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Emc Reports Third-Quarter 2015 Financial Results

The following excerpt is from the company's SEC filing.

Third-Quarter 2015 Summary:

Revenue up 1% year over year and up 5% year over year on a constant currency basis

GAAP and non-GAAP EPS of $0.25 and $0.43, respectively

EMC Emerging Storage, Pivotal and VMware revenues up 27%, 16% and 10% year over year, respectively; up 32%, 18% and 14% year over year on a constant currency basis, respectively

- EMC Corporation (NYSE:EMC) today reported third-quarter 2015 financial results. Consolidated third-quarter revenue was $6.08 billion, up 1% year over year and up 5% year over year on a constant currency b asis

. GAAP and non-GAAP

earnings per weighted average diluted share were $0.25 and $0.43, respectively.

EMC generated $1.4 billion in operating cash flow and $1.03 billion in free cash flow

in the third quarter, and ended the quarter with $14.3 billion in cash and investments. EMC returned $229 million to shareholders in the third quarter via a quarterly dividend.

Joe Tucci, EMC Chairman and CEO, said, “This is an historic time for EMC and the entire IT industry. EMC combining with Dell, two highly complementary companies, will create a tech industry powerhouse - a new company with more than $80 billion in revenue that is extremely well positioned for a new era. We firmly believe that this compelling combination is the best strategic option for all our stakeholders. Our customers are sharing overwhelmingly positive feedback about the potential of having a strategic partner with more heft and relevance to drive their digital transformations.”

Zane Rowe, EMC CFO, said, “EMC Emerging Storage, Pivotal and VMware generated positive momentum in the third quarter, thanks to the hard work of the entire EMC team. We continue to be relentlessly focused on building upon the strength of our portfolio and being more efficient. More specifically, the $850 million cost reduction and business transformation plans are on track, and the team is working on many initiatives in areas such as SKU simplification, facilities and manufacturing optimization, and direct material procurement that span EMC’s global operations.”

David Goulden, CEO of EMC Information Infrastructure, said, “As the broader market shifts toward cloud, mobile, social and Big Data, we continue to expect newer storage technologies revenue to grow at high teens while traditional stand-alone storage systems revenue to decline at low teens. We anticipated this trend ahead of the broader market and evolved to a wider and deeper portfolio that has reached an interesting inflection point. For the first time in Q3, our newer storage products

now make up more than half of our strategic storage business

. This is a good indicator of the progress we’ve made in transitioning the portfolio, setting EMC up nicely for the future.”

Business Highlights

EMC Information Infrastructure:

Third-quarter

revenue was down 3% year over year and up 2% year over year on a constant currency basis

. Information Storage revenue was down 2% year over year and up 3% on a constant currency basis

, a result of a higher than expected number of unshipped orders of approximately $100 million. Emerging Storage

revenue was up 27% year over year and up 32% on a constant currency basis

. Within Emerging Storage in the quarter, XtremIO had another quarter of strong triple-digit revenue growth and is on track for more than $1 billion in bookings in 2015.

Pivotal:

Third-quarter revenue was up 16% year over year and up 18% on a constant currency basis

. Pivotal continues its transition to a subscription business model, with annual recurring revenue

at the end of the third quarter of $75 million, up 26% quarter over quarter.

VMware:

Third-quarter revenue was up 10% year over year and up 14% on a constant currency basis

. VMware continues to be a central player in the transformation of IT and its influence continues to grow with key technologies in the software-defined datacenter, end-user computing and hybrid cloud. VMware continues to be integral to EMC’s success as demonstrated by the companies’ aligned strategies, technology integration and financial results, with VMware representing 27% of EMC consolidated third-quarter revenue and 44% of EMC consolidated third-quarter non-GAAP

operating income.

Global Highlights

EMC’s consolidated third-quarter revenue from North America and Latin America was up 4% and 1% year over year, respectively, and up 4% and 14% on constant currency basis

, respectively. EMEA and Asia Pacific and Japan revenue in the third quarter was down 3% and 4% year over year, respectively, and up 7% and 3% on a constant currency basis

Given the announcement made on October 12, 2015 regarding EMC’s entry into a definitive merger agreement, the company will no longer be providing outlook for its 2015 financial results.

Details will be provided during today’s 8:30 a.m. ET live webcast for investors, which is available on the EMC Investor Relations website (

http://www.emc.com/ir

Resources

To access today’s webcast at 8:30 a.m. ET, visit the EMC Investor Relations

A replay of today’s webcast will be available

EMC financial results are available on the U.S. Securities and Exchange Commission

For more information about Dell and EMC combining visit

http://www.emc.com/futureready

Visit the VMware Investor Relations

for more detail on its third-quarter results

Connect with EMC on Twitter (

@EMCCorp

@EMC_News), LinkedIn,

Facebook and SocialSphere

About EMC

EMC Corporation is a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is

cloud computing

. Through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset - information - in a more agile, trusted and cost-efficient way. Additional information about EMC can be found at www.EMC.com.

This release refers to growth rates at constant currency or adjusting for currency so that business results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of EMC's business performance. To present this information, current period results for entities reporting in currencies other than US dollars are converted into US dollars at the exchange rate applied in each month of the prior year quarter. Constant currency includes the impacts from EMC's hedging program.

Items excluded from the non-GAAP results for the third quarters of 2015 and 2014 are amounts relating to stock-based compensation expense, intangible asset amortization, restructuring charges, acquisition and other related charges, and VMware litigation and other contingencies. A benefit of the U.S. research and development (“R&D”) tax credit for the third quarters of 2015 and 2014 is included in the non-GAAP results for the third quarters of 2015 and 2014 as if the credit had been enacted. See attached schedules for GAAP to non-GAAP reconciliations.

Free cash flow is a non-GAAP financial measure which is defined as net cash provided by operating activities, less additions to property, plant and equipment and capitalized software development costs. See attached schedules for a reconciliation of net cash provided by operating activities to free cash flow for the three and nine months ended September 30, 2015 and 2014.

EMC’s Emerging Storage business primarily includes product and maintenance revenues from EMC Isilon, EMC Atmos, EMC VPLEX, EMC ViPR, EMC ScaleIO, EMC Elastic Cloud Storage Appliance, EMC RecoverPoint, Data Computing Appliance, ASD Suites and EMC vFlash and EMC XtremIO families.

Annual Recurring Revenue (“ARR”) is an operational performance metric used to assess the health and trajectory of our Pivotal segment. We calculate ARR as the value of contracted recurring revenue of term subscriptions which includes both current subscriptions and contracted subscriptions with a future start date, adjusted by the actual churn in the period. ARR should be viewed independently of revenue and any other GAAP measure.

Newer storage products include all-flash arrays, scale-out file, software-defined storage, converged infrastructure and purpose-built backup appliances.

Strategic storage business includes product-related revenue in the storage categories identified as High-End, Unified/Backup, and Emerging.

EMC, Atmos, Elastic Cloud Storage, EMC RecoverPoint, Isilon, VPLEX, ViPR, ScaleIO and XtremIO...


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