EMC Corporation (EMC)
Q2 2010 Earnings Call
July 21, 2010 8:30 a.m. ET
Tony Takazawa - VP, IR
David Goulden - EVP & CFO
Joe Tucci - President & CEO
Alex Kurtz - Merriman & Co.
Aaron Rakers - Stifel Nicolaus
Brian Marshall - Gleacher & Company
Ben Reitzes - Barclays
Mark Kelleher - Brigantine Advisors
Ittai Kidron - Oppenheimer
Richard Gardner - Citi
Kaushik Roy - Wedbush
Wamsi Mohan - Bank of America
Louis Miscioscia - Collins Stewart
Katy Huberty - Morgan Stanley
Toni Sacconaghi - Sanford Bernstein
Previous Statements by EMC
» EMC Corporation Q1 2010 Earnings Call Transcript
» EMC Corporation, Q4 2009 Earnings Call Transcript
» E M C Corporation Q3 2009 Earnings Call Transcript
Thank you. Good morning. Welcome to EMC's call to discuss our financial results for the Second Quarter of 2010. Today we are joined by Joe Tucci, EMC's Chairman and CEO and David Goulden, EMC's Executive Vice President and CFO. David will provide a few comments about the results we have released this morning. He will highlight some of EMC's activities this quarter and discuss our updated outlook for 2010. Joe will then spend some time to discuss in his view what is happening in the market, EMC's execution of the strategy and how EMC is positioned to help customers on the journey to the Private Cloud. After the prepared remarks, we will then open up the line to take your questions.
I would like to point out that we will be referring to non-GAAP numbers in today's presentation unless otherwise indicated. The reconciliation of our non-GAAP comments to our GAAP results can be found in the disclosure today in our press release, supplemental schedules and the slides that accompany our presentation. All these are available for download within the investor relations section of emc.com.
As always, we have provided detailed financial tables in our news release and on our corporate website. These include a lot of financial details but we do encourage you to take a look at them. The call this morning will contain forward-looking statements and information concerning factors that could cause actual results to differ can be found in EMC's filings with the U.S. Securities and Exchange Commission. And lastly I will note that an archive of today's presentation will be available following the call. With that it's now my pleasure to introduce David Goulden. David?
Thanks Tony. Good morning everyone and thank you for joining us today. I'm very pleased to report that EMC had another good quarter due to strong demand for our market leading solutions, our solid business model and great execution by the team. There are many highlights this quarter including record Q2 revenues of over $4 billion, up 24% and record Q2 non-GAAP net income of $596 million, up 66%, non-GAAP EPS of $0.28, up a robust 56%. Our storage business was up 21%.
VMware grew revenue 48% over last year. Free cash flow was $1.6 billion for the first half, up 47% and non-GAAP operating margin of 20.7% improved a 120 bits sequentially. Once again we achieved our triple play. We gained market share, invested for the future, and improved profitability. Within our consolidated revenue which is up 24% we saw excellent growth storage as I mentioned, up 21% year-on-year. Security revenue grew 18%. Our information intelligence group revenue was roughly flat and VMware revenue grew an impressive 48%.
Now let's take a closer look at some of the details within these business units. Within storage in the high end, Symmetrix product revenues were up 32% year-on-year as customers are embracing the capabilities of our high end solution. As the most powerful scalable storage solution on the market today V-Max clearly addresses customers needs as they build out their private cloud infrastructures. Our fully automated storage tiering software known as FAST is driving higher rate of SSD and ATA based storage in these systems, resulting in huge performance and cost improvements for our customers.
As anticipated, following the introduction of FAST, we have seen penetration rates continue to rise in terms of SSD capacity per system, percentage of systems shift with SSD and the proportion of systems being shipped with FAST. The combination of SSD and ATA drives with FAST software yields a solution with performance, scalability and cost effectiveness that's unmatched by our competitors.
Our VPLEX platform, which we announced in May, is a net new opportunity and it's proving to be a unique differentiator that is resonating with customers. Its technology is very complementary to tiered storage as the combination of tiering with the mobility from VPLEX creates entirely new usage models that's an ideal virtual storage infrastructure for the private cloud.
As we said with virtualization we're apt to consolidate it onto one server and then could be mobilized over many servers. Virtual storage creates an elastic tool of storage within which you can tier data and with VPLEX move data across arrays within and between data centers.
Our technology lead also extends to our mid-tier storage offerings. As you will recall, last quarter we expanded our disclosure to give you better insight into our progress in the mid-tier overall taking into account the mix shift occurring among our mid-tier products.
The many used cases mobile technology that’s available in the mid-tier have driven customers to demand ease of use and simplicity as well as the right technology for the right job. The strength and breadth of our technology portfolio helps to satisfy these customer requirements better than anyone else. Our approach is to continue to invest in our market leading log file and object storage products while converging technologies and products where it makes sense for simplicity and efficiency.