EMC Q Financial Results Tony Takazawa Director, Global Investor Relations April 19, 2005

Transcription

1 EMC Q Financial Results Tony Takazawa Director, Global Investor Relations April 19,

2 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) risks associated with acquisitions and investments, including the challenges and costs of integration, restructuring and achieving anticipated synergies; (iv) competitive factors, including but not limited to pricing pressures and new product introductions; (v) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (vi) component and product quality and availability; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) insufficient, excess or obsolete inventory; (ix) war or acts of terrorism; (x) the ability to attract and retain highly qualified employees; (xi) fluctuating currency exchange rates; and (xii) other one-time events and other important factors disclosed previously and from time to time in EMC s 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 and certain of the slides may contain information that is not prepared in accordance with generally accepted accounting principles ( GAAP ). If any non-gaap financial measures are presented, a reconciliation of these GAAP and non-gaap measures is included within these slides. 2

3 CFO Commentary Bill Teuber Executive Vice President & CFO 3

4 Q Highlights 10 th quarter in a row that EMC met or exceeded targets Top-line growth of 20% Double digit growth in every major geography Continued operating leverage Solid cash flow 4

5 Q Results Q1 Revenues of $2,243M, up 20% Y/Y Operating Income of $323M, up 90% Y/Y Operating Income up 63% Y/Y, ex restructuring charges Q1 EPS of $ 0.11 (per diluted share), up 83% Y/Y 5

6 Financial Results Detail Impact of currency Performance of major product categories Factors impacting operating margins Cash generation from operations Highlights from balance sheet Expectations for Q2 and FY

7 Currency Effects Benefit to consolidated revenue was 1.7% Y/Y 7

8 Changes to the Supplemental Revenue Schedule Now breaking out services revenue into software-related and non-software-related components Three new software license categories: Storage and Management Software License Backup and Archive Software License Content Management Software License Historical revenues for new components provided back to Q

9 Product Revenue Symmetrix Product* Revenues (millions) $652 Y/Y Growth -3% *Includes Symmetrix hardware, software, and upgrades Comments: One-time APJK orders in Q create difficult compare 9

10 Product Revenue Symmetrix Product CLARiiON Product* Revenues (millions) $652 $419 Y/Y Growth -3% 47% *Includes CLARiiON hardware, software, and upgrades Comments: Solid growth across geographies, especially Europe Balanced growth across partner channels and direct sales 10

11 Product Revenue Symmetrix Product CLARiiON Product Connectivity* Revenues (millions) $652 $419 $176 Y/Y Growth -3% 47% 23% *Includes switching products sold as Connectrix and Celerra, excluding disk revenue Comments: Connectrix port count growth in high 30% range Celerra NAS growth of 40% 11

12 Platform Software License and Maintenance Revenue Platform SW License* Platform SW Maintenance Revenues (millions) $284 $100 Y/Y Growth 13% 50% Total Platform SW $385 21% *Includes license revenue from software products that only work with EMC arrays Comments: Platform software growth rate a blend across Symmetrix, CLARiiON, Celerra and Centera platforms Note: May not foot due to rounding 12

13 EMC Software Group License Revenue Storage and Management* Revenues (millions) $147 Y/Y Growth 21% *Includes most of core EMC multi-platform software and SMARTS network management software Comments: Growth was led by SAN Manager and StorageScope 13

14 EMC Software Group License Revenue Storage and Management Backup and Archive* Revenues (millions) $147 $52 Y/Y Growth 21% 36% *Includes most of Legato products, Dantz products and traditional EMC backup products Comments: EMC Legato NetWorker showed strong performance Customers choosing backup-to-disk for faster recovery times 14

15 EMC Software Group License Revenue Storage and Management Backup and Archive Content Management* Revenues (millions) $147 $52 $49 Y/Y Growth 21% 36% 23% *Includes historical Documentum products and ApplicationXtender product Comments: Compliance-related solutions of particular interest with customers Added approximately 125 new customers 15

16 EMC Software Group Total Revenue ESG License ESG Maintenance ESG Consulting Revenues (millions) $248 $125 $28 Y/Y Growth 24% 21% 39% Total ESG Revenue $401 24% 16

17 VMware Revenue VMware Revenue* Revenues (millions) $80 Y/Y Growth 104% *Includes VMware product and services Comments: License revenue represented nearly 80% of VMware revenue 17

18 Total Software Revenue Platform SW License ESG SW License VMware SW License Software Maintenance* Revenues (millions) $284 $248 $62 $238 Y/Y Growth 13% 24% 88% 35% Total Software Revenue $832 26% * Includes maintenance revenues from Platform Software Products, ESG Software Products, and VMWare 18

19 Services Revenue Professional, Systems Maintenance and Other Services ESG Consulting Revenues (millions) $347 $28 Y/Y Change 25% 39% Total Professional, Systems Maintenance and Other Services $375 26% 19

20 Q Revenue Mix Software $832M 37% of total Systems $1,026M 46% of total Services $375M 17% of total 20

21 Q Revenues by Geography Revenues (millions) Y/Y Growth North America International EMEA APJK LA $1,308 $935 $641 $248 $46 23% 15% 15% 12% 27% 21

22 Margins for Q Operating Margin was 14.4% Well positioned to meet target of high-teens in Q Gross Margins were 52.3% Down 10 bps from Q

23 Gross Margin Analysis Q4 04 Gross Margin 52.4% Volume effect Mix Price/Cost/Other Total ~(60) bps ~10 bps ~40 bps ~(10) bps Q1 05 Gross Margin 52.3% 23

24 Operating Expenses Q (millions) Q (% of total revenues) SG&A R&D $616 $ % 10.4% 24

25 Q Tax Rate Effective tax rate for Q1 was 25.4% Elimination of tax exposures lowered expected 28% rate EPS would have come in at $0.11 for Q1 in either case Tax rate for the rest of 2005 expected to be around 28%, excluding any special items 25

26 Q Balance Sheet Highlights Cash and Investments were $7.5B $127M spent to buy back 9.8M shares in Q1 $253M spent on SMARTS acquisition 26

27 Using More of EMC s Strong Cash Position Net Addition to Cash & Investments by Quarter $700 Before Stock Buy-Back & Acquisitions Use of Cash Q1 04-Q1 05 $600 $500 $439 $581 $436 Stock buyback 32% Acquisitions 40% $400 $300 $351 $298 $200 $100 Balance Sheet 28% $- Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 27

28 Q Balance Sheet Highlights Days Sales Outstanding (DSOs) were 44 days Down 1 day from Q Inventory was $594M Turns calculated on total COGS were 7.3 CapEx was $98M Depreciation and Amortization was $166M 28

29 EMC Outlook 29

30 Q Outlook Revenue of $2.330B to $2.355B Diluted EPS of $0.12 Revenue outlook represents 18%-19% growth Y/Y 30

31 FY 2005 Update FY addressable market growth still believed to be 7%-8% More confident in our ability to grow 2x the upper end of this range SMARTS expected to add almost another point of growth EMC is still focused on: ILM strategy with enterprise customers International opportunities Mid-size/SMB marketplace 31

32 FY 2005 Update Full-year gross margins to be just under 53% Operating expenses to be in 35.5%-37.0% range for year Well-positioned to meet high-teens operating margins in Q4 EPS to be between $0.50 and $

33 CEO Commentary Joe Tucci President & CEO 33

34 Q&A 34