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EMC Q1 2013 Financial Results - Dell EMC · PDF fileEMC ViPR, Software-Defined Storage VNX Isilon 3rd Party VMAX ViPR Data Services ViPR Controller Commodity EMC ViPR Platform Provisioning

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  • 1 Copyright 2013 EMC Corporation. All rights reserved.

    Tony Takazawa Vice President, Global Investor Relations

    July 24, 2013

    EMC Q2 2013 Financial Results

  • 2 Copyright 2013 EMC Corporation. All rights reserved.

    Forward-Looking Statements

    This presentation contains forward-looking statements as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending; (iii) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (iv) competitive factors, including but not limited to pricing pressures and new product introductions; (v) component and product quality and availability; (vi) fluctuations in VMware, Inc.s operating results and risks associated with trading of VMware stock; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) risks associated with managing the growth of our business, including risks associated with acquisitions and investments and the challenges and costs of integration, restructuring and achieving anticipated synergies; (ix) the ability to attract and retain highly qualified employees; (x) insufficient, excess or obsolete inventory; (xi) fluctuating currency exchange rates; (xii) threats and other disruptions to our secure data centers or networks; (xiii) our ability to protect our proprietary technology; (xiv) war or acts of terrorism; and (xv) other one-time events and other important factors disclosed previously and from time to time in EMCs filings with the U.S. Securities and Exchange Commission. EMC disclaims any obligation to update any such forward-looking statements after the date of this presentation.

    This presentation contains non-GAAP financial measures which include, but are not limited to, non-GAAP Gross Margin, non-GAAP Operating Margin, non-GAAP EPS, non-GAAP Net Income, Free Cash Flow, Non-GAAP Non-Operating Expense, Non-GAAP Income Tax Rate and Non-GAAP VMware Minority Interest. A reconciliation to GAAP is included within this presentation and in the Current Report on Form 8-K furnished by EMC on July 24, 2013 which can be found at www.EMC.com or www.sec.gov.

    http://www.emc.com/http://www.sec.gov/

  • 3 Copyright 2013 EMC Corporation. All rights reserved.

    CFO Commentary

    David Goulden President, COO & CFO

  • 4 Copyright 2013 EMC Corporation. All rights reserved.

    EMC Consolidated Results Q213 Change Y/Y

    Revenue $5.61B 6%

    Non-GAAP Gross Margin 64.3% - 10 bps

    Non-GAAP Operating Margin 24.2% +20 bps

    Non-GAAP EPS $0.42 8%

    Q213 Growth

    Y/Y

    Info. Infrastructure $4.31B 4%

    Pivotal $0.07B 11%

    VMware $1.24B 14%

    Consolidated $5.61B 6%

    Q213 Growth

    Y/Y

    North America $3.11B 4%

    Latin America $0.19B 12%

    EMEA $1.49B 6%

    APJ $0.83B 12%

    Consolidated $5.61B 6%

    BRIC + 13 18%

    Note: Q2 2012 revenue and the corresponding growth rates from Greenplum, Pivotal Labs, Cloud Foundry, Spring, Cetas, GemFire and other products and services from the VMware vFabric Suite are included in the Pivotal results and excluded from the VMware and EMC Information Infrastructure results, as applicable.

  • 5 Copyright 2013 EMC Corporation. All rights reserved.

    EMC Segment Results

    Q2 2013

    EMC ii Pivotal VMware

    $2.47B $0.03B $1.11B

    57.5% 37.1% 89.6%

    Gross Margin $

    Gross Margin %

    $1.49B $0.07B $0.70B

    34.7% 93.0% 56.2%

    Operating Expense $

    Operating Expense %

    $0.98B -$0.04B $0.41B

    22.8% -55.9% 33.4%

    Operating Income $

    Operating Income %

    $4.31B $0.07B $1.24B Revenue

  • 6 Copyright 2013 EMC Corporation. All rights reserved. Refer to the schedules in the Appendix for a complete reconciliation of GAAP to non-GAAP.

    Note: Free cash flow is a non-GAAP financial measure which is defined as net cash provided by operating activities, less additions to property, plant and equipment and capitalized software development costs. See attached schedules for a reconciliation of net cash provided by operating activities to free cash flow for the six months ended June 30, 2013 and 2012.

    Free Cash Flow, Cash Use & Cash Balance

    YTD FCF $2.28B

    Cash Use

    Q2'12 Q3'12 Q4'12 Q1'13 Q2'13

    EMC ex.VMW Dom VMW Dom EMC ex.VMW Int'l VMW Int'l

    Cash & Investments Trend

    Q213

    EMC Repurchase EMC Shares $692M

    EMC Purchase VMware Shares $35M

    VMware Purchase VMware Shares $118M $2.7B

    $1.9B

    $2.7B

    $10.9B

    $1.6B

    $3.0B

    $3.7B

    $17.6B

    $9.2B

    $3.7B

    * May not foot due to rounding.

    *

  • 7 Copyright 2013 EMC Corporation. All rights reserved.

    Capital Allocation

    Initiated a quarterly dividend of $0.10/share

    Plan to repurchase $6B of EMC shares over 3 years ending 12/31/2015 Repurchase $3.5B from 1/1/13 through 6/30/2014

    Long term intention to return ~50% of EMC (ex. VMW) FCF to shareholders through combination of dividends and buybacks

    25%-30% of EMC (ex. VMW) FCF returned to shareholders via buybacks

    20%-25% of EMC (ex. VMW) FCF returned to shareholders via dividend

    Cash returns to shareholders grow along with EMC (ex. VMW) FCF

  • 8 Copyright 2013 EMC Corporation. All rights reserved.

    $0.37

    $0.38

    $0.39

    $0.40

    $0.41

    $0.42

    $0.43

    $0.44

    $0.45

    $0.46

    Q2'12 Gross margindollars

    Operatingexpense

    Non-operatingexpense

    Tax rate Minorityinterest

    Incrementaldilution

    Share count Q2'13

    Consolidated non-GAAP EPS Results Y/Y

    Refer to the schedules in the Appendix for a complete reconciliation of GAAP to non-GAAP.

    $0.39

    +$0.06 -$0.04

    -$0.01 $0.42

    +$0.01

    +$0.01

    +$0.03 $0.00

  • 9 Copyright 2013 EMC Corporation. All rights reserved.

    Best Of Breed. Architected Horizontally, Not Vertically. Choice.

    Has Built A Differentiated Stack

    PLATFORM FOR CLOUD, BIG/FAST DATA APPS

    INFORMATION INFRASTRUCTURE

    SOFTWARE-DEFINED DATA CENTER

    AD

    VAN

    CED

    SECU

    RIT

    Y

  • 10 Copyright 2013 EMC Corporation. All rights reserved.

    Performance by Business

    EMC Information Infrastructure $4.31B 4%

    High-End $1.21B 5%

    Unified & Backup/Recovery $1.49B 3%

    Emerging Storage $0.30B 39%

    Storage Other & PS $0.93B -4%

    RSA $0.23B 3%

    IIG $0.15B 0%

    Q213 Growth Y/Y

    Note: Q2 2012 revenue and the corresponding growth rates from Greenplum, Pivotal Labs, Cloud Foundry, Spring, Cetas, GemFire and other products and services from the VMware vFabric Suite are included in the Pivotal results and excluded from the VMware and EMC Information Infrastructure results, as applicable.

  • 11 Copyright 2013 EMC Corporation. All rights reserved.

    Workloads Will Drive Storage Innovation

    Decision Support

    Email

    VM Infrastructure

    Transaction Processing

    Home Directories

    Web Content

    Online Archive

    App Dev

    Content Mgmt.

    HPC

    Tech Apps

    Motion Video

    IT

    Storage As-A-Service

    Low Service Level

    High Service Level

    Capacity

    Performance

  • 12 Copyright 2013 EMC Corporation. All rights reserved.

    Our Storage Strategy: Best Of Breed

    Capacity

    Performance

    Low Service Level

    High Service Level

    LEADER SCALE-OUT NAS STORAGE

    LEADER OBJECT STORAGE

    Isilon

    Atmos

    LEADER HIGH-END STORAGE

    VMAX

    LEADER MIDRANGE STORAGE

    VNX

    LEADER BACKUP

    Data Domain, Avamar, & NetWorker

    XtremSW XtremSF

    SERVER-SIDE

    STORAGE

    XtremIO

    COMING: ALL FLASH STORAGE

  • 13 Copyright 2013 EMC Corporation. All rights reserved.

    Software Control Plane AND Data Plane

    EMC ViPR, Software-Defined Storage

    VNX Isilon

    3rd Party

    VMAX

    ViPR Data Services

    ViPR Controller

    Commodity

    EMC ViPR Platform

    Provisioning Self-Service Reporting Automation

  • 14 Copyright 2013 EMC Corporation. All rights reserved.

    Performance by Business

    EMC Information Infrastructure $4.31B 4%

    High-End $1.21B 5%

    Unified & Backup/Recovery $1.49B 3%

    Emerging Storage $0.30B 39%

    Storage Other & PS $0.93B -4%

    RSA $0.23B 3%

    IIG $0.15B 0%

    Q213 Growth Y/Y

    VMware $1.24B 14%

    Pivotal $0.07B 11%

    Note: Q2 2012 revenue and the corresponding growth rates from Greenplum, Pivotal Labs, Cloud Foundry, Spring, Cetas, GemFire and other products and services from the VMware vFabric Suite are included in the Pivotal results and excluded from the VMware and EMC Information Infrastructure results, as applicable.

  • 15 Copyright 2013 EMC Corporation. All rights reserved.

    EMC Go-To-Market

    CHANNEL/VSPEX

    DIRECT

    VCE

    SPs EN

    D C

    US

    TO

    MER

  • 16 Copyright 2013 EMC Corporation. All rights reserved.

    EMC 2013 Non-GAAP Business Outlook

    Refer to the schedules in the Appendix fo

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