Dell Technologies Inc.

Good afternoon and welcome to the fiscal year 2022 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, Inc. is prohibited. Following prepared remarks, we will conduct a question-and-answer session. If you have a question, simply press star, then 1 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, Erica, and thanks, everyone, for joining us. With me today are Jeff Clark, Chuck Witten, Tom Sweet, and Tyler Johnson. Our earnings materials are available on our IR website, and guidance will be covered on today's call. During this call, unless otherwise indicated, 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. All financial numbers in our earnings materials are now presented on a continuing operations basis unless otherwise noted. See Appendix C in our presentation for a recast of our P&L numbers. Growth percentages refer to year-over-year change unless otherwise specified. 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. During the call today, Jeff will recap FY22, the demand environment heading into FY23, and supply chain dynamics in CSG. Chuck will cover ISG and our growth initiatives, and Tom will cover our Q4 financial results, capital allocation, and guidance. Now I'd like to turn it over to Jeff. Thanks, Rob.

FY22 was a historic year for Dell Technologies. In fact, the best in our company's history. We reached more than $100 billion in revenue and grew 17%, a huge achievement for a company of our scale and ahead of our long-term value creation growth rates. and our opportunity continues to grow as we look ahead to FY23. We are more vital than ever to our customers in an expanding market fueled by digital transformation. IT investments remain a top priority for our customers as technology has become even more essential to their business. It's how you turn data into insight and action into better customer experience and competitive advantage. Customers also want choice and a trusted partner. Our position at the center of our customers' digital agenda and at the center of the technology ecosystem makes Dell the logical choice. You can see in how we're winning with the customers like the Miami Dolphins, AT&T, and Vodafone. With the world's largest reinsurer, Munich Re, and one of India's largest manufacturers, Greenpanel. across data storage, hyper-converged infrastructure, and in adjacent opportunities like multi-cloud, as-a-service, edge, and telecom. We are continuing to gain share in our core businesses and these emerging opportunities where we can bring our advantages to bear. We have differentiated ourselves through consistent performance across different economic environments, unprecedented challenges, and unforeseen events, and we have leaned into new opportunities always with an eye toward our customers. In FY22, we delivered record revenue of $101.2 billion, record operating income of $7.8 billion, diluted EPS of $6.22, and record cash flow from operations of $7.1 billion, truly a record year. And Q4 was no different. We saw 17% growth in demand of our products and services in the quarter, with broad growth across geos, industry vertical, and business units. As a result, we delivered record revenue up 16%. Operating income was a record up 1%, but slightly below our November guidance as we optimized our performance based on customer needs, parts availability, and backlog dynamics. Being trusted partners to our investors and lenders as well as our customers is important to us. And in FY22, we unlock shareholder value by the spin of VMware, simplifying our capital structure, deleveraging our balance sheet, returning to investment-grade ratings, approving a share buyback program for up to $5 billion, and today, announcing a quarterly dividend and an initial annual rate of $1.32 a share. Now, let me shift gears and share a little color on the current supply chain dynamics, and then we will move into BU performance. The global supply chain shortage of semiconductors and global logistics challenges for goods and components continues to impact just about every industry. We are still experiencing shortages of integrated circuits across a wide range of devices, including network controllers and microcontrollers that go into our products and solutions. The result? We are seeing an impact across client systems, servers, and storage. In addition, freight costs have continued to rise due to increased logistics rates, a higher mix of air due to ocean network congestion, and increased in part expedites to meet customer needs. We have reduced our PC backlog over the last two quarters, and it is nearing the high end of its normal range. However, we expect PC backlog to grow in Q1. Our higher margin ISG backlog increased again in Q4 to a record level due to a combination of very strong demand and a lack of component availability. We expect our ISG backlog to remain elevated through at least the first half of the year as part shortages continue. As we head into Q1, we do expect component costs to improve with modest deflation while freight costs remain elevated. We are awaiting information from the recent NAND contamination announcement from Kioxa and Western Digital to evaluate the impact on Dell. Our supply chain speed, agility, and flexibility has enabled us to meet customer needs in this environment, though challenges remain. And our supply chain continues to be a durable competitive advantage as we navigate the unprecedented supply uncertainty. Turning to CSG. Our PC business logged another record year. We delivered record revenue of $61.5 billion, up 27%. Record operating income of $4.4 billion, or 7.1% of revenue. Record unit shipments of 59.3 million units in calendar 21, up 18%, growing faster than any of the top three. In calendar year 2021, commercial share growth was up 70 basis points, more than any of the top three, and has now been up 470 basis points over the last five years. Turning to Q4, we delivered our sixth consecutive record CSG revenue quarter with $17.3 billion, up 26%, with healthy demand up 21%. Operating income was a record of $1.2 billion. We shipped a record 17.2 million PCs in calendar Q4, up 9%, and now have gained share in 32 of the last 36 quarters. Our leading innovation continues to build a strong foundation for future CSG results. We won 47 awards at CES in January, where we introduced our new XPS 13, our thinnest ever gaming notebook, the Alienware 14, and an advanced commercial notebook concept built around sustainability, recyclability, and reuse. Hybrid work, learning, shopping, socializing, entertainment, and travel is all here to stay. And we expect commercial PC and premium consumer growth in FY23, albeit at moderating rate relative to our record year. Clearly, CSG had a fantastic year, and we are well-positioned heading into FY23, as the client systems TAM has reset to a higher level. I am very proud of our FY22 results, our team, and the company and the culture we've created. And I'm incredibly excited about the road ahead with all of you. We expect another year of growth as we modernize the data center with automation and intelligence, deploy IT at the edge, and simplify multi-cloud for our customers. And with that, I'll turn it over to Chuck for some color on ISG and our growth initiatives. Chuck?