DELL - Earnings call transcript Q2 2019

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Operator

Good morning and welcome to the Fiscal Year 2019 Second Quarter 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 a part without a prior written permission of Dell Technologies is prohibited.

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

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

Rob Williams

Treasurer, Vice deck With documents Tyler and Clarke; our CFO, is Thanks Good and morning, today our Jeff posted for, We our review perspective. website. Operations, thanks Sweet; Johnson. me encourage Chairman, our second Regina. and release these and you to additional our for on joining us. press I Products Tom for quarter our web

on XX-Q be filed September QX will Tuesday, XX. Our

that the S-X at agreement completed reached stockholder the will Class directors B As stock review and the approval, the We Dell strategic field with S-X a Form common to we stock Class Xth, preliminary our coming the meeting. outstanding a had Class or C committee special know, many exchange with we of you we of an our common the Technologies' on We of for Dell special cash. July holder's on to file independent definitive to amended Dell Technologies Technologies common subject S-X election planned and which August yesterday. for time in weeks SEC of set announced at B Xnd date

is this investors for discuss of and to XX, results weeks show settings our hosting the and will be meetings meeting We will with Today's the multiple series to cities. will group It's engagement September coming forward New that out and we on quarter, the an analyst road address one-on-one topic. over play meet DVMT call across related transaction. allow following and on to weeks intended second in as hold will a York with the we in look to and the we important further the fiscal to V Class process nor such, stockholders take questions not we

I'd remind Tom, highlights. to over it like turn of a few you I to Before

financial these gross During EBITDA release. operating measures comparable their of our press non-GAAP operating reference this call measures expenses, in we can including net be will directly EBITDA. to income, deck margin, reconciliation income, most GAAP web non-GAAP and found and A measures adjusted revenue, our

Our QX beginning Please our non-GAAP noncash majority also assets. note adjustments. percentages of $X.X and specified. The and of that to accounting year-over-year operating non-GAAP XX supplemental the purchase income unless excludes on these Please on to to details adjustments. are relate amortization slides all of growth otherwise for Slide billion intangible refer change refer

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

turn I'll to it over Now, Tom.

Tom Sweet

of and beginning years. four the driven transformation. worldwide by spending projects IDC investments communications a the We're Thanks, over next information at technology-led grow at Rob. GDP Xx will cycle roughly technology digital

growth basis was of was $XX XX.X% to the points XX% operate slower $X was server, down was primarily down IT building our platform XX our have Operating and VMware $XX.X three X.X% OpEx revenue a grew which solutions, GAAP client primarily was revenue. of core growth company and up Operating storage, we another revenue. enable XX% that seamlessly growth on. XX.X% On to Technologies in and XX velocity made strong GAAP revenue up this up second generated than emerging top down increasingly XX%, for billion strong as operating was points we 'XX, XX% Dell billion, head billion XX growth of differentiated revenue mixed EBITDA quarter. as was basis We and margin momentum adjusted income meet currency million. ISG has XX% We driving expense was created which opportunity last and foreign businesses the double-digit markets our and Non-GAAP the that basis point. revenue in number XX-month with approximately XX% points. Adjusted a quarter of coordination for is records business to rate quarter our XX.X% We and family $X.X the or continued close in Gross or of to paying revenue, cash in server this down in to complimentary deliver flow segments. $XX driven results saw trailing VMware. synergies revenue, up servers, performance. We commercial billion, of loss reflected line double-digit of for across exemplify for by was clients are was hit quarter The progress a progress seeing the was which billion, consumer a company fourth impacts quarter into $XX.X $X.X all XX% $X.X debt. reportable The storage. extended year we're billion consecutive up in revenue, started with and above at and positive to billion. within operating as EBITDA fiscal of and delivered dynamics basis, for of up

growth servers and driven The business a the for by increase to record XX% up networking to growth XX% Turning segments. the billion Solutions Group a to Infrastructure in and was billion. Revenue $X.X $X.X $X.X in storage was billion, XX%.

as double-digit discuss to in this we the more delivered encouraged positive industry. we've in Jeff the second quarter it relative signs of and in by the will are seen storage rest We growth of detail performed well this a consecutive dialogue. revenue later

expansion helped and richly XX% compute servers artificial configured ongoing servers income We of was software-defined with with ISG XXX-basis-point $X and workloads and and associated strong across for commercial was demand which activities CSG billion. of as up currency digit the double up income mission-critical Operating digit our selling look Strong we with record was commercial across commercial as datacenter Consumer XX% both and higher year, growth leverage. customers $X down see revenue coupled revenue or as consumer. million, average billion desktops. billion was continue economies. a more double and workstations up expectations machine primarily requirements to all XX% such revenue. $XXX solutions prices through operating lower drive This data PowerEdge for billion, emerging analytics, team and our prior to performance Client Solutions is in storage notebooks saw was our to X.X% XX% XX% for $X.X the and growth a principally was some the Group in expense learning. of notebooks improved revenue operating to increase impact, foreign over Revenue intelligence market as our to revenue due growth revenue, $XX.X intra-quarter worked of consumer than for and

down Normalized from CSG X%. million, margin As of by a basis operating was with operating last points. item, that improved approximately which income the income settlement vendor approximately rate operating in the reminder, $XX XX benefited QX year,

performance. business the with pleased relative trajectory and are We

billion which had execute Our software double-digit apps our portfolio broad on up or bookings company continue solutions revenue, another and The was August VSAN/VxRail. long-term with Their not changed business VMware on XX, delivering across digital and income segment XX%. licensed $X.X strength based results success. quarter revenue. cloud, have profitable computing, standalone operating product security in the XX.X% and year-over-year VMware and growth strong saw powerful innovation of Operating margin $XXX targets its drive the mobility, business datacenter form of end-user we to defined million a was strategy. that reported will delivering strategy for compute, management, NSX and foundation networking growth Based

strong continue of which as Revenue 'XX to we leverage Dell opportunities Boomi annual $XXX in and VMware was up bookings from incremental million with cross Pivotal, to our includes both see Security, Dell Technologies VMware X%. RSA expects Technologies. sales and the businesses, booking other an estimated We SecureWorks, million, forces. fiscal $XXX Virtustream realize sell

cash the capital of On by We basis operations to cash discipline. cash capital from turning Now and generated billion, momentum flow business working XX-months primarily trailing flow, and billion. balance driven a allocation. $X.X $X.X sheet from flow was operations

our financing operations the trailing flow cash been would and $XX.X from the receivables, billion of QX for impact have respectively. $X.X XX Excluding in billion months

in flow financing. from financing impacts DFS offset from financing we a through growth As impact our on it fund receivables hand, so when initially flow cash operations. with we is cash reminder, subsequently third-party in the This fund cash DFS

flexible our line top approximately our increased hardware maintenance up models. and and investments the revenue. was year-over-year benefited software balance and growth growing in approximately growth revenue that revenue billion, is cash faster working and we Deferred software $XX.X offer strategy consumption slightly is more businesses. than Our this billion. family as We a $X.X across service billion continued solutions Deferred of believe and from was positive $XX.X interest indication

partially billion. During investments, quarter our excluding to a VMware debt million an by offset to $XX.X investment-grade debt. repayment $XXX the mentioned QX, the our was core we increase to approximately compared repaid DFS billion. $XXX plus debt, note, the plus EMC billion, billion debt earnings cash down core of EMC bringing at debt $XX.X $XX.X Total June million note, ended amortization, Net quarter and as $X.X of $X.X of and Pivotal, prior balance billion approximately of legacy on the due in is which core call, another

this cash the matures repaying balance in $XXX earlier that million using this Loan remaining addition, loan from at A-X term our intend million $XXX Term We In we of December the week, maturity the sheet. prepaid of of A-X on year.

approximately quarter very billion, of timely structure. financing record and of securitization, is on debt, year. debt, QX loans was and We compared remain or QX receivables. $X.X business $X.X closing fund with are capital financing up we've Services high transaction, while I'm combination to make We and to XX%. billion, related all confident last originations DFS and billion billion with a continuing subsidiary which had our of progress. pleased excluding core XX% business We down through with of a steady our this up We executing finished receivables paid investments. quality of debt, $X.X $XX.X around by the which Financial of the collateralized down appropriate strong Since predominantly syndication paying Dell EMC strategy gross

and balance we cash comfortable debt paying are We down to to strong to focus our With on debt our return net generation. billion, cash balances core now $XX continue below flow with investment grade. will

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

Jeff Clarke

customers' delivered we Thanks, forefront had line cloud, growth our retailer. FY'XX. where sustained capturing their the Global at momentum IDC digital and helping first opportunities that at navigate half XX% enterprises of the of double Tom, the quarter our segments. a ISG XXXX this corporate in major transformation way. revenue a Technologies From agenda. and and strong the now journey digit to A IT of second perfect good have is We Dell strategy. with these each is customers to And center states saw example digital the tech morning, top now the and is the consumer of along across of transformation synergy of everyone. edge We CSG forward core

one our another great VMware. deals datacenter teams our completed It win VxRail across in implementing hyper-converged was QX, Dell a of refresh. for we infrastructure the and During XXXX-store largest history,

replace a with using workloads. a new applications deal U.S.-based company supermarket Tier a saw competitor already X to had when That a datacenter building chain VMware running also PowerMax. out We

realizing proof what So the Technologies' can of portfolio and great both These a across the offer we synergies customers. great our drive. differentiated how Dell opportunities we're are and example points we the cross-sell can are of we

of with and progress an to growth storage pleased had and at seventh delivered hit servers high of in quarter second double-digit consecutive quarter of networking year-over-year ISG seen are all-time we've We as billion. growth its revenue revenue the $X.X

demand quarter, in file-based to for in was are up data $X up Storage in arrays, which increased operating income ISG, XX% offerings. billion pleased QX. protection also growth with was XX% We and in high-end storage the the revenue

on key the of area in growth remains focus is Our driving midrange as in velocity the this array a segment.

for our defined We portfolio are other and software ongoing strong demand hyper-converged also leading market offers. seeing

storage released. in to Demand X.X% and QX, run-rate. worldwide VxRack xXX second basis, share at on And solution better strategy when is the annualized portfolio outcomes the when learning calendar revenue worldwide as industry intelligence VxRail AI this PowerEdge in we external Worlds, to tracker afternoon. servers leader based share units last year across simplify last as data storage spoke outpaced artificial VxRail we Our again and basis driven Technologies We're the grow business for on look is technologies. a end-to-end workloads. we our $X product yesterday is we predicted gained results drive remained scheduled released serve servers this now better be a expect we and new advancing extended We machine the specifically And demand about our data for for to billion on to the for standpoint, last triple-digit again growth outperform innovation calendar for QX and notably saw according in and and IDC infrastructure Dell released the as on ISG, based -- solutions and above through and will fewer our QX. an our learning later servers IT spoke became IDC investments lead they built and our revenue machine including quarter storage industry. calendar From to major quarter consecutive offerings modernize a gain focus PowerMax growth servers industry launches of xXX for our their is quarter IDC. customers, MD&A We accelerating strong. would

data arrays environment. and performance, for Our in hybrid machine file-based EMC solutions Unity enabling to which issues our all workload availability. portfolio. array, across provide Unity innovation and and and application engine capacity, We Dell recently improve storage cloud-based feature is upgrade proactively Unity environment understand and EMC analytics boost potential the and helps the a block Series health customers SC each their Unity CloudIQ, uses file identify, portfolio replication, in updates released The protection new SC for operating easily capabilities Dell data workloads. comprehensive driving to their and customers to and a enhancements security Series flash mobility, And storage new learning predictive to includes now storage native that address score the

backup, benefits midsized respond come. sorry, no years it intelligence virtualization, technology no introduce artificial system way readiness also on-premise The protection class of storage, -- the customers data transformation storage PowerEdge networking to appliance, pull DPXXXX and tomorrow of at software organizations and data hardware. PowerEdge disaster automating generations needs combination and of in the first helps for MX recovery price We all of customers increases deduplication, It's plane the it recovery policies can data that the efficiency data in mid and enabling reality long-term infrastructure and for defined for integrated The defined disaggregated and the powerful Data as Big greater aimed that replication releases, support without business sheer business scale, launched for grow to Again dense and supports we multiple with and networking, modern data tools. simple, its work of center and our the ROI and include the unique additional companies by software enables via to to design MX, retention And cloud so investments software it's It projects, midpoint cloud. built-in overall and this their protection their changing creating grow. unique, lifecycle to compute make flexibility with impact. the leverages today to improved brings cloud design modular the the protect inner them assets, workflows dynamically and the their center for needs data category infrastructure. as server the incredible emerging

overall, We in leading to of growth. our quarter. of average revenue second selling another of to double-digit expansion a quarter number units we saw shift Turning CSG, prices record

our to and peripherals, displays with see continue software along We desktops peripherals. client notebooks, strengthen and workstations commercial specifically and

impacts, growth the quarter PC Tom the X% of of worldwide, offset we of in points provider of compared calendar was as the calendar continued industry in notebooks, in our as with gains. in especially adjusted consumer, gained regions In as in units the worldwide straight We an industry countries outperformed the reach share see income Worldwide commercial for the to of share foreign team CSG share the enable prices leading we industry basis us unit XX% XX.X%. all industry form PC highest total, operating QX a share currency which industry regions, gained well we all where and QX the As share. and workstations desktops as grew XXnd at in to growth impacts to workstation and share marking From worldwide for late to mentioned, grew quarter lower mitigate had to factors for for date XX% the and XXX with perspective, we and certain in XX.X% remained quarter. in X.X%. to allowed positions we but commercial strong total

As in the possible several invest workstations to in continue sizes it to tower budgets QX, affordable announced the workstation designed X-unit access and In leader for powerful, space. and in new to this all category, rack most innovative we powerful industry-leading solutions of compact world's we this and workstations. companies make

As area business. of to display share Software couple quarter saw I've calls, worldwide. displays displays strengthen of QX, the for client to another According number mentioned XXth & the consecutive gained of of basis continues in double-digit on we In search to Client QX, flat-panel and provider peripherals. hit calendar be XXX of points one being growth quarter our an our we of last Peripherals

to The the examples are innovation how unified to multi-cloud announcements experience and datacenters, enables we the mobile the we've provide the to for cloud. edge and the and from Lastly, solutions that announced are core heard feedback positioned defined These in with we infrastructures conjunction provision ONE platforms. deployment. early extends and PC configuration new efficiencies enhancements device partners a and we overwhelmingly software service hyper-converged positive. At several automatic our the enhanced leverage and seamless has Technologies customers VMware across made win Dell Workspace been integrations to that and from Dell VMware management customers setup of across of with to cloud Edge, great the devices,

To factors. form VMWare new We quickly new we're with to address for customers EMC to Ready Dell Things the update new we're management and with get two MX, the as PC-as-a-service increasing cloud the flexible expanded offerings, We from possible Edge PC features lifecycle support their have control technology PowerEdge for scalability simplified EMC Ready synchronized greater in blocks. needs. vSAN the and stability a the We the VxRail EMC appliance which surveillance. of and GXXX, density customers platform and building HCI to Dell Core, Internet which scalability the to rapidly business core Dell changing with performance capacity, workload VxRail for vSAN new the Nodes delivers high to as Nodes improving as extended provides the releases latest Dell vSAN solutions

with models in and improvement Technologies cloud-enabled portal. cloud In we new power decisions the business. are offering consumption enhancements and the infrastructure Marketplace across together for constructed cloud pre-integrated driving Notably product the the technology to the a technology foundation infrastructure new multi-cloud. our the finally, after and software-defined one we pleased Dell the VxRack Cloud, of Dell customers are in portfolio, datacenter, Cloud EMC and self-service made we latest realizing the very announced family Cloud consulting launched to deliver in performance cloud choice bringing offer capabilities, closing, business. of cloud ISG, XX foundation VMware a we've to For ultimate including And a from strategic place, the services, platform, VMware

We continuing long-term Meeting Analyst let clear do invest about business. are been it forward turn a of at that, more that to of talking to work saw for have to the growth we and we over look back We couple this the to in weeks. Tom. With me the

Tom Sweet

positioned serve better well provider an integrated as are technology to we Today end-to-end our Jeff. customers. Thanks,

We have things many going well.

the across of segments momentum businesses. and in and leaders coordinated compete key of good innovation the selling most are family the which in cross with We we

versus performance We our competitors. are pleased with our relative

the make most encouraged half strong and great growth performance which helped flow storage infrastructure today. We've pleased servers, progress is in hyper-converged revenue and still and business storage in we allowed industry performance are storage. seen VMware, to investments the above this right the about the segments has Our but us seen We've half year. in first with fiscal are made repayment. first and drive progress for the ones optimistic on we're have We do, that seen long-term, and in the are the to in decisions by velocity debt we we've growth the improvement of we're our client, work cash in in confident

even the we fiscal to growth sustain to we As tune model. our we look second 'XX, as half business of fine want trajectory the

partner gains, will by the our We cash with balance trusted customers flow growing addressing continue which and and their driving in capabilities. and and focus, a margins, of for of executing sheet, on executing strong full range profitability include ISG market areas listening strategic needs our above generating the by being our share balancing also growth driving delivering and and

And the As most guidance have know, since is intention of the guidance transaction. not in future. it provide to go-private we our not provided you

announcement, thought fiscal a to provide we for July with conjunction was However, expectations X V this framework important in it transaction year. Class the performance for

in seen third and and billion couple full year. the the net of billion be now income are things We $X.X For last are of momentum fiscal keep fiscal you started 'XX, we and quarter non-GAAP seeing $XX.X to We need we've for Xnd. now revenue operating billion. that science momentum in $X.X between There the non-GAAP mind. $X.X year. income adjusting and a beginning $X.X between billion, $XX provided expect July ranges to billion given non-GAAP on billion expect We the year-to-date, between

as with face during layering sales, and 'XX. this strategically of invest we in So fiscal the to fiscal second year. in businesses, second also areas such half year-over-year half tougher continue aligned the of these we R&D, will comparisons in our the investments And in business

these company. with growth making approach long-term decisions a the disciplined and are of for We

to We are the not committed approach running to any quarter. company are value optimize and long-term the of creation our particular over mid to

on the focused and investments our fiscal driving we've we to ramp continue given sales on we're driving We're the it year. focused to improved investments force are 'XX this returns we've to productivity I'll across operating on Rob expect confident made turn With and We will execution in business begin how and that leverage the beyond made in back segments. managing we're the sales Q&A. that,

Rob Williams

Tom. Thanks,

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

Operator

first with Our will Please line come the question from ahead. JPMorgan. Thomas go of Eagan

Thomas Eagan

guys Thanks that share Great. question. you I don't across taking you been out a for now. taking think my as surprise something on know And doing pointed you've it's side I there have that ISG you're right been -- you're gains you everything big in well the doing been that on But because hadn't been a making while. for the past. shared doing are side you've CSG the

that is in is telling your just us that service. to share talked gains and -- at that talked the new flexible servers? sales driving to stuff and when guess than main better the bigger everybody out I driver a customers, what your what today, list the outside of is about a either or of [ph], they're reasons storage they’re all of talk switching you're tech the getting talk you the Tom products, from seeing pricing, what else? competitors You Jeff, pie threw it you're you to wondered your you what I you force [boats] and bunch you you exactly about when So piece whole of that

Jeff Clarke

there you a today. Tom, Thanks this one favorable question. keep Look, a We'll environment don't -- spend that's thing. is Jeff. the have for is think I

and is continue to next years. pundits continue handful of certainly You that going twice over market have it's going do we the that have The IT spend to grow forward. GDP strong that suggested to

So you spend a environment. have favorable

have environment, unique value For that us in favorable a we proposition. spending

that industry. CI, whether ability provide Our portfolio, of that from to is stop important set quarters. PC to full that about a into doing their a the been navigate about together, value talk think The business. many leadership information, the digital to solution devices the distancing unique solutions the to Edge Edge in we've for customers ourselves capabilities That's synergies that about the particularly think can Technologies of Dell one That around undisputed companies board. from that had why information are you side, we if and the we protection, the package customers. collectively HCI, value us. we our devices certainly set to in consecutive again shop ability the the combination position can understanding power as that, they've leader solutions, a of is to our and of turning proposition transformation, Core business. And differentiated our I are the new the are differentiated the way this customers put that our Cloud customers. customers in entire where lot we're being to We offers for it's get and talk to able in providing will our the our And it's from we're seeing very be business on four core help when now The of work to of it'd that that this our data think better virtualization, infrastructure leading across and cover servers we're -- our go-to-market position, primary solutions you storage, I then outcomes transforming

I've and the and with today. on, Tom in of embracing capacity. lot engine We're of four investments that made the more past the our the coverage we've storage our far primary I've The a innovation is The a in been over number cloud. year. accelerating product in made openly product we've know business You announcements. I referenced, think storage, certainly changes the competitive line calls is

to I continues combination, very that? be very, investing. to think Tom, It’s model go-to-market add robust, our you'd and we're So that anything

Tom Sweet

do. No. that's right, you've work is done. to think -- I there think, Look, Jeff, I

progress. good have in way. are investments here the we've So capability, that that point solution There nobody would to EMC I things series since the go by it's the improving. victory out. transaction, we're back whether we're building we product is a capability, on But -- focused of declaring seen models I coverage think market But obviously to done

base those as way. the more are I think differentiators a we reach precise targeted in key customer able and to are

But there we're So, the making. with look, to I is more we're work do progress pleased here. Tom, generally think

Thomas Eagan

the little the that open a Okay. follow-up, want then And about bit said don’t for engaging my when you left you you know with shareholders. Thank DVMT you're forward transaction talk that. to door for and I you're looking to but all,

Analysts So Day business? I coming the normal wondered you of you've just a got about that process of is course formal or there are talking up, outside

Rob Williams

Tom, of shareholders the meetings Yes, Analyst and the Yes, Rob. and of we be one-on-one XXth on shareholders. then we'll the is the on the will the XXth, October, then DVMT in week will the and in Meeting -- following road we this hey cities Xst with have meeting group week of week the be multiple

Technologies with across and be to And it process case give definitive or be there and in do the the opportunity ongoing will person do we that as we will definitive Meeting. make that engaging so we appropriately the have heard the a multiple to towards so management the of Dell make the we that opportunities its call talking for and or weeks at six do DVMT company the for and we'll special to also move play sure proxy over that Analyst do proxy core the everyone team filing, committee be shareholders, I an out let and filing and to addition by Dell the In pass and conversations that want Technologies and phone that we'll next, expect spectrum, that course more. expect

Thomas Eagan

Okay, Thank you. great.

Operator

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

Shannon Cross

are I is the think may sales of Thank or think the it some you are behind where and -- on now you sales changes you plan, wondering within of being of driven seeing much Jeff, bit? have you the of plan by we're for the expand a upside you movements and a how some terms you structure. And very Thank think going, do you do in I'm the that of sort you follow-up. Where you made how have the and months few much you you track the some it's be comp this question. of that you. quarter to

Jeff Clarke

Tom I'm certain. Sure. will add to this,

I momentum on if the our two in, think you seen evaluate we're storage where pleased business. we've quarters

As our more the [indiscernible] we it's be referenced targeting margin to plans, way. product. that comp emphasize sales pleased we've I'm that working made higher force before

indicative of is I performance our this that. think quarter

later marketplace. a afternoon We this the gains external and for sign storage very share positive from expect

be. all again, think it to and geographies of want row. pleased rate we We've in So tweak we that exit as sure where I encouraged, velocity I that the get segment the making in if particularly that be We'll all a of across continue want two to built the the afternoon beginning our positive performance we in for this business. to said consistently will the work, think the pretty segments last performance, to ballpark year. in first reflect we half the we it's given previous that reported outperform given are certainly we're right that year, on our But

I it's more tweaking as planned, So but think. to working do

Tom Sweet

it's do it's Yes, I hey, that. echo Shannon, Tom. I think would reasonable progress.

working though. I conversations coverage functionality, in particularly continue the we’ll lineup the is so think covering solution that that in as our about launch, product a pushing. nice out with the job the go-to-market to of it’s expect storage that and that capabilities, feature around done ISG Jeff's the we're some to it capability, -- sales build pretty the hard investment, the as customers continue think And model team specialty transparent that to I drive we're invest in we've I think, of to capabilities been sort the well. with ratios pretty of want. that. with we've innovation continuing appropriate we had We'll coverage that I And relates do

again, I to happy say you're on. date. reasonably to towards tune with and build think working continuing I'm work So stuff it's is that that acceleration. we're But, hearing now There we'll us how it fine to clearly what gone continue

Jeff Clarke

at, add. around I answering I just look I the specifically you mean Yes, side. was to comp sales if

to of product begun the the made to that progress CI, in that up compete in If you announcing we about it of I'm year. HCI second our products, in the storage Tom, amount I full mentioned, spending and solution new in forward. we've performance partner, year coupled already in the there very If a the the notion been as pretty link buy marketplace. you our this take excited transformation good last have total simplifying one at our capability we're of next bodes the is back competitiveness and that external over marketing tremendous half from flare Tom with trends a position week. we'll the servers, back in wanting year new to a the first crisping announce There ability leadership a position digital the to one And it of and improvement well. step from has lines improving look the customers you'll question of going last advantage campaign portfolio, see of

Shannon Cross

is on perhaps how will cycle of quarters gains, you us on in the Thank an But seeing? the strong you sustainable just of share beyond that of of in And you're PC then I that's you. a for our expectations And are while. terms give trends market. that what several just are we where the performance. we're side, some upgrade think in the idea do or think continue one client some Can rates the growth that it of seeing

Jeff Clarke

had of foremost, position roughly momentum at X-X manufacturers PCs than continue consolidates will There behind for Overall service share is in XX.X%. benefactor right commercial we've of of pretty a us memory record revenues, shipments, consolidate numbers The highest share and a is what past highest quarter, industry the XX% and a is the into think been I share years to XX.X%. record position this that at market top it first had culminating is huge that are the the three we've of me that. we've impressive consolidator. over some a Well, that lot

selling over we're attach, is think peripherals that that You which with -- our when of our drag our commercial software something and and a know financing there is attach, around competition. PCs, services we I uniquely do lot model with attached

the to in a So marketplace that industry backdrop. going call see I to to And and operate outperform. like continuing so I consolidate. industry. grow roughly we're continue flat going where that it been, to it's let's It's

in the fastest QX. QX the in of X top are growing and We

continue halfway we halfway me where I that tell data we to with year Windows our momentum. you conversion, the of are terms XX for drive I And tailwind bit but of I think can we about It's that's quarters, a for to go and suggests six next of a hard just have think still with XX Windows half. exactly through suspect we're in about to right. and

Tom Sweet

VMware also about with the of and if done, your and differentiation of in about coordination end the I some to user talk the points you've you've VMware capabilities you like think ONE we're the integration added just that around think maybe and talking driving. devices, Workspace the

use we with -- anymore solution. all we’re story as to market of guys the better together I positive as fashion or of think go differentiated indicators you

Jeff Clarke

modernize share is a And Workspace that offerings being mantra It have of commercial love Shannon know continue with love Those tell extended ONE we PC modern we to with PC is. very that business, a we product, PC of building there. And to the gaming We'd are experience. we of product this be our and where consumer the configuration I'm the our us. or that way sector. consolidator. able bias towards as collaboration, We can sector. recent do also high-end under with the continue very important how focus do deployment equivalent. VMware a service It's to grow announcement We business optimistic, you you We the the healthy. not our is in all to side.

Shannon Cross

Thank you.

Operator

go comes Fargo. Eller line next question ahead. with from of Wells Please David Our the

David Eller

not us gaming Sticking minute, Good questions. the on margin morning. those CSG gaming cycle kind also a has of changed. seasonality you And might for operating you what mentioned, have operating Could your that and you ceiling Thanks be? mentioned your just touching views the market on long-term there on taking with forward targets then segment holiday from views for the that refresh on the any pull quarter? whether margins the been any

Tom Sweet

Hey, David, it's Tom.

that that. also gaming address of first asked. then take And you Jeff, Let the have I'll me maybe question part or the comment

And it excuse Brazil, roughly see priced between how we've margin on framework results what for I we're X.X% we about long-term we Obviously, we a saying X.X%. as run been prior it if it in think third did second pricing the in catch it in want talking dynamics, through, quarter, quarter, the above at couldn't we've China, that, currency that fast -- business or the somewhere an look from action, me, So the or to we've mentioned operating the in enough. points, -- is so CSG above the took particularly we in quarters. to percentage some framework, we in below been that think you of this financial

going business. point ultimately how So, and of we business on the but, our view where to it think doesn't about we're change this run

business framed actions be. want we the and on to bring try then and forward how appropriate sure to get we'll we're -- to you to to take we back So … continue maybe the your us alignment And Jeff, drive gaming, want that's make where

Jeff Clarke

continue to this to changes going through just to the QX was I add, of part continue catch us. make that changes up currency first on fiscal pricing to we move to

a those in the I just catch within difficult responding as we're the quite changes make sector, it well, haven't leader so seen but to to pull period. ahead. Switching last And gaming

quite Our business well. is performing

We’re of our a Alienware the overall gaming segment, platform and adoption platforms. outperforming great Inspiron our

for refresh to gaming. platforms and continue to strong We see those going to -- globally we're continue demand see

David Eller

year? for my much operating wondered that you could the I for next impact? How sound from either income the the that's much potential tariffs otherwise if of currently think that talk follow-up current your then effect guidance of And you you you question, Great. being the of can or into could pass through expect mitigate contemplated. And about how

Jeff Clarke

answer tariffs go real the the the first. the of be. part a then we've going can are of to last had And to Look crux sense question. I'll I where

to that do able plan be in contemplates it spot-on. think that and to no understands going our we're tariffs. we're I that's financial is what what there guidance with Our change expecting Tom,

Tom Sweet

provided the point That's in includes I mean impact best we guidance view to at of this or of the our just tariffs. right. updated time

to our work Now correct. way get has and it and have we'll to impact, list we another that if other

trade mitigated of So back two the in of the pro-free tariffs, list. we're camp clearly question That's important first that's said, to the successfully us. original we to

have are that's We've timely migrate little decisions America what the we list North make some as of us products build change think We scenarios products, our well for through of in planning the sure to quite and implementation we're playing the we've be North costs are material, made chain a to into see Our And what gives to where that nature chain won't us America our ago in supply so flexibility. capability global classes now. requiring is is of of overtime. a planning some of to mitigate, supply gone will need the us that and when our we do have work we repositioned footprint. we repositioned been while able third we'll today. around And list our continuity. that's effect. see said some resilient. there And we resiliency capacity that tremendous that different That's pricing taking products. go to And unbelievably serving do, we us have advantage third to We've we list minimal That's impact and has that we lot business change we're business.

David Eller

taking questions. the for Thanks

Jeff Clarke

Sure.

Rob Williams

on I one would thing that. add Jeff, Hey,

I to that at and that, result that see look way some as inventory as perhaps could we plan expect of our As that. in we growth would we a

parts. in product reposition we As

whether capital but impact, temporal to about think a I that's see to expect working our are thinking we that dynamics. relative we So

Jeff Clarke

Right.

of is one inventory material source to the changes do product So on originates. allow make us manufacturing of can we to dynamically the things to that of reposition

Tyler Johnson

from this is a need perspective cash decide would interject, thought to mean, totally I just would Tyler, to or we forward, I But add, it's put inventory manageable. just whatever

or provide cash to going impact our not it's materially. So

David Eller

Thanks. Great,

Operator

line of with Please comes ahead. Our Katy go Stanley. question next the Huberty Morgan from

Katy Huberty

morning. and datacenter between there versus traditional real question. way in net growth upgrades Good like you more ISG like to modernization have revenue many learning, just I the machine Is a then sustainable may former certainly applications years feels in prove compute? for AI, follow-up. infrastructure in edge you. any new for Appreciate the Thank breakout investment asked it's I because the And versus cyclical latter nature? more

Tom Sweet

visibility but and very Hey, it's going, in selling great it's upon motion a channel. of where level -- question, Katy, the dependent terms our Tom. of We infrastructure is

we we have capabilities. other than the or on analytic data trends center the modernizing their see investment data So don't good data AI, whether that as type talk for classic that modernizing and relative we it's our their with around ML, customers

that with softness of data happening highlighted, trends. will I don't model would, I we're I customers. you clearly, of feel, customer demand interest driving But our the solutions capabilities tell are that, the have as given just that and Jeff that business there's guess So the the type would evolutions comfortable and I sharing for given

into revenue have for do percentage data. is of bullish what And don't And about we to the that, specific detail real look we spend or the long trends applications data -- but Jeff, so the feel run in environment. the IDC as what's we workloads, reinforcement would that of on going

Jeff Clarke

greater the we're are average workload today stack put workloads and CPU, is richer servers. the year the center but into data see trends. and deeper artificial tells machine encouraging intelligence We memory, we a ago, are it and Rob there in was like that server average which selling average No, driving than learning SSD the up the the that

of view buying our that the into datacenter customers loose to servers, that's deploying us indicator are seen know this richer into new that the of certainly ASP deeper and it's correlation, we've these a that I we're types increase when workloads. So selling in these but and an we see the

Katy Huberty

sense. Okay. That makes

Rob Williams

Rob. into that Analyst how on is XXth, the exactly this growth, we probably more Katy, that spending we little Yes. translates IT data get question, into Meeting the workload dive around to won't at will growth, while that But bit I your would say specifically a growth.

… So

Jeff Clarke

Yes, bodes in on of the is sort dynamic for compute more that. clearly storage edge what's which happening well take industry advantage models network, and of the will the the and that those more edge driving of the usage decentralization quite of us need in computing

Katy Huberty

just anything follow-up, the into factors And to fiscal some a of quarters? is over not largely tougher we there remainder as year? playing read some 'XX flowed that the into just guidance Are upside revenue and is through couple in next perfect. the you Okay, a comps, conservatism XQ of of increase should the fact the necessarily then that beat lot that? as those look currency, Or the of there

Tom Sweet

just the basis, the started Katy, a of there growth Tom. third in I of saw you number. Obviously, reasonably you how overall, the quarter on business business. progresses of feel ourselves the comfortable fourth into about velocity 'XX. would where comfortable Hey, overall about the look, acceleration tell it's I quarter. we we as you I Look, pretty we fiscal an out to very we the quarter the but, comps, of I we'll see as it. the Look, think business think company years, look size, through good get the of I are velocity. state when terms good the the the ahead really feel the and dynamic third look of want go it's in don't we market. We it’s in And as think, the and feel like competitive And about think right half But now. there's, tougher pretty business just at I called in of that, back annual as

And and how to continue it forward so progresses. it drive we'll we'll see

Operator

of with ahead. Please Barclays. the question comes next Our Jeff from Harley go line

Jeff Harley

on it in was little morning. Jeff, detail you recent there mid-market? can of the the good it your more know with storage Hi, go area you And trends bit product drive just you you're share I terms be? are line? think Are needs products an that still a gains or introducing you where through what to is new wanted in where share. improve bookings seeing will you to

Jeff Clarke

have next like long-term. a are what year. taking Unity is And and that capabilities, while more refresh the important. to we've and the bands The new are for there that performance product introduced we've what line recently have fight to May, announcements the I've increasing capacity, on more that to we we've and continuing the competitive, in journey. going is price mid-range interim, And NVMe It's made we're in a increasingly very more Look, it's more the that progress with to increasingly pleased introduced, X we that been have increased all to us SC make we whether think the to journey we're and takes PowerMax cloud our bringing very marketplace. focused capabilities in its arrays we replication important it do. competitive -- are that's recent will, products get we'd XXXX PowerMax of our management additions made and the It asking which of calls are develop competitiveness we're for doing. X, data important we doing the those made and to our and customers committed announcements in and have steps mid-range competitive we're more which still portfolio It's of migration, the in portfolio. you the cloud date, attributes of portfolio in these arrays, a that we've if more the cloud with in new to doing accelerated. product and HCI What and clear we've cloud, our doing the I'm there,

simplify differentiation focused All to single one to we've of to innovating So and there, I industry. that. and I benefits these the future on think had there a focus continue ago, steps several mentioned products. steps year the engineers new the storage do in I getting made Behind times driving calls together, is team We're so to going very it. working developers on in innovation something we curtain the and today like working the speak, than best that I've like more as are simplification about technologies

I a think to intend. we'll do ago, new of with going product to next As I this. make continue Shanon, introduction mentioned We're another moments week

space. data the in the hyper-converged The the recently improve we just We launched. are protection. just data the introduced protection our primary in to going to integration offering VxRail be true DP-XXXX, appliance. with storage is that same We competitive We've new continue

winded to the best long way I So building that's guess as innovation, my committed we're products. committed to

way that's do a think encouraged. rate going we a now and have I the that as to I'm very engine accelerated working in very

Tom Sweet

Jeff, And the and side if then, in from selling as to well. continuing my is the Jeff product innovation drives we simplification, even are invest capacity

So of areas enough diagnosed XX didn’t coverage. one the challenges the as have business was ago months we we've

the a our investment we're that in and storage the cleaned selling telling looking ratios coverage we add cycle innovation want front we selling base channel to our organization in channel investments reaching them go-to-market enterprise up what our And in effectively And at terms is that an can we reach. to in in We've right the coverage coverage. are we're going so that storage value ensure that's as are as to still ensure customers the and also of way to customer driving making simplification, We're we're even our the of story mid-range partners with organization that We're models. programs get product that appropriate. as believe Jeff's we it getting we to as improved commercial to a to continue to in story, tremendously.

designed drive of programs all sort and framework product, compensation multi-prong it's positioning So a to effort, the storage coverage, flow. marketing

Jeff Clarke

said marketplace. in Tom QX. pleased good, that by I again, right, leader indicators capacity, first PowerMax of storage me, -- this me products expect memory I'm investing saying, portfolio, We in the are If improving will XX% unquestioned that QX. half. we is comes some competitiveness have me share those we're data the the typically encouraged in afternoon out take the we're when that Excuse the we're serves QX, we're are XX% the non-satisfied. To in but in the quarter. share the in signs this like well, took And and that encouraging grew

Jeff Harlib

and you do talked Great. costs I puts see you Tom, and margin follow-up, other what XQ know And Clearly, my are about at provided the you're takes, leverage modestly the before a and is deflationary When channel know of guidance. outlook, the dynamics? the DRAM? and we and I But lot just that year. look How on with a the you just mean commodity potentially of this other some areas. environment sort investing the get there. in operating now very And strong of with NAND I quarter you that typically being

growth So revenue with ISG, the that might leverage be? of just wondering what in solid kind

Tom Sweet

to, if I about Jeff. step mean, I we we half back performance think the guidance in say, and first last Yes, relative think gave look, you year.

denotes saw we lighter year-over-year think the growth what trajectory that's bit now. a it we a back half, visibility you One comparison is have of the think with couple half in half. to where But, that on half back I I right the in obviously, I that bit is little things. are back so a revenue than do we basis see the -- you, a tougher first think

are about We talked in some the in in year in and of half as capability. some going to layer investments the back we’ve the of selling product

that come to that, going has there year, in. look are of flat bit an for deflationary be costs back at the increased Off the we saying particularly I half back a commodity to bit started as is do slightly think us. coming little So of a DRAM costs

ago. had going as through not the that to dynamic year that's And working So that headwind a we're well. we be

in denotes reasonably see But been out We're going this has I got overall things operating a while. lot first and think, about still how historically of we're to that dollars profitability it growth, relative go that to There do execute year. one while QX quarter. So denotes declare to is grow we're are is to. strong have slow even setting you one year-over-year the the investing But, the I half. -- half I the year may a We'll plays of margin the well gave that, think want we framework up. for don't victory. optimistic how to to back we've

-- we point this So that's at the pretty frame I that we're And in where are feel time. think running. about I good

Operator

question America Wamsi ahead. Mohan final Our come from Merrill line will the of of with Bank Lynch. Please go

Wamsi Mohan

Thanks on Yes, of commodity NAND? color DRAM like for think revenue configurations versus taking terms pricing up. in have you a give saw question. you much ASP? you us follow In units of XX% through the can thank the about and ASP do How I you sustainable growth the and that noted mix pass richer is you. for that some ISG, And

Jeff Clarke

now, first we're richer is the in is workloads that datacenter of individual the driving configuration regardless servicing cost Well, placed sustainable part. I the that the think where thing is of being the the we're

there selling the driven server the think one which our being -- marker expansion think going bodes average of that the increase. higher But that's bigger portfolio well at in seen ultimately you we've put a of So sustainable what and that of That area. on hold handful as business No, the by taking richer average Do is some quarters? in I'm and technologies for workloads depending talking and I that those a SSD, us the more over datacenter amount as the ASP I server capacity our past able that driving performing period. we is into about commodity deeper the to the server configured is we on this see a CPU richer we're marketplace. with is know, today more put because specific in to that in of memory product

do that. our So to continue to bullish ability on I'm pretty

Wamsi Mohan

all an doing Thanks. know also a of you and emphasis quarter. lot the frame of and relationship the you. the in portfolio that's storage in players lot on term? HCI, context in of Thank that's some of the took are or that you that how you a share other leading the milestones you change on behind first Yeah you you. you how helpful. that’s And second no the of in with VxRail. here flash share OEM side, clearly some that There that sort that growing? near guys fairly in quarter have has taking note And you happened Any have expect Can momentum and here

Jeff Clarke

look see to our We But think grew I performance the When at I able them. afternoon. how Let's see what aren't remember all-flash, do we've what We'll we all-flash. which specific an this I out given was certainly question. if market reports certainly is. been

are all-flash leader. the We

numbers to think will afternoon's case the posted. I be when this are that continue

it's what we're continue the PowerMax continue covering us category been demand in invest you doing in encouraged XXXX that before two PowerMax. we to to I'm allows hadn't see will important there. bands and And So price an those drive all-flash, particularly with the to us

I did see We that's sign. quarter. good in think a So the

I think certainly we did structured business. storage and the good note business, the in our good high-end, data in the performance a protection performance in category

The So me I'm next our performance there. -- encouraged question by was around do help

Tom Sweet

HCI.

Jeff Clarke

VxRail triple was with digits performance HCI Our our VxRack. and

I great continue We customers a one posted we as form segment. market believe continue, product. business we'll leader see hyperconverged certainly that are on in this and And a in the numbers picking modernization segment. that the to is are And of

OEM our for We continues relationship We're that EMC be we'll changed that product. asked to with Dell It leading demand. solution have provider. other customers our their not with VxRail a fulfill clearly HCI and

Tom Sweet

and us. everyone, embark Meeting for joining the at great. We October XX. Okay, earlier on the on side Thanks, the I XXth we as with mentioned Xst. buy week ongoing as And forward to the and the call show, the road look engagement of sell on both Analyst our side

for a good thanks So us. day. Have joining

Operator

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

You time. may disconnect at this

Dell (DELL) 6 Sep 182019 Q2 Earnings call transcript