Dell (DELL) 30 Aug 192020 Q2 Earnings call transcript

Good afternoon, and welcome to the Fiscal Year 2020 Second Quarter Financial Results 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 prior written permission of Dell Technologies is prohibited.

Following prepared remarks, we will conduct a question-and-answer session. Instructions] [Operator

to Relations. over begin. Mr. like Head Rob the Investor of Williams, turn now to call Williams, I'd you may

Erika, our joining Vice for our and me Johnson. Thanks, are today Treasurer, us. Tyler Chairman, Tom CFO, With Clarke; Sweet; and Jeff thanks

margins, EBITDA, A call, gross adjusted adjusted be cash will refer flow. EBITDA, found of most non-GAAP press specified. directly we comparable change, income, these operating can this non-GAAP deck financial and expenses, note During including GAAP net measures unless our reconciliation measures, to and in reference measures revenues, release. that their operating income, web all EPS, to otherwise also Please growth percentages free year-over-year

to announced I transactions Carbon want to August that on will mention related Pivotal that the Black we VMware not questions XX. or taking be

to Finally, you a materially events current risks this our uncertainties, could and statements forward-looking call results made obligation and number forward-looking events relate our all web expectations. statements in during are that statements. and due to to which assume to based those on no projected We future results update are I'd that deck. discussed of like Actual from remind differ

Now I'll it over Jeff. turn to

have us. we to to of thanks investment view do long-term and been this Rob Thanks, consistent our what launched you realize Since opportunity. for all Dell joining we about we’ve technology Technologies, on and unprecedented global

economy. organization's Dell the the portfolio. technology from the across We this integrate that generation full Technologies infrastructure operating have innovate digital to and data of next Doing enables creates

and with eye to I some executing demand. And generate of strategic progress and fluctuations against made to win innovating towards the our areas We have the the share touch of units Today, and an business inevitable this priorities. we course, continue to these each like have to do of we’ve on would cash. within our near-term consolidation

remain the begin, drivers To business let for long-term our intact. me emphasize

that workloads data cycle an and exponential transformation. investment technology-led business early and of alongside better That mobile by the drive stages in is are cycle centric accelerating is that a diverse investment workforce. data, We the in increasingly outcomes fueled digital increase

But multi-cloud the including new grappling architectures, and increasing security, operating Edge with stock IoT. customers proliferation, to application, infrastructure the increasingly data environments approach their machine these realize and and management, artificial while to for complexity all outcomes, cloud learning, defining their are and intelligence across

cloud and public and as infrastructure hybrid clouds, hybrid strategies example. private operations seamless Take an the deploying compatibility, clouds, Companies cloud across Edge. want consitent

are delivering these partner We is customers challenges, end-to-end address innovating spending IT who optimistic to a about IT help need one them and because a comprehensive strategy.

latest more in fact our about excluding per IT IDC In than projects up optimistic XXXX backs IDC average. on year spending GDP growth the view. X.X% Xx telco, through will world for forecast or be

as So of believe I intact. business are we our drivers the long-term said,

quarter This future infrastructure across dramatically uniquely hard on to deliver with announcement made of me with to IT the Dell this point. the my integrating portfolio enormous been Last the and major capitalize cloud brings to space. positioned simplify we We’ve and work innovating of second Dell at unified that Technologies management. solutions work technology opportunity. Technologies is progress

management and offering from experience VMware's cloud single workloads with easiest our integration in a with way VMware software infrastructure for together the and a high Technologies full hyperconverged cloud that VxRail and hybrid cloud consistent platform, services environment and EMCs fastest SLAs, Dell with to and remains automation multi hybrid Dell cloud foundation Interest stack, and both native traditional Dell/EMC. consistent tools, platform flow customers consistent for cloud brings

pay Technologies for several way cloud they OpEx. premise initial use announced general VMworld, of our Earlier other you CapEx they data of as at new arrays this offering, it center-as-a-service the public models. fees the Dell managed subscription for for new becomes cloud week pay The flexible fully pay as same enhancements offerings, what and we servers, on availability customer to long infrastructure. validated storage industry's including designs for first availability use and consumption

Dell addition, platforms cloud support In service. container Pivotal Technologies we announced now VMware

And intent on acquire modern running, speed get recent capabilities e-cloud. VMware's and extends an stronger. to our Pivotal, with solutions announcement market for its building, of even Kubernetes further Pivotal managing to VMware's applications

devices is and Another Workspace. powerful innovating Dell capabilities across customer's experts the across we as Manage, integrates and part Dell highly are integrate how and services managed solution now Pro SecureWorks teams. IT Unified skilled includes of services, Technologies example of VMware that Dell's This Dell

the investment tells needs and features it security and on end-user, delivers those an devices device. the that you never workforce to with mentioned need. their IT personalized the they all specific workforce. the your directly Then preloaded mobile the and has to and pre-configured touch the applications usage. about applications cycle growing earlier Unified I and devices intelligent specific solution of Think diverse is the needs Workspace IT

With Workspace for VMware's Carbon of only for portfolio applications devices. multi-cloud and comprehensive and security a acquisition intrinsic Unified improve modern will at world Black, the

we delivering Dell while of the simplifying create the promise infrastructure As to future see our to can technology dramatically on are the edge, from Technologies you across the customer to cloud innovate experience.

what cash strategic consolidation, our and which win and generate next our in units to flow me brings drive creating innovation. fuel is business about priority, we're this to the in And all

center, market. the we solution outperforming storage And confidence in the generation prepare midrange significant strongest to our the next new traction consistently our offering our XT competitors. acceptance and data midrange the storage the from strong their have the history gives with in bring of businesses ramp solution. solution us to Unity We we're as are In seeing XT set market that

governance. PowerProtect IT management and PowerProtect out protection, deduplication, a highly self that The seeing receptivity complimented our XXXX by appliance. delivers generation Software. scale of is in offering also strong our are PowerProtect and agility, It We protection data delivers software defined Software XXXX next operation and service data

XX% cloud environment. example orders hybrid to enable marketplace. another foundation continue just with the VMware we a VMware collaborating another first are grew solution and It's VxRail bring QX, from best cloud as integration how benefit to to to with organizations In simple

introduced In user X-in-X and continues first with to XXXX and lighter technology. processing the new laptop customers is And more incredible XPS Dell and praise nearly from and like the XX World thinner Latitude Client receive life. media we with PC applications combination a our leading powerful our and power products it It sensing X-in-X. commercial deeming design built-in experience, designs new matched including with with Solutions, of alike perfect battery XPS

cash final point. products me brings win which my to our Our in and executing teams the to industry's turning are priority solutions, best and up generate consolidation flow,

we in. capture invest of in and we mindful to the near-term opportunity in on operate disciplined must innovate As remain enormous environment the front and us, which we of

I before gears Tom, to me component turn demand environment So on shift the to over view let and cost. it current our

split were X% anticipated. and enterprise a we're and and softer the than enterprise market clear between orders up spending Dell China PC globally. In industry we seeing excluding core Our infrastructure infrastructure the is

remain We industry the expected soft and balance through we the to anticipated.

businesses. the And the in to ISG year. expected first good approximately We purchasing ISG we our the remain of ISG We QX particularly balance customers multiple XX,XXX in the execution about the moreover, half, acquired a are from context. prior given In market China. soft customers, up lines XX% really of feel through year,

first orders half business up X% up in orders and QX Our remains healthy storage X%. with

as and half our the into remain of Our year. sales about team portfolio the head optimistic positioning we second

through many servers. current as revenue unprecedented server profitability last to still CapEx and and growth investments. the saw Turning balancing digesting navigate we industry The year customers their dynamics. are We're

more Our on QX higher deals selective revenue consciously margin in large realized were low margin server all but geographies. as declined, we we dollars

Outside IDC our of publish this America in its expect orders when China, and share and quarter EMEA, results next up to were server North we X% gain week.

remain their workloads. higher single system are up ASPs as digits strong, server value increasingly customers high Our for -- end support high buying high

strong Win a We'll In continues innovation well QX, our Longer-term, drive as continue and services, as commercial, gaming XX peripherals. performance, execution, and top the of by delivered CSG gains execution cost increasing the high-end share to to refresh attach and as software we and consolidate to through focus industry among consumer environment. to the on driven component vendors. expect declining record and continue financing

chain, we least the deflationary of aggregate end the at year. remain environment to through component supply and the the In cost expect

to we half. first expect the important the against significantly measured half it's second decline So note the to slowdown in

clearly quarter results strength strong This benefited we of IT a amid solutions from our volatility. us helped broad the portfolio, market deliver short-term which

reflected spending at of balance we marketplace, our competitive in performance What saw us the profitability, should half, the slightly continue maintaining to higher level. QX expect bias in In you a advantage. with towards but growth second soft our and to overall growth portfolio the pockets

portfolio and broad direct Whether market services industry and supply declines, industry. expect in a by in our to built any leading successful have differentiated financing business scale. solutions, We model, We're or our environment. with the be expands we chain with outperform to including its size and world-class the our the

our we that So to believe recap, long-term growth intact. drivers strongly are

digital near-term to and we than are confident is their we and better innovating digital partner innovating are best, most and Dell about for We're it's infrastructure the customer can the the are future. the We one transformation our the to learn no across trusted positioned journey. customers all Ultimately Technologies consolidation of portfolio investing to we create environment mindful and outperform. on be

Tom to talk turn our With results. it that, will to about I over QX

Thanks, Jeff.

generating long-term profitable growth with industry, based ability faster as competitors time. on faster We're the income and to in on Our needed revenue EPS and than focused the model flow focused market operating growing on is over adjust conditions. than cash strong growing

priorities balanced from conditions. with executed again these well and QX we market We profitability against as revenue

continue market broadest While portfolio IT industry's we solutions. this having enterprise of a softer benefit to the we from quarter, saw

quarter points billion points. approximately X% $XX.X up revenue, remained And was up by and of deferred driven a up to up Revenue rates and pricing with was increased revenue $XX.X growth up XX% cost billion, XXX basis excluding XX% orders lower $X China. year-over-year discipline. our Gross XXX component headwind balance impacting basis by margin to was core this revenue XX%. billion, X% FX

more investments And Operating four lines base. made expenses six customer prior were In XX% the in the or our acquisitions quarter, over in over our purchased were business year. XX% expand buyer us. customers of quarters, of last coverage part $X.X and sales from XX,XXX due billion, commercial up to new have X% approximately top to from enterprise have we the up

We're pleased $X.X income, XX.X% up our XX% with billion of which revenue. or operating to was

$X.XX in operating billion free $X.X the cash revenue quarter basis. to a rate and flow Our $XX.X lower had of profitability discipline. benefiting was or cash quarter, and month generating capital a EBITDA working $X.X on due XX.X% driven trailing XX adjusted mix. profitability and Adjusted by EPS of a record We revenue flow tax strong was from billion billion strong

as inventory last supply are reduced Some from that year. impacted working through dynamics we cash the of capital flow our working benefit came chain

also quarter. increased our We deferred XX% $XX.X revenue to now revenue XX% saw revenue XX% of each with making up to recurring billion

Our and year year-to-date. We well expand 'XX. continue debt we grow flow quarter as portfolios we in debt the billion repaid in positioned of businesses billion and adding $X.X to software predictability. repay revenue billion approximately gross of the $X and to approximately and total stability gross fiscal services are cash And $X in

have We billion EMC gross down the of merger. paid now debt $XX since

X%. to unit flat was $X.X down ISG at our Storage $X.X Shifting billion. revenue revenue business was results, billion,

continue growth orders our new and Unity industry. we Isilon seeing the in mentioned, diverse receptivity XT in in solution and HCI up for by range the on solutions. the X% strong to broadest mid portfolio most As within were strength and levers driven We're press Jeff industry-leading

long-term impact and has $X.X business and year server our quarter, was global The was again we more most were to affected in anticipated our softer market larger Servers XX%. relationships. into coming deals building revenue focused China sustainable on server down than selective The on billion, growth. the and this where networking pronounced remains customer

$X.X was or geography income XXX to billion Operating mix pricing our income due of largely business XX.X% percentage basis revenue. as was operating ISG as and discipline. up points, well

good billion, XX.X% Operating had up was quarter of or unit revenue. $XXX revenue $X.X million XX%. of VMware income Our another with business

license total reported over XX%. was software revenue up last sequential bookings results bookings total in XX% were revenue unearned growth standalone high single week, Based change in the license grew VMware's XX%. over grew on bookings center data and VMware plus NSX in the digits. vSAN license defined Core

end growth in units profitability strong Within billion, up in was notebooks, revenue Revenue desktops billion, PCs. $XX.X revenue continue driven $X.X as in up X%. in Consumer workstations. delivered record XX% commercial higher revenue consumer was $X.X double-digit CSG, by commercial was the to QX. billion, of XX% prioritize down mix CSG commercial with we and

this CSG million revenue. due was in $XXX X.X% to operating or consumer quarter strong CSG saw and pricing commercial component mix of We profitability cost income declines, discipline.

market us forward, profitability will balance continue dynamics. against revenue Going to and you see

originations of $XXX record business. strategic Dell did serving after $XXX our of $X Financial non-cash or tax We as to X%. were of customers the million We benefits a business. billion, our Virtustream Services a charge up review remain million net we reposition committed

Turning in pay structure, approximately and to QX cash the capital down our of balance after $XX grew $X billion investments we debt sheet to quarter billion. the and even

balance ended $XX.X details. debt $XX.X over since core billion. Slide our core XX the billion at Our quarter acquisition. debt for see more And billion, Please $XX web the EMC in at down deck ended net QX

We're free to cash our reducing focused committed achieving leverage maximizing We're on and grade remains strategy allocation unchanged. and investment flow ratings. capital

due the activity, and down will to to continue smooth XX pay we profile look next Given and for we have in our maturity And our VMware. our only optimize capital $X.X additional structure. billion debt debt opportunities recent excluding months, refinancing

as environment as We as of while well U.S into back still China. pricing discussions the trade the monitoring given market dynamics. ongoing adjusting appropriate maintain We're IT will and year, discipline the the between spending move we and competitive in macroeconomic as half

and to balance to Pivotal $XX.X VMware's Based acquisitions, $X.XX. for to QX GAAP 'XX on now current Carbon and of the of income $X.X billion and we $X.X guidance. results of year revenue Black the $X.XX Operating the billion. of to excluding our and billion year Moving fiscal $XX.X expectations expect impact EPS billion of

revenue non-GAAP billion $XX.X fiscal billion. $X.X to to profitability increasing current the and strong of our in operating our to $XX.X to billion, increasing the income range year, to to the our guidance first We're year $X.XX our for billion range $X.XX. $XX half to guidance non-GAAP non-GAAP narrowing range EPS Due we're

tax rate or our XX% XXX basis expect minus non-GAAP be We plus to points.

cash and well innovating are gain to for positioned. In drive We're flow. value core we share we're closing, and the growth and future driving

size We and have direct strongest world-class portfolios, with and comprehensive force scale we're industry's and enabling and customers its future. a largest one most of the on our chain sales focused digital supply

I Q&A. turn to that, to will back it Rob begin With

Thanks, Tom.

to as Q&A. the to We could ask to ask allow to that possible. question one you participant please of get first introduce Erika, you each us many Let's as get participant.

Katy We Huberty with JPMorgan. first will our from take question

you. Good Thank afternoon.

expect to Does of more of prices bias imply business pass-through memory towards of you the that couple the the a so, the You second And most in mentioned of growth next your into lower half the year. price expect you if that elasticity? see a quarters. segments which would

Katy, Hey, Tom. it's

starting are I probably were we think is we the of about those aggressiveness we those like have business the we little as a velocity mentioned which and to that we the that declines that business look, deals we we trying So, the as in And signal slowing, business mean in and space fact and the during ramp quarter. server through. velocity is are there trends in quarter, what -- we do seeing said the pass more bit are that to which about seeing -- cost to cycle of cost pass particularly in deflationary the in enterprise expect some first of will some large we large we we more think

company a directed scale. the we're that really sure make at towards to was So bias trying growth on drives

of back probably a pricing to we're think the the point to that And I We year, the aggressiveness I expect that but we're seeing balanced going are that going in would now bit half. would dynamics servers. back towards from do be more in right see the half I that

the business think perspective. feel and is about from pricing is I business may storage But a I the where pressure client point. servers some good have we think

you. Thank That’s very helpful.

bias going of the commodity watch in add second fuel a certainly that. product would the other going much line signaling to of mentioned in do forward first I Tom going have lines position the And year we the couple I servers, spend our in to is half the that, growth. product half, traditional that be we substantially price our that's we slows keeping that. so towards deflation continue to we're think to of We price the to of times to And said, our the thing as and are and that.

to We towards slight both have our growth, bias are a on keeping going in profitability the businesses. eye of

Katy. Thanks,

Our is question Goldman next Rod with from Hall Sachs.

in Yes. of seeing guys June where trajectory Hi, ask where the have at seems pattern and you guys. weakness the timeframe. of are we for seen to company reported say the that Thank developed in, question. about a I weakness, let's to have enterprise, seeing you’re look other strength? large that When we’ve wanted you enterprises demand

And been for you and I'm if to then Thanks. you’ve stable love be that, get could the small has so, just a would continue seem have you I'm also seeing. think wondering also and what on and whether you or businesses. that same been confirm wondering medium more to that’s seen weaken stabilized? its And Those that you're whether to comment

Sure, in softness is China. as quarter at seen, large the look particular, last talked bids the actually server Rod. about in and I When business in Jeff that well it here. we we’ve

large mentioned, softness to those there well enterprise continue -- in in business as as So we China. see you that

excluding In were to fact, if we look business were our had China, you at growth. actually server

Our up business is orders. X% in

half see the is aggressiveness to those orders, the pressure large the alluded of in year. in large accounts. enterprise that up the about in turning just to we ago that price think those second half Tom continue We moments second

out that see it's business been the of consistent and SB, think think segment will And perform. continue on I continue area seen. We then see what us for forward. I a So that you’ve we of but going with break growth don’t performance to we the that’s businesses, and MB

Great. Jeff. Thanks,

Our is Toni next Bernstein. Sacconaghi from with question Alliance

in down year? you. debt billion. look Thank pay your I this given significant you year-to-date, Yes. think I'm more was profit target wondering wouldn't operating $X.X overage to why your

mentioned operating you us pay income on will Perhaps You give to close view be aggressively the similar. an pretty billion, want debt? updated down more year you can think $X sounds wouldn't to what you why for which and

Tom. Hey, it's Toni,

the I the gave in our me a we guidance look bit And the talk plan. debt Tyler over operating income little around and the will I mean start about then given range performance up Let clearly first half. let

We of of that of quarter a think in should billion you are as cash, which the did $XX $X -- billion we about core.

mean, look some we have [indiscernible] stacks year. good look, that I at look on the we So that Right think about go now through may we I addressing at the maturity think are take $X things I as to of we flexibility the all as billion. a we [indiscernible] feel

have even We the we we where will we, if what see I than how unfolds doing whether you would add more that. submit the to rest would of to anything. don’t know Tyler, and year

mean, No, down you debt priority. I the think said remains it. I pay the

to focus that. on So we continue

continues $X remainder the very will our in billion we we confident the come about cash to feel the but see of We year, for talked about.

So really making progress. good

ratios, to we’re If turn you from going at last our where year look now. half of end improved about leverage a we the

So great making progress.

minutes, aggression high for single a, range prior thinking: XXX above mid than I at Are side. more points see suggest or I few just single-digit that margin high your the confident above got currently for boosted missed that suggesting another or could more you are disconnected incremental component I margins PC sneak but much we is -- servers, sustainability you basis digits this do operating which margin more think following normalized you address period. you PC sort normalized that in you how if quarters, I during of that And least more one. prices the rate? if in operating on the a to about call, apologize price Okay. so seem PC But op to has because couple on PC be a the a in of should above indicated pretty

Hey, it's Toni, Tom.

as here start So can let in then Jeff chime well. me and

as we $XX.X billion we which to about guidance $XXX was think our guidance of midpoint we a As $X.X gave, about midpoint. as roughly was of to which think raise the billion, million

through of from decline, about As that look we priced the which of think cost year, significant One about clear benefited the let PC things. some as through margins the we a couple it's we the half of and probably we that of XX% see of op have being cost bottom. fall back we’ve that -- also the cost

been we X% piece other XX% mix. the client has to XX% about from commercial of there of year-on-year The are and mix up dynamic the

beneficial as we been that’s navigated half. first so through And the

to I gradually norms. going think get margins I the historic normalize back think PC are as we towards see through half, the back we

We was normalizing cost the of lot less that it of rate beginning you than will have that first it but half prices the than about a in to significantly And is and decline unfolds, half. the see second decline as in market pricing already. capture think how the cost the to is in

norms. Not So thinking think margin more I back PC I what see we gradually things come going just Jeff, add. that sort dramatic fashion of like clip back. to know you migrating historical any are don’t but would in those to we're gradually

first and of them of performance you of commercial improvement mix two our cost couple the talked half the our things. about pricing Part being of about in XX% A or the decline. through

the associated double-digits that at there look lower led trade cost PC second along for Conversely, well look into And I half has exchange, to our structure some tell. DRAM. tilting which the if as to look data, attach I with decline. And I higher margin DRAM at fallen first at and has commercial where publicly a very, very We look to would If our second the uncertainty business grew today, its I the go the just cost with improvement business. available the projection commercial If rates And to remainder then that an spoke And where than point trade drive as certainly I at when consumer that the we have consumer. we of the make XX%, the year, head half. about, X% of XX%. to I half, a nearly point, say, the what of the is know second as peripherals we’ve the DRAM of year for financing services, we’re Toni. well. started direct know they seen and in you see you performance Our we which SRU

rate will of and end think that is the towards year. environment of So deflation changing the we pricing the the reflect

Toni. Thanks,

Thank does. you. it Yes,

Our with next is JP Coster Paul question from Morgan.

Yes. Thanks for taking my question. I I will sneak into may. quick ones, if

you kind kind out First And what fueling next you up, tough to this growth extent the does think of front, set foregoing or the business of at and of future China CSG the XX come that are the from that point, is Windows is you year back of of you. that some year? kind moment, on you on that very you think will competitive that to business segment you’re to kind Thank the moving comps market?

will China. you don’t Paul. the don’t Jeff, -- take and why I Why Win Hey, take comment XX

been that Yes, continuing mean, compares of industry plus performed of be us. for the We the so. source for compares look clearly data will be and and year for the you the the Paul. That next early remaining the in part six the see business the I is the part past growth into Windows roughly front and half to tougher calendar if It of migration. next commercial of quarters a growth business year. PCs is XX%-ish source commercial through past XX for year, a course, Tough probably has of at what’s there PC year. very of what

You the down year. This would go for PCs in latest that the as PC next be the I that business down. see next we commercial be will tell I also into to it's business biased year. things pretty that us year heavily being we’ve year for that are to I encouraging. is growth you and think which towards believe X% has prepare forecast headwind and a done going the The industry flat, next down roughly consumer forecast

capacity consolidate then from industry our smallest We focus going customers world. the that made are the coverage continues that us three coverage think the of PC consolidation towards that’s top and to largest on to of businesses long-term. and in underway the and We’ve We manufacturers. expansion sorts the all we the in consumer we for investments marketplace, to And Workspace Unified source businesses are our the you helps have capacity across driving solution into our growth will be commercial that the differentiated see a gaming the where new year. we technologies focus into business and our then with direct And us of will high-end focus business. the business that think and a on help next then head clearly as

is with and you're that is us that, seen business multiple Where generally a be in acquisition LOBs solutions year. other the have long-term dynamics this sell the that it And, scale has different hyper and as have that What do thing that evaluate half customer relates to we in service every participate the year quarter chosen business in large tends that business when scale of bids And that rebid opportunities, they're what to Paul, look not every generally buy to China, and at pricing at to getting China essentially the have we've not to been the strategic sense the hyper very and server multiple or where where it we to space business play us. of going look to large capabilities. the lot sticky, transactional. a is opportunity we or types made is meaning extent

you chosen customer in continue lasting and sustainable to it. in focused continues Instead that will not that’s we're And growing it. at on building so seen, participate the and not in base if the customer about participate -- -- to we’ve -- and given that what And the pattern China see pattern us very we relationship.

scale of have the and business participate hyper we're China just space, enterprise enterprise, we the go absent the mid into and and hyper that behaviors base to we in rather than small build focus space, they shifted and buying seeing. not larger must behavior So that the purchasing out the the server scale given buyer the

what think not So piece was in that there, time. know that it's I be right market us -- is lot we still don't now this it a was well, that a it of point interest to at of

same occurring in second China. the see largest market are With characteristics we in the the It's world. globally

is which business are a very opportunity big We of the that improving cloud out analytics data over world customer we the build in There's them is the base, want long-term in right? the marketplace and remain data the long-term, foundationally the a Because why strong entering scale. about economy. attributes, we're the optimistic want have hybrid we important,

you. Thank

Rakers Our with next Aaron question from Fargo. Wells is

Yes. taking the ask I storage about wanted business. the Thanks for to questions.

As flat storage revenue the about X% past kind from the playing demand growth of at into only up you look quarter. growth, here, orders effect We’ve healthy, enter this seen but bookings first was being half.

the you growth dynamics, terms or the of about the as specifically? you your product kind of expectation in the So what’s year do storage think the think growth cycle about progression how half for of back

continuing storage I performance I at quarter, HCI positive. think are through We that our to the grow. certainly look point to I When business the areas see

grew our that earlier of component made XX%. business, specifically I think that the we VxRail HCI reference

performance quarter broad category Our in past Unity product data converged new growth and infrastructure year-over-year range to XT unstructured and had of good business Unity actually we well. grill saw grew as mid our this the

the high XXXX bands for grew. mid that call to price last the PowerMax range, introduced all early in addition In the

in grow I the last the and capacity The the rate, in marketplace remainder sales to expect: more will line to will to the through this under that year. market. half continue some of optimistic about Literally and positioned the investments expect forecast, the competitive. a our that marketplace. we're that date. of keep to I great marketplace made growth force announcements second think I expected just see we we think that outperform to continues X%. in it the by would of in year And it and coverage, the you tenure prospects the the refresh The pretty outperform to is the grow we product in

we how lot it thinking are Jeff possibly a thing one add that, would And to about that, highlighted and I is. of

or the expansion, in been that we with why new the been in has year-over-year we customer give the ISG mean we buyers. selling sell of I things of into. of the LOB One LOBs, highlighted feel investment but expanding them ISG, made customer the around focused with is whether we’ve to about fact point buying capacity is which the one very XX,XXX they’re base broader base on to that broader [indiscernible] base a the is are or it a two this

paybacks been we investment difficulty]. sure the [technical for the motion by last do to is encouraged investment are the [technical right looking the and are one go but and we we’ve out from the and we expanding and so, And we’ve model, sales difficulty] make has clearly that obviously of coverage on that execute this been around, go-to-market over seeing by that two years trends this made we’re got

created will [Technical on difficulty] we’ve stages the an that marketplace created, certainly early the we be data data [indiscernible]. area is more more in there in edge. are being referenced There

across CI about [technical HCI, We leadership position coverage [technical market. we've investment And improved we and storage. talked have difficulty] external difficulty] that a

you. Thank

Cross Research. from is next question Shannon Cross with Our

Jeff, customers in much. cloud? from response very general public? Technologies seeing adoption, Thank And can cloud to clients commentary you. just you in hybrid talk more initial you a maybe both from about what Dell you’re Thank and about bit with

And last a our and PowerMax the Dell specifically world, validated MX Technologies our our XT extend compute. from talked interest Dell made storage PowerEdge arrays storage we of VMworld, Unity happy high, arrays what We designs the good had platform and cloud April. at Technologies our we At week support Unity and of I this to. been week extended about several announcements week. platform the we actually very to would We week has to that platform. be this announced

We a also, the on I'm we availability on which Pat announced stage center-as-a-service. earlier job week that the team excited in did the thing as and the about most of initial first data prem great and

that or of the -- form initial cloud service our which for we pay April, talked that any of of center that what demand added And product in the in on can back Dell availability exciting new payment for managed then that we announced we’ve So prem, building on is first of week consumption top data platform on our Technology upon and acknowledging terms us. models consumption. last pretty we and about

today, actually to quite customer well. cloud can how received the a that’s usage So operates we bill very by been public and similar

So capability. we're pretty excited about that

Pivotal support in the we about cloud service we have VMware a that think container You added and on top of comprehensive marketplace. hybrid very multi-cloud

to way. the to for. the our clouds. data do that. it a manage us do only allows to a be ability you edge to VMware that in way, what That's centers cloud workloads allows to automated Dell the prem consistent customers The to private on public our move to are asking fact in one In that able And across data

make pretty forward. bullish going sense? on I'm So that Does opportunities the

Yes, you. thank

next Our Matt from Cabral Credit with comes Suisse. question

Yes. you other touch I’m commodity margins quarter wondering factors, you if in storage just for between and in if particular a Thank little the mix, bridge the strength a ISG servers bit for and did the you on you. margins, could year-over-year can tailwinds what basis? On maybe you saw versus on

hey you typically We an We Tom. parse. it's Matt, revenue and op give Well, [indiscernible]. a don’t

me points. margin gross now. let but right? today, I try me about XXX our color sort feeling margin a some around performance, you there. look margin at it's let because start you we let at looked -- Q-on-Q we you -- me tell some I’m operating So you that, nice -- -- basis of give it, -- just I’m talking up What give or would if So and

we saw margins that, stable and saw goodness. talked the within what’s XX.X, decline, storage server goodness what OpEx we -- if principally gross enterprise aggressiveness to you margin and think which some is think to And driving from was margins I that slightly some And XX.X that about really margin, about -- server declining flat slightly. downward. if the pressure if think were were dynamics pricing previously deals that were down. in drove most actually large some of way a margins things you had we just your which would we you actual from margin that So China it's parse a see through you server And mixed to we saw some

saw, of the we pricing headlight the So also that's we are see we half. more do a here think environment of will that we why and essentially blasting server go the fact sort we back sort aggressiveness through on as that bit that's the in --

So there. of that's that anything our sort add how know, current would thinking. I -- Jeff, you don't

thought I now. it we about how think that's right

on. Spot

Thank you. helpful. very That's

from with is Daryanani question ISI. next Our Evercore Amit

going guys. was essentially a when guess revenues, commentary. about I’m lot missed talked a to of have about of your guys think broader negative [indiscernible], EPS, the in you question, Thanks but I missed all have every what your the -- getting given down expectation and into I the -- would peers you terms

was. are more numbers Your much really than better that fear

at is So driving is your you think better been I’m importantly think forward? of peers was this do what And you sustainable have the you about. talking curious, delta the performance do Dell go as performance

have growth address you our what that industry upon more Well, tell more if of in is capabilities perspective. Tom. we IT would you levers the I mean customers, comprehensive solutions won't broad build set comment think And I the can the peers. I think and comprehensive have, from have in infrastructure and most the it's are we we that hey, and levers right? Look, we our Amit, with portfolio so we on portfolio that our about

or that this as XX,XXX XS the billion work in year-over-year growth in the we've new XX% new X customers. it's base buyers acquisition whether done we or the about highlighted whether that customers, over of to think round ISG growth quarter the around with XX% last on the You go-to-market customer

well. focused as our So we have customer been very base on building

job financial deflationary in we have clearly -- think we And cost I model that we that But that decline relative premium about market been cash in of or the a and cost -- are the half [indiscernible] deflation look, to that Now that, grow we aided have some of had have guidance second have generally the through environment obviously said performance, obviously signaling think year. by first the flow. you my share, takes at if we the to our half the slows year. cost build our share us substantially in and

a data bit a quite would obviously think broad portfolio, and portfolio on quarter. different have strong a of play little think job are by that in And an different economic we I sustains a we doing mean aided we the CSG our But the were And, the business available environments. the If the that's so been think the best a allows that types bit execute look -- And a are again, model business has look, of us are you to drivers that's infrastructure we a that we a built at been model all team this have to center we perspective. pretty solely it my story, a but if model and back the growth did that. I good I pretty think I from execution the the marketplace. on gets of results, quarter to it broadness good

Thank you.

America. with of Our Wamsi Bank next Mohan question is from

little higher notebook here around server is Yes, around for very pricing. gains a pricing a And rising use the clear the for and share coming you lever and Can all if intend particularly absorb how your we specific think lever storage. tariffs to on thank about display. to shortly you. And around as and should in But Can comment more ATI you you. flash? as a you ability list the message there. be Thank

we I living Why that working in through tariffs. spent tariff very of don't Sure. have we with the a situation that and the Wamsi is are today take planning lot dynamic Clearly question. Jeff. time

agility allows us to of XX globe around the the impact. flexibility chain the and Our sites honestly fast minimize manufacturing to global and supply we need have

working that. talking the about. are of managing specifically through customers and on We List delivery to honestly, and our But in X, are you focused continuity what supply which are continuity of challenges supply we is quite

one with I when our customers earlier the raised going to to work in of to We from we mitigate vast to September X, X the not mentioned our impact will followed will previous [indiscernible] the cases List and and and monitors business. client with go December mitigated have List cost product. chatting We half continue we price, are X impact to of one that has up XX successfully cases There our are calls. In and through have the where the on been different majority comments think to we It's you and our made all X notebooks. in about some what’s prices. costs with second we’ve

still of We're cost. associated do costs We cannot price and alone along have customers ways. in We of we of we a various prepared, operations changes, How way sourcing the ones observe place that of that lot the of for And all that the uncertainty sure tariffs, with prepared will that? we flat the for our capabilities are the our are than have through. our We manufacturing in the our manufacturing sites all form making uncertainty that notebook spend it. in time go working in the pass to monitors. manufacturing process

where that's are. we So

today. come. And give is It think I answer has changed dynamically. that's pretty It can best couple the I to times. we'll probably of a More

continue that’s our but guess. to change,

are aggressiveness the we other in more signal pricing or seeing obviously bit Wamsi, did around a we comment signaling pricing, space. server your Hey, that

further relates LOBs. and -- I some it our pricing driving to we pricing of not storage we our any around our significant lines, other our mean, change in on intension/strategy we are not product strategy -- from As don’t are

-- to environment at some competitive of do these to and lever in we But in the price -- obviously relative are have we no we're a intension the So that this use market. areas. as there's other on ensure price point to

a Thanks lot. Okay.

Simon from James. Our Leopold is next Raymond with question

some I talked China but about as be a you. could and beyond question. enterprise then large it beyond more you other you’ve of number little already. dynamics, sort color is versus you me Europe Great. about maybe to is Thank a wonder a Could better. the because Europe. of bit I'd about like a talked little government little what And maybe you Thanks talk tight the hear verticals maybe such mentioned vertical geography also bit more times, better, weakness. of bit for to what if market trending maybe some Like led guess sounds on detail taking a from may some the government little I and that a markets bit touch we’ve

is This Simon. Tom. Hey,

-- and me now, at based level. can But start maybe as reasonably a and we right would demand. healthy. that. with has going been tell you America seen demand Jeff been in general pleased that And this we high keep generally try to geo about Let in. think we Latin has I’m just are we’ve jump quite North America pleased our with We're

Brexit this seeing Asia, we clearly short seen general we mean of some we’re for softer that’s that. Pleased in I softening in of Japan. think a year. or sort we with I whether we're economic Europe have some think market just related I and China parse dynamics, But seeing softening hard go a talked to there. us to what being about

velocity better to Zealand. coming see out of We Australia, starting are New

U.S. how So is the vertical tell a seems you it for I the local I QX you. a fine. obviously segment are basis, I spending state reporting generally market to customer And on -- perspective, be would general, that frame would quarter government think which its On would that strong mean and I up education that our be in in we holding

We in are the the QX business U.S. federal going optimistic about into

I -- across globe, procurements think be on track. government So the across continue to

you would anything I Jeff, don’t of So that. right to add what that now. sort we’re seeing know if

No, not It's at very good. all.

you. Thank Great.

from is Deutsche with Our next Jeriel Bank. question Ong

me accelerate. impact that year-on-year and question. of to between more trying that year. for XQ I It seems line true model some that’s these Could that like to top I’m a spends weak guidance? your letting statements your the teams. the yet reconcile of on year-on-year be throughout Thanks. IT mentioned actually to XQ. of help least year-on-year enterprise guidance storage how than going should if seeing storage, storage at clarify grow and rest is kind full-year and basis revenue you you But I’m me the ask continue the X% kind guys reconcile of the guys Thanks

It's sure. not I’m Well, Tom, Jeriel.

so offline. I single storage, think how mean we the So sort I’m not that you tell sure is modeling help I about of that market team of digits. as with low and what you you’re can -- maybe the would

continue is to mainstream of dynamic, see from And broader demand talked And so IDC. rest about think servers so X% forecast storage servers think that’s growth mix servers, year. in got the I you we for The referring to to forecasting in comment we QX. softness about that the for you’re negative IDC which that Jeff fact the at in ISG is the saw

two And you ISG. as between those model LOBs so there are some interplay

year. offline server look the maybe look you’re With to market challenging know remainder expect today. thinking at team business, But what and continue as the the of take that’s a be we So to that we the server to it. the about how for at can take revenue, see

about We optimistic are market. the more storage

model, Now to optimistic on work expect not see a better still and his that results that we -- the given a that it's coverage double-digit but improvement in should the product are product positioning line all done storage. it's market, we growth the we in team with has -- Jeff

this And the point. so at that's how we about year thought

Appreciate it. Thanks.

Our with next Andrew question from Research. Wolfe Vadheim is

Thank you. Hi.

half productivity? towards of see the growth like in set Can second begin benefit leaning the growth. commentary the start capacity but you that maybe to sales So the you But to you regards of was moved coverage profitability, are half discussed the investments with year. ramp the today's kind OpEx. year, just would second bounce where investments that and we Then level will these expectation seems it and as sales into add of to you

We you publicly. sort of was of would It's expect, ramping against than We we Now would talk that the that right? I is But market have about tell that we’ve curves balance productivity it year-ago. on look tougher it the normal you seeing of sort capacity a sort a don’t Tom. that numbers added the to ahead. are those we bit

that about And so managing dynamics productivity. are you’re macro there think as you

gets choppier give there, it's particularly market sales productivity orders to to. to bit But committed tend don’t the to brakes we have out we the server. a around on a just Although -- drive [inaudible] lot of will levels that simply

are even towards are but So revenue a base -- scale that The you’re to and growth we ourselves expansion, we engine we’re advantage to a biasing intact stays tougher the have market. we’re sure productivity we do -- continues. -- and comment, expansion trying curves growth. that make us benefits and customer, base sure we make the to signal quite are that for on is towards that What significant that, of in scale bias want want

add about particularly think in as market to we set I that the that some we think as still So we were was fact of up as the about sales year next opportunity and the what we signal we capacity, trying investing for year. are might

how that’s it. about we’re thinking So

Great.

one I had think we question. more

Yes.

our John will Roy question We final take with from UBS.

were could the] is Maybe -- and digestion, just why Hey, doing maybe weakness think it enterprise lot be just through you you're color seem something of it year. that? could really you enterprises back to the talking give the Is are us as else. that it enterprise [balance you a trade, what if a it order seeing macro, cloud, kind if you is of why final, and on there Maybe about is out softer. of some

right. even best storage XXXX. earlier. talked about about times market a serves longer in in calendar the the with. talking expected been what find serves If And growing time markets digestion and we been softness think and growing made what taken storage I think server with the XX%-ish if year in in of than market me me, in all year industry world, off has that has China. the dealing fastest that’s roughly large and memory before a Combined the last memory have server I There it I one the think that, but points and reference our talked year. of of we we’ve the XX% best Coming the we’re

enterprises interest macro create would tariffs way I’m Yes, of not then area that, have about of But I running where most uncertainty. some enough Brexit, asking is you area think its don't and us the don’t It we I And parse -- other or an the visibility you’re -- macro around it. or think that dynamics GDP of an large that trending. does add like are and uncertainty. to environment, in of whether potentially the rates also

business half optimistic said the to We probably right set of on also market. that, well, I up to these are think some continue IT and are Having mean, that in spending. we model that’s we’re their -- to as need they we're to still execute and have some transformation of the investments So And about level back of digital about their dampening the companies companies effect evolution. And essential year. still think I think

So business. we press and continuing drive are forward the to

you. Thank Great.

Thank you. Great.

Thanks, Jon. be Citi New a at York in September on will Hey Technology as Global reminder, we X and X. the Conference

hosting be in our New update also on September XX. for will York community the We business investment

forward joining today. the we continuing to for So Thanks look dialogue. us

conference. appreciate your concludes participation. This We today’s Call.

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