Dell (DELL) 26 Aug 222023 Q2 Earnings call transcript

Company Profile

Participants

Rob Williams	Head, Investor Relations
Jeff Clarke	Vice Chairman and Co-Chief Operating Officer
Chuck Whitten	Co-Chief Operating Officer
Tom Sweet	Chief Financial Officer
Tyler Johnson	Senior Vice President and Treasurer
Toni Sacconaghi	Bernstein
Erik Woodring	Morgan Stanley
Simon Leopold	Raymond James
Shannon Cross	Credit Suisse
Rod Hall	Goldman Sachs
Jim Suva	Citi
Aaron Rakers	Wells Fargo
Wamsi Mohan	Bank of America
Amit Daryanani	Evercore
Sidney Ho	Deutsche Bank
Steven Fox	Fox Advisors
Samik Chatterjee	JPMorgan

Call transcript

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Operator

Please stand by. Good afternoon. And welcome to the Fiscal Year 2023 Second Quarter 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. information of or Dell this prior without of permission written Technologies rebroadcast in part whole the Any is prohibited.

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

Rob Williams

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

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

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

guidance. operating including and and Jeff QX, will supply will the today, our CSG environments. call recap cover financial Tom cover performance, demand the ISG current Chuck During chain will and results and

to to like over I’d Now, it Jeff. turn

Jeff Clarke

results, In delivered environment. macro rapidly us. despite a joining QX, we changing for challenging financial and Thanks and executed strong everyone. well Hello,

core with EPS We ISG, strategy, record customers QX XX%. $XX.X of We growing both $X.XX, for era. opportunities X%, their revenue CSG growth was while also and our advanced billion, delivered diluted in the in data and our innovating long-term up enabling up and the

expect us enabled provides to and segments spoke the the when to in that The in back we saw execution higher of serve. last And demand and about our of and take in for macros May, view a over QX, important unit quarter, demand model pushed ASPs, we business gain like with calendar minutes IDC the we right we quarter, our PC context results. offsetting couple through and of late the remarks a the server as CSG. and in outperform to slowed has particularly differentiated XXXX I’d through Our to We in share share today. demand talk QX Since course partially PC environment releases storage decline went the of changed. decline. environment the the FY half in a gained

their to weakness customers were needs of the still slow execution Our cautious become able supply throughout we given a with and saw half was and chain in the the uncertainty. reduction view more quarter are throughout CSG demand dynamics have second The demand macro QX CSG. while growing the quarter. taking and pushed We challenging backlog as more excellent offset ISG

reducing inventories We responded our down swiftly by and managing have expenditures.

as NICs. is Now now to across and portfolio demand significantly remains innovation. including normal outpaced parts embedded QX we is the board. integrated and turn of chain servers, QX, shipments are lead supplies seeing power still backlog PC supply let the PC elevated. and me standard Like shortage and circuits, backlog, on the at time ISG levels particularly

in in deflation component aggregate cost we costs beginning while rates expect modest logistics QX decline. front, are to On the

richer environment and but configurations an Our the a strength in have year cost mix, ASPs lower impact. last been the have of could over product result

customers, enterprise-class the largest public year PowerStore brings Alpine, in storage multi-cloud major services expanding of public and XXX resiliency. bursting, and in our our cloud the for Turning clouds OSXX history deliver advancements insights, new ecosystem our increase the software Project achieve and deliver delivering all first for multi-cloud have test we PowerMax proud than new advances software, which and help significant the container to analytics of more the and cloud-based control, release clouds. faster data customers new and development, include made are half data experiences Dell data into innovation, solutions that new better we mobility, that cyber developing

devices beyond world, world’s commercial Cyber to compute touchpad. as continue APEX new APEX Latitude data with extend laptop and our deliver APEX first and full-stack CSG, Recovery Services, New the a solution. hybrid offerings, including deliver we protection storage, Dell a the for in like that And XXXX, collaboration

innovation, recently number celebrated of actually Precision launched way. of driving our XX I also so we industry position the along I’m business one years led when proud many this and the firsts Precision, workstation one worldwide. particularly We

in like to in it and network provide need progress XG May, Mobile milestone our we’ve government They In in T-Mobile’s RAN joined a and area. cloud-native advanced cloud-native examples will marked edge Network Telecom few XG. services. for technologies premise like on the customers with also As make areas highlighted, the that broadband XG a software this Private to enterprises we’re a I’d power major over network. T-Mobile strategic population computing of open service most connectivity built they with innovating XG easier Dell’s In IT June, we customers bring offer and of building announced the Dell’s on on U.S. of combined to embrace we world’s Open growth XX% important forces it. now to infrastructure, XG where DISH

control, shareholders we we think delivering the half the that and regardless environment, year, relative the to performance, have we cost focused prudent and built What second years during over management we of on can agile remain execution, of is our shown we the what for customers about are did we QX. As like and out-perform.

to Chuck. over it turn me let Now

Chuck Whitten

revenue the relative with grew Consistent again Starting of An differentiated commentary, delivered relative in with our PC worldwide Consumer fare up in X%, share CSG, income at calendar over IDC. excellent $XX.XB, success performance any revenue demand than the and we over results our environment points continues and Commercial CSG according better quarter and financial dynamics important progressed. managing while basis we revenue performance strong delivered in QX of display record and points XX%, declined results. X.X% revenue. is to QX We of We measure to Jeff. of Consumer. share operating of market ISG, Thanks, drove basis while QX share X%. XXX Commercial with gained unit XXX as shifting

XX PCs, QX our focus in of of segment points worldwide. most We Commercial have and unit quarters. And now one gained the the the PC over market, XX claim last number share gained unit share to calendar spot basis in of in XXX the profitable we

a Turning number categories. of sixth XX%, networking and demand We another revenue. in consecutive with across consecutive to our we diverse capabilities our our seventh at quarter us, in demand advantage, storage. differentiator era. leading continues simply needs In one income The architectures a QX the fifth ISG modest QX, storage to ISG. a strength fits growth data networking saw is of size XX% Servers meet for in as consecutive with quarter do delivered The X%, all real storage breadth our customers’ the and of high growth, not most growth operating since of growth has in be competitive double pace. PowerStore, grown with growth XX% positions of our albeit and $X.XB, servers grew record of with quarter we up and product revenue of storage digits every moderating grew end geographies quarter grew in And one marquee and storage in which breadth servers, portfolio mid-range at single and demand launch. saw

and share releases expect results in calendar mentioned gain September. to earlier, As in IDC QX storage server Jeff we when

a looking Finally on in infrastructure out ISG, subscription. offerings buy customers for call our our I’d to APEX, as momentum

while financial and cost and Our San XX% significant Private confident the work pre-pandemic is grew levels orders $X highlighted who strategy cloud remain in adding realizing almost using Customers we approach our comments. health Francisco, its in is our APEX in That the the long-term growth support customers. default now ARR market Bank has significant like billion combating Loan Home QX, while growth. and in Cloud over been XXX the in and Federal new increase APEX year-on-year PC in and to critical we his key era mixed and backbone There collaboration. for productivity patient for environment remain transformation savings position. labor market a clear outlook hybrid high back, is Stepping to near-term and data has as with staff as is said, from companies Montage size right, institution Private for who strategies, provide of worldwide. Jeff Cloud as digital markets its advantage to of like customers’ macro competitive members. signals, become and in customers reduce Done applications of necessary using APEX and can by marked costs, our automation shortages. care the and investments and the clinicians are information technology And competitive inflation to an access serves the the And Health, better

confident attractiveness multi-cloud businesses any data build in meaningful enable to advantages competitive to the in in environment. our So in the our new opportunity we long-term that era, and in remain and us of durable our markets, out-compete core

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

Tom Sweet

May billion, CSG strength up and We delivered see We by of in moderate. Chuck. late while would FY more growth Thanks ISG. both cycle that we infrastructure PC investment thought revenue $XX.X robust highlighted record would XXXX a QX X%, in driven

demand of demand Gross revenue. balanced was of was FX in and year, the in revenue and was billion, due now While we not and costs lower and of positioning. are expense more as last seeing did primarily Consumer yet an a weakness challenging demand XX% increase XXX ISG we back both we in flat as Overall pricing in profitability $X.X year. basis see the roughly margin of competitive revenue. points billion, XX.X% modest in gross Commercial. with than entirely margin we X% headwinds toward reflected Operating see we our as down head QX, to And half growth $X.X CSG, infrastructure a environment percentage

During number billion, measures reduction the a slowdown was $X instituted up including in at cost a Operating of hiring. income quarter, of X.X% external revenue. X% we

lower in profitability of net income XXX to per rate a debt diluted are that share a our was primarily as X%, was repurchases. to tax the portfolio and primarily income expense non-cash count market share in our driven diluted billion, value $XXX balances. due operating earnings was shares which up GAAP and investment exiting business million given in impacted million Russia, strategic items. result our $XXX charge a related to by Note our adjustment of with of growth net both Our was conditions up Fully million decreasing decline XX% $X.X by to and a interest $X.XX, sequentially XX.X%

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

remaining up Services revenue. includes performance were approximately Solutions. our or billion, committed obligations is X% $XX Dell contract value up not XX% originations in Rotation $X.X RPO billion, Financial Our and plus revenue deferred in Technology driven part by deferred included

and $XX.X billion We with have macroeconomic the ended in historically assets. seen originations quarter environment DFS stronger when the slows

Turning to sheet. our cash flow and balance

a Our the growth by and profitability cash QX is timing billion flow cash receivables by million working in was capital basis. XX-month $X.X $XXX primarily of did of our nice increase trailing QX sales rest due year. and partially in $XXX through an to offset focus was use from receivables by in inventory. quality flow a a remain by was capital. a we operations on Working impacted on offset driven the partially this the is inventory quarter move the The of reduction quarter, sequential aging of job as strong later the and and a which in will team million

$X.X $XXX and billion write-down with $XXX QX a Our XX.X gross $XXX million cash quarter core we basis. repurchased due in for debt and ended million $XX.X investment billion in returns and We principally and portfolio down of balance million strategic billion to investments, million million shares capital is the paid dividends. in $X.X in stock a on sequentially, $XXX

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

QX in guidance, cautious to Currency ISG. cautious XXX also CSG, In customers the and the roughly to rates declining backdrop, current commercial the basis are given Against XXX seeing to full macro-economic growing with in be more we within in velocity ISG QX Jeff roughly expect shifts the headwind we Turning gross us, points We for the CSG client we’re and now to year. as become low-teens. mix increase for a expect high-teens softening to and QX. environment. demand X% QX $XX between down business. our more as decrease at basis continues margin and specific revenue consumer $XX.X spending and ISG points a sequentially saw chrome highlighted, extended We billion, mid-point, in the to seeing in that billion do

Given versus the cost expect we QX. OpEx spend have to we be place, controls in down

For tax basis XXX you minus plus or non-GAAP XX% our rate, should points. assume

We range million for environment million expect flat at XXX the of roughly shares in diluted $X.XX, the share to saw we count expect year-on-year this year, XX%. midpoint. to out, with EPS growth growing shares. May to translated be Netting in diluted X% to The EPS we diluted $X.XX late expectation full a the XXX

results closing, EPS revenue financial $X.XX half. delivered FY enter the change between view and are the current the in cautious at midpoint. we second with X% In demand strong diluted to XXXX is for but quarter up as Given X%, environment, $X, second more our we flat up the

and We free what core strong new can we and our to customers’ remain consolidate time. our flow and we we our EPS build that to revenue deliver on growth focused and with shareholders control, engines over are strategy actively future. expect modernize And costs enable and executing spending our multi-cloud to growth managing cash our

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

Rob Williams

Thanks, Tom.

to Q&A. Let’s and go get ahead

as We to go are going can many get we as can stick to one the possible. to ahead first so analysts ask take question? each and you to participant Operator, question,

Operator

you. Thank

Our Toni with first Sacconaghi Bernstein. question comes from

Toni Sacconaghi

than that are you your two book-to-bill And why months you greater kind if quarter, your in Yes. they different NetApp, more cautious is saw and elaborate outlook well the in wondering and from X the like I’m might and seeing? Thank like below view strikingly peers enterprise of can X specifically just was three? you. month demand on Cisco I’m than the seems what some somewhat in wondering you linearity first other think the and

Tom Sweet

builds QX ask is that, let quarter as it builds we the Look, saw and Look, flowed, typical what start relates in Chuck and chime to quarter me Toni. pacing Hey, and to I’ll appropriate. as a Jeff in the shortly, it how get -- the the pipeline QX as What we not in we converts business and/or pipeline mid the pushed to quarter did and late the go quarter. the in we through build to so in as saw client and more right. was particularly

pipeline pushing ISG the to saw also our right. We demand

velocity is typically, we perspective, would frankly, typically two in of quite from pipeline talk not the sorting it is growth and macro quarter as an our we we customer the And overall in through the this the they’re dynamics. So see highlighted did we, a month linearity cautiousness track, when what see with just bigger base quarter. as saw, our

-- we backlog as of demand of sort in we since Chuck, don’t our clients. fruition. to pulse a that the So we to softer a we of seen, feel the anything of expected had the client selling -- commercial talked as cautiousness QX. much mean, we Look, on talked have as particularly see from around clearly, did size as somewhat as projects as largest would that, actually sorting more environment. And saw projects what a all to spend, of we tell pretty for good customers, of technology seeing I they’re and or CSG result And reduce about in had the and you’d is what we past. we I than as can part demand, we but if that, it demand current because on softer are organization softer close Jeff, we reminder, They’re companies, reduced actually just backlog, you direct May, cautiousness we’ve come like they’re behalf shipment profile we’re elevated of we the thinking for see. we all relates seeing we on longer enterprise And are of add know about, seen CSG the have that. we as taking in infrastructure, although what our had through to through projects, demand the

Chuck Whitten

on enterprise Toni, from observation little what I’ll Maybe, dynamics. from Yeah. hearing customers add we’re a

uncertainty, texturally, trade-offs the IT of business, within caution given budgets start reasons I look, around are purchases. shift immediate delaying That’s for macroeconomic sort multiple net buying their the reducing I meaningful and but of think, Commercial for over hiring, saw in orders corporate was course only just size citing the customers the the customers a with requirements, we sentiment quarter. if the PC future of

bit were dynamics a think I ISG different.

storage but a as in environment. So both moderating the rate growth and servers just we caution demand more at entered saw

are spending companies So paused, spend. split, spending on PC where more Commercial scrutiny putting infrastructure

quarter longer and behavior. to saw took throughout generally deliberate close more deals said, we customer the Tom As just

So demand we’re cited and today out is signal calling what from that hearing customers. us better see that what us you trusting Tom

Rob Williams

Thanks, Toni.

Next question.

Toni Sacconaghi

Thank you.

Operator

you. Thank

Our next Erik come from Morgan question Stanley. Woodring with will

Erik Woodring

I much of taking main more your believe trends pricing to guys as so other, product, versus get through on Thanks so you start question a business. of wanted the you Do your guys. you. kind maybe power one by my Hey, to business demand in to bit just for questions. that you out little tease have some pricing would just flow take have now more? these ability power love Thank I the to

Jeff Clarke

of our with the start This PCs work Erik. Maybe Jeff. I’ll way a comments, and Sure, is product through couple line.

workstations. of there. primarily when saw commented PCs we think Consumer, I premium richer mix versus And demand our a Consumer Latitude like seeing, products slowing, look we is we’re or more business of Commercial the quarter, our towards it’s uplift versus we our being at consistently Precision through you from in important while get our weighted Commercial class natural configurations notebooks,

where you products, richer financing attach capability long business very to PCs, a but of in attach because and and it’s those I how when we’re configurations I bodes seeing term and about differentiated addition, well anyone to to well, think software mentioning, do options peripherals, worthwhile ability I ability play. marketplace. that Then that we higher well over as know higher you our in think think the a So we mix end as our services our is think, else of

GPUs So may the ASPs they’ve Commercial into growth data to quality as with an quarters ability our our driving in feel because deeper had content we’re greater configurations of server better the we and part we’re workloads supply richer servers, each every six be of Similar across selling challenges towards example, quality servers, while trend our think continue richer that and able in for selling artificial mix, we about outperform in intelligence-related of to, the the softening to we’ve market driven getting of and pass over end now, to and servers higher business, if we’ve to users. as mix with opportunity the to incremental storage inflation storage, referring been content, continue to about. good the drive our drive ability think by is solutions similar you And richer by associated value been time through servers, of the center, to around in revenue. our higher workload for us an that’s expanded, with the the

level, space, storage us mid-range, in business. have to in cover the every storage, marketplace. differentiated We categories unstructured revenue in a broadest to protection end to entry to valuable the which allows drive the the We from of storage highly to market portfolio high all data the space, our the the aspect

Erik Woodring

Thanks, All Okay. Jeff. right.

Jeff Clarke

Sure.

Rob Williams

Next question.

Operator

Certainly.

Our next Leopold Simon Raymond James. question with comes from

Simon Leopold

question. the taking for Thanks

Rob Williams

question. next Justin, Hey,

Simon Leopold

better what I’m to guess PC, OpEx looking to cutting it’s response of I slowing, to actions or you to your on i.e., reduce whether see of is get you’re Yes. trying I’d and be prices, sense... this increasing taking whether promotions part might kind like maybe the a in

Jeff Clarke

a break. No other take X-minute that Yeah. am one. We’ll I doubt

your Justin, hear end? can us you on

Operator

sir. hear loud I you I and able Yes. can can Yes, hear hear you clear. Are to you. us?

Jeff Clarke

The out. last question dropped

a take X-minute to phone. to another and going shift We’re break

at So X we’re hour going to approximately. up pick the this back after call minutes

Rob Williams

Operator… Okay.

Jeff Clarke

in queue. the it just the question up we’ll And pick with next

Operator

remain on Everybody, you. shortly. taking the on just just by just we the line with we Technologies. and do We we’ll once please brief And are line stand Dell and just break thank stay resume resume and Absolutely. should a again, shortly. Please

Okay.

Rob Williams

there? you Justin,

Operator

sir. Yeah. Yeah. Yes,

We are back in the call.

Rob Williams

question? we Simon’s Can continue Okay. with

Operator

Absolutely.

Just one moment.

Jeff Clarke

Just a second.

Operator

your And your is line your right. question. All -- you. again. line caller Thank resume open with Please

Simon Leopold

to Hopefully, expenses. more whether for me. Thanks. might you. the you’re prices, you hear Thank you’re whether to you cutting be know response I something wanted permanent in I to from sense adding what ask sequentially but looking or can Great. perspectives? to you a specifically, those the trying weakening better promotions operating taking guided your actions what PCs, to of to environment, is lower get response about cut weakness

Tom Sweet

Hey. It’s Tom. Simon. Thanks,

start let So just Jeff or to appropriate. ask and in me -- chime I’ll Chuck as

navigate, let we’ve and -- pretty you me just first, as record the optimizing cycles it’s much before the economic the track so we’ve know, look, has business as ability seen teams of -- say, long a think Simon, So, and got doing I company’s -- it’s to and go. we

So about we right weakening think we’re actions obviously, driving sort as sets now, we of saw environment. of that the

of we that, We OpEx from that what a line measures our a as environment a pulled at result have deliver promotional number profitability best From to the in instituted ability we’ll type the with you pricing limiting our P&L things soften of starting from quite you external the that’s do see hiring. cost of a normal price back. do do an looked we do monitor how continue and make spending expectations. We’ve a you terms to when that perspective, though, think shape perspective and to sure have in would frankly, All or that perspective, effectively about as perspective. including discretionary to of you

that fact as see particularly the be I that around don’t we see right we we’re lot think environment, elasticity. Consumer, in a we now, to as of thoughtful only do in the going very

although channel competitive very and and we do promotional be of of focused that not clearly of, how our on sort any have going in the much as directed do, we we’re principally set. that so direct things that some spend as in And you product think to about

going to be in I you’re environment remain and what to I’d ask pricing test need be continue add pretty think from see closely Maybe, so a am like, few the to do competitive I market We’ll perspective. add also right we us we’ll given to things. disciplined you watching dynamics looks be -- elasticity -- but pricing. a pretty low I to now, Jeff, So you the think

Jeff Clarke

Yeah. I mean Tom, think, I discipline pricing. I in would demonstrated add, have we

portfolio on the is go product position. Our to across three price in

at loss that past gains consistent medium of win or Our decade. type remain consistently small share corporation and each business, global large whether business, the segment, believe good as our we over

to we’re So disciplined remain what in as said, happening aggressive, PCs. given is the going is Tom there in Consumer marketplace.

pricing note pervasive storage. there reflect of or then supply through And along I have where to not our step move pricing Commercial through system as worldwide. the I as are enables ushered towards that peripherals. towards drives plus education to we I’d down The consumer tends biased question. pricing backlogs, demand, premium the an servers, The supply, when quarters. in work as the side play demand true competitive. consumer environment of where of us if mix, last the past mobile ask in environment, It here back, We When to costs, us and you differentiated unbelievably relatively which here, same be to work our configurations true will, the on tends more is you has ahead same optimistic the stay, about drives area we we way PCs sorry, be being six even the we we have a increased what this that be higher on pass less side, and gone mentioned see change we way chain on all is mentioned, are is large back, Hybrid gaming the we is environment greater the tend to to tilted, long-term. have or more pricing the in environment our the which side, And and in for are in because benign. and advantage. which we

resources and We’re respond larger was approaching cycle what that’s you then years of still the we’re event put to at data infrastructure it market infrastructure three-year we at than edge, had world starting unprecedented triaging out we to excited highways COVID XG. what’s work-from-home by. is to gravity being created side, in replacement at on and three pulling from built a the the look digitize continues we’re digital the data new the nonlinear And at ago being which the happening with rate, pre-COVID, a levels, to the

optimistic So very we about marketplace. absolutely bullish the the characteristics long-term of are and

Rob Williams

Great. Thank Simon. you,

Simon Leopold

Jeff. Thanks,

Rob Williams

Thanks, Jeff.

Next question.

Operator

you. Thank

next Credit with Shannon Cross Suisse. question will come Our from

Shannon Cross

wanted about Thank you to very much. ask I APEX. Project

more You’re as $X Infrastructure over be if customers, that billion we now. we response Curious might going attractive ratable are. or a it that from something seems appears would service be to are the a as into downturn, which

then how Thank we small a albeit revenue also, time? part as if about that your a becomes should growth. margin you. about of you it but maybe about over potential And you think part how bigger think talk So business, now, for can

Chuck Whitten

said, hear APEX Look, new we’re ARR start to added to on from pleased is momentum layer approximately share XX% and today. we our and and the you XXX Thanks, Shannon. It’s Chuck. QX again. Good we as let now excited customers. on. year-on-year team milestones with in $X the billion, APEX we’re grew you I’ll orders

of custom a bit, lot it in solutions. our strength If seen you dissect we’ve a

are data interest said, And utility And effectively all look, of Dell capacity. we’re So on APEX customers in data which with the also committed by as scale managed pay-as-they-go from Demand type you seeing naturally cash effectively and pay-per-use lots a outlays that macro protection that’s or then customized their current want our manage model. to HCI, to to to looking model. our pivoting center on-demand a center customers environment, move APEX who offer, infrastructure offer, is data across buffer server, storage, of Flex part

and periodically we’re really momentum report and Look, want our to out extending our We’ll going remain the the So a progress, ahead APEX don’t focused continue to growth and good like from P&L to in get set ourselves. offer we on to we today, on business. hitting of milestones. margin, continue technical in did and reporting and

from come to more So, us APEX. on

Rob Williams

Thanks, Shannon.

Operator

Thank you.

Hall question Goldman Rod next come will Our Sachs. from with

Rod Hall

I Yeah. the question. for and can very to company, come important what I call across, Hi, think, look enterprise they both going in with guys. this read I sit to as maybe lot from here, of obviously, Dell, away guess, a Thanks Consumer. people a are

in the in I have with seen Any if the know a learn So environment. help the any enterprise could might on side in us trends double-click if consumers, exposure, what’s going you then consumer I kind smaller? these see One interested color end are further you large thing maybe weakening? there’s where the are enterprises that less you’ve consumer, slowdown, on good evidence wondered that we’re is you’ve of even there. lot those in on particular types guys us or give data And higher of think a Thanks this lot. any though starting likewise, of Commercial maybe seen do of you things, customer, you that

Jeff Clarke

as you just Sure, a and Rod. I’ll enterprise, start run take Tom add. this we certainly PC described. Chuck can at Commercial then Jeff, or with and If

but think I clear. a I ways, said variety it crystal make in try we it of to

corresponding the not set. saw all we Chuck does, saw bids that of things needs and -- impacted the macro the multinationals, being our on impacted to a large in, smaller large quarter operating it that’s how as behavior customers large least made pipeline the we customer are and part think way comments, bids needs, of through his characteristics the they we traditional as in because its that had we a referenced were of urgent or at or basis. size. our their large the more through what said and and their Tom, buying and the we as and cautious One to build appropriate, very future very relative way most bid that not buying SB what down were the the business we least NB a are were large slow or in that and across the call was environment did have corresponding quarter, corporations companies which did of seen what I of slowed expected historically large And through

better in a -- frequent those large servers businesses in PCs but slowed quarter. of Consumer the in sure became low and ones grown seen tell size of couple we that ample was channel seeing of what inventory. earnings channel that the that don’t the encouraging, of in the very the really because that’s you’re were and weeks. your didn’t challenge both in So is inventory, now which they smaller the the more bids on you that we Consumer, as, large certainly, performed basis, And and reported marketplace less has that through of you’ve and compete ample last has the end competitiveness On relative as primarily I’m checks throughout certainly the other some

In terms certainly, or and we business as the of the high impacted. XPS like consumer I we’re call premium end to it, mean, gaming

not less. to subcategories to exposure has that business two consumer a have those impacted They be were impacted. can’t You

more. that If didn’t, you think and give answers little let I I question. Rob’s break -- I’ll it a qualify here rule your

Tom Sweet

demand in Maybe ISG the from on Okay. talking of, add enterprise let Hey, demand you me about great perspective. terms an did or job infrastructure Jeff. a PC

in talk and is that pipeline overall and we stay of moderate overall said do customer the trend look, with technologies see pushing are are little just that, quarter is underlying we to As growth. see frankly, size theme we is in in to decision digital an What did cautious. ISG customers our bit. demand seeing quite customers cycles and is across environment we the spend, deal reducing, elongating the a terms track Obviously, demand continuing here

of quite is guide as we some where back look we informed about what we and thought were about, thought we our And versus that are frankly, now. May so in where

that’s as we upon the year backlog back demand an bring -- and year, Although ISG low say, about we we think and I in or ISG, should ultimate that softer, as digits we depending that’s ISG It backlog low-double probably the within bit of half still supply frankly, through in talked the for as the area signals demand year. go down quite a revenue, see about chain. is backlog sort that elevated double the will and of

Rod Hall

great. That’s

I don’t detail. to of, want I appreciate Rob, I’m that Okay. all afraid rules, break his so so

Rob Williams

Rod. Thanks, Okay.

Operator

will Citi. question next Suva with come our And from Jim

Jim Suva

stick And one Thank you. And to more question, is… I’ll I’m ask not one. that so smart enough to than

Rob Williams

decided. we That

Jim Suva

sense you. Dell, … any duration? share two there that or some here with shifts is this favor that sense Thank in actual actually share for these shifts pause of there’s are delays, or quarter is having, your opportunity an you’re will cancellations pause of surprise it about a kind

Tom Sweet

Hi. the of of We hear couple questions. first words your didn’t

up would helpful, If very that that could you please. again, set be

Jim Suva

You bet.

duration? you there’s do are So that on, pause shifts demand, are or what that to think? sense that is plans just it companies or orders on the I’m that and think like changing do trying about, you customers with think you and transitions one just more occurring these the share about technology big side especially companies than quickly a enterprise said broader pausing get and canceling their may more

Tom Sweet

cautionary of few that but they’re to ago are underestimate still can’t the needs. being I to us. immediate buying we the cautious, an a think of characterization longer The they’re those moments for things timing out actually and reevaluating future. it. of world I important companies built in and probably the think, are that’s our be impacting macro their the and digitizing in Again, that will postponing here how impact term would transformation, operating their way be I we about Well, notion I say won’t I view referenced are digital think environment build-outs, think the fast things and urgent is companies that the

distributed, life. to data a clearly data-driven and world technology require in connected, live is to to more that’s bring more everywhere sites that to building going going We’re with

I I are direct I think are way typically think, immediate we markets we think and that an operate down. typically in how well when we opportunity, up and when do nimble model the well markets do are, we our and agile

our think, we attached word I access that. that I company configurations a allows and market We PCs, a if prefer our peripherals, us word, this serve having to model outlined. servers in the or for appropriately see belief sell end early, that position your that services that of gives direct we pausing. to hope reasons and down land and I units the slowing the allowed soft marketplace ability helped. and do marketplaces some positioned in we’re with across advantage think help, use the to we to posts the financing, And will, our model you an that slow the us storage to listening our by So has us and intend higher would maybe, to I’ll share take

Jim Suva

Thank much. you so

Chuck Whitten

basically position is is we focus market these position what on this to we’re businesses offense times and uncertainty. and Yeah. Tom’s I build that in to adjacent can’t going up That our cycles. accelerate going control we worked and Yeah. in playbook I that what control in say, core has can mean and our to prior both economic we playbook help but to these intend have a we our businesses. to conversation play strategic -- over to of myself Look, multiple we’re in in our

So we while saw…

Jim Suva

[inaudible]. Yeah. I I it if anticipate, call

Tom Sweet

often… are We

Jim Suva

Yeah.

Tom Sweet

Often will…

Chuck Whitten

Right.

Jim Suva

QX plan… lesser For is it

Tom Sweet

So…

Chuck Whitten

Yes.

ahead. Go Yeah. Okay.

the cost that I prudent just not that think, applied. also finish and incredibly Sorry, took QX thought. we actions strategic uniformly were were to in my Look,

innovation and growth critical like businesses telecom stay investments. our and we critical multi-cloud edge maintained focused. made in priority We externally we So our investments

years, gained As opportunity number unit the one us to the commercial servers and Jeff of share an this and last position. for XXX said, storage. over that we’re a in almost five that’s is -- We in leader how -- mainstream company we’re that trying are XXX bps has

Rob Williams

you Thank Great. right. All Jim.

Next question, please.

Operator

Thank you.

Aaron Fargo. from Our next with question Wells comes Rakers

Aaron Rakers

guess, segment look that doesn’t question. for on dissimilar guidance, I I the you bit. actually, go seasonality, low-teens seasonality. It think ISG to want implies I kind little that’s question Thanks above I seem quarter. even to I’m if Rod’s the a at assuming this normal to Yeah. argue a back like year-over-year could think it’s taking said of I you really growth. bit the to little were

Tom Sweet

Yeah.

Aaron Rakers

bridge is So this me like, bridge actually backlog burning is, what as question relative to the that look quarter with just between think I on quarter my going if next after help guess deteriorating demand? and backlog far what’s seeing even about, should as that, ISG at demand just you’re we and we down slowing versus

Tom Sweet

our Aaron. demand That’s is demand this that quarter just right? what expectation setup I you through about Hey, actually the we moderating Yeah. so was went moderating think So about to, talked as in of was continues. ISG we conversation, if alluding what the QX and

you of the -- half think got I separately. into think things if overall we you about the for -- in the year, particularly space, to ISG back look these

ISG, bit components more than my point. we And how high-single at that demand sort a ISG are this storage growing the guidance, within the the we We of around about frame demand guidance server particularly optimistic are about comment of has and in chain and with of digits, drive the being both demand is principally backlog all digits using the quarter the low-double obviously back backlog through incremental current of on shipments, predicated elevated supply in the that year, this half then to through there. whatever generation

Jeff, in availability we to if that. supply in add supply anything the particularly think know chain, don’t the the chain. I in I more have ISG confidence you’d

Jeff Clarke

No.

out I think you it correctly. called

we second we that about supply things been in any given the we a and environment chain As look are the chain clearing year, what of have second sell to to able the do which demand half that supply perspective, what quarter, be half us to ship organization. at we’re from the talking we’ve in the the the believe is way in supposed impeded

the NICs half line of improve through them regulators, power year continues ICs the position. associated voltage and the to working of we’re the things supply with So the a in the and supplies controllers, out are to called the past good second in that in sight I’ve the embedded

Aaron Rakers

you. Thank Yeah.

Operator

And America. question our from with will next Mohan come Bank Wamsi of

Wamsi Mohan

at could thoughts is be any an million you talked XXX flow, Thank XXXX on view us but six look LTM free could impressive, wondering your update been right, maybe And months, it’s very cash Last was and flow we early if PCs negative. XXXX. about quarter, give if cash your over you in your last into the I free you. Yes. units. current

in CSG, of revenues particularly declining know weakening you’ve as got I elevated environment well. inventory through and this look you As levels demand

are there So pieces. moving a quite few

off, as burn should at pace look So next elevated the in you through about trying the free through you to potential that how quarters? couple that and thinking over give and inventory generation the flow we can rate any help of be of backlog, being cash us think your

Jeff Clarke

out address I’ll that thinking our Wamsi, XXX Sure. call last I’m there is. X put current where the since on our

with sure saw certainly, I’m new significant So you that their out a IDC came night last forecast, change.

definition market roughly their or XX%. down obviously, I changed particularly half, under million believe and market XXX their on the in now side which of the takes Second units, just

industry a That last to our it talked we our I on about a from is uses time, tying than customers that little model pessimistic hear built proprietary learn model. sources, model what is so many view, proprietary XXX that. and our that we view what our the Our from supply more and base uses

year. We’re around in sold million million half centering XXX the the units roughly of the for XXX year, first

be would math in you what how of get second the do can You half. or the it

navigate more the half allows at listening manage least business. to the that have down does proprietary us posts model our we So than on IDC second our insight, our and based and

in It XXX driving So to be of will decimal, outlook, that now it is approximation specific is our The wrong precision these tools current but an the the behavior. that’s think where our of isn’t million. tomorrow. we market

Rob Williams

Jeff. All Wamsi. Thanks, Thanks, right.

question, please. Next

Operator

with And come Evercore. Daryanani question Amit from will our next

Amit Daryanani

if half, back year? ISG, back seeing guess revenues flow for more the are you’re about talk that and positive is understand? about And half cash of the you still other, be really the we think half versus storage you free you for generation that helpful could maybe have Tom, my servers the way to alluding expectations have down then, taking would back weaker are maybe can Thanks in if versus question. to one I I just what

Tom Sweet

Yeah.

Let me take that.

start storage with me the Let just side.

performance. we’re look, the with So, pleased storage

storage QX quarter half. the of portions think, a portfolio. consecutive strength the in Look, that’s fifth we X% for and I first streak is of QX, growth that demand that across our X% in number X% of growth saw extended now in to growth so after P&L, we’re saw You growth

business an And that continues we’ve sort portfolio to and past, one very the grow, advantage call at business, of our around infrastructure breadth and in storage in high the as we core lumpy entry, pull a unstructured. healthy storage of I’d in be said can data the the growth saw half, continued lens quarter, Our out end, if PowerStore be to grew back first protection, to the businesses any so all clip. storage we hyperconverged

So the so growth as environment moderating sit But from server in today, storage QX. we do looking and we ahead see caution the demand more we in again to enters look, on do moderation that we growth we buying expect buying of storage, demand see in would where say, sort storage. extends storage than

Rob Williams

Great. All Thanks right. Thanks. for question. the

question, Next please.

Operator

And our next question will Bank. come from Ho Deutsche with Sidney

Sidney Ho

margin things. my is on of My question Thanks for taking the Great. question. side

in gross slightly kind flattish QX. think be in margin the of and QX up quarter, I you expect last to

you seeing operating trending while by Given now on you’re also segment of in what exchange you at terms operating your also are expenditures? can -- headwinds, what you’re how your seeing reducing margin expectations by and right incremental foreign comment Thanks. it, gross given talk margins, and about the

Tom Sweet

Sidney. Hey,

guidance more we back think well. helpful of continues although to was happen expect dynamics business, the bit the the that and the that’s we in currency, down said is the in the margin, you aggregate the given about mix given of to we gross that the we as currency, that our the an what results. taken May, some the again, foreign we’re saw decline gross But seeing to commercial the expected QX What just business the and to But excuse offset backlog the guidance pricing QX increase when in that in mix about to in operating PCs dynamics QX be this talk margins me, parse try mix of of we you year given and dynamic. business, we of half do in we effectively just level. the won’t operating margin an I said Let for to me the it if towards have what recall segment a we level, actions at mix QX, talked

now relatively expectation is as in the today margins our with So stable gross what of move year. QX through know that right and then remainder go the upward we you

Rob Williams

Great. All right.

please. question, Next

Operator

Fox question Steven will next Our Advisors. Fox from with come

Steven Fox

Good afternoon.

said wanted a maybe Just couple storage line. time or clarify understand of just things to you on

So when portfolio. pressures overall you. I and advantages sort But demand sort for understand three what can on in what going mix and trends back and you of forward? the of seeing overall growth looking macro you broad these you quarters, some next you’re how think storage the two said mean still might of over about mix the Thank that and into dig to the mix

Jeff Clarke

to Well, way let to question. try my work me that

in the to business the sources and the -- portfolio. number be think The I storage we businesses, storage So talked the tried just and PC share part that the to about we’ve we’ve and across and our positions expect say market. performance expect of demand, our I sources mid-single are And think of one going think business are that about marketplace gain our the performance? forward-looking of to to digits business Chuck demand. the as its outperform Where we server associated grow those referenced, we the

now architecture have made can feature Chuck any into have lean the It’s some midrange the of the had with and we references expect to XX% It’s modern We We software and new wish market most marketplace, replication. a mix we we We unmatched We’re in don’t doing. the into our half earlier, a continue and that. put We PowerStore, now, third marketplace to we a have we have is market we a our in PowerStore high leader that. Version put MetroSync market that but X the the in mid-range just how the new. marketplace. in end. marketplace controller. release just certainly, customers of PowerMax in the the of believe now it’s on are deficiencies of nearly native grow

Our PowerScale is product and structured new.

and to believe product we’ll attempt drive be growth Our go where we sources the I in going marketplace. successful be the differentiated PowerFlex software-defined outperforming in unmatched Those marketplace. is storage are

Tom Sweet

Jeff. Hey,

have, the cycle I that, there’s end that so the refresh we things given are to PowerMax mainframe from us portfolio of think a macro the benefit that. product well. addition that high couple as should help in Clearly,

do result a is that some to reality we getting innings, the there of of benefit Now the it’s but that expect as world is still and created. be early data

ability in and just feel the data grow positioning So and in outlined you the to capabilities that need continues company store the our think, of a about pretty I with the to opportunities. the solution market, good we

Jeff Clarke

before, HCI this think storage it, in I priorities consolidating taking Right. summarize more are in And maybe we the software-defined but leader, the but really if high if marketplace. mid-range to in the the think, end with want business. and then the you in I and the Innovating product lead are that, best the about share business our create where mentioned you space market and infrastructure

them to grow. on to the lean position leadership have and we all three So we in continue

Steven Fox

Thank you. helpful. very That’s Great.

Rob Williams

All right.

Operator

Thank you.

comes Chatterjee JPMorgan. next Our from Samik question with

Samik Chatterjee

Hey. that to one we your be in see any and countercyclical, your out will can Thanks on the managed for in squeezing the the mentioned reverses customers, some from that time, guess I me Thank I well. that obviously financial know expect talk I services you insights rebound some downturns the business the experience? parts a you. times called as where to was as slowing business call you’ve you’ve about should in. the curious if first, of on few was just as past economic particularly hopefully, from of

Tom Sweet

Yeah. Hey.

then Let here. and the me start guys can in jump

be might about move tend macro saw our of weakness, in balances that towards we think for the cash and business, you preserve DFS originations the what kind to and is seen DFS what you financing, As pointed have out uncertainty liquidity countercyclical us. want the we opportunities with or past in rightly are that clearly, opportunities macro in customers to and quarter this

in, So is and of I of as which or of the terms APEX opportunity, are subscription into point us. that lack for capital service APEX, will you thinking right, an talk lean frameworks to to is the opportunity an about preservation interested interesting many CapEx in customers a would be also

released are within now If and you flow. dynamic right where within sectors that’s verticals space into in investments defense think the opportunities the and money about or think upon depending governments, marketplace the going about macro how spending particular, the how within government sector, space, care they education you or in going are get government budgets the where interesting and on are and health

companies You’ve build so verticals seen the will the energy energy macro flowing around and require out. investment energy into and infrastructure

as So chain interesting costs, to within of in that deflationary opportunities areas while costs opportunity that remind to to we tended broad will QX. do for there. are of think slowing velocity. have and about component are expect guys we Obviously, this also times component we’ve a this that in I well conversation you would we following been in number of know those industry that we historically, try supply are of in context types deflationary -- his margin exploit us you there that as highlighted a a and economy appropriate around Jeff drive

are that navigate through to that confident do. growth have we’ll positioned vectors take we’ll of any But be out it. look, what to there. So It’s we advantage I’m

Rob Williams

Great. right. All All right.

and Operator have it last We question got one up. we wrap will

Operator

you. Thank

and question come Sankar Co. from final will with Cowen Our Krish

Unidentified Analyst

Hi. behalf Thanks question. Stephen my on calling for This [ph] of Krish. taking is

on in anticipated market, the are to are year be feedback slowing also of this of one as overall about the context but given out portfolio on talk ISG customer that systems releases. also you just of this xXX service year. within percentage server Obviously, have coming year server macro later that? increased the most product new you refresh do expected your the Thanks. probably one demand Just your a that with question Can a and line AMD-based anticipate chips

Jeff Clarke

I if see way Well, my work through let that. me

Servers, mode. about us. for So grown and really been six has technology The saying slowing quarters, a a architecture. we independent we’ve sector probably the we’re talked last share about quarters demand and in for It’s server of growth In this taking we seven seen of a we’re been servers. tremendous this this you’ve from benefited in infrastructure. marketplace. row It’s talking consumption in by case, massive that

what’s here get cycle and long cast I’m digestion the through as not be I paused period. So or is we as that to called consumption how can’t I go through consumption delayed going a cycle look we forward,

quite button xXX of have be products, architectures. We’re when poised high-value across consumption a we’ve We’ll workloads. of back gets on well classes We’ll made in refresh the strategically again. the turned performance both position progress

software what space when slowing. we’re talked across defined take say think, I the data sell nicely period was positions to forecast the about We it I doing of stopped. demand us in We quite deeper the didn’t the can’t that Board, ability center, Our that. into consumption to advantage resumes.

continue an intelligence. world world, important And notification. really think a data-intensive Those are I requires longer insights, world, a for that and our So a more built that’s that the customers. data-driven decentralized drive demand, embedded attributes to the a a world, term multi-cloud things automation we

terms what quite feel well. next positioned So but happens of in period longer term, the we’re time, I of really good. a I’m in not forecaster market

Chuck Whitten

didn’t it’s related to that intentionally feel second I hit were we couple just Very good. a better questions just of flow. We And that had I address those. like probably that cash

So in and Tom linearity half, second flow the questions demand cash the dynamics. given on

Tom Sweet

Yeah. in over of sort the seen revenue in of that dynamics dynamics I out was demand year, given or the half it dynamics the first obviously, and Look, the think, of a bit the pointed cash half sequential Amit we’ve quarter first of business. flow free softer, some

all particularly to in with little bit about We’ve cash you of pullback generate actions we revenue year, when as we think how do a driving guys tend you lot now, capital. have or Yeah, we a model, demand our tend half capital cash negative model, a is generate flow. back number of of we the to a you capital as free will when revenue about working the to know, expand got working utilization think flow efficient flatten in our down place working revenues that. around right of drive of more So

shape. in that work being to continuity inventory ensuring of supply the saw are down our We’ll our million receivables there our linearity build did of of receivable agings serve doing sales quarter in We the us result great of this saw a $XXX help capabilities way customers. as of supply continue that and quarter. some the -- to we came some through You cognizant that

this of We’re else what customer the to not stress seeing signs so that we’ll and work at the add there back to hard in from point get Tyler, that? any base profile. would you

Tyler Johnson

No. migrate would cash a for net I we’ll environment, where you over target, we well years, I look, if just it’s demand although and seeing, look capital you several that would But working would our saw time. mean, great above last and been right, from towards we probably the this obviously, obviously, was add. efficiency given benefited what back free flow our conversion to and income I be that that’s time, to X X and us over below target. year, we’re expect obviously say I back time are

Jeff Clarke

today. All right. That call Tyler. wrapped the Thanks,

a multitude IR and this activities Europe. in of conferences additional Just be we’ll Asia quarter as with a reminder, at

forward you road for we’re joining on today. you thank us the So seeing we when out to look and

Operator

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

at disconnect time. may this You

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