EMC 2015 Annual Meeting of Shareholders - Dell EMC · CORPORATE OVERVIEW ... 2015 2020 WW ICT ... impairment of strategic investment, capitalized software development costs and VMware

1 © Copyright 2015 EMC Corporation. All rights reserved.

WELCOME EMC 2015 Annual Meeting of Shareholders

April 30, 2015


CORPORATE OVERVIEW Zane Rowe

Chief Financial Officer


93% say technology

has changed customer

expectations

96% say technology has forever altered the

rules of business

© Copyright 2015 EMC Corporation. All rights reserved.

WELCOME TO THE DIGITAL ERA


TOP USER DEMANDS BY RANK


1 Faster access

to services

2 24/7

access

3 Access on

more platforms

4 Personalized experiences

PEOPLE DRIVE BUSINESSES TO CHANGE


SUCCESS REQUIRES USING DATA TO CREATE COMPELLING DIGITAL EXPERIENCES

CATCH PEOPLE OR THINGS IN THE ACT AND

AFFECT THE OUTCOME

New Systems Of Engagement

New Business Models

Internet Of Things


Only

30% can act in real time

Only

24% are very good at turning data

into useful information

50% are

experiencing data overload

49% Do not

know how to manage

data


TODAY BUSINESSES ARE ILL PREPARED TO

DELIVER


WE HELP CUSTOMERS TRANSFORM AND DIGITIZE THEIR BUSINESSES

• SOFTWARE TO MANAGE COMPUTE, NETWORKING & STORAGE

• HYBRID CLOUD

• DESKTOP & MOBILE DEVICES

• APPLICATIONS

• PAAS - RUN APPS ON ANY CLOUD

• BIG DATA - SYNTHESIZE & ACT UPON DATA


• STORAGE

• SOFTWARE-DEFINED STORAGE

• CONVERGED INFRASTRUCTURE

• SECURITY


WE HELP CUSTOMERS TRANSFORM AND DIGITIZE THEIR BUSINESSES

• SOFTWARE TO MANAGE COMPUTE, NETWORKING & STORAGE

• HYBRID CLOUD

• DESKTOP & MOBILE DEVICES

• APPLICATIONS

• PAAS - RUN APPS ON ANY CLOUD

• BIG DATA - SYNTHESIZE & ACT UPON DATA


• STORAGE

• SOFTWARE-DEFINED STORAGE

• CONVERGED INFRASTRUCTURE

• SECURITY


MODERN ARCHITECTURES ARE NEEDED TO SUPPORT DATA AND APPLICATIONS CIO MUST RUN EXISTING IT EFFICIENTLY AND INVEST IN NEW CAPABILITIES

Notes: • Source: IDC March 2015 • ICT = Information and Communications Technology • New Architectures = infrastructure and software that supports Cloud, Social, Mobile and Big Data

2013 2015 2020

WW

IC

T S

PEN

DIN

G

($ B

illio

ns)

60%


MODERN ARCHITECTURES ARE NEEDED TO SUPPORT DATA AND APPLICATIONS CIO MUST RUN EXISTING IT EFFICIENTLY AND INVEST IN NEW CAPABILITIES

Notes: • Source: IDC March 2015 • ICT = Information and Communications Technology • New Architectures = infrastructure and software that supports Cloud, Social, Mobile and Big Data

2013 2015 2020

WW

IC

T S

PEN

DIN

G

($ B

illio

ns)

Traditional New Architectures

60%


WE ARE LEADING THE TRANSFORMATION TO MODERN ARCHITECTURES EXCEL IN OUR TRADITIONAL BUSINESS AND EXPAND INTO NEW MARKETS

Market Leadership High

High

Low Low

Market Growth

Rate

PBBA

Security

Traditional Storage

Server Virtualization


WE ARE LEADING THE TRANSFORMATION TO MODERN ARCHITECTURES EXCEL IN OUR TRADITIONAL BUSINESS AND EXPAND INTO NEW MARKETS

Market Leadership High

High

Low Low

Market Growth

Rate

PBBA

Security

Traditional Storage


Software-Defined Networking

Business Mobility

Converged Infrastructure

Next-Gen Storage

Big Data and PaaS

Cloud Management

Software-Defined Networking

Business Mobility

Converged Infrastructure

Next-Gen Storage

Big Data and PaaS

PBBA

Security

Traditional Storage


Cloud Management


PRODUCTS COMBINE INTO INNOVATIVE SOLUTIONS

Enterprise Hybrid Cloud Business Data Lake


A UNIQUELY ALIGNED FEDERATION OF BUSINESSES

INFORMATION STORAGE & PROTECTION

INFORMATION INTELLIGENCE

END USER COMPUTING HYBRID CLOUD

SOFTWARE-DEFINED DATA CENTER

OPEN CLOUD DEVELOPMENT PLATFORM

BIG DATA SUITE AGILE APPLICATION DEVELOPMENT

IDENTITY SECURITY ANALYTICS

GRC

CONVERGED INFRASTRUCTURE


2014 NON-GAAP EPS GREW 6% CONSOLIDATED RESULTS

Note: See the attached schedules for a reconciliation of GAAP to non-GAAP.

2014 ($) GROWTH Y/Y (%)

Revenue 24.4B 5

Information Infrastructure 18.2B 2

VMware 6.0B 16

Pivotal 230M 27

Non-GAAP EPS 1.90 6


-4%

-2%

0%

2%

4%

6%

8%

10%

EMC HAS OUTPERFORMED OUR PEERS REVENUE CAGR VS. PEERS SINCE 2010

Includes closest quarters aligned with first-quarter CY10 through fourth-quarter CY14.

5.2 CY2014 Growth %

12.0 6.0 -2.5 3.4 0.4 -2.3 -5.7 -1.7


INVESTED >$21B IN FIVE YEARS INVESTMENTS ($B)

2.0 4.2 6.9

9.7 12.8

3.2 3.7

5.9

6.6

8.6

2010 2011 2012 2013 2014

5.2 2.8 4.8 3.6 5.1 Annual Investment

Notes: • M&A is net of cash acquired. • R&D expenses exclude Corporate Reconciling Items and Capitalized Software Development costs. • See the attached schedules for a reconciliation of GAAP to non-GAAP.


ACCELERATED CAPITAL RETURNS CUMULATIVE BUYBACKS AND DIVIDENDS ($B)

1.0 3.0 3.7

6.7 9.7

12.7 0.4

1.3

2.2

2010 2011 2012 2013 2014 2015e

Buyback Dividend

~3.9 1.0 2.0 0.7 3.4 3.9 Annual

Note: Free cash flow is a non-GAAP financial measure which is defined as cash flow from operations, 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.

• Expect to return ~$15B to shareholders since 2010

• 2014 FCF: $5.04B


OUR FINANCIAL FRAMEWORK

Gain Market Share

Invest for the Future

EPS Growth

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

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," certain items noted on each

such specific schedule (including, where noted, amounts relating to stock‐based compensation expense, intangible asset amortization,

restructuring charges, acquisition and other related charges, a gain on previously held interests in strategic investments and joint venture, an

impairment of strategic investment, capitalized software development costs and VMware litigation and other contingencies) are excluded from t

non‐GAAP financial measures.

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&

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 expenditu

and capitalized software development costs. Management believes that information regarding free cash flow provides investors with an importa

perspective on the cash available to make strategic acquisitions and investments, repurchase shares, pay dividends, service debt and fund ongoi

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 prepare

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.

Twelve Diluted

Months Ended Earnings

December 31, 2014 Per Share

Net Income Attributable to EMC GAAP 2,714$ 1.315$

Stock-based compensation expense 713 0.347 Intangible asset amortization 263 0.128 Restructuring charges 168 0.082 Acquisition and other related charges 108 0.052 Gain on previously held interests in strategic investments and joint venture (77) (0.038) Impairment of strategic investment 23 0.011 VMware litigation and other contingencies 7 0.003

Net Income Attributable to EMC Non-GAAP 3,919$ 1.900$

Weighted average shares, diluted 2,059 Incremental VMware dilution 7$

* 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.

Reconciliation of GAAP to Non‐GAAP*

(in millons, except per share amounts)

(unaudited)

2010 2011 2012 2013 2014

Research and Development Expenses ‐ GAAP 1,888$ 2,150$ 2,560$ 2,761$ 2,991$

Stock‐based compensation expense (259) (299) (352) (357) (382)

Intangible asset amortization (24) (16) (10) (8) (5)

Capitalized software development costs 363 442 419 465 509

Research and Development Expenses ‐ non‐GAAP 1,968$ 2,277$ 2,617$ 2,861$ 3,113$

Research and Development Expenses Cumulative ‐ non‐GAAP 1,968$ 4,245$ 6,862$ 9,723$ 12,836$

Reconciliation of GAAP to Non‐GAAP

(in millons, except per share amounts)

(unaudited)

Twelve Months Ended December 31,

Twelve

Months Ended

31-Dec-14

Cash Flow from Operations 6,523$

Capital expenditures (979) Capitalized software development costs (509)

Free Cash Flow 5,035$

Reconciliation of GAAP to Non‐GAAP

(in millons)

(unaudited)

Documents

EMC 2015 Annual Meeting of Shareholders - Dell EMC · CORPORATE OVERVIEW ... 2015 2020 WW ICT ... impairment of strategic investment, capitalized software development costs and VMware