The company?s software licenses gross margin expanded by over 40 basis points over the prior year quarter to 93.2% in Q3. Moreover, the company generated higher service revenues from hybrid cloud, network virtualization and end-user computing, and services revenues jumped by 13% through the quarter. However, its cost of services rose by only 8% y-o-y to $212 million for the quarter. As a result, the gross margin for the services division was up by about a percentage point over the year ago period at 78.6%. VMware?s cash operating expenses ? including R&D, sales and marketing expenses combined ? were about 5% higher than the year-ago quarter at just under $1.1 billion in Q3.
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