EMC: Fiscal 1Q16 Financial Results

EMC Corporation reported first-quarter 2016 financial results.

First-quarter consolidated revenue was $5.5 billion, down 2% year over year.

GAAP net income attributable to EMC was $268 million in the first quarter, and GAAP earnings per weighted average diluted share was $0.14 in the first quarter, up 8% year over year. Non-GAAP net income attributable to EMC was $603 million in the first quarter, and non-GAAP earnings per weighted average diluted share in the first quarter was $0.31, flat year over year.

EMC generated $932 million in operating cash flow and $588 million in free cash flow in the first quarter, and ended the quarter with $15 billion in cash and investments. EMC returned $227 million to shareholders via a quarterly dividend.

Joe Tucci, chairman and CEO, said: “We had a solid first quarter, generally in-line with our expectations when adjusted for an excess of unfulfilled orders at the end of the quarter. The broad secular IT trends reshaping our industry continue playing out as we expected. Our investments in growth platforms are increasingly gaining momentum, and we are confident in the depth and breadth of our product portfolio.”

He added: “We continue to make progress on our combination with Dell. Integration planning has accelerated to ensure we begin at full speed upon closing, the leadership team has been established, and we’ve received the vast majority of anti-trust approvals required. We expect the transaction to happen on the original terms and within the originally announced timeframe.”

Denis Cashman, CFO, said: “While overall we executed well in the first quarter, we did experience a higher than expected build in unshipped storage product orders of approximately $75 million due to the timing of bookings within the quarter. We are pleased that EMC information infrastructure operating expenses were down 8% as our $850 million cost reduction and business transformation plans announced last year are on track.“

David Goulden, CEO of EMC information infrastructure, said: “IT and digital business transformation initiatives require a modern data center utilizing flash, scale-out, software-defined and cloud-enabled technologies that are protected and trusted. Anticipating this, we have been actively innovating to transform our portfolio, well ahead of our peers. We are very encouraged by the increasing customer adoption of these technologies and had an exciting start to the year with major converged infrastructure and storage product launches. Looking forward, the upcoming merger with Dell and the broader technology and solutions portfolio of the combined company will enable us to become an even more strategic partner for our customers and partners.”

First quarter highlights

• EMC information infrastructure business first-quarter revenue was down 6% year over year (down 4% on a constant currency basis). In the first quarter EMC expanded its all- flash storage portfolio with the introduction of VMAX All Flash and the DSSD Rack-Scale flash solution. The company also introduced a new Hyper-Converged VCE VxRail appliance family in the first quarter, complemented by reseller agreements with Dell.
• VMware first-quarter revenue within EMC was up 5% year over year (up 6% on a constant currency basis2).
• Pivotal first-quarter revenue was up 56% year over year. Pivotal continues to have success with its cloud and big data subscription software, with annual recurring revenue up over 200% year over year.

Global highlights
Consolidated first-quarter revenue from North America was down 3% year over year. Consolidated first-quarter revenue in the Europe, Middle East and Africa region and in Latin America were down 1% and 14% year over year, respectively (up 2% and down 4% on a constant currency basis2, respectively). AsiaPac and Japan first-quarter revenue was up 2% year over year (up 4% 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 not be providing outlook for its 2016 financial results.