar is the functional currency of VMware’s foreign subsidiaries as of January 29, 2021. As of January 31, 2020, the U.S. dollar was the functional currency for the majority of VMware’s foreign subsidiaries, except for certain Pivotal foreign subsidiaries, many of which were wound down during fiscal 2021. Assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date. VMware records net gains and losses resulting from foreign exchange transactions as a component of foreign currency exchange gains and losses in other income (expense), net on the consolidated statements of income. These gains and losses are net of those recognized on foreign currency forward contracts (“forward contracts”) not designated as hedges that VMware enters into to partially mitigate its exposure to foreign currency fluctuations. VMware records foreign currency translation adjustments in other comprehensive income (loss), and the losses recognized during the years ended January 29, 2021, January 31, 2020 and February 1, 2019 were not significant. Cash and Cash Equivalents, Short-Term Investments, and Restricted Cash From time to time, VMware invests primarily in money market funds, highly liquid debt instruments of the U.S. government and its agencies and U.S. and foreign corporate debt securities. All highly liquid investments with maturities of 90 days or less from date of purchase are classified as cash equivalents and all highly liquid investments with maturities of greater than 90 days from date of purchase as short-term investments. Short-term investments are classified as available-for-sale securities. VMware may sell these securities at any time for use in current operations or for other purposes, such as consideration for acquisitions and strategic investments. When invested, fixed income investments are reported at market value and unrealized gains and losses on these investments, net of tax, are included in accumulated other comprehensive loss, a component of stockholders’ equity. Realized gains or losses are included on the consolidated statements of income. Gains and losses on the sale of fixed income securities issued by the same issuer and of the same type are determined using the first-in first-out method. When a determination has been made that an other-than-temporary decline in fair value has occurred, the amount of the decline that is related to a credit loss is realized and is included on the consolidated statements of income. Cash balances that are restricted pursuant to the terms of various agreements are classified as restricted cash and included in other current assets and other assets in the accompanying consolidated balance sheets. Refer to Note I for more information. Investments in Equity Securities VMware holds equity securities in publicly and privately held companies. VMware elected to measure securities in privately held companies at cost less impairment, if any, adjusted for observable price changes in orderly transactions for the identical or a similar security of the same issuer. VMware’s securities in publicly held companies are measured at fair value using quoted prices for identical assets in an active market. All gains and losses on these securities, whether realized or unrealized, are recognized in other income (expense), net on the consolidated statements of income. Allowance for Credit Losses VMware maintains an allowance for credit losses for estimated losses on uncollectible accounts receivable. VMware determines the allowance based on various factors such as historical experience, the age of the receivable and current economic conditions that may affect customers’ ability to pay. The allowance for credit losses was not significant for all periods presented. Property and Equipment, Net Property and equipment, net is recorded at cost. Depreciation commences upon placing the asset in service and is recognized on a straight-line basis over the estimated useful life of the assets, as follows: Buildings Term of underlying land lease Land improvements 15 years Furniture and fixtures 7 years Equipment 3 to 6 years Software 3 to 8 years Leasehold improvements 20 years, not to exceed the shorter of the estimated useful life or remaining lease term Upon retirement or disposition, the asset cost and related accumulated depreciation are removed with any gain or loss recognized on the consolidated statements of income. Repair and maintenance costs that do not extend the economic life of the underlying assets are expensed as incurred. Capitalized Software Development Costs Costs associated with internal-use software, including those used to provide hosted services, during the application development stage are capitalized. Capitalization of costs begins when the preliminary project stage is completed, management has committed to funding the project, and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalization ceases at the point when the project is substantially complete and is ready for its intended purpose. The capitalized amounts are included in property and equipment, net on the consolidated balance sheets. Development costs of software to be sold, leased, or otherwise marketed are subject to capitalization beginning when technological feasibility for the product has been established and ending when the product is available for general release. During the years presented, software development costs incurred for products during the time period between reaching technological feasibility and general release were not material and accordingly were expensed as incurred. Business Combinations For business combinations, with the exception of acquisitions of entities under common control, VMware recognizes the identifiable assets acquired, the liabilities assumed, and any non-controlling interests in an acquiree, which are measured based on the acquisition date fair value. Goodwill is measured as the excess of consideration transferred over the net amounts of the identifiable tangible and intangible assets acquired and the liabilities assumed at the acquisition date. VMware uses significant estimates and assumptions to determine the fair value of assets acquired and liabilities assumed and the related useful lives of the acquired assets, when applicable, as of the acquisition date. When those estimates are provisional, VMware refines them as necessary during the measurement period. The measurement period is the period after the acquisition date, not to exceed one year, in which VMware may gather and analyze the necessary information about facts and circumstances that existed as of the acquisition date to adjust the provisional amounts recognized. Measurement period adjustments are recorded during the period in which the adjustment amount is determined. All other adjustments are recorded to the consolidated statements of income. Acquisitions of entities under common control requires retrospective combination of entities for all periods presented, as if the combination had been in effect since the inception of common control. Assets and liabilities transferred are recorded at their historical carrying amounts on the date of the transfer. The difference between purchase consideration and historical value of the net assets on the date of the transfer are recognized in total stockholders’ equity on the consolidated balance sheets. Costs to effect an acquisition are recorded in general and administrative expenses on the consolidated statements of income as the expenses are incurred. Gains recognized for the remeasurement of ownership interest to fair value upon completion of a step acquisition are recorded in other income (expense), net on the consolidated statements of income. Purchased Intangible Assets and Goodwill Goodwill is evaluated for impairment during the third quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. VMware elected to perform a quantitative assessment of goodwill with respect to its one reporting unit. In doing so, VMware compared the enterprise fair value to the carrying amount of the reporting unit, including goodwill. VMware concluded that, to date, there have been no impairments of goodwill. Purchased intangible assets with finite lives are generally amortized over their estimated useful lives using the straight-line method. VMware reviews intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Derivative Instruments and Hedging Activities Derivative instruments are measured at fair value and reported as current assets and current liabilities on the consolidated balance sheets, as applicable. To manage VMware’s exposure to foreign currency fluctuations, VMware enters into forward contracts to hedge a portion of VMware’s net outstanding monetary asset or liability positions. These forward contracts are generally entered into on a monthly basis, with a typical contractual term of one month. These forward contracts are not designated as hedging instruments under applicable accounting guidance and therefore are adjusted to fair value through other income (expense), net on the consolidated statements of income. Additionally, VMware enters into forward contracts, which it designates as cash flow hedges to manage the volatility of cash flows that relate to operating expenses denominated in certain foreign currencies. These forward contracts are entered into annually, have maturities of twelve months or less, and are adjusted to fair value through accumulated other comprehensive loss, net of tax, on the consolidated balance sheets. When the underlying expense transaction occurs, the gains or losses on the forward contract are subsequently reclassified from accumulated other comprehensive loss to the related operating expense line item on the consolidated statements of income. The Company does not, and does not intend to, use derivative financial instruments for trading or speculative purposes. Employee Benefit Plans The Company has a defined contribution program for U.S. employees that complies with Section 401(k) of the Internal Revenue Code. In addition, the Company offers defined contribution plans to employees in certain countries outside the U.S. During the years ended January 29, 2021, January 31, 2020, and February 1, 2019, the Company contributed $176 million, $169 million and, $122 million, respectively, to its defined contribution plans. Advertising Advertising costs are expensed as incurred. Advertising expense was $33 million, $25 million and $33 million during the years ended January 29, 2021, January 31, 2020 and February 1, 2019, respectively. Income Taxes Income taxes as presented herein are calculated on a separate tax return basis, although VMware is included in the consolidated tax return of Dell. However, under certain circumstances, transactions between VMware and Dell are assessed using consolidated tax return rules. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their reported amounts using enacted tax rates in effect for the year in which the differences are expected to reverse. Tax credits are generally recognized as reductions of income tax provisions in the year in which the credits arise. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. During the fourth quarter of fiscal 2020, VMware completed the acquisition of Pivotal. Pivotal will continue to file its separate tax return for U.S. federal income tax purposes as it has since left the Dell consolidated tax group at the time of Pivotal’s initial public offering (“IPO”) in April 2018. The U.S. Tax Cuts and Jobs Act enacted on December 22, 2017 (the “2017 Tax Act”) introduced significant changes to U.S. income tax law. During December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which allowed for the recognition of provisional tax amounts during a measurement period not to extend beyond one year of the enactment date. Provisional taxes relating to the effect of the tax law changes, including the estimated transition tax and the remeasurement of U.S. deferred tax assets and liabilities, among others, were recognized during fiscal 2018. The Company completed its analysis of the impact of the 2017 Tax Act and recorded immaterial adjustments during the fourth quarter of fiscal 2019. The Global Intangible Low-Taxed Income (“GILTI”) provisions of the 2017 Tax Act require VMware to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. GAAP allows the Company to choose between an accounting policy that treats the U.S. tax under GILTI provisions as either a current expense, as incurred, or as a component of the Company’s measurement of deferred taxes. VMware has elected to record impacts of GILTI as period costs and recognized the tax impacts associated with GILTI as a current expense on its consolidated statements of income beginning with the year ended February 1, 2019. The difference between the income taxes payable or receivable that is calculated on a separate return basis and the amount paid to or received from Dell pursuant to VMware’s tax sharing agreement is presented as a component of additional paid-in capital, generally in the period in which the consolidated return is filed. Refer to Note P for further information. Net Income Per Share Basic net income per share is calculated using the weighted-average number of shares of VMware’s common stock outstanding during the period. Diluted net income per share is calculated using the weighted-average number of common stock, including the dilutive effect of equity awards as determined under the treasury stock method. VMware has two classes of common stock, Classes A and B. For purposes of calculating net income per share, VMware uses the two-class method. As both classes share the same rights in dividends, basic and diluted net income per share are the same for both classes. Concentrations of Risks Financial instruments, which potentially subject VMware to concentrations of credit risk, consist principally of cash and cash equivalents, short-term investments and accounts receivable. Cash on deposit with banks may exceed the amount of insurance provided on such deposits. These deposits may be redeemed upon demand. VMware places cash and cash equivalents and short-term investments primarily in money market funds and fixed income securities and limits the amount of investment with any single issuer and any single financial institution. VMware held a diversified portfolio of money market funds and fixed income securities, which primarily consisted of various highly liquid debt instruments of the U.S. government and its agencies and U.S. and foreign corporate debt securities. |
Pivotal Acquisition
Pivotal Acquisition | 12 Months Ended |
Jan. 29, 2021 | |
Business Combinations [Abstract] | |
Pivotal Acquisition | Pivotal Acquisition In December 2019, VMware completed the acquisition of Pivotal at a blended price per share of $11.71 and an aggregate purchase consideration of $2.9 billion. The purchase consideration of $2.9 billion was comprised of $15.00 per share or $1.7 billion of cash paid to the non-controlling interest holders of Pivotal’s Class A common stock, the exchange of $1.1 billion of VMware’s Class B common stock for Pivotal’s Class B common stock held by Dell, at an exchange ratio of 0.055 VMware shares for each Pivotal share, and a $155 million accrual for amounts potentially owed to dissenting shareholders in connection with the acquisition, which was recorded in accrued expenses and other on the consolidated balance sheet as of January 31, 2020. In recording the repurchase of the non-controlling interest, the Company recognized a reduction of additional paid in capital of $649 million, which corresponds to the excess of the purchase consideration of $1.8 billion that was paid and accrued, over the carrying value of the non-controlling interest of $1.2 billion. In the aggregate, this transaction resulted in a cash payout, net of cash acquired, of $838 million and the issuance of 7.2 million shares of VMware’s Class B common stock to Dell. Pivotal’s Class B common stock previously held by VMware was canceled. Following the completion of the acquisition, shares of Pivotal Class A common stock ceased to be listed on the New York Stock Exchange and registration of the Pivotal Class A common stock under the Exchange Act was terminated. During the second quarter of fiscal 2021, VMware paid $91 million to dissenting stockholders of Pivotal, representing a portion of the amount accrued as of January 31, 2020. The purchase was accounted for as a transaction between entities under common control. Assets and liabilities transferred were recorded at historical carrying amounts of Pivotal on the date of the transfer, except for certain goodwill and intangible assets that were recorded in the amounts previously recognized by Dell for Pivotal in connection with Dell’s acquisition of EMC during fiscal 2016. VMware’s previous investment in Pivotal, including any unrealized gain or loss previously recognized in other income (expense), net on the consolidated statements of income, were derecognized. Transactions with Pivotal that were previously accounted for as transactions between related parties were eliminated in the consolidated financial statements for all periods presented. All intercompany transactions and account balances between VMware and Pivotal have been eliminated upon consolidation for all periods presented. |
Revenue, Unearned Revenue and R
Revenue, Unearned Revenue and Remaining Performance Obligations | 12 Months Ended |
Jan. 29, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, Unearned Revenue and Remaining Performance Obligations | Revenue, Unearned Revenue and Remaining Performance Obligations Revenue Receivables VMware records a receivable when an unconditional right to consideration exists and transfer of control has occurred, such that only the passage of time is required before payment of consideration is due. Timing of revenue recognition may differ from the timing of invoicing to customers. Payment terms vary based on license, subscription or service offerings and payment is generally required within 30 to 45 days from date of invoicing. Certain performance obligations may require payment before delivery of the license or service to the customer. 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 right to invoice. Contract assets are classified as accounts receivables upon invoicing. Contract assets are included in other current assets on the consolidated balance sheets. Contract assets were $43 million and $26 million as of January 29, 2021 and January 31, 2020, 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 Customer deposits include prepayments from customers related to amounts received for contracts that include certain cancellation rights. 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. As of January 29, 2021, customer deposits related to customer prepayments and cloud credits of $294 million were included in accrued expenses and other, and $163 million were included in other liabilities on the consolidated balance sheets. As of January 31, 2020, customer deposits related to customer prepayments and cloud credits of $247 million were included in accrued expenses and other, and $143 million were included in other liabilities on the 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 January 29, 2021 and January 31, 2020 were $31 million and $13 million, respectively. Deferred commissions included in other assets were $1.1 billion and $938 million as of January 29, 2021 and January 31, 2020, respectively. Amortization expense for deferred commissions was included in sales and marketing on the consolidated statements of income and was $437 million, $354 million and $311 million, during the years ended January 29, 2021, January 31, 2020 and February 1, 2019, respectively. Unearned Revenue Unearned revenue as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Unearned license revenue $ 15 $ 19 Unearned subscription and SaaS revenue 1,998 1,534 Unearned software maintenance revenue 7,092 6,700 Unearned professional services revenue 1,209 1,015 Total unearned revenue $ 10,314 $ 9,268 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 January 29, 2021 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 twelve months ended January 29, 2021 were $8.4 billion and $7.4 billion, respectively, and did not include amounts for performance obligations that were fully satisfied upon delivery, such as on-premises licenses. During the twelve months ended January 29, 2021, VMware also assumed $33 million in unearned revenue in connection with business combinations. Total billings and revenue recognized during the twelve months ended January 31, 2020 were $8.1 billion and $6.4 billion, respectively, and did not include amounts for performance obligations that were fully satisfied upon delivery, such as on-premises licenses. During the twelve months ended January 31, 2020, VMware also assumed $154 million in unearned revenue in connection with the acquisition of Carbon Black, Inc. (“Carbon Black”). Revenue recognized during the year ended February 1, 2019 was $5.5 billion and did not include amounts for performance obligations that were fully satisfied upon delivery, such as on-premises licenses. 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 customer contracts at the end of any given period. |
Related Parties
Related Parties | 12 Months Ended |
Jan. 29, 2021 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties The information provided below includes a summary of transactions with Dell and Dell’s consolidated subsidiaries (collectively, “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, and Dell pays VMware for services or reimburses VMware for costs incurred by VMware, in connection with such projects. During the years ended January 29, 2021, January 31, 2020 and February 1, 2019, revenue from Dell accounted for 35%, 31% and 25% of VMware’s consolidated revenue, respectively. During the years ended January 29, 2021, January 31, 2020 and February 1, 2019, revenue recognized on transactions where Dell acted as an OEM accounted for 12%, 12% and 13% of revenue from Dell, respectively, or 4%, 4% and 3% of VMware’s consolidated revenue, respectively. 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 Receipts Unearned Revenue For the Year Ended As of January 29, January 31, February 1, January 29, January 31, 2021 2020 2019 2021 2020 Reseller revenue $ 4,053 $ 3,288 $ 2,355 $ 4,952 $ 3,787 Internal-use revenue 63 82 41 45 57 Collaborative technology project receipts 13 10 4 n/a n/a Customer deposits resulting from transactions with Dell were $214 million and $194 million as of January 29, 2021 and January 31, 2020, 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, and VMware pays Dell for services provided to VMware by Dell related to such projects. • 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 consolidated statements of income and primarily include salaries, benefits, travel and occupancy expenses. Dell also incurs certain administrative costs on VMware’s behalf in the United States (“U.S.”) that are recorded as expenses on VMware’s consolidated statements of income. • In certain geographic regions, Dell files a consolidated indirect tax return, which includes value added taxes and other indirect taxes collected by VMware from its customers. VMware remits the indirect taxes to Dell, and Dell remits the tax payment to the foreign governments on VMware’s behalf. • From time to time, VMware invoices end users on behalf of Dell for certain services rendered by Dell. Cash related to these services is collected from the end user by VMware and remitted to Dell. • 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): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Purchases and leases of products and purchases of services (1) $ 206 $ 242 $ 200 Dell subsidiary support and administrative costs 74 119 145 (1) Amount includes indirect taxes that were remitted to Dell during the periods presented. VMware also purchases Dell products through Dell’s channel partners. Purchases of Dell products through Dell’s channel partners were not significant 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. During the fourth quarter of fiscal 2020, VMware entered into an arrangement with Dell to transfer approximately 250 professional services employees from Dell to VMware. These employees are experienced in providing professional services that deliver VMware technology and this transfer centralizes these resources within the Company in order to serve its customers more efficiently and effectively. The transfer was substantially completed during the fourth quarter of fiscal 2020 and did not have a material impact to the consolidated financial statements. VMware also expects that Dell will continue to resell VMware consulting solutions. During the third quarter of fiscal 2019, VMware acquired technology and employees related to the Dell EMC Service Assurance Suite, which provides root cause analysis management software for communications service providers, from Dell. The purchase of the Dell EMC Service Assurance Suite was accounted for as a transaction by entities under common control. The amount of the purchase price in excess of the historical cost of the acquired assets was recognized as a reduction to retained earnings on the consolidated balance sheets. Transition services were provided by Dell over a period of 18 months, starting from the date of the acquisition, which were not significant. Dell Financial Services (“DFS”) DFS provided 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 due from related parties, net on the 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 $60 million, $66 million and $40 million during the years ended January 29, 2021, January 31, 2020, and February 1, 2019, respectively. Due To/From Related Parties, Net Amounts due to and from related parties, net as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Due from related parties, current $ 1,558 $ 1,618 Due to related parties, current (1) 120 161 Due from related parties, net, current $ 1,438 $ 1,457 (1) Includes an immaterial amount related to the Company’s current operating lease liabilities due to related parties. The Company also recognized an immaterial amount related to non-current operating lease liabilities due to related parties. This amount has been included in operating lease liabilities on the consolidated balance sheets as of January 29, 2021 and January 31, 2020. Amounts in due from related parties, net, excluding DFS and tax obligations, include the current portion of amounts due to and due from related parties. Amounts included in due from related parties, net are generally settled in cash within 60 days of each quarter-end. Special Dividend On July 1, 2018, VMware’s board of directors declared a conditional $11.0 billion one-time special cash dividend (the “Special Dividend”), payable pro-rata to VMware stockholders as of the record date. The Special Dividend was paid on December 28, 2018 to stockholders of record as of the close of business on December 27, 2018 in the amount of $26.81 per outstanding share of VMware common stock. Dell was paid approximately $9.0 billion in cash as a result of its financial interest in VMware’s common stock as of the record date. The Special Dividend was paid in connection with the closing of a transaction by Dell pursuant to which holders of Dell Class V common stock, which was designed to track the economic performance of VMware, exchanged the Dell Class V common stock for Dell Class C common stock or cash or both, resulting in the elimination of the Dell Class V common stock. Refer to Note Q for more information. Notes Payable to Dell As of January 29, 2021 and January 31, 2020, VMware had an outstanding promissory note payable to Dell in the principal amount of $270 million due December 1, 2022. The note may be prepaid without penalty or premium. Interest is payable quarterly in arrears at the annual rate of 1.75%. During each of the years ended January 29, 2021, January 31, 2020 and February 1, 2019, interest expense on the notes payable to Dell was not significant. Other Related Party Transactions Prior to the acquisition of Pivotal, certain members of Pivotal’s board of directors were executives of Ford Motor Company (“Ford”) and General Electric Company (“GE”), and these companies were customers of Pivotal. Revenue recognized from sales to Ford while it was a related party was not significant during the year ended January 31, 2020 and was $12 million during the year ended February 1, 2019. During the year ended February 1, 2019, revenue recognized from sales to GE while it was a related party was not significant. Subsequent to fiscal 2019, GE was no longer a related party. Subsequent to VMware’s acquisition of Pivotal, Ford was no longer a related party. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jan. 29, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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. The Court has not yet issued a scheduling order for the Consolidated Action, but the parties have moved forward with pretrial discovery. On June 23, 2020, the Company made a payment of $91 million to the petitioners in the Appraisal Action, which reduces the Company’s exposure to accumulating interest. In addition, on September 23, 2020, the Company filed a motion to dismiss the claims asserted in the Lopez Action and the Howarth Action, for which briefing was completed. The hearing date for this motion to dismiss is April 1, 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, 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 (“First Action”). After an August 6, 2019 hearing, the Delaware Court denied Cirba’s preliminary injunction motion. On August 20, 2019, VMware filed counterclaims against Cirba for infringing four VMware patents. The Delaware Court severed VMware’s patent infringement counterclaims from Cirba’s claims. 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. As to Cirba’s trademark-related claims, the jury found that VMware was not liable. A total of $237 million was accrued for the First Action 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 statement of income for the year ended January 31, 2020. On March 9, 2020, the parties filed post-trial motions in the First Action. On December 21, 2020, the Delaware Court granted VMware’s request for a new trial based, in part, on Cirba Inc.’s lack of standing, set aside the verdict and damages award, and denied Cirba’s post-trial motions (the “Post-Trial Order”). 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 (“Second Action”). The Second Action was transferred to the Delaware Court on February 25, 2020. On March 23, 2020, Cirba filed a counterclaim against VMware in the Second Action alleging infringement of an additional Cirba patent. The Delaware Court consolidated the First and Second Actions and ordered a consolidated trial on all of the parties’ patent infringement claims and counterclaims. The parties have proposed April 24, 2023 as the date for a consolidated trial. On January 20, 2021, Cirba moved to certify the Post-Trial Order to enable an interlocutory appeal to the United States Court of Appeals for the Federal Circuit. This motion has been fully briefed and is now pending before the Court. As of January 29, 2021, the Company reassessed its estimated loss accrual for the First Action based on the Post-Trial Order and determined that a loss is no longer probable and reasonably estimable with respect to the consolidated First and Second Actions. Accordingly, the estimated loss accrual of $237 million recorded on the consolidated balance sheet was derecognized, with the credit included in general and administrative expense on the consolidated income statement for 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’s investigation and 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 January 29, 2021, 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. Contractual Commitments VMware’s minimum contractual commitments as of January 29, 2021 were as follows (table in millions): Purchase Obligations Asset Retirement Obligations Total 2022 $ 391 $ 3 $ 394 2023 294 2 296 2024 331 1 332 2025 1 3 4 2026 — 9 9 Thereafter — 5 5 Total $ 1,017 $ 23 $ 1,040 VMware’s contractual commitments also include leased office facilities and equipment under various lease arrangements. Refer to Note N for more information on VMware’s lease commitments. Guarantees and Indemnification Obligations VMware enters into agreements in the ordinary course of business with, among others, customers, distributors, resellers, system vendors and systems integrators. Most of these agreements require VMware to indemnify the other party against third-party claims alleging that a VMware product infringes or misappropriates a patent, copyright, trademark, trade secret, and/or other intellectual property right. Certain of these agreements require VMware to indemnify the other party against certain claims relating to property damage, personal injury, or the acts or omissions of VMware, its employees, agents, or representatives. VMware has agreements with certain vendors, financial institutions, lessors and service providers pursuant to which VMware has agreed to indemnify the other party for specified matters, such as acts and omissions of VMware, its employees, agents, or representatives. VMware has procurement or license agreements with respect to technology that it has obtained the right to use in VMware’s products and agreements. Under some of these agreements, VMware has agreed to indemnify the supplier for certain claims that may be brought against such party with respect to VMware’s acts or omissions relating to the supplied products or technologies. VMware has agreed to indemnify the directors and executive officers of VMware, to the extent legally permissible, against all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or executive officer. VMware’s by-laws and charter also provide for indemnification of directors and officers of VMware and VMware subsidiaries to the extent legally permissible, against all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or executive officer. VMware also indemnifies certain employees who provide services with respect to employee benefits plans, including, for example, the members of the Administrative Committee of the VMware 401(k) Plan, and employees who serve as directors or officers of VMware’s subsidiaries. In connection with certain acquisitions, VMware has agreed to indemnify the former directors and officers of the acquired company in accordance with the acquired company’s by-laws and charter in effect immediately prior to the acquisition or in accordance with indemnification or similar agreements entered into by the acquired company and such persons. VMware typically purchases a “tail” directors and officers insurance policy, which should enable VMware to recover a portion of any future indemnification obligations related to the former officers and directors of an acquired company. It is not possible to determine the maximum potential amount under these indemnification agreements due to the relatively small number of prior indemnification claims and the unique facts and circumstances involved in each particular situation. Historically, payments made by the Company under these agreements have not had a material effect on the Company’s consolidated results of operations, financial position, or cash flows. |
Business Combinations, Definite
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill | 12 Months Ended |
Jan. 29, 2021 | |
Business Combinations, Goodwill and Intangible Assets Disclosure [Abstract] | |
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill | Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill Business Combinations Fiscal 2021 Acquisition of SaltStack, Inc. During the third quarter of fiscal 2021, VMware completed the acquisition of SaltStack, Inc., a developer of intelligent, event-driven automation software, to broaden VMware’s Cloud Management capabilities from infrastructure to applications. The total purchase price, net of cash acquired, was $51 million. The purchase price primarily included $29 million of identifiable intangible assets and $24 million of goodwill that is not expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of three years. Acquisition of Datrium, Inc. During the second quarter of fiscal 2021, VMware completed the acquisition of Datrium, Inc., a provider of cloud-native disaster recovery solutions, to broaden the VMware Site Recovery Disaster Recovery as a Service offerings. The total purchase price, net of cash acquired, was $137 million. The purchase price primarily included $25 million of identifiable intangible assets and $91 million of goodwill. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of three years to five years. During the fourth quarter of fiscal 2021, the Company evaluated facts and circumstances that existed as of the acquisition date and adjusted the provisional amount recorded to deferred tax asset, resulting in an increase of $40 million to goodwill, and determined that intangible assets and goodwill are expected to be deductible for tax purposes. Acquisition of Lastline, Inc. During the second quarter of fiscal 2021, VMware completed the acquisition of Lastline, Inc., a provider of network-based security breach detection products and services, to enhance capabilities for network detection and threat analysis on VMware NSX and SD-WAN offerings. The total purchase price, net of cash acquired, was $114 million. The purchase price primarily included $29 million of identifiable intangible assets and $86 million of goodwill that is not expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of one year to four years. Acquisition of Nyansa, Inc. During the first quarter of fiscal 2021, VMware completed the acquisition of Nyansa, Inc., a developer of artificial intelligence-based network analytics, to accelerate the delivery of end-to-end monitoring and troubleshooting capacities within VMware SD-WAN by VeloCloud. The total purchase price, net of cash acquired, was $38 million. The purchase price primarily included $14 million of identifiable intangible assets and $24 million of goodwill that is not expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of one year to four years. Other Fiscal 2021 Acquisitions During the year ended January 29, 2021, VMware completed five other acquisitions, which were not material, individually or in aggregate, to the consolidated financial statements. VMware expects these acquisitions to primarily enhance its product features and capabilities for its VMware Carbon Black Cloud and vRealize Operations offerings. The aggregate purchase price for these five acquisitions, net of cash acquired, was $62 million and primarily included $52 million of identifiable intangible assets and $16 million of goodwill, the majority of which is expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of one year to five years. For each of the acquisitions completed during fiscal 2021, the excess of the purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill, which management believes represents synergies expected from combining the technologies of VMware with those of the acquired businesses. The estimated fair value assigned to the tangible assets, identifiable intangible assets, and assumed liabilities were based on management's estimates and assumptions. The initial allocation of the purchase price was based on preliminary valuations and assumptions and is subject to change within the measurement period. VMware expects to finalize the allocation of the purchase price within the measurement period. The pro forma financial information assuming these fiscal 2021 acquisitions had occurred as of the beginning of the fiscal year prior to the fiscal year of acquisition, as well as the revenue and earnings generated during the current fiscal year, were not material for disclosure purposes. Fiscal 2020 Acquisition of Pivotal During the fourth quarter of fiscal 2020, VMware completed the acquisition of Pivotal, a leading cloud-native platform provider, to enhance VMware’s cloud native Kubernetes portfolio. Refer to Note B for more information. Acquisition of Carbon Black During the third quarter of fiscal 2020, VMware completed the acquisition of Carbon Black, a developer of cloud-native endpoint protection, in a cash tender offer for all of the outstanding shares of Carbon Black’s common stock, at a price of $26.00 per share. VMware acquired Carbon Black to create a comprehensive intrinsic security portfolio to protect workloads, clients and infrastructure from cloud to edge. Management believes the acquisition will result in synergies with the Carbon Black platform and its VMware NSX and VMware Workspace ONE offerings, among others, and enable VMware to offer a highly differentiated intrinsic security platform addressing multiple concerns of the security industry. The total purchase price was $2.0 billion, net of cash acquired of $111 million. Merger consideration totaling $18 million is held with a third-party paying agent and is payable to certain employees of Carbon Black subject to specified future employment conditions, and is being recognized as expense over the requisite service period of approximately two years on a straight-line basis. VMware assumed all of Carbon Black’s unvested stock options and restricted stock outstanding at the completion of the acquisition with an estimated fair value of $181 million. Of the total consideration, $10 million was allocated to the purchase price and $171 million was allocated to future services and will be expensed over the remaining requisite service periods of approximately three years on a straight-line basis. The estimated fair value of the stock options assumed by the Company was determined using the Black-Scholes option pricing model. The share conversion ratio of 0.2 was applied to convert Carbon Black’s outstanding stock awards into shares of VMware's common stock. The following table summarizes the allocation of the consideration to the fair value of the assets acquired and liabilities assumed on the date of acquisition (table in millions): Cash $ 111 Accounts receivable 58 Intangible assets 492 Goodwill 1,588 Other acquired assets 52 Total assets acquired 2,301 Unearned revenue 151 Other assumed liabilities 45 Total liabilities assumed 196 Fair value of assets acquired and liabilities assumed $ 2,105 The following table summarizes the components of the intangible assets acquired and their estimated useful lives by VMware in conjunction with the acquisition (amounts in table in millions): Weighted-Average Useful Lives Fair Value Amount Purchased technology 4.2 $ 232 Customer relationships and customer lists 7.0 215 Trademarks and tradenames 5.0 25 Other 2.0 20 Total definite-lived intangible assets $ 492 The excess of the purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The estimated fair value assigned to the tangible assets, identifiable intangible assets, and assumed liabilities were based on management's estimates and assumptions. Goodwill and identifiable intangible assets were not deductible for tax purposes. Acquisition of Avi Networks, Inc. During the second quarter of fiscal 2020, VMware completed the acquisition of Avi Networks, Inc. (“Avi Networks”), a provider of multi-cloud application delivery services. VMware acquired Avi Networks to provide customers with application delivery controller capabilities that include server load balancing for various applications and analytics. Together, VMware and Avi Networks expect to deliver a software defined networking stack built for the multi-cloud environment. The total purchase price was $326 million, net of cash acquired of $9 million. The purchase price primarily included $94 million of identifiable intangible assets and $228 million of goodwill that was not deductible for tax purposes. The identifiable intangible assets primarily consisted of completed technology of $79 million and customer relationships of $15 million, with estimated useful lives of one year to eight years. Merger consideration totaling $27 million is held in escrow and is payable to certain employees of Avi Networks subject to specified future employment conditions and is being recognized as expense over the requisite service period of approximately three years on a straight-line basis. The fair value of assumed unvested equity awards attributed to post-combination services was $32 million and is being expensed over the remaining requisite service periods of approximately three years on a straight-line basis. The estimated fair value of the stock options assumed by the Company was determined using the Black-Scholes option pricing model. Acquisition of AetherPal, Inc. During the first quarter of fiscal 2020, VMware completed the acquisition of AetherPal Inc., a provider of remote support solutions, to enhance VMware’s Workspace ONE offerings. The total purchase price was $45 million, which primarily included $12 million of identifiable intangible assets and $33 million of goodwill that was not deductible for tax purposes. The identifiable intangible assets primarily consisted of completed technology and customer relationships, with estimated useful lives of three years to five years. Other Fiscal 2020 Business Combinations During the third quarter of fiscal 2020, VMware completed four other acquisitions, which were not material individually to the consolidated financial statements. VMware expects these acquisitions to enhance its product features and capabilities for its Software-Defined Data Center solutions and SaaS offerings. The aggregate purchase price, net of cash acquired for these four acquisitions was $68 million, which primarily included $21 million of identifiable intangible assets and $48 million of goodwill, of which the majority was not deductible for tax purposes. The identifiable intangible assets had estimated useful lives of one year to five years and primarily consisted of completed technology. The pro forma financial information assuming fiscal 2020 acquisitions had occurred as of the beginning of the fiscal year prior to the fiscal year of acquisitions, as well as the revenue and earnings generated during the current fiscal year, were not material for disclosure purposes, both individually or in the aggregate. Fiscal 2019 Acquisition of Heptio Inc. During the fourth quarter of fiscal 2019, VMware completed the acquisition of Heptio Inc. (“Heptio”), a provider of products and services that help enterprises deploy and operationalize Kubernetes. VMware acquired Heptio to enhance VMware’s Kubernetes portfolio and cloud native strategy. The total purchase price was $420 million, net of cash acquired of $15 million. Merger consideration totaling $117 million, including $24 million being held in escrow, is payable to certain employees of Heptio subject to specified future employment conditions and is being recognized as expense over the requisite service period of approximately four years on a straight-line basis. Compensation expense recognized during each of the years ended January 29, 2021 and January 31, 2020 was $33 million, and was not material during the year ended February 1, 2019. The fair value of assumed unvested equity awards attributed to post-combination services was $47 million and will be expensed over the remaining requisite service periods of approximately three years on a straight-line basis. The estimated fair value of the stock options assumed by the Company was determined using the Black-Scholes option pricing model. Acquisition of CloudHealth Technologies, Inc. During the third quarter of fiscal 2019, VMware completed the acquisition of CloudHealth Technologies, Inc. (“CloudHealth Technologies”). CloudHealth Technologies delivers a cloud operations platform that enables customers to analyze and manage cloud cost, usage, security, and performance centrally for native public clouds, which expanded VMware’s portfolio of multi-cloud management solutions. The total purchase price was $495 million, net of cash acquired of $26 million. The fair value of assumed unvested equity awards attributed to post-combination services was $39 million and will be expensed over the remaining requisite service periods on a straight-line basis. The estimated fair value of the stock options assumed by the Company was determined using the Black-Scholes option pricing model. Other Fiscal 2019 Asset Acquisitions During the first quarter of fiscal 2019, VMware completed four asset acquisitions, in which the Company acquired certain intangible assets classified as completed technology. The aggregate purchase price of the intangible assets acquired was $26 million. The pro forma financial information assuming fiscal 2019 acquisitions had occurred as of the beginning of the fiscal year prior to the fiscal year of acquisitions, as well as the revenue and earnings generated during the current fiscal year, were not material for disclosure purposes, both individually or in the aggregate. Definite-Lived Intangible Assets, Net The following table summarizes the changes in the carrying amount of definite-lived intangible assets during the periods presented (table in millions): January 29, January 31, 2021 2020 Balance, beginning of the year $ 1,172 $ 966 Additions to intangible assets related to business combinations 149 622 Amortization expense (328) (300) Derecognized leasehold interest — (116) Balance, end of the year $ 993 $ 1,172 Upon adoption of Topic 842 in fiscal 2020, leasehold interest of $116 million related to favorable terms of certain ground lease agreements was derecognized and adjusted to the carrying amount of the operating lease ROU assets and classified as other assets on the consolidated balance sheets. Prior to adoption, these assets were classified as intangible assets, net on the consolidated balance sheets. As of the periods presented, definite-lived intangible assets consisted of the following (amounts in tables in millions): January 29, 2021 Weighted-Average Useful Lives Gross Carrying Amount Accumulated Amortization Net Book Value Purchased technology 5.3 $ 948 $ (462) $ 486 Customer relationships and customer lists 11.4 727 (281) 446 Trademarks and tradenames 7.6 132 (78) 54 Other 2.0 21 (14) 7 Total definite-lived intangible assets $ 1,828 $ (835) $ 993 January 31, 2020 Weighted-Average Useful Lives Gross Carrying Amount Accumulated Amortization Net Book Value Purchased technology 5.7 $ 1,030 $ (488) $ 542 Customer relationships and customer lists 11.4 739 (200) 539 Trademarks and tradenames 7.6 131 (58) 73 Other 2.0 22 (4) 18 Total definite-lived intangible assets $ 1,922 $ (750) $ 1,172 Amortization expense on definite-lived intangible assets was $328 million, $300 million and $247 million during the years ended January 29, 2021, January 31, 2020 and February 1, 2019, respectively. Based on intangible assets recorded as of January 29, 2021 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): 2022 $ 300 2023 249 2024 197 2025 104 2026 64 Thereafter 79 Total $ 993 Goodwill The following table summarizes the changes in the carrying amount of goodwill during the year ended January 29, 2021 (table in millions): January 29, January 31, 2021 2020 Balance, beginning of the year $ 9,329 $ 7,418 Increase in goodwill due to business combinations and related adjustments 270 1,911 Balance, end of the year $ 9,599 $ 9,329 |
Realignment
Realignment | 12 Months Ended |
Jan. 29, 2021 | |
Restructuring and Related Activities [Abstract] | |
Realignment | Realignment During the third quarter of fiscal 2021, VMware approved a plan to streamline its operations and better align resources with its business priorities. As a result of this action, approximately 280 positions were eliminated during the year ended January 29, 2021. VMware recognized $42 million of severance-related realignment expenses during the year ended January 29, 2021 on the consolidated statements of income. Actions associated with this plan were substantially complete by the end of fiscal 2021. During the fourth quarter of fiscal 2020, VMware approved a plan to streamline its operations, with plans to better align business priorities and shift positions to lower cost locations. As a result of these actions, approximately 1,100 positions were eliminated during the year ended January 31, 2020. VMware recognized $79 million of severance-related realignment expenses during the year ended January 31, 2020 on the consolidated statements of income. Actions associated with this plan were completed during fiscal 2021. The following tables summarize the activity for the accrued realignment expenses for the years ended January 29, 2021 and January 31, 2020 (table in millions): For the Year Ended January 29, 2021 Balance as of Realignment Expense Utilization Balance as of Severance-related costs $ 74 $ 42 $ (113) $ 3 For the Year Ended January 31, 2020 Balance as of Realignment Expense Utilization Balance as of Severance-related costs $ — $ 79 $ (5) $ 74 |
Net Income Per Share
Net Income Per Share | 12 Months Ended |
Jan. 29, 2021 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share Basic net income per share is computed by dividing net income by the weighted-average number of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number 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 units (“RSUs”), including performance stock unit (“PSU”) awards, and stock options, including purchase options under VMware’s employee stock purchase plan, which included Pivotal’s employee stock purchase plan through the date of acquisition. Securities are excluded from the computation of diluted net income per share if their effect would be anti-dilutive. VMware uses the two-class method to calculate net income per share as both classes share the same rights in dividends; therefore, basic and diluted earnings per share are the same for both classes. 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): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Net income attributable to VMware, Inc. $ 2,058 $ 6,412 $ 1,650 Weighted-average shares, basic for Classes A and B 419,841 417,058 413,769 Effect of other dilutive securities 3,399 8,177 7,362 Weighted-average shares, diluted for Classes A and B 423,240 425,235 421,131 Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic for Classes A and B $ 4.90 $ 15.37 $ 3.99 Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B $ 4.86 $ 15.08 $ 3.92 The following table sets forth the weighted-average common share equivalents of Class A 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): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Anti-dilutive securities: Employee stock options 150 34 50 Restricted stock units 5,038 315 255 Total 5,188 349 305 |
Cash, Cash Equivalents, Restric
Cash, Cash Equivalents, Restricted Cash and Short-Term Investments | 12 Months Ended |
Jan. 29, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Cash, Cash Equivalents, Restricted Cash and Short-Term Investments | Cash, Cash Equivalents, Restricted Cash and Short-Term Investments Cash and Cash Equivalents Cash and cash equivalents totaled $4.7 billion and $2.9 billion as of January 29, 2021 and January 31, 2020, respectively. Cash equivalents were $3.8 billion as of January 29, 2021 and consisted of money-market funds of $3.7 billion and time deposits of $102 million. Cash equivalents were $2.3 billion as of January 31, 2020 and consisted of money-market funds of $2.2 billion and time deposits of $102 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 consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash as of January 29, 2021 and January 31, 2020 (table in millions): January 29, January 31, 2021 2020 Cash and cash equivalents $ 4,692 $ 2,915 Restricted cash within other current assets 56 83 Restricted cash within other assets 22 33 Total cash, cash equivalents and restricted cash $ 4,770 $ 3,031 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 Short-term investments totaled $23 million as of January 29, 2021 and consisted of marketable equity securities that were previously subject to a certain sale restriction and therefore were classified as other assets as of January 31, 2020. The unrealized loss on short-term investments was not material during the year ended January 29, 2021. Refer to Note K for more information regarding the Company’s marketable equity securities. |
Debt
Debt | 12 Months Ended |
Jan. 29, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Debt Unsecured Senior Notes On April 7, 2020, VMware issued three series of unsecured senior notes pursuant to a public debt offering. The proceeds from the issuance were $2.0 billion, net of debt discount of $3 million and debt issuance costs of $17 million. VMware also has three series of unsecured senior notes issued on August 21, 2017 (collectively with the notes issued April 7, 2020, the “Senior Notes”). The carrying value of the Senior Notes as of the periods presented was as follows (amounts in millions): January 29, January 31, Effective Interest Rate 2021 2020 Senior Notes issued August 21, 2017: 2.30% Senior Note Due August 21, 2020 $ — $ 1,250 2.56% 2.95% Senior Note Due August 21, 2022 1,500 1,500 3.17% 3.90% Senior Note Due August 21, 2027 1,250 1,250 4.05% Senior Notes issued April 7, 2020: 4.50% Senior Note Due May 15, 2025 750 — 4.70% 4.65% Senior Note Due May 15, 2027 500 — 4.80% 4.70% Senior Note Due May 15, 2030 750 — 4.86% Total principal amount 4,750 4,000 Less: unamortized discount (7) (5) Less: unamortized debt issuance costs (26) (16) Net carrying amount 4,717 3,979 Current portion of long-term debt — 1,248 Long-term debt $ 4,717 $ 2,731 On May 11, 2020, VMware exercised a make-whole call and redeemed the $1.3 billion unsecured senior note due August 21, 2020 at a premium. The loss on extinguishment of debt was not material during the year ended January 29, 2021 and was recognized in other income (expense), net on the consolidated statements of income. Interest on the Senior Notes issued on April 7, 2020 is payable semiannually in arrears, on May 15 and November 15 of each year, beginning November 15, 2020. The interest rate on each note issued on April 7, 2020 is subject to adjustment based on certain rating events. Interest on the Senior Notes issued on August 21, 2017 is payable semiannually in arrears, on February 21 and August 21 of each year. Interest expense was $183 million, $129 million and $129 million during the years ended January 29, 2021, January 31, 2020 and February 1, 2019, respectively. Interest expense, which included amortization of discount and issuance costs, was recognized on the 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, 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. The Senior Notes contain restrictive covenants that, in 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. Refer to Note D for disclosure regarding the note payable to Dell. Revolving Credit Facility On September 12, 2017, 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 $1.0 billion for general corporate purposes. Commitments under the 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. A s of January 29, 2021 and January 31, 2020, there was no outstanding borrowing under the revolving credit facility. The credit agreement contains certain representations, warranties and covenants. Commitment fees, interest rates and other terms of borrowing under the revolving credit facility may vary based on VMware’s external credit ratings. The amount paid in connection with the ongoing commitment fee, which is payable quarterly in arrears, was not significant duri ng each of the years ended January 29, 2021, January 31, 2020 and February 1, 2019 . On September 8, 2017, Pivotal entered into a senior secured revolving loan facility in an aggregate principal amount not to exceed $100 million. The revolving loan facility was amended on May 6, 2019 and terminated on October 22, 2019. During the year ended February 1, 2019, $15 million was borrowed under the revolving loan facility. The total outstanding balance of $35 million was repaid during the year ended February 1, 2019. Senior Unsecured Term Loan Facility On September 26, 2019, VMware entered into a senior unsecured term loan facility (the “Term Loan”) with a syndicate of lenders that provided the Company with a borrowing capacity of up to $2.0 billion through February 7, 2020 for general corporate purposes. During the year ended January 31, 2020, the Company drew down an aggregate of $3.4 billion and repaid an aggregate of $1.9 billion. As of January 31, 2020, the outstanding balance on the Term Loan of $1.5 billion, net of unamortized debt issuance costs, was included in current portion of long-term debt and other borrowings on the consolidated balance sheets. During the third quarter of fiscal 2021, VMware repaid the outstanding balance of $1.5 billion on the Term Loan. The Term Loan contained certain representations, warranties and covenants. Commitment fees paid were not significant during the year ended January 31, 2020. Interest expense for the Term Loan, including amortization of issuance costs, was $17 million and $15 million during the years ended January 29, 2021 and January 31, 2020, respectively. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Jan. 29, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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. The following tables set forth the fair value hierarchy of VMware’s cash equivalents that were required to be measured at fair value as of the periods presented (tables in millions): January 29, 2021 Level 1 Level 2 Total Cash equivalents: Money-market funds $ 3,738 $ — $ 3,738 Time deposits (1) — 102 102 Total cash equivalents $ 3,738 $ 102 $ 3,840 Short-term investments: Marketable equity securities $ 23 $ — $ 23 Total short-term investments $ 23 $ — $ 23 January 31, 2020 Level 1 Level 2 Total Cash equivalents: Money-market funds $ 2,158 $ — $ 2,158 Time deposits (1) — 102 102 Total cash equivalents $ 2,158 $ 102 $ 2,260 (1) Time deposits were valued at amortized cost, which approximated fair value. The note payable to Dell, the Senior Notes and the Term Loan were not adjusted to fair value. The fair value of the note payable to Dell was $276 million and $269 million as of January 29, 2021 and January 31, 2020, respectively. The fair value of the Senior Notes was approximately $5.3 billion and $4.1 billion as of January 29, 2021 and January 31, 2020, respectively. The fair value of the Term Loan approximated its carrying value as of January 31, 2020 due to its short-term nature. Fair value for the note payable to Dell, the Senior Notes and the Term Loan was estimated primarily based on observable market interest rates (Level 2 inputs). VMware offers a deferred compensation plan for eligible employees, which allows participants to defer payment for part or all of their compensation. There is no net impact to the consolidated statements of income 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 this plan have not been included in the above tables. Assets associated with this plan were the same as the liabilities at $140 million and $106 million as of January 29, 2021 and January 31, 2020, respectively, and were included in other assets and other liabilities on the consolidated balance sheets, respectively. Equity Securities With a Readily Determinable Fair Value VMware’s equity securities include an investment in a company that completed its initial public offering during the third quarter of fiscal 2021. As of January 29, 2021, this investment had a fair value of $162 million, of which $139 million was included in other assets due to a certain sale restriction and $23 million was included in short-term investments as they were unrestricted and available for sale. During the year ended January 29, 2021, VMware sold $26 million of its marketable equity securities, and the realized loss on the sale was not material. VMware also recognized an unrealized gain of $163 million during the year ended January 29, 2021, to adjust the remaining investment to its fair value using quoted prices for identical assets in an active market (Level 1). As of January 31, 2020, this investment had a carrying value of $25 million and was included in other assets on the consolidated balance sheet. The unrealized gain recognized during the year ended January 31, 2020 was $21 million. All gains and losses on these securities, whether realized or unrealized, are recognized in other income (expense), net on the consolidated statements of income. 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. As of January 29, 2021 and January 31, 2020, investments in privately held companies, which consisted primarily of equity securities, had a carrying value of $129 million and $134 million, respectively, and were included in other assets on the consolidated balance sheets. During the y ears ended January 29, 2021 and February 1, 2019, VMware recognized unrealized losses of $14 million and $13 million respectively, on these securities. During the year ended January 31, 2020, VMware recognized an unrealized gain of $16 million on these securities. A |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 12 Months Ended |
Jan. 29, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | 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 consolidated balance sheets and is subsequently reclassified to the related operating expense line item on the consolidated statements of income in the same period that the underlying expenses are incurred. During the years ended January 29, 2021, January 31, 2020 and February 1, 2019, the effective portion of gains or losses reclassified to the consolidated statements of income was not significant. 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 consolidated statements of income in the same period that the interest charges are incurred. These forward contracts have contractual maturities of twelve months or less, and as of January 29, 2021 and January 31, 2020, outstanding forward contracts had a total notional value of $486 million and $480 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 January 29, 2021 and January 31, 2020. During the years ended January 29, 2021, January 31, 2020 and February 1, 2019, 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 consolidated statements of income. These forward contracts generally have a contractual maturity of one month, and as of January 29, 2021 and January 31, 2020, outstanding forward contracts had a total notional value of $1.2 billion and $1.1 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 January 29, 2021 and January 31, 2020. VMware recognized a loss of $63 million during the year ended January 29, 2021, and gains of $54 million and $69 million during the years ended January 31, 2020 and February 1, 2019, respectively, related to the settlement of forward contracts. Gains and losses are recorded in other income (expense), net on the 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 during the years ended January 29, 2021 and January 31, 2020 resulted in net gains of $31 million and $31 million, respectively. The combined gains and losses related to the settlement of forward contracts and the underlying foreign currency denominated assets and liabilities were not significant during the year ended February 1, 2019. Net gains and losses are recorded in other income (expense), net on the consolidated statements of income. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Jan. 29, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net, as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Equipment and software $ 1,620 $ 1,404 Buildings and improvements 1,137 1,088 Furniture and fixtures 132 120 Construction in progress 82 106 Total property and equipment 2,971 2,718 Accumulated depreciation (1,637) (1,438) Total property and equipment, net $ 1,334 $ 1,280 As of January 29, 2021 and January 31, 2020, construction in progress primarily represented various buildings and site improvements that had not yet been placed into service. Depreciation expense was $253 million, $234 million and $211 million during the years ended January 29, 2021, January 31, 2020 and February 1, 2019, respectively. |
Leases
Leases | 12 Months Ended |
Jan. 29, 2021 | |
Leases [Abstract] | |
Leases | LeasesVMware has operating and finance leases primarily related to office facilities and equipment, which have remaining lease terms of one month to 25 years. Lease expense recorded in the consolidated statements of income was $230 million and $206 million during the years ended January 29, 2021 and January 31, 2020, respectively. The components of lease expense during the periods presented were as follows (table in millions): Twelve Months Ended January 29, January 31, 2021 2020 Operating lease expense $ 190 $ 167 Finance lease expense: Amortization of ROU assets $ 6 $ 4 Interest on lease liabilities 2 1 Total finance lease expense $ 8 $ 5 Short-term lease expense $ 3 $ 3 Variable lease expense $ 29 $ 31 Total lease expense $ 230 $ 206 From time to time, VMware enters into lease arrangements with Dell. Lease expense incurred for arrangements with Dell was not significant during the periods presented. The Company subleases certain leased office space to third parties when it determines there is excess leased capacity. Sublease income was $20 million and $22 million during the years ended January 29, 2021 and January 31, 2020, respectively. Supplemental cash flow information related to operating and finance leases during the periods presented were as follows (table in millions): Twelve Months Ended January 29, January 31, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 174 $ 167 Operating cash flows from finance leases 1 2 Financing cash flows from finance leases 4 1 ROU assets obtained in exchange for lease liabilities: Operating leases $ 275 $ 226 Finance leases 1 63 Supplemental balance sheet information related to operating and finance leases as of the period presented was as follows (table in millions): January 29, 2021 Operating Leases Finance Leases ROU assets, non-current (1) $ 997 $ 53 Lease liabilities, current (2) $ 109 $ 5 Lease liabilities, non-current (3) 891 50 Total lease liabilities $ 1,000 $ 55 January 31, 2020 Operating Leases Finance Leases ROU assets, non-current (1) $ 886 $ 58 Lease liabilities, current (2) $ 109 $ 4 Lease liabilities, non-current (3) 746 55 Total lease liabilities $ 855 $ 59 (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 consolidated balance sheets. (2) Current lease liabilities are included primarily in accrued expenses and other on the consolidated balance sheets. An immaterial amount is presented in due from related parties, net on the consolidated balance sheets. (3) Non-current operating lease liabilities are presented as operating lease liabilities on the consolidated balance sheets. Non-current finance lease liabilities are included in other liabilities on the consolidated balance sheets. Lease term and discount rate related to operating and finance leases as of the period presented were as follows: January 29, January 31, 2021 2020 Weighted-average remaining lease term (in years) Operating leases 12.6 13.3 Finance leases 8.3 9.2 Weighted-average discount rate Operating leases 3.5 % 3.8 % Finance leases 2.9 % 3.1 % The following represents VMware’s future minimum lease payments under non-cancellable operating and finance leases as of the period presented (table in millions): January 29, 2021 Operating Leases Finance Leases 2022 $ 141 $ 6 2023 166 7 2024 135 7 2025 105 6 2026 88 8 Thereafter 651 27 Total future minimum lease payments 1,286 61 Less: Imputed interest (286) (6) Total lease liabilities (1) $ 1,000 $ 55 (1) Total lease liabilities as of January 29, 2021 excluded legally binding lease payments for leases signed but not yet commenced of $72 million. The amount of the future operating lease commitments after fiscal 2026 is primarily for 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. |
Leases | LeasesVMware has operating and finance leases primarily related to office facilities and equipment, which have remaining lease terms of one month to 25 years. Lease expense recorded in the consolidated statements of income was $230 million and $206 million during the years ended January 29, 2021 and January 31, 2020, respectively. The components of lease expense during the periods presented were as follows (table in millions): Twelve Months Ended January 29, January 31, 2021 2020 Operating lease expense $ 190 $ 167 Finance lease expense: Amortization of ROU assets $ 6 $ 4 Interest on lease liabilities 2 1 Total finance lease expense $ 8 $ 5 Short-term lease expense $ 3 $ 3 Variable lease expense $ 29 $ 31 Total lease expense $ 230 $ 206 From time to time, VMware enters into lease arrangements with Dell. Lease expense incurred for arrangements with Dell was not significant during the periods presented. The Company subleases certain leased office space to third parties when it determines there is excess leased capacity. Sublease income was $20 million and $22 million during the years ended January 29, 2021 and January 31, 2020, respectively. Supplemental cash flow information related to operating and finance leases during the periods presented were as follows (table in millions): Twelve Months Ended January 29, January 31, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 174 $ 167 Operating cash flows from finance leases 1 2 Financing cash flows from finance leases 4 1 ROU assets obtained in exchange for lease liabilities: Operating leases $ 275 $ 226 Finance leases 1 63 Supplemental balance sheet information related to operating and finance leases as of the period presented was as follows (table in millions): January 29, 2021 Operating Leases Finance Leases ROU assets, non-current (1) $ 997 $ 53 Lease liabilities, current (2) $ 109 $ 5 Lease liabilities, non-current (3) 891 50 Total lease liabilities $ 1,000 $ 55 January 31, 2020 Operating Leases Finance Leases ROU assets, non-current (1) $ 886 $ 58 Lease liabilities, current (2) $ 109 $ 4 Lease liabilities, non-current (3) 746 55 Total lease liabilities $ 855 $ 59 (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 consolidated balance sheets. (2) Current lease liabilities are included primarily in accrued expenses and other on the consolidated balance sheets. An immaterial amount is presented in due from related parties, net on the consolidated balance sheets. (3) Non-current operating lease liabilities are presented as operating lease liabilities on the consolidated balance sheets. Non-current finance lease liabilities are included in other liabilities on the consolidated balance sheets. Lease term and discount rate related to operating and finance leases as of the period presented were as follows: January 29, January 31, 2021 2020 Weighted-average remaining lease term (in years) Operating leases 12.6 13.3 Finance leases 8.3 9.2 Weighted-average discount rate Operating leases 3.5 % 3.8 % Finance leases 2.9 % 3.1 % The following represents VMware’s future minimum lease payments under non-cancellable operating and finance leases as of the period presented (table in millions): January 29, 2021 Operating Leases Finance Leases 2022 $ 141 $ 6 2023 166 7 2024 135 7 2025 105 6 2026 88 8 Thereafter 651 27 Total future minimum lease payments 1,286 61 Less: Imputed interest (286) (6) Total lease liabilities (1) $ 1,000 $ 55 (1) Total lease liabilities as of January 29, 2021 excluded legally binding lease payments for leases signed but not yet commenced of $72 million. The amount of the future operating lease commitments after fiscal 2026 is primarily for 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. |
Accrued Expenses and Other
Accrued Expenses and Other | 12 Months Ended |
Jan. 29, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other | Accrued Expenses and Other Accrued expenses and other as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Accrued employee related expenses $ 1,266 $ 845 Accrued partner liabilities 218 181 Customer deposits 294 247 Other (1) 604 878 Total $ 2,382 $ 2,151 (1) Other primarily consists of litigation accrual, leases accrual, income tax payable and indirect tax accrual. Accrued partner liabilities primarily relate to rebates and marketing development fund accruals for channel partners, system vendors and systems integrators. Accrued partner liabilities also include accruals for professional service arrangements for which VMware intends to leverage channel partners to directly fulfill the obligation to its customers. As of January 31, 2020, other included $237 million litigation accrual related to Cirba patent and trademark infringement lawsuit and $155 million accrual for amounts owed to dissenting shareholders in connection with the Pivotal acquisition. Refer to Note E and Note B, respectively, for more information. |
Income Taxes
Income Taxes | 12 Months Ended |
Jan. 29, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The domestic and foreign components of income before income tax for the periods presented were as follows (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Domestic $ 932 $ 895 $ 680 Foreign 1,450 543 1,149 Total income before income tax $ 2,382 $ 1,438 $ 1,829 VMware’s income tax provision (benefit) for the periods presented consisted of the following (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Federal: Current $ 157 $ 78 $ 181 Deferred (19) (219) (92) 138 (141) 89 State: Current 73 45 31 Deferred (14) (44) (10) 59 1 21 Foreign: Current 246 240 137 Deferred (119) (5,018) (8) 127 (4,778) 129 Total income tax provision (benefit) $ 324 $ (4,918) $ 239 Provision for income taxes increased during the year ended January 29, 2021, primarily driven by a decrease in discrete tax benefits related to intra-group transfers of certain of the Company’s intellectual property rights. The increase was also driven by a decrease in excess tax benefits recognized, which were $41 million during the year ended January 29, 2021 compared to $182 million during the year ended January 31, 2020. During the second quarter of fiscal 2020, the Company completed an intra-group transfer of certain of its intellectual property rights (the “IP”) to its Irish subsidiary, where its international business is headquartered (the “IP Transfer”). The transaction changed the Company’s mix of international income from a lower non-U.S. tax jurisdiction to Ireland, which is subject to a statutory tax rate of 12.5%. A discrete tax benefit of $4.9 billion was recognized with a deferred tax asset during the second quarter of fiscal 2020. This deferred tax asset was recognized as a result of the book and tax basis difference on the IP transferred to an Irish subsidiary and was based on the intellectual property’s current fair value. A reconciliation of VMware’s effective tax rate to the statutory federal tax rate for the periods presented is as follows: For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Statutory federal tax rate 21 % 21 % 21 % State taxes, net of federal benefit 2 % — % 1 % Tax rate differential for non-U.S. jurisdictions (8) % (3) % (6) % U.S. tax credits (10) % (17) % (11) % Excess tax benefits from stock-based compensation (1) % (11) % (6) % Discrete tax benefit due to IP Transfer (1) (2) % (343) % — % Permanent items 12 % 9 % 14 % Effective tax rate 14 % (344) % 13 % (1) A discrete tax benefit of $59 million was recognized with a deferred tax asset during the year ended January 29, 2021. This deferred tax asset was recognized as a result of intra-group transfer of Pivotal’s IP rights to an Irish subsidiary. A discrete tax benefit of $4.9 billion was recognized with a deferred tax asset during the year ended January 31, 2020. This deferred tax asset was recognized as a result of the book and tax basis difference on the IP transferred to an Irish subsidiary. Deferred tax assets and liabilities are recognized for future tax consequences resulting from differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to be reversed. Significant deferred tax assets and liabilities as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Deferred tax assets: Accruals and other $ 238 $ 169 Lease liabilities 167 152 Unearned revenue 501 390 Stock-based compensation 86 88 Tax credit and net operating loss carryforwards 553 583 Other assets, net 54 51 Intangible and other non-current assets 4,900 4,804 Gross deferred tax assets 6,499 6,237 Valuation allowance (366) (332) Total deferred tax assets 6,133 5,905 Deferred tax liabilities: Deferred commissions (158) (133) ROU Assets (145) (131) Property, plant and equipment, net (109) (101) Total deferred tax liabilities (412) (365) Net deferred tax assets $ 5,721 $ 5,540 Net deferred tax assets were comprised of deferred tax assets of $5.8 billion and $5.6 billion as of January 29, 2021 and January 31, 2020, respectively, partially offset by deferred tax liabilities of $60 million and $16 million as of January 29, 2021 and January 31, 2020, respectively. Deferred tax liabilities were included in other liabilities on the consolidated balance sheets for the periods presented. The increase in net deferred tax assets from January 31, 2020 to January 29, 2021 was primarily driven by the increase in unearned revenue, as well as the $59 million deferred tax asset recognized as a result of the intra-group transfer of Pivotal’s intellectual property rights to VMware’s Irish subsidiary. The increase in net deferred tax liabilities from January 31, 2020 to January 29, 2021 was primarily driven by the book and tax basis difference on one of VMware’s investments in equity securities that completed its initial public offering during the third quarter of fiscal 2021 of $52 million. VMware had federal, state and foreign net operating loss carryforwards of $655 million, $714 million and $191 million, as of January 29, 2021, respectively. VMware had federal, state and foreign net operating loss carryforwards of $971 million, $940 million and $199 million as of January 31, 2020, respectively. The federal and state net operating loss carryforwards will start to expire in fiscal 2024 and fiscal 2022, respectively, if not utilized. These net operating losses have various carryforward periods, including certain portions that can be carried forward indefinitely. The majority of the Company’s foreign net operating loss carryforwards can be carried forward indefinitely. VMware had federal research and development (“R&D”) tax credit carryforwards of $46 million and $34 million as of January 29, 2021 and January 31, 2020, respectively. The federal R&D tax credit will start to expire in fiscal 2026, if not utilized. VMware also had California and other state R&D credit carryforwards for income tax purposes of $323 million and $287 million as of January 29, 2021 and January 31, 2020, respectively. The California R&D tax credit carryforwards can be carried forward indefinitely and the other state R&D tax credit carryforwards will start to expire in fiscal 2022, if not utilized. In addition, the amount of foreign tax credit carryforwards held as of January 29, 2021 and January 31, 2020 was not significant. VMware also had non-U.S. capital loss carryforwards of approximately $22 million for both periods as of January 29, 2021 and January 31, 2020, which can be carried forward indefinitely. VMware determined that the realization of deferred tax assets relating to portions of the state net operating loss carryforwards, state R&D tax credits and foreign capital loss carryforwards did not meet the more-likely-than-not threshold. Accordingly, a valuation allowance of $366 million and $332 million was recorded as of January 29, 2021 and January 31, 2020, respectively. If, in the future, new evidence supports the realization of the deferred tax assets related to these items, the valuation allowance will be reversed and a tax benefit will be recorded accordingly. VMware believes it is more-likely-than-not that the net deferred tax assets as of January 29, 2021 and January 31, 2020, will be realized in the foreseeable future as VMware believes that it will generate sufficient taxable income in future years. VMware's ability to generate sufficient taxable income in future years in appropriate tax jurisdictions will determine the amount of net deferred tax asset balances to be realized in future periods. During the year ended January 29, 2021, the total change in the valuation allowance was $34 million, which was primarily due to California R&D credits generated in the current year, partially offset by the California R&D credits usage. For the periods presented, VMware’s rate of taxation in non-U.S. jurisdictions was lower than the U.S. tax rate. VMware’s non-U.S. earnings are primarily earned by its subsidiary organized in Ireland, where the statutory rate is 12.5%. Prior to the year ended February 2, 2018, the Company did not recognize a deferred tax liability related to undistributed foreign earnings of its subsidiaries because such earnings were considered to be indefinitely reinvested in its foreign operations, or were remitted substantially free of U.S. tax. Under the 2017 Tax Act, all foreign earnings are subject to U.S. taxation. As a result, the Company repatriated, and expects to continue to repatriate, a substantial portion of its foreign earnings over time, to the extent that the foreign earnings are not restricted by local laws or result in significant incremental costs associated with repatriating the foreign earnings. As of January 29, 2021, the amount of deferred tax liability related to the potential repatriation of foreign earnings was not material. Further developments in non-U.S. tax jurisdictions and unfavorable changes in non-U.S. tax laws and regulations, such as foreign tax laws enacted in response to the 2017 Tax Act, could result in adverse changes to global taxation and materially affect VMware’s financial position, results of operations, or annual effective tax rate. Tax Sharing Agreement with Dell On December 30, 2019, VMware entered into an amended tax sharing agreement with Dell in connection with, and effective as of, the Pivotal acquisition. The tax sharing agreement with Dell, as amended and subject to certain exceptions, generally limit VMware’s maximum annual tax liability to Dell to the amount VMware would owe on a separate tax return basis. Although VMware’s results are included in the Dell consolidated return for U.S. federal income tax purposes, VMware’s income tax provision is calculated primarily as though VMware were a separate taxpayer. However, under certain circumstances, transactions between VMware and Dell are assessed using consolidated tax return rules. VMware has made payments to Dell pursuant to the tax sharing agreement. The following table summarizes the payments made during the periods presented (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Payments from VMware to Dell, net $ 307 $ 159 $ 243 Payments from VMware to Dell under the tax sharing agreement relate to VMware’s portion of federal income taxes on Dell’s consolidated tax return as well as state tax payments for combined states. The timing of the tax payments due to and from related parties is governed by the tax sharing agreement. VMware’s portion of the Transition Tax is governed by a letter agreement between Dell, EMC and VMware executed during the first quarter of fiscal 2020 (the “Letter Agreement”). The amounts that VMware pays to Dell for its portion of federal income taxes on Dell’s consolidated tax return differ from the amounts VMware would owe on a separate tax return basis and the difference is recognized as a component of additional paid-in capital, generally in the period in which the consolidated tax return is filed. The difference between the amount of tax calculated on a separate tax return basis and the amount of tax calculated pursuant to the tax sharing agreement was recorded as a decrease in additional paid-in capital of $46 million during the year ended January 29, 2021. The difference between the amount of tax calculated on a separate tax return basis and the amount of tax calculated pursuant to the tax sharing agreement was recorded as an increase in additional paid-in capital of $85 million during the year ended January 31, 2020, primarily due to a reduction in Transition Tax liability based on the terms of the Letter Agreement and certain tax attribute determination made by Dell. The amount recognized in additional paid-in capital during the year ended February 1, 2019 was not significant. As a result of the activity under the tax sharing agreement with Dell, amounts due to Dell was $451 million and $529 million as of January 29, 2021 and January 31, 2020, respectively, primarily related to VMware’s estimated tax obligation resulting from the Transition Tax. 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 over a period of five years. Pivotal Tax Sharing Agreement with Dell During the fourth quarter of fiscal 2020, VMware completed the acquisition of Pivotal. Pivotal will continue to file its separate tax return for U.S. federal income tax purposes as it left the Dell consolidated tax group at the time of Pivotal’s IPO in April 2018. Pivotal continues to be included on Dell’s unitary state tax returns. Pursuant to a tax sharing agreement, Pivotal historically received payments from Dell for tax benefits that Dell realized due to Pivotal’s inclusion on such returns. Payments received from Dell were recognized as a component of additional paid-in capital. During the years ended January 31, 2020 and February 1, 2019, $25 million and $15 million, respectively, was recognized in additional paid-in capital related to Pivotal’s tax sharing agreement with Dell. In April 2019, Pivotal and Dell amended their tax sharing agreement with regard to the treatment of certain 2017 Tax Act implications not explicitly covered by the original terms of the tax sharing agreement. The amendment resulted in a one-time payment of $27 million by Dell to Pivotal in August 2019. During the year ended February 1, 2019, payment received from Dell pursuant to the tax sharing agreement was $44 million. Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding interest and penalties associated with unrecognized tax benefits, for the periods presented is as follows (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Balance, beginning of the year $ 479 $ 385 $ 305 Tax positions related to current year: Additions 65 116 57 Tax positions related to prior years: Additions 12 98 44 Reductions (25) (7) (1) Settlements (14) (28) (4) Reductions resulting from a lapse of the statute of limitations (14) (83) (8) Foreign currency effects 5 (2) (8) Balance, end of the year $ 508 $ 479 $ 385 Of the net unrecognized tax benefits, including interest and penalties, $352 million and $323 million were included in income tax payable on the consolidated balance sheets as of January 29, 2021 and January 31, 2020, respectively. Approximately $341 million and $313 million, respectively, would, if recognized, benefit VMware's annual effective income tax rate. VMware includes interest expense and penalties related to income tax matters in the income tax provision. VMware had accrued $48 million of interest and penalties associated with unrecognized tax benefits for both periods as of January 29, 2021 and January 31, 2020. Interest and penalties associated with uncertain tax positions included in income tax expense (benefit) were not significant during the years ended January 29, 2021 and January 31, 2020 and were $15 million during the year ended February 1, 2019. The Dell-owned EMC consolidated group is routinely under audit by the IRS. All U.S. federal income tax matters have been concluded for years through fiscal 2016 while VMware was part of the Dell-owned EMC consolidated group. The IRS has started its examination of fiscal years 2015 through 2019 for the Dell consolidated group, which VMware was part of beginning fiscal 2017. In addition, VMware is under corporate income tax audits in various states and non-U.S. jurisdictions. Consistent with the Company’s historical practices under the tax sharing agreement with EMC, when VMware becomes subject to federal tax audits as a member of Dell’s consolidated group, the tax sharing agreement provides that Dell has authority to control the audit and represent Dell’s and VMware’s interests to the IRS. Open tax years subject to examinations for larger non-U.S. jurisdictions vary beginning in 2008. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. When considering the outcomes and the timing of tax examinations, the expiration of statutes of limitations for specific jurisdictions, or the timing and result of ruling requests from taxing authorities, it is reasonably possible that total unrecognized tax benefits could be potentially reduced by approximately $14 million within the next 12 months. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Jan. 29, 2021 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Special Dividend On July 1, 2018, VMware’s board of directors declared a conditional $11.0 billion Special Dividend, payable pro-rata to VMware stockholders as of the record date. During the fourth quarter of fiscal 2019, the conditions of the Special Dividend were met. The Special Dividend was paid on December 28, 2018 to stockholders of record as of the close of business on December 27, 2018 in the amount of $26.81 per outstanding share of VMware common stock. Stock awards that were outstanding at the time of the Special Dividend were adjusted pursuant to anti-dilution provisions in the Company’s stock plan documents that provide for equitable adjustments to be determined by VMware’s Compensation and Corporate Governance Committee in the event of an extraordinary cash dividend. A conversion ratio based on the per share dividend amount and VMware’s closing stock price on December 28, 2018 was used to adjust the stock awards outstanding at the time of the Special Dividend. The adjustments to awards included increasing the number of outstanding restricted stock units and stock options, as well as reducing the exercise prices of outstanding stock options. The adjustments did not result in incremental stock-based compensation expense as the anti-dilutive adjustments were required by the Company’s equity incentive plan. VMware Class B Common Stock Conversion Rights Each share of Class B common stock is convertible into one share of Class A common stock. If VMware’s Class B common stock is distributed to security holders of Dell in a qualified distribution, the Class B shares will no longer be convertible into shares of Class A common stock unless a stockholder vote is obtained after certain conditions are satisfied. Prior to any such distribution, all Class B shares automatically convert into shares of Class A common stock if Dell transfers such shares to a third party that is not a successor or a Dell subsidiary or at such time as the number of shares of common stock owned by Dell or its successor falls below 20% of the outstanding shares of VMware’s common stock. As of January 29, 2021, 307.2 million shares of Class A common stock were reserved for conversion. VMware Equity Plan In June 2007, VMware adopted its 2007 Equity and Incentive Plan (the “2007 Plan”). On June 25, 2019, VMware amended its 2007 Plan to increase the number of shares available for issuance by 13.0 million shares of Class A common stock. As of January 29, 2021, the number of authorized shares under the 2007 Plan was 145.2 million, including 6.1 million shares automatically added to the share reserve pursuant to anti-dilution provisions of the 2007 Plan triggered by payment of the Special Dividend (the “Anti-Dilution Adjustment”). The number of shares underlying outstanding equity awards that VMware assumes in the course of business acquisitions are also added to the 2007 Plan reserve on an as-converted basis. VMware has assumed 12.1 million shares, which accordingly have been added to authorized shares under the 2007 Plan reserve. Awards under the 2007 Plan may be in the form of stock-based awards, such as restricted stock units, or stock options. VMware’s Compensation and Corporate Governance Committee determines the vesting schedule for all equity awards. Generally, restricted stock grants made under the 2007 Plan have a three-year to four-year period over which they vest and vest 25% the first year and semi-annually thereafter. The per share exercise price for a stock option awarded under the 2007 Plan shall not be less than 100% of the per share fair market value of VMware Class A common stock on the date of grant. Most options granted under the 2007 Plan vest 25% after the first year and monthly thereafter over the following three years and expire between six Pivotal Equity Plan Prior to the acquisition of Pivotal, Pivotal granted stock-based awards, such as restricted stock units or stock options to its employees. Pivotal’s restricted stock grants generally vested over four years and options granted generally vested over 48 months Upon completion of the acquisition by VMware, no further awards will be granted under the plan. Pivotal’s outstanding unvested RSUs and options on the date of the acquisition were converted to VMware RSUs and options and valued at their historical carrying amounts. 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. From time to time, VMware also purchases stock in private transactions, such as those with Dell. All shares repurchased under VMware’s stock repurchase programs are retired. The following table summarizes stock repurchase authorizations approved by VMware’s board of directors, which were open or completed during the years ended January 29, 2021, January 31, 2020 and February 1, 2019 (amounts in table in millions): Announcement Date Amount Authorized Expiration Date Status July 15, 2020 $1,000 January 28, 2022 Open May 29, 2019 1,500 January 28, 2022 (1) Open August 14, 2017 1,000 August 31, 2019 Completed in fiscal 2020 (1) During July 2020, VMware’s board of directors extended authorization of the existing stock repurchase program through January 28, 2022. In the aggregate, $1.1 billion remained available for repurchase as of January 29, 2021. The following table summarizes stock repurchase activity during the periods presented (aggregate purchase price in millions, shares in thousands): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Aggregate purchase price (1) $ 945 $ 1,334 $ 42 Class A common stock repurchased 6,944 7,664 286 Weighted-average price per share $ 136.13 $ 174.02 $ 148.07 (1) The aggregate purchase price of repurchased shares is classified as a reduction to additional paid-in capital until the balance is reduced to zero and the excess is recorded as a reduction to retained earnings. VMware and Pivotal 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 Class A 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-based or market-based vesting component. Upon vesting, PSU awards convert into VMware’s Class A common stock at various ratios ranging from 0.1 to 2.0 shares per PSU, depending upon the degree of achievement of the performance or market-based target designated by each award. If minimum performance thresholds are not achieved, then no shares are issued. Pivotal’s restricted stock consisted of RSU awards. The value of the grant was based on Pivotal’s stock price on the date of the grant. Upon the completion of the acquisition by VMware, all outstanding Pivotal RSUs were converted to VMware RSUs using a conversion ratio of 0.1. The following table summarizes restricted stock activity since February 2, 2018 (units in thousands): VMware RSUs Pivotal RSUs Number of Units Weighted-Average Grant Date Fair Value Number of Units Weighted-Average Grant Date Fair Value Outstanding, February 2, 2018 17,360 $ 78.62 — $ — Granted 6,663 146.61 9,854 15.78 Special Dividend adjustment 3,236 n/a n/a n/a Vested (7,370) 75.45 — — Forfeited (1,674) 86.90 (353) 16.09 Outstanding, February 1, 2019 (1) 18,215 90.06 9,501 15.77 Granted (2) 9,074 157.07 20,504 16.02 Vested (8,179) 80.28 (4,009) 15.56 Forfeited (3) (1,636) 101.29 (25,996) 16.01 Outstanding, January 31, 2020 17,474 128.38 — — Granted 11,201 149.63 n/a n/a Vested (8,296) 114.59 n/a n/a Forfeited (2,588) 137.55 n/a n/a Outstanding, January 29, 2021 17,790 147.46 n/a n/a (1) The weighted-average grant date fair value of outstanding RSU awards as of February 1, 2019 reflects the adjustments to the awards as a result of the Special Dividend. (2) RSUs granted under the VMware equity plan includes 2.2 million RSUs issued for outstanding unvested RSUs assumed as part of the Pivotal acquisition. (3) RSUs forfeited under the Pivotal equity plan includes 21.7 million RSUs that were converted to VMware RSUs as part of the Pivotal acquisition, using a conversion ratio of 0.1. As of January 29, 2021, the 17.8 million units outstanding included 17.2 million of RSUs and 0.6 million of PSUs. The above table includes RSUs issued for outstanding unvested RSUs in connection with business combinations. Restricted stock that is expected to vest as of January 29, 2021 was as follows (units in thousands, aggregate intrinsic value in millions): Number of Units Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (1) Expected to vest 15,214 2.64 $ 2,097 (1) The aggregate intrinsic value represents the total pre-tax intrinsic values based on VMware's closing stock price of $137.85 as of January 29, 2021, which would have been received by the RSU holders had the RSUs been issued as of January 29, 2021. The aggregate vesting date fair value of VMware’s restricted stock that vested during the years ended January 29, 2021, January 31, 2020 and February 1, 2019, was $1.1 billion, $1.4 billion and $1.1 billion respectively. As of January 29, 2021, restricted stock representing 17.8 million shares of VMware’s Class A common stock were outstanding, with an aggregate intrinsic value of $2.5 billion based on VMware’s closing stock price as of January 29, 2021. The aggregate vesting date fair value of Pivotal’s restricted stock that vested during the year ended January 31, 2020, prior to the acquisition, was $68 million. No restricted stock vested during the year ended February 1, 2019. VMware and Pivotal Employee Stock Purchase Plans In June 2007, VMware adopted its 2007 Employee Stock Purchase Plan (the “ESPP”), which is intended to be qualified under Section 423 of the Internal Revenue Code. On June 25, 2019, VMware amended its ESPP to increase the number of shares available for issuance by 9.0 million shares of Class A common stock. As of January 29, 2021, the number of authorized shares under the ESPP was 32.3 million shares. Under the ESPP, eligible VMware employees are granted options to purchase shares at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. The option period is generally twelve months and includes two embedded six-month option periods. Options are exercised at the end of each embedded option period. If the fair market value of the stock is lower on the first day of the second embedded option period than it was at the time of grant, then the twelve-month option period expires and each participant is granted a new twelve-month option. As of January 29, 2021, 12.3 million shares of VMware Class A common stock were available for issuance under the ESPP. The following table summarizes ESPP activity for VMware during the periods presented (cash proceeds in millions, shares in thousands): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Cash proceeds $ 207 $ 172 $ 161 Class A common stock purchased 2,025 1,489 1,895 Weighted-average price per share $ 102.44 $ 115.51 $ 84.95 As of January 29, 2021, $107 million of ESPP withholdings were recorded as a liability in accrued expenses and other on the consolidated balance sheets for the purchase that occurred on February 28, 2021. Prior to the acquisition of Pivotal, Pivotal granted options to eligible Pivotal employees to purchase shares of its Class A common stock at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value of the Pivotal stock at the time of exercise. Pivotal’s ESPP activity was not material during the periods presented. VMware and Pivotal Stock Options The following table summarizes stock option activity for VMware and Pivotal since February 2, 2018 (shares in thousands): VMware Stock Options Pivotal Stock Options Number of Shares Weighted-Average Exercise Price Number of Shares Weighted-Average Exercise Price Outstanding, February 2, 2018 1,647 $ 54.63 54,388 $ 7.82 Granted 574 16.07 2,832 14.03 Special Dividend adjustment 348 n/a n/a n/a Forfeited (31) 24.44 (2,028) 9.35 Expired — — (273) 7.02 Exercised (569) 46.73 (9,018) 6.89 Outstanding, February 1, 2019 (1) 1,969 36.50 45,901 8.31 Granted (2) 1,571 73.19 — — Forfeited (3) (149) 52.83 (10,822) 10.65 Expired — — (128) 10.10 Exercised (4) (776) 39.94 (34,951) 7.59 Outstanding, January 31, 2020 2,615 56.58 — — Granted 31 43.20 n/a n/a Forfeited (156) 70.75 n/a n/a Exercised (1,247) 52.34 n/a n/a Outstanding, January 29, 2021 1,243 58.68 n/a n/a (1) The weighted-average exercise price of options outstanding as of February 1, 2019 reflects the adjustments to the options as a result of the Special Dividend. (2) Stock option granted under the VMware equity plan includes 0.6 million options issued for unvested options assumed as part of the Pivotal acquisition. (3) Stock options forfeited under the Pivotal equity plan includes 6.2 million options converted to VMware options as part of the Pivotal acquisition, using a conversion ratio of 0.1. (4) Stock options exercised under the Pivotal equity plan includes $22.4 million of vested options that were settled in cash as part of the Pivotal acquisition. The above table includes stock options granted in conjunction with unvested stock options assumed in business combinations. As a result, the weighted-average exercise price per share may vary from the VMware stock price at time of grant. The stock options outstanding as of January 29, 2021 had an aggregate intrinsic value of $98 million based on VMware’s closing stock price as of January 29, 2021. Options outstanding that are exercisable and that have vested and are expected to vest as of January 29, 2021 were as follows (outstanding options in thousands, aggregate intrinsic value in in millions): VMware Stock Options Outstanding Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value (1) Exercisable 769 $ 54.72 5.12 $ 64 Vested and expected to vest 1,228 58.26 5.89 98 (1) The aggregate intrinsic values represent the total pre-tax intrinsic values based on VMware's closing stock price of $137.85 as of January 29, 2021, which would have been received by the option holders had all in-the-money options been exercised as of that date. The total fair value of VMware stock options that vested during the years ended January 29, 2021, January 31, 2020 and February 1, 2019 was $92 million, $64 million and $35 million, respectively. Total fair value of Pivotal stock options that vested during the years ended January 31, 2020 and February 1, 2019 was $27 million and $41 million, respectively. The VMware stock options exercised during the years ended January 29, 2021, January 31, 2020 and February 1, 2019 had a pre-tax intrinsic value of $111 million, $103 million and $56 million, respectively. The Pivotal options exercised during the years ended January 31, 2020 and February 1, 2019 had a pre-tax intrinsic value of $278 million and $97 million, respectively. The pre-tax intrinsic value of Pivotal options exercised during the year ended January 31, 2020 includes vested options that were settled in cash as part of the Pivotal acquisition. VMware Shares Repurchased for Tax Withholdings During the years ended January 29, 2021, January 31, 2020 and February 1, 2019, VMware repurchased 3.0 million, 3.0 million and 2.6 million, respectively, of Class A common stock, for $413 million, $521 million and $373 million, respectively, to cover tax withholding obligations in connection with such equity awards. These amounts may differ from the amounts of cash remitted for tax withholding obligations on the consolidated statements of cash flows due to the timing of payments. Pursuant to the respective award agreements, these shares were withheld in conjunction with the net share settlement upon the vesting of restricted stock and restricted stock units (including PSUs) during the period. The value of the withheld shares, including restricted stock units, was classified as a reduction to additional paid-in capital. Net Excess Tax Benefits Net excess tax benefits recognized in connection with stock-based awards are included in income tax benefit on the consolidated statements of income. Net excess tax benefits recognized during the years ended January 29, 2021, January 31, 2020 and February 1, 2019 were $41 million, $182 million and $116 million, respectively. Stock-Based Compensation The following table summarizes the components of total stock-based compensation included in VMware’s consolidated statements of income during the periods presented (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Cost of license revenue $ 1 $ 1 $ 1 Cost of subscription and SaaS revenue 19 13 7 Cost of services revenue 99 83 58 Research and development 524 459 391 Sales and marketing 322 293 226 General and administrative 157 168 117 Stock-based compensation 1,122 1,017 800 Income tax benefit (231) (347) (253) Total stock-based compensation, net of tax $ 891 $ 670 $ 547 As of January 29, 2021, the total unrecognized compensation cost for stock options and restricted stock was $1.9 billion and will be recognized through fiscal 2025 with a weighted-average remaining period of 1.5 years. Stock-based compensation related to VMware equity awards held by VMware employees is recognized on VMware’s consolidated statements of income over the awards’ requisite service periods. Fair Value of VMware and Pivotal Options The fair value of each option to acquire VMware Class A common stock and Pivotal Class A common stock granted during the periods presented was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: For the Year Ended January 29, January 31, February 1, VMware Stock Options 2021 2020 2019 Dividend yield None None None Expected volatility 38.8 % 34.0 % 31.9 % Risk-free interest rate 0.4 % 1.5 % 2.9 % Expected term (in years) 2.6 2.7 3.2 Weighted-average fair value at grant date $ 102.55 $ 98.00 $ 143.01 Pivotal Stock Options Dividend yield n/a n/a None Expected volatility n/a n/a 33.4 % Risk-free interest rate n/a n/a 2.8 % Expected term (in years) n/a n/a 6.08 Weighted-average fair value at grant date n/a n/a $ 5.23 VMware Employee Stock Purchase Plan Dividend yield None None None Expected volatility 36.1 % 27.4 % 33.5 % Risk-free interest rate 1.0 % 1.7 % 2.0 % Expected term (in years) 0.7 0.6 0.8 Weighted-average fair value at grant date $ 33.60 $ 35.66 $ 34.72 The weighted-average grant date fair value of VMware stock options can fluctuate from period to period primarily due to higher valued options assumed through business combinations with exercise prices lower than the fair market value of VMware’s stock on the date of grant. For equity awards granted under the VMware equity plan, volatility was based on an analysis of historical stock prices and implied volatility of VMware’s Class A common stock. The expected term was based on historical exercise patterns and post-vesting termination behavior, the term of the option period for grants made under the ESPP, or the weighted-average remaining term for options assumed in acquisitions. VMware’s expected dividend yield input was zero as the Company has not historically paid, nor expects in the future to pay, regular dividends on its common stock. The risk-free interest rate was based on a U.S. Treasury instrument whose term is consistent with the expected term of the stock options. For equity awards granted under the Pivotal equity plan, volatility was based on the volatility of a group of comparable public companies based on size, stage of life cycle, profitability, growth and other factors. The expected term was estimated using the simplified method and was determined based on the vesting terms, exercise terms and contractual lives of the options. Pivotal’s expected dividend yield input was zero as the Company has not historically paid regular dividends on its common stock. The risk-free interest rate was based on a U.S. Treasury instrument whose term was consistent with the expected term of the stock options. Accumulated Other Comprehensive Income (Loss) The changes in components of accumulated other comprehensive income (loss) during the periods presented were as follows (tables in millions): Unrealized Gain (Loss) on Foreign Currency Translation Adjustments Total Balance, February 1, 2019 $ 2 $ (4) $ (2) Amounts reclassified from accumulated other comprehensive income (loss) to the consolidated statements of income, net of tax (provision) benefit of $—, $— and $— (2) — (2) Other comprehensive income (loss), net (2) — (2) Balance, January 31, 2020 — (4) (4) Unrealized gains (losses), net of tax provision (benefit) of $—, $— and $— (1) — (1) Other comprehensive income (loss), net (1) — (1) Balance, January 29, 2021 $ (1) $ (4) $ (5) Unrealized gains and losses on VMware’s available-for-sale securities are reclassified to investment income on the consolidated statements of income in the period that such gains and losses are realized. The effective portion of gains or losses resulting from changes in the fair value of forward contracts designated as cash flow hedging instruments is reclassified to its related operating expense line item on the consolidated statements of income in the same period that the underlying expenses are incurred. The amounts recorded to the related operating expense functional line items on the consolidated statements of income were not significant to the individual functional line items during the periods presented. |
Segment Information
Segment Information | 12 Months Ended |
Jan. 29, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Segment InformationVMware operates in one reportable operating segment; thus, all required financial segment information is included in the consolidated financial statements. Operating segments are defined as 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): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Revenue: License $ 3,033 $ 3,181 $ 3,042 Subscription and SaaS 2,587 1,877 1,303 Total license and subscription and SaaS 5,620 5,058 4,345 Services: Software maintenance 5,105 4,754 4,351 Professional services 1,042 999 917 Total services 6,147 5,753 5,268 Total revenue $ 11,767 $ 10,811 $ 9,613 Revenue by geographic area during the periods presented was as follows (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 United States $ 5,878 $ 5,405 $ 4,696 International 5,889 5,406 4,917 Total $ 11,767 $ 10,811 $ 9,613 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 each of the years ended January 29, 2021, January 31, 2020 and February 1, 2019. Long-lived assets by geographic area, which primarily include property and equipment, net, as of the periods presented were as follows (table in millions): January 29, January 31, 2021 2020 United States $ 864 $ 860 International 241 209 Total $ 1,105 $ 1,069 As of January 29, 2021, the U.S. and India accounted for 80% and 10% of these assets, respectively. No individual country other than the U.S. accounted for 10% or more of these assets as of January 31, 2020. VMware’s product and service solutions are helping customers in the following areas: • Multi-Cloud • Virtual Cloud Network • Digital Workspace • Application Modernization • Intrinsic Security VMware develops and markets product and service offerings within each of these areas. Additionally, synergies are leveraged across these areas. VMware’s products and services from each area may also be bundled as part of an enterprise agreement arrangement or packaged together and sold as a solution. Accordingly, it is not practicable to determine revenue by each of the areas described above. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Jan. 29, 2021 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | VMWARE, INC. SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (in millions) Tax Valuation Allowance Balance at Beginning of Period Tax Valuation Allowance Charged to Income Tax Provision Tax Valuation Allowance Credited to Other Accounts Tax Valuation Allowance Credited to Income Tax Provision Balance at End of Period Year ended January 29, 2021 income tax valuation allowance $ 332 $ 58 $ (1) $ (23) $ 366 Year ended January 31, 2020 income tax valuation allowance 283 89 — (40) 332 Year ended February 1, 2019 income tax valuation allowance 310 65 (32) (60) 283 |
Overview and Basis of Present_2
Overview and Basis of Presentation (Policies) | 12 Months Ended |
Jan. 29, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Retrospective Combination of Historical Financial Statements and Basis of Presentation | Retrospective Combination of Historical Financial Statements In December 2019, VMware completed the acquisition of Pivotal, which was, at the time, a subsidiary of VMware’s parent company, Dell Technologies Inc. (“Dell”). The purchase of the controlling interest in Pivotal from Dell was accounted for as a transaction between entities under common control in accordance with Accounting Standards Codification 805-50, Business Combination - Related Issues, which requires retrospective combination of entities for all periods presented, as if the combination had been in effect since the inception of common control. The consolidated financial statements of VMware and notes thereto are presented on a combined basis, as both VMware and Pivotal were under common control for all periods presented. Refer to Note B for more information on VMware’s acquisition of Pivotal. Basis of Pre sentation The consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for annual financial reporting. Effective September 7, 2016, Dell (formerly Denali Holding Inc.) acquired EMC Corporation (“EMC”), VMware’s parent company, including EMC’s majority control of VMware. As of January 29, 2021, Dell controlled 80.6% of VMware’s outstanding common stock and 97.4% of the combined voting power of VMware’s outstanding common stock, including 31 million shares of VMware’s Class A common stock and all of VMware’s Class B common stock. As VMware is a majority-owned and controlled subsidiary of Dell, its results of operations and financial position are consolidated with Dell’s financial statements. Management believes the assumptions underlying the 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 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. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of VMware and subsidiaries in which VMware has a controlling financial interest. The portion of results of operations attributable to the non-controlling interests for Pivotal prior to the acquisition was included in net loss attributable to non-controlling interests on the consolidated statements of income for the periods presented. As part of the acquisition of Pivotal, VMware acquired the non-controlling interests in Pivotal from the holders of Pivotal Class A common stock and has held 100% of the controlling financial interest in Pivotal since December 2019. The cumulative portion of the results of operations and changes in the net assets of Pivotal attributable to the non-controlling interests through the acquisition date were reclassified to additional paid-in capital on the consolidated balance sheet as of January 31, 2020. 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 consolidated statements of cash flows based upon the nature of the underlying transaction. |
Use of Accounting Estimates | 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. |
Revenue Recognition and Deferred Commissions | Revenue Recognition VMware derives revenue primarily from licensing software under perpetual licenses or consumption-based contracts and related software maintenance and support, subscriptions, hosted services, training and consulting services. VMware accounts for a contract with a customer if all criteria defined by ASC 606, Revenue from Contracts with Customers are met, including that collectibility of consideration is probable. At inception of a contract with a customer, the Company evaluates whether the promised products and services represent distinct performance obligations within the context of the contract. Performance obligations that are both capable of being distinct on their own and distinct within the context of the contract are recognized on their own as distinct performance obligations. Performance obligations under which both of these two criteria are not met are recognized as a combined, single performance obligation. Determining whether the Company’s licenses, subscriptions and services are considered distinct performance obligations that should be accounted for separately or together often involves assumptions and significant judgments that can have a significant impact on the timing and amount of revenue recognized. Revenue is recognized upon transfer of control of licenses, subscriptions or services to the customer in an amount that reflects the consideration VMware expects to receive in exchange for those licenses, services or subscriptions. Control of a promised license, subscription or service may be transferred to a customer either at a point in time or over time, which affects the timing of revenue recognition. VMware’s contracts with customers may include a combination of licenses, subscriptions and services that are accounted for as distinct performance obligations. Licenses that represent distinct performance obligations are recognized at a point in time when the software license keys have been made available to the customer. Licenses sold as part of the Company’s subscriptions that do not represent distinct performance obligations are recognized over time along with the associated services that form a combined performance obligation with the software. Management assesses relevant contractual terms in contracts with customers and applies significant judgment in identifying and accounting for all terms and conditions in certain contracts. Certain contracts include third-party offerings and revenue that may be recognized net of the third-party costs, based upon an assessment as to whether VMware had control of the underlying third-party offering. Revenue is recognized net of any taxes invoiced to customers, which are subsequently remitted to governmental authorities. From time to time, VMware may enter into revenue and purchase contracts with the same customer within a short period of time. VMware evaluates the underlying economics and fair value of the consideration payable to the customer to determine if any portion of the consideration payable to the customer exceeds the fair value of the goods and services received and should be accounted for as a reduction of the transaction price of the revenue contract. License Revenue VMware generally sells its license software through distributors, resellers, system vendors, systems integrators and its direct sales force. Performance obligations related to license revenue, including the license portion of term licenses, represent functional intellectual property under which a customer has the legal right to the on-premises license. The license provides significant standalone functionality and is a separate performance obligation from the maintenance and support and professional services sold by VMware. On-premises license revenue is recognized at a point in time, upon delivery and transfer of control of the underlying license to the customer. License revenue from on-premises license software sold to original equipment manufacturers (“OEMs”) is recognized when the sale to the end user occurs. Revenue is recognized upon reporting by the OEMs of their sales, and for the period where information of the underlying sales has not been made available, revenue is recognized based upon estimated sales. Subscription and SaaS Revenue VMware’s subscription and SaaS revenue consists of hosted services, license usage fees from the Company’s VCPP, and perpetual or subscription license sales of its software platform with open source licenses or offerings under which licenses and services are accounted for as combined performance obligations. VMware’s hosted services consist of certain software offerings sold as a service-based technology without the customer’s ability to take possession of the software over the subscription term. Hosted services are recognized as SaaS revenue over time as customers consume the services or ratably over the term of the subscription, commencing upon provisioning of the service. VCPP partners license on-premises software from VMware on a monthly basis under a usage-based model. Generally, contracts with VCPP partners include cancellation rights. Revenue recognition is based on fees associated with reported license consumption by the VCPP partners and includes estimates for the period when consumption information has not been made available. Subscription license sales of the Company’s software platform offering provides customers with a term-based license to its platform, which includes, among other items, open-source software, support, enhancements, upgrades and compatibility to certified systems, all of which are offered on an if-and-when available basis. Subscription revenue is recognized ratably over the contract term beginning on the date that the Company’s platform is made available to the customer. Subscription sales also include offerings sold on a perpetual and term basis where licenses provide customers with access to and the right to utilize the threat intelligence capabilities and ongoing support. VMware considers the software license and access to critical threat intelligence capabilities to be a single performance obligation. Subscription revenue is recognized ratably over the contract term beginning on the date the software is delivered to the customer. Subscription licenses sold on a term-basis are generally over a one Services Revenue VMware’s services revenue generally consists of software maintenance and support and professional services. Software maintenance and support offerings entitle customers to receive major and minor product upgrades, on a when-and-if-available basis, and technical support. Maintenance and support services are comprised of multiple performance obligations including updates, upgrades to licenses and technical support. While separate performance obligations are identified within maintenance and support services, the underlying performance obligations generally have a consistent continuous pattern of transfer to a customer during the term of a contract. Maintenance and support services revenue is recognized ratably over the contract duration. Professional services include design, implementation, training and consulting services. Professional services performed by VMware represent distinct performance obligations as they do not modify or customize licenses sold. These services are not highly interdependent or highly interrelated to licenses sold such that a customer would not be able to use the licenses without the professional services. Revenue from fixed fee professional services engagements is recognized based on progress made toward the total project effort, which can be reasonably estimated. As a practical expedient, VMware recognizes revenue from professional services engagements invoiced on a time and materials basis as the hours are incurred based on VMware’s right to invoice amounts for performance completed to date. Contracts with Multiple Performance Obligations VMware enters into revenue contracts with multiple performance obligations in which a customer may purchase combinations of licenses, maintenance and support, subscriptions, hosted services, training, consulting services, and rights to future products and services. For contracts with multiple performance obligations, VMware allocates total transaction value to the identified underlying performance obligations based on relative standalone selling price (“SSP”). VMware typically estimates SSP of services based on observable transactions when the services are sold on a standalone basis and those prices fall within a reasonable range. VMware utilizes the residual approach to estimate SSP for products or services sold to customers due to highly variable pricing. Rebates and Marketing Development Funds Rebates, which are offered to certain channel partners and represent a form of variable consideration, are accounted for as a reduction to the transaction price on eligible contracts. Rebates are determined based on eligible sales during the quarter or based on actual achievement to quarterly target sales. The reduction of the aggregate transaction price against eligible contracts is allocated to the applicable performance obligations. The difference between the estimated rebates recognized and the actual amounts paid has not been material to date. Certain channel partners are also reimbursed for direct costs related to marketing or other services that are defined under the terms of the marketing development programs. Estimated reimbursements for marketing development funds are accounted for as consideration payable to a customer, reducing the transaction price of the underlying contracts. The most likely amount method is used to estimate the marketing fund reimbursements at the end of the quarter and the reduction of transaction price is allocated to the applicable performance obligations. The difference between the estimated reimbursement and the actual amount paid to channel partners has not been material to date. Returns Reserves With limited exceptions, VMware’s return policy does not allow product returns for a refund. VMware estimates and records reserves for product returns at the time of sale based on historical return rates. Amounts are recorded as a reduction of revenue or unearned revenue. Returns reserves were not material for all periods presented. Deferred Commissions Sales commissions, including the employer portion of payroll taxes, earned by VMware’s sales force are considered incremental and recoverable costs of obtaining a contract, and are deferred and generally amortized on a straight-line basis over the expected period of benefit. The expected period of benefit is generally determined using the contract term or underlying technology life, if renewals are expected and the renewal commissions are not commensurate with the initial commissions. Sales commissions related to software maintenance and support renewals are deferred and amortized on a straight-line basis over the contractual renewal period. |
Foreign Currency Remeasurement and Translation | Foreign Currency Remeasurement and TranslationThe United States (“U.S.”) dollar is the functional currency of VMware’s foreign subsidiaries as of January 29, 2021. As of January 31, 2020, the U.S. dollar was the functional currency for the majority of VMware’s foreign subsidiaries, except for certain Pivotal foreign subsidiaries, many of which were wound down during fiscal 2021. Assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date. VMware records net gains and losses resulting from foreign exchange transactions as a component of foreign currency exchange gains and losses in other income (expense), net on the consolidated statements of income. These gains and losses are net of those recognized on foreign currency forward contracts (“forward contracts”) not designated as hedges that VMware enters into to partially mitigate its exposure to foreign currency fluctuations. VMware records foreign currency translation adjustments in other comprehensive income (loss) |
Cash and Cash Equivalents, Short-Term Investments, and Restricted Cash | Cash and Cash Equivalents, Short-Term Investments, and Restricted Cash From time to time, VMware invests primarily in money market funds, highly liquid debt instruments of the U.S. government and its agencies and U.S. and foreign corporate debt securities. All highly liquid investments with maturities of 90 days or less from date of purchase are classified as cash equivalents and all highly liquid investments with maturities of greater than 90 days from date of purchase as short-term investments. Short-term investments are classified as available-for-sale securities. VMware may sell these securities at any time for use in current operations or for other purposes, such as consideration for acquisitions and strategic investments. When invested, fixed income investments are reported at market value and unrealized gains and losses on these investments, net of tax, are included in accumulated other comprehensive loss, a component of stockholders’ equity. Realized gains or losses are included on the consolidated statements of income. Gains and losses on the sale of fixed income securities issued by the same issuer and of the same type are determined using the first-in first-out method. When a determination has been made that an other-than-temporary decline in fair value has occurred, the amount of the decline that is related to a credit loss is realized and is included on the consolidated statements of income. |
Investments in Equity Securities | Investments in Equity Securities VMware holds equity securities in publicly and privately held companies. VMware elected to measure securities in privately held companies at cost less impairment, if any, adjusted for observable price changes in orderly transactions for the identical or a similar security of the same issuer. VMware’s securities in publicly held companies are measured at fair value |
Allowance for Credit Losses | Allowance for Credit Losses VMware maintains an allowance for credit losses for estimated losses on uncollectible accounts receivable. VMware determines the allowance based on various factors such as historical experience, the age of the receivable and current economic conditions that may affect customers’ ability to pay. The allowance for credit losses was not significant for all periods presented. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net is recorded at cost. Depreciation commences upon placing the asset in service and is recognized on a straight-line basis over the estimated useful life of the assets, as follows: Buildings Term of underlying land lease Land improvements 15 years Furniture and fixtures 7 years Equipment 3 to 6 years Software 3 to 8 years Leasehold improvements 20 years, not to exceed the shorter of the estimated useful life or remaining lease term Upon retirement or disposition, the asset cost and related accumulated depreciation are removed with any gain or loss recognized on the consolidated statements of income. Repair and maintenance costs that do not extend the economic life of the underlying assets are expensed as incurred. |
Capitalized Software Development Costs | Capitalized Software Development Costs Costs associated with internal-use software, including those used to provide hosted services, during the application development stage are capitalized. Capitalization of costs begins when the preliminary project stage is completed, management has committed to funding the project, and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalization ceases at the point when the project is substantially complete and is ready for its intended purpose. The capitalized amounts are included in property and equipment, net on the consolidated balance sheets. Development costs of software to be sold, leased, or otherwise marketed are subject to capitalization beginning when technological feasibility for the product has been established and ending when the product is available for general release. During the years presented, software development costs incurred for products during the time period between reaching technological feasibility and general release were not material and accordingly were expensed as incurred. |
Business Combinations | Business Combinations For business combinations, with the exception of acquisitions of entities under common control, VMware recognizes the identifiable assets acquired, the liabilities assumed, and any non-controlling interests in an acquiree, which are measured based on the acquisition date fair value. Goodwill is measured as the excess of consideration transferred over the net amounts of the identifiable tangible and intangible assets acquired and the liabilities assumed at the acquisition date. VMware uses significant estimates and assumptions to determine the fair value of assets acquired and liabilities assumed and the related useful lives of the acquired assets, when applicable, as of the acquisition date. When those estimates are provisional, VMware refines them as necessary during the measurement period. The measurement period is the period after the acquisition date, not to exceed one year, in which VMware may gather and analyze the necessary information about facts and circumstances that existed as of the acquisition date to adjust the provisional amounts recognized. Measurement period adjustments are recorded during the period in which the adjustment amount is determined. All other adjustments are recorded to the consolidated statements of income. Acquisitions of entities under common control requires retrospective combination of entities for all periods presented, as if the combination had been in effect since the inception of common control. Assets and liabilities transferred are recorded at their historical carrying amounts on the date of the transfer. The difference between purchase consideration and historical value of the net assets on the date of the transfer are recognized in total stockholders’ equity on the consolidated balance sheets. |
Purchased Intangible Assets and Goodwill | Purchased Intangible Assets and Goodwill Goodwill is evaluated for impairment during the third quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. VMware elected to perform a quantitative assessment of goodwill with respect to its one reporting unit. In doing so, VMware compared the enterprise fair value to the carrying amount of the reporting unit, including goodwill. VMware concluded that, to date, there have been no impairments of goodwill. Purchased intangible assets with finite lives are generally amortized over their estimated useful lives using the straight-line method. VMware reviews intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities Derivative instruments are measured at fair value and reported as current assets and current liabilities on the consolidated balance sheets, as applicable. To manage VMware’s exposure to foreign currency fluctuations, VMware enters into forward contracts to hedge a portion of VMware’s net outstanding monetary asset or liability positions. These forward contracts are generally entered into on a monthly basis, with a typical contractual term of one month. These forward contracts are not designated as hedging instruments under applicable accounting guidance and therefore are adjusted to fair value through other income (expense), net on the consolidated statements of income. Additionally, VMware enters into forward contracts, which it designates as cash flow hedges to manage the volatility of cash flows that relate to operating expenses denominated in certain foreign currencies. These forward contracts are entered into annually, have maturities of twelve months or less, and are adjusted to fair value through accumulated other comprehensive loss, net of tax, on the consolidated balance sheets. When the underlying expense transaction occurs, the gains or losses on the forward contract are subsequently reclassified from accumulated other comprehensive loss to the related operating expense line item on the consolidated statements of income. The Company does not, and does not intend to, use derivative financial instruments for trading or speculative purposes. |
Employee Benefit Plans | Employee Benefit PlansThe Company has a defined contribution program for U.S. employees that complies with Section 401(k) of the Internal Revenue Code. In addition, the Company offers defined contribution plans to employees in certain countries outside the U.S. |
Advertising | AdvertisingAdvertising costs are expensed as incurred. |
Income Taxes | Income Taxes Income taxes as presented herein are calculated on a separate tax return basis, although VMware is included in the consolidated tax return of Dell. However, under certain circumstances, transactions between VMware and Dell are assessed using consolidated tax return rules. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their reported amounts using enacted tax rates in effect for the year in which the differences are expected to reverse. Tax credits are generally recognized as reductions of income tax provisions in the year in which the credits arise. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. During the fourth quarter of fiscal 2020, VMware completed the acquisition of Pivotal. Pivotal will continue to file its separate tax return for U.S. federal income tax purposes as it has since left the Dell consolidated tax group at the time of Pivotal’s initial public offering (“IPO”) in April 2018. The U.S. Tax Cuts and Jobs Act enacted on December 22, 2017 (the “2017 Tax Act”) introduced significant changes to U.S. income tax law. During December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which allowed for the recognition of provisional tax amounts during a measurement period not to extend beyond one year of the enactment date. Provisional taxes relating to the effect of the tax law changes, including the estimated transition tax and the remeasurement of U.S. deferred tax assets and liabilities, among others, were recognized during fiscal 2018. The Company completed its analysis of the impact of the 2017 Tax Act and recorded immaterial adjustments during the fourth quarter of fiscal 2019. The Global Intangible Low-Taxed Income (“GILTI”) provisions of the 2017 Tax Act require VMware to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. GAAP allows the Company to choose between an accounting policy that treats the U.S. tax under GILTI provisions as either a current expense, as incurred, or as a component of the Company’s measurement of deferred taxes. VMware has elected to record impacts of GILTI as period costs and recognized the tax impacts associated with GILTI as a current expense on its consolidated statements of income beginning with the year ended February 1, 2019. The difference between the income taxes payable or receivable that is calculated on a separate return basis and the amount paid to or received from Dell pursuant to VMware’s tax sharing agreement is presented as a component of additional paid-in capital, generally in the period in which the consolidated return is filed. Refer to Note P for further information. |
Net Income Per Share | Net Income Per Share Basic net income per share is calculated using the weighted-average number of shares of VMware’s common stock outstanding during the period. Diluted net income per share is calculated using the weighted-average number of common stock, including the dilutive effect of equity awards as determined under the treasury stock method. VMware has two classes of common stock, Classes A and B. For purposes of calculating net income per share, VMware uses the two-class method. As both classes share the same rights in dividends, basic and diluted net income per share are the same for both classes. |
Concentrations of Risks | Concentrations of Risks Financial instruments, which potentially subject VMware to concentrations of credit risk, consist principally of cash and cash equivalents, short-term investments and accounts receivable. Cash on deposit with banks may exceed the amount of insurance provided on such deposits. These deposits may be redeemed upon demand. VMware places cash and cash equivalents and short-term investments primarily in money market funds and fixed income securities and limits the amount of investment with any single issuer and any single financial institution. VMware held a diversified portfolio of money market funds and fixed income securities, which primarily consisted of various highly liquid debt instruments of the U.S. government and its agencies and U.S. and foreign corporate debt securities. VMware’s fixed income investment portfolio was denominated in U.S. dollars and consisted of securities with various maturities. VMware manages counterparty risk through necessary diversification of the investment portfolio among various financial institutions and by entering into derivative contracts with financial institutions that are of high credit quality. VMware provides credit to its customers, including distributors, OEMs, resellers, and end-user customers, in the normal course of business. To reduce credit risk, VMware performs periodic credit evaluations, which consider the customer’s payment history and financial stability. |
Accounting for Stock-Based Compensation | Accounting for Stock-Based Compensation VMware restricted stock, including performance stock unit (“PSU”) awards, are valued based on the Company’s stock price on the date of grant. For those awards expected to vest, which only contain a service vesting feature, compensation cost is recognized on a straight-line basis over the awards’ requisite service periods. PSU awards will vest if certain VMware-designated performance targets, including in certain cases a time-based or market-based vesting component, are achieved. All PSU awards also include a time-based vesting component. If minimum performance thresholds are achieved, each PSU award will convert into VMware’s Class A common stock at a defined ratio depending on the degree of achievement of the performance target designated by each individual award. If minimum performance thresholds are not achieved, then no shares will be issued. Based upon the expected levels of achievement, stock-based compensation is recognized on a straight-line basis over the PSU awards’ requisite service periods. The expected levels of achievement are reassessed over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based compensation is adjusted and recorded on the consolidated statements of income and the remaining unrecognized stock-based compensation is recognized over the remaining requisite service period. With the exception of stock options assumed as a part of transactions under common control, the Black-Scholes option-pricing model is used to determine the fair value of VMware’s stock option awards and Employee Stock Purchase Plan shares. The Black-Scholes model includes assumptions regarding dividend yields, expected volatility, expected term and risk-free interest rates. These assumptions reflect the Company’s best estimates, but these items involve uncertainties based on market and other conditions outside of the Company’s control. For outstanding stock options assumed as a part of a transaction between entities under common control, equity awards are converted to VMware’s Class A common stock and valued at historical carrying amounts. |
Leases | Leases VMware adopted ASU 2016-02, Leases (“Topic 842”) during fiscal 2020 and applied it retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment to retained earnings. The Company elected to apply practical expedients upon transition to this standard, which allowed the Company to use the beginning of the period of adoption as the date of initial application, and to not reassess lease classification, treatment of initial direct costs, or whether an existing or expired contract contained a lease. Prior period amounts were not recast under this standard. VMware determines if an arrangement contains a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether the Company obtains substantially all economic benefits from and has the ability to direct the use of the asset. Right-of-use (“ROU”) assets resulting from operating leases are included in other assets, and operating lease liabilities are included in accrued expenses and other and operating lease liabilities on the consolidated balance sheets. ROU assets resulting from finance leases are included in property and equipment, net, and finance lease liabilities are included in accrued expenses and other and other liabilities on the consolidated balance sheets. Lease assets and liabilities are measured at the present value of the future minimum lease payments over the lease term at commencement date using the incremental borrowing rate. The incremental borrowing rate is generally determined using factors such as the Treasury yields, the Company’s credit rating and interest rates of similar debt instruments with comparable credit ratings, among others. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that VMware will exercise that option. Lease expense resulting from the minimum lease payments is amortized on a straight-line basis over the remaining lease term. VMware elected the practical expedient to exclude leasing arrangements with a duration of less than twelve months. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. Certain lease agreements may contain lease and non-lease components, such as common-area maintenance costs. The Company elected to account for these components as a single lease component in determining the lease liability. Variable lease payments, which are primarily comprised of common-area maintenance, utilities and real estate taxes that are passed on from the lessor in proportion to the space leased by the Company, are recognized in operating expenses in the period in which the obligation for those payments are incurred. |
Recently Adopted Accounting Standards and New Accounting Pronouncement | Recently Adopted Accounting Standards Effective February 1, 2020, VMware adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires the measurement and recognition of current expected credit losses for financial assets. The standard did not have a material impact on the Company’s consolidated financial statements. New Accounting Pronouncement In August 2020, the Financial Accounting Standards Board issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, simplifying the accounting for convertible instruments and contracts in an entity’s own equity and amending the diluted earnings per share guidance for greater consistency within the standard. With the exception of the impact to the Company’s diluted net income per share, which is not expected to be material, the updated standard is not expected to have any other impact on the Company’s financial statements. The updated standard is effective for |
Overview and Basis of Present_3
Overview and Basis of Presentation (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Property and Equipment, Net | Depreciation commences upon placing the asset in service and is recognized on a straight-line basis over the estimated useful life of the assets, as follows: Buildings Term of underlying land lease Land improvements 15 years Furniture and fixtures 7 years Equipment 3 to 6 years Software 3 to 8 years Leasehold improvements 20 years, not to exceed the shorter of the estimated useful life or remaining lease term Property and equipment, net, as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Equipment and software $ 1,620 $ 1,404 Buildings and improvements 1,137 1,088 Furniture and fixtures 132 120 Construction in progress 82 106 Total property and equipment 2,971 2,718 Accumulated depreciation (1,637) (1,438) Total property and equipment, net $ 1,334 $ 1,280 |
Revenue, Unearned Revenue and_2
Revenue, Unearned Revenue and Remaining Performance Obligations (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Unearned Revenue | Unearned revenue as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Unearned license revenue $ 15 $ 19 Unearned subscription and SaaS revenue 1,998 1,534 Unearned software maintenance revenue 7,092 6,700 Unearned professional services revenue 1,209 1,015 Total unearned revenue $ 10,314 $ 9,268 |
Related Parties (Tables)
Related Parties (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | 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 Receipts Unearned Revenue For the Year Ended As of January 29, January 31, February 1, January 29, January 31, 2021 2020 2019 2021 2020 Reseller revenue $ 4,053 $ 3,288 $ 2,355 $ 4,952 $ 3,787 Internal-use revenue 63 82 41 45 57 Collaborative technology project receipts 13 10 4 n/a n/a Information about VMware’s payments for such arrangements during the periods presented consisted of the following (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Purchases and leases of products and purchases of services (1) $ 206 $ 242 $ 200 Dell subsidiary support and administrative costs 74 119 145 (1) Amount includes indirect taxes that were remitted to Dell during the periods presented. Amounts due to and from related parties, net as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Due from related parties, current $ 1,558 $ 1,618 Due to related parties, current (1) 120 161 Due from related parties, net, current $ 1,438 $ 1,457 (1) Includes an immaterial amount related to the Company’s current operating lease liabilities due to related parties. For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Payments from VMware to Dell, net $ 307 $ 159 $ 243 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating Lease and Other Contractual Commitments | VMware’s minimum contractual commitments as of January 29, 2021 were as follows (table in millions): Purchase Obligations Asset Retirement Obligations Total 2022 $ 391 $ 3 $ 394 2023 294 2 296 2024 331 1 332 2025 1 3 4 2026 — 9 9 Thereafter — 5 5 Total $ 1,017 $ 23 $ 1,040 |
Business Combinations, Defini_2
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Business Combinations, Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the allocation of the consideration to the fair value of the assets acquired and liabilities assumed on the date of acquisition (table in millions): Cash $ 111 Accounts receivable 58 Intangible assets 492 Goodwill 1,588 Other acquired assets 52 Total assets acquired 2,301 Unearned revenue 151 Other assumed liabilities 45 Total liabilities assumed 196 Fair value of assets acquired and liabilities assumed $ 2,105 |
Schedule of Finite-Lived Intangible Assets Acquired | The following table summarizes the components of the intangible assets acquired and their estimated useful lives by VMware in conjunction with the acquisition (amounts in table in millions): Weighted-Average Useful Lives Fair Value Amount Purchased technology 4.2 $ 232 Customer relationships and customer lists 7.0 215 Trademarks and tradenames 5.0 25 Other 2.0 20 Total definite-lived intangible assets $ 492 |
Schedule of Finite-Lived Intangible Assets | The following table summarizes the changes in the carrying amount of definite-lived intangible assets during the periods presented (table in millions): January 29, January 31, 2021 2020 Balance, beginning of the year $ 1,172 $ 966 Additions to intangible assets related to business combinations 149 622 Amortization expense (328) (300) Derecognized leasehold interest — (116) Balance, end of the year $ 993 $ 1,172 As of the periods presented, definite-lived intangible assets consisted of the following (amounts in tables in millions): January 29, 2021 Weighted-Average Useful Lives Gross Carrying Amount Accumulated Amortization Net Book Value Purchased technology 5.3 $ 948 $ (462) $ 486 Customer relationships and customer lists 11.4 727 (281) 446 Trademarks and tradenames 7.6 132 (78) 54 Other 2.0 21 (14) 7 Total definite-lived intangible assets $ 1,828 $ (835) $ 993 January 31, 2020 Weighted-Average Useful Lives Gross Carrying Amount Accumulated Amortization Net Book Value Purchased technology 5.7 $ 1,030 $ (488) $ 542 Customer relationships and customer lists 11.4 739 (200) 539 Trademarks and tradenames 7.6 131 (58) 73 Other 2.0 22 (4) 18 Total definite-lived intangible assets $ 1,922 $ (750) $ 1,172 |
Schedule of Future Amortization Expense | Based on intangible assets recorded as of January 29, 2021 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): 2022 $ 300 2023 249 2024 197 2025 104 2026 64 Thereafter 79 Total $ 993 |
Schedule of Goodwill | The following table summarizes the changes in the carrying amount of goodwill during the year ended January 29, 2021 (table in millions): January 29, January 31, 2021 2020 Balance, beginning of the year $ 9,329 $ 7,418 Increase in goodwill due to business combinations and related adjustments 270 1,911 Balance, end of the year $ 9,599 $ 9,329 |
Realignment (Tables)
Realignment (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Restructuring and Related Activities [Abstract] | |
Summary of Accrued Realignment Charges | The following tables summarize the activity for the accrued realignment expenses for the years ended January 29, 2021 and January 31, 2020 (table in millions): For the Year Ended January 29, 2021 Balance as of Realignment Expense Utilization Balance as of Severance-related costs $ 74 $ 42 $ (113) $ 3 For the Year Ended January 31, 2020 Balance as of Realignment Expense Utilization Balance as of Severance-related costs $ — $ 79 $ (5) $ 74 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Earnings Per Share [Abstract] | |
Computations of Basic and Diluted Net Income per Share | 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): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Net income attributable to VMware, Inc. $ 2,058 $ 6,412 $ 1,650 Weighted-average shares, basic for Classes A and B 419,841 417,058 413,769 Effect of other dilutive securities 3,399 8,177 7,362 Weighted-average shares, diluted for Classes A and B 423,240 425,235 421,131 Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic for Classes A and B $ 4.90 $ 15.37 $ 3.99 Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B $ 4.86 $ 15.08 $ 3.92 |
Antidilutive Securities Excluded from Computation of Net Income per Share | The following table sets forth the weighted-average common share equivalents of Class A 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): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Anti-dilutive securities: Employee stock options 150 34 50 Restricted stock units 5,038 315 255 Total 5,188 349 305 |
Cash, Cash Equivalents, Restr_2
Cash, Cash Equivalents, Restricted Cash and Short-Term Investments (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Cash and Cash Equivalents, 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 consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash as of January 29, 2021 and January 31, 2020 (table in millions): January 29, January 31, 2021 2020 Cash and cash equivalents $ 4,692 $ 2,915 Restricted cash within other current assets 56 83 Restricted cash within other assets 22 33 Total cash, cash equivalents and restricted cash $ 4,770 $ 3,031 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Debt Disclosure [Abstract] | |
Carrying Value of Senior Notes | The carrying value of the Senior Notes as of the periods presented was as follows (amounts in millions): January 29, January 31, Effective Interest Rate 2021 2020 Senior Notes issued August 21, 2017: 2.30% Senior Note Due August 21, 2020 $ — $ 1,250 2.56% 2.95% Senior Note Due August 21, 2022 1,500 1,500 3.17% 3.90% Senior Note Due August 21, 2027 1,250 1,250 4.05% Senior Notes issued April 7, 2020: 4.50% Senior Note Due May 15, 2025 750 — 4.70% 4.65% Senior Note Due May 15, 2027 500 — 4.80% 4.70% Senior Note Due May 15, 2030 750 — 4.86% Total principal amount 4,750 4,000 Less: unamortized discount (7) (5) Less: unamortized debt issuance costs (26) (16) Net carrying amount 4,717 3,979 Current portion of long-term debt — 1,248 Long-term debt $ 4,717 $ 2,731 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Hierarchy | The following tables set forth the fair value hierarchy of VMware’s cash equivalents that were required to be measured at fair value as of the periods presented (tables in millions): January 29, 2021 Level 1 Level 2 Total Cash equivalents: Money-market funds $ 3,738 $ — $ 3,738 Time deposits (1) — 102 102 Total cash equivalents $ 3,738 $ 102 $ 3,840 Short-term investments: Marketable equity securities $ 23 $ — $ 23 Total short-term investments $ 23 $ — $ 23 January 31, 2020 Level 1 Level 2 Total Cash equivalents: Money-market funds $ 2,158 $ — $ 2,158 Time deposits (1) — 102 102 Total cash equivalents $ 2,158 $ 102 $ 2,260 (1) |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Depreciation commences upon placing the asset in service and is recognized on a straight-line basis over the estimated useful life of the assets, as follows: Buildings Term of underlying land lease Land improvements 15 years Furniture and fixtures 7 years Equipment 3 to 6 years Software 3 to 8 years Leasehold improvements 20 years, not to exceed the shorter of the estimated useful life or remaining lease term Property and equipment, net, as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Equipment and software $ 1,620 $ 1,404 Buildings and improvements 1,137 1,088 Furniture and fixtures 132 120 Construction in progress 82 106 Total property and equipment 2,971 2,718 Accumulated depreciation (1,637) (1,438) Total property and equipment, net $ 1,334 $ 1,280 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Leases [Abstract] | |
Lease Cost, Cash Flow, Term and Discount Rate | The components of lease expense during the periods presented were as follows (table in millions): Twelve Months Ended January 29, January 31, 2021 2020 Operating lease expense $ 190 $ 167 Finance lease expense: Amortization of ROU assets $ 6 $ 4 Interest on lease liabilities 2 1 Total finance lease expense $ 8 $ 5 Short-term lease expense $ 3 $ 3 Variable lease expense $ 29 $ 31 Total lease expense $ 230 $ 206 Supplemental cash flow information related to operating and finance leases during the periods presented were as follows (table in millions): Twelve Months Ended January 29, January 31, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 174 $ 167 Operating cash flows from finance leases 1 2 Financing cash flows from finance leases 4 1 ROU assets obtained in exchange for lease liabilities: Operating leases $ 275 $ 226 Finance leases 1 63 Lease term and discount rate related to operating and finance leases as of the period presented were as follows: January 29, January 31, 2021 2020 Weighted-average remaining lease term (in years) Operating leases 12.6 13.3 Finance leases 8.3 9.2 Weighted-average discount rate Operating leases 3.5 % 3.8 % Finance leases 2.9 % 3.1 % |
Lease Assets and Liabilities | Supplemental balance sheet information related to operating and finance leases as of the period presented was as follows (table in millions): January 29, 2021 Operating Leases Finance Leases ROU assets, non-current (1) $ 997 $ 53 Lease liabilities, current (2) $ 109 $ 5 Lease liabilities, non-current (3) 891 50 Total lease liabilities $ 1,000 $ 55 January 31, 2020 Operating Leases Finance Leases ROU assets, non-current (1) $ 886 $ 58 Lease liabilities, current (2) $ 109 $ 4 Lease liabilities, non-current (3) 746 55 Total lease liabilities $ 855 $ 59 (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 consolidated balance sheets. (2) Current lease liabilities are included primarily in accrued expenses and other on the consolidated balance sheets. An immaterial amount is presented in due from related parties, net on the consolidated balance sheets. (3) Non-current operating lease liabilities are presented as operating lease liabilities on the consolidated balance sheets. Non-current finance lease liabilities are included in other liabilities on the consolidated balance sheets. |
Operating Lease Liability Maturity | The following represents VMware’s future minimum lease payments under non-cancellable operating and finance leases as of the period presented (table in millions): January 29, 2021 Operating Leases Finance Leases 2022 $ 141 $ 6 2023 166 7 2024 135 7 2025 105 6 2026 88 8 Thereafter 651 27 Total future minimum lease payments 1,286 61 Less: Imputed interest (286) (6) Total lease liabilities (1) $ 1,000 $ 55 (1) Total lease liabilities as of January 29, 2021 excluded legally binding lease payments for leases signed but not yet commenced of $72 million. |
Finance Lease Liability Maturity | The following represents VMware’s future minimum lease payments under non-cancellable operating and finance leases as of the period presented (table in millions): January 29, 2021 Operating Leases Finance Leases 2022 $ 141 $ 6 2023 166 7 2024 135 7 2025 105 6 2026 88 8 Thereafter 651 27 Total future minimum lease payments 1,286 61 Less: Imputed interest (286) (6) Total lease liabilities (1) $ 1,000 $ 55 (1) Total lease liabilities as of January 29, 2021 excluded legally binding lease payments for leases signed but not yet commenced of $72 million. |
Accrued Expenses and Other (Tab
Accrued Expenses and Other (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Payables and Accruals [Abstract] | |
Components of Accrued Expenses | Accrued expenses and other as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Accrued employee related expenses $ 1,266 $ 845 Accrued partner liabilities 218 181 Customer deposits 294 247 Other (1) 604 878 Total $ 2,382 $ 2,151 (1) Other primarily consists of litigation accrual, leases accrual, income tax payable and indirect tax accrual. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax | The domestic and foreign components of income before income tax for the periods presented were as follows (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Domestic $ 932 $ 895 $ 680 Foreign 1,450 543 1,149 Total income before income tax $ 2,382 $ 1,438 $ 1,829 |
Schedule of Components of Income Tax Expense (Benefit) | VMware’s income tax provision (benefit) for the periods presented consisted of the following (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Federal: Current $ 157 $ 78 $ 181 Deferred (19) (219) (92) 138 (141) 89 State: Current 73 45 31 Deferred (14) (44) (10) 59 1 21 Foreign: Current 246 240 137 Deferred (119) (5,018) (8) 127 (4,778) 129 Total income tax provision (benefit) $ 324 $ (4,918) $ 239 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of VMware’s effective tax rate to the statutory federal tax rate for the periods presented is as follows: For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Statutory federal tax rate 21 % 21 % 21 % State taxes, net of federal benefit 2 % — % 1 % Tax rate differential for non-U.S. jurisdictions (8) % (3) % (6) % U.S. tax credits (10) % (17) % (11) % Excess tax benefits from stock-based compensation (1) % (11) % (6) % Discrete tax benefit due to IP Transfer (1) (2) % (343) % — % Permanent items 12 % 9 % 14 % Effective tax rate 14 % (344) % 13 % |
Schedule of Deferred Tax Assets and Liabilities | Significant deferred tax assets and liabilities as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Deferred tax assets: Accruals and other $ 238 $ 169 Lease liabilities 167 152 Unearned revenue 501 390 Stock-based compensation 86 88 Tax credit and net operating loss carryforwards 553 583 Other assets, net 54 51 Intangible and other non-current assets 4,900 4,804 Gross deferred tax assets 6,499 6,237 Valuation allowance (366) (332) Total deferred tax assets 6,133 5,905 Deferred tax liabilities: Deferred commissions (158) (133) ROU Assets (145) (131) Property, plant and equipment, net (109) (101) Total deferred tax liabilities (412) (365) Net deferred tax assets $ 5,721 $ 5,540 |
Schedule of Payments Under the Income Tax Sharing Agreement | 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 Receipts Unearned Revenue For the Year Ended As of January 29, January 31, February 1, January 29, January 31, 2021 2020 2019 2021 2020 Reseller revenue $ 4,053 $ 3,288 $ 2,355 $ 4,952 $ 3,787 Internal-use revenue 63 82 41 45 57 Collaborative technology project receipts 13 10 4 n/a n/a Information about VMware’s payments for such arrangements during the periods presented consisted of the following (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Purchases and leases of products and purchases of services (1) $ 206 $ 242 $ 200 Dell subsidiary support and administrative costs 74 119 145 (1) Amount includes indirect taxes that were remitted to Dell during the periods presented. Amounts due to and from related parties, net as of the periods presented consisted of the following (table in millions): January 29, January 31, 2021 2020 Due from related parties, current $ 1,558 $ 1,618 Due to related parties, current (1) 120 161 Due from related parties, net, current $ 1,438 $ 1,457 (1) Includes an immaterial amount related to the Company’s current operating lease liabilities due to related parties. For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Payments from VMware to Dell, net $ 307 $ 159 $ 243 |
Summary of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding interest and penalties associated with unrecognized tax benefits, for the periods presented is as follows (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Balance, beginning of the year $ 479 $ 385 $ 305 Tax positions related to current year: Additions 65 116 57 Tax positions related to prior years: Additions 12 98 44 Reductions (25) (7) (1) Settlements (14) (28) (4) Reductions resulting from a lapse of the statute of limitations (14) (83) (8) Foreign currency effects 5 (2) (8) Balance, end of the year $ 508 $ 479 $ 385 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Stockholders' Equity Note [Abstract] | |
Stock Repurchase Program | The following table summarizes stock repurchase authorizations approved by VMware’s board of directors, which were open or completed during the years ended January 29, 2021, January 31, 2020 and February 1, 2019 (amounts in table in millions): Announcement Date Amount Authorized Expiration Date Status July 15, 2020 $1,000 January 28, 2022 Open May 29, 2019 1,500 January 28, 2022 (1) Open August 14, 2017 1,000 August 31, 2019 Completed in fiscal 2020 (1) During July 2020, VMware’s board of directors extended authorization of the existing stock repurchase program through January 28, 2022. The following table summarizes stock repurchase activity during the periods presented (aggregate purchase price in millions, shares in thousands): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Aggregate purchase price (1) $ 945 $ 1,334 $ 42 Class A common stock repurchased 6,944 7,664 286 Weighted-average price per share $ 136.13 $ 174.02 $ 148.07 (1) The aggregate purchase price of repurchased shares is classified as a reduction to additional paid-in capital until the balance is reduced to zero and the excess is recorded as a reduction to retained earnings. |
Summary of Restricted Stock Activity | The following table summarizes restricted stock activity since February 2, 2018 (units in thousands): VMware RSUs Pivotal RSUs Number of Units Weighted-Average Grant Date Fair Value Number of Units Weighted-Average Grant Date Fair Value Outstanding, February 2, 2018 17,360 $ 78.62 — $ — Granted 6,663 146.61 9,854 15.78 Special Dividend adjustment 3,236 n/a n/a n/a Vested (7,370) 75.45 — — Forfeited (1,674) 86.90 (353) 16.09 Outstanding, February 1, 2019 (1) 18,215 90.06 9,501 15.77 Granted (2) 9,074 157.07 20,504 16.02 Vested (8,179) 80.28 (4,009) 15.56 Forfeited (3) (1,636) 101.29 (25,996) 16.01 Outstanding, January 31, 2020 17,474 128.38 — — Granted 11,201 149.63 n/a n/a Vested (8,296) 114.59 n/a n/a Forfeited (2,588) 137.55 n/a n/a Outstanding, January 29, 2021 17,790 147.46 n/a n/a (1) The weighted-average grant date fair value of outstanding RSU awards as of February 1, 2019 reflects the adjustments to the awards as a result of the Special Dividend. (2) RSUs granted under the VMware equity plan includes 2.2 million RSUs issued for outstanding unvested RSUs assumed as part of the Pivotal acquisition. (3) RSUs forfeited under the Pivotal equity plan includes 21.7 million RSUs that were converted to VMware RSUs as part of the Pivotal acquisition, using a conversion ratio of 0.1. |
Summary of Restricted Stock Expected to Vest | Restricted stock that is expected to vest as of January 29, 2021 was as follows (units in thousands, aggregate intrinsic value in millions): Number of Units Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (1) Expected to vest 15,214 2.64 $ 2,097 (1) The aggregate intrinsic value represents the total pre-tax intrinsic values based on VMware's closing stock price of $137.85 as of January 29, 2021, which would have been received by the RSU holders had the RSUs been issued as of January 29, 2021. |
Employee Stock Purchase Plan, Activity | The following table summarizes ESPP activity for VMware during the periods presented (cash proceeds in millions, shares in thousands): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Cash proceeds $ 207 $ 172 $ 161 Class A common stock purchased 2,025 1,489 1,895 Weighted-average price per share $ 102.44 $ 115.51 $ 84.95 |
Summary of Stock Option Activity | The following table summarizes stock option activity for VMware and Pivotal since February 2, 2018 (shares in thousands): VMware Stock Options Pivotal Stock Options Number of Shares Weighted-Average Exercise Price Number of Shares Weighted-Average Exercise Price Outstanding, February 2, 2018 1,647 $ 54.63 54,388 $ 7.82 Granted 574 16.07 2,832 14.03 Special Dividend adjustment 348 n/a n/a n/a Forfeited (31) 24.44 (2,028) 9.35 Expired — — (273) 7.02 Exercised (569) 46.73 (9,018) 6.89 Outstanding, February 1, 2019 (1) 1,969 36.50 45,901 8.31 Granted (2) 1,571 73.19 — — Forfeited (3) (149) 52.83 (10,822) 10.65 Expired — — (128) 10.10 Exercised (4) (776) 39.94 (34,951) 7.59 Outstanding, January 31, 2020 2,615 56.58 — — Granted 31 43.20 n/a n/a Forfeited (156) 70.75 n/a n/a Exercised (1,247) 52.34 n/a n/a Outstanding, January 29, 2021 1,243 58.68 n/a n/a (1) The weighted-average exercise price of options outstanding as of February 1, 2019 reflects the adjustments to the options as a result of the Special Dividend. (2) Stock option granted under the VMware equity plan includes 0.6 million options issued for unvested options assumed as part of the Pivotal acquisition. (3) Stock options forfeited under the Pivotal equity plan includes 6.2 million options converted to VMware options as part of the Pivotal acquisition, using a conversion ratio of 0.1. (4) Stock options exercised under the Pivotal equity plan includes $22.4 million of vested options that were settled in cash as part of the Pivotal acquisition. Options outstanding that are exercisable and that have vested and are expected to vest as of January 29, 2021 were as follows (outstanding options in thousands, aggregate intrinsic value in in millions): VMware Stock Options Outstanding Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value (1) Exercisable 769 $ 54.72 5.12 $ 64 Vested and expected to vest 1,228 58.26 5.89 98 (1) The aggregate intrinsic values represent the total pre-tax intrinsic values based on VMware's closing stock price of $137.85 as of January 29, 2021, which would have been received by the option holders had all in-the-money options been exercised as of that date. |
Summary of Components of Stock-Based Compensation | The following table summarizes the components of total stock-based compensation included in VMware’s consolidated statements of income during the periods presented (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Cost of license revenue $ 1 $ 1 $ 1 Cost of subscription and SaaS revenue 19 13 7 Cost of services revenue 99 83 58 Research and development 524 459 391 Sales and marketing 322 293 226 General and administrative 157 168 117 Stock-based compensation 1,122 1,017 800 Income tax benefit (231) (347) (253) Total stock-based compensation, net of tax $ 891 $ 670 $ 547 |
Employee Stock Purchase Plan, Valuation Assumptions | The fair value of each option to acquire VMware Class A common stock and Pivotal Class A common stock granted during the periods presented was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: For the Year Ended January 29, January 31, February 1, VMware Stock Options 2021 2020 2019 Dividend yield None None None Expected volatility 38.8 % 34.0 % 31.9 % Risk-free interest rate 0.4 % 1.5 % 2.9 % Expected term (in years) 2.6 2.7 3.2 Weighted-average fair value at grant date $ 102.55 $ 98.00 $ 143.01 Pivotal Stock Options Dividend yield n/a n/a None Expected volatility n/a n/a 33.4 % Risk-free interest rate n/a n/a 2.8 % Expected term (in years) n/a n/a 6.08 Weighted-average fair value at grant date n/a n/a $ 5.23 VMware Employee Stock Purchase Plan Dividend yield None None None Expected volatility 36.1 % 27.4 % 33.5 % Risk-free interest rate 1.0 % 1.7 % 2.0 % Expected term (in years) 0.7 0.6 0.8 Weighted-average fair value at grant date $ 33.60 $ 35.66 $ 34.72 |
Stock Options, Valuation Assumptions | The fair value of each option to acquire VMware Class A common stock and Pivotal Class A common stock granted during the periods presented was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: For the Year Ended January 29, January 31, February 1, VMware Stock Options 2021 2020 2019 Dividend yield None None None Expected volatility 38.8 % 34.0 % 31.9 % Risk-free interest rate 0.4 % 1.5 % 2.9 % Expected term (in years) 2.6 2.7 3.2 Weighted-average fair value at grant date $ 102.55 $ 98.00 $ 143.01 Pivotal Stock Options Dividend yield n/a n/a None Expected volatility n/a n/a 33.4 % Risk-free interest rate n/a n/a 2.8 % Expected term (in years) n/a n/a 6.08 Weighted-average fair value at grant date n/a n/a $ 5.23 VMware Employee Stock Purchase Plan Dividend yield None None None Expected volatility 36.1 % 27.4 % 33.5 % Risk-free interest rate 1.0 % 1.7 % 2.0 % Expected term (in years) 0.7 0.6 0.8 Weighted-average fair value at grant date $ 33.60 $ 35.66 $ 34.72 |
Schedule of Accumulated Other Comprehensive Income (Loss) | The changes in components of accumulated other comprehensive income (loss) during the periods presented were as follows (tables in millions): Unrealized Gain (Loss) on Foreign Currency Translation Adjustments Total Balance, February 1, 2019 $ 2 $ (4) $ (2) Amounts reclassified from accumulated other comprehensive income (loss) to the consolidated statements of income, net of tax (provision) benefit of $—, $— and $— (2) — (2) Other comprehensive income (loss), net (2) — (2) Balance, January 31, 2020 — (4) (4) Unrealized gains (losses), net of tax provision (benefit) of $—, $— and $— (1) — (1) Other comprehensive income (loss), net (1) — (1) Balance, January 29, 2021 $ (1) $ (4) $ (5) |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Jan. 29, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Type | Revenue by type during the periods presented was as follows (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 Revenue: License $ 3,033 $ 3,181 $ 3,042 Subscription and SaaS 2,587 1,877 1,303 Total license and subscription and SaaS 5,620 5,058 4,345 Services: Software maintenance 5,105 4,754 4,351 Professional services 1,042 999 917 Total services 6,147 5,753 5,268 Total revenue $ 11,767 $ 10,811 $ 9,613 |
Schedule of Revenue by Geographic Area | Revenue by geographic area during the periods presented was as follows (table in millions): For the Year Ended January 29, January 31, February 1, 2021 2020 2019 United States $ 5,878 $ 5,405 $ 4,696 International 5,889 5,406 4,917 Total $ 11,767 $ 10,811 $ 9,613 |
Schedule of Long-Lived Assets by Geographic Area | Long-lived assets by geographic area, which primarily include property and equipment, net, as of the periods presented were as follows (table in millions): January 29, January 31, 2021 2020 United States $ 864 $ 860 International 241 209 Total $ 1,105 $ 1,069 |
Overview and Basis of Present_4
Overview and Basis of Presentation (Basis of Presentation and Principles of Consolidation) (Details) - shares shares in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Pivotal | ||
Overview and Basis of Presentation [Line Items] | ||
Percentage of controlling financial interest | 100.00% | |
VMware | Dell Technologies Inc. | ||
Overview and Basis of Presentation [Line Items] | ||
Outstanding ownership percentage of VMware controlled by Dell | 80.60% | |
Combined voting power of outstanding stock (as a percentage) | 97.40% | |
VMware | Dell Technologies Inc. | Class A Common Stock | ||
Overview and Basis of Presentation [Line Items] | ||
VMware's outstanding common stock controlled by Dell (in shares) | 31 |
Overview and Basis of Present_5
Overview and Basis of Presentation (Revenue Recognition) (Details) - Subscription and SaaS | 12 Months Ended |
Jan. 29, 2021 | |
Minimum | |
Revenue from External Customer [Line Items] | |
Revenue contract term | 1 year |
Maximum | |
Revenue from External Customer [Line Items] | |
Revenue contract term | 3 years |
Overview and Basis of Present_6
Overview and Basis of Presentation (Property and Equipment, Net) (Details) | 12 Months Ended |
Jan. 29, 2021 | |
Land improvements | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 15 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 7 years |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 20 years |
Minimum | Equipment | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Minimum | Software | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Maximum | Equipment | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 6 years |
Maximum | Software | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 8 years |
Overview and Basis of Present_7
Overview and Basis of Presentation (Purchased Intangible Assets and Goodwill) (Details) | 12 Months Ended |
Jan. 29, 2021USD ($)reporting_unit | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable units | reporting_unit | 1 |
Goodwill impairment | $ | $ 0 |
Overview and Basis of Present_8
Overview and Basis of Presentation (Employee Benefit Plans) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Company contributions | $ 176 | $ 169 | $ 122 |
Overview and Basis of Present_9
Overview and Basis of Presentation (Advertising) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Advertising expense | $ 33 | $ 25 | $ 33 |
Overview and Basis of Presen_10
Overview and Basis of Presentation (Concentrations of Risks) (Details) | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Accounts Receivable | Distributor One | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 13.00% | 14.00% | |
Accounts Receivable | Distributor Two | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 12.00% | 11.00% | |
Accounts Receivable | Distributor Three | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | ||
Sales | Distributor One | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% | 12.00% | 13.00% |
Sales | Distributor Two | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | 12.00% |
Pivotal Acquisition (Details)
Pivotal Acquisition (Details) $ / shares in Units, shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2019USD ($)$ / sharesshares | Jul. 31, 2020USD ($) | Jan. 29, 2021USD ($) | Jan. 31, 2020USD ($) | Feb. 01, 2019USD ($) | |
Business Acquisition [Line Items] | |||||
Reduction of additional paid in capital | $ 1,724 | ||||
Cash payout, net of cash acquired | $ 409 | 2,437 | $ 938 | ||
Additional Paid-in Capital | |||||
Business Acquisition [Line Items] | |||||
Reduction of additional paid in capital | 649 | ||||
Pivotal | |||||
Business Acquisition [Line Items] | |||||
Blended price per share (in USD per share) | $ / shares | $ 11.71 | ||||
Aggregate purchase consideration | $ 2,900 | ||||
Aggregate purchase consideration (in USD per share) | $ / shares | $ 15 | ||||
Net cash payout to noncontrolling interest holders | $ 1,700 | ||||
Accrual for amounts owed to dissenting shareholders | 155 | 155 | |||
Excess of purchase consideration paid and accrued over carrying value of noncontrolling interests | 1,800 | ||||
Noncontrolling interest | 1,200 | ||||
Cash payout, net of cash acquired | $ 838 | ||||
Payments to dissenting stockholders | $ 91 | ||||
Pivotal | Additional Paid-in Capital | |||||
Business Acquisition [Line Items] | |||||
Reduction of additional paid in capital | $ 649 | ||||
Pivotal | Class B Common Stock | |||||
Business Acquisition [Line Items] | |||||
Exchange rate ratio | 0.055 | ||||
Pivotal | Dell Technologies Inc. | Class B Common Stock | |||||
Business Acquisition [Line Items] | |||||
Equity instruments issued in acquisition | $ 1,100 | ||||
Shares issued | shares | 7.2 |
Revenue, Unearned Revenue and_3
Revenue, Unearned Revenue and Remaining Performance Obligations (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Revenue from Contract with Customer [Abstract] | |||
Contract assets | $ 43 | $ 26 | |
Customer deposits included in accrued expenses and other | 294 | 247 | |
Customer deposits included in other liabilities | 163 | 143 | |
Deferred commissions, current | 31 | 13 | |
Deferred commissions, non-current | 1,100 | 938 | |
Amortization of deferred commissions | $ 437 | 354 | $ 311 |
Remaining weighted average contractual duration | 2 years | ||
Current period billings | $ 8,400 | 8,100 | |
Revenue recognized from amounts previously classified as unearned revenue | 7,400 | 6,400 | $ 5,500 |
Unearned revenue acquired with business combinations | $ 33 | $ 154 | |
Minimum | |||
Disaggregation of Revenue [Line Items] | |||
Receivables, payment terms | 30 days | ||
Maximum | |||
Disaggregation of Revenue [Line Items] | |||
Receivables, payment terms | 45 days |
Revenue, Unearned Revenue and_4
Revenue, Unearned Revenue and Remaining Performance Obligations (Summary of Unearned Revenue) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Disaggregation of Revenue [Line Items] | ||
Unearned revenue | $ 10,314 | $ 9,268 |
Unearned license revenue | ||
Disaggregation of Revenue [Line Items] | ||
Unearned revenue | 15 | 19 |
Unearned subscription and SaaS revenue | ||
Disaggregation of Revenue [Line Items] | ||
Unearned revenue | 1,998 | 1,534 |
Unearned software maintenance revenue | ||
Disaggregation of Revenue [Line Items] | ||
Unearned revenue | 7,092 | 6,700 |
Unearned professional services revenue | ||
Disaggregation of Revenue [Line Items] | ||
Unearned revenue | $ 1,209 | $ 1,015 |
Revenue, Unearned Revenue and_5
Revenue, Unearned Revenue and Remaining Performance Obligations (Remaining Performance Obligations) (Details) - USD ($) $ in Billions | Jan. 29, 2021 | Jan. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||
Remaining performance obligation | $ 11.3 | $ 10.3 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation percentage | 54.00% | |
Remaining performance obligation period | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-30 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation percentage | 55.00% | |
Remaining performance obligation period | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-30 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation period |
Related Parties (Transactions w
Related Parties (Transactions with Dell) (Details) - employee | 3 Months Ended | 12 Months Ended | |||
Jan. 31, 2020 | Nov. 02, 2018 | Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Dell acting as OEM | |||||
Related Party Transaction [Line Items] | |||||
Percentage of revenues | 4.00% | 4.00% | 3.00% | ||
Dell | OEM Revenue | |||||
Related Party Transaction [Line Items] | |||||
Percentage of revenues | 12.00% | 12.00% | 13.00% | ||
Majority Shareholder | |||||
Related Party Transaction [Line Items] | |||||
Approximate number of employees to be transferred to VMware | 250 | ||||
Majority Shareholder | Business Acquisition | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, transition services period | 18 months | ||||
Majority Shareholder | Dell | Revenue Benchmark | |||||
Related Party Transaction [Line Items] | |||||
Concentration risk, percentage | 35.00% | 31.00% | 25.00% |
Related Parties (Schedule of Re
Related Parties (Schedule of Related Party Transactions) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Related Party Transaction [Line Items] | |||
Unearned Revenue | $ 10,314 | $ 9,268 | |
Dell | |||
Related Party Transaction [Line Items] | |||
Customer deposits | 214 | 194 | |
Dell | Reseller revenue | |||
Related Party Transaction [Line Items] | |||
Revenue and Receipts | 4,053 | 3,288 | $ 2,355 |
Unearned Revenue | 4,952 | 3,787 | |
Dell | Internal-use revenue | |||
Related Party Transaction [Line Items] | |||
Revenue and Receipts | 63 | 82 | 41 |
Unearned Revenue | 45 | 57 | |
Dell | Collaborative technology project receipts | |||
Related Party Transaction [Line Items] | |||
Revenue and Receipts | 13 | 10 | 4 |
Dell | Purchases and leases of products and purchases of services | |||
Related Party Transaction [Line Items] | |||
Related party costs | 206 | 242 | 200 |
Dell | Dell subsidiary support and administrative costs | |||
Related Party Transaction [Line Items] | |||
Related party costs | $ 74 | $ 119 | $ 145 |
Related Parties (Dell Financial
Related Parties (Dell Financial Services) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Dell | Financial Services | |||
Related Party Transaction [Line Items] | |||
Financing fees | $ 60 | $ 66 | $ 40 |
Related Parties (Due To_From Re
Related Parties (Due To/From Related Parties, Net) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jan. 29, 2021 | Jan. 31, 2020 | |
Related Party Transaction [Line Items] | ||
Due from related parties, net cash settlement period | 60 days | |
Dell | ||
Related Party Transaction [Line Items] | ||
Due from related parties, current | $ 1,558 | $ 1,618 |
Due to related parties, current | 120 | 161 |
Due from related parties, net, current | $ 1,438 | $ 1,457 |
Related Parties (Special Divide
Related Parties (Special Dividend) (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 28, 2018 | Jul. 01, 2018 | Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 |
Related Party Transaction [Line Items] | |||||
Conditional cash dividend | $ 11,000 | ||||
Dividend paid per share (in USD per share) | $ 26.81 | ||||
Payment for special dividend | $ 0 | $ 0 | $ 11,000 | ||
Dell | |||||
Related Party Transaction [Line Items] | |||||
Payment for special dividend | $ 9,000 |
Related Parties (Note Payable t
Related Parties (Note Payable to Dell) (Details) - Dell - Notes payable - Note, December 2022 | Jan. 29, 2021USD ($) |
Related Party Transaction [Line Items] | |
Principal amount | $ 270,000,000 |
Interest rate | 1.75% |
Related Parties (Other Related
Related Parties (Other Related Party Transactions) (Details) $ in Millions | 12 Months Ended |
Feb. 01, 2019USD ($) | |
Ford | |
Related Party Transaction [Line Items] | |
Revenue from related parties | $ 12 |
Commitments and Contingencies_2
Commitments and Contingencies (Narrative) (Details) $ in Millions | Jun. 23, 2020USD ($) | Mar. 05, 2020stockholdershares | Jan. 24, 2020USD ($)patent | Oct. 22, 2019patent | Aug. 20, 2019patent | Apr. 25, 2019patenttrademark | Jan. 31, 2020USD ($) |
Appraisal Action | |||||||
Loss Contingencies [Line Items] | |||||||
Number of petitioners | stockholder | 2 | ||||||
Aggregate number of shares seeking a judicial determination of fair value | shares | 10,000,100 | ||||||
Amount paid to the petitioners | $ | $ 91 | ||||||
Cirba Inc. Vs. VMware | |||||||
Loss Contingencies [Line Items] | |||||||
Patent infringement claims | 2 | ||||||
Trademark infringement claims | trademark | 3 | ||||||
Number of patents allegedly infringed upon | 4 | 4 | |||||
Number of patents willfully infringed upon | 2 | ||||||
Damages awarded | $ | $ 237 | $ 237 |
Commitments and Contingencies C
Commitments and Contingencies Commitments and Contingencies (Operating Leases and Other Contractual Commitments) (Details) $ in Millions | Jan. 29, 2021USD ($) |
Purchase Obligations | |
2022 | $ 391 |
2023 | 294 |
2024 | 331 |
2025 | 1 |
2026 | 0 |
Thereafter | 0 |
Total | 1,017 |
Asset Retirement Obligations | |
2022 | 3 |
2023 | 2 |
2024 | 1 |
2025 | 3 |
2026 | 9 |
Thereafter | 5 |
Total | 23 |
Total | |
2022 | 394 |
2023 | 296 |
2024 | 332 |
2025 | 4 |
2026 | 9 |
Thereafter | 5 |
Total | $ 1,040 |
Business Combinations, Defini_3
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Business Combination) (Details) | 3 Months Ended | 12 Months Ended | |||||||||||
Jan. 29, 2021USD ($) | Oct. 30, 2020USD ($) | Jul. 31, 2020USD ($) | May 01, 2020USD ($) | Nov. 01, 2019USD ($)business$ / shares | Aug. 02, 2019USD ($) | May 03, 2019USD ($) | Feb. 01, 2019USD ($) | Nov. 02, 2018USD ($) | May 04, 2018USD ($)asset_acquisition | Jan. 29, 2021USD ($)acquisition | Jan. 31, 2020USD ($) | Oct. 08, 2019USD ($) | |
Business Acquisition [Line Items] | |||||||||||||
Goodwill | $ 9,599,000,000 | $ 7,418,000,000 | $ 9,599,000,000 | $ 9,329,000,000 | |||||||||
Fair value of assumed unvested equity awards | 1,900,000,000 | $ 39,000,000 | $ 1,900,000,000 | ||||||||||
Weighted-average remaining recognition period | 1 year 6 months | ||||||||||||
Number of asset acquisitions | asset_acquisition | 4 | ||||||||||||
Purchased technology | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Asset acquisition consideration transferred | $ 26,000,000 | ||||||||||||
SaltStack, Inc. | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price | $ 51,000,000 | ||||||||||||
Intangible assets | 29,000,000 | ||||||||||||
Goodwill | 24,000,000 | ||||||||||||
Goodwill expected to be deductible for tax purposes | $ 0 | ||||||||||||
SaltStack, Inc. | Completed technology | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 3 years | ||||||||||||
Datrium, Inc. | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price | $ 137,000,000 | ||||||||||||
Intangible assets | 25,000,000 | ||||||||||||
Goodwill | $ 91,000,000 | ||||||||||||
Goodwill, purchase adjustments | 40,000,000 | ||||||||||||
Datrium, Inc. | Completed technology | Minimum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 3 years | ||||||||||||
Datrium, Inc. | Completed technology | Maximum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 5 years | ||||||||||||
Lastline, Inc. | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price | $ 114,000,000 | ||||||||||||
Intangible assets | 29,000,000 | ||||||||||||
Goodwill | 86,000,000 | ||||||||||||
Goodwill expected to be deductible for tax purposes | $ 0 | ||||||||||||
Lastline, Inc. | Completed technology | Minimum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 1 year | ||||||||||||
Lastline, Inc. | Completed technology | Maximum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 4 years | ||||||||||||
Nyansa, Inc. | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price | $ 38,000,000 | ||||||||||||
Intangible assets | 14,000,000 | ||||||||||||
Goodwill | 24,000,000 | ||||||||||||
Goodwill expected to be deductible for tax purposes | $ 0 | ||||||||||||
Nyansa, Inc. | Completed technology | Minimum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 1 year | ||||||||||||
Nyansa, Inc. | Completed technology | Maximum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 4 years | ||||||||||||
Other Acquisitions | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price | $ 68,000,000 | $ 62,000,000 | |||||||||||
Intangible assets | 52,000,000 | 52,000,000 | |||||||||||
Goodwill | $ 16,000,000 | $ 48,000,000 | $ 16,000,000 | ||||||||||
Number of other acquisitions | 4 | 5 | |||||||||||
Other Acquisitions | Completed technology | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Intangible assets | $ 21,000,000 | ||||||||||||
Other Acquisitions | Completed technology | Minimum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 1 year | 1 year | |||||||||||
Other Acquisitions | Completed technology | Maximum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 5 years | 5 years | |||||||||||
Carbon Black | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price | $ 2,000,000,000 | ||||||||||||
Intangible assets | $ 492,000,000 | ||||||||||||
Goodwill | 1,588,000,000 | ||||||||||||
Goodwill expected to be deductible for tax purposes | $ 0 | ||||||||||||
Blended price per share (in USD per share) | $ / shares | $ 26 | ||||||||||||
Consideration held with a third-party paying agent | $ 18,000,000 | ||||||||||||
Award requisite service period (in years) | 2 years | ||||||||||||
Fair value of assumed unvested equity awards | $ 181,000,000 | ||||||||||||
Weighted-average remaining recognition period | 3 years | ||||||||||||
Share conversion ratio | 0.2 | ||||||||||||
Cash acquired from acquisition | $ 111,000,000 | ||||||||||||
Carbon Black | Equity Attributable to Pre-Combination Services | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Fair value of assumed unvested equity awards, pre-combination service cost | 10,000,000 | ||||||||||||
Carbon Black | Equity Attributable to Post Combination Services | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Fair value of assumed unvested equity awards | $ 171,000,000 | ||||||||||||
Carbon Black | Customer relationships and customer lists | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Intangible assets | 215,000,000 | ||||||||||||
Carbon Black | Purchased technology | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Intangible assets | $ 232,000,000 | ||||||||||||
Avi Networks, Inc. | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price | $ 326,000,000 | ||||||||||||
Intangible assets | 94,000,000 | ||||||||||||
Goodwill | 228,000,000 | ||||||||||||
Goodwill expected to be deductible for tax purposes | $ 0 | ||||||||||||
Award requisite service period (in years) | 3 years | ||||||||||||
Cash acquired from acquisition | $ 9,000,000 | ||||||||||||
Consideration held in escrow | 27,000,000 | ||||||||||||
Avi Networks, Inc. | Equity Attributable to Post Combination Services | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Fair value of assumed unvested equity awards | $ 32,000,000 | ||||||||||||
Weighted-average remaining recognition period | 3 years | ||||||||||||
Avi Networks, Inc. | Completed technology | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Intangible assets | $ 79,000,000 | ||||||||||||
Avi Networks, Inc. | Customer relationships and customer lists | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Intangible assets | $ 15,000,000 | ||||||||||||
Avi Networks, Inc. | Developed technology rights and customer relationships | Minimum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 1 year | ||||||||||||
Avi Networks, Inc. | Developed technology rights and customer relationships | Maximum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 8 years | ||||||||||||
AetherPal Inc. | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price | $ 45,000,000 | ||||||||||||
Intangible assets | 12,000,000 | ||||||||||||
Goodwill | 33,000,000 | ||||||||||||
Goodwill expected to be deductible for tax purposes | $ 0 | ||||||||||||
AetherPal Inc. | Developed technology rights and customer relationships | Minimum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 3 years | ||||||||||||
AetherPal Inc. | Developed technology rights and customer relationships | Maximum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Useful lives (in years) | 5 years | ||||||||||||
Heptio | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price | 420,000,000 | ||||||||||||
Cash acquired from acquisition | 15,000,000 | ||||||||||||
Merger consideration payable to employees subject to specified future employment conditions | 117,000,000 | ||||||||||||
Consideration held in escrow | $ 24,000,000 | ||||||||||||
Requisite service period | 4 years | ||||||||||||
Compensation expense | $ 33,000,000 | $ 33,000,000 | |||||||||||
Heptio | Equity Attributable to Post Combination Services | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Fair value of assumed unvested equity awards | $ 47,000,000 | ||||||||||||
Weighted-average remaining recognition period | 3 years | ||||||||||||
CloudHealth Technologies | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price | 495,000,000 | ||||||||||||
Cash acquired from acquisition | $ 26,000,000 |
Business Combinations, Defini_4
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 | Oct. 08, 2019 | Feb. 01, 2019 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 9,599 | $ 9,329 | $ 7,418 | |
Carbon Black | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 111 | |||
Accounts receivable | 58 | |||
Intangible assets | 492 | |||
Goodwill | 1,588 | |||
Other acquired assets | 52 | |||
Total assets acquired | 2,301 | |||
Unearned revenue | 151 | |||
Other assumed liabilities | 45 | |||
Total liabilities assumed | 196 | |||
Fair value of assets acquired and liabilities assumed | $ 2,105 |
Business Combinations, Defini_5
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Intangible Assets Detail) (Details) - USD ($) $ in Millions | Oct. 08, 2019 | Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2019 |
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | $ 1,828 | $ 1,922 | |||
Accumulated Amortization | (835) | (750) | |||
Net Book Value | 993 | 1,172 | $ 966 | ||
Amortization expense | 328 | 300 | $ 247 | ||
Purchased technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 948 | 1,030 | |||
Accumulated Amortization | (462) | (488) | |||
Net Book Value | $ 486 | $ 542 | |||
Purchased technology | Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 5 years 3 months 18 days | 5 years 8 months 12 days | |||
Customer relationships and customer lists | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | $ 727 | $ 739 | |||
Accumulated Amortization | (281) | (200) | |||
Net Book Value | $ 446 | $ 539 | |||
Customer relationships and customer lists | Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 11 years 4 months 24 days | 11 years 4 months 24 days | |||
Trademarks and tradenames | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | $ 132 | $ 131 | |||
Accumulated Amortization | (78) | (58) | |||
Net Book Value | $ 54 | $ 73 | |||
Trademarks and tradenames | Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 7 years 7 months 6 days | 7 years 7 months 6 days | |||
Other | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | $ 21 | $ 22 | |||
Accumulated Amortization | (14) | (4) | |||
Net Book Value | $ 7 | $ 18 | |||
Other | Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 2 years | 2 years | |||
Leasehold interest | Accounting Standards Update 2016-02 | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Net Book Value | $ 116 | ||||
Carbon Black | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | $ 492 | ||||
Carbon Black | Purchased technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 4 years 2 months 12 days | ||||
Intangible assets | $ 232 | ||||
Carbon Black | Customer relationships and customer lists | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 7 years | ||||
Intangible assets | $ 215 | ||||
Carbon Black | Trademarks and tradenames | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 5 years | ||||
Intangible assets | $ 25 | ||||
Carbon Black | Other | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Useful Lives (in years) | 2 years | ||||
Intangible assets | $ 20 |
Business Combinations, Defini_6
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Roll-forward of Intangible Assets) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Finite-lived Intangible Assets [Roll Forward] | |||
Balance, beginning of the year | $ 1,172 | $ 966 | |
Additions to intangible assets related to business combinations | 149 | 622 | |
Amortization expense | (328) | (300) | $ (247) |
Derecognized leasehold interest | 0 | (116) | |
Balance, end of the year | $ 993 | $ 1,172 | $ 966 |
Business Combinations, Defini_7
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Amortization of Intangible Assets) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 |
Business Combinations, Goodwill and Intangible Assets Disclosure [Abstract] | |||
2022 | $ 300 | ||
2023 | 249 | ||
2024 | 197 | ||
2025 | 104 | ||
2026 | 64 | ||
Thereafter | 79 | ||
Net Book Value | $ 993 | $ 1,172 | $ 966 |
Business Combinations, Defini_8
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill (Changes in Carrying Amount of Goodwill) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jan. 29, 2021 | Jan. 31, 2020 | |
Goodwill [Roll Forward] | ||
Balance, beginning of the year | $ 9,329 | $ 7,418 |
Increase in goodwill due to business combinations and related adjustments | 270 | 1,911 |
Balance, end of the year | $ 9,599 | $ 9,329 |
Realignment (Narrative) (Detail
Realignment (Narrative) (Details) $ in Millions | 12 Months Ended | |||
Jan. 29, 2021USD ($)position | Jan. 31, 2020USD ($)position | Feb. 01, 2019USD ($) | ||
Restructuring Cost and Reserve [Line Items] | ||||
Number of positions eliminated | position | 280 | 1,100 | ||
Realignment Expense | [1] | $ 42 | $ 79 | $ 9 |
Severance-related costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Realignment Expense | $ 42 | $ 79 | ||
[1] | Includes stock-based compensation as follows: Cost of license revenue $ 1 $ 1 $ 1 Cost of subscription and SaaS revenue 19 13 7 Cost of services revenue 99 83 58 Research and development 524 459 391 Sales and marketing 322 293 226 General and administrative 157 168 117 |
Realignment (Schedule of Restru
Realignment (Schedule of Restructuring Reserve) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | ||
Restructuring Reserve [Roll Forward] | ||||
Realignment Expense | [1] | $ 42 | $ 79 | $ 9 |
Severance-related costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance as of beginning of period | 74 | 0 | ||
Realignment Expense | 42 | 79 | ||
Utilization | (113) | (5) | ||
Balance as of end of period | $ 3 | $ 74 | $ 0 | |
[1] | Includes stock-based compensation as follows: Cost of license revenue $ 1 $ 1 $ 1 Cost of subscription and SaaS revenue 19 13 7 Cost of services revenue 99 83 58 Research and development 524 459 391 Sales and marketing 322 293 226 General and administrative 157 168 117 |
Net Income Per Share (Computati
Net Income Per Share (Computations of Basic and Diluted Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Earnings Per Share [Abstract] | |||
Net income attributable to VMware, Inc. | $ 2,058 | $ 6,412 | $ 1,650 |
Weighted-average shares, basic for Classes A and B (in shares) | 419,841 | 417,058 | 413,769 |
Effect of dilutive securities (in shares) | 3,399 | 8,177 | 7,362 |
Weighted-average shares, diluted for Classes A and B (in shares) | 423,240 | 425,235 | 421,131 |
Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic for Classes A and B (in USD per share) | $ 4.90 | $ 15.37 | $ 3.99 |
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B (in USD per share) | $ 4.86 | $ 15.08 | $ 3.92 |
Net Income Per Share (Anti-Dilu
Net Income Per Share (Anti-Dilutive Shares Excluded From Net Income) (Details) - Class A Common Stock - shares shares in Thousands | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities, amount (in shares) | 5,188 | 349 | 305 |
Employee stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities, amount (in shares) | 150 | 34 | 50 |
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities, amount (in shares) | 5,038 | 315 | 255 |
Cash, Cash Equivalents, Restr_3
Cash, Cash Equivalents, Restricted Cash and Short-Term Investments (Cash and Cash Equivalents) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Cash equivalents: | ||
Cash and cash equivalents | $ 4,692 | $ 2,915 |
Cash equivalents | 3,800 | 2,300 |
Money-market funds | ||
Cash equivalents: | ||
Cash equivalents | 3,700 | 2,200 |
Time deposits | ||
Cash equivalents: | ||
Cash equivalents | $ 102 | $ 102 |
Cash, Cash Equivalents, Restr_4
Cash, Cash Equivalents, Restricted Cash and Short-Term Investments (Restricted Cash) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 |
Investments, Debt and Equity Securities [Abstract] | ||||
Cash and cash equivalents | $ 4,692 | $ 2,915 | ||
Restricted cash within other current assets | 56 | 83 | ||
Restricted cash within other assets | 22 | 33 | ||
Total cash, cash equivalents and restricted cash | $ 4,770 | $ 3,031 | $ 3,596 | $ 6,076 |
Cash, Cash Equivalents, Restr_5
Cash, Cash Equivalents, Restricted Cash and Short-Term Investments (Short-Term Investments) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Investments, Debt and Equity Securities [Abstract] | ||
Short-term investments | $ 23 | $ 0 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) | May 11, 2020USD ($) | Apr. 07, 2020USD ($)debt_instrument | Sep. 12, 2017USD ($)extension | Oct. 30, 2020USD ($) | Jan. 29, 2021USD ($) | Jan. 31, 2020USD ($) | Feb. 01, 2019USD ($) | Sep. 26, 2019USD ($) | Sep. 08, 2017USD ($) |
Debt Instrument [Line Items] | |||||||||
Interest expense | $ 204,000,000 | $ 149,000,000 | $ 134,000,000 | ||||||
Long-term debt | 4,717,000,000 | 2,731,000,000 | |||||||
Repayment of term loan | 1,500,000,000 | 1,900,000,000 | 0 | ||||||
Term Loan | Unsecured Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest expense | 17,000,000 | 15,000,000 | |||||||
Term loan maximum borrowing capacity | $ 2,000,000,000 | ||||||||
Repayment of term loan | $ 1,500,000,000 | ||||||||
Short-term debt | 1,500,000,000 | ||||||||
Senior Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of debt instruments | debt_instrument | 3 | ||||||||
Proceeds from debt issuance | $ 2,000,000,000 | ||||||||
Debt discount | 3,000,000 | 7,000,000 | 5,000,000 | ||||||
Debt issuance costs | $ 17,000,000 | ||||||||
Interest expense | $ 183,000,000 | 129,000,000 | 129,000,000 | ||||||
Repurchase price as percent of principal | 101.00% | ||||||||
Long-term debt | $ 4,717,000,000 | 3,979,000,000 | |||||||
Senior Notes | Note Due August 2020 | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt | $ 1,300,000,000 | ||||||||
Line of Credit | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Credit facility maximum borrowing capacity | $ 1,000,000,000 | $ 100,000,000 | |||||||
Line of credit term | 5 years | ||||||||
Number of line of credit term extensions | extension | 2 | ||||||||
Line of credit term extension duration | 1 year | ||||||||
Long-term debt | $ 0 | 0 | 0 | ||||||
Borrowings under credit facility, net of issuance costs | 15,000,000 | ||||||||
Repayment of credit facility | $ 35,000,000 | ||||||||
Unsecured Debt | Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Borrowings, net of issuance costs | 3,400,000,000 | ||||||||
Repayment of term loan | $ 1,900,000,000 |
Debt (Carrying Value of Senior
Debt (Carrying Value of Senior Notes) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Apr. 07, 2020 | Jan. 31, 2020 |
Debt Instrument [Line Items] | |||
Net carrying amount | $ 4,717 | $ 2,731 | |
Senior Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | 4,750 | 4,000 | |
Less: unamortized discount | (7) | $ (3) | (5) |
Less: unamortized debt issuance costs | (26) | (16) | |
Net carrying amount | 4,717 | 3,979 | |
Current portion of long-term debt | 0 | 1,248 | |
Long-term debt | 4,717 | $ 2,731 | |
Senior Notes | 2.30% Senior Note Due August 21, 2020 | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.30% | ||
Long-term debt | $ 0 | $ 1,250 | |
Effective Interest Rate | 2.56% | ||
Senior Notes | 2.95% Senior Note Due August 21, 2022 | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.95% | 2.95% | |
Long-term debt | $ 1,500 | $ 1,500 | |
Effective Interest Rate | 3.17% | ||
Senior Notes | 3.90% Senior Note Due August 21, 2027 | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.90% | 3.90% | |
Long-term debt | $ 1,250 | $ 1,250 | |
Effective Interest Rate | 4.05% | ||
Senior Notes | 4.50% Senior Note Due May 15, 2025 | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.50% | ||
Long-term debt | $ 750 | 0 | |
Effective Interest Rate | 4.70% | ||
Senior Notes | 4.65% Senior Note Due May 15, 2027 | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.65% | ||
Long-term debt | $ 500 | 0 | |
Effective Interest Rate | 4.80% | ||
Senior Notes | 4.70% Senior Note Due May 15, 2030 | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.70% | ||
Long-term debt | $ 750 | $ 0 | |
Effective Interest Rate | 4.86% |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value Hierarchy) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments | $ 23 | |
Cash and Cash Equivalents | Cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 3,840 | $ 2,260 |
Cash and Cash Equivalents | Cash equivalents | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 3,738 | 2,158 |
Cash and Cash Equivalents | Cash equivalents | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 102 | 102 |
Cash and Cash Equivalents | Money-market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 3,738 | 2,158 |
Cash and Cash Equivalents | Money-market funds | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 3,738 | 2,158 |
Cash and Cash Equivalents | Money-market funds | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 0 | 0 |
Cash and Cash Equivalents | Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 102 | 102 |
Cash and Cash Equivalents | Time deposits | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 0 | 0 |
Cash and Cash Equivalents | Time deposits | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 102 | $ 102 |
Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments | 23 | |
Short-term Investments | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments | 23 | |
Short-term Investments | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments | $ 0 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Deferred compensation plan assets | $ 140 | $ 106 | |
Investment at fair value | 162 | ||
Investment at fair value included in other assets | 139 | ||
Investment at fair value included in short-term investments | 23 | ||
Sale of marketable equity securities | 26 | ||
Investment at carrying value | 25 | ||
Securities without readily determinable fair value | 129 | 134 | |
Unrealized loss on equity securities without a readily determinable fair value | 14 | $ 13 | |
Unrealized gain on equity securities without a readily determinable fair value | 16 | ||
Level 2 | Notes Payable | Dell | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value of debt | 276 | 269 | |
Level 2 | Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value of debt | 5,300 | 4,100 | |
Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Unrealized gain on adjustment of investments to fair value | $ 163 | $ 21 |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activities (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Derivative [Line Items] | |||
Gain (loss) on forward contracts not designated as hedging instruments | $ (63) | $ 54 | $ 69 |
Combined gain (loss) on settlement of forward contracts and the underlying foreign currency denominated assets and liabilities | $ 31 | 31 | |
Foreign Exchange Forward | Not Designated As Hedging Instrument | |||
Derivative [Line Items] | |||
Forward contract maturity | 1 month | ||
Notional amount | $ 1,200 | 1,100 | |
Cash Flow Hedging | Foreign Exchange Forward | Designated As Hedging Instrument | |||
Derivative [Line Items] | |||
Notional amount | $ 486 | $ 480 | |
Cash Flow Hedging | Foreign Exchange Forward | Designated As Hedging Instrument | Maximum | |||
Derivative [Line Items] | |||
Forward contract maturity | 12 months |
Property and Equipment, Net (Co
Property and Equipment, Net (Components of Property and Equipment) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 2,971 | $ 2,718 |
Accumulated depreciation | (1,637) | (1,438) |
Total property and equipment, net | 1,334 | 1,280 |
Equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 1,620 | 1,404 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 1,137 | 1,088 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 132 | 120 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 82 | $ 106 |
Property and Equipment, Net (Na
Property and Equipment, Net (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation | $ 253 | $ 234 | $ 211 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jan. 29, 2021 | Jan. 31, 2020 | |
Lessee, Lease, Description [Line Items] | ||
Lease expense | $ 230 | $ 206 |
Sublease income | $ 20 | $ 22 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease contract | 1 month | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease contract | 25 years |
Leases (Lease Cost) (Details)
Leases (Lease Cost) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jan. 29, 2021 | Jan. 31, 2020 | |
Leases [Abstract] | ||
Operating lease expense | $ 190 | $ 167 |
Finance lease expense: | ||
Amortization of ROU assets | 6 | 4 |
Interest on lease liabilities | 2 | 1 |
Total finance lease expense | 8 | 5 |
Short-term lease expense | 3 | 3 |
Variable lease expense | 29 | 31 |
Total lease expense | $ 230 | $ 206 |
Leases (Lease Cash Flow) (Detai
Leases (Lease Cash Flow) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from operating leases | $ 174 | $ 167 | |
Operating cash flows from finance leases | 1 | 2 | |
Financing cash flows from finance leases | 4 | 1 | $ 0 |
ROU assets obtained in exchange for lease liabilities: | |||
Operating leases | 275 | 226 | |
Finance leases | $ 1 | $ 63 |
Leases (Lease Assets and Liabil
Leases (Lease Assets and Liabilities) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Operating Leases | ||
ROU assets, non-current | $ 997 | $ 886 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssets | us-gaap:OtherAssets |
Lease liabilities, current | $ 109 | $ 109 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued expenses and other | Accrued expenses and other |
Lease liabilities, non-current | $ 891 | $ 746 |
Total lease liabilities | 1,000 | 855 |
Finance Leases | ||
ROU assets, non-current | $ 53 | $ 58 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization |
Lease liabilities, current | $ 5 | $ 4 |
Lease liabilities, non-current | 50 | 55 |
Total lease liabilities | $ 55 | $ 59 |
Leases (Lease Term and Discount
Leases (Lease Term and Discount Rate) (Details) | Jan. 29, 2021 | Jan. 31, 2020 |
Weighted-average remaining lease term (in years) | ||
Operating leases | 12 years 7 months 6 days | 13 years 3 months 18 days |
Finance leases | 8 years 3 months 18 days | 9 years 2 months 12 days |
Weighted-average discount rate | ||
Operating leases | 3.50% | 3.80% |
Finance leases | 2.90% | 3.10% |
Leases (Lease Liability Maturit
Leases (Lease Liability Maturity) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Operating Leases | ||
2022 | $ 141 | |
2023 | 166 | |
2024 | 135 | |
2025 | 105 | |
2026 | 88 | |
Thereafter | 651 | |
Total future minimum lease payments | 1,286 | |
Less: Imputed interest | (286) | |
Total lease liabilities | 1,000 | $ 855 |
Finance Leases | ||
2022 | 6 | |
2023 | 7 | |
2024 | 7 | |
2025 | 6 | |
2026 | 8 | |
Thereafter | 27 | |
Total future minimum lease payments | 61 | |
Less: Imputed interest | (6) | |
Total lease liabilities | 55 | $ 59 |
Legally binding minimum lease payments for leases signed but not yet commenced | $ 72 |
Accrued Expenses and Other (Com
Accrued Expenses and Other (Components of Accrued Expenses) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accrued employee related expenses | $ 1,266 | $ 845 |
Accrued partner liabilities | 218 | 181 |
Customer deposits | 294 | 247 |
Other | 604 | 878 |
Total | $ 2,382 | $ 2,151 |
Accrued Expenses and Other (Nar
Accrued Expenses and Other (Narrative) (Details) - USD ($) $ in Millions | Jan. 24, 2020 | Jan. 31, 2020 | Dec. 31, 2019 |
Cirba Inc. Vs. VMware | |||
Loss Contingencies [Line Items] | |||
Damages awarded | $ 237 | $ 237 | |
Pivotal | |||
Loss Contingencies [Line Items] | |||
Accrual for amounts owed to dissenting shareholders | $ 155 | $ 155 |
Income Taxes (Income (Loss) Bef
Income Taxes (Income (Loss) Before Income Taxes) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ 932 | $ 895 | $ 680 |
Foreign | 1,450 | 543 | 1,149 |
Total income before income tax | $ 2,382 | $ 1,438 | $ 1,829 |
Income Taxes (Tax Expense (Bene
Income Taxes (Tax Expense (Benefit) by Jurisdiction) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Federal: | |||
Current | $ 157 | $ 78 | $ 181 |
Deferred | (19) | (219) | (92) |
Total | 138 | (141) | 89 |
State: | |||
Current | 73 | 45 | 31 |
Deferred | (14) | (44) | (10) |
Total | 59 | 1 | 21 |
Foreign: | |||
Current | 246 | 240 | 137 |
Deferred | (119) | (5,018) | (8) |
Total | 127 | (4,778) | 129 |
Total provision (benefit) for income taxes | $ 324 | $ (4,918) | $ 239 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Aug. 31, 2019 | Aug. 02, 2019 | Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | Oct. 30, 2020 | Jul. 31, 2020 | |
Schedule of Income Taxes [Line Items] | |||||||
Net excess tax benefits | $ 41 | $ 182 | $ 116 | ||||
Deferred tax asset, intra-entity transfer other than inventory | $ 4,900 | 59 | 4,900 | $ 59 | |||
Deferred tax assets | 5,781 | 5,556 | |||||
Deferred tax liabilities | 60 | 16 | |||||
Deferred tax liabilities, investments in equity securities | $ 52 | ||||||
Valuation allowance | 366 | 332 | |||||
Increase (decrease) in valuation allowance | (34) | ||||||
Increase (decrease) to stockholders' equity from tax sharing agreement | $ (46) | 85 | 2 | ||||
Transition tax, payment period | 5 years | ||||||
Net unrecognized tax benefits, including interest and penalties | $ 352 | 323 | |||||
Unrecognized tax benefits that would impact effective tax rate | 341 | 313 | |||||
Unrecognized tax benefits, interest and penalties on income taxes accrued | 48 | 48 | |||||
Unrecognized tax benefits, interest and penalties on income tax expense | 15 | ||||||
Reduction in total unrecognized tax benefits reasonably possible within next 12 months, minimum | 14 | ||||||
Dell | |||||||
Schedule of Income Taxes [Line Items] | |||||||
Income tax due to related parties, non-current | 451 | 529 | |||||
Dell | Tax sharing agreement | |||||||
Schedule of Income Taxes [Line Items] | |||||||
Increase (decrease) to stockholders' equity from tax sharing agreement | 25 | 15 | |||||
State Net Operating Loss Carryforwards, State R&D Tax Credits, Capital Losses, and Certain non-U.S. Net Operating Losses | |||||||
Schedule of Income Taxes [Line Items] | |||||||
Valuation allowance | 366 | 332 | |||||
Research Tax Credit Carryforward | |||||||
Schedule of Income Taxes [Line Items] | |||||||
Tax carryforward | 46 | 34 | |||||
Pivotal | Dell | Tax sharing agreement | |||||||
Schedule of Income Taxes [Line Items] | |||||||
Cash paid for taxes, net | $ 27 | $ 44 | |||||
IRS | |||||||
Schedule of Income Taxes [Line Items] | |||||||
Operating loss carryforwards | 655 | 971 | |||||
State and Local Jurisdiction | |||||||
Schedule of Income Taxes [Line Items] | |||||||
Operating loss carryforwards | 714 | 940 | |||||
International | |||||||
Schedule of Income Taxes [Line Items] | |||||||
Operating loss carryforwards | 191 | 199 | |||||
International | Capital Loss Carryforward | |||||||
Schedule of Income Taxes [Line Items] | |||||||
Tax carryforward | 22 | 22 | |||||
Ireland | International | |||||||
Schedule of Income Taxes [Line Items] | |||||||
Foreign statutory income tax rate, Ireland | 12.50% | ||||||
California | State and Local Jurisdiction | Research Tax Credit Carryforward | |||||||
Schedule of Income Taxes [Line Items] | |||||||
Tax carryforward | $ 323 | $ 287 |
Income Taxes (Effective Income
Income Taxes (Effective Income Tax Rate Reconciliation) (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | Jul. 31, 2020 | Aug. 02, 2019 | |
Income Tax Disclosure [Abstract] | |||||
Statutory federal tax rate | 21.00% | 21.00% | 21.00% | ||
State taxes, net of federal benefit | 2.00% | 0.00% | 1.00% | ||
Tax rate differential for non-U.S. jurisdictions | (8.00%) | (3.00%) | (6.00%) | ||
U.S. tax credits | (10.00%) | (17.00%) | (11.00%) | ||
Excess tax benefits from stock-based compensation | (1.00%) | (11.00%) | (6.00%) | ||
Discrete tax benefit due to IP Transfer | (2.00%) | (343.00%) | 0.00% | ||
Permanent items | 12.00% | 9.00% | 14.00% | ||
Effective tax rate | 14.00% | (344.00%) | 13.00% | ||
Deferred tax asset, intra-entity transfer other than inventory | $ 59 | $ 4,900 | $ 59 | $ 4,900 |
Income Taxes (Deferred Tax Asse
Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Jan. 31, 2020 |
Deferred tax assets: | ||
Accruals and other | $ 238 | $ 169 |
Lease liabilities | 167 | 152 |
Unearned revenue | 501 | 390 |
Stock-based compensation | 86 | 88 |
Tax credit and net operating loss carryforwards | 553 | 583 |
Other assets, net | 54 | 51 |
Intangible and other non-current assets | 4,900 | 4,804 |
Gross deferred tax assets | 6,499 | 6,237 |
Valuation allowance | (366) | (332) |
Total deferred tax assets | 6,133 | 5,905 |
Deferred tax liabilities: | ||
Deferred commissions | (158) | (133) |
ROU Assets | (145) | (131) |
Property, plant and equipment, net | (109) | (101) |
Total deferred tax liabilities | (412) | (365) |
Net deferred tax assets | $ 5,721 | $ 5,540 |
Income Taxes (Tax Sharing Agree
Income Taxes (Tax Sharing Agreement) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Related Party Transaction [Line Items] | |||
Payments from VMware to Dell, net | $ 543 | $ 369 | $ 399 |
Dell | Tax sharing agreement | |||
Related Party Transaction [Line Items] | |||
Payments from VMware to Dell, net | $ 307 | $ 159 | $ 243 |
Income Taxes (Unrecognized Tax
Income Taxes (Unrecognized Tax Benefits) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance, beginning of the year | $ 479 | $ 385 | $ 305 |
Tax positions related to current year/period: | |||
Additions | 65 | 116 | 57 |
Tax positions related to prior years/period: | |||
Additions | 12 | 98 | 44 |
Reductions | (25) | (7) | (1) |
Settlements | (14) | (28) | (4) |
Reductions resulting from a lapse of the statute of limitations | (14) | (83) | (8) |
Foreign currency effects | 5 | ||
Foreign currency effects | (2) | (8) | |
Balance, end of the year | $ 508 | $ 479 | $ 385 |
Stockholders' Equity (Special D
Stockholders' Equity (Special Dividend) (Details) - USD ($) $ / shares in Units, $ in Billions | Dec. 28, 2018 | Jul. 01, 2018 |
Text Block [Abstract] | ||
Conditional cash dividend | $ 11 | |
Dividend paid per share (in USD per share) | $ 26.81 |
Stockholders' Equity (Equity Pl
Stockholders' Equity (Equity Plans) (Details) - shares | Jun. 25, 2019 | Nov. 30, 2019 | Jan. 29, 2021 |
Pivotal Equity Plan | Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 4 years | ||
Pivotal Equity Plan | Employee stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 48 months | ||
Class A Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock unit conversion into common stock (in shares) | 1 | ||
Class A Common Stock | Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock unit conversion into common stock (in shares) | 1 | ||
Class A Common Stock | VMware 2007 Equity and Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of additional shares authorized from business acquisitions | 13,000,000 | ||
Number of shares authorized | 145,200,000 | ||
Number of shares authorized, anti-dilution adjustment | 6,100,000 | ||
Number of shares available for grant | 17,900,000 | ||
Number of shares available for grant, anti-dilution adjustment | 2,500,000 | ||
Class A Common Stock | VMware 2007 Equity and Incentive Plan | Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Conversion ratio upon vesting | 25.00% | ||
Class A Common Stock | VMware 2007 Equity and Incentive Plan | Employee stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years | ||
Options minimum exercise price as percentage of fair value on grant date | 100.00% | ||
Class A Common Stock | VMware 2007 Equity and Incentive Plan | Employee stock options | Vesting at the end of first year | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Conversion ratio upon vesting | 25.00% | ||
Class A Common Stock | VMware 2007 Equity and Incentive Plan | Minimum | Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years | ||
Class A Common Stock | VMware 2007 Equity and Incentive Plan | Minimum | Employee stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options expiration period | 6 years | ||
Class A Common Stock | VMware 2007 Equity and Incentive Plan | Maximum | Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 4 years | ||
Class A Common Stock | VMware 2007 Equity and Incentive Plan | Maximum | Employee stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options expiration period | 7 years | ||
Class A Common Stock | VMware 2007 Equity and Incentive Plan | Other Acquisitions | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of additional shares authorized from business acquisitions | 12,100,000 | ||
Class A Common Stock | Conversion from Class B Common Stock into Class A Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares reserved for conversion | 307,200,000 | ||
Class B Convertible Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Minimum percentage of total outstanding common stock owned required before automatic conversion | 20.00% |
Stockholders' Equity (Stock Rep
Stockholders' Equity (Stock Repurchase Program) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | |||||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | Jul. 15, 2020 | May 29, 2019 | Aug. 14, 2017 | |
Class of Stock [Line Items] | ||||||
Aggregate purchase price | $ 945 | $ 1,334 | $ 42 | |||
Class A Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Authorized repurchase amount under stock repurchase program | $ 1,000 | $ 1,500 | $ 1,000 | |||
Remaining authorized repurchase amount | 1,100 | |||||
Aggregate purchase price | $ 945 | $ 1,334 | $ 42 | |||
Class A common shares repurchased (in shares) | 6,944 | 7,664 | 286,000 | |||
Weighted-average price per share (in USD per share) | $ 136.13 | $ 174.02 | $ 148.07 |
Stockholders' Equity (Summary o
Stockholders' Equity (Summary of Restricted Stock Activity) (Details) $ / shares in Units, $ in Millions | 10 Months Ended | 12 Months Ended | ||
Nov. 30, 2019USD ($)$ / sharesshares | Jan. 29, 2021USD ($)$ / sharesshares | Jan. 31, 2020USD ($)$ / sharesshares | Feb. 01, 2019USD ($)$ / sharesshares | |
Expected to vest | ||||
Number of Units (in shares) | 15,214,000 | |||
Weighted-Average Remaining Contractual Terms (in years) | 2 years 7 months 20 days | |||
Aggregate Intrinsic Value | $ | $ 2,097 | |||
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Conversion ratio or awards upon acquisition | 0.1 | |||
Restricted Stock | Pivotal Equity Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Conversion ratio or awards upon acquisition | 0.1 | |||
Performance Stock Units (PSUs) | ||||
Number of Units | ||||
Outstanding (in shares) | 600,000 | |||
RSUs | ||||
Number of Units | ||||
Outstanding (in shares) | 17,200,000 | |||
Class A Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stock unit conversion into common stock (in shares) | 1 | |||
Expected to vest | ||||
Share price (in USD per share) | $ / shares | $ 137.85 | |||
Class A Common Stock | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stock unit conversion into common stock (in shares) | 1 | |||
Fair value of restricted stock-based awards, vested | $ | $ 1,100 | $ 1,400 | $ 1,100 | |
Aggregate intrinsic value, nonvested | $ | $ 2,500 | |||
Number of Units | ||||
Outstanding (in shares) | 17,800,000 | |||
Class A Common Stock | Restricted Stock | Pivotal Equity Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Fair value of restricted stock-based awards, vested | $ | $ 68 | |||
Number of Units | ||||
Forfeited (in shares) | (21,700,000) | |||
Class A Common Stock | Restricted Stock | VMware RSUs | ||||
Number of Units | ||||
Outstanding (in shares) | 18,215,000 | 17,474,000 | 18,215,000 | 17,360,000 |
Granted (in shares) | 11,201,000 | 9,074,000 | 6,663,000 | |
Special Dividend adjustment (in shares) | 3,236,000 | |||
Vested (in shares) | (8,296,000) | (8,179,000) | (7,370,000) | |
Forfeited (in shares) | (2,588,000) | (1,636,000) | (1,674,000) | |
Outstanding (in shares) | 17,790,000 | 17,474,000 | 18,215,000 | |
Weighted-Average Grant Date Fair Value | ||||
Outstanding, weighted-average grant date fair value (in USD per share) | $ / shares | $ 90.06 | $ 128.38 | $ 90.06 | $ 78.62 |
Granted, weighted-average grant date fair value (in USD per share) | $ / shares | 149.63 | 157.07 | 146.61 | |
Vested, weighted-average grant date fair value (in USD per share) | $ / shares | 114.59 | 80.28 | 75.45 | |
Forfeited, weighted-average grant date fair value (in USD per share) | $ / shares | 137.55 | 101.29 | 86.90 | |
Outstanding, weighted-average grant date fair value (in USD per share) | $ / shares | $ 147.46 | $ 128.38 | $ 90.06 | |
Class A Common Stock | Restricted Stock | VMware RSUs | Pivotal | ||||
Number of Units | ||||
Granted (in shares) | 2,200,000 | |||
Class A Common Stock | Restricted Stock | Pivotal RSUs | ||||
Number of Units | ||||
Outstanding (in shares) | 9,501,000 | 0 | 9,501,000 | 0 |
Granted (in shares) | 20,504,000 | 9,854,000 | ||
Vested (in shares) | (4,009,000) | 0 | ||
Forfeited (in shares) | (25,996,000) | (353,000) | ||
Outstanding (in shares) | 0 | 9,501,000 | ||
Weighted-Average Grant Date Fair Value | ||||
Outstanding, weighted-average grant date fair value (in USD per share) | $ / shares | $ 15.77 | $ 0 | $ 15.77 | $ 0 |
Granted, weighted-average grant date fair value (in USD per share) | $ / shares | 16.02 | 15.78 | ||
Vested, weighted-average grant date fair value (in USD per share) | $ / shares | 15.56 | 0 | ||
Forfeited, weighted-average grant date fair value (in USD per share) | $ / shares | 16.01 | 16.09 | ||
Outstanding, weighted-average grant date fair value (in USD per share) | $ / shares | $ 0 | $ 15.77 | ||
Class A Common Stock | Performance Stock Units (PSUs) | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Conversion ratio or awards upon acquisition | 0.1 | |||
Class A Common Stock | Performance Stock Units (PSUs) | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Conversion ratio or awards upon acquisition | 2 |
Stockholders' Equity (Employee
Stockholders' Equity (Employee Stock Purchase Plan) (Details) - Employee stock - Class A Common Stock - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | Jun. 25, 2019 | Nov. 30, 2019 | Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 |
ESPP | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of additional shares authorized | 9,000 | ||||
Number of shares authorized | 32,300 | ||||
Fair market value at grant purchase price, percentage | 85.00% | ||||
Fair market value at grant exercise price, percentage | 85.00% | ||||
Number of shares reserved for future issuance | 12,300 | ||||
Cash proceeds | $ 207 | $ 172 | $ 161 | ||
Class A common shares purchased (shares) | 2,025 | 1,489 | 1,895 | ||
Weighted-average price (USD per share) | $ 102.44 | $ 115.51 | $ 84.95 | ||
ESPP withholdings | $ 107 | ||||
Pivotal ESPP | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Fair market value at grant purchase price, percentage | 85.00% | ||||
Fair market value at grant exercise price, percentage | 85.00% |
Stockholders' Equity (Summary_2
Stockholders' Equity (Summary of Stock Option Activity) (Details) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Jan. 29, 2021USD ($)$ / sharesshares | Jan. 31, 2020USD ($)$ / sharesshares | Feb. 01, 2019USD ($)$ / sharesshares | |
Class A Common Stock | |||
Weighted-Average Exercise Price | |||
Options, exercisable, intrinsic value | $ | $ 111 | $ 103 | $ 56 |
Share price (in USD per share) | $ / shares | $ 137.85 | ||
Fair value vested in period | $ | $ 92 | $ 64 | $ 35 |
VMware Stock Options | |||
Weighted-Average Exercise Price | |||
Options, exercisable, outstanding (in shares) | 769 | ||
Options, exercisable, weighted average exercise price (USD per share) | $ / shares | $ 54.72 | ||
Options, exercisable, weighted average remaining contractual term (in years) | 5 years 1 month 13 days | ||
Options, exercisable, intrinsic value | $ | $ 64 | ||
Options vested and expected to vest, outstanding (in shares) | 1,228 | ||
Options vested and expected to vest, weighted average exercise price (in USD per share) | $ / shares | $ 58.26 | ||
Options vested and expected to vest, weighted average remaining contractual term (in years) | 5 years 10 months 20 days | ||
Options, vested and expected to vest, intrinsic value | $ | $ 98 | ||
VMware Stock Options | Class A Common Stock | |||
Number of Shares | |||
Outstanding, Beginning balance (in shares) | 2,615 | 1,969 | 1,647 |
Granted (in shares) | 31 | 1,571 | 574 |
Special Dividend adjustment (in shares) | 348 | ||
Forfeited (in shares) | (156) | (149) | (31) |
Expired (in shares) | 0 | 0 | |
Exercised (in shares) | (1,247) | (776) | (569) |
Outstanding, Ending balance (in shares) | 1,243 | 2,615 | 1,969 |
Weighted-Average Exercise Price | |||
Outstanding, Beginning balance (in USD per share) | $ / shares | $ 56.58 | $ 36.50 | $ 54.63 |
Granted (in USD per share) | $ / shares | 43.20 | 73.19 | 16.07 |
Forfeited (in USD per share) | $ / shares | 70.75 | 52.83 | 24.44 |
Expired (in USD per share) | $ / shares | 0 | 0 | |
Exercised (in USD per share) | $ / shares | 52.34 | 39.94 | 46.73 |
Outstanding, Ending balance (in USD per share) | $ / shares | $ 58.68 | $ 56.58 | $ 36.50 |
Intrinsic value of stock options outstanding | $ | $ 98 | ||
VMware Stock Options | Class A Common Stock | Pivotal | |||
Number of Shares | |||
Granted (in shares) | 600 | ||
Pivotal Stock Options | Employee stock options | |||
Weighted-Average Exercise Price | |||
Conversion ratio or awards upon acquisition | 0.1 | ||
Pivotal Stock Options | Class A Common Stock | |||
Number of Shares | |||
Outstanding, Beginning balance (in shares) | 0 | 45,901 | 54,388 |
Granted (in shares) | 0 | 2,832 | |
Forfeited (in shares) | (10,822) | (2,028) | |
Expired (in shares) | (128) | (273) | |
Exercised (in shares) | (34,951) | (9,018) | |
Outstanding, Ending balance (in shares) | 0 | 45,901 | |
Weighted-Average Exercise Price | |||
Outstanding, Beginning balance (in USD per share) | $ / shares | $ 0 | $ 8.31 | $ 7.82 |
Granted (in USD per share) | $ / shares | 0 | 14.03 | |
Forfeited (in USD per share) | $ / shares | 10.65 | 9.35 | |
Expired (in USD per share) | $ / shares | 10.10 | 7.02 | |
Exercised (in USD per share) | $ / shares | 7.59 | 6.89 | |
Outstanding, Ending balance (in USD per share) | $ / shares | $ 0 | $ 8.31 | |
Options, exercisable, intrinsic value | $ | $ 278 | $ 97 | |
Fair value vested in period | $ | $ 27 | $ 41 | |
Pivotal Stock Options | Class A Common Stock | Pivotal | |||
Number of Shares | |||
Forfeited (in shares) | (6,200) | ||
Exercised (in shares) | (22,400) |
Stockholders' Equity (Shares Re
Stockholders' Equity (Shares Repurchased for Tax Withholdings) (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock repurchased during period, value | $ 413 | $ 521 | $ 373 |
Class A Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock repurchased during period (in shares) | 3 | 3 | 2.6 |
Stock repurchased during period, value | $ 413 | $ 521 | $ 373 |
Stockholders' Equity (Net Exces
Stockholders' Equity (Net Excess Tax Benefits) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Stockholders' Equity Note [Abstract] | |||
Net excess tax benefits | $ 41 | $ 182 | $ 116 |
Stockholders' Equity (Share-Bas
Stockholders' Equity (Share-Based Compensation) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | Nov. 02, 2018 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | $ 1,122 | $ 1,017 | $ 800 | |
Income tax benefit | (231) | (347) | (253) | |
Total stock-based compensation, net of tax | 891 | 670 | 547 | |
Unrecognized compensation cost for stock options and restricted stock | $ 1,900 | $ 39 | ||
Weighted-average remaining recognition period | 1 year 6 months | |||
Cost of license revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | $ 1 | 1 | 1 | |
Cost of subscription and SaaS revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | 19 | 13 | 7 | |
Cost of services revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | 99 | 83 | 58 | |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | 524 | 459 | 391 | |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | 322 | 293 | 226 | |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | $ 157 | $ 168 | $ 117 |
Stockholders' Equity (Share-B_2
Stockholders' Equity (Share-Based Compensation Valuation Method) (Details) - $ / shares | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
Pivotal Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield (as a percent) | 0.00% | ||
Employee stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Expected volatility (as a percent) | 38.80% | 34.00% | 31.90% |
Risk-free interest rate (as a percent) | 0.40% | 1.50% | 2.90% |
Expected term (in years) | 2 years 7 months 6 days | 2 years 8 months 12 days | 3 years 2 months 12 days |
Weighted-average fair value at grant (USD per share) | $ 102.55 | $ 98 | $ 143.01 |
Employee stock options | Pivotal Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility (as a percent) | 33.40% | ||
Risk-free interest rate (as a percent) | 2.80% | ||
Expected term (in years) | 6 years 29 days | ||
Weighted-average fair value at grant (USD per share) | $ 5.23 | ||
Employee stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Expected volatility (as a percent) | 36.10% | 27.40% | 33.50% |
Risk-free interest rate (as a percent) | 1.00% | 1.70% | 2.00% |
Expected term (in years) | 8 months 12 days | 7 months 6 days | 9 months 18 days |
Weighted-average fair value at grant (USD per share) | $ 33.60 | $ 35.66 | $ 34.72 |
Stockholders' Equity (Accumulat
Stockholders' Equity (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Balance | $ 7,009 | ||
Unrealized gains (losses), net of tax provision (benefit) of $—, $— and $— | (1) | ||
Amounts reclassified from accumulated other comprehensive income (loss) to the consolidated statements of income (loss), net of tax (provision) benefit | $ (2) | ||
Other comprehensive income (loss), net | (1) | (2) | $ 6 |
Balance | 9,051 | 7,009 | |
Total | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Balance | (4) | (2) | |
Other comprehensive income (loss), net | (1) | (2) | 2 |
Balance | (5) | (4) | (2) |
Tax (provision) benefit on amounts reclassified from accumulated other comprehensive income | 0 | ||
Tax provision (benefit) before reclassifications | 0 | ||
Unrealized Gain (Loss) on Forward Contracts | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Balance | 0 | 2 | |
Unrealized gains (losses), net of tax provision (benefit) of $—, $— and $— | (1) | ||
Amounts reclassified from accumulated other comprehensive income (loss) to the consolidated statements of income (loss), net of tax (provision) benefit | (2) | ||
Other comprehensive income (loss), net | (1) | (2) | |
Balance | (1) | 0 | 2 |
Tax (provision) benefit on amounts reclassified from accumulated other comprehensive income | 0 | ||
Tax provision (benefit) before reclassifications | 0 | ||
Foreign Currency Translation Adjustments | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Balance | (4) | (4) | |
Unrealized gains (losses), net of tax provision (benefit) of $—, $— and $— | 0 | ||
Amounts reclassified from accumulated other comprehensive income (loss) to the consolidated statements of income (loss), net of tax (provision) benefit | 0 | ||
Other comprehensive income (loss), net | 0 | 0 | |
Balance | (4) | (4) | $ (4) |
Tax (provision) benefit on amounts reclassified from accumulated other comprehensive income | $ 0 | ||
Tax provision (benefit) before reclassifications | $ 0 |
Segment Information (Schedule o
Segment Information (Schedule of Revenue by Type) (Details) $ in Millions | 12 Months Ended | |||
Jan. 29, 2021USD ($)segment | Jan. 31, 2020USD ($) | Feb. 01, 2019USD ($) | ||
Segment Reporting [Abstract] | ||||
Number of reportable segments | segment | 1 | |||
Disaggregation of Revenue [Line Items] | ||||
Revenue | [1] | $ 11,767 | $ 10,811 | $ 9,613 |
Total license and subscription and SaaS | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 5,620 | 5,058 | 4,345 | |
License | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | [1] | 3,033 | 3,181 | 3,042 |
Subscription and SaaS | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | [1] | 2,587 | 1,877 | 1,303 |
Total services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | [1] | 6,147 | 5,753 | 5,268 |
Software maintenance | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 5,105 | 4,754 | 4,351 | |
Professional services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 1,042 | $ 999 | $ 917 | |
[1] | Includes related party revenue as follows (refer to Note D): License $ 1,598 $ 1,569 $ 1,176 Subscription and SaaS 524 342 217 Services 1,994 1,459 1,003 |
Segment Information (Schedule_2
Segment Information (Schedule of Revenue by Geographic Area) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||||
Revenue | [1] | $ 11,767 | $ 10,811 | $ 9,613 |
United States | ||||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||||
Revenue | 5,878 | 5,405 | 4,696 | |
International | ||||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||||
Revenue | $ 5,889 | $ 5,406 | $ 4,917 | |
[1] | Includes related party revenue as follows (refer to Note D): License $ 1,598 $ 1,569 $ 1,176 Subscription and SaaS 524 342 217 Services 1,994 1,459 1,003 |
Segment Information (Schedule_3
Segment Information (Schedule of Long-Lived Assets by Geographic Area) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jan. 29, 2021 | Jan. 31, 2020 | |
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Long-lived assets by geographic area | $ 1,105 | $ 1,069 |
United States | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Long-lived assets by geographic area | $ 864 | 860 |
United States | Assets Benchmark | Geographic Concentration Risk | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 80.00% | |
International | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Long-lived assets by geographic area | $ 241 | $ 209 |
India | Assets Benchmark | Geographic Concentration Risk | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 10.00% |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2021 | Jan. 31, 2020 | Feb. 01, 2019 | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | $ 332 | $ 283 | $ 310 |
Tax Valuation Allowance Charged to Income Tax Provision | 58 | 89 | 65 |
Tax Valuation Allowance Credited to Other Accounts | (1) | 0 | (32) |
Tax Valuation Allowance Credited to Income Tax Provision | (23) | (40) | (60) |
Balance at End of Period | $ 366 | $ 332 | $ 283 |