Johannesburg, 28 Jul 2014
EMC Corporation (NYSE:EMC) has reported second-quarter 2014 financial results, including record second-quarter revenue of $5.9 billion, an increase of 5% year-over-year. GAAP net income attributable to EMC was $589 million and GAAP earnings per weighted average diluted share was $0.28. Non-GAAP1 net income attributable to EMC was $882 million and non-GAAP1 earnings per weighted average diluted share was $0.43.
EMC generated $1.3 billion in operating cash flow and $930 million in free cash flow2 in the second quarter - up 2% and 10% year-over-year, respectively. EMC ended the quarter with $14.6 billion in cash and investments. The company repurchased approximately $600 million worth of its common stock in the second quarter and returned approximately $200 million to shareholders via a quarterly dividend.
In addition, EMC's Board of Directors has approved an acceleration of EMC's share buyback plan for 2014 from $2 billion to $3 billion. Including the accelerated buyback and EMC's increased dividend (announced in the first quarter of 2014), EMC expects to return more than $7 billion to shareholders over the course of 2013 and 2014.
Joe Tucci, EMC Chairman and Chief Executive Officer, said: "Our industry and customers are in the midst of a massively disruptive and transformational shift, and the pace of change is accelerating. EMC detected it early on, put the right strategy in place and is executing well. New customers are coming to EMC for the first time, and existing customers are investing more heavily, because of our expanded capabilities across EMC Information Infrastructure, VMware and Pivotal. As a result, we have no doubt that EMC and our customers and shareholders will emerge among the primary beneficiaries of this transformation."
David Goulden, CEO of EMC Information Infrastructure and EMC's Chief Financial Officer, said: "EMC performance in Q2 was solid and on track, with good performance from each of our major business units. We are at the threshold of expansive opportunity and remain confident about the rest of the year, as evidenced by the accelerated buyback programme. Our market leadership, healthy partner ecosystem and cutting-edge technologies all support a strategy that deeply resonates with customers."
Second-quarter highlights
* EMC Information Infrastructure business revenue was up 1% year-over-year. Excluding the High-End Storage business3, Information Storage revenue grew 7% year-over-year - which is faster than the industry growth rate. Emerging Storage4 revenue grew 52% year-over-year, based on demand for technologies such as the EMC XtremIO all-flash storage array, EMC ViPR software-defined storage and EMC Isilon scale-out storage.
EMC has established clear leadership in the all-flash array market, with XtremIO, surpassing a $300 million annualised demand run rate5 in its second full quarter of availability. ViPR adoption continues, with the number of customers doubling in the second quarter compared to the first quarter of 2014. Data Domain had another strong quarter and the Data Protection Suite achieved very strong double-digit revenue growth both sequentially and year-over-year. RSA Information Security revenue grew 6% year-over-year, with Security Analytics and Archer each up over 20% in the second quarter. VCE had another strong quarter as demand for VCE Vblock systems once again showed very strong year-over-year growth.
* Pivotal grew revenue 29% year-over-year. The proliferation of Cloud Foundry as the industry's standard for open source PaaS continues to flourish. Attendance at the second annual Cloud Foundry Summit held in the second quarter more than doubled.
* VMware continues to see growth, with revenue up 17% year-over-year. VMware remains focused on delivering virtualisation technologies to propel its three strategic initiatives, including software-defined data centres, hybrid cloud and end-user computing.
Global highlights
EMC's consolidated second-quarter revenue from the United States was up 3% year-over-year at $3.1 billion, representing 52% of consolidated second-quarter revenue. Revenue from EMC's business operations outside of the United States increased 7% year-over-year to $2.8 billion, representing 48% of consolidated second-quarter revenue. Within this, revenue from EMC's Europe, Middle East and Africa region grew 12% year-over-year and revenue from EMC's Latin America region grew 14% year-over-year. Revenue from the BRIC+13 markets grew 5% year-over-year.
Business outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not give effect to the potential impact of mergers, acquisitions, divestitures or business combinations that may be announced or closed after the date hereof. These statements supersede all prior statements made by EMC regarding 2014 financial results.
All dollar amounts and percentages set forth below should be considered to be approximations.
* Consolidated revenues are expected to be $24.575 billion for 2014.
* Consolidated GAAP operating income is expected to range from 16.3% - 16.8% of revenues for 2014 and consolidated non-GAAP6 operating income is expected to range from 24% - 24.5% of revenues for 2014.
* Consolidated GAAP earnings per weighted average diluted share are expected to be $1.30 for 2014 and consolidated non-GAAP6 earnings per weighted average diluted share are expected to be $1.91 for 2014.
* The consolidated GAAP income tax rate is expected to be 23.0% for 2014 and the consolidated non-GAAP6 income tax rate is expected to be 23.5% for 2014. This assumes that the US research and development tax credit is extended during 2014.
* Consolidated net cash provided by operating activities is expected to be $7.2 billion for 2014 and free
cash flow2 is expected to be $5.8 billion for 2014.
* The weighted average outstanding diluted shares are expected to be 2.05 billion for 2014.
* EMC expects to repurchase an aggregate of $3 billion of the company's common stock in 2014.
Resources
* The second-quarter 2014 Webcast will be available for replay on the EMC Investor Relations Web site at http://www.emc.com/ir.
* EMC financial results are also available on the US Securities and Exchange Commission Web site.
* Visit http://ir.vmware.com for more detail on VMware's second-quarter 2014 financial results.
* Download the EMC Investor Relations App here.
* Visit EMC Pulse for breaking product and technology news from EMC.
* Visit EMC Reflections for executive insight on business and IT trends.
* Connect with EMC via @EMCCorp, LinkedIn and Facebook.
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