Dell (DELL) 22 Nov 222023 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen. And welcome to the Fiscal Year 2023 Third Quarter Financial Results Conference Call for Dell Technologies Incorporated. I’d like to inform all participants that this call is being recorded at the request of Dell Technologies. This broadcast is the copyrighted property of Dell Technologies Incorporated. Any rebroadcast of this information in whole or part without prior written permission of Dell Technologies is prohibited.

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

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

are complement materials IR our afternoon. covered will our to discussion on encourage which includes on website and be our this materials available presentation I today’s additional you earnings Our and review content call. to Guidance

made financial net Growth unless measures including share. call, During our diluted measures otherwise most comparable and these financial margin, references to differ to in that events press earnings expectations. of change to otherwise this and uncertainties, could events are unless our discussed those of indicated, no refer measures, which in a directly refer webdeck risks update our are this our statements, GAAP and webdeck non-GAAP operating number percentages all non-GAAP to and forward-looking Actual based obligation forward-looking year-over-year expenses, during Statements income, per gross We on current assume projected to due can revenue, measures reconciliation filings. materially future found to and release. results statements. SEC their operating to our specified. A income, and be call from results relate

Chuck. over I’ll to it Now, turn

of $XX.X good multiple we servers and X% in profitability, of QX very was record including though ISG record while record fairly From slowing last well to $XX.X billion, of demand, revenue our strong with and infrastructure relative delivered EPS end net call. in previewed We results billion, difficult down billion as that quarter, types storage income earnings with of The execution QX perspective, CSG the and including our PowerStore. ISG up despite diluted CSG Rob. storage demand down was did operating we and high XX%. was last Thanks played good revenue underlying soft $X.X revenue with demand growth XX% out disciplined $X.X PC environment $X.XX. profitability a macro billion, up hold highlighted

Our the in environment. model deliver market focus, to strategic our underscores QX advantages ability our results any and differentiated performance our of

unique direct from across the another faster shift the sizes allows geographies real provides of sales sequentially demand decreasing to environment Our of which demand us rest model all as feedback industries, took X% changed, see customers And time our the and and actions the showed costs, and environment industry. results. to which in in decisively, reduce QX sequentially QX. and X% expense operating reacted We we quickly in our than

last we gained QX leading industry storage in the share agenda and innovation like In announced of all subscription And multicloud, including without strategic in us executed we rest positions infrastructure by weeks, offerings, PC allowed to of share in with operating of consistent now Despite servers most six as-a-service. in have share competitor the commercial new elevated profitable on relative backlog, segments QX given the the with in market and gain model above edge, now ISG, extend market. expense XX and And Dell industry. our strong reduced QX. results the we we have XX XX the profitability expected performance component to We the the launches delivered distortions in stayed deflation cost areas some and over continued as unit access on PC when of expect our last December. to reduced We in faster than our server QX million since quarterly and APEX compromising are in our quarters. commentary backlog $XXX XX focused IDC

public platform It Dell’s software our announced to first the Frontier, Project industry-leading edge storage the as clouds purpose-built APIs and of we is on their our industry-leading cloud PowerFlex industries. or and to multicloud operations software data cloud-first of of edge capabilities today, our design Dell’s across storage infrastructure. to applications public provide earlier customers resides, launch for AWS. software the solution, need availability on operations our about and without to PowerFlex, AWS our for of offerings broad unifying simplify excited point, And a to enable With a specialized mobility an effort part set Alpine, storage focused available of data in the bring cloud software storage We’re use on Project public data wherever initiative infrastructure flagship management. deliver will defined

of new Alpine customers our enabling hand, portfolio remains near-term growing criticality Stepping customers power offerings the while to of and drive competitiveness matter long-term and APEX back, climate. economic add will SaaS The customers to and solutions some delay uncertain. related the Project no data to a productivity market one continue IT. technology move multicloud. need growing ahead Our digitally through seeing to continues world to we to the drive harness customers challenged technology to purchases. to to forward, of continue near-term On with are business Other given exponentially, grow their the to look transform, Dell our continues their IT

a drive commercial positioned efficiencies, seeking to PCs leader whether growth, As and we and well in infrastructure, a customer are or combination. productivity is the market

trusted quickly a We’re customers, needs. to advisors allows their business and model to us meet adjust our to have that we

the execute deliver very are QX and advantages no So, our proof underlying results adapt was the in ability despite matter ability of our uncertainty. near-term to environment. confident we and to

across to the playbook strategic has winning cycles, intend did This with we and taking continue and QX. delivering control: no as building well we our pricing and our team. our performance, matter innovation our we’ll multiple cost culture position, maintaining of relative unique to discipline, against differentiated we is driving agenda, can our what the customers, managing always, a care served backdrop, accelerate us position, focus that As on in

the it turn I’ll Now Tom over to for financials.

P&L QX our with near-term demand pleased despite tougher the environment. I’m performance Chuck. Thanks

with out the slowing we As we as mentioned, slowing and QX a ISG Chuck generally we bit third demand environment expected, our and in than anticipated. more demand highlighted velocity server played quarter earnings albeit conversation, the softening

since We well executing have consolidation grown seven strategy we continue to the core we’ve year the for last a few revenue have In our over CAGR grown at executed to win markets and in and in and modernization and our XX. ISG, our our X% focus on revenue QX. of consecutive fiscal quarters years again

both as storage have our quarter over in well this number bigger three two number our than servers one, IDC combined, per again share refreshed gaining come and added revenue as storage the and in consistent we are portfolio, been last have structural anticipate the mainstream we X results out In storage, December. share two with are to gaining last one and server where when We share years servers gainers over in XXX bps in quarters, we gaining IDC. position,

Our at CSG a XX. fiscal business has grown since XX% CAGR year

earlier, mentioned unit have QX. of Commercial quarters XX Chuck in gained XX including the PC share last As we

billion costs. and the percentage a with Profitability XX.X% along headwind of a Turning elevated expense X% QX slightly the in current cost to backlog and of Gross ISG year-on-year, points, shift impacted was Gross reduced down in we X% QX. margin beginning $X.X a our We turning with billion, and remained approximately slowed $XX.X CSG mix now operating strong in revenue declining basis ISG but revenue. from revenue to XXX X as points. by of by favorable X% was macro and reduced and range to normal backlog hiring backlog costs margin more and decrease XX.X% QX FX quarter. substantially the primarily of revenue with $X.X quarter environment. servers. our discretionary reduced was a up billion, total results. billion, sold goods during up the sequentially $X.X deflationary strong We due particularly performance, was given delivered due to logistics in ISG components of certain down

As revenue. a up billion, a income $X.X operating and result, of was X.X% XX% record

a net growth rate income primarily decline in income. due was to expense XXX due to primarily to count interest share with decreasing a of result share balances. diluted a record share up lower $X.X as operating year-to-date debt mix QX. billion, earnings and to was per XX.X%, decreased of geographic shares XX%, sequentially Our in $X.XX, by diluted driven million tax repurchases our up QX XX% in income Fully

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

performance obligations, partially Y/Y backlog is billion, remaining down offset by $XX deferred revenue. Our RPO, in decline or a approximately due in increase an to

XX% commentary. and Servers billion, Turning was billion, Storage driven up and by QX up our ISG, QX to $X.X revenue billion, $X.X consistent call networking server in up with revenue a XX%. reduction backlog, was our XX% $X.X units. our business was In revenue

configurations richer revenue, workloads. was XXX income offset demand $X.X as at benefited and unit softening more see a with from higher did prices running we or in in which by operating mentioned, average ISG points by selling given of somewhat we pricing basis XX.X% servers expenses scale billion complex customers lower operating came discipline. record up As driven

Dell Consumer XX%. due $XX.X CSG Client and billion margin Our with CSG partially billion, down primarily down $X to due gross stronger geographies revenue softness prices across as Group X% operating with operating primarily PCs in of higher customers Commercial quarter billion, Average billion, down assets. and in DFS lower the XX% revenue. trended to revenue to selling were Commercial underlying strength Consumer was operating scaling, consumer up both Financial billion, was ended Services was $XX.X $X.X originations XX% expenses. was demand. both configurations. richer Solutions billion, X.X% XX% revenue $X.X income down and was by in income offset and percentage Commercial with $XX.X and bought

an seen subscription more the recently macroeconomic in as historically originations, slows. stronger environment have interest and We models, increasing

flow sheet. and our balance to Turning cash

operations on sequential from twelve million a decline was was trailing the Our billion by in but strategically Within flow dynamics. supply basis. reducing working in inventory offset cash was $XXX P&L $X.X and we cash components the capital. use and QX up and helped through working capital, navigate a to priority. flow by sequentially accelerated profitability is capital month as in approximately revenue as of purchases some a remains continue efficiency chain key Improving inventory we working QX

debt capital billion to million cash core ratio billion sequentially and is principally $XXX in and leverage down due core ended with Our $X.X is investments, in million balance our $XX.X returns. $XXX We the quarter X.Xx.

of QX stock million paid We and Turning $XXX million in repurchased allocation. $XXX shares in for to million dividends. XX.X capital

to billion repurchase our current million XX.X addition bought beginning of annual $X.XX billion. have for program, back shares $X we the dividend, our share since In

maintaining forward, Going continue be capital while shares repurchasing to opportunistic. programmatically our dilution to manage flexibility balanced will we approach, allocation

and down Similar flat. roughly headwind XX% be to Turning environment, QX, QX billion demand $XX to continues guidance, revenue with a at we expect ISG us. between currency mid-point, the to considering billion, $XX for the

revenue. QX to We impact are roughly expecting a XXX basis-point

be we continue however, on the see million OpEx in roughly fiscal our a We focused managing sequentially expect to $XXX week cost, increase QX. to given do extra

We the up interest expect by driven our volatility sequentially on our be $XX derivatives interest impact expense and other rate portfolio. million and to

For year. for the XX% rate our minus the you at midpoint, non-GAAP rate, assume should XX% XXX plus which or reflects points a basis tax full

We early X% on at recognize the XXX XX. in range expect to fiscal the Netting our this annual you expect diluted our in shares. of to share process. out, of planning midpoint. roughly EPS I million about view many XXX down million count $X.XX questions that still diluted It’s have our be year we $X.XX,

However, I’ll frame our current thinking.

quarter IT and ongoing as slowing to the likely These particularly guidance range it’s dynamics about we customers, creating their rates interest think point. starting a on rising and fiscal our intentions we economic for half businesses. a pressure is upcoming of what sequentials know to next second we the weigh results. global In outcomes they below their strong our year, currency expect third delivered QX factors With macroeconomic growth, historical including closing, financial today, even year. are years’ as broader of using result, revenue a as continue as digitize financial our inflation, spending We

value creation though in diluted long-term better. years. We revenue the Since purchases have a at free customers have strong a our fiscal conviction even delivering in cash at earnings share to we we TAM EPS paused plus, framework each has adjusted has to are X%, and income net CAGR the to And a revenue diluted with committed over X% near-term. a X% of last per free grown some of income have X% net our our CAGR, cash grown CAGR nearly XX% in of XXX% the to or target XX, CAGR our of and flow the adjusted our year fiscal exceeded of an flow conversion growth three

our over of through and time We months our committed X% to returned have $X.X shareholders XX% of over and return to dividends. free share billion our the last adjusted to repurchase shareholders capital cash also XX flow to have

continue environment, financial are can will we what this and our to in how focusing journey. and in We posture along on we customers the helping be our managing disciplined business control their complex macro digital

to to turn Rob Q&A. begin it back I’ll Now,

Thanks, Tom.

that possible. Let’s as get participant ask to one as each get to allow Q&A. to question We to you many of us ask

to go question. Let’s the first

question Cowen [Operator Company. Instructions] Sankar first with our Krish from take We’ll and

curious, IT now? can where taking any Yes. the is Hi. that, large and it ecosystem? ones? my on And softening. storage across just they’re mentioned smaller see spending of the seeing. on how the IT software? Thanks of budgets enterprises, you Is you environment thoughts Just or for And all right more across their Is curious, I’m kind think it question. server Chuck, within the you we’re What give do spending kind do about you focusing

Thanks, Yes. Krish.

bit Let a you highlighting. by me we’re a dynamic let But environment. just start very in texture of executed little well me give seeing. maybe Look, what very was that the we

As deliver performance to And is relative very and highlighted, our server client did and this in delivered that across storage, objective gain. we share QX, we profitability. environment good we’ve in principal and

while So, seeing. on some the offer going specific get demand me numbers to we’re today, not that texture environment into let we’re

growth. with, First, weaker just our remains slowing environment I in CSG that you demand consumer commercial. would saw We say saw the challenged server than results, as

worse was than Tom our call. at anticipated probably bit little prepared As remarks, time QX it earnings we the highlighted a our of in

customer verticals dynamics growth And so revenue and server seeing across of those customers, exceptions reduction across multiple question was PowerStore. that, consistent HCI geographies, broader as well said, we’re storage There’s It’s server economic to a were probably backlog what’s out of underpinning fared largely the better size. weakness sector One better. call would high-end medium globally relative we about say, we XX% very aided and similar feedback the direct not rest ultimately the macroeconomic QX, behavior what dynamics of face To categories, of including and couple a very as customer is much cautious lot had more the business. in business described last And out. deliberate would energy your QX to we would of U.S. growth by but the -- as we to there. in across the texture sector, which and highlight government storage the we and dynamics performing generally China, immune be we’d quarter. then saw And the a pronounced

budgets, we’re reassessment effectively their for and So, buying hearing immediate needs. of just reprioritization spending customers of

QX call. called continuation trends during net, we So a that say earnings out I would the of our QX was

ahead. our take next David We’ll Please with from go Vogt question UBS.

framework kind this your Can you maybe earlier elaborate for Tom, is about you. of the remarks on ‘XX. for

moves sequential last, the that QX communicate as little let’s year? then So, take sort of the of obviously, start to there’s sequential level historical we think a you Just a about the a since uncertainty? you bit to and pattern to to the maybe Just line say, given normal how move three two that years sort trying little over maybe Thanks. bit. haircut set my lot dropped when we you basically trying moving are and -- talk a with do of but about pieces, clarify, through

look complexity would around on, complex, with at a we supply year particular, to the and -- our to range these I a could depending be chain, elaborate as go inflation has wide in some And growth dynamics outcomes how sort continues change there, whether happy point it, the look what’s at as general, of I high perspective. say the process amount of us. from a pretty the the complexity. FX, move on geopolitical. financial on ‘XX of you probably early rates, degree and there’s Clearly, at year and next get of that out half it’s in back fair Obviously, interest point, but this that. or we pretty things it’s on of there’s planning -- there’s in global going fiscal are a of David, upon environment, landscape

that we with right now. do mentioned their of customers a spend cautiousness see Chuck bit So, in

pretty that’s evident. think I

-- a do spending focus it’s of a that’s historical And what revenue said, say And you’re what normal help we took I the we’re be can challenges on And point having those other of would put and get we’ll help to a data think got the reminder, the you current perspective, the fiscal manage of of going way look just that, Maybe of think two-year I ran ensuring on to don’t we’ve number the that we P&L half customers measures at it, it. -- is, our coming we’re want growth so to because some cut ‘XX. guide meaning of evolve and continue But on in you months. over I focused ballpark the going to we if going to is working bit, triangulate recognizing and elaborate on to that of back in to you a well other year complexity in over now a have to hair control and and midpoint historicals been what our -- satisfaction. focus thinking it’s spend going sort all like hiring a quarters as result sequential, on cost both looks restrained and while if what maybe tight and that, as of trying historic then couple as we to some control, change next highlight properly, P&L we our that was from both for our spend still into said exactly I as place. be -- customer ensuring through

So QX, of midpoint, think printed points XX to minus growth our that’s XX obviously, that the the QX at about probably rate, and just to a minus do we X sort sort minus ought XX, of math. as you of for something guide you that minus

from next take Barclays. Please We’ll go Long our question with Tim ahead.

Obviously, deeper a guide, market. dig like more that little bit little of the challenged hoping in CSG. to was sounds it’s into I a the

mentioned up I think the were ASPs QX. you in

are commercial impact bit what you And will in and with I can in with you we maybe what’s in inventory on going down gist. consumer? So margin? a where that It’s the sure worked of on probably Thank as see What your about pricing if could in channel throw well. being think little the you talk kind have you going just it’s backlog. there, multiple parter you. get I’m and but

Yes. a in lot Tim, there. there’s

start me double unpack it we’ll triple Let team to probably this or one. and

So look, obviously, backdrop. challenging it’s PC a market

go year, So on I still our which the million units. be double-digit I internal maybe QX. with decline think our sort implies I’ll a year-over-year. And million largest would estimates we start just call units of last this in And single of that sort our of recent industry think for history. as we that QX into current XXX XXX estimate decline mid shared That’s in percentage to

XXXX sharper. to to have see back go You’d to something

with I Commercial tend more durable and premium of been PCs, reality industry trends. the better be is market, that’s today. consumer where portion So, And commercial that’s than to consumer, and excluding and highlighted, Chrome, gaming, with that’s of along up long-term the the the consistent focused. we’ve clearly backdrop holding as

dynamic And right that see the so now. that’s we

see said, immediate through I environment. promotional move for we’ve environment, seen, waiting needs are particular. elevated. remain units expected as of We in purchase activity sort their that customers -- inventories for this to from in in of distribution As sort to channel what And

in as the of clearly couple has relatively we’ve for a environment, Consumer Look, of businesses. pricing, stable first If number environment. was In you to pricing this competitive factors. pricing as ago, terms the environment seen and very, progressed. the mentioned stay given the we Clearly, a as aggressive that remained there’s across a a the saw our were would competitive, demand very I the competitive ASPs. and seen moment, in call pressure more see PCs We’ve even now on of more quarter quarters more progressed. remains largest we commercial I accounts right slowdown also aggressive pricing, quarter very describing. get it particularly pricing

backdrop, we’re we’re they CSG. supply what out chain the standpoint, where that’s and quarter, and standard -- so, in now times given dynamic and ship in any from what in sell last really you where demand the a supply And as year, of is imagine, we that’s the are across balance can lead were on a we more position portfolio,

take next Morgan. JP We’ll question our ahead. Chatterjee from go Samik with Please

sequential and But, provided the on the if carries some decline I ‘XX structure thinking mix CSG. you the the I’m about you’re about the of can the headwinds and your that look a couple versus And you sort of we what to quarters are of takes thoughts sustainability puts P& what rest terms that And I the over environment you just of cost think of sort of are maybe of of thinking ‘XX? OpEx ISG you’re impact demand when fiscal on how you’ve guess forward, sort initial about of here. talk the and talk fiscal if can align as in sort particularly some in on understand But, to top the challenges line. assuming of of? you in that of margin, trying had gross L

want just through as as you top it stability will P&L OpEx, into highlight get through We item. of though, some change today. right? to our potentially we work back don’t next given We there pressure, of work so there that environment, what that like. out are if way year balances in dynamics and look bit to see the ASP the is line we some component we what deflationary a that I the first we that demand way little look now gave what would are relates dynamics do declining just a might we’ll know look, the do year. our may through supply-demand first, half next sort half expect look, So you with our through of guys costs your we Samik, I’d Hey year. I which at of line way Yes. of the thinking might every margin Obviously, mean, right think margin expect a gross think talking couple things like. in So early a

fact However, I due in OpEx thicker this, our cost have or where through. mix control space our actions at think rate I that have that or the your the to like do those and look that I client as markets, our we’re work way of think anything on will complex From OpEx. look, configuration very we’re products all in appropriate manage a we’ve the if taken that fact -- the we a way focused and an have we’re envelopes as environment OpEx, our rates how we’ll you it’s from servers you P&L. demonstrated we’ve got, do spend much adjust so if through well. cost helpful to margins, that shipping on think focused whether And that a perspective, content manage be we would can our memory attach targets to

way that. through so. do in the them our we’ll feel work The taken in our can you we’ve pretty to continue ability actions already, I confident P&L, to see So, and

Again, think line guys to right this you around look, it’s just have full of early now. it see sort sure make to point. P&L wanted I top I at we some So as talking context

with We’ll take from our next Amit go Evercore. Please Daryanani question ahead.

the way the guess, a this week at an it us of as and or I Is server performance well ISG up. one and quarter. versus goes as impact in even the much side backlog aggregate extra missed the have headwind Tom, end related in maybe you OpEx was look demand? OpEx the a growth in the sounds week? X then to talk mentioned And just QX. revenue is How weak I I this extra could the like you. tell from QX bit from I this, think the really about was buckets you benefit but understand And end more and or slides demand you hoping could there ISG what could storage? of Thank

hinted Yes. look, Amit, storage I call. bit on other And characterize server server on HCI, had QX XX% elevated relative better. not the into say I’m business. growth categories, the would ton add reduction. and backlog therefore, would is by in PowerStore. remains is would fared we’re It that business story. saw growth. of We not look, mean, aided the server sure of anticipated we to norms, earnings had given revenue our a server server now slowing a historical answers business, our the in prior say, multiple its -- the backlog I And was to the we P&L roughly maybe than in. in across to to have I’ll coming say, high-end saw storage growth jump over Storage different I at We backlog somewhat normal a the larger at hinted course that quarter vis-à-vis worsened I even of stated it QX that, quarter. our range.

little bit dynamics all in a saw so, of but storage, And server a trend the we different across QX. that in and continuation all, of

of about week, if the to results an dynamics project demand more bid Obviously, is impacted think get of guide. of level extra there an some that also As our there our Any given and based, incremental are that revenue/margin, our an week quarter. the transactional of extra fiscal in embedded from majority is which is extra by business and -- year. big you it of transactional you some get there already we’ve our already of week doesn’t QX, end relates really a businesses, but impact

above. So, our all guide those of envelops

next ahead. Aaron go Wells our Rakers question Please from Fargo. take We’ll with

pressure to your profile want guess back that on very the the model, strong the quarter to ISG bit and sustainability how quickly in think performance costs do capture able component server the in in in last given margin business. of go just the about a to context. being the I thinking operating we about I this context understand little of margin terms you’re maybe of of and deflationary that that how dynamics

environment, Aaron, look, talked let right? has highlighted environment pricing what QX for and in a -- Hey the bit, we fact perspective. sort already to Obviously, -- you that a Chuck call we’re perspective, in is the that it’s what we of saw that the -- Chuck from given this in that our as pacing come try unpack quarter. saw a pricing QX I saw And So of different. about me we we that costs deflationary margin as a we well that’s component or to down much that don’t from we as reasonably think cost extent move tend do

So, and we well that component priced we logistics input We for as as costs FX costs dynamics obviously some the the environment. saw costs. lower in from had of other

amount memory a better-than-anticipated putting servers I led As the and margins, of some on say. storage of to the and result particularly would that, given configuration we’re the

Jeff the that’s things configuration and you ability pricing other that on obviously time, have But if of I add some for pricing those know hold -- impacts. commodities. adjust -- you one element don’t get into maybe over And only like to and mix of to so, as stack again, our to anything. market

that add to inventory. to Maybe our model and back to

run to the think, of a how us have beginning. most. since one the gave And availability it we earlier cost inventory lower lower I than component, of the model, company We benefits

time. chain had well executed sets. mismatch We fewer this has through supply Our

lower lower also that, the demand and benefited supplier And freight lower the take Tom So, we the we able throughout as obviously backlog to were said, that rates, convert shipments shipments throughout quarter. result we’ve from advantage, as premiums, able quarter. and expedites, a of the to were

from Bank. Ho We’ll Sidney question next take go our ahead. Deutsche with Please

is cash question My on flow.

So, rest take working think by first capital noticed Thanks. long you exceed some And about next And net your to you quarter. do get the flow talked do the asking would you income? I you levels. definition, flow normalized three think do How the of QX, cash I year, year? as inventory in free to aggregate, year to quarters the guess am was last back of through about expect building your how cash I we in think negative. strategic for it

is one. This that Tyler. take I’ll

seeing think we to been that strong, about right? couple last right, we conversion from of has were maybe you that. start, I think build So, look, that cash if just really negative cycle, benefit the and given cash So years, obviously

take And I balances is contraction capital. we also down, don’t two think quarter, working and saw which opportunities right? things P&L, the of intent, the you seeing which but miss cash those what talked got it, opposite to then in that, right? there’s we’re the capital of to about is cash. advantage and and our working So, is we’ve And want impacting drive us obviously, happening, impacted this you now that

that and we and the in next same that, thinking I’m I working in something we thinking And be know QX, as we context it P&L, the time, that’s on there about you think substantial, keep how at year thinking opportunities one, have into has we’ll do have don’t I’m talked some to it. I’m that and impact Now, and guidance, obviously, driving pressure be about Tom recognize will provide will capital, it. down. and cash. do, that’s that how to So, right? focused be quite we’ll But it’s about in smart But that

would to for and cash generate I we -- a be tends Tyler, historically then, And do QX look, quarter us. stronger seasonally Yes.

in way going of sequential to model But, in negative what terms that team you’re seeing. We’ve cash. you cycle, or it. looks confident use we’re look, managing Now, is it. on we’ll Pleased cash aging the through ability to in that’s terms our of through generation. way get capital manage what we’re got working do quarter. of to have in when work negative its profile, when It’s terms collections, in the our conversion receivables a P&L, in inventory. through we’re what in to -- I’m way And long-term with revenue decline like cash this work But the obviously, our doing

just it’s I it. going is intact. where But to way one So, our we’re a just cycle to -- the work have long we’re believe in through model term,

go with question Erik Stanley. next We’ll take our Morgan from ahead. Woodring Please

if volume, of could of quarter, offset think over -- configs some for you or those of comments quarter on some pricing year. the a maybe mentioned we whether grow should a helped of if Would a to whether we versus both richer bit. fourth to as you the unpack that of to double headwind still the just the to discounting on on allow pricing Maybe guide just kind your January elaborate know love click fiscal or

comments volume versus pricing January quarter. really the for just So,

we you want say in as obviously, hey, guide, sort ‘XX, of sort mid-XX of ‘XX ‘XX, we dynamics dynamics as to growth. think is a about think right, about sort implies units -- that or of lot the into got the flat. not negative business second, ISG be QX. in expect we Look, to but work get midpoint at XX, way versus client minus you the -- One, we minus be essentially roughly to Look, budget you whether corporate year-over-year been typically QX, there margin, be CSG our the corporate that think ‘XX, stronger so going of little highlighted of the the in given the has of commercial side -- the mix season. are a that a cycle, we incremental consumer we coupled holiday positive downward year did you stronger have cycle the a -- the which we PC fact us bit put, on perspective, pressure puts -- PC little as little for imagine, the that quarter. budget inventory in see of terms that month quarter The might and to has particularly And third get in a into discounting some obviously, with dynamics. some levels Traditionally, bit a storage is channel. bit seasonal so some of tends a through our that in ASPs, the flip to tends Yes. that from detail, That to a margin I’m shifts I for margin of happen calendar a in if you’ve elevated QX

then margins So, I’m L the level with highlighted, about that quite we being together quite we aggregate you that an and think couple from it. of at sort put QX And that think you gets talking, frankly, the all dynamic sort we as P& OpEx flat. QX of walk to roughly frankly, as it the about

We’ll take Fox Please next Advisors. question Fox, our Steven go from ahead.

bit, of I under things at your had beat a rates. margin configuration question we including also. quarter, mentioned I gross dynamics, sort was control lot when just a attach content of that the and this in different seem margins big a you like little look curious,

in environment, much to how much versus Thanks. Dell So, the better? margins forward to able manage were gross the you of being margins how just able bit can a up about manage going sort the tough circumstance? we And little think

start. me Yes, let

I think, of look, both quarters. QX it’s and I our execution advantages think highlights in model very the -- good

server SSDs, unpack content declines. then, GPUs, the the side on foundationally, And offset PC look, rates, of And business, side, more stable pressure. along richer a you of if that with on favorable product offsetting think is configurations unit clearly, So And ISG a memory, attach helping dynamic. rates, pricing we QX, the higher mix so the unit mix. relatively higher and dynamic we’ve higher said, as a pricing saw richer PC combination

margin model, what industry. able react, put a of just So ability our to couple the allows real foundationally. And prudent controls with then in deflationary think being see described. is and I the lower when lower we that access and the deflation us faster were Tom we questions that demand component were OpEx with the as I cost about it to story signal think to QX that’s ago, talking But we our you than couple quickly inventory

across that puts is A of lot the were control. those So, and QX. takes in our

this our advantages the model is that in of environment. of Some

is channel of excess to inventory. have another Maybe don’t to that, inventory add we view

We’re having of to that. position to have not a a to in discount promote that, not in position

in position chase not to go volume. We’re where you a have

have We today, historically, the consumer band an I a the gives That and seeing we’re high-price the in commercial. conscious on market. [indiscernible] in strategy us think advantage and it focus

able not costs, maybe that I said, by take we were to component inventory. advantage we’re the again, to we input have have and wasn’t to of logistics throughout fact costs the to having think Coupled clear quarter. I excess worth down. discounting emphasizing Plus Chuck come respond lower inventory, promotional that, down burn So, lower as activity just it’s costs like but the -- earlier, with that

as we’re don’t ocean. demand, ahead to now able much. on As is things put supply the expedite of to We have

quarter. equation, us air helped into bottom as obviously all which expedited in the cost freight. performance line this the using Those of and much input not We’re go our

Please Mohan go take America. from We’ll ahead. with Wamsi question our of Bank next

that that storage on the this say now? far from the support on the that is CSG It’s all if component Thank the you actually left any right ISG? you any because get maybe normalizing? talked Wamsi And in today. on How reducing backlog then you. backlog get for we And did quarter. the that And or revenue filling environment do affecting side, weren’t it all would out about server you’ll on think Ruplu ISG, about able is you -- anything, on or you talk are you shortage Can just still backlog have to the is you you parts? on table the side,

Sure.

handful displays, PCs, supply questions business, that. docs, the and those the to Let me PCs, a shortages supply multiple ahead at able as about to point the advantage again, some try I readjust of where we’re and CSG largely minor of our that demand freight is consumer across If break to now are. I at that exceptions, take think down to of networks least look commercial of

about in in hot constraints tend asked backlog good marketplace backlog -- in supply. it tend had to and about I to today. tend a -- as are reduction. since where you be the the we of power supply, Servers, position. power and Those team we still ICs mentioned, They to spots think the in NICs. are the they supplies, in be talked We’re high-performance

particularly I in quite think period and in of the storm storage, allowed time parts. throughout shortages In custom we well to this server us and QX weathered shipments. would maximize these ASIC be the it

long this translate the way time. CPLDs, we I devices. time to and line customers remember COVID on types of through of all think best path is as the those last time. lead is PC say standard I our supply this front is So, standard I product time. a essentially The been be challenge to product our said lead form PC think can’t of don’t chain in It’s it you -- on to was in of the lead FPGA, line time able

that storage. on standard Our throughout and server improve as the is a well product of large it lead percentage quarter line, will time,

think backlog it in normal backlog, I in specific So, if we about at PCs. terms of are

I slightly in storage. at and to backlog a normal normal servers near think elevated in we’re backlogs

all of answered questions. your I think that three

Please We’ll Simon ahead. take with James. go Leopold from question Raymond next our

so, as the maybe wanted business, should talk to see or threats general that why? we storage demand the to coming in your them you. to not signal would business, why could if servers, trending I differently? would server seeing in you idea sense should of of you’re or to Thank think be or that correlated the And if slowing storage

is would from to are now, sit What Simon, would where we there. never in that right say, held we spending out would the dynamics storage it’s better Look, we QX. our look, Yes. I that is immune IT up broader argue say

market. right, storage. Clearly, tends is server the there’s a say, world think but now, less needs PC right it correlation, been more commercial to exploding. The have historically, I or data amplitude you’re than, our market

we strong guidance, a we’re implicit QX. storage quarter when anticipating in forward flash so, seasonally And what’s in to our

market. think you’re server our storage I the right where still a at so, And while strength seeing been in now, business, we’re there’s from right, sit storage and historically, correlation least between we

helps side. think, storage maybe entire cyber well the and broad the increasingly more the in That primary weather add these -- than participate And resilience changes HCI as to data I point portfolio, others. as cyclical storage, protection, side one us we quick is market,

ahead. our Toni with next take from We’ll question Please go Bernstein. Sacconaghi

how demand I’m you. square just much you incrementally and worse trying in QX. Thank to Yes. sequentially fiscal may get think

of kind QX at by from X-plus-percent. I your to up QX you’re when So, look numbers, typically,

week business, of deliver $X minimum know an have probably contracts. extra billion. will extra I those you those -- An week have X%. get say, contractual let’s a but to add I So, you on

billion. up another $X-plus that’s X%. That’s So,

to $X So down normal seasonality, $X-plus be be and basically you’d billion, billion. you’re up guiding

versus normal $X So seasonality. a it’s delta billion

was a incrementally delta it $X you Does So, that backlog the And billion demand I questions. quarter, billion guess, but that for worse? I of in drawdown? you are extra the $X.X see adjusting get any getting doesn’t week. normal that imply explain versus couple the anticipating

any backlog was, So, in elevated entering how where relative And in the drawdown you. QX? are server expecting is QX? you dollar Thank to storage backlog terms

try and me answer let Toni, of Hey some questions those anyway.

be clearly, given client be now So, that to the were of ISG where as versus or in flat quarter. I’m we continues telling you business the growth. I’m sort apparent expect we I QX, that’s PC this it fact projecting look, they to think negative to -- about relates to as pretty that sorry, mid-XXs we’re revenue I’m think expecting negative the roughly growth mean, -- soften, year-over-year think I right? that I

So softening. the business is

manage we that like always we’ll think way our through do. I

that it to XXth a extra week, transactional there in little bit It’s the demand As relates significant. there. not of is

there. from to the trying haven’t about that on give we your court right? -- math I what billion X% of next for our or And demand look, guide we’re year, of a point But your comment. that you So, think is if soften, done think you follows sort -- on $X does view that’s

forecast But to storage in in it. As elevated. the what it relates Street is slightly just Yes, in general, to we’re normal happens with to talk we’ve talked backlog, ranges. of backlog look, is how about about terms back going fact we that the backlog in don’t

be opportunity, for the of orders quarter in, it that’s going So an but if the to storage very much us. there’s business always the with and be interesting how upon there, has any come which linearity dynamic been would dependent storage

to Chuck, and if I So, to best or anything time, business tightly we’ll of that. what a point you’d at know don’t point this we’ve manage continue the as result. Jeff you is add our view told in

billion, webdeck. of just did our quick Well, [indiscernible]. revenue. PC billion lies it it’s in I a the [ph] lies look side. $XX.X I think did CSG $XX This probably in Last we QX, there QX,

explicitly, I during weakening about only commented as you The [indiscernible] service thing quarter. the

comment And weakening the was the throughout that the really the I’m in wondering guidance whether is really didn’t if PCs is, why unless were not You that it’s indeed where changes expecting because clear ASPs. guidance quarter. wasn’t, you’re real it case

think back fact Look, we have -- soft, QX saw commentary, PCs -- commercial to weakening. think Yes. PCs I been PCs saw we saw the about that and we what our as we talked you consumer

that’s think I pretty So self-explanatory.

Suisse. from ahead. Please question next our take with go Cross Credit We’ll Shannon

I Tom I that which seeing I’m one subscription back of or that who not increasing you interest was it. mentioned go made, wanted know models. comments you’re Chuck, the about a don’t little locking bit know -- if is customer them. to in to have dampening but bases obviously a interested impact we bit they’ll about of what can in in a talk I think to recurring revenue. are should revenue, How sure

you So, can you. from maybe just if discuss Thank of what a hearing bit you’re customers.

about Yes. Shannon. new and we hit it QX, Chuck. adding of been it’s how we consistent Look, our progress been thoughtful It’s be highlighted continued business, Thanks, saw that that’s that sort We’ve we healthy customers. milestone the billion APEX rate discuss in start. -- there. going I’ll a and at to we’re growing which $X

quarter-to-quarter We’re to of not not -- certainly going provide updates. sort

offers. broad-based be Right of interest in conversations a billion in the our macro you we now, sizable not imagine. remains see much does and concentrated of from XX-month whole it tend very clearly larger in of would but navigate customers APEX that. try they share interest as the since you beyond P&L. as what medium-sized the traced can again released companies the we enough to environment offers portfolio getting in we’re would we to last We I go high interest. $XXX continue saw we’ve as of the tend can trailing to It’s And in in businesses sort business invest healthy more this is that world, tell to back customer that relative growth the our to growth subscription ARR lot so, August. a at some to new be triple-digit in And our We series metrics webdeck and quarter. spoke to But

are We getting customer lot a of interest.

offer I’m that the the think, and is extension then can on. the option done capability and around to target extended [ph] think, And then APEX expanding service, two new another that computing we new I I our full ADSS, tell we’ve one, continued pretty offer. our grow offers is offers. which high-performance a I sorry, our was we’ve that backup we just to is Red to can back Hat What geographic the opportunity us of in continue going capability, add I pipeline service another channel that customer capability announced. It’s grow. managed Shannon. is And we secondly, exciting as-a-service you for announced And September. APEX the the one, around

Keith, over closing comments. last Thanks, it we’ll for take Shannon. one turn Hey Chuck then and back question, to we’ll

go ahead. Please with Thank you. Citigroup. question We’ll take our Jim final Suva from

have only on inventories. I one that’s actually And and question you. Thank your

kind more just you with understand here, While and because they to key were you working up capital, there’s a talked inventory when is is of about kind secure simply pretty renormalize can talk you need deflationary for us you deflationary about which to but to some and components, it you’ll actually I better have shortages? the or the hold just environment think to environment, wonder understandable, of

chain to I manage through In less goal, the the last of going supply of and Hey down. us we couple I Look, deflationary goal think clearly here that a environment, We inventory. built is to pandemic. Yes. over mean, Jim. of my it inventories all need the want hold it you dynamics years given the

not thing down I’m the inventory of I unfolds. sort an so, where on to did line buys exact actually And nicely. economic sense. The we this going absent came strategic -- we did made think -- you how strategic time buys the But quarter, this give quite we

we that. the so was -- whole And behind that point

the we’ll to it’s evaluate a in And we we’re come chain level, of dynamics, few we as terms perspective. what’s meantime, think supply quarters, number on few quarters that. so, do working have to down of in next as right to the capital from go I then, more more But pretty over be the a pushing to given this the continue going inventory. and normalize So, on focused inventory

Thanks for that, Jim.

wrap. team, final leave delivered years, to call, last I’m you Before Look, going the few with on performance of thoughts the few delivered the and in then we strong we a we QX. and we’ll end behalf again over

We discussed react see and we the highlights advantages market the we to QX and of As our position model. the changes today, first, outperform. business in

leadership have across be we of appropriate We our good long-term a We in challenging drove took We environment. gain. profitability. led delivering a record action. differentiated expect the remain we these our forward, commitments. QX, we Tom, who any seasoned And return we say what our do in cycles. economic when So, capital in that demand in We delivered the track near challenging the we delivered mean But we Jeff environment by and innovation importantly, favor. very to trends results have team deliver cost very that’s against much can share market drove and strong term. And agenda Michael,

in to on focused for can control, what stay we we delivering did to as remain stakeholders our and results QX. we committed going we’re So, differentiated

So you we appreciate seeing today, with everybody soon. forward us and look that, joining to

today’s participation. Ladies concludes this your appreciate conference and call. gentlemen, We

time. You may this now at disconnect