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UPDATE 1-VMware's profit margins fall, shares dip

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June 1 (Reuters) - Virtualization software maker VMware Inc reported a fall in quarterly profit margins on Thursday, hurt by a sharp rise in R&D and marketing costs.

Shares of Palo Alto, California-based VMware which have risen about 58 percent in the last 12 months dipped 4 percent to $93.48 in trading after the bell.

VMware posted adjusted operating margin of 28.5 percent in the first quarter ended May 5, compared to operating margins of over 30 percent in the past three quarters.

Research and development costs jumped 18.2 percent to $421 million in the quarter, while sales and marketing expenses rose 3.7 percent to $586 million.

The result overshadowed a better-than-expected first-quarter profit and revenue, fueled by strong demand for VMware's virtualization software used by companies to boost cloud computing efficiency.

Services revenue rose 10.7 percent to $1.13 billion in the quarter, but was slightly below the revenue posted in the quarter ended Dec. 31.

VMware has benefited from strong demand from businesses for its virtualization software that allows one computer or server to perform the work of multiple machines by emulating them, which boosts efficiency and helps cut costs.

VMware's net income rose to $232 million, or 56 cents per share in the first quarter, from $161 million, or 38 cents per share, a year earlier.

Excluding one-time items, the company earned 99 cents per share.

VMware, which is majority-owned by Dell Technologies Inc , said revenue climbed 9.3 percent to $1.74 billion.

Analysts had expected a profit of 95 cents per share and revenue of $1.71 billion, according to Thomson Reuters I/B/E/S. (Reporting by Laharee Chatterjee in Bengaluru; Editing by Sai Sachin Ravikumar)