Revenues for the first quarter were $1.06 billion, an increase of 25.1% from the first quarter of 2011, and 24.8% measured in constant currency.

Operating income for the first quarter was $217 million, an increase of 41% from the first quarter of 2011. Non-GAAP operating income for the first quarter was $344 million, an increase of 36% from the first quarter of 2011.

Net income for the first quarter was $191 million, or $0.44 per diluted share, compared to $126 million, or $0.29 per diluted share, for the first quarter of 2011. Non-GAAP net income for the quarter was $287 million, or $0.66 per diluted share, compared to $204 million, or $0.48 per diluted share, for the first quarter of 2011.

Trailing twelve months operating cash flows were $2.12 billion, an increase of 64%. Trailing twelve months free cash flows were $2.07 billion, an increase of 53%.

Cash, cash equivalents and short-term investments were $5.22 billion and unearned revenue was $2.81 billion as of March 31, 2012.

In January 2012, VMware announced the availability of the VMware vCenter™ Operations Management™ Suite, a comprehensive management portfolio designed to help customers deliver IT as a service by simplifying and automating the operations of virtual and cloud environments. Updates to the VMware vCenter Operations Management Suite include deeper integration of capacity and configuration management capabilities and new “application awareness” to enable customers to optimize infrastructure operations based on application needs.

In February 2012, VMware unveiled at VMware Partner Exchange new solution competencies, programs and rewards designed to help partners guide their customers into the Cloud Era. The event grew by approximately 20% over 2011, attracting 4,000 IT experts from around the world to hear about the latest virtualization and cloud technology trends and learn hands-on how they can become the trusted advisers that will move customers to the next phase of IT as a service.

VMware recently celebrated the anniversary of Cloud Foundry™, the industry’s open platform as a service with announcements of new partnerships, a new system for managing open source software contributions, new tools for operating large-scale services, and additional multi-cloud deployment choices.

In April, VMware announced the availability of VMware Accelerate Advisory Services. Addressing the increasing role IT organizations play in the overall effectiveness of business outcomes, these new strategy consulting services will target C-level executives, introducing a method to help accelerate IT and business transformation and deepen the understanding of how cloud computing can deliver business results.

Operating activities:

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Stock-based compensation, excluding amounts capitalized

Excess tax benefits from stock-based compensation

Other

Changes in assets and liabilities, net of acquisitions:

Accounts receivable

Other assets

Due to/from EMC, net

Accounts payable

Accrued expenses

Income taxes receivable from EMC

Income taxes payable

Deferred income taxes, net

Unearned revenue

Net cash provided by operating activities

Investing activities:

Additions to property and equipment

Capitalized software development costs

Purchases of available-for-sale securities

Sales of available-for-sale securities

Maturities of available-for-sale securities

Purchase of strategic investments

Business acquisitions, net of cash acquired

Transfer of net assets under common control

Other investing

Net cash used in investing activities

Financing activities:

Proceeds from issuance of common stock

Repurchase of common stock

Excess tax benefits from stock-based compensation

Shares repurchased for tax withholdings on vesting of restricted stock

Net cash provided by (used in) financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of the period

Cash and cash equivalents at end of the period

Revenues:

License

Services

Total revenues

Operating expenses (1):

Cost of license revenues

Cost of services revenues

Research and development

Sales and marketing

General and administrative

Operating income

Investment income

Interest expense with EMC

Other income, net

Income before income taxes

Income tax provision

Net income

Net income per weighted-average share, basic for Class A and Class B

Net income per weighted-average share, diluted for Class A and Class B

Weighted-average shares, basic for Class A and Class B

Weighted-average shares, diluted for Class A and Class B

(1) Includes stock-based compensation as follows:

Cost of license revenues

Cost of services revenues

Research and development

Sales and marketing

General and administrative

Current assets:

Cash and cash equivalents

Short-term investments

Accounts receivable, net of allowance for doubtful accounts of $2,734 and $3,794

Due from EMC, net

Deferred tax asset

Other current assets

Total current assets

Property and equipment, net

Capitalized software development costs, net and other

Deferred tax asset

Intangible assets, net

Goodwill

Total assets

Current liabilities:

Accounts payable

Accrued expenses and other

Unearned revenues

Total current liabilities

Note payable to EMC

Unearned revenues

Other liabilities

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Class A common stock, par value $.01; authorized 2,500,000 shares; issued and outstanding 126,852 and 123,610 shares

Class B convertible common stock, par value $.01; authorized 1,000,000 shares; issued and outstanding 300,000 shares

Additional paid-in capital

Accumulated other comprehensive income

Retained earnings

Total stockholders’ equity

Total liabilities and stockholders’ equity

Operating expenses:

Cost of license revenues

Cost of services revenues

Research and development

Sales and marketing

General and administrative

Operating income

Operating margin

Income before income taxes

Income tax provision

Tax rate

Net income

Net income per weighted-average share, basic for Class A and Class B (3)

Net income per weighted-average share, diluted for Class A and Class B (4)

Operating expenses:

Cost of license revenues

Cost of services revenues

Research and development

Sales and marketing

General and administrative

Operating income

Operating margin

Income before income taxes

Income tax provision

Tax rate

Net income

Net income per weighted-average share, basic for Class A and Class B (3)

Net income per weighted-average share, diluted for Class A and Class B (4)

Revenues:

License

Services:

Software maintenance

Professional services

Total services

Total revenues

Percentage of revenues:

License

Services:

Software maintenance

Professional services

Total services

Total revenues

GAAP cash flows from operating activities

Capitalized software development costs

Excess tax benefits from stock-based compensation

Capital expenditures

Free cash flows

GAAP cash flows from operating activities

Capitalized software development costs

Excess tax benefits from stock-based compensation

Capital expenditures

Free cash flows

Stock-based compensation. Although stock-based compensation is an important aspect of the compensation of VMware’s employees and executives, determining the fair value of certain of the stock-based instruments we utilize involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock options, which is an element of our ongoing stock-based compensation expense, is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. In addition, we account for stock-based compensation under GAAP, which requires that we report the excess income tax benefit from stock-based compensation as a financing cash flow rather than as an operating cash flow. We have added this benefit back to our calculation of free cash flows in order to generally classify cash flows arising from income taxes as operating cash flows.

Employer payroll tax on employee stock transactions. The amount of employer payroll taxes on stock-based compensation is dependent on VMware’s stock price and other factors that are beyond our control and do not correlate to the operation of the business.

Amortization of intangible assets. A portion of the purchase price of VMware’s acquisitions is generally allocated to intangible assets, such as intellectual property, and is subject to amortization. However, VMware does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition’s purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition. Therefore, VMware believes that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods.

Acquisition related items. Acquisition related items include direct costs of acquisitions, such as transaction fees, which vary significantly and are unique to each acquisition. Additionally, VMware does not acquire businesses on a predictable cycle.

Capitalized software development costs. Capitalized software development costs encompasses capitalization of development costs and the subsequent amortization of the capitalized costs over the useful

life of the product. Amortization and capitalization of software development costs can vary significantly depending upon the timing of products reaching technological feasibility and being made generally available. In addition, we exclude the capitalization of software from our free cash flows to better convey management’s view of operating cash flows. To the extent that we capitalize costs under generally accepted accounting guidance, we increase our GAAP operating cash flows due to the reduced expense recognized within net income and paid out in cash during the period. Historically, the amount of software development costs that we capitalized during a given fiscal period was often significant. However, following the release of VMware vSphere 5 and the comprehensive suite of cloud infrastructure technologies in the third quarter of 2011, management determined that VMware’s go-to-market strategy had changed from single solutions to product suite solutions. As a result of this change in strategy, and the related increased importance of interoperability between our products, the length of time between achieving technological feasibility and general release to customers has significantly decreased. Given that we expect the majority of our product offerings to be suites or to have key components that interoperate with our other product offerings, the costs incurred subsequent to achievement of technological feasibility are expected to be immaterial in future periods and we do not expect to record significant capitalized software development costs under our current strategy. We did not record capitalized software development costs during the first quarter of 2012. We also expect amortization of previously capitalized software development costs to steadily decline as previously capitalized software development costs become fully amortized.

Tax Adjustment. Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating our non-GAAP income. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenues and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.