Dell (DELL) 8 Mar 182018 Q4 Earnings call transcript

Good morning and welcome to the Fiscal Year 2018 Fourth Quarter and Year End Earnings Conference Call for Dell Technologies, Inc. I’d like to inform all participants this call is being recorded at the request of Dell Technologies. This broadcast is the copyrighted property of Dell Technologies, Inc. Any rebroadcast of this information, in whole or part without the prior written permission of Dell Technologies is prohibited.

As a reminder, the company is also simulcasting this call at investors.delltechnologies.com. webcast year. available this location the of one for replay will at be same A

remarks, will over prepared Mr. like Senior Following we President Williams, to Instructions] session. Vice turn I’d you [Operator may the Investor call of to begin. Williams, conduct Rob Relations. a question-and-answer

documents fourth With We've additional I'd quarter's have and in QX, XX-K our these press Regina. Products on review items Vice I quarter Thanks, to us. and morning year posted our fully our to deck is Form will Operations, results. Beginning website. comparable thanks and XX. March few for today Good this Clarke like fiscal results XXXX Treasurer, to Chairman Johnson Tyler now CFO, our financial results. joining Thursday, on we Jeff web our and for me highlight Tom releases Sweet; Full quarterly filed year-over-year be on you a perspective. related encourage

financial not do all to this impact year's otherwise of call ASC adoption XXXX Also quarter to our the today to compared hold unless are to QX results year-over-year as financial through was the quarter historical a for April information. based walk restated percentages ASC in fiscal all XXX, that a note specified, note XX-week investors XXX. XXX We revenue QX. standard, of and and impact the So reported separate ASC of reflect Please of XX-week intend in provide late change. growth that on refer adoption

a and its comparable of material the operating basis. revenue, in our web non-GAAP income, tables and reference these a continuing reconciliation accompanying in expenses, operations call, our supplemental release. GAAP be operating we measures adjusted will gross on press including this measures, During found can directly to EBITDA financial net deck measure most income, EBITDA A margin, non-GAAP

you to beginning more non-GAAP forward-looking the total and slides non-GAAP on adjustments during on all full and year call operating that relate this non-cash web expectations. assets. of that no our relate differ approximately excludes and based for remind on Actual made non-GAAP billion We and The approximately $XX.X excludes to of impact excuse quarter. our GAAP adjustments. There operating billion the in in for are details our items will in the projected – and each non-cash amortization XX will excludes adjustments. - events our number although accounting $X.X the and Our the supplemental bridging for materially due statements these QX our refer to results statements few me, of decline risks income Cautionary and are like purchase income Slide our in non-GAAP the adjustments of significant results I'd next statements. majority to obligation from intangible years, Statement to results Slide and section uncertainties, additional events subsequent update to which be could continue on non-GAAP deck a Please discussed web are detail current those X assume forward-looking between of deck. to future

strategic part over a the that is position planning, this before to Dell Directors XX-D doing business are want is of Technologies' from February of to Finally, we our turn it we of X, of ongoing filed I a and the Tom, evaluating on disclosing dress This opportunities. potential strength. Board amended I number multiyear

Magic leadership of in share We the XX we and Gartner reports. are Quadrant in leaders categories, top market XX have

this that will significant any topic. down said, the questions will related or in Tom remarks, further generation, debt. progress paying not we discuss condition and the take flow filing with financial With his As we strong to solid made in we're cash have on address

Now I'll turn it over Tom. to

paying the results billion delevering, is paying our revenue year, toughest strong We fiscal strong a the family. move delivered through of down seeing since with in and $XX I Technologies customer component of on better-than-expected job billion good our improve strong with synergies on entire allowing have for sales line collaboration revenue did EMC more year, investing profit We increased acceptance transaction. one and the while significantly through $XX in Jeff we've team all good $X. and a teams of by top cash detail. make debt will Group the seen. areas. Dell the This The and EBITDA as Rob. drove we're environments delivering significant of coordination was of we billion changes gross the for revenue in cost off number navigating closing strong velocity, integration, of the coverage to XXXX flow made pleased adjusted progress us $X.X as billion, and program, we global our of of channel Solutions X operating our made progress We and Thanks, broad discuss we've saw portfolio. across Infrastructure momentum and that solutions in we

we consumption $X.X deck or was and details Operating growth billion, models selectively sequentially, flexible XX.X% Gross how Please invest was on turn the velocity points our up billion billion, client, even for up down servers. servers up revenue billion, adjustments. given an we the provide to $X XX dynamics as billion by we've billion and XX.X% continued $XX.X XX web is drive ISG strong more XX.X% the $X.X improving basis and of revenue discipline in flexible with and revenue a XXX billion, the up revenue, models, to in see warranty. up will of top X.X% $XX.X for billion predictable million. X% Deferred these strength quarter. up Specific solutions. they operating driven Now basis $XXX revenue, with income continue XX% of more XX% seen mixed EBITDA margin VMware, respond with for results or fourth was X% across in Though and $X.X choice was billion, growth points. opportunities. consumption within to storage. EBITDA GAAP to was for the for business let procure margin and to we of and XX was the driven our for was was not a long-term to revenue. Slide in was revenue, $X.X X was Non-GAAP which utilize OpEx loss along customers' to up up revenue quarter me which of OpEx for line X% in to recurring basis stream. profit by demand as points, down arrangements GAAP the $X. approximately was request revenue $XX.X extended quarter recognized, Adjusted maintenance, immediately year-over-year

I me let jump segment couple into make of a Before additional results, comments.

sequentially patterns First, as of the the down we've seasonal seen typically business. prior is given years, QX in

a see cash first use also seasonal historical We of quarter patterns. given the in

historical trends, at Looking the the we of then through momentum remainder year. build

reform. also Second, I tax touch to want on

of and As rules. Due tax analysis, new of and comprehensive based was as a to our December. are analysis clarifications. passed extensive the tax on bill spending. current estimates the requires impact provide guidance reform our tax it Today, U.S. complex the issue view the the that and a continues of I you in IT will bill, government the nature tax positive economy overall to reform know, We for tax reform

to expenses income approximately future part, will of we benefit for tax. assets by by quarter, offset, $XXX billion repatriation impact by the the a the transition liabilities, to million During tax be the a tax benefit tax to tax offset tax re-measurement of $X.X fourth recorded current impact and of reform cash substantially in and other billion charge related net of total the of $X driven related attributes. The deferred

Going we on reform rate. the tax evaluate tax continue to forward, effective our of impact

tax not our Given our impacts that what and roughly rate tax implemented. change fully will should negative reform impact we as offset know positive the is today, materially interpreted when the effective expectation

The performance Now a fourth growth its ongoing revenue of for the $X.X billion billion. was let X%. cloud continue financial quarter PowerEdge demand as with for along down servers segments to strong time the Storage driven view we Infrastructure record billion, storage our was up year-over-year. transaction expansion from which and servers was of for increase and third since was with you demand Solutions consecutive our business were for double-digit $X.X But revenue Revenue to both prices. Group XX% first quarter. give Servers PowerEdge of and server our servers see revenue, by grew XX%. selling networking, of up $X.X average the closed, primarily me the summary delivered

flexible One due to to of behind and maintenance is the demand reported the deferred revenue related primarily between our variance consumption models. drivers and results

for a this on gain or Operating is that encouraged to recovery investments the a income better coming was year, X.X% quarter extent, ISG over actions we $XXX are demand prior a basis to a the decline point servers and a of and, component as the year velocity due over we gradual mix expect the put XXX revenue, lesser primarily million of we exited higher basis, storage higher in place quarters which costs. with and traction. We

the to of good S&P. to and profitability up profitability higher due attaching across as selling is overall income cost and Client X%, selling team storage Solutions a higher-margin displays. CSG commercial products. services revenue. in client, revenue consumer prices and VMware expansion million, average offsetting Revenue was balancing and XPS operating average up up for XX% X%, velocity workstations, or quarter. revenue, focused growth up as and on was which $X.X of while Revenue was Revenue as by and operating for revenue component by notebooks both million which $XX.X X% Consumer in business, which include and and the was price data the driven protection. was grew strong RSA, improving of billion, revenue headwinds prices growth of $XXX VMware XX% also well in and X%. a on another through income focused Group servers businesses, million, in - had repricing which $XXX to are our We selling our Boomi, peripherals. $XXX double-digit XX.X% and for average for growing did job both SecureWorks, double-digit was notebooks growth up X.X% in billion segment other the software Commercial Pivotal from was driven was

to to sheet as the strong the and had which in improved allocation. was paid $X.X QX generation maintenance billion, turning predominantly balance overall cash contracts, from and cash operations upfront. flow seasonal capital increase services We Now in and profitability are due

billion, Our balance approximately cash billion was the prior $XX. quarter. $X.X and up X investments versus

$XX delevering to the remained committed On debt, balance the DFS excluding we've fully closing transaction, and of billion gross down sheet. side, the since paid debt debt,

debt. $XX.X total at QX, debt During Total quarter billion, million EMC approximately in we prior $XXX quarter an in the DFS debt, in approximately ending $XX.X million with paid to debt billion $XX.X the ended down we debt. million than from closed due time increase down the is the the quarter transaction. at of $XXX $XXX billion Core higher

loan unrestricted margin a we with excludes the As debt core structure and debt agencies DFS-related the the discussions. is subsidiary capital to aligned reminder, rating for and debt, present leverage how

on approximately or For additional X web $X.X Slide see Technologies family. XX%. included across up the for is Demand what please of in excluded services DFS QX, deck. were balances, In detail originations is the strong financial billion, our Dell debt

end receivables stand at the of of As up XX%. $X.X financing billion, now XXXX, fiscal

continue our on growth DFS prior calls, in fund increase discussed the to receivables in business. drives we the we've As debt as financing an

Now over and walk ISG. to highlights let the Jeff CSG operational of turn through it you me to

market. our Tom. made and we in quarter. to business us the improvement in offerings product started spoke our continued already changes fourth we've success the the growth traditional that accountability. products servers, quarters, how simplified ended trajectory set go the categories all-flash last to we product seen up saw already more for the organization, leaders for year We Since year. strong hyperconverged Client, in a aligning improved we We've moving demand on as the exited have we've high performance Thanks, in improved across with and and to forward. the in speed and storage We simplify ISG infrastructure prior effectively December, note,

VxRail all offering enhanced example, be November We storage products expanded announced the to after VxRack shipping Storage range started we the For launched. and aligning to products software-defined SDDC. Program our Loyalty in we Future-Proof vSAN, will our it of shortly storage strategy mid storage and

also It targeted strategically software-defined and aligned our solutions hyperconverged simpler better strengths faster things Lastly, collaboration faster it promotes also we've go-to-market selective and portfolios customers. to engine, across decisions both our a service increased with and means benefiting our cloud, to for like build organization simpler faster data businesses promotes infrastructure leverage go solutions infrastructure. as software-defined A businesses center, innovation. a and -- to and faster storage,

full the Technologies' and customers, transformation were the need IDC are 'XX. on partners digital, as working into customers a finding Dell solid workforce areas value that and External been conducted analysts. by they move have areas improve are year XXXX with promises. we proposition recognize that we resonating that leading a IT, pre-merger some at clear ISG the with security Looking CSG, Dell and we to results and feedback It's EMC that with we our say that is for positive, fiscal survey industry of XX% We addressing. has have focus, and of delivered overall few FY

the of some on touch me highlights. Let

fourth two the double-digit PC growth In in billion, FY awards up income 'XX, growth quarter our XX of revenue. of unit setting and and our record said, are record-high gaming consumer, the off excellent premium We holiday clients rugged CSG delivered QX, year, notebooks. and year row we saw XPS, slowed We a share investments we in record. a in notebooks, year, which season has CES $XX.X at for straight was a which That had full worldwide received we've $X.X a X.X% the of this grew-double results, up in and billion XXth was all including latitudes of XX% reporting Operating gains. paying of revenue year-over-year in workstations, our quarters. X%. past made digits was For and premium delivered calendar as demand was

on market driving in So 'XX. we're a while growth focused higher unit FY relative consolidating profitability maintaining in

quarter provider Dell It time growth peripherals, saw by spot unit X also the up million cloud both was of the billion number servers servers see mixed income expectations. was record see to XXth in ISG effectively to world configured QX driven we've we continued performance client stations. server, based for more richly year was ASPs this expectations below in servers, servers managed growth generation partially a PowerEdge $X.X FY was for includes the Revenue record mentioned, the operating $XX.X and the mitigate we while first be unit year the the for Tom both year. or XXX networking the We X we've in continues and pricing the year [ph] QX higher based 'XX xXX year-over-year like units. a Servers fiscal for revenue billion this year. marked X.X% docking This time past share items the the which revenue, ongoing shipped from the that to number the was S&P on and a and according calendar to we've to search. for PowerEdge revenue, memory QX, good on our basis was strong in finished As display third as up displays saw growth a year, cost our revenue, billion, and X of consecutive for continue we of basis ramped gained and XX%. became market above and display double-digit servers. IDC. calendar since points on which we've inflation. for at is xXX both and entered server for was second servers market we undisputed $XX.X been revenue units and leader. In worldwide leader categories and

Revenue year. to X the $XX. storage. full for Moving was billion

arrays in our Isilon triple-digit our saw demand strength growth all-flash year. while market-leading over demand grew double-digits Our NAS scale-out the VxRail hyperconverged portfolio and with for

nearly demand we rate and undisputed of the business Our billion, $X with all-flash the year the exited in leader remain third of at one share. arrays nearly worldwide market a all-flash revenue

past the plans the we few implemented in through actions action growth, challenged, As made are expect to have we've both next traditional focused these storage financial calls, and a share, year. on business. previous the to results and improving storage were we We benefits of and and improve discussed protection market midrange, on investments on and over laser particularly data this months materialize

Looking forward, we the to build we velocity operational momentum want against seen the we've and continue drive hard on to while improvements.

improving market The and sales consolidation 'XX ramp reduce into while win. technology plays Our a portfolio we're profitability; deliver service; and storage me, or client priorities hands complexity positioned are which our the be continue to data the of productivity, world-class the - accelerate market maintain profitability. FY journey; to will quality to complexity unit velocity directly for and multi portfolio; trends with protection velocity; reduce while quarter excuse and velocity across server maintaining and accelerate

right team to on portfolio With unmatched lead through journey our an the to back me have let over that, turn Tom. and future. right We this digital strategy, it the customers their

solid We server delevering the Jeff. multiple market performance good the great cost and some goals us or made and velocity 'XX. And grew headwinds. made We tough at feel efficiencies, challenges in make Analyst to and laid the in allowing strides above through navigated working services Overall, delivered capital and against some Thanks, generated strong balance Meeting. on at to successfully fiscal leaned progress in we of four We we client, April team the sheet. cash progress the component out areas drive business. about strategic flow our

to more solutions, We tools. well and are but efforts, as we positioning work and the to well integration into still related systems do product have as

Finally, this with our and customers full in Technologies a and resonating capabilities seamless we customers. to more the Dell is comprehensive brought of experience

U. the economic had S. GDP see. global we macro are positive being which driven must areas forward expenditures, continue for our and our The storage, are believe We good transformation, edge from as 'XX, capacity, order to improved of protection improve our the expectations market move cloud of requires let that factors. IT in focus has a have for setting few digital all strategy to and impact have With had on opportunities the execute 'XX. the want fully data advantage - reform the to business capital stronger to these We customers outline changes has tax sentiment towards four which into in take expectations we strategic for environment to fiscal be areas a embrace mind, up of core more we and As our position requires and grown. more the me compute strengthen and are to fiscal and business. the to security, of

The that first a and is want continue to sheet. cash particular balance have We client. delever fiscal and drive focus much we to from change strong market 'XX. with continue share have growing gains, and above generate on storage the to flows to And the

balance closing, third full With position trends, serving believe priorities we and through the The velocity have to for customers. journey we profitability the I'll the 'XX range server Rob to of that, we headed capabilities. outlined good the data drive during fiscal addressing our our about executing accelerate back it In and We and market ISG we the turn listening business to as protection velocity. The our begin to Q&A. Jeff focus their to is into profitability remarks. and model on given right feel as we strategy continue by transformation their capturing that customers goal delight need goal to last storage and needs and digital in his is

Thanks, Tom.

Instructions] A. Q& can introduce to first question? the Regina, [Operator please you get Let's

line Eller will Our David question come first go Wells ahead. Fargo. Please of from with the

thank call. and the Good for morning you taking

have operating if that the things that, the onetime were past, was strong and very wondering like You I know, was have performance In CSG in been settlements any income? the helped. and there there in items segment,

we No, around not. principally ensure pricing value just pure were execution Hey, David, Tom. had the with the performance-oriented solutions. pricing that work we that team for our of a and properly were quarter It the the had, it's that to there cost component we based upon do and ensuring dynamics was they that that did

no. So

one-ff, in terms quarter. In really not of anything the there

execute performance Tom XPS, gaming those profiles what our we that the David, QX. performance would add to all I our in bring in well rugged, our PC, good so notebooks, good in did said premium margin business, quite and side, good And commercial to

displays your And terms some and was Jeff, cat think in mentioned attached… of when you about of [ph] services those better,

our attach, that [ph] our an and business then say around drag accessories notebook I'll more attach, do us attach. business, docs Plus well display with to opportunity particularly with revenue for continued along was performance quite to our

your step years? for on was frame That's back then And where a you helpful. for and competitive for environment, your are could So the in cycle But areas helpful. just the That for out laid very take very maybe Okay. Slide XXXX segment FY coming the XX. you each? market expectations we each focus

then start, me more Jeff insights. will and probably let give some Well, you

client about the ‘XX so, So as instance, IDC commercial will right, market the in marginally. market in that X.X, if think although minus - about say would for we for calendar the the look, year up coming commercial segment, PCs, - be X.X, think is business roughly you would a you

much status the pretty been what's going in quo, that of on of market So late. sort

or, server which is market, with the the servers, in mainstream says quarter is it X.X% particularly the in fourth where year, I flat from growth IDC where down guess, for ended On it it's fourth slightly quarter. - next the

in In storage are, get we and a in terms of I'll cycles, terms where to second. of those

The the that in So industry clearly commercial compute-centric relatively looks pretty we're the believe more stable. client way so dynamics and Also right the in are look, mean, - stable. good latitude And around about business gaming relatively feel The with like offerings PC the we the as we light, and feel the XPS well macros covered really coming good where a server offerings. our capabilities, about feel look are mentioned, and and we new we velocity there. lines, the Jeff pretty there's now. trends our I platforms. our products thin market

you're although Jeff in midrange on there progresses. that to soft and can So continued there's forecasted about insight us, high-end, growth not maybe to some as - would is the flat market, for the year. was the storage high end market, in and add as this a In although it we'll be it's IDC the supposed see have say how softness

clearly for production and we drive us so... velocity do position get of way an that's we area focus storage So velocity, think how and as our through

business, No. Tom, hit you of which we the have I market, the xXX notebooks tremendous growth focus low think roughly on. business look right more I look to be We digits; negative; shining Commercial growth. slightly the in is the The the to all would be at in digits business negative said, commercial, low spot be positive as the to points. single positive. - being consumer, of single PC flat. xXX storage server at Tom PC

our grow storage the low think out is to we And marketplace called hyperconverged are continues there. then also there Tom a category. the midrange double-digits. all-flash is So growth that that, in the Within leader opportunity, clearly which category in external and I that market

question. the taking for Thanks

Please next Our go JPMorgan. the comes line ahead. from question Egan Thomas of with

is morning. cash bulk is flows Good question. about a want that you looks selling some repatriation tax have the bit the XX-D. attractive amended go of laws of discount. and debt prioritization you due, a you've it's I'd you how the got got some today? coming cash to some do from think and bulk taking your How of your for by Thanks the changes about to quo? in being anything changes at little and some such where which you've because to going ask status of given ask you And prioritization. you of The stock, the also What VMware cash the about taxes Then operations at given like You've is cash. probably I'm today. pretty generated got got the pay the tracking in VMware not

to Paying those view, So prioritizing us Binding tracker? able down? just to from a of how try holistic you're taxes? And going all you that cash things? get Tom, to repay of to think debt where you give and you're do be could

happy $X.X Tom, our from let let was that, $X.X VMware. flow last that We of which -- roughly with me was and start I'm year, me to address about about this just think us. cash billion operations, billion

So continue the storage do give roughly will the to of don't and we billion was continue we in out call. execute we expect that on $X.X on execute on to but that, priorities EMC. that do to some strategy guidance, We Dell, we we and our continue expand core laid as expect, as the Dell

As we balance sheet capital haven't is about about our as it's driven. primarily priority. great delevering priorities, know, think cash also be off a efficiency our changed, the that really just continue priorities, it's that We've not operations they we us. from going think you helped flow have driven which working initiatives from we've to to And

that as analyze the XX don't I so. will what you I impact change we manageable. there's relatively think So months really it today, - very from a minimal tax big cash a in over the last tell and the tax is strategy reform from we've impact been or perspective doing

us time, a rethink is not significant that, so causing present And strategy. our to at change or or driver

core Dell VMware Dell, continue manage operations. our EMC and drive about how delevering cash the $X.X So more our help at and we That's have investments. about if future exclude flows you through than cash even we to from investments way we of us current cash billion as maturities, enough think

that delevering right getting as invest of metrics. back do to relatively over the sheet. think really investment-grade unchanged priorities We'll committed time into we sort to of the business. even to like my that are period committed back the I'd we're We're balance So

got on And insights thinking. sort add current our so to And that's other to that, or Tyler. any if anything of maybe comment you he's I'll Tyler ask would

Okay.

the into the sheet sheet billion which cash, balance said essentially the the only balance where and on that, we're which go year have short really thing dip paid to talked a a healthy would beginning added next to cash Tom in about it we EMC in call in that that timing. to the you We've be VMware that that for down roughly very We've little billion we've use same us bit, we're we of $X.X delever. mean, going the think the our the saying but term sheet. down. I paying about on might all. going transaction into balance on $XX talked kind I $X.X with of been have puts we're manage We [ph] some but position billion. Tom, revolver as planning we QX, gaps and in is excluding to

feel tractor, as strong relates flow past, be in to we And have around I I really but focus. deleveraging we'll really was in opportunistic it be QX. quarter so to up. as where And that the to mean, our cash continue ended continues a it look, good we

maybe deferred you're measuring demand? GAAP can't revenue see on demand dollars? little How just time, done saying Thanks. the just bit as Could a you've parts about since you Because you if wondered you. in Thank could we Like what That's talk is that it color strikes deal. us turnaround a little side in about then me seems point Is up your And been us can revenue? the helpful. important of year-over-year be because follow-up, was? give sort color The around thorn you're important. then the give on to a the demand And if that. EMC pretty in the what of is a that first - little you me my for bit being may it's demand was? increase I pretty give total to it And it? Okay. obviously, be storage. for But some of

encouraging QX, word egg use when Look, our I'll the [ph] would encouraging. velocity. exit orders I Yes. Look, it one. at probably ham look Tom, in this is demand the and you

We we've added place, we we that we've hard the in that in speed put is program set our put that the yet. But trend very in improved to loyalty that the work think haven't of a we place pay customer year fact beginning that end last product capacity, decision, the at we've increased our competitiveness, dividend.

So we're encouraged.

data. QX the market You saw share

better and growth that as have business. the exit to storage on with business, we're set change business storage We And focus tremendous where take plan, think again, performance without good expectations are 'XX And saw we encourages Tom? share the year of all-flash in our take a question, to bit We've on Tom performance built and tone saw and of our a as the our external fiscal in the in to of our have performance a have organization us again HDI is, we've work we've I to year. business. We FY in share. do. in We the plan. we encouragement. good where plan something a the organization It that grow expecting

markets, mean, the instance, think I these of our a the right, business I around some we have in said in with for think that to I about other we around consistent the share our Jeff. take lobs, in that's comment markets, consolidating which take fact is are mean, generally plan plan how right? share. you

to motion offer You the and be have product to very on grow, team with ISG focused the share. his how take has both he selling to and been and does position aligned the Jeff

are We are the that of flexibility how the with now more some arrangements have in deferring that bit up revenue. choice little We're selling and when you to models or in you of them a these things consumption. offering wanting fact bit work also about changing and are changing us, models our customers typically, they of end flexibility, lot around consumption types a like little flexible more a contractual provide contractually think

and related pretty mostly strong business. And to in strong the revenue, as the of our so relates side growth that ISG - deferred storage we did see really our growth was in it

there changing. sort it why going time, share, of the order is in talking are us the points right to Jeff see doesn't just because offerings that's guys sensitize big how we'll dynamics - changing terms models I'd in That you of some so the for to are the in I these talking IDC It's deferred about. of out there should models, get. some are you around type some a now. but happen and demand data consumption I not models environment, counted little saw revenue to bit fact models, think the like that natural looks like say, customer talk more utility and between service overnight, the And count some that as with industry of that get framework that the sort But flexible does and what first a of in

- So let I'll me echo just finish with Jeff.

what We about There's work a of lot confused do. do. we We're not to are left encouraged. have left to

have to attack need midrange to a got that the our there. done We've us offering. that ensure that more of lot taking growth in ensuring area And do fair We of Jeff's particularly for that work over a we trend do marketplace. and we, we're work That's this one share quarter, work becomes to instance time.

we're for it work direction. storage. of in it on And that's strong is So the It's us, your margin connects very going focused right to drives in we need profile front growing we It so cash. get first the good question, back which have a to and us.

I'd Tom, one thing. add

this, we and I last you'd about think with call. in the it talked agree

compensation FY really As for honed storage we 'XX. plan 'XX. difference to 'XX what in achieve FY think head FY our is I into performance we'll FY between a focus And on the we've force in in 'XX, and key that sales our

We put storage to relates risk market. clearly more have as it at dollars

to due their to need they too, So plan. storage sell

Great. you. Thank

Jeff ahead. comes Harlib line Your with go Barclays. the from question of next Please

Hi, good morning.

Just -- to want I margins. about just talk

that XQ. into done the puts had next you fiscal the fiscal of look I will be mean, you As some cost-savings I takes, billion program that and said think year, $X

above servers. target. quarters challenges margin prior on trending better which solidly reinvesting, the it mix have is then And also seemed business across you offset. your an last And You're then of the to somewhat some with two computing, be

margin discussion puts an maybe takes So overall and and just on outlook?

it's Tom. Jeff, Hey,

here jump and Let me let in start, Jeff as I'll well. then

mean, guidance don't So around we margin. look, I give obviously

So let give let as that. the we you of environment, me about think me thoughts. with start couple But a

First, swing about environment 'XX, fiscal in a I I'm cost environment pricing the we've we billion an to was deflationary or that go our record about, environment. FY publicly to a had inflationary way a saying pretty for swing tough talked navigate that And on from through. FY component which as absolute think roughly $X.X adjust is was XXXX 'XX was

about accelerating the we the some of we our inflation velocity the you dealing saw saw from us half, the plus we go-to-market 'XX So - second point as you not through to results year to And where in a the fiscal implementation. as first QX. think our as got then and with the first we went saw what the lot as that business half of half you through felt good, around exit reasonably

we think as last of We'll from costs tailwind. pricing pricing perhaps the helpful right big to a So big see through component have progresses - be medical be perspective. year. will now, as it slight not understand it as from We not - will year a the that's how we perspective, and that even headwind a as was it's

So from perspective. there out it's that's Look, a margin competitive positive pricing perspective. from

area happy extraordinarily So we've see that a help we're that make the would margin always and gross our well. Servers be got think and data that's dollar as be that to dynamic, contribution so properly. with mix we're got to we there work of the and of go that plan, our the some top going solutions, of that's on a and their set around - price margin point to bit set going you us is track an our go some competitive for protection do if there. we high-margin plan, servers, storage focus while our we sure products execute a little velocity area From improving would we've from because if you execute

that's so for area a focus us. And

look, how anything, next it's So if we year. about execute go

better, margins to make but so to have sure we think do around And model. that opportunity go I work to there's an be execute that

you would add. I what So don't know Jeff,

We're start the with increasing the to see while you Maybe try unit to a couple velocity. of points though. maintain that One going profitability CSG. on - we'll

achieve did slowed share second the believe profitability. where the the while we unit velocity of commercial financing While attach[ph] the with gain, to pick that's our straight half the that organization year, of motion purchase. of do can same and in maintaining and with velocity of And we we year-over-year each and level services our drag bias we peripherals, towards unit up can quarters XX priority our a

to a we're notebooks Displays winning, We do have I'm is and the ability the us which XPS, a price commercial so bands, business earlier, notebooks, for rugged there. is encouraged mentioned some categories, workstations, of our great precision premium gaming unique also in latitude, that, encouraged I premium where as there. I'm categories.

we that are this as expand servers, year. to I continue On to slow head We fiscal leader. to want working And be we position into don't down. the market

didn't fast an not mix grow is issue, enough. too in Our issues grew mix issue servers ISG or storage

access did the guess, today. I margin gross by XX% have the are [indiscernible] to make growth and will to the the things doing lift not a grow of portfolio. And that has us want In profitability. we then we terms, storage of more advantage so, than enterprise continue to fundamental ISG drive did I sense? that composition the That at the And we'll customers in, that the given ISG we take opportunity access than I to benefited to customers the of lot of continue change to EMC have So we we want servers grow that. Storage aggregate new not do and need acquisition growth. end before. to day, to sell Does

models, permanent up of The flow the over them to of the strong of be billion made the the next are in to changes I that, seasonal Yes, That you above X? impacting on on great. $X And of just we cash cash very timing benefits. how well just do how flow. issues was you've that. them I'm see just was And core flexible shift follow kind that or consumption your unusual? Dell were processes? these free there - very you modeling. helpful. see unusual flow Any then some year wondering would do The cash there's my quarter, follow-up there if free know in what about

I'll start, answer more and can I intelligently then than Tyler can. probably it

business of get a from But effects model, the through our maintenance all - in velocity wasn't really whether deferred and quarter, one shipment comment would flexible whether then and. cash you up or we drive growth it think build comes deferred revenue some servers the about other some working of the we that of than get as the there it's - and to capital we front with to right? look, drove I the velocity flow as the -- capital. of a of were continue very wasn't And of many respects, models unusual efficient free whether in give drives in out strong, working So - demand when effective growth, we prepaid stronger other dynamics is pleased drives revenue through there standard the down cash that's really from storage, use and that we we anything PCs, consumption

unusual deferred nothing other than So revenue.

time. upfront. relationship. a As They're dynamics right? Utility you and licensing it flexible something the where better we going basis some balance, the in get arrangements. relates we flexible careful models consumption to where some a our it's different deeper short-term as on a look, opposite, But models context - generally we stronger typically the some the multiyear Because arrangements consumption quite of instances, subscription they're over the cash of that per They these profitable models, to customer over we're your se time. [indiscernible] are work have typically and P&L through in even like get with build particularly way cash

continue Pivotal, we is, mix we an to grow our based grow. of RSA subscription cash, our grow. So we model both properly just want to our the to And emerging want I them Boomi, businesses new We to are in like models. make that balance to think that relationship customers. in where to respects, also a their In are continuing our business with have and going of fast commitments some they're business right have P&L manage sure many respects, about the our quite many terms and

to emerging of elements continue those that? some Would we'll from anything see coming so new and deferred revenue add And of to businesses. some growth you

million on free and we financing thing QX. Yes, a you out and cash I how guess, with maybe a Like depending account growth kind the what had really reinforcing said, into strong when expense. you in you of take our you add, receivables, $XXX we impact was approximately it. if Jeff that I paid think from million calculate look, It $XXX only interest flow, right? covered agreeing I would just your

happy about So where up we really ended

Thank you.

Your Bank. next Please Keirstead comes Karl question from of ahead. Deutsche go with line the

Thanks very much.

it Just So But rights? if to business protection to in you filing, ask shareholder constituency any you this is combination I How XX-D the in question to understand. your fairly current DVMT I'll pushes to too wanted close how of general important review? treat general. view Thank beyond Dell this you.

Hey, that Karl, on defer we'll question. have to

not it. another we'd to related you to question happy take want be amended the to XX-D, If take the XX-D,

it. Got

will rate expense. there's could financial context rule an little I exposure much maybe can offer necessarily that a just around follow-up there's in Okay. of think and question, thumb I a rising rates, with us to debt offer on front, interest the of maybe And of in you color might the a modeling terms one appreciated? financial of your that's any variable. you rising if portion don't environment, bit disclose is interest But interest and results that we are help

around our have debt. target Hi. So I at broad look Tyler. - a we mean, This is really from the perspective, floating right? rate structure look, actually of capital do kind

roughly rate floating down XX% debt paying floating I I between target the look what outperforms XX% actually somewhere think floating. the back the has been our if debt, Because and rate. since close floating XX%. probably really fixed-rate we've to rate been debt of about go over you transaction, at it is time and now

of the So lower range. we're at that actually end

that very yes, we've And down, the feel and account expense piece is we've about interest higher that take you is into even than debt more that comfortable the of we've position. paid if the compensated. So through, though higher, LIBOR repricings gone

this we're lower So than to once and the that it, billion. will driven we to year to deal, our mean, overall closed actual paying to is again, continue for, down, be I $X billion expense annualized $X.X call down. where looking interest

sheet. so the balance And out we'll continue expense to of take interest

Right. Thank much. you so

Goldman with question comes of next Jarman Sachs. from ahead. the Your Frank line go Please

guess focus again for I and revenue specifically the my I taking wanted just questions the Great thanks ASP's. guys. to growth on

and you. I can the versus component component is what guys more Thank storage related business think to higher across With as that said versus you're but how you us in of seeing regards they think what the the to PCs well? give are really granularity versus were you higher, about costs. more kind passing sort you on specifically broadly of maybe servers any

a cost look and had Jeff from we a I higher TRU growth revenue typically know terms the expansion as as me season can lot start maybe a pure was know result of component comments. mean in some servers ASP peak we driven you environment. And about that in some did talk of Let of costs [ph] or principally the you a input add

we that. we about cover Well to generally think particular. I our revenue also our in we know, Jeff that what try echo to price won’t way servers want But in around, you it you So velocity very also, that with pleased through ensure percentages, we off. to said PCs well, I give overall we're as exact and

driven of growth TRU we we the unit way that's much how by balance the shipments So units expansion we revenue in and driven. know how you you you how careful growth was roughly through think think in much about know through what PCs is in that And want think are revenue XX% as of driven know, our much terms servers about as ASP do versus units was should versus We same. instance where how that, to if we our for half is over way

here to X% something being think our you PC and or about If X% revenue a you business know been roughly that. from up like basis X% is

So cost question go will we environment it can that component we change know competitive we've as expansion a function there. is hold you that as onto The the be ASP forward. got a of

are offerings really different dynamic that so little about a a different embedded in thought as like it business. velocity to the within ASPs a missed carefully. think really are same about Jeff, sort don't storage in the We storage did or ASP in of relates don't that. think the watched that's anything you pretty process. it's we configurations it, ASPs So businesses so calling software from are I less. and it - would We The ways highlight… software

revenue the with - start growth mix exposure you notebooks, pricing commercial, are if to to to of of them exposure the premium dynamics business, CSG add would notebooks. I a efficiency, you hit our combination exposure

mix helps speech services and motion so our that [ph] us, well as So attaching peripheral opportunities, as attach more helps financing the on of side. us CSG

think I that's sustainable.

side. server the On

Combine We with that are need in the XX that last in server the ago. we protracted compounding than we've longest were effect. more today than quarter have price a DRAM we to were last that putting We seen year into DRAM a increase we're years.

of So server that the increase part our is revenue some on side.

workload. is our we of it's enterprise servers in DRAM encouraging are that me tells SSD amount going me the For average the - going higher our average SSD the the and size into selling in servers increasing

our Does value higher time. than more customers, configurations help? the past. And I sustainable selling inside is deeper solutions penetrating we in are in believe that that We had

earlier tax And great. related in number tax. $X that that guess up $XXX deferred billion net EMC specifically I it's Is on there of you by impact us which how give And granularity can future And thinking to the you. Yeah, tax. in they and the repatriation it billion offset assets that Thank VMware to about one is said about regards the that think call, of a related transition of benefit versus I made you comments Dell a of tax a $X.X of should on then million you the then future sort is you. secondly the second liabilities to transition was with a provisions? follow change side? function just the about Thank think any

me and reform. some economy the business the immediate big Okay, optimistic We're good have move do CapEx some impact that go thoughts Look, supporters our will the try say look We the I’ll me work. a and its around and year. give Tom. that know territorial. around take. tax of we and hey we’re through helpful reasonably of let on Frank, let first the so It's as obviously for the expensing to you

that, billion the family so you of So about and that we very know - thought we the also about as But VMware parse we it's you not you Dell coming of for clearly going of technologies is the its out that know, in the NOL tax a in to calculation the how as of complex very to which se. cash overall substantially transition $X per really piece a less we from have. is I'm think of manageable be sense right, it the about think but talk we impact parts some some going it's positions impact that

continues and I So to because know, evaluate look manageable, it's we're issued. I to it think get think regulatory it's very is the you the continuing environment guidance

forward positions as I'm optimistic So you go we [indiscernible] know, the and know, go to around you reasonably but – tax impacts forward due

guys. Thanks much so great. Okay,

America. Jason comes question of go Please Bank from of ahead. next with Kilgariff Your the line

guys. Hey. Good morning,

that's of I something of to touched a been wanted clarify Just kind guess couple on times.

quarter that remind fiscal you’ve down quarter. us a is typically first So

months going or maturities in you're off so those current three still You've about got next the thinking the maturity? the is billion $X pay to

debt we some current have due – coming $X.X in April. pay, got the We've Its $XXX are of we’ve schedule that got and due like sort know, some of million the a and normal a Tom, term looks billion in then will the I coming loan… piece don't legacy amortization June of maturities we something

We've year end of the in December. got - at the AX matures

around pay yeah, which to and seen in you us is terms the the to And your we when why around that's the cash. million to is the full, But the the dip now. liquidity manage of off them what billion intra through QX do right you’ve and globe. Its is of out in can then some into is QX in loan but $XXX then intention next quarter in dynamics quarter year. position $X.X ends. plan may We And spread have build sorry. line Yeah term only cash

about? I at about that think $X said comfortable Okay, level then going still side, of billion Is you that great. cash And right $X think you're the billion Dell. cash to on past to in the to the

to I can. which continue as work it really look to probably like China fair. it I mean I yeah, get of different closer X kind think kind It's we locations to mean, Yeah out currently I we but of when that’s sits India and think and fluctuates. - in that's depends temporarily cash

you Thank guys. much. Great, very

Regina, got I we've more. time think one for

of Our line final Wells question Winslow comes from Fargo. the Philip with go Please ahead.

taking ramp at Thanks just agreement. looking Hey. for of seen the question. relationship VMware’s in filings, Dell Obviously that reseller that we’ve my with terms

market synergies? just product - – still what's go on are the like you of and about market but year whether just kind when you know, I the at work You you it here, to what's look your grade. to realized, it's if XXXX com when of what in self to ’XX, give you a that the be transaction. ramping date think wonder fiscal or synergies focused area the post terms go Obviously

Yeah, I done look front have on think we trends synergy like to been I'm oriented, think position a that’s we with driving effectively opportunity that terms pretty things PC do. hardware the work the offerings. happy well think and some revenue movements we’re better ReadyNode's the ReadyNode's, more - continued VMware working the actually about some our worked products server is do in of integration with together, are of defined exceeded teams with as done been Think where of of first more we were technology of know, holistic targets teams. so are a we've Dell had the some software the you year is family think as the by Technology’s. good think work We've result synergy that exceeded ready that’s the more collective that there headed and and the the We to about

think it's continue go for we customers as we Technology’s going for to ramp, we through So and beneficial this think and is to FY VMware. both Dell for ’XX our clearly

customer. It we continue to have you a at to these market in you areas as to ensuring go work opportunities. positioning, know the the about that align optimistic know, mean coordination present very our we're we efficiency of we do doesn't have so still one some And customer and level face we the to

side. would to the area, with work revenue synergy some on where do overall in that to there's but So date pleased pretty optimistic I and are about we say

Thanks, guys.

All right, great. everyone Thanks for joining.

call. concludes This We today's conference appreciate your participation.

at may this time. You disconnect