EMC Corporation - Dell EMC Australia LEADER SCALE-OUT NAS STORAGE LEADER HIGH-END STORAGE LEADER...
Transcript of EMC Corporation - Dell EMC Australia LEADER SCALE-OUT NAS STORAGE LEADER HIGH-END STORAGE LEADER...
1
EMC Corporation Investor Overview
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) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (iv) competitive factors, including but not limited to pricing pressures and new product introductions; (v) component and product quality and availability; (vi) fluctuations in VMware, Inc.’s operating results and risks associated with trading of VMware stock; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) risks associated with managing the growth of our business, including risks associated with acquisitions and investments and the challenges and costs of integration, restructuring and achieving anticipated synergies; (ix) the ability to attract and retain highly qualified employees; (x) insufficient, excess or obsolete inventory; (xi) fluctuating currency exchange rates; (xii) threats and other disruptions to our secure data centers or networks; (xiii) our ability to protect our proprietary technology; (xiv) war or acts of terrorism; and (xv) 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 contains non-GAAP financial measures which include, but are not limited to, non-GAAP Gross Margin, non-GAAP Operating Margin, non-GAAP EPS, non-GAAP Net Income, Free Cash Flow and Non-GAAP Income Tax Rate. A reconciliation to GAAP is included within this presentation and in our filings with the SEC which can be found at www.EMC.com or www.sec.gov.
3
EMC Federation The Right Strategy For A Massive Opportunity
Businesses Are Facing A Major Transformation. New Competitors In Every Industry Are Offering Frictionless Access To Online Services Through A Myriad Of Mobile Devices
The EMC Federation Can Help. Best-of-Breed Information Infrastructure, Software-Defined Data Center And A New Platform For Next Generation Applications
The EMC Federation Is Better Together. The EMC Federation Is Strategically Aligned & Together Uniquely Solve Customer Problems. But, They Are Free To Operate Independently To Provide Better Focus And Execution.
The EMC Federation Creates Value. Continued Re-Investment And Returns To Shareholders Is A Proven Formula For Ongoing Value Creation.
4
EMC Federation: Solid Long-Term Results
2008 2009 2010 2011 2012 2013 5-Yr
Change
Revenue $14.9 $14.0 $17.0 $20.0 $21.7 $23.2 9% CAGR
Gross Margin % 56.9% 57.0% 60.4% 62.6% 64.5% 64.0% 710 bps
Op Margin % 18.0% 17.4% 22.0% 23.9% 24.9% 24.7% 670 bps
Non-GAAP EPS $1.00 $0.90 $1.26 $1.51 $1.70 $1.80 12% CAGR
Free Cash Flow $2.6 $2.6 $3.4 $4.4 $5.0 $5.5 16% CAGR
(Consolidated Non-GAAP, As Marked; $ In Billions)
Note: Dollars in billions. Note: *Non-GAAP. Refer to the schedules in the appendix for a complete reconciliation of GAA to non-GAAP including Gross Margin %, Operating Margin %, EPS and Free Cash Flow on this slide.
*
*
*
5
SOFTWARE-DEFINED STORAGE (INFORMATION INFRASTRUCTURE)
SOFTWARE-DEFINED ENTERPRISE Paul Maritz
SOFTWARE-DEFINED DATA CENTER Pat Gelsinger
David Goulden
The EMC Federation Strategically Aligned, Focused And Free To Execute On Their Mission
AD
VAN
CED
SECU
RIT
Y
6
Many Industries Face Structural Change
7
Many Industries Face Structural Change
A Software-Defined Thermostat Company
8
Many Industries Face Structural Change
A Software-Defined Sports Clothing
Company
9
Mainframe, Mini Computer
Terminals
LAN/Internet Client/Server
PC
Mobile Cloud Big Data Social
Mobile Devices
MILLIONS OF USERS
THOUSANDS OF APPS
HUNDREDS OF MILLIONS OF USERS
TENS OF THOUSANDS OF APPS
BILLIONS OF USERS
MILLIONS OF OF APPS
Source: IDC, 2012
Transition To The 3rd Platform
10
2013-2016 Workload Growth
Sources: IDC, Gartner, AWS Workload Estimates*
Next-Gen Cloud Applications
2016 34M
2013 11M 300%
2016 120M
2013 91M 30%
Traditional Applications
Reduce Operating Expenses Invest In New
Model
11
Addressing Both IT & The Business
Chief Information Officer (CIO)
Data Center Operations “Run Applications”
Application Development “Build New Apps For The Business”
12
AD
VAN
CED
SECU
RIT
Y
SOFTWARE-DEFINED STORAGE (INFORMATION INFRASTRUCTURE)
David Goulden
SOFTWARE-DEFINED DATA CENTER Pat Gelsinger
SOFTWARE-DEFINED ENTERPRISE Paul Maritz
Best Of Breed. Architected Horizontally, Not Vertically. Choice.
Our Strategy: Build A Differentiated Stack
13
What Matters: Apps. Data. Analytics.
Apps Power Businesses. Those Apps Generate Data
Analytic Insight From That Data Drives New App Functionality, Which In-Turn Drives New Data
The Faster You Move Around That Cycle, The Faster You Learn, Innovate & Pull Away From The Competition
14
Enabled By Pivotal One.
Apps Power Businesses. Those Apps Generate Data
Analytic Insight From That Data Drives New App Functionality, Which In-Turn Drives New Data
The Faster You Move Around That Cycle, The Faster You Learn, Innovate & Pull Away From The Competition
15
Pivotal One An Open PaaS Platform For The Enterprise,
Powered By Cloud Foundry
Enables Multi-Cloud Deployment On-Premise To Public Cloud, VMware, AWS, Openstack
Enable New Levels Of Agility And Speed Modern Application Development & Deployment
Integrated Value Modern Development Languages, Runtimes & Differentiated Data Services
Open Ecosystem: Broad Industry Support
16
17
Addressing Both IT & The Business
Chief Information Officer (CIO)
Data Center Operations “Run Applications”
Application Development “Build New Apps For The Business”
18
SOFTWARE-DEFINED STORAGE (INFORMATION INFRASTRUCTURE)
SOFTWARE-DEFINED ENTERPRISE Paul Maritz
SOFTWARE-DEFINED DATA CENTER Pat Gelsinger
David Goulden
AD
VAN
CED
SECU
RIT
Y
Best Of Breed. Architected Horizontally, Not Vertically. Choice.
Our Strategy: Build A Differentiated Stack
19
The Software-Defined Data Center Extending Benefits Beyond Servers to Entire Data Center
All Infrastructure Is Virtualized And Delivered As A Service Control Of This Data Center Is Entirely Automated By Software.
20
SDDC, Foundation Of The 3rd Platform
Private Cloud
Hybrid Cloud
Public Cloud
vCHS & VSPP Partners
Policy-Based Management
Network Storage Compute
Virtualized Infrastructure Abstract & Pool
Cloud Automation Cloud Operations Cloud Business
21
AirWatch: Enterprise Mobile Mgmt & Security Addressing The Needs Of Mobile Users Accessing The Data Center
22
SOFTWARE-DEFINED STORAGE (INFORMATION INFRASTRUCTURE)
SOFTWARE-DEFINED ENTERPRISE Paul Maritz
SOFTWARE-DEFINED DATA CENTER Pat Gelsinger
David Goulden
AD
VAN
CED
SECU
RIT
Y
Best Of Breed. Architected Horizontally, Not Vertically. Choice.
Our Strategy: Build A Differentiated Stack
23
Workloads Have Different Requirements
ADVANCED DATA SERVICES
SIMPLE DATA SERVICES
Transaction Processing
Online Archive
VM Infrastructure
Decision Support
Full Motion Video
High Performance Computing
Web Content
Content Management
IT Applications
Storage As-A-Service
Home Directories
Application Development
Tech Apps
24
A Commitment To Best-Of-Breed
VMAX
LEADER SCALE-OUT NAS STORAGE
LEADER HIGH-END STORAGE
LEADER MIDRANGE STORAGE VNX
Isilon
Data Domain, Avamar, & NetWorker
LEADER BACKUP
LEADER OBJECT STORAGE
Atmos
25
XtremIO : The All Flash Array Leader Consistent Performance, Regardless Of Workload
ADVANCED DATA SERVICES
SIMPLE DATA SERVICES
100μS
5mS
1mS
500μS XtremIO
VNX
Isilon
VMAX
26
EMC Converged Infrastructure Leader Data Center HW Integrated Systems Revenue Share, 2Q12-2Q13
VCE VBLOCK Integrated Infrastructure Systems Leader
EMC VSPEX Integrated Reference Architecture Systems Leader
Market Share Analysis: Data Center Hardware Integrated Systems, 2Q13 ; Published: 12 December 2013
VSPEX 45%
FlexPod 44% VCE
51%
HP 27%
IBM 11%
HDS 5% Dell 3%
Oracle 3%
27
Multiple Storage Architectures for 3rd Platform
VM VM VM VM
Storage Software
Commodity Hardware / DAS
New & Basic Workloads
VM VM VM
Storage Arrays
Performance & Mission-Critical Workloads
28
Software-Defined Storage
Storage Arrays
VM VM VM
Performance & Mission-Critical Workloads
Commodity Hardware / DAS
New & Basic Workloads
VM VM VM VM
Provisioning Self-Service Reporting Automation
VNX Isilon XtremIO 3rd Party
VMAX
ViPR Data Services
VIPR Controller
Storage Software Across Commodity Hardware & Storage Arrays
29
VSAN
Storage Arrays Commodity Hardware / DAS
New & Basic Workloads Performance & Mission Critical Workloads
VNX Isilon
3rd Party VMAX XtremIO
vCenter vSphere
vCloud Automation Center
vCloud Operations
ViPR Data Services
ViPR Controller
VASA VVOL
Tight Integration With The VMware SDDC
VASA VVOL
30
SOFTWARE-DEFINED STORAGE (INFORMATION INFRASTRUCTURE)
SOFTWARE-DEFINED ENTERPRISE Paul Maritz
SOFTWARE-DEFINED DATA CENTER Pat Gelsinger
David Goulden
AD
VAN
CED
SECU
RIT
Y
Best Of Breed. Architected Horizontally, Not Vertically. Choice.
Our Strategy: Build A Differentiated Stack
31
3rd Platform REDEFINES The Landscape Cloud, Mobile & Social Combined With A New Set Of Threats
Advanced Threats
Sophisticated Fraud
Public Private
Hybrid
Cloud & Mobile Perimeters Are Gone
Social Networks More Identities To Verify
New Threats Examine All Behavior
32
Transfer Funds
Access Bank Account
Download Sales Pipeline
Read Email
Identity & Access Management
Fraud Network
Device Profile
User Behavior Profile
Analysis Engine
User Action
Private Cloud
Public Cloud
Username & Password
Two-Factor
Additional Authentication
Username & Password
Additional Authentication
Out Of Band
Challenge Q
IDENTITY & ACCESS
MANAGEMENT
FRAUD PREVENTION
33
Public & Private Threat Intelligence
Security Analytics Platform
Investigate & Analyze
Visualize
Respond
Alert & Report
Analytics Big Data
Store
Governance
Compliance
Incident Management
Remediation
SECURITY ANALYTICS + ARCHER
eGRC SUITE
34
Serv
ice P
rovid
er
Partners
vCHS Ente
rprise D
ata
Cente
r
Application Fabric / Data Fabric / PaaS
Software Defined Data Center
End User Computing
Applications Content-Aware Security Analytics
Converged Infrastructure
Sto
rage
35
Serv
ice P
rovid
er
Partners
vCHS Ente
rprise D
ata
Cente
r
Application Fabric / Data Fabric / PaaS
Software Defined Data Center
End User Computing
Applications Content-Aware Security Analytics
Converged Infrastructure
Sto
rage
EVP SOLUTIONS
Software Defined
Data Center
Business Data Lake
Security Analytics
36
Open Strategy Gives Customers Choice
37
Bridging the Gap Between 2nd and 3rd Platform
Traditional Applications
2016 120M
2013 91M 30%
Today’s Data Center
• Remains A Very Large Market • We Have The Largest Share &
Best Portfolio • We Continue To Gain Share
Software-Defined Data Center
Next Gen Cloud Applications
2016 34M
2013 11M 300%
Leveraging Our Position As A Trusted Market Leader To Help Customers Bridge The Gap
• Fast-Growing Opportunity • Ahead Of The Rest In
Enterprise PaaS Platform, SDDC & SDS
38
2013 Overall IT Spending ~ 2%
Power of the Federation
17%
4%
N/A
11%
65%
7%
Competitor data based on Thomson consensus estimates of closest four quarters to EMC FY’13 based on available public information; *VCE percentage increase reflects growth in demand as revenue for VCE is not publicly disclosed.
(Consolidated)
8%
1%
1%
-1%
-6%
1%
15%
5%
15%
11%
50+%*
7%
39
Research & Development
EMC Innovation Investment
Technology Acquisitions
$11.5B
$9.3B
*Cash R&D and acquisition spend 2009-2013
40
Capital Allocation
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
$22
$24
2009 2010 2011 2012 2013
Share Purchases
Acquisitions
Dividends
Free Cash Flow
Cumulative FCF vs. Cash Use * 2009-2013
* Excludes acquisition impact of consumer business
• Generated $21.0B of FCF • Invested 44% in Acquisitions • Utilized 46% for Share Purchases • Deployed 93% of FCF
2009 - 2013
• Initiated Quarterly Dividend $0.10/share (~$400M YTD)
• Plan to Repurchase $6B EMC Shares over 3 Yrs ($3B FY13)
• Invested $770M FY13 in Acquisitions
2013
Long-term Intent to return ~50% of EMC (ex. VMW) FCF to Shareholders through
Dividends and Share Repurchases
41
Capital Allocation Investment Balanced with Returns to Shareholders
20-25%
25-30% ~50%
Allocation Framework*
Dividends
Share Repurchases
Investments for
Growth
• Continued Investment in Enormous Opportunities Presented by Mobile, Cloud, Big Data and Trusted IT
• Initiated Quarterly Shareholder Dividend
• Plan to Repurchase $6B 2013-2015
• Cash returns to shareholders grow along with EMC ex-VMW FCF
42
EMC Federation Unique Structure Offers Unparalleled Benefits
Customer Choice – No Vendor Lock-In. Customers Can Move Forward With Confidence In Their Future Flexibility.
Focus On Specific Mission – Develop Optimal Ecosystems. Free To Form Partnerships With Competitors To Other Members Of The Federation.
Tight Technology Integration – For Integrated Stack. Federation Offers Comprehensive Solution For Customers Who Prefer Full Stack.
Scale – Coordination In Major Accounts, Services, Alliances. Federation Provides Much Greater Go-To-Market Reach Than Would Be Possible Standalone.
Shared Resources – Talent, Dollars, Intellectual Property. Federation Provides Ability To Recruit, Retain & Subsequently Direct Skills Where Needed Most.
44
Next-Gen Cloud Applications
Traditional Applications
Technology Silos
File & Block
Storage Arrays
Perimeter-Based Security
Project-Based IT
On-Premise
The 3RD Platform Redefines Everything
Converged Infrastructure
Object/HDFS
Software-Defined Storage
Data-Driven Security
Policy-Based Automation
On-Premise & Off-Premise
Use of Non-GAAP Financial Measures
This presentation, the accompanying schedules and the additional content that is available on EMC's website contain non-GAAP financial
measures. These non-GAAP financial measures, which are used as measures of EMC's performance or liquidity, should be considered in addition to,
not as a substitute for, measures of EMC's financial performance or liquidity prepared in accordance with GAAP. EMC's non-GAAP financial
measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and
accordingly, care should be exercised in understanding how EMC defines its non-GAAP financial measures in this presentation.
Where specified in the accompanying schedules for various periods entitled "Reconciliation of GAAP to Non-GAAP," (a) certain items noted on each
such specific schedule (including, where noted, amounts relating to stock-based compensation expense, intangible asset amortization,
restructuring and acquisition-related charges and IPR&D, the amortization of VMware’s capitalized software from prior periods, a net gain on
disposition of certain lines of business and other, an RSA special charge(release), a provision for litigation, a gain on Data Domain and Spring Source
common stock, a loss on interest rate swaps, a gain on strategic investment and special tax items) are excluded from the non-GAAP financial
measures and (b) the benefit of the R&D tax credit for 2012 is included in the non-GAAP financial measures for the full year 2012 and excluded in
the non-GAAP results for the full year 2013.
EMC’s management uses the non-GAAP financial measures in the accompanying schedules to gain an understanding of EMC's comparative
operating performance (when comparing such results with previous periods or forecasts) and future prospects and includes the benefit of the R&D
tax credit in, and excludes the above-listed items from, its internal financial statements for purposes of its internal budgets and each reporting
segment’s financial goals. These non-GAAP financial measures are used by EMC's management in their financial and operating decision-making
because management believes they reflect EMC's ongoing business in a manner that allows meaningful period-to-period comparisons. EMC's
management believes that these non-GAAP financial measures provide useful information to investors and others (a) in understanding and
evaluating EMC's current operating performance and future prospects in the same manner as management does, if they so choose, and (b) in
comparing in a consistent manner the Company's current financial results with the Company's past financial results.
This presentation also includes disclosures regarding free cash flow which is a non-GAAP financial measure. Free cash flow is defined as net cash
provided by operating activities less additions to property, plant and equipment and capitalized software development costs. EMC uses free cash
flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than capital expenditures
and capitalized software development costs. Management believes that information regarding free cash flow provides investors with an important
perspective on the cash available to make strategic acquisitions and investments, repurchase shares, pay dividends, service debt and fund ongoing
operations. As free cash flow is not a measure of liquidity calculated in accordance with GAAP, free cash flow should be considered in addition to,
but not as a substitute for, the analysis provided in the statement of cash flows.
All of the foregoing non-GAAP financial measures have limitations. Specifically, the non-GAAP financial measures that exclude the items noted
above do not include all items of income and expense that affect EMC's operations. Further, these non-GAAP financial measures are not prepared
in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and do not reflect any benefit that
such items may confer on EMC. Management compensates for these limitations by also considering EMC's financial results as determined in
accordance with GAAP.
December 31, December 31, December 31, December 31, December 31, December 31,
2008 2009 2010 2011 2012 2013
Gross Margin GAAP 8,222$ 7,745$ 10,031$ 12,169$ 13,638$ 14,473$
Stock-based compensation expense 80 99 109 124 126 124
Intangible asset amortization 159 132 132 157 199 232
Amortization of VMware's capitalized software from prior periods - - - 0 62 34
RSA special charge (release) - - - 66 (24) -
Restructuring, acquisition-related charges - 12 - - - -
Gross Margin Non-GAAP 8,461$ 7,989$ 10,271$ 12,516$ 14,001$ 14,864$
Revenues 14,876$ 14,026$ 17,015$ 20,008$ 21,714$ 23,222$
Gross Margin Percentages:
GAAP 55.3% 55.2% 59.0% 60.8% 62.8% 62.3%
Non-GAAP 56.9% 57.0% 60.4% 62.6% 64.5% 64.0%
December 31, December 31, December 31, December 31, December 31, December 31,
2008 2009 2010 2011 2012 2013
Operating Margin GAAP 1,569$ 1,414$ 2,683$ 3,442$ 3,964$ 4,150$
Stock-based compensation expense 501 606 685 836 920 935
Intangible asset amortization 280 248 285 342 365 389
Restructuring, acquisition-related charges and IPR&D 331 120 84 97 110 224
Amortization of VMware's capitalized software from prior periods - - - - 62 34
RSA special charge (release) - - - 66 (24) -
Provision for litigation - 58 - - - -
Operating Margin Non-GAAP 2,681$ 2,445$ 3,738$ 4,784$ 5,397$ 5,732$
Revenues 14,876$ 14,026$ 17,015$ 20,008$ 21,714$ 23,222$
Operating Margin Percentages:
GAAP 10.5% 10.1% 15.8% 17.2% 18.3% 17.9%
Non-GAAP 18.0% 17.4% 22.0% 23.9% 24.9% 24.7%
Note: Schedules may not add or recalculate due to rounding
Twelve Months Ended
Twelve Months Ended
Reconciliation of GAAP to Non-GAAP
(in millons)
(unaudited)
Diluted Diluted Diluted
December 31, Earnings December 31, Earnings December 31, Earnings
2008 Per Share 2009 Per Share 2010 Per Share
Net Income Attributable to EMC GAAP 1,275$ 0.610$ 1,088$ 0.528$ 1,900$ 0.880$
Stock-based compensation expense 371 0.178 436 0.212 473 0.220
Intangible asset amortization 181 0.087 162 0.079 187 0.087
Restructuring, acquisition-related charges and IPR&D 284 0.137 84 0.041 72 0.034
Special tax items (18) (0.009) 61 0.030 83 0.039
Gain on Data Domain and SpringSource common stock - - (25) (0.012) - -
Provision for litigation - - 52 0.025 - -
Net Income Attributable to EMC Non-GAAP 2,093$ 1.003$ 1,858$ 0.903$ 2,715$ 1.260$
Weighted average shares, diluted 2,080 2,055 2,148
Incremental VMware dilution 7$ 2$ 9$
Diluted Diluted Diluted
December 31, Earnings December 31, Earnings December 31, Earnings
2011 Per Share 2012 Per Share 2013 Per Share
Net Income Attributable to EMC GAAP 2,461$ 1.098$ 2,733$ 1.234$ 2,889$ 1.333$
Stock-based compensation expense 587 0.263 623 0.282 636 0.295
Intangible asset amortization 224 0.100 238 0.108 256 0.118
Restructuring, acquisition-related charges and IPR&D 81 0.036 87 0.040 156 0.072
Amortization of VMware's capitalized software from prior periods - - 33 0.015 18 0.009
Net gain on disposition of certain lines of business and other - - - - (21) (0.010)
RSA special charge (release) 56 0.025 (18) (0.008) - -
Loss on interest rate swaps - - 24 0.011 - -
Gain on strategic investment (29) (0.013) (32) (0.014) - -
Special tax items - - 11 0.005 19 0.009
R&D tax credit - - 60 0.027 (60) (0.028)
Net Income Attributable to EMC Non-GAAP 3,381$ 1.510$ 3,759$ 1.700$ 3,893$ 1.798$
Weighted average shares, diluted 2,229 2,206 2,160
Incremental VMware dilution 14$ 10$ 8$
* Net of tax and non-controlling interest in VMware, Inc., except weighted average shares, diluted.
Note: Schedules may not add or recalculate due to rounding
Twelve Months Ended
Twelve Months Ended
Reconciliation of GAAP to Non-GAAP*
(in millons, except per share amounts)
(unaudited)
December 31, December 31, December 31, December 31, December 31, December 31, Cumulative
2008 2009 2010 2011 2012 2013 2009 - 2013
Cash Flow from Operations 3,565$ 3,334$ 4,549$ 5,669$ 6,262$ 6,923$ 26,738$
Capital expenditures (696) (412) (745) (801) (819) (943) (3,721)$
Capitalized software development costs (295) (305) (363) (442) (419) (465) (1,994)$
Free Cash Flow 2,574$ 2,618$ 3,440$ 4,425$ 5,024$ 5,515$ 21,023$
Note: Schedules may not add or recalculate due to rounding
Reconciliation of GAAP to Non-GAAP
(in millons)
(unaudited)
Twelve Months Ended