DELL - Earnings call transcript Q4 2020

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Operator

Good afternoon, and welcome to the Fiscal Year 2020 Fourth Quarter and Year-end Financial Results Conference Call for Dell Technologies, Inc. I'd like to inform all participants this call is being recorded at the request of Dell Technologies. This broadcast is the copyrighted property of Dell Technologies, Inc. Any rebroadcast of this information in whole or part without the prior written permission of Dell Technologies is prohibited. [Operator Instructions].

turn Relations. over to Head Rob like Investor of now the to call Williams, I'd Mr. may you Williams, begin.

Robert Williams

Jeff Tom for today Johnson. Chairman Officer, is everyone, our our Thanks, joining Vice and us. Chief Treasurer, and our Sweet; With me Clarke; Tyler CFO, Operating

this operating otherwise, references of expenses, EBITDA net EBITDA, measures we operating to our including non-GAAP and indicate financial their and most measures to web GAAP found adjusted cash measures reconciliation to income, these non-GAAP measures, unless flow. adjusted revenue, call, financial release. During comparable all deck refer gross A press be free margin, income, directly can in

recast all and results. to Please that growth also specified, refer unless that to note segment year-over-year historical otherwise been include change VMware pivotal percentages have results

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

turn it over Now I'll to Jeff.

Jeffrey Clarke

Rob. Thanks,

and Technologies environment. moves stores, been do positions No we all Dell of one data infrastructure. more combined better our the any customers physical No a begins the protects our never As processes, of potential competitor fourth their data advantaged positioned we've across our company, as year across unlock to help and coming enjoys than virtual way.

in innovation I some FY as head an 'XX yet know am talent, into climb, evident and the results. our have of breadth Our us position decade. capabilities we to is we advantaged optimistic, I that data hills starting investment gives in

know you 'XX, income of understand delivered want We Revenue I FY with up with going modestly strong results. on operating profitability of EPS $XX.X and Infrastructure what $X.XX. is delivered billion at XX%. we revenue Group In grew X%. to Solutions

there. start let's So

down up 'XX $XX large FY investments that market. 'XX, in networking we didn't FY our FY but -- to chase a Server X% 'XX revenue but billion, digested in slowed. profitability ISG, declined China customers and versus CapEx In down 'XX enterprise was FY was up revenue in as large server our enterprises unprofitable XX% deals as

server remains long-term Our share strong. trajectory

to in mainstream #X years, approximately basis X been winning are points share have for and the We of server consolidation, in gaining over the IDC. we quarters according revenue XXX X last

both mainstream AI to and value the In increasingly machine-learning overall market IT plan growth, server servers, XXXX, calendar IDC, more driven to server grow and a requirements we the is premium and X.X% we're revenue FY planning at for revenue at and distributed solutions to higher our server 'XX, return at year robust to workload edge. in IDC grow the forecast. to expected According by to

take the Shifting storage. the Roughly began we lay stabilize ago, growth. business and X.X actions to foundation to to for years

data approximately opportunities, we invested productivity. share This organization, reach the over into points capacity like sales customers. Earlier rate cross-sell server to synergies action, month, year, coverage, into have basis will we of a XXXX. X this and including sales, more protection full level XXX We marketing, have selling of investment will specialists combined billion $X and next One and reclaimed we our basis these specialists. storage critical on realize storage in since run and

evaluated modernizing we our our the Power X.X-year under will portfolio. World portfolio, a brand, over new Dell storage considerable by entire storage made Technology X in dozens of now storage have And ago roughly completing lineup progress from moving customers. XX May, product our to journey years mid-range refreshed products have our being XX today, entire simplifying of We including solution by ISG

We top to been from more competitive bottom. have never

to a with are growth storage at 'XX by strongest the market revenue in and FY to planning core grow storage protection. We data premium HCI, followed

and tenured the is best stabilized, portfolios year and the business to simplified been. is team the of and ready sell, Our is it's 'XX FY is ISG. -- the ever

XX%. at FY year cost XX.X the growing XX Solutions an We year. a well, up outstanding taking was navigating tariff consolidation, refresh taking and dynamic CPU Client with Windows with through for premium a share commercial advantage record and revenue What's in billion, the of X%, tailwinds during calendar of units million 'XX cycle, environment. the more, to record component market. Group a $XX.X the shipped executed shortages up while from a winning the declining we're We

years for plan IDC, gained X have share momentum and a market in to consolidates row the this is further. as according to We continue the

tougher 'XX, FY solid year we're to half. compare refresh windows the the of part in the before second wanes. In the first we PC a This means market expect as remain through XX the facing declining

IDC, forecasts result PC excuse -- diversified units revenue, The more growth including VMware. business, ISG advantage a CSG X.X% in year. much that but down our of units important this IDC to the making PC be slowing me, is that's

positioned Our well business VMware double-digit FY year had business of forward. unit growth. $XX.X billion, is of XX%, with the revenue up another another going revenue 'XX strong year And

installed is of combined hundreds workloads and decided the of multi-cloud the the running of clouds bigger customers thousands have are public For more the And example, VMware customers combined. on than have today answer. base we are VMware all

an Technology NSX provides that the Dell and with Cloud VMware advantage the Cloud we infrastructure, as and Foundation have EMC across entire multi-cloud is ecosystem. best consistency our the model industry's of Couple The operating leading Dell solution.

we Kubernetes capabilities. strengthened Pivotal Tanzu, and and of With integrating an critical approach container-based and Pacific, development are our and platform, anywhere. VMware's acquisition combining it development, IP simplified they is go-to-market into application with with And In VMware Project vSphere. enterprise-grade runs building embedding

promising attach we already. rates seeing Carbon integrated security are In Black offering, is security, our PC commercial into and

end-to-end model to work across us Going for We together deliver to across forward, expect to a to our Technologies allows and customers. development, solutions Dell planning and integration continue joint product better innovate us put do that innovation to the collaborative portfolio.

We are co-engineered VCF Dell This when Dell with our is also solutions, to Technology Dell their Technologies that our true collaboratively differentiated Smart digital and can customers sales with to this journey. unique VxRail with experience market first on do team increasing Customers today, driving is Cloud, help our love customer especially including go Fabric best and X NSX. we traction customer and a customers it, only and Unified Director with We provide. Workspace, largest it's Technologies transformation growth. unified it as seeing

FY customers, in in grow line major revenue of set 'XX business and of we every this X% For saw total.

Looking our grew customer segment at performance. Preferred the rest Enterprise revenue of X%. orders accounts,

China, FY is excluding FY have in and to reach in as VMware 'XX. investments Our small grew segment base commercial direct reach orders Dell's X% VMware made of 'XX. revenue customer and medium This work business growth business double-digit with we growth strong revenue, The especially mid-market. delivered in downstream have orders in we both to valuable together the

good across board the our VMware simplify is the deals and to increasing through Dell is going And market. of we streamline as go news volume the

DFS 'XX. in duration FY includes size, services. DFS, is VMware profitable, transaction significantly billion includes grew payment more it's a XX% when and more solution, in originations in longer example, VMware a the And larger $X.X to For transaction in

innings with the cross-sell go-to-market early in are of opportunities. significant realizing We our synergies full still

example, quarter, buy XX,XXX half For storage only approximately and of from server Technologies. we have customers every Dell them

to providing opportunity, businesses, selling this power-up incentives today. additional address across of programs sell customers program existing new not marketing our To to segments do we've our out new to purchase lines of enable rolled who business global across lines all them and

there well for work strategy, and our long term. ahead, While in is confident I more are the we increasingly positioned am

We growth, value in drive ignite remain And aligned our Dell Tom. ISG clear, XX synergies. manage is I'll the to Technologies' it Win Technologies data and on has focused job on maximizing the turn over shareholders. potential no the for now Our Dell ceiling transition era.

Thomas Sweet

Jeff. Thanks,

all structures, progress at these operations, compound have a our opportunities We made of year in value current Since synergies, for growth revenue we and as roughly levers: have significant company, XX% on X shareholders first rate. are across full areas. combined annual our we aligned each and capital a new focused XXXX, in grown corporate maximizing

reinvested year R&D. in And the and have billion transaction, in per between EMC billion $X.X $X M&A, $X VMware. roughly billion since We through primarily

our one a debt down optimize $XX.X amount and structure. given At portfolio while announced the corporate have simplifying are will in and EMC solutions transaction, of have since any nonstrategic the approximately the to RSA assets debt we transaction we last due $X billion year. gross divested time, paid gross basis, billion same continuing Including week, we calendar the of on

and proceeds the ratio a debt are billion committed paydown leverage investment-grade We billion, to previously confident by $X debt increasing fiscal using end divestiture. from core $X.X our Today, 'XX the to in target are the reaching fiscal achieving ratings, year. the we remain approximately of from RSA announced Xx

We lever as additional what a maximize opportunistically stock the are of up to announcing is for help a discount effective provides significant an billion our XX repurchase price. we advantage in also over of next to $X Share program immediately. share we repurchase value shareholders months, take believe

financial and allocation to Our on pay debt remains principally we'll focus capital policy overall and unchanged, framework continue down.

QX. to Turning

by X%. a this particularly $XX.X to enterprise balance headwind large remained XXX basis approximately We was growth and quarter, revenue and conditions, in market challenging through in points. continue QX profitability up impacting revenue China. billion, FX

Our $XX.X XX% and of to deferred balance billion, driven software the sales maintenance services. revenue grew by

billion of and which on service revenue, is approximately offerings. $X model, deferred our revenue these as or is will continue recurring and utility combination XX% of to now revenue, focus a quarterly the growing we Our amortization,

was in mix medium was software. customer up coverage billion capabilities points, sales billion, business. specific to component and part were and including driven pricing revenue, and target basis up made sales costs, to to $X.X discipline broaden expenses lower up X% segments, X% by margin in due solution and to of we $X.X have Gross investments Operating small XXX shift XX.X%

Operating billion or income to of was up revenue. XX.X% X% $X.X

X%, was expense. and Our reduction in benefiting a $X.X interest operating up net income consolidated from improvements primarily billion,

Our EPS was $X quarter. for the

$XX.X XX.X% and record a was $X.X year. EBITDA or Adjusted the billion revenue for billion of

XX%, adjusted record flow X and And we Over billion years, have working EBITDA. billion capital profitability year $X.X QX, the We strong discipline. up a over generated free XX%. up $X.X adjusted was generated by driven full $XX of adjusted cash free billion, flow our cash in last of

CPUs approximately our repaid of through billion the job business billion, our profitability. nice the strong a fiscal $X.X Shifting Revenue year, to workstations. revenue double-digit billion, by CPU Profitability up including for in in working Client commitment. discipline consumer or component results, billion, continued was We to our line desktops revenue commercial did was X.X% mix. delivered $X.X primarily commercial XX%, $X we unit 'XX team driven growth $XX.X cost growth revenue. the prioritize CSG quarter our Commercial and debt up as was declines, $X.X up group as of million gross or was revenue and pricing X%, commercial $XXX business. billion to Solutions in X% income QX with shortages. and operating Consumer was

work large was Infrastructure do revenue we Storage to revenue. down revenue $X.X HCI, Servers XX.X% in soft was in down or in Europe. in and a certain of billion, market, strong said, large have demand core customers Jeff down part billion offset $X.X operating U.S. in enterprise income the in XX%. $X.X with was ISG networking $X.X Group. X%, in the ISG As by billion, China softness and storage. to due XX%, revenue Solutions double-digit billion, growth and particularly was

incremental was mid-teens unit XX%, billion, NSX, $X Our and bookings Services Financial another and and And business sales With were up billion income XX.X% billion, Technologies, up XX%, XX%, Dell operating EUC Revenue with driving of of $XX.X Dell with XX%, managed record we revenue solid record vSAN originations product operating across revenue. facilitate income. respectively. $X.X of a billion, up over DFS, grew over assets quarter. $X.X VMware XX%. had solution or recurring

a now the we Services. model utility, nearly flexible data have Service billings -- under Demand in choice million. as offerings, With $XXX with billion management, and FY On $X.X Financial solutions totaled center consumption Across portfolio, are flex flexible consumption our through and we Dell customers' Flex offering and industry-leading 'XX flexible our as-a-service assets our approximately PC consumption

billion structure, to balance and sheet and $XX.X our ended investments. cash the with Turning capital quarter of we

the VMware's year debt to funding includes over-collateralized debt the total the Our majority is and at more billion. feel $XX.X where obligations. is DFS representative core loan, total we the our of Dell core debt Because non-recourse debt debt obligations, service Dell margin ended

'XX. in debt down year core $XX.X Our the fiscal ended billion, $X.X at billion

debt from turn increase ended ratio leverage FY originations. at important down core a $X.X our Our the that DFS-related from is of our at DFS-related is to to not which the by the billion debt grown the company full with debt, in of our backed X.Xx to of has cash Core it's receivable X.Xx flow Majority note pay does down. year. nonrecourse require streams, financing operations 'XX beginning high-quality and excludes it

to Moving guidance.

We in IT China. continue macroeconomic including and to the environments, softness spending monitor in enterprise large current

monitor impact sales and supply the on chain. We also our of COVID-XX

We XX the Win to 'XX. the of expect first into refresh continue fiscal half

to as While CPU expect fiscal cost expect earnings be the in half of our least environment shortages continue year. headwind inflationary at to improved, QX discussed have margins. call, to a And them we through the first we the 'XX, component in

the on about We QX to percentage our closer call. levels 'XX also operating income talked trending fiscal

of in QX, $X.X billion expect and to billion EPS $XX.X to billion; $X.XX to of fiscal revenue billion; $X of and operating closes GAAP assuming we Because factors, 'XX income sale RSA of $XX.X the $X.XX. these

the non-GAAP range our EPS expect points. billion guidance non-GAAP $XX be $X.X range rate to revenue is expected $X.XX to billion to billion; income operating or is plus -- non-GAAP fiscal is XXX be and non-GAAP tax to $XX We minus to our $X.XX; our basis for year to range XX.X%, billion; $X.X our current

our QX softness not This our ensuring customers, in impact. market. by employees impact largest potential Like of China, We do driven in our guidance and our top does a is factor anticipate priority full second safety communities. and the year negative COVID-XX our health normal on seasonality any

We the times chain-related client. particularly will for products, in with manage dynamics lead extended certain supply

favorable closing, year, gains. XX share we This demand Win cost with PC growth last component leaned on and year, and CSG In we growth the environment. lean CSG will expansion on driven by refresh given margin ISG

we We the at As see decade. possibilities 'XX data Dell is enter potential and of Jeff as year ISG. fiscal said, the great Technologies

value to integrating markets for and and hardware We focus delivering employees. in by consolidation the will continue and business investors across the our winning customers, differentiated on core our in innovating our our

long-term and on focused as is ability based adjust is on to market model profitable given conditions. Our growth, our advantaged needed

faster term on EPS in focused strong operating income growing industry, and faster than are growing long over generating the We competitors cash and revenue than flow. the

With turn I'll to it begin to that, back Rob Q&A.

Robert Williams

Tom. Thanks,

introduce can first Let's go to Q&A. please (Operator question. the Erica, Instructions) you

Operator

first our [Operator Goldman Rod Instructions]. And from Hall we'll with take question Sachs.

Roderick Hall

focus if you a expanded And year. little and the wanted see look us aggressively you is color that I we more could I intend to more expansion, guess, terms that give signal next on the why into in bit DFS to use just of forward guys DFS quarter. that faster fiscal a as this

Thomas Sweet

it's Rod, Tom.

the customer I growth great were Demands, facilitate VMware -- of look, provide what the in of saw flexible to On models pleased the And the capabilities we've the that very of and very been Technologies, selling that we've drive consumption and base with financing family hey, Flex solutions utilizing and DFS ability seen help So driving with their models pleased we've across our to business. think of our the capabilities QX Dell necessary in we and financing terms and sales. in origination you We the the obviously, saw numbers. principally through utility the the been receptivity the

over assets. And managed so with roughly pleased We're the with I ending we're billion think that. $XX.X in year

using for receivables. business the financing most DFS the securitized the by part, the financed we've that obviously, Rod, know, You securitized debt,

And so that structure works very efficiently.

team grow that cost say. we're models capability. -- and around selling of by originations members, can continue economic we flexible proven it. continue and think to people to consumption I excited And the to with to facilitator inexpensive to of should drive that relatively It's And we be of I to our demand of solutions. a So think going as-a-service drive continue of capital. our ability that to models, provide we're framework that the we're continue our and seeing And -- DFS type

Jeffrey Clarke

the ingest that I some metering us called which look give we see IT that grow, IT you're the able to differentiated a you're forced mean, program without very is flexibility And various want I our the you our us to as that customers Demand they us much November, build programs add Dell so we consume pay of it's being in usage services. way Tom consumption, from going a last wave future. modern We upon capabilities think a to services to of our think Flex various that allow or whether and packages need Technologies to have continue our Demand, digest the use to IT. the I that. variety managed customers think or offering We to at to our consume would so mentioned. On some of center utility ways, Rod, it launched On data as-a-service,

the please. our pick way You our have our this that. gear. to as and offer we capability along this week, servers, the VxRail And added And entire capability service on the seen, from Dell Cloud, plus subscription Foundation, to can you you might earlier choose then portfolio across a PCs Cloud Technology our with VMware infrastructure all we

So want I want our a to It's think, I. it's Tom -- with this they component. I customers, sticky look, -- said, consume as increasingly key to and how is

Operator

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

Amit Daryanani

really you of fiscal year or Or when But margins, something is do talk start 'XX of with can the -- with bogie it. bogie, trying I sort growth for guess, you statement? Is what segment to think revenue Jeff, off have mean you a just company? be about deal I infrastructure Dell. year understand, infrastructure operating the to thereabouts. that I'm that's you there maybe a mean of that made how what that you understand, you help me for to -- the just mentioned Can segment does

Jeffrey Clarke

and first Tom kind ham Windows last the you hit has our the the that together. in win and this I you and the core this if the the the of simple. on be did egg to company is think a 'XX. It's win to Tom consolidation, the fact step revenue the that perform then of growth consolidation you will of in facing and year, FY us I look half our at then to tougher mentioned it we for of guidance back XX that we'll us Yes, transition think market, and that we the market, side, ISG in But CSG grow. in think the storage the in requires to to construct year, if business compares. And and than we for And earlier, outperform Look, win strategy core have server market, core of of business. consolidation our bogies the the about case, better have

We it And share be revenue you basis, year-over-year dramatic performance and a to I'm the I to not has give in the it. business gain have wasn't share the would implied whole QX and where talked a gave. Tom was plan we that a a mean, the on out. about numbers down numbers where the to perform that ISG see guidance our and year heard gain. improvement. Tom have It's over we I going have those liked

would side. will the storage I'll if maybe will is, you it guess X change So we ISG? be with to side start -- I And about have the next look the think think server Why at of it storage. year I your and be question components, from what will as different? what because

We in coverage. in sellers, tenured most capacity That have FY 'XX had and capacity capacity with our productive is we've the into tenured. head lot We'd more increasingly coverage period. invested storage and a

we prefer product the the completeness by years last that or that X.X with of mid-year. completed modernizing the It's of product couple the spent you portfolio portfolio stack. overhaul that the You if

areas So in our we belief the part many that storage. plan. storage That's growth a modern it's portfolio, with why in tenured plan most of have and is, gain our sales competitive is best-in-class the force share in

Thomas Sweet

add would the I Jeff, comment. on storage

buy to Just servers something to those to that sales buyers we between the tenured coverage there the a buyers roughly storage, like that an that X:X there it's or storage. opportunity that opportunity with sell sell the organization cross our of opportunity we're with ratio and at driving. as cross expansion and synergy the look There's server more

feel that I good think customer to we're expand mine for customer the opportunity go base the about storage. -- base and

that, fiscal phone about versus as be 'XX, we through that's I folks fiscal on think think that's about. the important to what's way for the different our other 'XX going the think thing to

to talk real want quick? You servers about

Jeffrey Clarke

I'm our of on to happy top servers year. this think that well. you performance When and as about servers add

calendar X our over billion in the the year back you a gain. I previous customers, points large Calendar revenue We've they of for years. think are share at roughly last outlooks digesting step fiscal capital profile year were years, we of investments than 'XX this last vastly the IDC remarks, $X server X of demand left If time. added X over Surveying XXX and 'XX of the basis mentioned of was years. the in improved 'XX, last the

back. comes demand the that optimistic we're So

And We built We've a period. have share the #X growth. we've a for our think that's to and where a significant marketplace, that mentioned, premium -- that's historically the pretty catalyst a in we year. share, run we ran over how server the X-year I as at plan at become provider We've taken premium. point this

Thomas Sweet

we to talked that bid the calls everybody, this chatted seen done. Yes. and Enterprise, the large the that that server quite around about, we've challenges remind China for in space, we've year, of North have, America And year, business, over frankly, the and we've just most around about principally last

So down when mean, look, server overall, about think I roughly fact -- revenue's you XX% year-over-year. the

server You revenue a the if at the or orders velocity down China X%. that, of roughly demand's ship you dissect roughly that rest down is and dissect you down while basis, back and XX%, on world's our XX% demand our look and

our the we roughly that EMEA, saw which medium in translate and that softness saw does we double in market was rate in or and what really business, It space, America, that North within digits commercial, China growth small So growth was down like American Enterprise and in means America, North APJ Latin growth to? market above-market business areas there.

And over think there. we been. spots expanding focused We're the we the so to buyer and time to expand have continue understand the the changing to the business for to value model there, lifetime soft but going there's that will with look, derive on that way continue business situationally, now, we're that's focused our And make the we base that buyer customers obviously, -- on acquire. on we'll server navigate where work work going base coronavirus I dynamics we're model -- in sure China on China.

we're do how business, And drive into on we so back really profitability. focused thoughtful being about velocity while the

Operator

from our take We'll question with Sacconaghi Toni next Bernstein.

Toni Sacconaghi

you wondering on was can longer-term outlook. I if comment your sort of just

think years, X you at last X, to been, XX. the public, your X%, growth. became in I which at you And you X% Day is and line said has X, the X X%, revenue I plus Analyst about years, and if talked to or growth revenue X, your minus look X% before fall, X% top growth X% X

So you've X ex-Vmware, for X X the years. you of you in essentially haven't And -- of years. or really X X been X the grown

around commentary of sort top a sort longer-term your deck. track growth the on the Dell, thinking ex-VMware become in And I'd outlook. So feel it provided we if increasingly be line, in core about you your of that historical explain could the why cautious about basis slide -- And is. like given long-term should nebulous record does like you've go-forward flattish given and

Thomas Sweet

it's Tom. Toni,

look, think So I it this. would about like

you're the a And in point. model down under years, if situational on But on our and And premium. been of had over market, some last compound even And -- gain. that and think top yes, the the rate growth share has growing long-term market variability where so growth I much have of is. been and we've It's So if a growth still market been X%. to your there around by consolidation pressure, is X has the year. at at rates to a a built you're their -- continue

in. that what do navigate the think our we've way seen you've I environment us been through is

So business. billion would velocity added was Fiscal a through navigate we've the had 'XX what and we 'XX fiscal of sort client $XX clearly fiscal tough clearly the the roughly where leaned has revenue environment, business. I 'XX of year we one where to infrastructure been spend to and into call of

in cash and generated strong through and time, as business. profitability we flow extra And think, --I so point -- the same at navigated the

valid mirror the point's of Look, -- we've going talked think, it. yes, term, is longer sort our in we'd that what to your of, So we had sense is growth like we've fact think I the GDP. through navigate about to

although trying a so or you a market year in to I as And negative, business, we're end of think, in for gave today range. we're the right 'XX, But going premium the our negative range an looking be or in to coronavirus. FY include you've us, forecast so upper at X fiscal 'XX exists got at range we that doesn't again, has specifically the IDC it at there. thoughtful the client for now, you're X grow around GDP guidance next sort Obviously, of of that the dynamics the environment

You've got low you've an essentially an server forecast forecast IDC says is growth single-digit IDC got that revenue, external in relatively and that mainstream storage. flat essentially on

And do from growth driven continue so driving the to lot synergies context that we're we have of create long the story. a of we're way going our and VMware bullish on think been to velocity overall the with so. business. have premiums And positive I of clearly a we'll has a Yes, in been VMware a the dynamics But to driving, we're for term work in it does VMware, growth growth bit even with through.

long been, the have the we in, we're the to about tried in I but some the look, in navigate I we're thoughtful to have how dynamics think guiding bullish environment context the of term, So business going we're seeing. through to we're be of we're think, short-term that

Operator

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

Shannon Cross

need in all interest make weakness just but and talk puts of we then of bit in puts terms TCs theoretically terms a of where some back of think generation, little investment same in you with because about can with coronavirus, level you camp of can of to make. the of year. given then a the fiscal the line in amount getting the And can equity about be XXXX? in talk and sure for just all below-the-line we're that, we And just some the may be and the comfort you cash question, so toward should takes, end the the they the Tom, coming of bit a also that's takes

Thomas Sweet

Great. Thanks, Shannon.

Let and me Tyler cash here. start on the is then

also like on would comment additional I any -- I'd insight. him So to also

is So good what look, forecast. we think did QX a had remarks -- we to transaction uncertainty, about scheduled we -- will, I QX we in the or to created has prepared coronavirus our up RSA debt RSA time the a -- frame of Yes, signaled know as conversation flow my of in, up the result about be given expect estimating we're normal softer some given in the and -- We the sequentials repayment level coronavirus QX today sequentials or I think it the impact. did to this did at point. cash guidance that if you our feel that from I that's with close

the that it we know looking are isn't affects that not that, what with point -- year. at that We full at this

perhaps supply only they now, or move look try impact way the And there's think been it's coronavirus or the business now. chain to extent point that, domestic Chinese We -- perishable itself. through has China in the if want then right at don't impact how this that do it don't China in that becomes times does at demand as the lead QX to where softening, the now we they're X demand, through dynamics, the thinking going the our we've that see which you is, about principal right product is virus. think and question or the do time of been, a with obviously, impacts that the extent have we question product buy is to elsewhere. economy The is, work, an what they is defer? One I as a lead to to demand is business, this right thinking that perishable, the the there's expect in given and consumer our that contain our you

we'll But refine learn obviously to about for think forecast working capital We've feel as about this and year, at model. full our we cash Now, efficient that impacts. more very we forward move continue in got good a time. point do I the

year. amount some coming whole that? can due, think was comment And get I at and think Tyler, of goal try maybe And our manageable very, debt maturity it's the on very if and to look of drive ahead stacks this you you the I future down.

Tyler Johnson

additional of couple points. a maybe Shannon,

right, at if obviously, and we're one, -- at cash, where very we So you look levels. ended we're balance sheet ending the it healthy

to really what So actually we cash is I of you China. And China then talked our accessible. immediately the if feel always in and is cash about dynamics good the the use about in run generated some not that. And Tom company, about think where

from So using what it's for an liquidity in terms day-to-day kind I'm necessarily perspective, not of liquidity. of impact a

Robert Williams

then below-the-line And the question?

Thomas Sweet

yes. Oh,

like the So page and lay you where talk the -- slide it's where F&O I deck I think think about we the -- Slide point XX or in I to out the Page if XX we impact. deck,

year, should fact 'XX, for a million the level, roughly that principally The think dollars. below and think billion $X.X at hundred what about see level, at about you you up made line, that we is this look about will, the some have FX you if I of it you EMC Dell expense essentially the expense interest couple costs. way if FY of interest If Dell roughly is, reduced

additional getting has income. -- interest VMware less debt and We are

of So That an it coming or forecast million of and hundred by that out you've couple happen as the million offset the don't gains got venture will then say, $XXX or you got of we And FX. happens not. portfolio. so

to some we program. count at out of range. about $X.X It's XXX-ish to seeing ought $XXX line. be million range, so And the F&O perspective, be think billion we're $X.X And to a equity from billion sort of think thinking right dilution given roughly would -- the the share you is of I in in that the number that between

of sort So math. rough that's

we've and of you Now share count that's modeling. depending that know number that not sort exercises, price will upon, been obviously, share fluctuate but the of

Operator

Huberty next from Katy Morgan Stanley. of our question We'll take

Kathryn Huberty

today just storage about from there's capital whether you. to delay about happened that to delay? wanted ask start Jeff, a what was talk think the first get bigger of you share Tom, ISG importance announced a think the we storage, midrange the can to once you a to that the then Should given launch, potentially of repurchase impact as revenue the follow-up return for you program just investment-grade? And business,

Thomas Sweet

Katy, it's Tom.

share we Let me bit time, shareholder return appropriate is little about, program. about a the the a have value, at talk which always repurchase, thought shareholder --

thought we I if and where in were as ability schedule continue it, to and debt, in to you debt was repurchase repayment will, about and we our put thought to it plan. timely, given we appropriate down pay a think share our

$X and X it's be We opportunistic. quite thoughtful a a to sense doesn't at over make us. think that trading billion about our obviously, -- going bit Now, we're discount years, stock to and is

we're opportunity -- create changed value shareholders. begin and have the shareholder hit allocation investment-grade, I answer so second adjust question, to of we are think, the which would we past said framework I some of we the that having your type we of do capital so think creation our for a have would advantage to -- once And take is, that. part in going to

step And in so journey. that first I think the yes, this is

point shareholder the That are obviously do at making as and or to value as way this debt We hit around commitments return investment-grade. work shareholder is on back our use of forward. sure primary repayment. sense capital think we framework And our I but a in that -- focused we makes a move -- our that we time comp

Jeffrey Clarke

Midrange.

Thomas Sweet

Midrange.

Jeffrey Clarke

me a clear if we're question Katy, we've then what enough. you where follow-up and at, let ask I'm not can tell so done you

beta all, of arrays largest QX. quite in the history to our first in program, we ever number run of of company the honestly, a the So delivered beta we've program that

been dozens flexibility to really absolute of the has that So we performance platform have overwhelmingly the customers positive. in dozens the pleased the and From the today, hands the of their feedback product platform. have upon of we're

us mega we the to on and to So to we've learned the end opportunity side drive force program. the do address in we're year-end as of be year. That's we're it Quite end how that force, that get done our That's And the test and really we've ever do I But experience that It reliability learned by sales was on most hearing date. by I at-scale reason the us of being learn excited we pushing what a year. storage. honestly, of it would sales an we late marketplace, And test. that last as fiscal system last long beta we me. system our how quality underestimated from to a to we've what is late been the that do leader broadest And -- comprehensive at-scale It the of in an is the we've launches studying enable launch wanted with I committed the result, take. to byproduct opportunity of the keep done done. larger focused during It sort in did. made customer the I a gave the with it's gave decision to what what done us late. didn't the the quick on year. of

there. is We're we've of the sales Two end entire we front They're And them about and Midrange.NEXT fiscal quarter our up the QX, this weeks we excited about it before the been XT ago, most product, comprehensive is midrange to the product trained the begin grow excited which about We in of we Unity that storage to high the on X.X%. revenue the done. the the up get we is challenged. storage slightly forecast selling in mentioned there and expected the of Tom about prospects we midrange, platform. with of well, mid It's performing midrange we're midrange. platform, the the pretty will coverage have storage with force, no quite stood is But impact earlier, segment, a really yes, portfolio material actually and done. or crispened to 'XX the largest the When actually really is midrange think be which area the need we to will calendar our down. in It where end this plans quite product marketplace, excited. and

quarter. taking be the will end the delivering of and We orders before

Operator

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

Wamsi Mohan

about from I was sell are had portfolio to if of RSA. Clearly, then, I a done not. ton mean, talk know a a bit how you timing little or that I core a lot acquisitions. Dell buried historically, can sort There's you decision wondering perspective? there with EMC reorganization. what you prompted And used a where Wondering had of in that that's don't that

towards capital more if go the be So return, those that would and portfolio more of any magnitude to think on the happen. and where changes, if that, of there were users color potentially you to are they

Thomas Sweet

Wamsi, it's Tom.

continue we combined you consistently as structure and And that have have look the capabilities business, been and shortly the and year corporate or we the the -- business recall, that after sell software we did last said the what think has over the X legacy the we to I family. we within So the... companies, services assets Dell at the the Services

Robert Williams

ECD.

Thomas Sweet

business. you. ECD Thank

decision so it. How a we're core products. security RSA at to the of the And do -- security. intrinsic our into asset. look, strategy, we to is are triggered essentially, we build focused the at look nice continue on continue But RSA we security we was as look increasingly

optimize of structure core ownership optimize and that to going if to that the different and do wasn't think platform it to I hands asset, be was to with strategy, better our put platform that the our probably asset. going in that the an was security perspective it was something and

And sell. so that to was decision the

nice the running job did process. a team think the I

evaluate alignment going services. areas, to in rest the data with -- thinking assets, headed the where data through we're of security And the to the strategically continue a assume portfolio. alignment number of of including and management, of capability We're

don't I to us. skis over to those are of here. all Obviously, of go want my interest areas So

part the capabilities So to what commitment corporate portfolio. where the partner are capabilities we'll want think we continue what Because what our to you feedback right own, family. that better the is in family. to to the of capabilities where And what Dell their be obviously, capabilities do -- And around of that's be belong complexity do been of capabilities continues we but continue the think to off through what is our not simplify we'll about need outside thoughtfully for, and should structure. to -- the we Technologies' family way

Jeffrey Clarke

and maybe way consolidating product and made think, progress Technologies of I simplifying amount Well companies. portfolio, tremendous of Dell changing we we've a more IP, of that to offer build the across view, products a to point IP the that, add Tom, the integrated

you're drive go the to if time individual and Cloud, simplifying of great cloud incremental the building in, which Workspace, world think was foundation, that one we're consolidation, multi-hybrid point one all deeply the portfolio portfolio form we is customers. work across series going to our done now I offers the where a the an strategy, modern spent way, a integrated build mentioned that Unified in solutions. And is integrated I VMware, services of with VMware, offers done we've about see about that that and another the Dell win the of value of Remember, the we that customers, technology our second work solutions that So you around PCs, consolidation our sell being products operate to other Technology Black, integrated that yet for our simplifying a of Carbon more our component cloud with VxRail, deal by, first can now building of the building there. a to and more really with PC Dell Dell experience we us about we've consolidate platform and

forward. more do going us of see that You'll

Operator

from our question Ong We'll Jeriel with Deutsche next take Bank.

Kanghui Ong

it cetera, there. your with quarter. a I mid-range, point the in your products year. view see the in bit -- seems little just kind ISG I each passing a in having terms the of more ISG, growth seems think bullishness for more And of little a and like has it et kind you've So of then year-on-year painted storage server so But paint to on more kind of of I networking of picture side, want and think the about declined there's maybe can picture kind bit

So growth what for confidence around turning and gives you full in year? the contributing to that

Jeffrey Clarke

that Well, Tom I and earlier the made. comments think I'd point question I to and back

the You're over annual server for XX, When deceleration we of the at look of XX. clearly number the recall right. there the a performance X, business. minus minus quarter, was store fourth minus that XX, -- the correctly I Tom XX, minus minus represented,

there, Tom I EMEA, APJ we've the at so follow-up you called was the in that North about China. is Enterprise. hotspots Greater and America that our are and then in X concentrated in We America think America actually other down the over enterprise grew really X%, slowed an it North going North are consistently market in In words, is LatAm. down, America, our China on If we small that XX% business. performance?" Greater Enterprise break "What the on and have what year. Inside commercial change dynamics North X%. minus China of orders medium out the doing grew to that's the real market and and been minus was business, in talked ones business, we world question China basis differently Rest down the was

across the base. about about coverage PC the in think models. a think bring have sell can we grow That's that what expand the to enterprise the we the that a we customers server change We're they coverage different because alignment. each have we our if enhancing have off cross-sell I between number big cross capability and across map, the sell. those our accounts different different accounts, we fundamentally We're but fold. of drop and the customers our work so those of bring have of And number we customers to the Yes, if already and buyer and is need there in enterprise you at those underway. inside through that's that, in we're a set to will, core, as customers going driving on customers we We're -- end-to-end And the new that accounts. to customer buyers X. back are we coverage And the

inside new programs We have the corporation. some

North the marketing not weeks expand bring buyer would our segments, this, across and our to build seed it, a build we've base, about Enterprise, buyer this trained allowing know us largest You sales cross-sell, on force ago in is customers. for units the to the America us which essentially various programs X base case, and incentives but program, power-up go

on We're of sales this force bringing back year. that tenured We going force see that there. as again, more force, lean to sales more optimistic we that head is into tenured, we're sales productive our more is a and fiscal pretty a notion

be rate's last to same projected So look That's changing. how is up. to we operate at year. or be We're Depending it, where the to better, be grow X you predominantly that's to The going xXX forecasted Mainstream what a forecasted on Content than premium. up X.X%. market's too. X%. place -- space, is market's at better points the time up

high-value outperform drive and Those the the Tom, TRUs. to about to ability higher add? is exposure market. across to share we're workloads take broadly marketplace And pretty Our server increasing. our anything optimistic

Thomas Sweet

you'll on you would with also forecasted, that's and pricing adjust the as content that just adjust you year. would higher a through cost commodity -- see as the the No. being you on inflation that you're about how positive impact I go fact think TRUs comment with

to So that's line. benefit also a top

Jeffrey Clarke

right. All Exactly.

Operator

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

Aaron Rakers

comments prepared if far X:X you months. as ratio, could initiatives in actually And portfolio. over was evolved past of What forward? have would understand ratio storage that like, it, year curious X put What One driving purchase remarks was think the customers server the about XX looking that? of you does kind how that the that's the or call I'm success place? made X you XX the your in define how how ago? or that us during look you help do that And as

Jeffrey Clarke

I say XX,XXX I roughly quarter certainly our buy have server I storage. we than say. remarks, believe prepared half didn't the in and customers less that, what said a meant I that's Well, to

Aaron Rakers

Yes.

You did.

Jeffrey Clarke

place has our server Look, capacity base if That that trend modestly you and is -- person, sales And the the sales ramp. isn't. storage long-term of in maker, longer that change stores a direction component in the buyer is come for a put productivity change to intended look It up specialist at we challenge. the and been a coverage to takes that sales that growing one there, the trajectory.

tenured I the afternoon fiscal we think to I been So is of head reference as into greatest that the productivity Tom sellers us. session is That's made That storage and the it's driver. a throughout this 'XX. important our have

you to competitive bottom, about more the of productivity, tenured if from the that So going that's line drive our lever think top more are business a with. to marketplace, coverage product we storage broad

an which Up, winning called promotional again, reference a driving program about I Power sales to incentives units, and then place. customers. that in place is, program, And centered previous put made question the is putting upsell we It in just of internal we're portfolio, new seed in our really cross-sell offers, around

sell improved I force incents a Tom of fact, sales multiple that and sales In our compensation and to plan lines account. business

in this -- sales the storage, down compensation the where is stack with in division, tilted of our and most start incenting most business sell next our we've servers move you year. if most lines So have the to in cross-selling, we more we the force PC customers the next as certainly customers plan customers

Thomas Sweet

solution have the mean, this on as of and we other adjusted velocity the will models is the storage XX% tenured out plus mentioned I our coverage the we the then velocity solution and so for we Jeff, the the VxRail -- organization, combined capability year-over-year, since population. of also, about more where velocity thing into selling right? capability to that part in the to but comment driving customer that. you've Hey, fact appropriate continue think we I clearly have talk sales on, we farther reach think ACI great we're focused organizations, I that's that there's called product important -- need that's and workloads, set, And growing it's as storage

Jeffrey Clarke

We freed up capacity.

Thomas Sweet

that To selling drive motion customers. touches more a

the the capacity. tenure bringing here. coverage no expansion, And going there's the marketing of magic so to going be -- so selling it's capacity, be mid-range is combination X -- the of programs model online, and to we're bullet a This our capability

So to opportunities those VxRail think, our combined, coupled I with all to capability, us great velocity in grow. point for

Operator

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

Simon Leopold

But -- color that helpful. given vision you and the around coverage, results they're you've more Thanks to towards for the gave looks for imply the I have aggressiveness and that reflect seeing my for that ISG expected fiscal That's from that. question been commentary Dell. investments making capacity have competitors I better is, I your more to year around trended guess these XQ 'XX. guess, for from I stable, bit would a that guess, pretty

Or puts North some maybe if a that So there were saw takes what better. quarter? could in headwinds help us little if flesh just to been you've could incremental help if you were and America this to us you were understand that seeing? just specific unique out So you maybe that the

Thomas Sweet

appropriate terms of think philosophy business be win think aggressive has we pricing in through value, this we to I have navigated when that to year, it's business. aggressive appropriately our acquisition here longer-term been the that as think we'll to we where be has Look, customer Yes. then to year

And As think it we there's I we where competitive you environment sense really see dynamics of or of couple -- don't quite of the we went business. us, a that -- through essentially, the things. some competitive long-term I think and make made doesn't haven't have frankly, don't to value, us where from saw seen sense the and back and so pricing step

in space, opportunities has on servers to those the down and of America price been As for North the of Enterprise, enterprise it bids aggressive. most large the is or contracts relates bid quite aggressiveness number instance,

where that, that other and selling around have you so aggressive in chosen the into threading And customer? And decisions participate, profitability customer we've some softness you as have over that been gone that selective in to been we've opportunity get to that's time. of result second. you And you a China the look in balance. year. the as North What's Do recover we Enterprise. of And saw lobs to America I'll the needle do overall you're talk we through the have have a then like? to that pricing

trends in of we've QX? talked clearly see the continued the essentially that we anything in on terms longer. so And pricing, think QX, I in did about the is have -- and incremental the look, do of cycle opportunities aggressiveness time

that And been just so through. we way a our had work that's dynamic to

'XX, And to the said, so into as pivot think and better what's you well, be supposed market is you got fiscal better, then well, we've different, coverage.

basis the our in into has space Again, array. side, to all organizations cross-sell softness around we've reach dynamics that the with be our VxRail infrastructure year. And are going the what to on the coming product. in been think a as share, we to the selling I think taken positioned has solution we're us opportunities perspective. it's from positive We've been seen there. I a -- for been core a storage great been 'XX, had over success step into the think model soft. a challenging better last But navigating X points and years. XXX think FY XXX through We've firm environment I of share We've coverage I from

as and business we've so across of drove are in was yet, -- it's revenue there a strong the we navigation clearly ISG had the great but space, a that. Granted, I the look, pressure those some do to flow. And think cash profitability result

the it's see participate do and given we that we model all the how balance that market about you so in. And

Robert Williams

wrap to thanks, We're Well, good. Well, going Simon. there. right. All up

an Morgan we at track Just begin a next Francisco. hosting San that X. Technologies as Stanley in the we'll week will reminder, of And continue World. be and Dell evening We'll be IR at May the on X

see you additional there, hopefully, information the So in of and coming weeks on many that we'll there'll event. be

for thanks today. So joining us

Operator

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

time. this now at may You disconnect

Dell (DELL) 27 Feb 202020 Q4 Earnings call transcript