Slide 1: Fiscal 2Q 2020 Results
FISCAL 2Q 2020 RESULTS February 2020
Slide 2: Disclosures: Forward-Looking Statements
DISCLOSURES: FORWARD-LOOKING STATEMENTS Statements contained in this presentation that are not historical fact may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may
Slide 3: Disclosures: Non-GAAP Financial Measures
DISCLOSURES: NON-GAAP FINANCIAL MEASURES Non-GAAP gross margin and fully diluted earnings per share discussed in this presentation exclude as applicable stock- based compensation expenses, consulting expenses related to regaining SEC compliance and other non-recurring expenses, and the related tax e
Slide 4: A Stronger Foundation
A STRONGER FOUNDATION Stronger Foundation Capitalizing on the Convergence of Cloud, AI, and 5G / Edge • Refreshed management team • Cloud • Enhanced governance and control • Artificial Intelligence • Strengthened balance sheet • 5G / Edge Product Innovation is our DNA • Approximately 1,700 employees
Slide 5: Revenue
REVENUE $900 $1,000 $900 $850 $810M- $870M $800 $800 $700 $750 $600 $M $500 $M $700 $871M $871M $400 $650 $300 $600 $200 $100 $550 $0 2Q 3Q 4Q 1Q 2Q $500 Guidance Revenue FY19 FY20 Revenue Above Upper End of Guidance Revenue Grew Sequentially • Revenue $871M vs guidance of $810M-$870M • +9% QoQ • -6
Slide 6: Customer and Product Mix
CUSTOMER AND PRODUCT MIX Subsystems & Accessories 23% Direct / OEM 49% Channel 51% Server and Storage Systems 77% Direct / OEM and Channel Grew Sequentially Systems Grew Sequentially • Indirect / Channel +12% QoQ and +18% YoY • Systems +6% QoQ and -12% YoY • Direct / OEM +6% QoQ and -23% YoY • Syste
Slide 7: Geographic Mix
GEOGRAPHIC MIX Others 3% Asia 19% EMEA US 18% 61% Growth Led by the US • US +12% QoQ and +3% YoY • EMEA +12% QoQ and -20% YoY • Asia +3% QoQ and -16% YoY 7
Slide 8: Gross Margin and Operating Expenses
GROSS MARGIN AND OPERATING EXPENSES 17% $120 $100 16% $80 15% $M $60 14% $102M 15.9% $40 13% $20 12% $0 2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q FY19 FY20 FY19 FY20 Non-GAAP Gross Margin Expanded YoY Non-GAAP Operating Expenses Higher • Gross Margin +210bp YoY, driven by lower key component costs • Operating E
Slide 9: Earnings Per Share
EARNINGS PER SHARE 80 70 60 50 Cents 40 30 57c 20 10 0 2Q 3Q 4Q 1Q 2Q FY19 FY20 Non-GAAP Diluted EPS 57c • vs 68c last Q and 66c year-ago Q • Impacted by higher operating expenses 9
Slide 10: Cash Generation
CASH GENERATION $120 $100 $80 $M $60 $40 $82M $20 $0 2Q 3Q 4Q 1Q 2Q FY19 FY20 Strong Cash Flow from Operations • Cash Flow from Operations $82M • Free Cash Flow $71M • Cash and Cash Equivalents $309M 10
Slide 11: 3Q20 Outlook
3Q20 OUTLOOK REVENUE NON-GAAP EPS $770M to $830M 35c to 55c 11
Slide 12: Appendix
APPENDIX 12
Slide 13: 2Q20 Highlights (Non-GAAP)
2Q20 HIGHLIGHTS (NON-GAAP) 2Q20 QoQ YoY Revenue $871M +9% -7% Guidance $810M-$870M Gross Margin 15.9% -50bps +210bps Operating Expenses $102M +19% +26% Earnings Per Share 57c -11c -9c Cash Flow from Operations $82M +1368% +88% Revenue Mix: Systems 77% +6% -12% Direct / OEM 49% +6% -23% Channel 51% +
Slide 14: Reconciliation: GAAP to Non-GAAP
RECONCILIATION: GAAP TO NON-GAAP Three Months Ended Six Months Ended December 31, December 31, 2019 2018 2019 2018 GAAP GROSS PROFIT $ 138,404 $ 127,922 $ 269,333 $ 251,161 Add back stock-based compensation 384 428 779 866 Non-GAAP GROSS PROFIT $ 138,788 $ 128,350 $ 270,112 $ 252,027 GAAP GROSS MARG
Slide 15: A Long History of Growth
A LONG HISTORY OF GROWTH • 5-Year CAGR: +19% • 10-Year CAGR: +21% 1.0 Components and Subsystems 2.0 Systems Motherboards 3.0 Solutions Chassis BigTwin Server Building Blocks Ultra Management Storage Software GPU Solutions Global Services and Support SuperBlade ... FY94 FY95 FY96 FY97 FY98 FY99 FY00