Revenue for the leading virtualization software vendor rose 33% to $472.1 million, from $357.8 million for the same quarter of last year. Analysts were looking for a top line of $462.7 million, according to Thomson Reuters.
Profit grew 29% to $83.3 million, or 21 cents a share, from $64.7 million, or 18 cents a share, in the year-ago period.
Excluding special charges, EPS was 24 cents. Analysts were expecting 20 cents, less items.
Deferred revenue catapulted 83% year over year to $780 million.
Shares rose $3.89, or 20.8%, to $22.62 in extended trading, after ending the regular session down 9.25%.
VMware cautioned that its full-year revenue growth would likely be near the low end of the previously projected range of 42% to 45%, suggesting 2008 total revenue closer to $1.882 billion. Full-year growth of 42% suggests fourth-quarter revenue of $516.2 million.
For the fourth quarter, analysts are expecting EPS, less items, of 24 cents on revenue of $518.4 million.
issued a new challenge to VMware Tuesday by launching and shipping its Virtual Machine Manager software, with licenses starting at $1,304, or $1,497 for its full System Center with VMM.
Microsoft estimates its price points are one-third that of VMware's comparable virtualization-management software. Microsoft's System Center provides management of both virtual and physical servers.
reports results late Wednesday. Microsoft releases earnings Thursday after the bell.