Dell (DELL) 25 Feb 222022 Q4 Earnings call transcript

Good afternoon, and welcome to the Fiscal Year 2022 Fourth Quarter and Year-end 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 without the prior written permission of Dell Technologies, Inc. is prohibited.

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

Thanks, Whitten, for are everyone, Johnson. Erica, With and today me joining Jeff Sweet Tom us. Chuck and Tyler Clarke, thanks,

available materials IR our covered are will website, today's call. Our guidance be on earnings and on

EBITDA, unless GAAP reconciliation operating to can deck measures, to of financial including share, materials continuing these non-GAAP this their otherwise all otherwise measures release. basis, EBITDA presented indicated, press earnings found financial most numbers During adjusted income, web references to income, noted, directly our gross free now non-GAAP comparable A our and margin, our filings. could expenses, see obligation that events update numbers. to adjusted earnings Actual statements percentages refer call, discussed P&L Appendix a results a are unless financial made operating based measures in in All are C net be on and this measures our cash refer and revenue, per unless uncertainties, Statements in flow. recast results our of our statements. on are and projected and of Growth to risks specified. future events a no expectations. differ and which those materially in deck web due We during current change presentation assume year-over-year to forward-looking for otherwise SEC from relate call operations number forward-looking to

Chuck ISG our Tom our allocation the and results, chain into QX 'XX and and call today, supply cover will demand FY Jeff and CSG. environment in financial the will heading initiatives, cover capital 'XX, During recap guidance. growth dynamics FY will

it over like to I'd Now Jeff. to turn

was 'XX Rob. Dell Thanks, a historic for Technologies. year FY

rates. long-term for And We scale growth our history. $XXX ahead and In to continues grow a achievement of in our look huge grew more as ahead company's than the best in 'XX. value company billion FY a of revenue we our and reached creation XX%, fact, opportunity our to

our led than an our vital more top a insight data how experience and transformation. more has market trusted priority in competitive choice business. customers IT ever and expanding technology want their action are turn to as It's digital even We and become customers to into into better partner. you essential investments remain Customers for a advantage. by also customer

at choice. ecosystem position of technology logical center customers' and the the makes the agenda at Our our center of Dell digital the

and largest how of data You opportunities manufacturers winning adjacent with AT&T reinsurer, customers with the edge as-a-service, can in Dolphins, Re and the telecom. in world's and Munich the and hyperconverged infrastructure see Greenpanel Vodafone, we're multi-cloud, one storage, across Miami like like largest India's

gain bring to to opportunities and advantages share our these in we our continuing are emerging core We can where businesses bear.

operations from vertical and growth cash a quarter the in $X.X $X.XX XX% services of demand year. different. diluted EPS broad QX in different performance, $X.X differentiated new have across 'XX, an into ourselves leaned record We events, have consistent challenges eye uncredited of $XXX.X income no geos, truly products saw business our billion, economic flow opportunities And of growth with and FY revenue our across operating customers. environments, and toward we of of delivered with billion, record record we industry units. In record unforeseen was billion, We through and always and

for as needs, and our to ratings, parts important dynamics. 'XX, income up of a a slightly initial by was our availability balance As is capital but up up buyback as result, on share. we trusted and partners customer returning simplifying performance customers optimize we structure, billion deleveraging X%, to to rate guidance our November spin we delivered XX%. FY investment-grade program $X to shareholder today, record an backlog the $X.XX sheet, at announcing us. a dividend our our based quarterly a VMware, value Operating And annual record, a lenders in Being revenue unlock of and our share approving below as investors well

me color continues on then dynamics, challenges move goods global and little the The gears global industry. BU just and supply shortage and share impact about and let current Now a chain chain semiconductors shift of performance. into will supply every for we components logistics to

and experiencing micro our We systems, servers and result across are a we go of into and network including wide integrated of circuits are products controllers solutions. an across shortages storage. still The range devices, client that seeing impact controllers

costs increased to due needs. have and a higher customer expedites freight meet increase to congestion to mix addition, rise continued part logistics ocean network air rates, due to In of in

have quarters, range. our its the PC high over last We of is X it nearing end and the reduced backlog normal

However, we backlog in QX. PC expect to grow

availability. level ISG record a again Our higher-margin lack backlog to the demand and QX increased due compounded of to very in of combination strong a

the our through half of year least ISG continue. expect shortages to first part remain elevated backlog at We as the

As QX, expect while we cost costs elevated. modest improve with remain freight we deflation component head into do to

the NAND Digital impact Dell. the from We on information announcement from evaluate are contamination to recent awaiting Western Kioxa and

our chain agility meet be a advantage this supply competitive as chain the unprecedented challenges environment, speed, us has navigate though supply needs remain. uncertainty. and Our to flexibility durable continues supply customer enabled in we And to

Turning CSG. to

more up of faster basis We billion of calendar the shipments been over year. up years. in than the last top record now XXX of X basis top any XX%, another million XXXX XX.X And record XX%; of delivered growing record has calendar of and X.X% revenue any points logged commercial or billion, was unit X 'XX, up growth $XX.X X. record units income of business operating revenue; PC $X.X the share Our points XX year up than

in our PCs calendar last million Turning X billion. $XX.X to X% was billion, QX, record healthy QX. quarters. a XX%. XX of record up up consecutive now demand, Operating share the We We with gained record XX% of CSG quarter delivered in up revenue and a with sixth income shipped $X.X XX.X have

Our the our our and notebook January, introduced And notebook, new to around year, socializing, We expect rate the positioned future to an a work, at the culture in very incredibly advanced 'XX, strong 'XX FY are ever innovation XX, gaming a albeit commercial CSG all continues and leading foundation about stay. we've client we awards year. consumer CES built results. at has is well record reuse. and to here FY the where XPS XX our CSG Hybrid I all build for won am Alienware fantastic of team concept heading And in the we I'm reset a 'XX to you. into created. higher moderating and level. a proud shopping, and ahead as PC had and FY excited entertainment TAM with learning, sustainability, results, commercial XX, Clearly, and road we recyclability our company travel systems thinnest growth relative premium of

automation We our edge to turn deploy simplify expect at and of ISG growth our and multi-cloud Chuck? another And for the center as customers. with for year and on color we growth over it initiatives. intelligence some data I'll the Chuck IT with modernize that,

and position. for Thanks, privileged We're about 'XX We momentum, FY we're record a and the with incredibly one Jeff. great was books. ended optimistic 'XX strategic beyond. FY the year indeed in

storage year, demand transformation Turning server flat in up and grew revenue spend, infrastructure consecutive operating X accelerated Mid-range for geographies billion, and to was storage the our demand digital year since company's leading portfolio full of FY were X% underpinned FY with supply products quarters for course revenue by server storage growth. year. over the the ISG acquisition, and the ISG specifically accelerate double margin in the and up growth. to by ramping all record orders gated year storage ISG QX. constraints digits demand our EMC and fastest PowerStore year-over-year for and at were and the history backlog $XX.X billion, Widespread of by rate growth our as were in results. of product 'XX culminating 'XX, continues encouraged orders $X.X was corresponding Fiscal income ISG we growing the both solutions, across in remains grew 'XX fastest

navigate chain, supply supply which As where Jeff go-to-market, unique signal our a we flexibility, gives us to our have and the demand model, supply. shape our direct business creates to we design high-quality differentiated will highlighted, product and advantaged demand the continue to with our challenging environment ability

to QX. Turning

up final third consecutive 'XX and digits. ISG X% demand Storage Our server revenue FY strengthening $X.X to was up for in was year quarter quarter fiscal of a the of up with high single billion. and growth microcosm a demand across with demand XX%, was storage ISG's portfolios. our

of data to storage where portfolio, object, protection, Our sizes. unstructured capture customer across us a and growth variety in and enabled we're leading all-flash, high-end, #X midrange storage architectures entry HCI

growth, select Within buyers X% XX% PowerStore revenue growth aforementioned to ramp high up X%. indicators roughly leading For by demand billion, demand HCI flat income over revenue of now backlog and approximately are and services midrange, storage customers, enterprise Servers QX, new and Storage due power to XX% growth XX% our example, inflation XX% for component end, growth. storage buyers, in consecutive we repeat build growth deferred $X.X logistics double-digit was for and and solutions of year-over-year XX% up saw and were sequentially demand the backlog midrange unstructured tough a continued amortized software networking down the due content storage driven and operating in comparison. gets future a to X% of year-over-year mix. that time. store despite SAN our important quarter, fifth primarily was ISG Encouragingly, Dell up and to for costs. was

turbulent FY actions ISG We year component to was a are infrastructure though markets managing. and markets as the increases cost rebounded business remain actively mitigate In we pricing for risks logistics solid returned summary, growth. continue that to to take 'XX shortages

strong share revenue, guidance Tom demand Our continues of is poised business. challenging supply leading momentum a server ISG thoughts to forward the deliver given model on integrated and storage a in were in ahead for dynamics. of FY despite 'XX, will moment. the our indicators business and

like priority types momentum core, in Before we growth our At handing business, depending to over spaces, saw opportunities Flex for businesses. both customers engaged to our our from and as give on our competitive to our commercial on including services, experience highlighted and including These our their and inside solutions where briefly durable right managed also we us were to subscribe positioned Customers solutions, indicator billion over APEX important our select APEX in an we FY in progressed, distinct solutions investments multiple an different asset a branded growth Analyst is that pleased but buy on made are advantages technical these opportunities In to our 'XX subscription needs. September fully touch these growth. with Tom, and of year core let like and our acceleration consumption a can and initiatives. modern markets me was meeting, as-a-service service solutions resonating our TAM of year strategy outside offerings We our launched growth edge customers. future offering adjacent $XXX positions strategic our Demand provide important a that telco with win. rapid customers. particular, the as APEX market that us

We a with also and major service console. X of steady to their Noteworthy access will solution offers the retention customers stream maintaining Data a offers. APEX, continuing Services, and services all while in SaaS deliver and push multi-cloud. 'XX, APEX single to Telco, clouds protection new avoiding the and APEX data strategy. all-in-one on-premise, in portfolio to hybrid XXX% Services customer and customers centralized infrastructure was edge a to 'XX requirements. innovations applications, delivered points FY monitoring the be access regulatory recovery wins APEX with data which Backup and Multi-cloud want in lock meet to they in The conviction simultaneous as public and offering expansion telco data allows of Services, for FY solution agenda Edge provides a innovation backup compliance scalable, cloud SaaS-based protection storage through and end egress in data control no long-term protection with with And our QX disaster giving Cloud our workloads. about and manage. The long-term which and with in enabling fees us and secure management of

our more these As provide we initiatives solid will will with FY detail. And a we with a material, across become Tom. enter in that, turn environment closing, In growth I it of confidence. 'XX actually over and more to demand businesses lot

growth another storage by of XX%, In $XX well and delivered Chuck. in revenue servers for Thanks, and continued we CSG driven QX, ISG with of record for billion, revenue. ahead record quarter up and flat basis lower Gross $X.X primarily of of was was XX.X% higher-than-anticipated CSG XXX costs due margin component revenue. mix. year-over-year revenue as margin to at percentage and higher Gross a billion, points logistics demand

to the economy, and take logistics to of backlog Part remain across and at shortages year-over-year impact expect OpEx remain full cost least manage continue We ISG the of variability. to at expense risk actions with first supply and pricing commodity chain 'XX. XX.X%. year flat was fiscal at rate through roughly the year revenue fiscal $X.X the billion, elevated half 'XX XX% of we Operating

benefit to benefits for in from invest continue and did lower the We compensation growth long-term but period.

travel. of work, 'XX to slightly effective up impact business-related our as at we Net the percentage operating billion, up debt to our November growth chain and revenue. the rate. as lower we due income an ahead and OpEx to year fiscal offset a business, interest balances, return $X.X tax with in fiscal the to 'XX, increase billion, engage year in of was income decline than slightly of revenue a Operating $X.X more in record Looking disruptions. reduced than in we invest X% was expense was X.X% given by guidance expect and be higher in supply X%, This income a employees

XX.X%, revenue $X.XX result rate lower corporate higher billion, our shares than transactions at the resulting of tax available in income time in tax EPS reduced tender expected was with million Adjusted $X.X utilization year. of X% QX Fully diluted The X% up jurisdictions full December. driven VMware was we was the and to EBITDA $X.XX, and of effect the earnings in executed as for refinancing up tax billion, $X.X count total of the The share higher call. a tax of combined rate non-GAAP was higher including approximately to impact reduction EPS. credits. Our The at was diluted by was down spin. X.X% diluted XXX a XX% and increasing we

Our a $X billion recurring is revenue approximately XX%. up quarter,

or Financial billion, obligations, the $X.X deferred in not up is managed were billion, performance assets. RPO, committed and revenue. $XX deferred remaining included Services includes value ended in XX%. with plus quarter Our originations total in approximately up QX revenue contract $XX.X XX% billion Dell DFS

from adjusted line cash mainly driven EBITDA. was free flow to generated as $X.X Turning cash flow of in our billion and our cash We flow QX $X.X billion balance sheet. and QX, was cash strong adjusted top $X growth operations by flow billion.

working We chain levels we are see inventory happy with the disciplined management although of availability. capital, the supply dynamics component our continue given higher and to

$XX.X in primarily We through balance and in expect investments $X.X of and $XX.X The dividend billion VMware $XX will billion balance billion the balance debt $X.X improves notes, QX and chain with cash. million cash as $X.XX debt year. of a coming funded billion new existing approximately inventory save funded billion. supply sheet annual bonds in expense. balances repaid over to refinancing high-coupon $XX.X exited We interest and core activity situation come a the with in proceeds of We long-dated retired billion down

Turning to capital allocation.

capital of return previously shares totaling we to average have We we free million. on XX.X as in intent over $XXX manage C flow to dilution repurchased with our going adjusted we As and is XX% framework. our mentioned, consistent stock million to intend shares to And to buying return common shareholders allocation continue Class forward opportunistically of cash time. capital programmatically QX, our shareholders, XX%

repurchased repurchased stock. of Friday, million has To Program Class QX complement end a million. X.X business approximately program, we the our to have C the for and shares date, repurchase last share outstanding per the X.X% through approved additional Board QX of of common close our we dividend have since an Additionally, of $XXX $X.XX share.

billion the with growth grow each subject quarterly long-term at our case, per have impact dividend $X and to in expect roughly the share of to our expect dividend cash our future time to consistent full payments EPS We approximately approvals. opportunity the $X.XX year, over be least Board or for we to

X-K. For M&A. return release gross shareholders, pursue leverage our continue announcement, dividend capital in review to targeted and toward the more invest business please core X.Xx we Form details to on and delever Alongside press today's the will goal

Before Jeff Ukraine. for and on I year provide would to comments a I thoughts QX like guidance, invite full few on back

Thanks, Tom.

Ukraine. Regarding

thoughts First families and are those impacted. our with and foremost, loved have who ones who are lost all

top a safe members Our supporting secure this priority to relocate attempt environment. they at is time team to our Ukrainian as and

are working to monitoring We things and and situations. employees address are family their with closely personal

become and they you, As the is to the Tom. operations Back will as in details we situation for business available. rapidly more share evolving, region,

Thanks, Jeff.

Dell 'XX. Turning Digital in transformation fueling macroeconomic to as environment global that We're expect their QX top at XX% the billion, and $XX.X our midpoint a the mid-single Against year in QX with our their customers up overall IT revenue with to partner billion fiscal projected as our look ISG and multi-cloud journey. spending CSG customers, between priority optimistic growth it's about growing. is backdrop, the and for and $XX.X we digits.

tax QX non-GAAP earlier it XX% going Netting million normal EPS midpoint. based rates out, interest at lower slightly is elevated on are our EPS to reform. dynamic XXX XXX in in and tax backlog, more This or affected appropriate. points, basis recognize diluted environment of this diluted the and availability component believe by in that commentary, X% logistics we between to guidance higher up a $X.XX the plus than assume tax expect And overall driven share ISG, is but given share XXX range million range non-GAAP shares. $X.XX, I forward. any assumes I wider my on by rate, repurchase not For U.S. should foreign count expense earnings you minus expect we U.S. particularly

year year a strong year performance we're coming record with 'XX, 'XX. very off For in fiscal fiscal

As updated will point, 'XX our an on suggest a year with value year we long-term you perspective we the creation forward. align and expectations as starting fiscal move financial provide framework, we

As EPS revenue better growth at in a or range and term. the the over that's X% growth X% reminder, X% to long

deliver cash also flow buybacks. back significant our expect solid free to dividend We share announced and return with and capital shareholders to

our think impacted with members reiterate has as there. and As everyone closely support developing will in our team supporting I thoughts foremost, region in the first we that, we been who and Ukraine, news about monitor are

minimal exposure broader initial revenue is direct is to basis, we on 'XX. delivered While with guidance value in our Russia extraordinary and QX and consistent determine closing, potential operating the impact and through disciplined cash our Ukraine early sale to the an record to revenue, year any a too EPS We it year VMware, on fiscal debt thoughts percentage our income, rating. resulting spinoff delivered significant an investment-grade and of of Boomi flow. shareholder paydown, In and

buybacks We customers' dividend. and and also that, With capital revenue our with with strong begin actions shareholders build shareholder announcement capital We consolidate new future comprehensive and delivering flow turn our time. and cash core while introduced the framework our to free I'll share over on remain began growth Rob Q&A. executing our to EPS strategy of that multi-cloud modernize a focused engines back enable growth to allocation it return to a and

Thanks, Tom.

each question? participant get the first allows question. Let's ask to go to Q&A. possible. that many Erica, you ask you as It introduce can to of as We one

Research. first with from Cross Shannon our Cross take We'll question

the think increases. about in of if talk be price or about some also, can about see sufficient we And will or I the the to given talk these And whether on geopolitically knows, right maybe CSG of going you're inflation some but in -- think at or start can you because components costs demand. pushback ISG. managing you're and not now, at through wondering benefit timing moves pressures you seeing the increases there you run that's and offset you of on point, point, was and of how how to elasticity nobody obviously, both price component some -- if the enough should -- questions how everything if to general, you

to bit that, Jeff little Shannon, I'll about chat let ask weigh then in potentially well. Chuck a as me and

in have particularly what been effectively, on when you our we of as adjusting about us, So given think increases, and volatility as have as general, the space arriving price we're prices various been look, have in moving seeing management of been upward at the the doing factories, that appropriate. see semiconductor parts dynamics we we are costs

have seeing given I that flow you're P&L, seeing that price fact think we're is generally elevated it's impact given through through do part dynamic the somewhat a right that any of though, to muted the got the now, think that the you as are backlog, we backlog. increases

in ISG a we And a that's you as which of the and themselves so CSG, extent bit to the prices clearly in P&L. appropriate, is, ultimately of the we're do we at the going upper the would to pricing we're of end as terms in elevated new backlog, in perspective headwind have adjust activities what look, to characterize be our normal manifesting But inflationary always we're across in industries environment, Jeff to you we we're and in, that see it's mindful know dynamic, our that an we I or that? add sure around make we're solutions. if anything of all appropriate value that you don't also as would for pricing getting your Chuck, multiple the and know, market would readjust appropriate which elasticity point to but

a Shannon. in to costs, just think the couple costs costs they're probably through QX. around went total factories flat move a component an logistics as in comments, look slightly We QX, when is, One Maybe at offset period input we material by down delivered. increasing we inflationary of slightly to go to

the up out been that those talked material volatility, will, uncertainty didn't we've all them about. is around, So bit, subassembly volatility, one our it's We to us is when certainly facilities that turn some which compression maybe that can led a working parts And surprise. we you factories products. that catching we've we're challenges of of or margin that finished them of as costs expedites to through moving of uncertainty if see little much with chasing associated our that move are of the show the into biggest

price, precise it's today, so the look And that accurate at we're in we're pricing it's being costs you When business, same our go the that that's even that's premium true broadly our is base. about. the transferred in commercial same trying that we're base storage whether into to the as the of PCs, across thing thing consumer operating server seeing get whether and more up, environment side

the into It's cost is it's transferred as be we and as can, right levels can. that it. it word that mindful. understand plan higher and and know to planful responding can't uncertainty it as that it's don't it So fast we the efficiently at less volatility for I describe and if being backlog, helped. it, that price could where it that we're is I -- as And we hope efficient of capturing

Vogt from We'll with question UBS. our next take David

and full being at sort framework when question the to of this it's demand sort there if about? a about by a is impact point? held what potentially So chain revenue that chain, revenue just supply and half that sort we're But is year of in sort is all early, and maybe right at to difficult that quantify see a Is I of -- what mentioned of the of reiteration way improvement. the some get know Chuck year from chain long-term back think I trying supply all second going now? perspective Jeff from is think a to the we're just different we context from answer. thinking so, for the And underpinning of how supply Tom sense the to moving a the of the pieces so

that the we David, like year about I to of the you those we let expect what do and -- within around right from will we for us the got year, we and so the think guidance your want you, with guidance with that we I about sequentials the you've about supply demand year as starting I year, the work to a perspective and as but to And we're you good the reiterate first interact we're ISG, it chain long-term a terms today, growth, as supply headwinds point think chain you. now, clearly, that. through of logistics but have out as the laid framework. think clearer optimistic a gave way dynamics And midpoint least go through the is of environment seeing, situation I the think be to about me think at update half QX the -- know continue first a XX% we'll think And the through how year-over-year revenue you particularly I dynamics, with that becomes in expect right? do you our long-term we that

given QX shortages expect, The some particularly other bit an being do frankly, in talked component level. although around in of make, elevated quite -- backlog like -- point we've with a desktops the to though, space We I'd with we're is about ISG at little seeing. headwind of CSG the

full concept variability quite of as sequentials today, the a worked about the I think through perhaps that we've to in aren't going modeling, through we the through the half, I work the we're -- keep as are way that you we we're as do of that those year have the normal mind few about your frankly, So as first first see again, as your it's the to years quarter our out. and think navigation we've the been work optimistic I framework optimistic year year. way laid think quite And year. way just our but it But

Mohan question Bank next with America. from We'll of take our Wamsi

in increase I know the about you're that on backlog any as about growth? in help is give you you're And the concerned pieces here into premium well, levels? growth thinking environment? noted PC the you thinking consumer commodity and term. noted How given you moving are ASP about continue fiscal you Jeff, to wondering expected to about the how how commercial 'XX. was I CSG improve trends can -- us near inventory

Sure, Wamsi.

I X them. questions. to get to I'll all of different think try that was

And growth million generally it's of of reset. at area we've PCs at percentage the So we come has back we consumer to and a step XXX and if getting represent an growth back through large XX% from, roughly first you our look gone has PCs, we roughly TAM the off, look PCs that and come the where years environment, from consecutive believe strong units of commercial been revenues. very in, just industry commercial if that we're PC X

premium to low premium Where have X mid digits, end PCs to growing share low growing we will or Chrome. 'XX bands consumer price Our the numbers. is take consumer expect single grow. calendar 'XX, In we in view in fiscal is top digits. PCs of and on mid-single those have those sectors and pressure continue obviously be commercial We and

You've probably not talk about all us equal. units created heard this are

Some are in play premium believe most the PCs. and consumer than valuable valuable commercial PCs others, units we space we more

consumer environment little moving consumer ASP pricing is points end commercial. up is parts that the ASP I So norm associated driven the material we valuable low there base action a continue as into see can to in increased be clearly, in well. see If in we're the I so mid-range back a consolidator premium mentioned of the in that that in to have as And levels a trends moving earlier, what the continued cost The to bit been come inventory certainly on to challenges logistics today material and then move the those have pressure those grows pricing Chrome. trends, costs, inflationary. has mentioned still earlier, commodity we optimistic as and we we all there. the bands sectors, getting market look for sectors, grow price valuable at and price We

demand PC absolute we've backlog And commodities. going don't terms backlog most Tom the exists the and in displays, supply, see quarters, know in ahead take our continued in material in spent last a environment business. of you why else. inventory, we of actually just reducing because So X if made that to if you we reference, largely it, we've it's for need as example, will, take QX, That building that's valuable we desktops somewhere of the

all got I think answered. I those

of question the Sacconaghi] next Your comes from Bernstein. line with [Tom

my not wanted occurred bit my the first had little for name. guidance Thanks more. mess It's a last question. peel but name back taking Toni Sacconaghi. the lot I to I’ve a just

over QX I you're down is And sequentially, sounds X to PCs. last Or you're that I Are backlog is also in years. ISG X%, to half. going QX, is build you course if growth you're going XX% backlog So it calls guiding you grow? down your anticipating of -- XX% there for solely have like average year, and about at think, it again, is get over full look QX, the the the stronger to negative It typically like thinking second in if then you're kind growth normal And it of for about PCs? in ISG the sounds guiding in seasonality year. attributable will for the the

communicate? negative pretty means to that you're Or message wrong what's with trying PCs So growth my the in Is there? that overall. logic

I negative Toni. Look, don't Yes. we think... see I in And think growth overall, PCs

second half. the In

in gave some expect are ISG that importantly, one I and said, of PC headwinds, expect the as ISG what the And given we we we just growth, I QX. expand you, of do for we the QX. grow in in just some some variability Yes, component of backlog do with availability, you, EPS I dynamics some reason about PC to think, see. to but in revenue expect understand CSG there we backlog that and the the spread more I gave caution that's in

the with way, we of As year think we overall we positive growth think about work if guidance, that what that midpoint sort of the know through remainder I our today. you see of the

thinking can dynamics. with supply the trends year. offline we are navigation short-term do the about we this a right from but So We're need favor. to some optimistic in our our The There now. chain is that's perspective, take modeling

next from take our Jim Citigroup. Suva We'll with question

have just have various drives do I availability just to and into on And And us even kind that color. by that that X commentaries question. those commented more I you I assume assume and comments or meant with assume I maybe supplier and X wanted for outcomes? of know about contaminated into has for I more right? that that get pricing. supply it to you is you you the what got assessing than it's bad some some Is not to inventory situation. system. out your Digital the Western prepared your

enterprise in multiple I that the and reference Kioxa SSDs Happy occurred partners is products. to factories and means was about we contamination and factories, The the Western making today world Jim. NAND the contaminated. that have Yes, class both answer, client announcement of which is for by Digital in their in product the

that a we when the And pressure. there's in be going gap. to of gap great sometime a there's future, demand, commodity see supply in is Typically, pricing a

communicate with we're vintage an a a companies risk forward. what of that size the contaminated there's is future, So impact answer to output those that trying signaling I supply it? large and reasonably is I hope I at a did we're that just factories going output represent that in -- have and large hope. will of X the unknown

That great I color. think did. was I

next from Leopold We'll take with James. question our Simon Raymond

comment expecting down build and a hairs demand to backlog a really of backlog the supply in unpack could guess rebuild of what's I'm to you to about a drawn split or bit the backlog of some after this constraints then made rising backlog, the You've And PCs, again. understand having I combination result but quarter. or is the leading trying

Tom? one, want take me you Do that

Jeff? don’t you Why jump. start, I'll And

devices node, signaling node, XX-nanometer we the at that we've If go categories, talking to that been of XX-nanometer XX-nanometer nodes, each long look parts all be the our for cetera, what semiconductor whether a a continue across node, plethora it's it running in we're a comes it of doesn't, and a Trailing persists. shortage about time, and et time through we're assembly through. that of sometimes The sometimes nonlinear, be it that capacity taking optimization that short our up output shows it supply. sometimes on timing supply is advantage challenge the meaning delayed. and that is of and the ultimately is sometimes Working

we're desktops, called demand, and continuing shortage -- in hit semiconductor growth. supply CSG And to demand our our business is product, demand we display continues most see hence backlog our that as the that Tom So out. notably and signaling high-end what is short of

server controllers the demand a hence continues very of again, programmable backlog that They similar supply ahead and is CPLDs the all the thing saw power and of sort is through into supply have need, controllers ICs. and first the past. of that the devices those out with called I've the side, of we which the short year, believe backlog been be same network QX, to continue then we and are high-speed micro that build. logic Those build. controllers in And supply, ones trend, demand in which that in we ahead this half in storage around FPGAs of notably On

our growth what we're signaling. We're that's think challenged supply. but I in it's my in So in the signaling, Chuck's businesses, remarks with remarks,

just chain to understand, we supply demand to sure all worse? So stable, is make paraphrase is

of worsened. to and into has QX pretty in of amount uncertainty. in continues dynamic. of backlog excuse Supply servers PC in -- the We think displays categories continues X storage. It desktops, those chain be and It's after and fair worsened quarters, on side half it a first down that There's X challenged. years X has burn the or me, in

Evercore. take our Amit from We'll with next question Daryanani

talk profit think that dollar I just you long-term well. EPS puts you would operating about Or profit ISG in 'XX other in framework helpful. Question. EPS about, be 'XX? a operating on you margins up, think, that I growth. growth. see does going as stock guess the How up and X% you have And in between maybe versus can growth there talk and about fiscal growth If takes do 'XX dollar and CSG break of what the I one buybacks

Amit, remember as we to framework, if -- Look, the the it is the X% allocation think we recall about think this. are relates like Yes. which about you as EPS you you chatted to plus, XX% So shareholder are -- combination of programs I capital and right? got that return, growth When introduced of using came the to enacted a dilution that -- LTI manage VMware dividends. share spend. coming buyback through that dilution capital the we've to buyback of principally program share the out we Obviously, and XX% out the capital

to from I around think move XXX XXX million you shares we'll And if expect that about you for that perspective, then our as you as programmatic perspective. QX And do somewhere think in move an our be forward, from count instance, so somewhat guidance, share we're EPS, forward. million we quarter our the should

from overall basis, the been years expect thoughtful so well, around will I look to you I consistently, an We into get in share do we somewhere how we've if be last on perspective. at number X.X] op operating want look, I I profit about And think -- buyback. to of the forecasting inc think over you it relates [X.X, that will we as tell that. annual don't do an margin, overall,

something to into expand. not is to what's maybe for an the quite operating you More last think I Obviously, we're [X.X], give around drive quite margin have that part continue by to us from for for range and perspective. ISG demand, slightly there of they years couple guidance is overall business. of we as mean, perspective, margin year. to as been continue been I have interesting storage from we op operating the opportunity a probably margins to going you strong look, be I historically, CSG strong. But I That's on. that, right somewhere don't tell as look want not get will

some mix will be the this Some we dynamics. profitability of year variability our But through -- reasonable. and this the work of should way the business demand supply we think as there be chain overall,

Hall next question take with our We'll from Goldman Sachs. Rod

to you I margins? that. see a the kind say to potential to bit. for that's least margin you're little ask a or down I that that trajectory the willing EBIT to just wonder where of Or deteriorate there's the at QX further? on follow-up you'd I have think do you And bottom level, into implied about be then margins looks at fiscal least margin wanted like And guidance. at guiding whether the in It down

is OpEx obviously would where roughly, tax a think I trend gave needs basis walk probably the the it, as we a in Rod, pretty I year. XX.X XX would basis that gave call think we a about about think XX%. QX, points We XX.X did XX.X tax billion consistent to for think on the the indication you I up think I gotten then P&L the some for you year. billion. from if And move you revenue XX you've rate talk of little that's of as to you bit, points, you for QX range guidance going you, gave I points rate. think EPS through you bring I But OpEx by we basis as XX to about our

that well at given area will quickly an is and you other around do later chat $X.X the you times probably on year, interest -- premium as to billion will in there X.Xx as to down focus I year, some used think leverage I amount and we repayment. delevering, the X, interest some more do debt, about QX if the during a we've of point be, there we continue debt prepayable think somewhere because should of did repay, I just other. debt -- get -- there. that since I've will any have X.Xx probably moving to That talked we somewhere make about, core don't probably be that's

INO, probably you're to full So $XXX $XXX on the million to -- safe [X.X]. for to so million closer year somewhere say for somewhere the in in

of put I today. to you given pieces going an come some or up as QX you're if margin at think operating together, that's slightly business it the in mix look we to QX, where higher of we gross those of all than ended

generally that's QX. about how I -- So we're think thinking that's

folks here to for on and just of the keep moving try a in going call interest I'm get the question.

your So question. appreciate I

next Samik Chatterjee question take We'll our JPMorgan. from with

was on does so. about here. quarter revenue my reseller to or in If $XX million translating or the an roughly math operating question is relationship profit of the it really loss relationship My like the the right, I'm doing look VMware the line

getting of. rate think run to be we to positive about? And seasonality the right to how wanted mindful check there. time certainly, is should the we a just And be about to math should thinking if going forward? run back rate I doing that's there what sort the we should period So some that in assuming quarterly be if of I'm that Or future,

which is what's includes and principally both in Yes, that VMware it. business, it's $XX Virtustream the of SecureWorks has other Samik, million also total Resell,

what and up looks XX% contribution of with in and Dell And VMware. VMware I terms X revenue like, we've think that contribution. the the the relationship broader range on relationship total spent resell growing the of VMware years to of of business roughly the that revenue, in that frame we've mid-XX% terms VMware somewhere last -- VMware sort taken in

driving As -- in velocity past, we've of over talked focus our solution the capability. the time VMware -- about revenue that about of was of last in terms on margin period that and with VMware

if on resetting time. focused we and of as those So the the on through you over have we and have do customers, and to separated, VMware our pricing way said, now will, are do with that working VMware process through on work spin, pricing X relationships contracts years our we and with

to of seeing, that So is think a that I to dynamic. the going is, you're terms the lot time -- is VMware a to bit principally, loss of be most fair, that Resell that us of take of which operating it's needle move in do

it a view at -- to that think as and over I that's probably forward. so do take to got it's journey time, better that going I some opportunity. We've move think how we And an improve drive but we there least will it there. about as XX-month profitability opportunity work

Co and our Krish question Cowen We'll from next with take Sankar

forecast. more is question My about like the

of management. supply, you been the historically given for excellent Kind exceeding Dell Tom or X% fact demand has curious, growth. gross numbers. you or Jeff, the revenue think mentioned kind like I constraint known about is supply margin And and X% inventory that Chuck, of to missed

of is actually forecast to So how supply? the this tied impact demand And at demand forecast much point? your supply concerns could

sure with right configurations bring Well, that and we capture Supply for. look, that. like I have with Chuck customers working try now. and job -- and we and we're demand tend our here, availability organization, it make should think to working I selling about demand the to and constrained jump Jeff component our believe selling in-house in our is But

XX% have a through great said, demand. That mean, cost, late does the model Jeff the team to and think opportunity industry. you throughout impacting parts the That shape are and think as to our move there about being we're if constraints we roughly I And I direct So job are with XX% incremental supply product channel, arriving around. causing as us are chain given having the are and as logistics the that. highlighted,

some there in QX. pressure that gross So margin, has and noticed on been you

bit the that as think Pricing is efficiency manifest we as we long an will that's And well P&L elevated pricing clear that you pricing it. for backlog. ultimately, as through a we're have as I itself something see backlog challenging.

of So think to there's think the year, to the to perspective overall, over is I there. think think year, for gross trend course the we does I not I , that but do margin gradually is, tend as our about it get up work it look, that do

it. Tom, part to is, that cost commitments interest of we building know best didn't the we question. maybe addition backlog the And catch we a we to, in of There's profile made gave optimizing know customers with company we spoke incurred were chasing the right spent decision looking and shipments, long-term look, by with do the the customers. customers. demand that. We our to But serving incremental we at we price in that our to no the and cost the quarter with taking we care our and

team this. through what does. is we'll our This work business, supply Dell model, Our chain our

differentiated. Our is model

to in our direct our development We We're chain shaping quicker demand purest move more and supply and we qualify demand product allows -- capable marketplace. have which that doing. selling is us with leverage material, what the product believe to most our of model in been the than We industry. the better signal and transmit model we've and

may think X This stuff. what way front loves find serve or overcome. as in and quite we're be as much team a years last I our our us, they well headwinds and saying navigated backlog this wins we customers, chain of do we've is to the we to supply will going

our Fargo. Wells Rakers next take with We'll Aaron question from

at about, XX I billion $XX obligations. think deck, was about the or but backlog. today, of in wanted I bit disclosing you're quarter, billion, know I I you billion was $XX And slide last if was look talked actually that ask XX that remaining to it performance that, billion. you a that I number, think little disclosed

what the backlog billion, in backlog at that that, to maybe there's $X.X built? is, then next of about ago, billion how that the up And do I'm year a at deferred, I we difference that's think accounting you've think when a that So level? And relative I is curious that what And from exit of like? should the change that look difference look would that of year that. more RPO if a you guess $XX that you this normalized

hey, it's look Well, Aaron, -- Tom.

that the reduce and recorded which profiles, actually at was sort in built as pretty businesses billion, was We the that, RPO, is apologize, imagine, significant build space. I the has ISG about I billion, P&L. RPO, look of you talked QX $XX about had you took. the So look have the to was happen right? think but might one -- So in QX our margin client end different we And impacts able ins actually at in saw on moved outs were if fact QX at gross we backlog of in you profitability base, it constraints to backlog QX. those you margin the we backlog, -- was $XX was which and the of that that as of What or and backlog

mean, have backlog yet obligations what's that of long-term revenue, terms we there's plus in in there's plus In of but deferred remaining. contracts not that change I recognized the RPO, deferred we performance component where revenue have

up capabilities mix a there's and types in services there. So of of

through can can would that take if that. We you, with we further so that be helpful. And go

So...

question last in space joined here who one give a let's late to Erica, lead analyst then little our newest the here.

[Eric question of final We'll Stanley. from take Woodridge] Morgan our

net income realize it, should appreciate or about basis your guys. we qualitative I think on then takes relative to year? just cash Q&A but either overall a and the go you year? flow quantitative guide growth thoughts as specific me. for for or the operating to cash I'll don't Maybe you share flow, that's And next be end that seasonal just should how puts the But we year, about on it, tracking right? just I a we question Maybe there? any thinking it through can with any

net cash cash least and you don't But adjusted XXX% guide on financial -- where income. our Look, by as we flow better long-term welcome, -- about think you if way. Yes. we but or free the Eric about being of flow, flow, at we cash talked from framework remember,

I holds true. think that trend

you you'd somewhere historical ratios If performance, our cash coming seasonal of for to at be in about sort do proxy a probably years. around It's the look number our we the to there X.X have year. of think Look, last flow. think X.X I over patterns reasonable

pandemic. really given the upon flow patterns are Those cash effects cash realized few that, have But quarters QX I relatively demand typically our a I flow some has been changed based cash you think us Having of our overall, we seasonal historical tell ability. years, right? think the has said and QX flown last softer. that, of generally I'll patterns that you have of patterns. been over revenue stronger our given bit QX about quarter. and and generation feel how flow QX the weakest little those on good is

time, grown X% years, average, the at by flow last on EPS XX% free of a If over we've CAGR and a cash revenue over CAGR roughly X growing CAGR. you growing [X%] period while look at adjusted that

flow quite think I strong. So generation it's our cash

managing disciplined managing team and the a their job of done the in nice think has I sheet. balance or way sheet with balance the

about I I generation. so Tyler, And cash anything our point? flow would you that add this don't know, good feel to at if

overview. good you I think pretty a gave

nothing So add. to Tom, no,

a right. in wraps All early San Technology you May. in Dell you soon. information from James technology-based Morgan everyone. look and us Francisco see it. We'll for That Orlando discussion to and weeks Thanks, Stanley X Raymond from World in in in Talk on

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

at disconnect this You may now time.