VMware on Thursday announced its plans to acquire Pivotal Software, a cloud-native platform provider, for $2.7 billion. Both VMware and Pivotal are owned by Dell Technologies.
Meanwhile, VMware also announced plans to purchase cybersecurity firm Carbon Black for about $2.1 billion.
Both transactions are expected to close in the second half of VMware’s fiscal year 2020, which ends January 31, 2020.
“These acquisitions address two critical technology priorities of all businesses today — building modern, enterprise-grade applications and protecting enterprise workloads and clients,” VMware CEO Pat Gelsinger said in a statement. “With these actions we meaningfully accelerate our subscription and SaaS offerings and expand our ability to enable our customers’ digital transformation.”
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Gelsinger expounded on that in a conference call Thursday, stating that the acquisitions will enable VMware to address three growing trends within the enterprise: “First, multi-cloud is the new model for enterprise IT,” he said. “Second, digital transformation is driving accelerated pace of cloud-native app development. Last but not least, as businesses move applications to the cloud and access it over distributed networks and from a diversity of endpoints, security has become a significant challenge and priority.”
By combining Pivotal’s development platform, tools and services with its own infrastructure capabilities, VMware will be able to deliver customers a comprehensive Kubernetes portfolio for building and managing applications, Gelsinger said.
Pivotal has fully embraced Kubernetes, recently launching Pivotal Spring Runtime for Kubernetes and the upcoming Pivotal Application Service for Kubernetes. VMware, meanwhile, has increased its Kubernetes-related investments over the past year with the acquisition of Heptio. In February 2018, the two companies jointly launched VMware Pivotal Container Service (PKS).
“We believe the developer space is going through a massive transition,” Gelsinger said on Thursday’s call. “What we see is the opportunity to be this full stack provider… We need to own… an end-to-end Kubernetes platform.”
Meanwhile, the combination of Carbon Black’s solutions with VMware’s security offerings “will create a modern security cloud platform for any application, running on any cloud, on any device,” the company said in a release.
Carbon Black has more than 5,600 customers and 500 partners globally. Its cloud-native security platform leverages big data and behavioral analytics to provide endpoint protection against cyberattacks.
“This is VMware building a security cloud platform, and we expect there’s integrations across our portfolio that will be benefited by Carbon Black technology,” Gelsinger said.
While Carbon Black faces some strong competition, “the opportunity is a market in disruption,” Gelsinger said. “The market is not being effective today. [Enterprises are] spending way too much on security, getting way too little security as a result.”
VMware on Thursday also reported second quarter financial results that surpassed expectations.
Non-GAAP net income for the second quarter was $667 million, or $1.60 per diluted share. Revenue for the quarter was $2.44 billion, an increase of 12 percent from the second quarter of fiscal 2019.
Analysts were expecting earnings of $1.55 per share on revenue of $2.43 billion.
License revenue for the second quarter was $1.01 billion, an increase of 12 percent from the second quarter of fiscal 2019.