Dell Technologies Inc.

Good afternoon and welcome to the fiscal year 2021 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. 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 Rob Williams, Head of Investor Relations. Mr. Williams, you may begin.

Thanks, Catherine, and thanks, everyone, for joining us today. With me today are our Vice Chairman and COO, Jeff Clark, our CFO, Tom Sweet, and our Treasurer, Tyler Johnson. Our press release, financial tables, web deck, prepared remarks, and additional materials are available on our IR website. The guidance section will be covered on today's call. During this call, unless we otherwise indicate, all references to financial measures refer to non-GAAP financial measures, including non-GAAP revenue, gross margin, operating expenses, operating income, net income, earnings per share, EBITDA, adjusted EBITDA, and adjusted free cash flow. A reconciliation of these measures to their most directly comparable gap measures can be found in our web deck and press release. Please also note that all growth percentages refer to year-over-year change unless otherwise specified. Additionally, 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 our web deck and SEC filings. We assume no obligation to update our forward-looking statements. Finally, before I turn it over to Jeff, I want to touch on the amended 13D we filed in July 2020 regarding our exploration of potential alternatives with respect to our ownership interest in VMware. We continue to believe that a tax-free spin could drive significant shareholder value by simplifying our capital structures and enabling greater strategic flexibility while maintaining a strong commercial partnership between Dell and VMware. Both companies continue to be engaged on key work streams, and as VMware communicated earlier today, we are making progress in our discussion. However, there is no assurance that we will reach a definitive agreement. We will not address the discussions any further or take questions related to this topic on today's call. Now, I'll turn it over to Jeff.

Thanks, Rob. Hi, everyone. Thanks for joining us for our first call of calendar 2021. 2020 was a year that none of us anticipated and none of us want to repeat. But it also brought out the best of humanity and reinforced the criticality of technology to solving the problems of today and tomorrow. At Dell Technologies, we are grateful and honored to have a central role in helping our customers, from consumers to the largest enterprises, keep our society, our economy, and our lives moving forward. Finally, I could not be prouder of how our teams responded in Q4 and throughout this challenging year, delivering for customers worldwide the real business outcomes they need. As a result, our customer relationships and conversations have deepened. And no customer is asking how they can unwind their investments in digital transformations. It's all about moving their businesses forward and investing in their future. For example, gaining insights from data Customers like the University of Pisa in Italy turn to PowerStore, PowerScale, and PowerMax for core storage infrastructure and to enable remote learning and accelerate their hybrid cloud and AI projects. Swisscom AG is using our as-a-service and flexible consumption storage solutions for affordable, on-demand access to extra capacity when they need it. And Dell Technologies is in the middle of the edge and telecom transformation, most recently with TecmoHindra and AllF Edge in Brazil to offer edge computing as a service to local telecommunication service providers. These customer examples illustrate not just the market tailwinds that will benefit Dell Technologies, a future that is highly digital and highly distributed, but why we are uniquely positioned to take advantage of the trends. Our unique direct sales engine touches more customers than anybody in technology, giving us insights as we build solutions and allowing us to meet customers where they are in their digital transformation. Our breadth from edge to core to cloud makes us relevant no matter the customer challenge, and our unmatched global services allow us to simplify IT complexity for our customers. Behind all of this, of course, are award-winning product teams, a global supply chain with unmatched scale and reach, and financing capabilities that makes us trusted advisors to IT decision makers of companies of all sizes. Dell Technologies has never been stronger or more relevant. Turning to the financial results, we delivered a record $26.1 billion of revenue in Q4 with sequential revenue growth of 11%, driven by strong results in our CSG and VMware businesses, as well as our improvement in the ISG business. Tom will cover Q4 in more detail later in the call. For the full year, revenue was a record $94.4 billion, up 2%. Operating income was up 6% to $10.8 billion. And adjusted EBITDA was $12.7 billion, up 8%. Earnings per share for the full year was $8, up 9%. Throughout FY21, we leveraged the depth and breadth of our portfolio to lean into the pockets of growth when and where they occurred. We executed with discipline, speed, and precision. And in what was an extremely dynamic environment, we delivered record results. Our client solutions group had an outstanding year, delivering record shipments, revenue, and operating income. Revenue for the full year was $48.4 billion, up 5%. And operating income was up 7% to $3.4 billion. And for the calendar year 2020, according to IDC, we shipped 50.3 million units, up 8% and the most ever in a year. Our commercial PC results were even stronger with commercial unit growth of 11%. Dell gained the most commercial unit share of the top three vendors with share gain concentrated in notebooks. Resilient demand was driven by the fast-growing technology-enabled world where consumers can do anything from anywhere. Instead of going to work, school, entertainment, a restaurant, or shopping, it all comes to us. The PC is the hub of this new economic model. Our consumer business delivered record revenue of $13 billion for the year, up 12%. Customers have shifted to e-commerce and our strategy shift earlier this year to advantage our direct and online selling paid off. Our consumer business was up 51% on a revenue basis based on orders and our consumer online business was up 64% for the year on orders revenue. Commercial revenue was up 3% to $35.4 billion, also a record. Orders for our commercial notebooks were up 46% on a unit basis and 28% on an orders revenue basis, while orders revenue for commercial Chromebook was up triple digits. ISG Solutions Group revenue was $32.6 billion, down 4%. We saw demand in the second half of the year improve with our best results in Q4. as spend increased in the infrastructure needed to power the do-from-anywhere world. Servers and networking revenue for the year was $16.5 billion, down 4%, but with growth in the fourth quarter. Server demand improved in Q4, and power edge orders were up mid-single digits. Our storage revenue was $16.1 billion, down 4%. but we did see demand growth in key areas. PowerMax, hyper-converged infrastructure, and PowerProtect data domain all saw solid growth during the year on an order's basis. Our mid-range storage business returned to growth in the fourth quarter, driven by accelerated adoption of a power store. Power store orders grew four times compared to the third quarter orders, orders as customers embrace the next generation of modern data center technology and applications. In a challenging environment, PowerStore is ramping faster than XtremeIO and VxRail, making it the fastest new architecture we have released. Additionally, approximately 20% of our PowerStore customers are new to our storage business as we tripled the number of wins against key competitors quarter over quarter. Our VMware business also had a strong year. with revenue $11.9 billion up 9%. Our partnership and co-innovation engine with VMware has never been stronger. In Q4, we announced a collaboration with SK Telecom and VMware to deliver 5G-enabled edge computing solutions to help enterprises quickly act on data where it resides. Throughout a year of unprecedented disruption, we were able to pivot quickly, deliver profitable growth, disciplined share gains, consistent execution, innovation, and strong financial returns. Now let's move from FY21, and I'll share a little perspective of what we see ahead. We believe the demand environment will continue to improve. Estimates from both IDC and Gartner see IT spending growing mid-single digits in calendar year 2021, including growth in our core PC, server, and storage markets. The do-from-anywhere world is here to stay. We believe the total addressable market is expanding as there are still millions of children around the world that need PCs. The number of PCs in the household continues to increase, and additionally, the refresh cycles are accelerating with the shift to notebooks. And we are on the cusp of widespread 5G connectivity driving real-time, automated, and intelligent outcomes at the edge. This will drive an estimated $700 billion in cumulative spend on the edge IT infrastructure and data centers within the next decade. There is a lot of opportunity ahead for Dell Technologies, and we are going after it with a balanced growth strategy. That begins with growing and modernizing our core businesses. The value creation potential in our client and our infrastructure business is enormous. as we consolidate share in the markets that have steady GDP-like growth. We also know long-term success means doing more than just winning the consolidation. It requires us to keep modernizing the customer experience, which brings us to APEX, announced last October at Dell Technologies World. With APEX, we are extending our long history of offering IT as a service to deliver IT resources on demand, Dell-managed infrastructure, enabling our customers to pay for only what they use, built on a foundation of trusted technology, all at scale. Starting in May, we will bring the first of the new APEX offers to market and add new offerings over the course of the year. This foundational work sets us up to respond to accelerating customer needs and capture market momentum. Momentum towards a hybrid, distributed future filled by data and analytics. We are integrating and innovating of VMware and across our leading capabilities and partner ecosystems to create the automated integrated infrastructure for 5G and the data era that is AI and ML enabled with intrinsic security throughout. And that's how we went at the edge, the next technology frontier. By extending our cloud model and ecosystem to the edge, we can provide a consistent approach to infrastructure, data, applications, and security across the entire environment. The competitive advantages I highlighted earlier, our end-to-end portfolio, our sales force and customer intimacy, our global services capability give us a distinctive position in the next evolution of our industry. Before I turn it over to Tom, let me leave you with a few thoughts. We are emerging in an advantage position for the enormous opportunities ahead. Technology delivered as a service, 5G, and edge computing. Technology is clearly front and center for the digital futures, and Dell Technologies is uniquely positioned to win in the data era that is already underway. Now I'll turn it over to Tom for a closer look at the financials.