DELL - Earnings call transcript Q3 2018

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Operator

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

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

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

Rob Williams

Solutions our With responsibility Infrastructure Jeff segments joining our Tom Regina. from our Group Vice and Sweet; releases supply chain review Thanks, non-GAAP is us. December posted of Consistent operating Europe Chairman web morning for Clarke. additional documents financial Form and purchase website webcast. perspective. QX filed our is of our and call is to Products thanks leading approximately will Group Tuesday, and accounting are today and XXQ Good Operations, Jeff on our primary The where you being intangible relates these has addition of this Chief to Client results encourage adjustments. also $X.X joining non-cash press We've Solutions in to amortization be Q&A with these third on includes for Johnson. and income majority I function. us for me Treasurer, quarter deck assets. prior our periods Financial XXth. Also QX on Tyler billion Officer, for

EMC to GAAP there lesser for a our the and next results extent Go merger items to to continue years. will transaction the due be [ph] non-GAAP Dell reminder private a significant As and few between the bridging

comparable the growth on total results fiscal third well we deck results. to that fully comparable note will get to percentages only unless to for refer decline a non-GAAP year-over-year specified may to which Although filings be of and adjustments. include quarter fiscal due quarter year-over-year web Beginning our refer subsequent Please not details in SEC our merger. will please change EMCs all otherwise quarterly historical results portion the impact QX more as XXXX as in each our the

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

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

to over it turn I'll Now Tom.

Tom Sweet

quarter the Thanks momentum I Rob. third the was Overall seeing business. with we're results and pleased in the

see acceptance We on to increasing and broad top the line seeing growth portfolio. of continue our solutions we're customer

million. the of client, with results better Non-GAAP XX.X XX.X solid cash with line VMware. quarter a GAAP XXX loss of billion Overall generally top the and were flow servers, growth balance profitability. operating with We revenue third for strong also revenue profitability. GAAP had pleased and and was we for approximately improved generation was billion

will revenue velocity cost driven as margin billion improved see Adjusted of Gross on business to Operating was innovative XX.X% over continue as our was which optimizing points and we and focus income sequentially to quarters OPEX product of by across coming the cost and recovery was discipline believe X.X over for sold. non-GAAP quarter prior web XX.X% to EBITDA overall XX quarters market up basis billion storage X.X XXX revenue the highlighted discipline EBITDA improvement was some have was and the this which or XXX as $X basis or see in progress of over a new goods quarter resources down up drive or XX.X% was we features. deck working XX% while more revenue XX% we've we billion to of structure. basis details point points ramp be X.X go revenue. our to introduce are XX of the pricing OPEX business gradual slide As a sequentially the for billion improve or last adjustments. we on from few our quarter. the we we begun Please the second

performance PowerEdge to the We sequential highlights. demand. by Jeff on operational increase at growth networking and delivered quarter-on-quarter. up unit and performance revenue on Revenue Servers business you turn year-over-year. Servers Solutions quarter Infrastructure with while ASPs. give expansion will second record who I revenue was up financial the was XX% me a view let segments go will summary the X.X both of delivered segment billion driven then also with X.X X% for double-digit servers the strong and Cloud Now of billion Group of into seeing solid detail from The consecutive of over of it more server

is offset was storage prior right have work business. is storage as to storage. Operating still ISG the profitability quarter driven income XXX point operating newer by for well was softness discipline. or we to X% hyperconverged over by OPEX solutions better direction do profitability billion in flat of was moving improve million overall ISG more like for revenue the increase all-flash which as as infrastructure but revenue the Our the servers profile and basis X.X quarter-on-quarter a and income in of growth roughly and XXX was traditional

growth going billion building Revenue growth CSG up by X% and grew displays and and investments gaming on on XX% working Group our strength million are revenue forward. which commercial business despite storage within notebooks, country XXX due as balancing was continues in workstations, profitable of X.X% was services. and momentum team the from servers operating in our Consumer and ongoing benefits We expansion protection data was small X% Solutions and up profitability component up the and revenue the challenges competitive Commercial for the cost and notebooks Client of revenue to velocity X%. environments. in income consumer attached to in to driven was XX program. execute key

Going VMware's the agreement XXX VMware a focused to of billion the agreement sequential license partner want best license plus leaders change a once again Secureworks, and partner VMware XXX was year-over-year nice global on list call. income growth underscoring Boomi its Technology $X million. to DXC also its bookings earnings system to announced company's QX. X% other forward client. total up growth. Ecosystem XXX to top quarter being unearned revenue. QX commercial as Revenue sequentially seeing large in RSA, for with grew VMware on XXX from to continuing growth Fortune was a consultancies to year-over-year. I again was we're drive Standalone VMware or commitment revenue license culture. NFX strong profitable positioned which also in category the the VMware The over ranked forward-looking up another revenue License integrators congratulate is and up to include operating customers. importance announced enterprise named across for for strong of Pivotal which the Pivotal testament included the innovative enterprise included company XX.X% businesses Pivotal, NSX which It's having approximately had XXX% and double-digits vSAN were was six platform XX million is year-over-year. QX especially strategic momentum over from and reported of strong DXC in as part segment The line in over ready rate revenue NSX companies delivered breakout our number bookings of recently regional the Future team program. results. for

growth solutions gross by our year-to-date Accenture as November solid Additionally in Accenture XXX the migration all released expansion. quarter. enterprises for suites. positive new Pivotal approximately cloud to and a business product evidenced formed RSA continued Customers that where business software the to accelerate growth its yesterday they and Secureworks million revenue announced margin help XX% its embracing four had security and of standalone it reported RSA are orders the growth group Pivotal earnings innovation. group, in

to customers. the flexible I consumption sheet offer the balance mention model that jump we want I to Before

We flexibility and multi-year demand with providing see for a variability a building of lower strong frameworks remain nature resulted focused strategic in to as these customers stream recurring the continue on solutions for level these last these revenue in as We quarter larger we saw quarter-to-quarter. QX versus offerings of Technologies. Dell

balance working to allocation, the and operations due capital to sheet from X.X predominantly Now cash was in QX capital improved profitability and billion benefits. turning

and position includes issuance. balance for half a proceeds will cash billion in debt balance approximately investments and XXXX. see maturities X.X versus VMware's first of billion the quarter fiscal you up our recent XX Also Our $X billion cash grow due prior approximately of balance the from coming was as as we reminder our sheet debt debt

which how total quarter core with debt, total As it debt, debt, rating subsidiary related we consistent with is did margin debt DFS which our subsidiary debt we total loan. discuss discussed and excludes debt the last we subsidiary and agencies debt including debt the excluding

balances web X detail or these deck. on the included slide what's additional see of in For excluded please

million billion billion XX.X from company legacy billion well notes including with quarter of paid up During approximately billion debt X.X XXX total the third quarter. X.X as her prior We sheet. from in from cash the balance on ended we QX as down in debt VMware's in repayment the X.X

above as Services. financing an funds result debt Dell mentioned approximately balance that as of in bond billion total a million well increased Financial increase as debt VMware's Our issuance of $X structured XXX

also the enhanced combined to credit rate debt savings management. opportunity of took approximately of traunches. and The we this annualized effect result of facility and re-priced interest and loan billion XX.X and During revolving the term $XX reposition the million liquidity quarter

debt billion transaction. the debt transaction the remained down XX.X at DFS QX committed related up levering billion originations Our to another XX.X QX respond close is at business innovative In offerings. billion high driving in up we've financing XX.X increase balance gross to paying when related Since quarter. paid segments and as the excluding September grow approximately of DFS sheet. X.X of stand billion the down our DFS continues to of $XXX closing receivables core for remain at X.X quarter fully the million $X now strong XX% our record end debt we as the debt of and and down across DFS XX% which Demand and were debt an by customers EMC from of billion XXXX approximately billion ended financing

which program will balance recently and August see related was our group includes our business. shares $XXX Jumping solely the fund financing stock have was under funded through to A DVMT completed in DFS stock. we continue program, the announced receivable As Class our million VMware. B grow latest million we the million we approximately agreement To repurchase to of repurchase Class so with as we B shares date repurchased purchase This a Class XX.X share program. common XX.X

our remain management flow cash We generation repayment. with debt are continued generally and balance and on sheet pleased focused

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

Jeff Clarke

be It's to to supply CSG, ISG Thanks great Tom and chain. hello our and everyone. discuss here

the Rob now its products and organization, a kind. mentioned only As combined one I of lead operations

set been the we of ISG Edge new will our months. be thought share little for my my the three product I've role a I than drive observations. a integrated, to some in for of able more might be less As innovative organization it initial Core if Cloud. the part solutions I holistic to operations from one the to customers and helpful of

infrastructure transform provider resonating our is essential customers us their who to to First, our digitize are with be environments. strategy well looking to the and

second is to to the IT Core portfolio Edge from the across of Cloud. to breadth our Second, spectrum the the none the

meeting in complexity continue to expectations, go and functionality, execution simplification our our and customer's required. market is our lastly sharpen to and to we and storage protection and ensure product we needed more than data enhance And to have to needs to add need offering we capabilities focus execute are engineering and offerings, feature, our Third, initiatives. is new

Now ISG and me some highlights let CSG. third provide quarter for

operating income As for and the prior million. ISG's saw positive Tom $XXX quarter billion mentioned the revenue third quarter. growth was Both $X.X was from

Servers. for ISG reference the QX meaningful making closed appropriate to the reminder to year, due discussion. grow will facilitate with demand on up fact last QX to in Cloud transaction or a be and Server strong that orders PowerEdge EMC a I basis. during where unit revenue were continued mandated both more in and single-digits high year-over-year growth year-over-year As trajectory

seeing data are as software and defined more customers content computing memory higher to and We big look storage solutions. for power in run servers

selling cost resulting managed effectively in mitigate prices. have pricing We ongoing higher inflation to memory

outgrew seen industry we generation innovation. Additionally XXth capabilities value calendar ASPs we've PowerEdge capturing in leading and a our based ramp markets both higher for demonstrating the hyper and We are revenue. XXX we R&D revenue. the both units and for grew scale and overall as units QX the also and servers of both and leader worldwide servers we mainstream units are markets In server of and revenue our industry on

at revenue gained the mainstream XXX on total share and Looking revenue revenue. basis points XXX for of points share basis share year-over-year we of XXX basis a in

storage the mid storage, declined orders solutions. with Moving in our to in single-digits new growth solid

Isilon to NAS for portfolio hyper leading continued grow to grow converged all-flash Demand market in triple-digits Our strength VxRail. our and arrays with double-digits. continues scale-out in

call last results. range year. the benefits actions and are our discussed to storage quarter's behavior earnings appropriate have long-term market in the actions storage to to sales in spurs the As of strength mid go expect our materialize plan improve next drive and ensuring our capacity to we We implemented particularly increased we adding compensation specialists on by through these growth

we class needs. continue focus customer's our evaluate our to to our world addition solve developing portfolio and In on products

been all-flash appliances and offering feedback investment and in At we protection SC upgrades file in-line For online EMC available controller Program this saving early upgrades the -- our will quarter. be positive. key customers data multiple to be will along upgrades include place we and benefits. available example perform introduced key storage ability from duplication, Dell time application storage Unity all-flash along portfolio recently EMC Unity upgrades. and mid-range EMC data Dell has SC month introduced that our products same software later The Dell Storage this in partners our replication, cost The two the customers Loyalty very Future-Proof synchronous the for with with

operational continue cost-out go We our to against and portfolio, to targeting drive our in ISG market, product improvements hard initiatives.

market the desktops commercial strong we improvement. and gain have QX up QX another worldwide in billion XXXX growing to was PC Moving for according to maintained we market positive velocity was the CSG profitable was We segment. Dell quarter on moved back income with on our year-over-year $XX growth share million in calendar The balancing XXth in margin focus units while share in to IDC. CSG the and overall global increased as unit X% growth, up QX growth $XXX market which revenue and X% calendar X%. outperformed consecutive on operating in delivering basis quarter. above PC a year-over-year our

In in We the workstation provider positive QX for industry units continue Dell the calendar of be region. workstations growth had year-over-year worldwide. to leading every a and outgrew

client. inch gaming every the every world These and featuring new for in ProSupport deliver mainstream products Alienware We're attached in marketplace. products in S&P CSG commitment provider class XX client the Dell Our West new offerings top one rates the demonstrate and commercial polar where gaming consumer Plus curved number our service We level both investments evident blue to were a PAX LED desk our gaming we services. and higher and at be clear Displays announced success seeing in to highlight display gaming laptop at continues for for player a a panel with were in QX world. saw premium attach and new also lighting gaming display.

service before deliver support optimize technology problems viruses support we continued to predict the automatically and -- top only gaming for issues, During CSG performance Dell's Premium the it first across consumer in start, Dell's consumers find by announced a and and Powered comprehensive investment Plus tier drive services for to they helping innovation consumer -- new and drive Dell is CSG. Dell innovation is remove continued growth assist QX PC's. and across proactively exclusive Support PC's. available most investment

workstations, our and balancing made year for to memory been XX of continue of and good the be we sales storage, will displays, World year. servers, and reducing pricing that to up continue and storage I continue product profitability. but with a inventory working memory first to sales the improve over and From to Overall significant operations global supply and headwind teams times a to expect initiatives. we've cycle to believe inflationary want last capital slowly chain, standpoint maintaining in through working moderating the improvement positioning, the We be and made gaming. share our we number next year. focus and while integrating look have working multiple It's storage, including ramping various take leader performance months we we've unprecedented progress areas over clear productivity half progress velocity, that also closely areas growth we're in a past an of of

a continue higher infrastructure converged With solutions like offer Tom. level and unmatched solutions holistic across about profitable business us of Core integration our client I more I let and data hyper view continues Cloud we for gain for the the to and our and to in We that a over and share. allowing me the to see strong believe optimistic defined the and innovation center customers the to demand software I'm back our to industry. it turn Edge future. hand of it's set

Tom Sweet

exciting Jeff's Thanks Jeff. that In of time sentiment be closing to Technologies. it Dell is part I an echo

growth of our servers, family and strong portfolio. and of client, businesses expansion We converged businesses, have velocity hyper including steady made infrastructure, DFS and from the our other good progress in across VMware

of and business the to overall generally the recognize into storage that we're ISG integration data improve work and believe of to the to still tracking months is right XX there state direction. in do the also with the I'm profitability business protection business. overall We the and our pleased improve

We journey. the positioned meet win company needs and transformation best customer's today's in in environment digital are to IT their

We accelerate solutions implement the the and a by help IoT Technologies navigate services The solutions acceptance we are and flexibility only adoption on New entire architectures O'Farrell that IoT led tailored businesses. designed and provider a as when VMware can has York This is unveiled of in display offer Dell single Ray for integrated and strategy set customers provide gaining and customers. IoT was flexible broader breadth solutions. CTO, family to division of new that October our across to in new portfolio division

to and will forward experience. in additional the As enable generating than and and the to comprehensive share we capabilities with focus in to customers company de-levering Dell on cost seamless move faster continue actions Technologies markets, of of success, growing we the sheet, balancing consolidating the cash investments long-term bringing for position market a gaining strong our flow to balance full

will Finally, our be let you our XXXX fiscal as quarter me those that full the when combined company. a results comparing remind fourth for quarter we report we results of against first

In of previous addition that was year's to this compared quarter note XX our quarter. as a week QX XX QX fiscal fourth week XXXX

rates turn I'll So that it begin to back Q&A. With Rob to year-over-year need growth this. consider to

Rob Williams

Thanks Tom.

Let's first with go Regina, one. to each Q&A. introduce follow-up you can question. the question We please ask have ask one if you participant that one

Operator

Please of will question Frank Sachs. from first Goldman the come Our with line go ahead. Jarman

Franklin Jarman

terms market congrats update you're and discussion NAND continuing next quarter. on you. we think worked availability seeing few you are an of I negotiations on as thanks chain supply costs us been guys peaking some about those the move to further XXXX? your over your Great, you can just and ability how months give input the potentially the with costs if wanted into Thank what push memory we and prices guess see, some in about should I to there's start you as that of so, on the guys to just off seeing guys through

Jeff Clarke

that the Clarke the highest the things; recall of a what Jeff two memory any inflationary here. seen through of online been A period rates longest Frank, is there suspect in DRAM consumption hey things I can of the at which why I you've then the in basis capacity of decade plus. a we've we've seen. couple Sure, is gone given byproduct DRAM and And been new that's one, brought question hasn’t

fact we seen our group In well. per density that and up year-over-year ship go as our will own server basis tremendously a memory sequentially on we've server

tremendous on putting So pressure supply.

just is we half driving still inflationary to through year. As continues a that is and the more as pricing think help. We capacity does next that's tremendous go arrays NAND first the of our moderately of demand while year. first it for pressuring half up next well the DRAM And are result outlook see units through of moderating we NAND available, all-flash inflation

Franklin Jarman

proposed on to made a that's announcement last with then that guys you're as week earnings, I since ask and you? it Yup, better that I super be helpful about understand follow-up have to guess I looks wanted foreign question the thinking amount repatriated tax illiquid about taxable know and for like a was reform guess been just foreign wanted how I it on build you tax X.X% coalition focused earnings do specifically you the or what unrepatriated would

Tom Sweet

that supporter I'm get And Clearly types to right a some big of specifics of it over about been, those reformed XX believe changes to they're time Frank years to tax updating. by and which the We territorial system the going Look U.S. does contemplating. the not we are in I'm not we policy way as tax this, is where proposed into have now. of so legislation do reform. get fans hasn’t saves we're going need in been that

generally given -- think through in of that things to ourselves fact we in and as how obviously the to growth for the part they the interest that looking job representatives about some we is -- repatriation And U.S. an legislation that also that's making like that it's headwinds has are that So, impacts that strategy this. sure there -- a we've of we're headwind going us proposed company tax might the deductibility and capital is growth repatriation reconciled voice our sort potential funded around the are which as heard is which that here at whether be we're the that growth, our you about our think we're anti-growth should effectively how of a to talking some

into through will to about not best ensure navigate specific you positioned I'm we we to I moving would end going again appropriate see the that how our then forward. that. specifics where take So, of the this at tell we'll of builds are get as we aspects that day the will what the and actions the and lands as we can

Franklin Jarman

it, I undistributed your just applying billion to to about should that Got shouldn’t we? guess subs XX-K I tax to your last so rate basis like be understand looks of the earnings year, end at were X.X% a we look I if it book XX at the foreign was

Tom Sweet

think to there think factors I your mean that I No, other you that have from that way is look doing that number.

So the I be don't should think appropriate at this point. that doing you calculation

Franklin Jarman

very Thanks great. guys. much Okay,

Operator

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

Jeff Harlib

profile was morning. very businesses. in question if margin and margins, good talk both the you I'm just ISG of Hi, My CSG it could about is solid those wondering on in both and

which to You're DRAM growth continue In we it is business server like and negative a to lagging lower well seems have increase with margin storage mix business. the target recently in your X% above in would be prior had ISG CSG. your X%

if through margins? in that of terms go So can you the

Tom Sweet

Hey Tom. Jeff, it's

overall things been quarter Jeff as a of some he margins headwind a like. highlighted clearly. as Clearly of But add commentary Let color inflationary bit component have a if quarter. to think our affecting and me look couple do would I it you then at can so been and has cost there's it Jeff look that

it with the step we increases. cost back is is component are we've talked it adjusting about I ensure to we quarters think and what pricing coming think increasing in been which that from consistent as though that capturing you this pretty about prior have our cost

we quarter-on-quarter It that seen have us. look helpful the our stickiness and effectiveness. for the been has pricing we pricing as effect So -- effectiveness of

been like as helped in been by of things FX mix look little We as of also from the got we've been so the you what's us helped we've sense business across have excess the at mix helpful of a and currency and also the globe. bit for has with happened well

three us then that been been in a those for of which helpful QX. on of component our the cost side a have I impact guess also bit down and we've had So, continued headwind has

to the the then that mix particularly related it on around And got out server We storage relates good we've helpful. of that. you fact side from the pretty given So the comment that soft and been warranties your pricing [ph] boost on is a servers. within family actions ISG configurations velocity done and drove within the has

movement. So I movement the ISG our you've basis then margins, XXX in seen absolute up right quarter-on-quarter went mean because direction. of almost still that And were CSG of than But margins roughly points. they obviously less that terms in

Jeff Harlib

and… great Okay,

Jeff Clarke

We're on Jeff are the that one DRAM, would -- going I earlier with build other kind mentioned our average out server is bigger selling NAND, selling that. thoughts the solutions of be are of SSD. higher we And and value doors a workloads, are stack. Tom out excuse direct going out what they in up me higher selling to value us value that's me extracting Excuse value result for said, higher more with going a

servers are a selling their we premium XXG that at just predecessors. to Our launched

value I think we servers our our to in So continue quite well. ability the of the marketplace to perform products sell seeing are and

is size. part its we chain other supply and have I the think that global The

in to and I business customers value we're coming I are have our we going it. they're as DRAM up And it. paying is said server much as obviously for knowing something for PC on it. so DRAM business, have have getting having supply have And for a think we in cost We that our whether is that's us

the continue mix improve So Tom prices that's very our And of in mentioned improve business element true. PC our to we're seeing there. the and margins then

you If performance that's PC's relative margin in the to at commercial of PC's business. look our to consumer PC strong improvement contributor a

Jeff Harlib

is to this can general very be, forma of up would quarter just respect the follow even with helpful. on that's segments? each the commentary Great, first margins in any provide outlook, the revenues, full pro you My XQ

Tom Sweet

is Oh, hey we Look do you don't it right. Tom. Jeff, know guidance forward

looked with be So seasonal X% start seen if this me you roughly comment. consistent that quarter. were would to let bump tell if historical in expect you to at sequential just I a X% that with what revenue history we've to would patterns see you

and So, that of QX right down you that's the seasonally turned nature grows. we the how that in then after something business just about of think should terms remember

I and week that in dynamic thing XX that put week we've and had XX last big absent would could watch to only front, QX that consumption in we mean these a I'm quarter getting this and the In talked have therefore were revenue we're about deferring the now. flexible out healthy it remember well a I call models models a tell of from points my the QX in the a We So, in have fairly -- the seasonally where and quarter. in in terms look on about I your typically said consumption to other see go perspective upfront us we but I customer around would QX. and be lot as so week I consumption revenue quarter. this will through dose models it's cash less a that therefore thinking you for we the are mixes QX how you flexibility not was models more Also we it the talked for pretty have some and a flexible plays we'll offering cases they remember and getting these quarter year up revenue. QX recognizing QX flexible in talking of am And those as

just you about year-over-year the comparison. mind in think that So, too keep as

Jeff Harlib

Great, thank you.

Operator

the comes question go Fargo. of next Please with ahead. Ehrlich line from Your David Wells

David Ehrlich

Good morning, for the taking thank you questions.

You little whole your kind if talked and expectations of basket panels, color inputs, could you the for but XXXX a memory more for I about bit kind in maybe whole so basket of provide of displays, some around XXXX? wondered maybe

Jeff Clarke

offset discrete boards, at the slight next components enough for metal, set DRAM year. a happening LCD's, showing we helping inflation deflationary and offset deflation, not signs memory Yeah, we of other NAND. see commodities devices. us That's to Look see of us the circuit what's in batteries, slight market place the

David Ehrlich

talk ability out to and costs? related the about you can then take Great maybe also non-commodity

Jeff Clarke

organization. are the across supply and the or clearly synergy in Excuse that on portfolio activities specifically sure of business. I'm the product the Tom I a speak we to Well in. the side the number rest on the chain vast doing me jump can of will

that that we We are plan, honestly have we quite I are on to mean executing plan. plan. a

have Dell have to across Last one. expected our of day we that certainly that We applied broader do. reaping us you portfolio entire which terms year We're done purchase the would had our initiatives pricing time of lead throughout our benefits capital most this efficiency managing working chain seen of improvement through cycle the time tremendous and to year. in through particularly the improvement, customer supply We've in our form facilities our base inventory. notably on

on are along managing we path cost our supply the think and the side. I the of product commodity So chain well the other outside

Tom Sweet

Jeff. fair that's Yeah,

we target synergy, out cost billion overall there. the obviously have $X put On that

you business to probably are delay had had we those to the would that the that flow investments synergies how go made incremental also through. some going the full back We market of cycle told in in we cost

on making that. considering been we'll on We cost even with business. the remain we've upfront to the investments pretty evaluate activities think that we've our about I and -- track been continue

generation this the But to to EBITDA of that here through level combined So across I the delivered do the in the right that we goal And that pulling long-term, overtime tell you for right various we're we'll that also right. the targeting. profitability entity. levers ensure also drive we're is

position making about year well. to are to range we as the think appropriate in be to So five we three want as where company we investments

David Ehrlich

be questions -- help into Tom of X achieved? of a you is there investors and the scale that do the can amount from then times us I investments get lot when incremental Okay billion some way back investing or that maybe any have that us target might been maybe for kind of around business, understand

Tom Sweet

of there. I -- quantified it I mean I'm the really haven't the to want of dollars -- told don't have specifically been but and incremental not we go think I'm hundreds investments Well, we've you look really that millions in

to -- to business have the With obviously dynamic continues the is environment evolve from that the continues and you evolve. though that

such part And so efficiency G&A cost continuously we're the as of opportunities opportunities and of looking for the company.

in forward terms position would probably those move of reasonable a And the be that what year we so the synergies investments still to had delay in. we earlier giving in the I or of that's year so we business. said realization as back a in think

Rob Williams

so this as get we forward as possible. a one with is have reminder question David, Thanks to move as to can many follow-up everyone one we people to

question. next Regina So

Operator

Thomas from next Please the ahead. J.P. comes Morgan. question of Your Eagan go line with

Thomas Eagan

help to us storage was I in how point you that the the basis given that but how better ISG XXX for question. margin I I wanted much follow-up that understand of out margins morning. of could because much Hi, on pointed appreciate all that qualitative service out networking you improvement and and was was sequential stuff of had good both? profitability if wondering the you just us you've

Tom Sweet

get I see level detail. the and in Yeah, the did business. servers mean hey the look I'm I not mix to the we benefit in expansion given say going in seeing we're from that down will price that velocity to of configuration servers both

better the products mix we I look as storage we've of NAND Also mix So heavier better the that a wasn't and quarter. point benefit wanted we helping that of from out and servers that pricing OPEX -- that tell it. well. right, in then drove some quite on in as volume that as got you these as I we would are us where got we also then remember memory and therefore And is at we loading you even fact would Jeff highlighted even got and

with expansion. progress, of did managing want team as be vary think know work that. you I yet to to reasonable more in had with I our that mind. generally profitability flexible defer mix we to going quarter you terms you that about so of but But we and to pleased models very clear It's consumption a overall I I it quarter-by-quarter therefore got do. the we quarter progress the didn’t we Yes, job keep lighter really of in on pretty in saw OPEX made much what revenue so this pleased perhaps a I'm clearly and want QX. That's So, saw not some as where so profitability

Jeff Clarke

and couple particularly to a we certain just about pricing. pricing get as this of be we bit -- into before tend have talked reminder our when so bit some of Yeah, up of CSG, these with effect committed a larger certain lag we able customers there a does This impacts quarters of to where better. more a we and be level catch little a ISG tend to on to a

Tom Sweet

are from across you to a array of products as portfolio higher going grew, extreme generation we're business XXth to quarter-over-quarter all-flash the [indiscernible] premium carry generally servers. are they percentage saw XXG give significantly margins. but pretty And our went not couple grew the the increased And we XXG went of

Thomas Eagan

Okay, just two let then the sort maybe to breakdown would XXX couldn’t of Rob a a and me follow-up for parter. I of if get my since maybe

quarter, bigger maybe, the expecting than June, in chance of you balance remind generator? talked quarter then You billion doing due talk as that to XX.X billion come of usual cash the is to less U.S., how talked cash could historically much a you've EMC that of look are of bond, about or on a average with beginning usual any down cash you you sheet with debt about about you is so got in than that cash current X.X that this retaining And refinance? and or us the all pay the there's it the

Tom Sweet

alley. Tyler, we let your hey don’t that question take down is this power why why you Hey, right don’t -- since

Tyler Johnson

hear Yeah, me Thomas. hey I can hope okay. you guys

you're that's reminder, cash. including VMware the at also that when a cash looking right just first So balance

Dell that ex-VMware I I'm how pay down think Technologies is about right. debt a with it looking number, when remember smaller which at So

debt points places probably thing. be paying it the to said, we or where taking probably $X.X down business just over moves of billion. We've XX% I in of is and restricted going Tom balances sitting like around in maybe and obviously taking The So on But just type that like to what's to to think given it's have up. U.S. in we're cash low the going got happening that geography into focus that investments flows. the excess XX% the books in we talking conserve is little try do that on the and account that keep have call any we kind tied But intercompany depending mentioned of And time somewhere around the $X different we billion, the cash. of and cash

that things QX QX, payments that it QX so expectation. be weaker bonus But right. asked stronger a as compensation in then by typically thing, we cash pay cash a and be quarter cash quarter which my season would tends is You out about tends certain of be like type to to followed and

and maturity cash then be to on going those the of the prepare little to through have that generation And the I've is currently I between to now the April I smaller in need it's untapped balance I portion if I funded we've that for one to dip into that. and a fund keep is a with maturities, then. got temporary. in two have if is that sheet, I cash and so that June do So will of combination got I purely bit do that available And mean a flow my do, expectation mind that revolver

to year amortization So and for I my coming of the did mean for due I'm that worth down these I again over time. on with got term is to loans payments $X.X once period pay looking we've we typically a some quarter when short of next that use if the be about of would include time. debt billion of cash fund inner I expectation and it that kind gas so only

Thomas Eagan

thanks. Great,

Operator

comes question Citi. David of Phipps Please line Your from with next the ahead. go

David Phipps

about thinking happened other and bonds, things in that investment question, and on thanks. is two Tyler about how they maybe you're just maturities there bonds grade investment down that some be cash to happen forward? and future maybe about up investment paying the the grade thinking paying the the as just grade just non investment grade if go or refinancing non in bonds following investment grade non thinking last -- just of Dell to down Hi, be -- when that bonds there is -- you're is paying next down

Tyler Johnson

to love Well, debt the you it's not I be know most but first able I down to pay obviously would as retail. mean expensive all

to what and not down So we that's that if I've I are we're the doing, term in or embedded easy due. part of so got will refinancing number to see be of but saying years loan optimize say and it that mean I no got continue refinance to good to prepaid the stuff non-existent a is there nice they that If think billion term is B at pay will the is debt I now for come we XX that's XX a take XX I as earlier. gone I will mean, is off reason right. consideration consider. will the paying my deleveraging, balance threw to got want or don't which is and structure and structure. as that loans, X.X sheet the is I out trying so things I've end think the due longer always pick I'm and sense to it capital And that I'm we a the so capital whatever down is we've makes focus opportunities and then line out. do table the opportunity I the something the down that wouldn’t is

David Phipps

we to the storage new generally [Multiple that richer Dell? now and And that onto will a about one just in tell we the ask I then Tyler, mix wanted had for quarter Tyler. look Speaker]. servers me I to then fourth another at that tag for the just

Tom Sweet

the being inputs Tyler's on reasons, Speaker]. Look in have but [Multiple driven. of we that. clearly Tom component the will you Let jump at are projecting dynamics me pricing demand to actions, take that, if look lots and we business talking centric this into right solutions right. don't up point that now mix more of question extraordinarily results server just up. of welcome ASPs although richer I in compute gone you again than mentioned of future seeing that is for a velocity Tyler strong because tell the question cost get Jeff are the More the as

server really about strong we those So is is storage think we some QX, be will with look an if it's at do going seasonally And would question The I how our hold. do see quarter. strong that you extraordinarily that that to this historically patterns think seasonal be. of

seasonal the And the you so that storage out into typically quarter we how expect plays the perspective. And and of perhaps would year well. storage finishing plays how to should should historical but as times you'll server budget patterns budget tell some strongest see have is the projects and from at do be as good activity you see year that from a their cycles -- on their this you there flush the that see of therefore are corporate customers

Tyler Johnson

to be so slowing we're to up is clear our But down storage. job not servers really speed

Tom Sweet

that. keep I'm business is both, to past and Yeah, get is going just so this Jeff's our helpful and anyway. do I we talked he to now to is to it pretty that have job not trying on from perspective and work mean what where Jeff performance as is want we which But happy we've about to with on very storage we got go all really do told want the server I on

David Phipps

my a you, and follow question up. Thank that's

Tom Sweet

you. Thank

Rob Williams

I would another Dave you have given one but…

Operator

Bank of go comes Please America. from line Adam the with ahead. Willinger question next Your of

Adam Willinger

question. for taking the thanks Hey,

So flexible the on consumption another had model. question I

do first types into the to quarter of portion deals that and visibility in trending So an in are think do anomaly any of these these the of second is you overall quarter like quarter? the just kind fourth have versus you trends long-term deals third how

Tom Sweet

models. shouldn’t you read softer flexible QX was fact little QX into that of Yeah, the look that consumption bit than I terms do in anything think

customers, take larger to think variability. these They negotiate are that going we I are think going that complex, the to multi-year, things of I types some negotiating to with arrangements they're and vary. typically time so see and are are they customers the global

in it's all Technologies see given activity perspective. an being a flexible customer in models I year entirely a end plays of see things a have and how uptick we just from conceivable QX out. think natural consumption But both that we'll equal will to that Dell from of sort

Adam Willinger

Okay you and of kind kind margin of flexible presence And the I touched then kind of on consumption is short-term about about think to business fair on still a how a think kind the kind of if I of model for am on and of one of it margin still prior XX% over storage the of it briefly kind you incremental of impact the to does relationship. it these for but in topic, life trying on recognize think questions area? the both that

Tom Sweet

all Well years look guys these five associated depending margin upon I do flexible the models. that cycle effect a contract you and agreement. mean deferring over terms that be consumption They like have recognition know we the and to of as of might of revenue amortizing two revenue the

a is and period to seeing better tend what the the little better they the profitability of a are be course these so it be ramps contract to to over a of they have but historically course the So lower we ramps it tend tend profile over profit contract. over if time starts

be pattern shown over of but all does the and higher when of in length the have are of kind change contract recognized. to the generally it -- dollars timing pattern So, entire those does it margin basis

in And that into stream constructs for revenue building ensuring like relationship, or stream more a of sort service more these of so a customer of strategic partner an intimate us. the of builds we more we customers a remember do as to of that's types the got the But a focused context these recurring structures are that or trying on a are and of although profitability privately we being incremental clearly business. for these some we short-term flexibility flexibility drive have And and not probability here. controlled to we've helpful do quarter-to-quarter as be the

Adam Willinger

so thanks much. Okay,

Operator

Cross with line question Research. Cross Please Shannon ahead. go comes of the next from Our

Shannon Cross

on very a sort about competitive side terms can my the for you're of you as of well some taking seeing storage question. the Thank the bit both of technologies legacy? landscape what much you Jeff in newer in as talk

Jeff Clarke

I of $XX at is that things hi Sure, quarter. my and think couple doing? three you it's the marketplace first we are a how is last market a opportunity. through a confused that that months Shannon, This external It market shrinking. as grew think a I it's storage I'm look get learning billion we big big Well market,

we in big, and their need to extreme a have and with notably. XX% benefit net do. they share We have think a and opportunity big most line clarity that's reaping up I What from and to them competition see focus about Clearly share this have product the I as they're is our they in grow all market that.

of our remarks Some are organization pivoting too. my about

to going hire specialists in more going we're out investments. capacity. We QX. we hired build think I that talked Tom sales specialists sales to that We're mentioned quarter sales in specialists about last going actually invest QX, we're in more more to investment.

capacity not areas decided out the at more more that's We're coverage to the segment consciously the the exclusion the either. enterprise. sales of And enterprise of One have mid-market build out in for is we commercial segment. more do building capacity in

We the an SC line We're a our D duplication and sales making We portfolio. storage more product Unity storage. we We our organizations sales can two added continuing biased and tweak adjustments all-flash range. get towards added updates to we in just base the mid are commercial leadership significant to product so compensation made in to offers in more our organization. knowledge moving between the

a and a Our two mentioned data in particularly very performance extreme is think attributes marketplace IO its competitors that services with which I earlier its product. differentiated in-line is great against the asset I the

loyalty or Another thing it's against if last I we competitive just which new unmatched. is launched program you a absolutely compare is it the week in the XX customer think landscape days

protection it nature. program We basically three it's that guarantees well investment is of basically quite for an XX for competitors upping ours and have and analysts guarantee to guarantee our customers customers the Our which is for years, components their honestly set responded industry got quite a competitive with our our I seven days. key or think product

So I opportunity, undeniable, lost a a we clearly are think it's big big in results it's share the have we're out. public market,

coverage sales We are not in and satisfied in with that expertise. capacity or investing

now to to Unity. customers We and puts We competitiveness. believe the know continue IO. product and is in picking loyalty the I us We that happy, advantage need position and if behind have I D programs again all-flash am don’t we detail. your a it. I and a here's and there add the have for risk, need portfolio We to extreme competition us pulling that to more in if continue question, of drive our to set to its in didn't, needed We no Duplications the out I to say into SC. performance walk the go guarantee answers

Shannon Cross

how ISG between leadership No, sounds underway. approach versus that prior the curious of you're changes integration just of that to I maybe clearly investing in does. a businesses, I'm you're any two terms the think in I maybe you certain was -- lot in see already areas, like it that going

are you assets? working curious EMC how with I'm So the just

Jeff Clarke

our Dell try them family assets assets, is team. Well going we to I'm family as integrate bottom to one of assets. refer either the Dell top EMC it not absolutely to

it's we organization portfolio. do low storage products what going can portfolio We're in don't of products the the across complexity we're storage ACI to going the the going for what or the something the When case end right buy not our decisions make we of going going seamlessly customers my and that's entire end You the if portfolio. the better environments. interests and question. be of customers. more answers do the have work applications be high the previous to to to aware We're remarks going may to we storage at marketplace. appropriately range in number that know are for some forward. to going look portfolio, deck, styled at data your for across of be in it in our build make will positioned to the a deck, best I clear is the mentioned of I across orientation mid sales our force the and in across and more organization clear the protection we look That I an

Tom Sweet

is But a Jeff that journey, multi quarter right.

Jeff Clarke

It's know products, But mean offer doesn't product can per we Given of same number through less complexity XXXth will customers the treat the for offers treat much cycle we complex, the of product, complexity we easier and clear entire country way world this. time of largest that given how mean commitments the our many less the made marketing for our storage not our sales product the XXXth breadth country and in easier me our the the needs we country all to in. we've you world. can customers in the work teams development, to to make portfolio and Interestingly to countries buy. of we communicate

next over the of handful work on see you'll us So quarters that

Shannon Cross

It's to nice so Great, much. talk. thank you

Rob Williams

joining. with there be reminder, everyone invite be will gaming Quick Shannon. consumer January of to Thanks with show. happy at suite thanks and we Come Great, that's would to thanks to we speak for by reach us, products out Jeff, anyone to full CES out early the and you. in our

great and thanks a So, holiday everyone. have season

Operator

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

disconnect may time. at this You

Dell (DELL) 7 Dec 172018 Q3 Earnings call transcript