EMC Corporation (NYSE:EMC), the world leader in information management and storage, today reported record first-quarter revenues on increased demand for its new family of high-end networked EMC Symmetrix® storage systems, EMC Documentum® content management software, EMC Smarts® resource management software and VMware™ virtual infrastructure software.
First Quarter Financial Results
* Total consolidated revenue for the first quarter of 2006 was $2.55 billion, 14% higher than the $2.24 billion reported for the first quarter of 2005.
* Net income for the quarter was $272.5 million or $0.11 per diluted share, which includes $0.03 per share for employee stock option expense. Had EMC expensed stock options during the year-ago quarter, net income for the first quarter of 2006 would have been up 50% compared with the $182.2 million or $0.07 per diluted share that EMC would have reported for the first quarter of 2005.
* Net income for the first quarter of 2006, excluding stock-based compensation and intangible asset amortization (which is a non-GAAP measure), grew 28% to $380.3 million or $0.16 per diluted share, compared with non-GAAP first-quarter 2005 net income of $296.6 million or $0.12 per diluted share.
Additional information about EMC's net income is included within the supplemental tables released with today's first-quarter financial announcement.
Joe Tucci, Chairman, President and CEO of EMC, said, "The power of our balanced, solutions-focused business model is evident. Our sustained focus on information lifecycle management (ILM) and expanding portfolio of best-in-class products and services enabled us to deliver double-digit revenue growth for the 11th quarter in a row.
"Our business continues to be rich with opportunity," Tucci continued. "We have the strongest new product lineup in our history, and this aggressive rollout will continue at a fast pace as the year unfolds. At the same time, we are making major inroads into emerging areas like unified ILM, virtualization, model-based resource management and information security. Together, these new, exciting solutions are enabling us to engage customers at a more strategic level and help them transform the way they build, manage and realize more value from their information infrastructures."
Systems revenue in the first quarter was $1.23 billion, a 20% increase over the year-ago quarter, giving EMC its strongest quarterly systems revenue growth rate in more than two years. EMC had double-digit software license and maintenance revenue growth for the 11th consecutive quarter, increasing revenues 11% to $925 million. Professional services, systems maintenance and other services revenue grew 6% year over year to $396 million.
EMC completed the first quarter with $7.4 billion in cash and investments. Year-to-date the company has purchased approximately $375 million in EMC stock in the open market and redeemed $125 million in convertible debt. Earlier this week, EMC's Board of Directors approved the repurchase of an additional 250 million shares of EMC common stock.
"When you consider its price relative to the opportunity, EMC stock at these levels continues to be one of the best values in the market," said Bill Teuber, EMC's Executive Vice President and Chief Financial Officer. "We plan to purchase another $2.5 billion worth of stock through the rest of this year, deploying $3 billion toward share reduction in 2006 – three times our 2005 investment. These investments, along with our continued interest in strategic, growth-oriented acquisitions, are part of our expanded commitment to increase our addressable market and drive shareholder value by leveraging our strong cash position."
First Quarter Highlights
EMC's strong, double-digit systems revenue growth was driven by solid demand for the new Symmetrix DMX-3 family of tiered networked storage. Sales of the new DMX-3 made up more than half of the total Symmetrix systems revenues during the quarter, as customers increasingly deployed the most scalable, highest-performance system available in the marketplace today.
EMC multi-platform software revenue growth was led by record sales of enterprise content management software. Excluding acquisition impact, enterprise content management software license revenue grew approximately 30% compared with the year-ago quarter, driven by rapid growth of unstructured information and improved synergy between EMC's traditional and software-focused sales forces. Smarts software also surged during the quarter as customers continue to transition to model-based resource management to pinpoint service-affecting problems automatically and calculate the impact of those problems in real time without human intervention.
VMware, an EMC subsidiary, again achieved record quarterly revenues, growing sales 64% year over year to $131 million during the first quarter. VMware showed continued growth as customers increasingly standardize on its enterprise-class suite of virtual infrastructure products. During the quarter, VMware introduced VMware Server (the successor to GSX Server) and made it freely available to accelerate mainstream adoption of virtualization. VMware Server is the first commercially available server virtualization product with support for 64-bit virtual machines and Intel Virtualization Technology. During the quarter VMware also continued to win top accolades in the industry, with its innovation and technology leadership being recognized by eWeek and InfoWorld.
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 any mergers, acquisitions, divestitures or business combinations that may be announced after the date hereof. These statements supersede all prior statements regarding business outlook set forth in prior EMC news releases.
* Consolidated revenues for the second quarter of 2006 are expected to be at least $2.66 billion.
* GAAP diluted earnings per share for the second quarter are expected to be $0.13. Non-GAAP diluted earnings per share, excluding stock-based compensation and intangible amortization, are expected to be $0.17.
* Consolidated revenues for 2006 are expected to be between $11.1 billion and $11.3 billion. Current expectations are for revenues to be at the lower end of that range.
* GAAP diluted earnings per share for 2006 are expected to be between $0.54 and $0.57. Non-GAAP diluted earnings per share, excluding stock-based compensation and intangible amortization, are expected to be between $0.70 and $0.73.
About EMC
EMC Corporation (NYSE: EMC) is the world leader in products, services and solutions for information management and storage that help organizations extract the maximum value from their information, at the lowest total cost, across every point in the information lifecycle. Information about EMC's products and services can be found at www.EMC.com.
First Quarter Financial Results
* Total consolidated revenue for the first quarter of 2006 was $2.55 billion, 14% higher than the $2.24 billion reported for the first quarter of 2005.
* Net income for the quarter was $272.5 million or $0.11 per diluted share, which includes $0.03 per share for employee stock option expense. Had EMC expensed stock options during the year-ago quarter, net income for the first quarter of 2006 would have been up 50% compared with the $182.2 million or $0.07 per diluted share that EMC would have reported for the first quarter of 2005.
* Net income for the first quarter of 2006, excluding stock-based compensation and intangible asset amortization (which is a non-GAAP measure), grew 28% to $380.3 million or $0.16 per diluted share, compared with non-GAAP first-quarter 2005 net income of $296.6 million or $0.12 per diluted share.
Additional information about EMC's net income is included within the supplemental tables released with today's first-quarter financial announcement.
Joe Tucci, Chairman, President and CEO of EMC, said, "The power of our balanced, solutions-focused business model is evident. Our sustained focus on information lifecycle management (ILM) and expanding portfolio of best-in-class products and services enabled us to deliver double-digit revenue growth for the 11th quarter in a row.
"Our business continues to be rich with opportunity," Tucci continued. "We have the strongest new product lineup in our history, and this aggressive rollout will continue at a fast pace as the year unfolds. At the same time, we are making major inroads into emerging areas like unified ILM, virtualization, model-based resource management and information security. Together, these new, exciting solutions are enabling us to engage customers at a more strategic level and help them transform the way they build, manage and realize more value from their information infrastructures."
Systems revenue in the first quarter was $1.23 billion, a 20% increase over the year-ago quarter, giving EMC its strongest quarterly systems revenue growth rate in more than two years. EMC had double-digit software license and maintenance revenue growth for the 11th consecutive quarter, increasing revenues 11% to $925 million. Professional services, systems maintenance and other services revenue grew 6% year over year to $396 million.
EMC completed the first quarter with $7.4 billion in cash and investments. Year-to-date the company has purchased approximately $375 million in EMC stock in the open market and redeemed $125 million in convertible debt. Earlier this week, EMC's Board of Directors approved the repurchase of an additional 250 million shares of EMC common stock.
"When you consider its price relative to the opportunity, EMC stock at these levels continues to be one of the best values in the market," said Bill Teuber, EMC's Executive Vice President and Chief Financial Officer. "We plan to purchase another $2.5 billion worth of stock through the rest of this year, deploying $3 billion toward share reduction in 2006 – three times our 2005 investment. These investments, along with our continued interest in strategic, growth-oriented acquisitions, are part of our expanded commitment to increase our addressable market and drive shareholder value by leveraging our strong cash position."
First Quarter Highlights
EMC's strong, double-digit systems revenue growth was driven by solid demand for the new Symmetrix DMX-3 family of tiered networked storage. Sales of the new DMX-3 made up more than half of the total Symmetrix systems revenues during the quarter, as customers increasingly deployed the most scalable, highest-performance system available in the marketplace today.
EMC multi-platform software revenue growth was led by record sales of enterprise content management software. Excluding acquisition impact, enterprise content management software license revenue grew approximately 30% compared with the year-ago quarter, driven by rapid growth of unstructured information and improved synergy between EMC's traditional and software-focused sales forces. Smarts software also surged during the quarter as customers continue to transition to model-based resource management to pinpoint service-affecting problems automatically and calculate the impact of those problems in real time without human intervention.
VMware, an EMC subsidiary, again achieved record quarterly revenues, growing sales 64% year over year to $131 million during the first quarter. VMware showed continued growth as customers increasingly standardize on its enterprise-class suite of virtual infrastructure products. During the quarter, VMware introduced VMware Server (the successor to GSX Server) and made it freely available to accelerate mainstream adoption of virtualization. VMware Server is the first commercially available server virtualization product with support for 64-bit virtual machines and Intel Virtualization Technology. During the quarter VMware also continued to win top accolades in the industry, with its innovation and technology leadership being recognized by eWeek and InfoWorld.
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 any mergers, acquisitions, divestitures or business combinations that may be announced after the date hereof. These statements supersede all prior statements regarding business outlook set forth in prior EMC news releases.
* Consolidated revenues for the second quarter of 2006 are expected to be at least $2.66 billion.
* GAAP diluted earnings per share for the second quarter are expected to be $0.13. Non-GAAP diluted earnings per share, excluding stock-based compensation and intangible amortization, are expected to be $0.17.
* Consolidated revenues for 2006 are expected to be between $11.1 billion and $11.3 billion. Current expectations are for revenues to be at the lower end of that range.
* GAAP diluted earnings per share for 2006 are expected to be between $0.54 and $0.57. Non-GAAP diluted earnings per share, excluding stock-based compensation and intangible amortization, are expected to be between $0.70 and $0.73.
About EMC
EMC Corporation (NYSE: EMC) is the world leader in products, services and solutions for information management and storage that help organizations extract the maximum value from their information, at the lowest total cost, across every point in the information lifecycle. Information about EMC's products and services can be found at www.EMC.com.
