Dell Technologies Inc.

Good afternoon and welcome to the fiscal year 2019 fourth quarter earnings conference call for Dell Technology, 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. As a reminder, the company is also simulcasting this call at investors.delltechnologies.com. A replay of this webcast will be available at the same location for one year. Following prepared remarks, we will conduct a question and answer session. If you have a question, simply press star then one on your telephone keypad at any time during the presentation. I'd like to turn the call over to Karen Witzler-Hollier, Director of Investor Relations. Mrs. Witzler-Hollier, you may begin.

Thanks, Erica, and thanks, everyone, for joining us. With me today are our CFO, Tom Sweet, our Vice Chairman, Products and Operations, Jeff Clark, and our Treasurer, Tyler Johnson. We've posted our press release and web deck on our website. I encourage you to review these documents for additional perspective. Our fiscal 2019 10-K will be filed on Friday, March the 29th. Before I turn it over to Tom, I would like to highlight a few items. During this call, we will reference non-GAAP financial measures including non-GAAP revenue, gross margin, operating expenses, operating income, net income, EBITDA, adjusted EBITDA, and free cash flow metrics. Our reconciliation of these measures to their most directly comparable GAAP measures can be found in our web deck and press release. Our fiscal year 19 and Q4 non-GAAP results exclude the impact of certain adjustments such as purchase accounting, amortization of intangibles, transaction related expenses, as well as fair value equity adjustments and discrete tax items. The majority of these adjustments are non-cash in nature. Please refer to the supplemental slides beginning on slide 23 for more detail. Our non-GAAP net income now excludes, among other items, fair value or mark-to-market adjustments on equity investments, as well as discrete tax items. We re-evaluated the presentation of non-GAAP net income and made these changes to enhance the comparability of current operating performance to past operating performance. Non-GAAP net income for prior periods has been recast to reflect this change. Given the Class V transaction, Our Q4 and FY19 non-GAAP EPS numbers are not meaningful. We have included an adjusted non-GAAP EPS which reflects non-GAAP EPS as if the Class V transaction had happened at the beginning of the year. The view is most comparable to equity analysts' models for Q4. See slide 37 in the web deck for more detail. We will provide annual non-GAAP guidance for fiscal year 20 later on this call. A reconciliation of these measures to their most directly comparable GAAP measures can be found on slide 33 in the web deck. Please also note that all growth percentages refer to year-over-year change and less otherwise specified. Finally, I'd like to remind you that all statements made during this call that relate to future results and events are forward-looking statements. based on current expectations. Actual results and events could differ materially from those projected due to a number of risks and uncertainties, which are discussed in the Cautionary Statement section in our web deck. We assume no obligation to update our forward-looking statements. Now I'll turn it over to Tom.

Thanks, Karen. We are in the midst of a technology-led investment cycle driven by digital transformation and vast amounts of data created daily. Our focus is enabling customers to digitally transform and drive their businesses forward. We have a unique portfolio in terms of breadth and capability, and our customers increasingly see us as a key partner to meet their needs from the edge to the core to the cloud, which is showing up in our results. An example of this is VxRail, combining Dell EMC compute and storage with VMware software in an industry-leading HCI solution with an approximate $2 billion annual run rate as of Q4. Recently, we also created a unique endpoint security solution for commercial PCs through a partnership between Dell and SecureWorks. We intend to continue driving broader collaboration across our family of businesses to create new solutions to meet our customers' growing needs. I am pleased with our strong fiscal 2019 top-line velocity in financial performance. Our FY19 revenue was $91.3 billion, up $11 billion or 14%. We drove strong top-line velocity with all three of our business units delivering double-digit revenue growth for the full year. Jeff will talk about our fiscal year business unit results in greater detail. We delivered operating cash flow of $7 billion and adjusted EBITDA of $10.3 billion, or 11.3% of revenue, while investing back in the business, including sales coverage to support storage and buyer base expansion. Since the close of the EMC transaction, we have now paid down $14.6 billion of gross debt, which excludes DFS-related and subsidiary debt. While we did add $5 billion in debt to close the Class B transaction, I want to emphasize that we are still focused on delevering and getting back to investment-grade ratings. Shifting to Q4 results, revenue was $24 billion, up 8%, driven primarily by double-digit growth in servers, VMware, and strong performance in commercial clients. Our Q4 deferred revenue was up $1.9 billion, sequentially to $24 billion, reflecting higher hardware and software maintenance from growth in the business, particularly storage, as we drive our solutions deeper into the data center. Gross margin was up 13% to $8 billion, or 33.5% of revenue, 140 basis point increase, due to higher gross margins in ISG and CSG resulting from pricing discipline and lower commodity cost. We also saw higher ISG and VMware mix contribution. Operating expenses were up 13% to $5.4 billion, or 22.4% of revenue. As mentioned on prior calls, we have been investing in sales capacity and in other areas supporting the customer experience to position ourselves for future growth. Additionally, variable compensation expense increased given the overall performance of the business. Operating income was up 12% to $2.7 billion, or 11.1% of revenue. Shifting to our BU results for the quarter, ISG revenue was $9.9 billion, up 10%. Within ISG, servers and networking revenue was $5.3 billion, up 14%. Storage revenue was $4.6 billion, up 7%. We are pleased with our server velocity. We continue to see significant increases in average selling prices driven by our 14th generation mix and higher value workloads requiring more memory and storage content. Storage revenue grew for the fourth consecutive quarter. We have more work to do, but believe we have taken the right actions to drive meaningful long-term improvements in our storage business. ISG operating income was 1.3 billion, or 12.8% of revenue. Operating income was up 110 basis points due to better profitability in storage, servers, and networking. CSG revenue was 10.9 billion, up 4%. Within CSG, Commercial revenue was $7.8 billion, up 9%, driven by double-digit growth in commercial notebooks and workstations. Consumer revenue was $3.1 billion, down 6%, as we shifted our focus toward high-end notebooks and gaming, given supply chain dynamics. CSG operating income was $555 million, or 5.1% of revenue. We saw better profitability in CSG this quarter due to our mix, pricing, and component cost. Our VMware business unit revenue was $2.6 billion, up 17%. Operating income was $872 million, or 33.1% of revenue. Based on VMware's standalone results reported earlier today, VMware saw broad-based strength across a diverse product portfolio in all three geographies. License bookings for the NSX portfolio grew over 50%, and license bookings for vSAN, which includes vSAN within VxRail, were up over 60% in Q4. Our other business revenue, which includes Pivotal, SecureWorks, RSA, Virtustream, and Boomi, was $593 million, up 5%. Now, let me turn it over to Tyler to update you on cash and our capital structure. Thanks, Tom.