UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORTPURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): May 31, 2018

VMWARE, INC.(Exact name of registrant as specified in its charter)

Delaware 001-33622 94-3292913

(State or Other Jurisdictionof Incorporation)

(CommissionFile Number)

(IRS EmployerIdentification Number)

3401 Hillview Avenue, Palo Alto, CA 94304

(Address of Principal Executive Offices) (Zip code)

Registrant’s telephone number, including area code: (650) 427-5000

N/A(Former Name or Former Address, if changed since last report)

ChecktheappropriateboxbelowiftheForm8-Kfilingisintendedtosimultaneouslysatisfythefilingobligationoftheregistrantunderanyofthefollowingprovisions(seeGeneralInstructionA.2.below):

☐ WrittencommunicationspursuanttoRule425undertheSecuritiesAct(17CFR230.425)

☐ SolicitingmaterialpursuanttoRule14a-12undertheExchangeAct(17CFR240.14a-12)

☐ Pre-commencementcommunicationspursuanttoRule14d-2(b)undertheExchangeAct(17CFR240.14d-2(b))

☐ Pre-commencementcommunicationspursuanttoRule13e-4(c)undertheExchangeAct(17CFR240.13e-4(c))

IndicatebycheckmarkwhethertheregistrantisanemerginggrowthcompanyasdefinedinRule405oftheSecuritiesActof1933(§230.405ofthischapter)orRule12b-2oftheSecuritiesExchangeActof1934(§240.12b-2ofthischapter).

Emerginggrowthcompany☐

Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.☐

Item 2.02 Results of Operations and Financial Condition.

OnMay31,2018,VMwareissuedapressreleaseannouncingitsfinancialresultsforthequarterendedMay4,2018.Thepressrelease,whichincludesinformationregardingVMware’suseofnon-GAAPfinancialmeasures,isattachedheretoasExhibit99.1andisincorporatedbyreferenceherein.

TheinformationinthisItem2.02andtheExhibitattachedheretoshallnotbedeemed“filed”forpurposesofSection18oftheSecuritiesExchangeActof1934(the“Exchange Act ”)orotherwisesubjecttotheliabilitiesofthatsection,norshallitbedeemedincorporatedbyreferenceinanyfilingundertheSecuritiesActof1933ortheExchangeAct,regardlessofanygeneralincorporationlanguageinsuchfiling.

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits

99.1PressreleaseofVMware,Inc.datedMay31,2018

SIGNATURES

PursuanttotherequirementsoftheSecuritiesExchangeActof1934,theRegistranthasdulycausedthisreporttobesignedonitsbehalfbytheundersignedhereuntodulyauthorized.

Date:May31,2018

VMware,Inc.

By: /s/ZaneRoweZaneRoweChiefFinancialOfficerandExecutiveVicePresident

Exhibit 99.1

VMware Reports Fiscal 2019 First Quarter Results

Totalrevenuegrowthof14%year-over-year

Broad-basedstrengthacrossallthreegeographies

PALO ALTO, CA —May 31, 2018 —VMware,Inc.(NYSE:VMW),aleadinginnovatorinenterprisesoftware,todayannouncedfinancialresultsforthefirstquarteroffiscalyear2019:

• Revenueforthefirstquarterwas$2.01billion,anincreaseof14%fromthefirstquarteroffiscal2018.

• Licenserevenueforthefirstquarterwas$774million,anincreaseof21%fromthefirstquarteroffiscal2018.

• GAAPnetincomeforthefirstquarterwas$942million,includingagainof$781milliononPivotalSoftware’sIPO,or$2.29perdilutedshare,up

288%perdilutedsharecomparedto$245million,or$0.59perdilutedshare,forthefirstquarteroffiscal2018.Non-GAAPnetincomeforthequarterwas$516million,or$1.26perdilutedshare,up18%perdilutedsharecomparedto$440million,or$1.06perdilutedshare,forthefirstquarteroffiscal2018.

• GAAPoperatingincomeforthefirstquarterwas$382million,anincreaseof47%fromthefirstquarteroffiscal2018.Non-GAAPoperatingincomeforthefirstquarterwas$598million,anincreaseof13%fromthefirstquarteroffiscal2018.

• Operatingcashflowsforthefirstquarterwere$1.10billion.Freecashflowsforthequarterwere$1.03billion.

• Totalrevenueplussequentialchangeintotalunearnedrevenuegrew17%year-over-year.

• Licenserevenueplussequentialchangeinunearnedlicenserevenuegrew21%year-over-year.

“Q1wasastrongstarttotheyear,andwearepleasedwithourresults,whichcontinuetobedrivenbybroad-basedstrengthacrossourdiverseproductandservicesportfolioandinallthreegeographies,”commentedPatGelsinger,chiefexecutiveofficer,VMware.“Aswemarkourtwentiethanniversary,VMwaresoftwarecontinuestobeattheforefrontofinnovation,servingastheessential,ubiquitousfoundationfortheworld’sdigitalinfrastructure.”

“Q1resultsreflectthesuccesswehavewithourbroadandincreasinglyintegratedproductandservicesportfolio,”saidZaneRowe,executivevicepresidentandchieffinancialofficer,VMware.“Thestrongstarttofiscal2019hasuswellpositionedtoexecuteonourstrategy.”

Recent Highlights & Strategic Announcements

• InearlyMay,VMwareoutlineditsvisionforthefutureofnetworking,announcedtheVMwareNSXnetworkingandsecurityportfolioandunveiledthe

VirtualCloudNetwork.TheVirtualCloudNetworkwillenableorganizationstocreateadigitalbusinessfabricforconnectingandsecuringapplications,dataandusersinahyper-distributedworld.

• VMwareannouncedthatVMwareCloudonAWSisnowavailableinEuropeandwilloffernewcapabilitiestoaccelerateandsimplifyenterprisecloudmigrationandhybridclouddeployments.

• VMwareintroducedanumberofupdatestoitsWorkspaceONEplatformthatmakeitthefirstandonlyintelligence-drivendigitalworkspacetoimproveuserexperienceandenablepredictivesecurityacrosstheperimeter-lessenvironment.

• VMwareunveilednewreleasesofVMwarevSphereandVMwarevSAN—whichpowertheindustry’sleadinghyper-convergedinfrastructure(HCI)

solutions—tohelpenterprisessecurelyruntheirbusiness-criticalandmodernapplicationsinthedatacenter,attheedge,inthepubliccloud,orinhybridcloudenvironments.

• VMwarewasnamed#1inHCIsoftwaremarketshareinIDC’sWorldwideQuarterlyConvergedSystemsTracker.*

• AtMobileWorldCongress2018inBarcelonainFebruary,VMwareannouncedupdatestoitsgrowingtelcosoftwareandCloudServicesportfoliothat

helpcommunicationsserviceproviders(CSPs)createnewrevenuestreams,opennewindustryopportunities,drivedowncostsandreadytheirnetworksforthe5Gworld.

• ForbesnamedVMwareNo.21onForbes’listofAmerica’sbestemployers.Additionally,VMwarewasrankedasthefourthbestemployerinForbes’“IT,Internet,Software&Services”category.

Thecompanywillhostaconferencecalltodayat2:00p.m.PT/5:00p.m.ETtoreviewfinancialresultsandbusinessoutlook.AlivewebbroadcastoftheeventwillbeavailableontheVMwareinvestorrelationswebsiteathttp://ir.vmware.com.Slideswillaccompanythewebbroadcast.Thereplayofthewebcastandslideswillbeavailableonthewebsitefortwomonths.Inaddition,sixquartersofhistoricaldataforunearnedrevenuewillalsobemadeavailableathttp://ir.vmware.cominconjunctionwiththeconferencecall.

###

*IDCQuarterlyConvergedSystemsTracker,April5,2018

Adoption of New Revenue Standard ASC 606

DuringMay2014,theFinancialAccountingStandardsBoardissuedupdatestoaccountingstandardsrelatedtorevenuerecognition(“ASC606”).VMwareadoptedASC606onafullretrospectivebasiseffectiveFebruary3,2018.Accordingly,thefinancialresultsforthefirstquarteroffiscal2019presentedinthisreleasehavebeenpreparedunderASC606.Inordertoprovidemeaningfulcomparisonstopriorperiods,VMwarehasincludedfinancialstatementsforthefirstquarteroffiscal2018andabalancesheetasoftheendoffiscal2018adjustedforASC606.Allyear-over-yearcomparisonsinthisreleasecomparefirstquarterfiscal2019resultstothefirstquarteroffiscal2018asadjustedforASC606.

Tofurtherassistinvestors,thefinancialtablesinthisreleasealsoincludeasupplementalunearnedrevenuescheduleforeachquarteroffiscal2018asadjustedforASC606,aswellasasupplementalscheduleoffinancialinformationforeachquarteroffiscal2018andthefullfiscalyears2018and2016.

About VMware

VMwaresoftwarepowerstheworld’smostcomplexdigitalinfrastructure.Thecompany’scompute,cloud,mobility,networkingandsecurityofferingsprovideadynamicandefficientdigitalfoundationtoover500,000customersglobally,aidedbyanecosystemof75,000partners.HeadquarteredinPaloAlto,California,thisyearVMwarecelebratestwentyyearsofbreakthroughinnovationbenefitingbusinessandsociety.Formoreinformationpleasevisithttps://www.vmware.com/company.html.

Additional Information

VMware’swebsiteislocatedatwww.vmware.com,anditsinvestorrelationswebsiteislocatedathttp://ir.vmware.com.VMware’sgoalistomaintaintheinvestorrelationswebsiteasaportalthroughwhichinvestorscaneasilyfindornavigatetopertinentinformationaboutVMware,allofwhichismadeavailablefreeofcharge.TheadditionalinformationincludesmaterialsthatVMwarefileswiththeSEC;announcementsofinvestorconferencesandeventsatwhichitsexecutivestalkaboutitsproducts,servicesandcompetitivestrategies;webcastsofitsquarterlyearningscalls,investorconferencesandevents(archivesofwhicharealsoavailableforalimitedtime);additionalinformationonitsfinancialmetrics,includingreconciliationsofnon-GAAPfinancialmeasurestothemostdirectlycomparableGAAPmeasures;pressreleasesonquarterlyearnings,productandserviceannouncements,legaldevelopmentsandinternationalnews;corporategovernanceinformation;andothernews,blogsandannouncementsthatVMwaremaypostfromtimetotimethatinvestorsmayfindusefulorinteresting.

VMware,VMwareCloud,NSX,vSphereandVMwarevSANareregisteredtrademarksortrademarksofVMware,Inc.oritssubsidiariesintheUnitedStatesandotherjurisdictions.Allothermarksandnamesmentionedhereinmaybetrademarksoftheirrespectiveorganizations.

Use of Non-GAAP Financial Measures

Reconciliationsofnon-GAAPfinancialmeasurestoVMware’sfinancialresultsasdeterminedinaccordancewithGAAPareincludedattheendofthispressreleasefollowingtheaccompanyingfinancialdata.Foradescriptionofthesenon-GAAPfinancialmeasures,includingthereasonsmanagementuseseachmeasure,pleaseseethesectionofthetablestitled“AboutNon-GAAPFinancialMeasures.”

Forward-Looking Statements

Thispressreleasecontainsforward-lookingstatementsincluding,amongotherthings,statementsregardingVMware’sstrategicpositioningandabilitytoexecuteonitsstrategiesandthestrengthsandexpectedbenefitstocustomersofVMwareproductsandservices.Theseforward-lookingstatementsaresubjecttothesafeharborprovisionscreatedbythePrivateSecuritiesLitigationReformActof1995.Actualresultscoulddiffermateriallyfromthoseprojectedintheforward-lookingstatementsasaresultofcertainriskfactors,includingbutnotlimitedto:(i)adversechangesingeneraleconomicormarketconditions;(ii)delaysorreductionsinconsumer,governmentandinformationtechnologyspending;(iii)competitivefactors,includingbutnotlimitedtopricingpressures,industryconsolidation,entryofnewcompetitorsintothevirtualizationsoftwareandcloud,enduserandmobilecomputingindustries,andnewproductandmarketinginitiativesbyVMware’scompetitors;(iv)VMware’scustomers’abilitytotransitiontonewproductsandcomputingstrategiessuchascloudcomputing,desktopvirtualizationandthesoftwaredefineddatacenter;(v)VMware’sabilitytoenterintoandmaintainstrategicallyeffectivepartnershipsandalliances;(vi)theuncertaintyofcustomeracceptanceofemergingtechnology;(vii)rapidtechnologicalchangesinthevirtualizationsoftwareandcloud,enduserandmobilecomputingindustries;(viii)changestoproductandservicedevelopmenttimelines;(ix)VMware’srelationshipwithDellTechnologiesandDell’sabilitytocontrolmattersrequiringstockholderapproval,includingtheelectionofVMware’sboardmembersandmattersrelatingtoDell’sinvestmentinVMware;(x)VMware’sabilitytoprotectitsproprietarytechnology;(xi)VMware’sabilitytoattractandretainhighlyqualifiedemployees;(xii)theabilitytosuccessfullyintegrateintoVMwareacquiredcompanies

andassetsandsmoothlytransitionservicesrelatedtodivestedassetsfromVMware;(xiii)theabilityofVMwaretorealizesynergiesfromDell;(xiv)disruptionsresultingfromkeymanagementchanges;(xv)fluctuatingcurrencyexchangerates;(xvi)changesinVMware’sfinancialcondition;and(xvii)risksassociatedwithcyber-attacks,informationsecurityandprivacy.Theseforward-lookingstatementsaremadeasofthedateofthispressrelease,arebasedoncurrentexpectationsandaresubjecttouncertaintiesandchangesincondition,significance,valueandeffectaswellasotherrisksdetailedindocumentsfiledwiththeSecuritiesandExchangeCommission,includingVMware’smostrecentreportsonForm10-KandForm10-QandcurrentreportsonForm8-Kthatwemayfilefromtimetotime,whichcouldcauseactualresultstovaryfromexpectations.VMwareassumesnoobligationto,anddoesnotcurrentlyintendto,updateanysuchforward-lookingstatementsafterthedateofthisrelease.

Contacts:

PaulZiotsVMwareInvestorRelationspziots@vmware.com650-427-3267

MichaelThackerVMwareGlobalPRmthacker@vmware.com650-427-4454

VMware, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME(amounts in millions, except per share amounts, and shares in thousands)

(unaudited) Three Months Ended May 4, May 5, 2018 2017 (1) Revenue:

License $ 774 $ 641Services 1,234 1,124

Totalrevenue 2,008 1,765Operatingexpenses(2):

Costoflicenserevenue 45 39Costofservicesrevenue 251 250Researchanddevelopment 453 421Salesandmarketing 706 579Generalandadministrative 169 151Realignmentandlossondisposition 2 64

Operatingincome 382 261Investmentincome 48 23Interestexpense (34) (7)Otherincome(expense),net 779 4

Incomebeforeincometax 1,175 281Incometaxprovision 233 36

Netincome $ 942 $ 245

Netincomeperweighted-averageshare,basicforClassesAandB $ 2.33 $ 0.60Netincomeperweighted-averageshare,dilutedforClassesAandB $ 2.29 $ 0.59Weighted-averageshares,basicforClassesAandB 404,968 408,431Weighted-averageshares,dilutedforClassesAandB 410,932 414,018 (1)  AdjustedtoreflecttheadoptionofAccountingStandardsCodification(“ASC”)606,RevenuefromContractswith

Customers. (2)  Includesstock-basedcompensationasfollows:

Costoflicenserevenue $ — $ 1Costofservicesrevenue 11 14Researchanddevelopment 84 82Salesandmarketing 46 48Generalandadministrative 20 18

VMware, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in millions, except per share amounts, and shares in thousands)

(unaudited) May 4, February 2, 2018 2018 (1)

ASSETS Currentassets:

Cashandcashequivalents $ 7,101 $ 5,971Short-terminvestments 5,529 5,682Accountsreceivable,netofallowancefordoubtfulaccountsof$2and$2 1,001 1,394Duefromrelatedparties,net 181 532Othercurrentassets 289 257

Totalcurrentassets 14,101 13,836Propertyandequipment,net 1,098 1,074Otherassets 1,710 924Deferredtaxassets 48 227Intangibleassets,net 535 548Goodwill 4,596 4,597

Totalassets $22,088 $ 21,206

LIABILITIES AND STOCKHOLDERS’ EQUITY Currentliabilities:

Accountspayable $ 126 $ 15Accruedexpensesandother 1,141 1,357Unearnedrevenue 3,370 3,438

Totalcurrentliabilities 4,637 4,810NotespayabletoDell 270 270Long-termdebt 3,966 3,964Unearnedrevenue 2,386 2,401Incometaxpayable 957 954Otherliabilities 212 183

Totalliabilities 12,428 12,582Contingencies Stockholders’equity:

ClassAcommonstock,parvalue$.01;authorized2,500,000shares;issuedandoutstanding106,434and103,776 1 1ClassBconvertiblecommonstock,parvalue$.01;authorized1,000,000shares;issuedandoutstanding300,000shares 3 3Additionalpaid-incapital 992 844Accumulatedothercomprehensiveloss (54) (15)Retainedearnings 8,718 7,791

Totalstockholders’equity 9,660 8,624

Totalliabilitiesandstockholders’equity $22,088 $ 21,206

(1)  AdjustedtoreflecttheadoptionofASC606.

VMware, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions)(unaudited)

Three Months Ended

May 4,

2018 May 5,

2017 (1) Operating activities: Netincome $ 942 $ 245Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities:

Depreciationandamortization 156 136Stock-basedcompensation 161 163Deferredincometaxes,net 180 2Unrealized(gain)lossonequitysecurities,net (776) —Lossondisposition 1 63Lossondispositionofassets,revaluationandimpairment — 3LossonDellstockpurchase — 2Changesinassetsandliabilities,netofacquisitions:

Accountsreceivable 393 321Othercurrentassetsandotherassets (136) (66)Dueto/fromrelatedparties,net 351 (34)Accountspayable 101 59Accruedexpensesandotherliabilities (215) (42)Incometaxespayable 20 15Unearnedrevenue (83) (90)

Netcashprovidedbyoperatingactivities 1,095 777

Investing activities: Additionstopropertyandequipment (61) (49)Purchasesofavailable-for-salesecurities (391) (506)Salesofavailable-for-salesecurities 148 548Maturitiesofavailable-for-salesecurities 371 418Purchasesofstrategicinvestments (2) (6)Proceedsfromdispositionofassets 2 —Businesscombinations,netofcashacquired (26) —Netcashpaidondispositionofabusiness (2) —

Netcashprovidedbyinvestingactivities 39 405

Financing activities: Proceedsfromissuanceofcommonstock 91 7Repurchaseofcommonstock — (425)Sharesrepurchasedfortaxwithholdingsonvestingofrestrictedstock (94) (120)

Netcashusedinfinancingactivities (3) (538)

Netincreaseincash,cashequivalentsandrestrictedcash 1,131 644Cash,cashequivalentsandrestrictedcashatbeginningoftheperiod 6,003 3,239

Cash,cashequivalentsandrestrictedcashatendoftheperiod $ 7,134 $ 3,883

Supplemental disclosures of cash flow information: Cashpaidforinterest $ 63 $ 9Cashpaidfortaxes,net 42 27Non-cash items: Changesincapitaladditions,accruedbutnotpaid $ 11 $ 5 (1)  AdjustedtoreflecttheadoptionofASC606andAccountingStandardsUpdate(“ASU”)No.2016-18,StatementofCashFlows(Topic230):Restricted

Cash.Netcashprovidedbyoperatingactivitiesforthefirstquarteroffiscal2018increasedby$2millionwhencomparedtothepreviouslyreportedamountduetotheadoptionofASU2016-18.

  

VMware, Inc.

GROWTH IN REVENUE PLUS SEQUENTIAL CHANGE IN UNEARNED REVENUE(in millions)(unaudited)

Growth in Total Revenue Plus Sequential Change in Unearned Revenue Three Months Ended

May 4,

2018 May 5,

2017 (1) Totalrevenue,asreported $ 2,008 $ 1,765Sequentialchangeinunearnedrevenue(2)(3) (83) (124)

Totalrevenueplussequentialchangeinunearnedrevenue $ 1,925 $ 1,641

Change(%)overprioryear,asreported 17%

Growth in License Revenue Plus Sequential Change in Unearned License Revenue Three Months Ended

May 4,

2018 May 5,

2017 (1) Totallicenserevenue,asreported $ 774 $ 641Sequentialchangeinunearnedlicenserevenue(3)(4) (27) (25)

Totallicenserevenueplussequentialchangeinunearnedlicenserevenue $ 747 $ 616

Change(%)overprioryear,asreported 21%(1) AdjustedtoreflecttheadoptionofASC606.(2) Sequentialchangeinunearnedrevenueconsistsofthechangeintotalunearnedrevenuefromtheprecedingquarter.Totalunearnedrevenueconsistsofcurrent

andnon-currentunearnedrevenueamountspresentedinthecondensedconsolidatedbalancesheets.(3) InconjunctionwiththedispositionofthevCloudAiroffering,approximately$35millionofunearnedrevenuewasreclassifiedtoaccruedexpensesandotheron

thecondensedconsolidatedbalancesheetasofMay5,2017.Includedinthe$35millionoftotalunearnedrevenuewasapproximately$18millionofunearnedlicenserevenue.Theamountsshowninthetableareinclusiveofthesereclassification.

(4) UnearnedlicenserevenueprimarilyconsistsoftheallocatedportionofVMware’sSaaSofferings.

VMware, Inc.

SUPPLEMENTAL UNEARNED REVENUE SCHEDULE(in millions)(unaudited)

May 4, 2018

February 2, 2018 (1)

November 3, 2017 (1)

August 4, 2017 (1)

May 5, 2017 (1)

February 3, 2017 (1)

Unearnedrevenueasreported: License $ 157 $ 184 $ 143 $ 115 $ 111 $ 136Softwaremaintenance 5,024 5,082 4,541 4,429 4,221 4,313Professionalservices 575 573 508 450 428 435

Totalunearnedrevenue $ 5,756 $ 5,839 $ 5,192 $ 4,994 $ 4,760 $ 4,884

(1) AdjustedtoreflecttheadoptionofASC606.

VMware, Inc.

RECONCILIATION OF GAAP TO NON-GAAP DATAFor the Three Months Ended May 4, 2018

(amounts in millions, except per share amounts, and shares in thousands)(unaudited)

GAAP Stock-Based

Compensation

Employer Payroll Taxeson Employee

Stock Transactions

Intangible Amortization

Acquisition,Disposition and Other

Related Items

Tax Adjustment (1)

Non-GAAP, as adjusted (2)

Operatingexpenses: Costoflicenserevenue $ 45 — — (30) — — $ 15Costofservicesrevenue $ 251 (11) (1) (1) — — $ 239Researchanddevelopment $ 453 (84) — — (1) — $ 368Salesandmarketing $ 706 (46) (1) (7) (1) — $ 651Generalandadministrative $ 169 (20) — — (11) — $ 137Realignmentandlossondisposition $ 2 — — — (2) — $ —

Operatingincome $ 382 161 2 38 15 — $ 598Operatingmargin(2) 19.0% 8.0% 0.1% 1.9% 0.8% — 29.8%Otherincome(expense),net(3) $ 779 — — — (776) — $ 2Incomebeforeincometax $ 1,175 161 2 38 (761) — $ 614Incometaxprovision $ 233 (134) $ 98Taxrate(2) 19.8% 16.0%Netincome $ 942 161 2 38 (761) 134 $ 516Netincomeperweighted-averageshare,dilutedforClassesAandB(2)(4) $ 2.29 $ 0.39 $ — $ 0.09 $ (1.85) $ 0.33 $ 1.26

(1) Non-GAAPfinancialinformationforthequarterisadjustedforataxrateequaltoourannualestimatedtaxrateonnon-GAAPincome.Thisrateisbasedonour

estimatedannualGAAPincometaxrateforecast,adjustedtoaccountforitemsexcludedfromGAAPincomeincalculatingthenon-GAAPfinancialmeasurespresentedaboveaswellassignificanttaxadjustments,suchasadjustmentsresultingfromtheU.S.TaxCutsandJobsActenactedonDecember22,2017(the“TaxAct”).Ourestimatedtaxrateonnon-GAAPincomeisdeterminedannuallyandmaybeadjustedduringtheyeartotakeintoaccounteventsortrendsthatwebelievemateriallyimpacttheestimatedannualrateincluding,butnotlimitedto,significantchangesresultingfromtaxlegislation,materialchangesinthegeographicmixofrevenueandexpensesandothersignificantevents.Duetothedifferencesinthetaxtreatmentofitemsexcludedfromnon-GAAPearnings,aswellasthemethodologyappliedtoourestimatedannualtaxratesasdescribedabove,ourestimatedtaxrateonnon-GAAPincomemaydifferfromourGAAPtaxrateandfromouractualtaxliabilities.

(2) Totalsmaynotsum,duetorounding.Operatingmargin,taxrateandnetincomeperweightedaverageshareinformationarecalculatedbasedupontherespectiveunderlying,non-roundeddata.

(3) Non-GAAPadjustmenttootherincome(expense),netincludesgainsorlossesonequityinvestments,whetherrealizedorunrealized.Duringthefirstquarteroffiscal2019,thisadjustmentprimarilyincludedagainof$781million,whichrelatedtoVMware’sinvestmentinPivotaltoadjustittoitsfairvalue.

(4) Calculatedbasedupon410,932dilutedweighted-averagesharesforClassesAandB.

VMware, Inc.

RECONCILIATION OF GAAP TO NON-GAAP DATAFor the Three Months Ended May 5, 2017

(amounts in millions, except per share amounts, and shares in thousands)(unaudited)

GAAP (1) Stock-Based

Compensation

Employer Payroll Taxeson Employee

Stock Transactions

Intangible Amortization

Acquisition,Disposition and Other

Related Items (1)

Loss on Share Repurchase

Tax Adjustment (1)(2)

Non-GAAP, as adjusted (1)(3)

Operatingexpenses: Costoflicenserevenue $ 39 (1) — (26) — — — $ 12Costofservicesrevenue $ 250 (14) (1) (1) (1) — — $ 233Researchanddevelopment $ 421 (82) — — (3) — — $ 337Salesandmarketing $ 579 (48) (2) (4) — — — $ 524Generalandadministrative $ 151 (18) — — (5) — — $ 128Realignment $ 64 — — — (64) — — $ —

Operatingincome $ 261 163 3 31 73 — — $ 531Operatingmargin(3) 14.8% 9.2% 0.2% 1.8% 4.2% — — 30.1%Otherincome(expense),net $ 4 — — — 1 2 — $ 7Incomebeforeincometax $ 281 163 3 31 74 2 — $ 554Incometaxprovision $ 36 78 $ 114Taxrate(3) 12.8% 20.5%Netincome $ 245 163 3 31 74 2 (78)$ 440Netincomeperweighted-averageshare,dilutedforClassesAandB(3)(4) $ 0.59 $ 0.39 $ 0.01 $ 0.08 $ 0.18 $ —$ (0.19)$ 1.06

(1) AdjustedtoreflecttheadoptionofASC606.(2) Non-GAAPfinancialinformationforthequarterisadjustedforataxrateequaltoourannualestimatedtaxrateonnon-GAAPincome.Thisrateisbasedonour

estimatedannualGAAPincometaxrateforecast,adjustedtoaccountforitemsexcludedfromGAAPincomeincalculatingthenon-GAAPfinancialmeasurespresentedaboveaswellassignificanttaxadjustments.Ourestimatedtaxrateonnon-GAAPincomeisdeterminedannuallyandmaybeadjustedduringtheyeartotakeintoaccounteventsortrendsthatwebelievemateriallyimpacttheestimatedannualrateincluding,butnotlimitedto,significantchangesresultingfromtaxlegislation,materialchangesinthegeographicmixofrevenueandexpensesandothersignificantevents.Duetothedifferencesinthetaxtreatmentofitemsexcludedfromnon-GAAPearnings,aswellasthemethodologyappliedtoourestimatedannualtaxratesasdescribedabove,ourestimatedtaxrateonnon-GAAPincomemaydifferfromourGAAPtaxrateandfromouractualtaxliabilities.

(3) Totalsmaynotsum,duetorounding.Operatingmargin,taxrateandnetincomeperweightedaverageshareinformationarecalculatedbasedupontherespectiveunderlying,non-roundeddata.

(4) Calculatedbasedupon414,018dilutedweighted-averagesharesforClassesAandB.

VMware, Inc.

REVENUE BY TYPE(in millions)(unaudited)

Three Months Ended

May 4,

2018 May 5,

2017 (1) Revenue:

License $ 774 $ 641Services:

Softwaremaintenance 1,077 979Professionalservices 157 145

Totalservices 1,234 1,124

Totalrevenue $ 2,008 $ 1,765

Percentageofrevenue: License 38.6% 36.3%Services:

Softwaremaintenance 53.6% 55.5%Professionalservices 7.8% 8.2%

Totalservices 61.4% 63.7%

Totalrevenue 100.0% 100.0%

(1) AdjustedtoreflecttheadoptionofASC606.

VMware, Inc.

REVENUE BY GEOGRAPHY(in millions)(unaudited)

Three Months Ended

May 4,

2018 May 5,

2017 (1) Revenue:

UnitedStates $ 938 $ 890International 1,070 875

Totalrevenue $ 2,008 $ 1,765

Percentageofrevenue: UnitedStates 46.7% 50.4%International 53.3% 49.6%

Totalrevenue 100.0% 100.0%

(1) AdjustedtoreflecttheadoptionofASC606.

VMware, Inc.

RECONCILIATION OF GAAP CASH FLOWS FROM OPERATING ACTIVITIESTO FREE CASH FLOWS

(A NON-GAAP FINANCIAL MEASURE)(in millions)(unaudited)

Three Months Ended

May 4,

2018 May 5,

2017 (1) GAAPcashflowsfromoperatingactivities $ 1,095 $ 777Capitalexpenditures (61) (49)

Freecashflows $ 1,034 $ 728

(1) AdjustedtoreflecttheadoptionofASU2016-18.GAAPcashflowsfromoperatingactivitiesforthethreemonthsendedMay5,2017increasedby$2million

whencomparedtothepreviouslyreportedamountduetotheadoptionofASU2016-18.

VMware, Inc.

SUPPLEMENTAL SCHEDULE OF FINANCIAL INFORMATION ADJUSTED FOR ASC 606(amounts in millions, except per share amounts, and shares in thousands)

(unaudited)

DuringMay2014,theFinancialAccountingStandardsBoardissuedupdatestoaccountingstandardsrelatedtorevenuerecognition(“ASC606”).VMwareadoptedASC606onafullretrospectivebasiseffectiveFebruary3,2018.

Condensed Consolidated Statements of Income Adjusted for ASC 606

Thefollowingtablepresentsthecondensedconsolidatedstatementsofincomeforthequarterlyandannualperiodsoffiscal2018andtheannualperiodoffiscal2016asadjustedforASC606(tablesinmillions,exceptpershareamounts,andsharesinthousands): For the Three Months Ended For the Twelve Months Ended

May 5,

2017 August 4,

2017 November 3,

2017 February 2,

2018 February 2,

2018 (1) December 31,

2016 Revenue:

License $ 641 $ 783 $ 758 $ 1,018 $ 3,200 $ 2,799Services 1,124 1,149 1,180 1,208 4,662 4,274

Totalrevenue 1,765 1,932 1,938 2,226 7,862 7,073Operatingexpenses:

Costoflicenserevenue 39 39 38 41 157 159Costofservicesrevenue 250 231 240 263 984 894Researchanddevelopment 421 428 449 457 1,755 1,503Salesandmarketing 579 613 624 689 2,506 2,307Generalandadministrative 151 160 175 169 654 689Realignmentandlossondisposition 64 36 2 2 104 52

Operatingincome 261 425 410 605 1,702 1,469Investmentincome 23 25 33 38 120 77Interestexpense (7) (7) (28) (33) (74) (26)Otherincome(expense),net 4 51 (2) 15 66 (17)

Incomebeforeincometax 281 494 413 625 1,814 1,503Incometaxprovision 36 88 18 1,012 1,155 280

Netincome(loss) $ 245 $ 406 $ 395 $ (387) $ 659 $ 1,223

Netincome(loss)perweighted-averageshare,basicforClassesAandB $ 0.60 $ 0.99 $ 0.97 $ (0.96) $ 1.62 $ 2.91

Netincome(loss)perweighted-averageshare,dilutedforClassesAandB $ 0.59 $ 0.98 $ 0.96 $ (0.96) $ 1.59 $ 2.87

Weighted-averageshares,basicforClassesAandB 408,431 408,399 406,733 403,383 406,738 420,520

Weighted-averageshares,dilutedforClassesAandB 414,018 412,768 413,013 403,383 413,368 423,994

(1) Totalsmaynotsum,duetorounding.Netincomeperweighted-averageshareinformationiscalculatedbasedupontherespectiveunderlying,non-roundeddata.

VMware, Inc.

RECONCILIATIONS OF GAAP TO NON-GAAP DATA(amounts in millions, except per share amounts, and shares in thousands)

(unaudited) For the Three Months Ended August 4, 2017

GAAP As Adjusted Under

ASC 606 Non-GAAP Adjustments

Non-GAAP As Adjusted Under

ASC 606 (6) Operatingincome $ 425 248(1) $ 673Incometaxprovision $ 88 56(2) $ 145Netincome $ 406 154(3) $ 559Netincomeperweighted-averageshare,dilutedforClassesAandB(5)(6) $ 0.98 0.37(4) $ 1.35(1) Non-GAAPadjustmentstooperatingincomeincludestock-basedcompensation($169million),employerpayrolltaxesonemployeestocktransactions($1

million),intangibleamortization($33million)andacquisition,dispositionandotherrelateditems($45million).(2) Non-GAAPadjustmentstoincometaxprovisionwere$56millionduringthethreemonthsendedAugust4,2017.(3) Non-GAAPadjustmentstonetincomeincludestock-basedcompensation($169million),employerpayrolltaxesonemployeestocktransactions($1million),

intangibleamortization($33million),acquisition,dispositionandotherrelateditems($7million)andtaxadjustment(-$56million).(4) Non-GAAPadjustmentstonetincomeperweighted-averageshare,diluted,includestock-basedcompensation($0.41),intangibleamortization($0.08),

acquisition,dispositionandotherrelateditems($0.02)andtaxadjustment(-$0.14).(5) Non-GAAPnetincomeperweighted-averageshare,diluted,wascalculatedbasedupon412,768dilutedweighted-averagesharesforClassesAandB.(6) Totalsmaynotsum,duetorounding.Netincomeperweighted-averagesharewascalculatedbasedupontherespectiveunderlying,non-roundeddata. For the Three Months Ended November 3, 2017

GAAP As Adjusted Under

ASC 606 Non-GAAP Adjustments

Non-GAAP As Adjusted Under

ASC 606 (6) Operatingincome $ 410 225(1) $ 634Incometaxprovision $ 18 113(2) $ 132Netincome $ 395 115(3) $ 509Netincomeperweighted-averageshare,dilutedforClassesAandB(5)(6) $ 0.96 0.28(4) $ 1.23(1) Non-GAAPadjustmentstooperatingincomeincludestock-basedcompensation($182million),employerpayrolltaxesonemployeestocktransactions($2

million),intangibleamortization($33million)andacquisition,dispositionandotherrelateditems($8million).(2) Non-GAAPadjustmentstoincometaxprovisionwere$113millionduringthethreemonthsendedNovember3,2017.(3) Non-GAAPadjustmentstonetincomeincludestock-basedcompensation($182million),employerpayrolltaxesonemployeestocktransactions($2million),

intangibleamortization($33million),acquisition,dispositionandotherrelateditems($11million)andtaxadjustment(-$113million).(4) Non-GAAPadjustmentstonetincomeperweighted-averageshare,diluted,includestock-basedcompensation($0.44),intangibleamortization($0.08),

acquisition,dispositionandotherrelateditems($0.03)andtaxadjustment(-$0.27).(5) Non-GAAPnetincomeperweighted-averageshare,diluted,wascalculatedbasedupon413,013dilutedweighted-averagesharesforClassesAandB.(6) Totalsmaynotsum,duetorounding.Netincomeperweighted-averagesharewascalculatedbasedupontherespectiveunderlying,non-roundeddata.

VMware, Inc.

RECONCILIATIONS OF GAAP TO NON-GAAP DATA (cont.) For the Three Months Ended February 2, 2018

GAAP As Adjusted Under

ASC 606 Non-GAAP Adjustments

Non-GAAP As Adjusted Under

ASC 606 (7) Operatingincome $ 605 214(1) $ 820Incometaxprovision $ 1,012 (843)(2) $ 170Netincome(loss) $ (387) 1,044(3) $ 657Netincome(loss)perweighted-averageshare,dilutedforClassesAandB(5)(6) $ (0.96) 2.55(4) $ 1.60(1) Non-GAAPadjustmentstooperatingincomeincludestock-basedcompensation($170million),intangibleamortization($36million)andacquisition,disposition

andotherrelateditems($8million).(2) Non-GAAPadjustmentstoincometaxprovisionwere$843millionduringthethreemonthsendedFebruary2,2018.(3) Non-GAAPadjustmentstonetincome(loss)includestock-basedcompensation($170million),intangibleamortization($36million),acquisition,disposition

andotherrelateditems(-$5million)andtaxadjustment($843million).(4) Non-GAAPadjustmentstonetincome(loss)perweighted-averageshare,diluted,includestock-basedcompensation($0.41),intangibleamortization($0.09),

acquisition,dispositionandotherrelateditems(-$0.01)andtaxadjustment($2.06).(5) GAAPnetlossperweighted-averageshare,diluted,wasbasedupon403,383dilutedweighted-averagesharesforClassesAandB.Duringthethreemonths

endedFebruary2,2018,VMwareincurredaGAAPnetloss.Asaresult,allpotentiallydilutivesecuritieswereanti-dilutiveandexcludedfromthecomputationofGAAPnetlossperweighted-averageshare,diluted.

(6) Non-GAAPnetincomeperweighted-averageshare,diluted,wascalculatedbasedupon410,096dilutedweighted-averagesharesforClassesAandB.(7) Totalsmaynotsum,duetorounding.Netincome(loss)perweighted-averagesharewascalculatedbasedupontherespectiveunderlying,non-roundeddata. For the Twelve Months Ended February 2, 2018

GAAP As Adjusted Under

ASC 606 Non-GAAP Adjustments

Non-GAAP As Adjusted Under

ASC 606 (6) Operatingincome $ 1,702 954(1) $ 2,657Incometaxprovision $ 1,155 (597)(2) $ 558Netincome $ 659 1,507(3) $ 2,166Netincomeperweighted-averageshare,dilutedforClassesAandB(5)(6) $ 1.59 3.65(4) $ 5.24(1) Non-GAAPadjustmentstooperatingincomeincludestock-basedcompensation($683million),employerpayrolltaxesonemployeestocktransactions($6

million),intangibleamortization($132million)andacquisition,dispositionandotherrelateditems($132million).(2) Non-GAAPadjustmentstoincometaxprovisionwere$597millionduringthetwelvemonthsendedFebruary2,2018.(3) Non-GAAPadjustmentstonetincomeincludestock-basedcompensation($683million),employerpayrolltaxesonemployeestocktransactions($6million),

intangibleamortization($132million),acquisition,dispositionandotherrelateditems($87million),lossonsharerepurchase($2million)andtaxadjustment($597million).

(4) Non-GAAPadjustmentstonetincomeperweighted-averageshare,diluted,includestock-basedcompensation($1.65),employerpayrolltaxesonemployeestocktransactions($0.02),intangibleamortization($0.32),acquisition,dispositionandotherrelateditems($0.21)andtaxadjustment($1.44).

(5) Non-GAAPnetincomeperweighted-averageshare,diluted,wascalculatedbasedupon413,368dilutedweighted-averagesharesforClassesAandB.(6) Totalsmaynotsum,duetorounding.Netincomeperweighted-averagesharewascalculatedbasedupontherespectiveunderlying,non-roundeddata.

For the Twelve Months Ended December 31, 2016

GAAP As Adjusted Under

ASC 606 Non-GAAP Adjustments

Non-GAAP As Adjusted Under

ASC 606 (6) Operatingincome $ 1,469 855(1) $ 2,325Incometaxprovision $ 280 206(2) $ 486Netincome $ 1,223 661(3) $ 1,884Netincomeperweighted-averageshare,dilutedforClassesAandB(5)(6) $ 2.87 1.58(4) $ 4.44(1) Non-GAAPadjustmentstooperatingincomeincludestock-basedcompensation($636million),employerpayrolltaxesonemployeestocktransactions($8

million),intangibleamortization($125million),realignmentcharges($52million)andacquisition,dispositionandotherrelateditems($34million).(2) Non-GAAPadjustmentstoincometaxprovisionwere$206millionduringthetwelvemonthsendedDecember31,2016.(3) Non-GAAPadjustmentstonetincomeincludestock-basedcompensation($636million),employerpayrolltaxesonemployeestocktransactions($8million),

intangibleamortization($125million),realignmentcharges($52million),acquisition,dispositionandotherrelateditems($54million),gainonsharerepurchase(-$8million)andtaxadjustment(-$206million).

(4) Non-GAAPadjustmentstonetincomeperweighted-averageshare,diluted,includestock-basedcompensation($1.50),employerpayrolltaxesonemployeestocktransactions($0.02),intangibleamortization($0.30),realignmentcharges($0.12),acquisition,dispositionandotherrelateditems($0.13)andtaxadjustment(-$0.49).

(5) Non-GAAPnetincomeperweighted-averageshare,diluted,wascalculatedbasedupon423,994dilutedweighted-averagesharesforClassesAandB.(6) Totalsmaynotsum,duetorounding.Netincomeperweighted-averagesharewascalculatedbasedupontherespectiveunderlying,non-roundeddata.

About Non-GAAP Financial Measures

ToprovideinvestorsandotherswithadditionalinformationregardingVMware’sresults,VMwarehasdisclosedinthisearningsreleasethefollowingnon-GAAPfinancialmeasures:non-GAAPoperatingincome,non-GAAPoperatingmargin,non-GAAPnetincome,non-GAAPnetincomeperdilutedshare,andfreecashflows.VMwarehasprovidedareconciliationofeachnon-GAAPfinancialmeasureusedinthisearningsreleasetothemostdirectlycomparableGAAPfinancialmeasure.Thesenon-GAAPfinancialmeasures,otherthanfreecashflows,differfromGAAPinthattheyexcludestock-basedcompensation,employerpayrolltaxonemployeestocktransactions,amortizationofacquiredintangibleassets,realignmentcharges,acquisition,dispositionandother-relateditems,gainorlossonsharerepurchase,certainlitigationandothercontingenciesanddiscreteitemsthatimpactedourGAAPtaxrate,eachasdiscussedbelow.Ournon-GAAPfinancialmeasuresalsoreflecttheapplicationofournon-GAAPtaxrate.FreecashflowsdifferfromGAAPcashflowsfromoperatingactivitieswithrespecttothetreatmentofcapitalexpenditures.

VMware’smanagementusesthesenon-GAAPfinancialmeasurestounderstandandcompareoperatingresultsacrossaccountingperiods,forinternalbudgetingandforecastingpurposes,forshort-andlong-termoperatingplans,tocalculatebonuspaymentsandtoevaluateVMware’sfinancialperformance,theperformanceofitsindividualfunctionalgroupsandtheabilityofoperationstogeneratecash.Managementbelievesthesenon-GAAPfinancialmeasuresreflectVMware’songoingbusinessinamannerthatallowsformeaningfulperiod-to-periodcomparisonsandanalysisoftrendsinVMware’sbusiness,astheyexcludechargesandgainsthatarenotreflectiveofongoingoperatingresults.Managementalsobelievesthatthesenon-GAAPfinancialmeasuresprovideusefulinformationtoinvestorsandothersinunderstandingandevaluatingVMware’soperatingresultsandfutureprospectsinthesamemannerasmanagementandincomparingfinancialresultsacrossaccountingperiodsandtothoseofpeercompanies.Additionally,managementbelievesinformationregardingfreecashflowsprovidesinvestorsandotherswithanimportantperspectiveonthecashavailabletomakestrategicacquisitionsandinvestments,torepurchaseshares,tofundongoingoperationsandtofundothercapitalexpenditures.

Managementbelievesthesenon-GAAPfinancialmeasuresareusefultoinvestorsandothersinassessingVMware’soperatingperformanceduetothefollowingfactors:

• Stock-basedcompensation.Stock-basedcompensationisgenerallyfixedatthetimethestock-basedinstrumentisgrantedandamortizedoveraperiodofseveralyears.Althoughstock-basedcompensationisanimportantaspectofthecompensationofVMware’semployeesandexecutives,theexpenseforthefairvalueofthestock-basedinstrumentsVMwareutilizesmaybearlittleresemblancetotheactualvaluerealizeduponthevestingorfutureexerciseoftherelatedstock-basedawards.Managementbelievesitisusefultoexcludestock-basedcompensationinordertobetterunderstandthelong-termperformanceofVMware’scorebusiness.

• Employerpayrolltaxonemployeestocktransactions.Theamountofemployerpayrolltaxesonstock-basedcompensationisdependentonVMware’sstockpriceandotherfactorsthatarebeyondVMware’scontrolanddonotcorrelatetotheoperationofthebusiness.

• Amortizationofacquiredintangibleassets.AportionofthepurchasepriceofVMware’sacquisitionsisgenerallyallocatedtointangibleassets,suchasintellectualproperty,andissubjecttoamortization.However,VMwaredoesnotacquirebusinessesonapredictablecycle.Additionally,theamountofanacquisition’spurchasepriceallocatedtointangibleassetsandthetermofitsrelatedamortizationcanvarysignificantlyandareuniquetoeachacquisition.Therefore,VMwarebelievesthatthepresentationofnon-GAAPfinancialmeasuresthatadjustfortheamortizationofintangibleassetsprovidesinvestorsandotherswithaconsistentbasisforcomparisonacrossaccountingperiods.

• Realignmentcharges.Realignmentchargesincludeworkforcereductions,assetimpairments,lossesonassetdisposalsandcoststoexitfacilities.

VMware’smanagementbelievesitisusefultoexcludetheseitems,whensignificant,astheyarenotreflectiveofVMware’scorebusinessandoperatingresults.

• Acquisition,dispositionandother-relateditems.AsVMwaredoesnotacquireordisposeofbusinessesonapredictablecycleandthetermsofeach

transactioncanvarysignificantlyandareuniquetoeachtransaction,VMwarebelievesitisusefultoexcludeacquisition,dispositionandother-relateditemswhenlookingforaconsistentbasisforcomparisonacrossaccountingperiods.Theseitemsinclude:

• Directcostsofacquisitionsanddispositions,suchastransactionandadvisoryfees.

• AccrualsfortheportionofmergerconsiderationpayableininstallmentsthatmaybepaidincashorVMwarestock,attheoptionofVMware.

• Gainsorlossesonequityinvestments,whetherrealizedorunrealized,includingagainof$781million,whichrelatedtoVMware’sinvestmentinPivotaltoadjustittoitsfairvalueduringthefirstquarteroffiscal2019.

• Chargesrecognizedfornon-recoverablestrategicinvestmentsorgainsrecognizedonthedispositionofstrategicinvestmentsareincludedasother-relateditems.

• Gainsorlossesonsaleordisposalofdistinctlinesofbusinessorproductofferings,ortransactionswithfeaturessimilartodiscontinuedoperations,includingrecoveriesorchargesrecognizedtoadjustthefairvalueofassetsthatqualifyas“heldforsale.”

• CertaincostsincurredrelatedtoDell’sacquisitionofVMware’sparentcompany,EMCCorporation.

• Gainorlossonsharerepurchase.InDecember2016,VMwareenteredintoastockpurchaseagreementwithDellandDell’swholly-ownedsubsidiary,EMCEquityAssetsLLC,pursuanttowhichVMwareagreedtopurchase$500millionofVMwareClassAcommonstock.ThroughDecember31,2016,VMwarehadpurchased4.8millionsharesfor$375million,aswellasrecognizedaderivativeassetrelatedtoitsobligationtorepurchase$125millionofadditionalshares.Thederivativeassetwasmeasuredatfairvalueonarecurringbasisandresultedintherecognitionofgainsandlosses,whichwererecordedtootherincome(expense),netonthecondensedconsolidatedstatementsofincome.OnFebruary15,2017,thestockpurchaseagreementwithDellwascompleted.VMware’smanagementbelievesitisusefultoexcludethemark-to-marketadjustmentonthederivativeasset,asitisnotreflectiveofVMware’scorebusinessandoperatingresults.

• Certainlitigationandothercontingencies.VMware,fromtimetotime,mayincurchargesorbenefitsthatareoutsideoftheordinarycourseofVMware’s

businessrelatedtolitigationandothercontingencies.VMwarebelievesitisusefultoexcludesuchchargesorbenefitsbecauseitdoesnotconsidersuchamountstobepartoftheongoingoperationofVMware’sbusinessandbecauseofthesingularnatureoftheclaimsunderlyingsuchmatters.

• Taxadjustment.Non-GAAPfinancialinformationforthequarterisadjustedforataxrateequaltoVMware’sannualestimatedtaxrateonnon-GAAPincome.ThisrateisbasedonVMware’sestimatedannualGAAPincometaxrateforecast,adjustedtoaccountforitemsexcludedfromGAAPincomeincalculatingVMware’snon-GAAPincomeaswellasdiscreteitems,suchastheestimatednettaxexpenserecognizedinthefourthquarteroffiscal2018inconnectionwiththeenactmentoftheTaxCutsandJobsActonDecember22,2017.VMware’sestimatedtaxrateonnon-GAAPincomeisdeterminedannuallyandmaybeadjustedduringtheyeartotakeintoaccounteventsortrendsthatVMwaremanagementbelievesmateriallyimpacttheestimatedannualrateincluding,butnotlimitedto,significantchangesresultingfromtaxlegislation,materialchangesinthegeographicmixofrevenueandexpensesandothersignificantevents.Duetothedifferencesinthetaxtreatmentofitemsexcludedfromnon-GAAPearnings,aswellasthemethodologyappliedtoVMware’sestimatedannualtaxratesasdescribedabove,theestimatedtaxrateonnon-GAAPincomemaydifferfromtheGAAPtaxrateandfromVMware’sactualtaxliabilities.

Additionally,VMware’smanagementbelievesthatthenon-GAAPfinancialmeasureoffreecashflowsismeaningfultoinvestorsbecausemanagementreviewscashflowsgeneratedfromoperationsaftertakingintoconsiderationcapitalexpendituresduetothefactthattheseexpendituresareconsideredtobeanecessarycomponentofongoingoperations.

Theuseofnon-GAAPfinancialmeasureshascertainlimitationsbecausetheydonotreflectallitemsofincomeandexpensethataffectVMware’soperations.Specifically,inthecaseofstock-basedcompensation,ifVMwaredidnotpayoutaportionofitscompensationintheformofstock-basedcompensationandrelatedemployerpayrolltaxes,thecashsalaryexpenseincludedinoperatingexpenseswouldbehigher,whichwouldaffectVMware’scash

position.VMwarecompensatesfortheselimitationsbyreconcilingthenon-GAAPfinancialmeasurestothemostcomparableGAAPfinancialmeasures.Thesenon-GAAPfinancialmeasuresshouldbeconsideredinadditionto,notasasubstitutefororinisolationfrom,measurespreparedinaccordancewithGAAPandshouldnotbeconsideredmeasuresofVMware’sliquidity.Further,thesenon-GAAPmeasuresmaydifferfromthenon-GAAPinformationusedbyothercompanies,includingpeercompanies,andthereforecomparabilitymaybelimited.

ManagementencouragesinvestorsandotherstoreviewVMware’sfinancialinformationinitsentiretyandnotrelyonasinglefinancialmeasure.