DELL - Earnings call transcript Q3 2019

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Operator

Good afternoon and welcome to the Fiscal Year 2019 Third 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 part or whole without 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

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

quarter XX. Our will on filed XX-Q Monday, December third be

take to Let a Class address moment V pending me the transaction.

the proposed a to special scheduled Following we December AM Central we stockholder XX, form to Time. extensive our outreach Class at vote and X the on common filed We announced on the and supplemental transaction. to S-X are hold stock definitive November on XXth V XX and amendments November meeting Tuesday, engagement,

We of on XX. the approval expect announce December transaction to stockholder

the symbol transaction. December day calendar common under Class XX. this we common November weighted transaction DELL ticker price of the weighted the final the scenario, V C the will be the in price first used In to volume the used day Class date for the of Class today, measurement volume period the So with would for be XX-day stock determination year this the of determine to average stock. connection projected on the NYSE and XX close trading This V the of be average with exchange in ratio the expect the on close to first

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

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

billion $X.X amortization adjustments. adjustments. relate of intangibles also for to refer to are Our beginning these QX accounting supplemental year-over-year and non-GAAP assets. non-cash note Please large of that the portion details of slide XX A our of on includes Please all growth operating non-GAAP and refer to otherwise slides income unless purchase specified. percentages

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

Tom Sweet

are assembled has model. Technologies that financial capabilities Dell Today, broad Rob. within Thanks, set the drive a differentiated industry and of attractive an

We in a for running optimization flow. the growth business and relative gain with cash of and the our the primary are on long-term focus share disciplined way

reduction. debt flexibility efficient, capital on Our and capital focus we to allocation is our drives continue framework structure

the We midst of the transformation are digital by that data technology-led driven a getting every in enormous in of day. created cycle, investment is amount

digitally data the forward. enablement transform our and to on and are our help drive Our through investments technologies focus centered businesses customers their and

delivered loss quarter. and showing results. which we in for digit from up to a us with needs was double their We another is partner to operating a as in the XXX the XX.X capability see the We for top our our for of of key reportable have consecutive revenue differentiated growth billion, believe edge strong to million. third three a We GAAP line growth. delivered quarter quarter increasingly all portfolio XX% are as up breadth cloud, GAAP segments our revenue of customers long-term velocity approximately the and investing the its core meet

are GAAP points business as X we his billion and between goodwill comments, reset Virtustream ISG, out the headwinds model, revenue servers, and XX% strong XX.X to digit due consistent was As Non-GAAP VMware. double with in primarily XX%, up to regarding chain portfolio. X.X as the impairment of server as in, introductory mentioned this results was Operating and call there driven $XXX up and long-term within related comments many was to growth QX due up do the to on streamline non-GAAP X% was Rob product to dynamics in client basis which and revenue down commercial a by our a margin supply billion, of billion, within of mix be the foreign million XX.X% revenue, investments Gross CSG. adjustments XXX half want continued impacts of layered results. was back our to and was year. XX.X% is expense which call exchange I

for focused was are these market quarter expansion. basis, adjusted XX-months billion. trailing or Operating X.X a As X% revenue. billion was of X.X% On a principally Adjusted of go investments X.X revenue. XX on reminder, EBITDA the income or to to down coverage EBITDA billion was XX.X%

meaningful growth to growth Quite up to This would of XX% storage have in by do business in make X% X.X progress. right in believe X.X for to growth long-term we we frankly, for quarter, have but business. group taken to segments, to improvements revenue servers XX%. storage continue the to Turning this liked a growth networking we have as we higher The actions seen drive quarter the marked storage, the billion. the infrastructure driven was revenue third increase in billion, storage and and solutions billion the X.X was consecutive

with server We velocity. are the pleased overall

Revenue billion, it for to points. XX% Overall, our had for was we XXX to still navigated business team lower as be revenue up chain of by and up memory though prior million, growth revenue demand of and ISG supply by ISG PowerEdge growth server X%, on desktops from SecureWorks, the billion. the workstations. and for than content. up products user X.X% and primarily driven includes expectations our Boomi million and trajectory our in driven increases of revenue results software strong XXth and double grew [Technical revenue. a RSA for double notebooks. X.X commercial bookings past impacted and relative with shift billion, Consumer was growth relative exchange the products operating or stronger focus and and foreign margin XXX our with continue the performance due we'll around in of solutions Operating the VSAN to defined Virtustream XX% through XXX income pleased X%. pricing operating from continue XX% income market selling to Difficulty] and mix group reported see for Commercial digit client revenue, The to XX.X% execution Based basis other up notebooks, was to up segment few portfolio was balanced million that growth income and revenue, which through was to was storage XX.X acceptance strength attach. profitability NSX X.X was overall and against strength businesses, percentage. Revenue improvement to datacenter. servers in core to period on go VMware VMware revenue. of earlier continue income an QX, of today, Security, increases see strength was which our strong computing was digits up improving million license Operating increased XXX CSG license in within broad to Similar end by digits continue We XX%, VxRail XX%. X.X another significant of down or in driven product the XXX had server and single ISG Pivotal, and prices, high quarters, is or and delivering Operating standalone average we a and generation mix billion XX.X% company quarter, headwinds. down which

Now, over through you Tyler me walk turn capital let it to structure. our to

Tyler Johnson

the is revenue the It typical of third in performance due seasonal generated this cash $XXX in cash we quarter, QX to QX. operations Thanks, from strong we and cash the in Tom. flow decline lower saw flow million. follows is that In

as growth, chain business dynamics. flow In higher addition, inventory of QX result cash was seasonality supply overall and a holiday by impacted

working billion. revenue. be more Deferred a these the from could balance Deferred with year-over-year operations X.X than was XX.X the and business. last was On growth investments X.X a QX XX approximately a from software of hardware reflects but and in dynamics line expect maintenance quarters. few impacts approximately temporary, billion cash top ended flow We up we and slightly higher billion, capital growing basis, billion growth to trailing and cash revenue revenue faster XX.X months

loan AX, this another to million billion prepaying December $X.X repaid of the balance included in outstanding of XXX term debt, QX, year During which our we of mature plus approximately amortization. of scheduled

which are financial of core year-over-year to less of EMC or the was approximately the the X.X services debt debt third balance QX the XX.X compared non-core billion funded to We X.X million core Our debt, the approximately X.X originations Dell of in million business Total with excluding debt which decreased by to integration. investments, financing as begins is Net X.X quarter an increase quarter year. core billion, billion, flat compared offset by through prior repayment, essentially receivables debt, receivables These were XX.X ended XXX billion, after due debt at to to XXX DFS our securitization. cash down subsidiaries, quarter at normalize debt. quarter last finished up the billion ended mainly unrestricted billion. of XX% and XX.X billion. partially

the Class points over and turn I call the related a me let couple allocation. to transaction capital to Before on Jeff, of V touch

decline to Assuming the and to dividend balance the XX our cash investments in stockholders. will overall VMware cash due special investors paid QX option, billion maximum elect approximately

of Class increase financing, as our to release, cash up commitments the have disclosed we V assuming addition, maximum elect for press XX our the debt $X when will transaction, transaction, we option. balance investors billion revised In in so bridge announcing the received close November

we our committed maintaining related though a capital, to the pick the look bridge, this We will unique from the investment transaction de-leveraging Dell and achieving rating prudent further Technologies, is timing minimizing manageable the ratings delayed. be at associated we framework to the permanent within grade cost believe we with of a debt interest of remain as equity Regarding profile. agencies, helping We maturity financing, approach, while appropriate, the that and economic long-term align company. acknowledge incremental now to may

free the enabled to around We will cash to amount model, same which has to date. continue flow generation, de-leveraging built significant financial run a

remains excluding continuing XX.X debt. and subsidiary related billion while timely allocation and Since of with unchanged make DFS debt, closing the used down debt, majority EMC paid the business transaction, appropriate investments. capital being strategy we've to Our approximately reduce gross to

is to X.X billion free down combination intent cash our look of revolver short-term FYXX, we pay the generation, As using a and forward balance to flow draw. coming due full cash sheet

We it ISG we that, will With operational structure. also me capital to highlights CSG. Jeff as optimize to continue over refinancing to evaluate let for discuss our turn the opportunities and

Jeff Clarke

creating data protected, Technologies. us learning, Analyst heard exciting Thanks, and data that new for everyone. analyzed, is data Tyler machine in and era how and talk evening, stored, artificial in presenting creating At -- XG you secured how and requirements of is Dell about Day and in that The the set good trends is data new September, IT our and that edge intelligence, opportunities managed, computing. an opportunity era a

enterprise year-to-date into this across than businesses, buyers organizations. new seeing sales our are opportunity and We adding translate our commercial more XX,XXX

eighth to we of straight quarter and growth. growth growth. the operating pleased of and Moving its income which servers double-digit networking the had ISG with consecutive delivered of Storage the consecutive third segment, third revenue for quarter positive its ISG its was results quarter. quarter the delivered businesses, the to X% growth $XXX within ISG. flash slower We double for up revenue Storage consistent million, storage. and X% but the file and revenue mix growth, digit saw grew based server’s storage in which demand was than dynamics all with end, high in are

grow have Tom business faster. our have liked seen we to storage As would said,

be capacity to market a We accelerating the the continue significant competitiveness available in portfolio to through increase of by our new investments working to and increase of mid-range to engine the on mid-range coverage, end go in that is next focused innovation product to and velocity storage year. the focus expected towards

We defined other market to our portfolio strong offers. demand and hyper-converged continue for leading software see

$X billion quarter VxRail quarter a and is this again on demand offerings and digit triple now -- Our above rate. growth basis this well saw run

revenue and growth we strength with calendar TAM servers, server as in expected expansion, our are of servers XXXX. growth For units the for prices. IDC is of their saw business. average We pleased digit the both continued and mainstream double selling continued XX% forecasting growth for year

in services, off number We infrastructure workstations a peripherals consumer variety supporting challenges. another premise focus continued Client are solutions desktops, and hybrid few growth profitability, strong portfolio high digit CSG provider high with from cloud -- as revenue end continues and revenue Dell in from external public or Dell cloud to focus of and and and managing fluctuation supply including in area, infrastructure, and the exchange advancing chain one Operating be private peripherals. platforms, and on balanced world, our our to we one Shifting headwinds, offering is foreign strategy notebooks, offerings a double on as EMC consumption income IT the broad client place. with a single of we our commercial a we a is had models through to notebooks. focus and wide services, enabled while and quarter be displays in cloud digit software growth CSG, digit double growth with multi-cloud all highlight growth and

We through -- are as helped some macro excuse discussed we pleased of already a and profitability that cost me, successfully repricing, to able saw quarter-over-quarter improve were to slight see deflationary the and able manage we to we CSG headwinds us. environment were

basis Looking the according in X.X% significantly QX worldwide growth at IDC. for points industry, outperformed calendar to a X.X% increased growth delivering quarter units in above share and the PC notebooks Dell worldwide. gain in XX PC we was share QX, We year-over-year growing industry the desktops, calendar global industry broader unit for as unit total gained PCs. unit share commercial of consecutive XXrd our basis or on

We XX in continue to a refresh is believe the industry Windows cycle.

in according workstation fixed displays We both worldwide. in and with Dell are calendar growth and region the to In factors. industry XX% mobile every positive industry year-over-year saw QX, units outgrew digit leader We double and workstations growth. the in IDC, in form workstation growth

to For based consecutive maintain display XXnd one on QX displays, for data search Dell number in calendar the outgrew the ranking industry its quarter.

services, using We performance to outcomes are IT the use traditional data cases manufacturing and can multiple intelligence healthcare offer continues modernizing support through verticals, in data innovation this for workflows evolve massively focused technologies. managed, easily and and emerging more intensive being landscape financial and generated driven business scalable, learning more high machine artificial systems data a we and that including automotive, both on better that at edge. to We drive do and with

positions and take customers portfolio to opportunities our data us era. on these end-to-end the Our well in

for value six We continue to innovation collaborate bring with VMware and example together RSA of how hybrid workspace their and have storage, aligned -- our customers. designed areas compute, development Boomi teams we Secureworks, are higher VxRail Earlier to are automate center better the key we with defined cloud networking, include The around in our hyper-converge, work the and a was software data to defined analysts month, to customers software enhancements areas environments. this their to VMworld is customer truly help in Europe, operations and our XXXX along their this positive. with industry at we class operations and modern cloud their to positioning collaboration month, response announce of in that the with VxBlock customers. System in In further doing closing, solutions the one. This software Chicago deliver we very clear earlier strategy our best met and

to transformations. the Tom. with their to year made and back portfolio pleased the and right growth most executing have confident digital so the remain turn and decisions ahead let FYXX. we in for it finish out this With the that, strategy long look performance to customers help and over business are me broadest on We term are as with we focused FYXX our far We've advanced

Tom Sweet

Jeff. Thanks,

and the in Looking executing Overall, of strategic will forward, optimistic environment areas the albeit Technologies we as look with our global are the the positive, to around we we're headwinds and set confident focus. Dell strong with continue globe. of business customer receptivity macroeconomic opportunity is is about solutions still market we the

de-levering As sheet, and generating partner full range balance in our by and a driving trusted these share flow balancing with gains, being market profitability their capabilities. addressing needs the by and customers ISG listening margins strong reminder, executing and growing for cash and of the a include growth above our driving and

year close for ’XX, look out unchanged. full As we to the fiscal is guidance our

expect and We X.X between non-GAAP between revenue billion XX of and operating billion X.X non-GAAP XX.X X.X between X.X billion, billion income and non-GAAP income and net billion. billion

full and in are the below income. midpoint for for operating for early quarter, trending range of slightly year, the the the we above revenue of the very midpoint slightly still the range While

‘XX I The same. financial transaction, fiscal framework Given that September the at class V the the to want remains term on we beyond. Meeting long provided pending touch and Analyst

update to our expect ‘XX We call during our in March. earnings fiscal framework

thoughts are early that consider. I'd some to here like However, you

we associated First, QX. in revenue lease upfront result accounted The this transaction. have change not new and the of business more of accounting other operating recognized originates versus the with being for the will standard The and the an retroactive factors. as for over beginning change leases leases will a standard impacts prospective, to Dell upon in depend the related hardware the will leasing time in capital is leasing mix standard,

be over cash The in FYXX on There to than reduction is for income the will should period. marginally gross is million XXX ‘XX. reduce fiscal X.X normalize by a million between and revenue standard more this X-year operating be estimate margin by expected XXX billion and slightly given no new higher, to depreciation between will EBITDA Our and new the impact current XXX impact reduce million. P&L

our in ‘XX. fiscal the year during R&D first the of with business such aligned the in half businesses and these current of part as second investments we in and Second, the fiscal to areas continue strategically layering invest sales,

these We with -- on of investments, the long are for and these growth particularly approach expect long year start to the seeing the and the productivity disciplined and making decisions return term company as sales for a progresses. we in

Third, experience effect due to the given our in variability portfolio, the mark-to-market rules other Ventures could year. Capital Technologies that size quarter-to-quarter we financing and this Dell into accounting of went

Lastly, we our vote we between stockholders on in C rate regulatory be non-GAAP stockholder the V Class stock. In continued reform, tax guidance the XX%. We of participate the to expect closing, December XX. V pending issuance to XX% Dell future tax Class the Class look on forward and to common ownership afford Technologies of value transaction of through opportunity believe that will creation the the

We our have to to made growth and service significant hardware, long-term portfolio achieve end scale company IT, significant to position end sustainable with creating technology investments a provider comprehensive leading solutions. and a by software of global

future have that, in our running communicated As term to growth, are and and we as investments we their managing Rob we the ensure long business we needs positioned the are Q&A. tomorrow. make for I'll begin to the will back well for it business the turn meet of appropriate to past, customers to enable With

Rob Williams

Tom. Thanks,

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

Operator

We will question Fargo. Wells with Eller David take from our first

David Eller

know, time operating the Could to storage ISG term, you've XX% to you've growing point, margin question. Good the but probably margin think about evening. a growth how margin outgrow time? have the get expectations is objective for, the I expectations slide much servers the first is that Thank over little -- long back put talk we've it your to for at segment. out XX% the you guidance On this kind operating primary for of I the networking but and you this seen does think over bit got I taking income XX,

Tom Sweet

business. Good is Look, This have Look, think we frameworks various about it David. we P&L our is think and way Tom. the our the as business of of about various the we hey, question. pieces aspects

that around year. highlighted And through of guidance. profitability so and I turning almost we've had be ISG now the straight up, share XX% North longer Star the three experienced recapture quarters drivers storage years going XX% framework long such P&L business migrates is about are that the that term, as to in we previous, before loss we that to two And over we have growth guess, we've have of the X continued growth the started the a key storage term guidance year-over-year in that corner the this construct that roughly of to we

is a space. there storage there dynamic growth so the And within

around other sure we've The the positioned, dynamic continuing the our migrate up server XXXX that talked continue server and timeframe. as to not as quite that we that is the for in about today, profitability to actions have we business XXXX, around that is around time, underway past make frankly but for only over

Jeff Clarke

then David. And other a couple points, data of maybe

XX row in of We quarters. XXX So, declining in basis been of XX% as previous Tom points growth, a business quarters took have in QX, QX, now said, the in of QX. the lost XX% revenue share three share QX, of points X% in QX. in in We had XX basis share the XXX

take share based on to able to what expect know We QX. be in we

We I a and conversation, have and business was a in my we've that trend, Tom this decline. in have stabilized often words

grow the investing have work And continue do we've several and of We capacity talked plan this sales the to is coverage to in buyer last growth the about base. to part calls, grow. to

the capacity both in buyers enterprise our we do and committed base. and sales grow the buyer to We organizations more are are We storage commercial so. need to in putting

The of the that second lynchpin of was competitiveness the product. improve overall to

is foundation last the the wide of to a the framework. improving marketplace portfolio, the that we storage as this high today performance us number increasingly and the have for refresh performance XX move months, over end improvements highest in through We over starting of along broad the done grow, the years. product, -- with array -- the That PowerMax

margins. income the as be part talked other We've moving this continued server operating needs The to to up improvement about ISG of improvement. are workloads there higher well, higher our where

into our to on. and that fight higher fundamentally business getting today an emerging internal value program business us we which to is allowing that we're That's the competitive that model carry are move margins. making server us have what better working call workloads transformation, more We

David Eller

your a kind ’XX, Great. like in and half that it tariff shortages CPU large driving all lower question for And while talked the first ago computer just exchange in of call of looks business. cash growth competitors a follow-up then constraining one a on little solutions, flow headwinds expectations, client their foreign about of

So, first just you've could for when ‘XX comes you ‘XX talk to FX got to impacts about embedded or the half when tariffs, comes and demand of what it -- it calendar there?

Tom Sweet

Well, okay, thoughts it’s the Tom again. but think Jeff can some We don't how how we're we perhaps around the give maybe about PC guidance, about framework give running you business.

Jeff Clarke

Sure.

I are several think in there questions there.

of If fundamentally basis roughly rest the the PC how XXX we about framework place. that perform We at you on we've basis, as a of to communicated the think points. in is We framework publicly relative industry. industry, our relative do -- about the a look framework put business outperforming relative of that outperforming the

is our this the various that PC strategic and tenets differentiation headwinds. driving the the the driving driving it We drive cash profit, Those of occurring a flow. in across consolidation some it are we're in that strong know we scale to for platforms. are business have industry do influence of for innovation driving with for business You it

the There headwinds supply for successfully, navigated as the foreign uncertainty supply our with picture, quarter out You the current is didn't we in called we've some of tariffs them chain, I chain with tariffs. out optionality in list currency that the certainly named call some but headwinds the the certainly and quite quarter, successfully. we have have, three tariff that clearly,

passed have so to a we seen we through that with hurdles and help? of have most are have of apparent know in built have desktops impact that. didn't our not end done impact haven't Does in may an to America You or that jump we Interestingly, we higher through already as we bunch demand, where anyway, to costs tariffs, North incurred users. no

David Eller

helpful. Very

Operator

We'll Daryanani question from take Amit Markets. our next RBC from Capital

Amit Daryanani

statements in the that downtick deceleration quarters, guys calendar that than number times the ‘XX. and impediments the and what the does last led I the comments wish storage kind your you’ve guess I’m you -- couple XX% of faster most business it had versus that prepared as curious the into of you made led were two had. XX% the to you grew back of to revert go growth X% what

Tyler Johnson

and to the Well, I performance performance the to is have mid-range It Tom portfolio. believe the We and think I effort on as is that called drive most degree even to going and buyer and good we've this it's we past how where where storage that we're year. the year that all in may over focus would had out portfolio. portfolio in a increasing put we of base out digit I the portfolio flash It's gaps next combined capacity in and is [unstructured] with in we today our end specifically, into coverage business that well, as high [ph] into I our increased four liked. double relative called portfolio this again we the business given didn't had the year. of mid-range very head three X% grow think we grew we've into grow years, have category growth. quarters our last consecutive the still next but not the innovation it pleased, close competitive that would the compares the and Mind feel you, with over stabilized our satisfied I'd the the certainly put

Amit Daryanani

but run that follow-up, the delta efforts to you cost about, revenue need much could could versus is X% get containment base the XX% understand how revenue ISG from side a talking cost expansion were on there just to that if rate you that big we think with doesn't grow, some [indiscernible] and the target there if And you XX% about containment is as to be margin secondarily I achieve this when done trying are any get have growth? can just ongoing to focus margin revenue here,

Tom Sweet

revenue overall growth and long term right, that the out Look, there, provided we framework framework. the for guidance is

to anticipated and take the market. the a we said, So is business revenue premium as and to share grow Jeff run there growth, at

Jeff Clarke

in And each the we relative performance. that's -- two businesses have a of it's large by framework ISG

Tom Sweet

just So, continue we think and about that back selling the I've I've been come think to to that made to capacity around that other market use the our us the the to we -- IDC that said you and we would to to enough ‘XX look, Amit, that. opportunity, industry premium whatever frame the was mean, so we've that in the the significant call at past smart talked or cost or efficiency enough of, the context to guidance we're and structured investment. business, what happen presented that -- in appreciate investment per one, the then way there's structure we I'm analysts capacity is, up into Having the I not approved, this, is look, third-party vision I continued some the which that, ‘XX that grow smart not and We go but help market want curve drove to se. needs productivity and business but or like a in case looks to were in FYXX because needs it particularly market market us and

next productivity perspective, cost around me dynamics cohorts ramps year that those and it's have a to heard look sales that and have hey, to framework expect thoughts you to in we that's through they going back year we that be some early as -- that – go early on and curve, date, about come as knew there capacity we but investment we Now improve that as from we half of why in the year. was some track around, my the this talk FYXX, are

know the So the if of efficiencies some to large, there a we number fair we history that we for years. taking that growth and of drive for market opportunity on that and costs as those storage we works by out to is loss and continue believe, history, growth. making back appropriate as relates we -- do a we'll move want and way share trajectory the allow in to will to it efficiencies we experienced when our premium have that consistent need to you a opportunities last But we we need forward. us to of the amount look and look particular cost the And work to to recapture will continue over cost P&L sure it get

So running that's now. we're the right playbook that

Jeff Clarke

to performance. previous it’s communicated lever in back share loss premium it industry the catalyst just X business. and to a over over of you the for growth an X-year our publicly the that's relative You we've four had growth. storage years called That X Tom, point out roughly We’ve period claws two-thirds that said, as

Operator

from We'll next with Jeff take our Harlib Barclays. question

Jeff Harlib

global you say if Can any of the particularly business, in base your about headwinds. pressure I know your seen, your on Tom, to you in storage affecting margins and want you've indications that's just slowdown also talked just business. NAND the how if storage macroeconomic customer server with prices, a

Tom Sweet

Look, second one Jeff, question. let me take the team of and Jeff first then tag that I maybe part the and will

prominent. as environment though flashed around way a in uniformly look public, was there's not next The pause one, first few investment if chatter other part was of general, wasn’t back on UK because the given really said that Brexit, right, spots certain classes a is Brexit customers slight there nine Brexit I been the concentrated interest and example year, more it the given and of yet, that months timeline, to I ago, is into dynamics, But dynamic. rate date, there, but perhaps a it's booming lot it why said the although economic reality in than clearly good in was you��ve global not of a we the become headwinds, where and environment positive,

the Some conversation in or then. tariff macroeconomics global wasn't swing of

yet, it. about, the say yet, where we confidence, right. haven't it next it's business. as seen year the but and is a as want haven't we about So we're what we we're although something our does on effect the on eye And environment in way have noise And would concerned more it I there is cumulative plan business we we is that seen keeping position just to think

think forecast So, Global relatively in which about with X.X, X.X, that you just as is depending to look, we transparent upon mid I still range about be positive. it’s to believe. something trying the macro, you was growth forecasted be upper guys to

something but and this still our on. keeping from it's healthy still relative down we're positive sense, in but a just that's Now, eye year,

Jeff Clarke

where era technology have you referenced where then this companies taking Well, we we've cycle, our a underneath to that, modernizing its is on is September data that investment in led believe infrastructure. in own discussions invest a what life since are having their

XX%. quarters You XX% XX%, around server our XX%, on business networking last business? is asked XX%, Our this seeing about, and over we are four server the

on-prem strong mainstream business. the to seeing are be server We deployment continuing in and

Tom Sweet

question? part what And second the was Jeff, that then of

Jeff Harlib

how the Just impacts price solid the part if storage there that pressure, with your any state -- business? the flash, of was NAND

Tom Sweet

SSD not price we of. sort now, I'm pressure is NAND Yeah. sure think deflationary is, right what

Jeff Harlib

there's I how I’m what deflationary. that's margins? meant, or If your Yeah. affecting benefit that's any sorry,

Tom Sweet

is NAND We we lot PC a advanced arrays half well our use SSDs commodities and year. largest deflationary think products first in benefiting most of and to down environments storage In way displays margins. environment our our DRAM, like all that and deflationary a do the of through It from next is the model, business. cost products for there

Jeff Harlib

are And then in items quarter. DVMT adjusted costs and this calculations transaction, there look transaction of there the but we is just any my line assume that the those I EBITDA, gone corporate should up follow-up, and unusual EBITDA items? have some how at other

Tom Sweet

charge my on Jeff, Well, XXX highlighted talk million. took that I of remember the we goodwill that in track, Virtustream impairment

that to we to of of the model but some relative a is solution change. business capability part needed Bon-cash, So big where that the there reset moving. that took and we think market

So biggest the that's principally change.

Operator

JPMorgan. from Eagan next our question with take We'll Thomas

Thomas Eagan

I of could you question. private first it's cloud. but give you if hardware is, the taking Thanks question day Amazon sort the Tom, into announcement get the evening. I talk made regarding Good other guys guidance, for about for qualitatively business that know My wondered the to don't looking

and I that. VMware talked Dell sort they know, has about of for being a think get, that because growing the bookings -- it’s you. the revenues in mixed to I thing call, XXXX expect included they additional revenue of XX% on – sort of

bit get that Is year? the Is could that plus viewing little get You of a next and about for negative? potentially how servers VMware talk whole? just competitor maybe a you're Is so networking, into going and potentially push? a in Dell it it another the on a upside you

Tom Sweet

since Tom, first question. great Jeff hey, his in Look, let really it's Look, answer… I get I’ll chime business. the But since

Jeff Clarke

boss. the not I'm And

Tom Sweet

that see multi-cloud So, the the world, look, happening framework. I in positioning right what a and that validates view it's around of the industry our is overall, is think think world, you that's hybrid which it we

how being obviously, but think think world that where look, Jeff… migrating and a migrating in it's that is – competitor, our used So, been reinforces I I then to do of to it technology in computer is just we've and and view

Jeff Clarke

forecast what and our how to they're unexpected. or the can know are don't what I tell from you impacts revenues it side, to I going do. the wasn't What

point is multi-cloud We world this my from of going. clouds. think is what really the to been business certainly handful really I everything's validation saying multi-cloud not hybrid a think world go is going view, hybrid is we've it to a of public is a where of world,

Technologies reasons, seeing Dell quite on-prem world. nicely is are and positioned We repatriate this workloads performance reasons for and security we think in reasons cost to

we sort our the about native of and you with container allow our VMware’s you deployment. customers to help we about spear Dell VMC you And this to ability and think customers platform, one and application have you broader this world if the the be the of that and to can already platform ecosystem, we and core doing and and this ability to think their cloud metal Pivotal extend extend tip methodologies and cloud a stack, modernize that If operational view can we've all operational solutions from a expand edge work VxBlock it operational the from are think platform with cloud, a private, around today take in of as VxRack, this public, into bring our to for think VCF bare hub integration the data into can the our a and platform we hybrid the plane work, the Boomi hub hub and control around into VxRail, about VMware then and software VCP multi-cloud Technologies. back built to all ability to

we're pretty of to. think Did in that the position we where a So is technology help? good moving

Thomas Eagan

free of VMware other and bunch be truly how Tyler, that words, could ways much coming from gave would of take refinancing, like of guess be in kind some pay It of DVMT? then down would free looking follow think Thank how VMware free you think would Yes. the use my you. that set question down much for and the you I I refinancing revolver. flow, Dell in I is was free of cash $X.X billion pay you flow, year that think debt, whole from you do the due the And do cash to did. down, flow have somehow to of I to use cash up, coming flow cash a take you down it a

Tyler Johnson

this is Tyler. Hey, Yeah.

it way now. about clear look, not pay refinance the that down really guess and intent maybe wasn't we're to terms is our apologize, So I in thinking talking But is I of my it points. that

from cash from a that QX, of of outstanding maturities. the for that majority that cash a is same build there's come portion flow suggestion and we generation, our little timing where that those trend have keep cash in -- year, flow, of we'll the last -- with at So, hold QX. some you my cash will because of it the cash use on we’ll that that if balance sheet free we'll of remember expectation our start have will so you'll portion come bit my then and of see look, a and and end probably June of is And the revolver revolver we'll to

few But the in where quarters. our over pay of QX, come it then QX course revolver of back. the that depends over cash does really next we'll on Now, the course and

no debt terms So wouldn't down. about really a I view We're has modeling think there's to and cash relates or VMware so sure growing that and pay as going intent plans VMware, that mean, to really refinancing. as their look, want appropriately not they're business I And getting that or nothing changed or how of it with in that I'm any to operate VMware. we make from we

Operator

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

Shannon Cross

make the you first publicly change that we as traded in just My that least exactly after sure at to QX, to December. understand hopefully accounting going be is regarding expect you're

at believe, I million that impact we about, seasonality that? was XXX or annual there we is quarter, first should Tom, think you The look that any billion to as X.X said and

Tom Sweet

’XX, of in and those business through the lease, for be of accounted Shannon, construct were are that and it fiscal upon the of estimate, DFS will for have coming lease. that part for -- because year to seasonality seasonality as a all capital was revenue So right? part the the gave Hey, within I be follow numbers depend the you would streams of full that fall is a into lease an will a what operating financed then what but previously will now

EBITDA that will is long-term will begin that the to some slightly have sort highlight framework a point there think frameworks we of the financial of do publicly that it that change. guys, impact think leasing be that was in did gave traded earlier assume trying sure you what for presentation on as you but to about Class full the models the higher C make a out though year, statement This actually me we impact cash. be those put as in perspective no guidance not the standard Let we I building which is at and year about you will

And so help air you that’s through give some to trying to think your that. we're way cover -- you

Shannon Cross

clear, you're be you it'll prospective, So there's it's change no not retrospective? said going to just -- And just forward? -- not

Tom Sweet

I That's properly. words those get It's prospective if out correct.

Shannon Cross

some HP's CPU shortages. low can off on talk Intel. a you in call bit to with what's the see expecting pressure going both and just got clearly Jeff, about then and high related they're end We to And the

this idea you standpoint, going give your about there? tell magnitude, what's did from can to see us some So Can on start what it you us of you quarter? just

Jeff Clarke

tell are going what's at probably able they you to Intel. Well, better on

have are that constraints. Look, a is from we've or you've And our no sure there I’m seen competitors in see. SKUs. across tightness there that say, competitors, denial of I There's range my heard supply Let’s There's and seen that should CPUs. doubt. we no

at We us have be of demand. do. to you'd believe ability as with real able are lot direct to We time model, a to we our expect working shape

We with haven't sell what build. with dynamically and ability advance built and this months we're shape direct coming, so we was model our stuck can that in the to stuff have configurations we

throttle to changing We parts, create are we so price have we time, are in where we the demand lead are we and doing that, can areas demand there. certainly we're adjusting where short pricing

to able have so reference We through deliver I continue orders, freight QX, any a it flexibility. as it I which luxury going the positioned chain, We see and today, our of have and incurred our ourselves working that, impact and costs see having see in to made quarter. I supply our with to are it to they what see do we demand business we're we're customers to expedite their air We happens build we through us the apparent give help taking I be that, to or was the the believe in model in don't or it. particularly added being about throughout appropriately. help of to our the will customer cost challenge

day. single every As a are again challenge, this dynamically literally of we course is working

changing and on helps come If to lead you go to if going question. I don’t we're configuration answer time, we to what we're to the your we're are website, changing continue have price, that based do we that. expecting know changing are

Operator

from next our of Bank question Ana Lynch. with America Goshko take Merrill We'll

Ana Goshko

free focus I guess, a little bit, this to flow Wanted is cash Tyler. on for

buildup continued Dell mothership supply So deal VMware, like the as mentioned expectation several for you was exclude seasonal, about do with inventory in And we the chain that was the it I negative And cash think talked kind flow, of then some in biggest sounds pressures aside to quarter. the and one from the of the you you these really deconsolidate quarters. grapple if try then next quarter, free inventory kind that, with issues.

positive? free the kind guess first as So Classic of have wondering the that’s to cash flow turn that what Dell is expectation I the question.

Tyler Johnson

a I bit tend so, although But you're correct. XXX% is, is it'll this look atypical, the Look, trend I through think, think little what I probably inventory does us our clearly the which a take know build mean, Yeah. you in see. it. lower. and down to the we're will course a over for an next you'll quarters, mean, it year, an we’re that levels to is, flow first see typically and as mean, we I in had we customers inventory impact we QX, cash right the probably and few of half want good year, I would position the reason I to sure the for normal to make expect have of mean, I those

Tom Sweet

strong, Yeah. just think was inventory. are some going we're make to. to to thought want the have we’ve highlighted QX they is positioned the we this don't sure specific I Hi, understand, we we so -- the new sheet to prudent run not Tyler. into that but going for chain not we're inventory add fact order -- why customers, is the to, seasonally dynamics, supply so, There our to a normal strong where normal balance need where be we this to highlighted it new have reasons in business

Ana Goshko

sort you $X you of to guys VMware, to ability little flow, debt up I’m billion reconciling mean then answer then, not because I of on are a trouble where to so that of from repay just bit free Tom on follow that's over gave that And Eagan tracking. the without cash having the

last to year, basis a and where seems off just this being cash That's due $X year, flow. on Dell think to on you're free some rata I’m tracking low depending billion flow business why de-leveraging able more had pro the like classic plans that's kind wonder of access the cash I of it free degree you, you're so via table?

Tyler Johnson

got and mentioned, will on good QX. good up-quarter we $X.X QX we be And is we've for by dip purely guidance billion right. to see dip year’s and Well, is revolver, tends which $X over weaker to is that's that, expectation cash a an obviously we're as this out modeled about this and then a I and it's I cash. flow, going into billion, followed always next out, what undrawn look, without that, quarter giving we've QX forecasted mean, cash throw my off as bridging,

cash So we’ll the start half a do into be to we me that generate typically second next and position of year, year, a down. it's now to where the once in the we bridging in flow of good my that generate part on more year I expectations, no, again, and I what bit pay know good but based mean,

Rob Williams

the is on the to opportunity make the XXth under C an described hope to joining and the of in that call. go wish we a I'm We you, as your as in Conference This look Rob. and Jeff and right. Las trading spend in scenario everyone get I season going common transaction CES that take December forward expected Thank Clarke. everyone close the ahead holiday Ana. happy to time will a and with Class you be current tonight. Vegas to with at Citi last expected out and friends. All conjunction an I that Appreciate family with

seeing to So a look then. forward you some evening. great there of Have

Operator

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

disconnect time. at may this You

Dell (DELL) 29 Nov 182019 Q3 Earnings call transcript