Dell Technologies Inc.

Good afternoon and welcome to the fiscal year 2024 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 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, everyone, for joining us. With me today are Jeff Clark, Yvonne McGill, and Tyler Johnson. Our earnings materials are available on our IR website, and I encourage you to review these materials and the presentation, which includes additional content to complement our discussion this afternoon. 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 gross margin, operating expenses, operating income, net income, diluted earnings per share, and adjusted free cash flow. The reconciliation of these measures to their most directly comparable gap measures can be found in our web deck and our press release. 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. Now I'll turn it over to Jeff.

Thanks, Rob, and thanks, everyone, for joining us. As I reflect back on this past year, it's increasingly clear that data and technology are central to everything our customers do, and Dell is well-positioned to thrive in this environment. Our FY24 revenue was $88.4 billion, with operating income of $7.7 billion and EPS of $7.13. In a year where revenue declined, we maintained our focus and operational excellence, delivering solid earnings per share and outstanding cash flow. FY24 was one of those years that didn't go as planned, but I really like how we navigated it. We showed our grit and determination by quickly adapting to a dynamic market, focusing on what we can control and extending our model into the high-growth AI opportunity. Our operating margin rate improved. as we delivered higher gross margins with disciplined operating expense management. We focused on cash and working capital improvements, generating $8.7 billion of cash flow from operations, and we improved our cash conversion cycle to negative 47 days exiting the year, a 15-day improvement. We delivered on our capital allocation commitments, and we have returned $7 billion to shareholders since the initiation of our dividend. Earlier today, we announced an increase to our dividend, which Yvonne will cover in more detail. We have positioned ourselves well in AI. We've already started to benefit from the momentum we're seeing. We saw strong demand continue for our AI-optimized server portfolio, including our flagship PowerEdge XE9680, which remains the fastest ramping solution in company history. We have just started to touch the AI opportunities ahead of us, including broader adoption of AI by enterprise customers and the projected growth in unstructured data where we are well-positioned with industry-leading storage solutions. We believe the long-term AI action is on-prem where customers can keep their data and intellectual property safe and secure. PCs will become even more essential as most day-to-day work with AI will be done on the PC. We remain excited about the long-term opportunity in our CSG business. Look for us to make a number of new product and solution announcements at Dell Technology World in May that will help customers get started with AI and make it easy. Turning to Q4, we saw positive signs in the business as we exited the year, but enterprise and large customers remained cautious with their spend. Our Q4 execution was solid given the environment with ISG faring better than CSG. We delivered revenue of $22.3 billion with strong profitability and cash flow. Operating income was $2.1 billion, diluted EPS was $2.20, and cash flow from operations was $1.5 billion. In ISG, traditional server demand grew year-over-year and a third consecutive quarter of sequential growth, and storage demand grew above normal seasonality, though down year-over-year as expected. Storage recovery typically lags servers by a couple of quarters. Our strong momentum in the AI build-out continues as we believe Dell is uniquely positioned with our broad portfolio to help customers build Gen AI solutions that meet their performance, cost, and security requirements. In Q4, we saw strength across a wider range of customers and geographies with an expanding pipeline. AI-optimized server orders increased by nearly 40% sequentially. We shipped $800 million of AI-optimized servers, and our backlog nearly doubled sequentially, exiting the fiscal year at $2.9 billion. Demand continues to outpace GPU supply, though we are seeing H100 lead times improving. We are also seeing strong interest in orders for AI-optimized servers equipped with the next generation of AI GPUs, including the H200 and the MI300X. Most customers are still in the early stages of their AI journey. and they are very interested in what we are doing at Dell. We are helping them get started and work through their use cases, data preparation, training, and infrastructure requirements. They appreciate our perspective, our collaborative approach, and the capabilities we can provide to help them create holistic AI solutions, including our end-to-end portfolio, engagement with our engineering teams, consulting services, and financing options. Progress in this space won't always be linear, but we are excited about the opportunity ahead. In CSG, we remain optimistic about the coming PC refresh cycle as the PC install base continues to age, Windows 10 reaches end of life later next year, and the industry makes advances in AI-enabled architectures and software applications. In Q4, we maintained pricing discipline and managed our costs well in an increasingly competitive environment, delivering solid operating margins. In the near term, the PC market is still soft, and we expect the recovery to push into the second half as enterprise and large customers remain cautious with their spend. We will continue to execute our CSG strategy, which has served us well across various economic cycles, focusing on commercial and high-end consumer with a strong attached motion. As we enter FY25, our strategy remains simple. We are leveraging our strengths to extend our leadership positions and turning new opportunities into incremental growth. We are well positioned with our unique operating model and a number of tailwinds. We are driving a disproportionate level of AI server growth fueled by our technology leadership, engineering expertise, service capabilities, and our traditional server business is gaining momentum. Our storage business will benefit from the exponential growth expected in unstructured data, and we are bullish on the coming PC refresh cycle where we are well-positioned. We are optimistic about FY25 and expect a return to growth above our long-term framework. Now over to Yvonne for more details about Q4.