Dell Technologies | Citi Global Technology Conference
September 7, 2022

Jim Suva:...investors, thank you so much for joining us here at the Citigroup Global
Technology Conference, here live in New York City, New York. This keynote
session is featuring Dell Technologies, stock ticker DELL. Joining me on stage isthe very well known and prominent, very honored to have himself, Michael Dell.
A few housekeeping items. No media and no press are allowed. Disclosures areavailable at check-in and on the Citi Investor website called Velocity. Dell has
asked me to read the following Safe Harbor. I do have a brief disclosure to readfrom Dell directly.
The non-GAAP financial measures that discuss may refer to non-GAAP results,
including non-GAAP diluted earnings per share and adjusted free cash flow.
Unless otherwise indicated for reconciliation to the most recent direct comparable
GAAP measures, please consult the slides labeled Supplemental Non-GAAP
Measures in the performance review available on the fiscal 2023 Q2 results page
on investors.delltechnologies.com.
And the Safe Harbor statement: Dell Technology statements that relate to the
future results and events are forward-looking statements and are based on Dell
Technologies’ current expectations. Actual results and events in the future
periods may differ materially from those expressed or implied by these forwardlooking statements because of a multiple number of risks, uncertainties, andother factors, including those discussed in Dell Technologies’ periodic reports
filed with the SEC. Dell Technology assumes no obligation to update it’s forwardlooking statements. Any investor subject to MiFID II, please ensure you have theapplicable research agreement in place.
And with that, I'd like to introduce who’s attending here from Dell. On stage is
Michael Dell himself and in the audience is also the Chief Financial Officer, Tom
Sweet. So, thank you so much for joining us here.
Michael, to kick things off with and I’ll come join you on the seats, you have led
the company through a tremendous amount of change since the formation fromorganic growth to also acquisitions, such as the EMC acquisition to the mostrecent spinouts. As you look back, what are some of the more strategic changes
that you are most proud of and some of the ones that were more challenging?

Michael Dell: All right, Jim. Well, thank you very much for having me here. Great. Great to bewith you all today. So, as I think about that question on the long arc of history,
we’ve been helping customers for a long time, going back to the emergence ofthe client server computing, the sort of initial days of data centers andvirtualization being built, and now multi-cloud. And all through that time, we’vebeen executing and kind of consolidating and gaining share.

1The EMC combination was a pretty historic opportunity to bring together anincredible set of capabilities and an effectively number one industry-leading
portfolio across infrastructure. We believed that there would be substantial
revenue synergies by being able to provide customers with a more complete
solution and that over time the silos that had separated networking and storage
and compute would start to disappear and customers would be more buying
appliances and outcomes. And that has absolutely continued now with theevolution to multi-cloud.
If I think back about what could have gone better, it took us some time to sort ofbring together the portfolios and simplify things. We now have our storage
portfolio working quite well and we’ve had several quarters now of consistent
growth in storage. We’ve consolidated things around our PowerMax,
PowerStore, PowerFlex in terms of our core storage platforms and PowerScale.
And we continue to focus on, again, modernizing the core business,consolidating share, and investing in the new areas of growth, specifically edge
and teleco.
Jim Suva:

A lot of change, for sure. You recently did a spinout of VMware. So, can you talkto us a little bit about your post-spin strategy now?

Michael Dell: Sure. So, the VMware spin was completed in November of last year. As many of
you are aware, VMware was already a public company, so that was not new tofolks. Again, what we focused on is continuing to consolidate share. We’re in a
$1.4 trillion TAM. Last year, the business was a little over $100 billion. So, stilllots of opportunities to grow in our core businesses and investing in new areas.
If you think about edge, as an example, most of the physical world is in theprocess of becoming instrumented and intelligent and connected. And what allthat means is that there’s enormous amounts of data and compute that are going
to be created and stay in the physical world. For example, there are roughly 600
mega cloud data centers in the world, but there are about seven million cellularbase stations.
Every single one of those cellular base stations is in the process of becoming a
mini-data center, a multi-access edge compute node, and we’re working with 30plus of the largest carriers to put infrastructure into those nodes because 5G is
not about talking on the phone faster; it’s about things talking to things and about
data. And the – there is an enormous tailwind in our business around the, all thedata that’s being created in the world and that requires modern computer science
to be able to analyze it and make sense of it and create outcomes from it. Again,
those are all big drivers for our growth.
So, we’ll continue to have a kind of first and best alliance with VMware, even post
the proposed Broadcom acquisition. But there are other providers out there that
we partner with and certainly we’ll continue to invest in our own IP as well.
Jim Suva:2And, Michael, there’s a packed room of investors here, absolutely packed, eventhose standing along the wall. How should investors think about that strategy thatcontinues to change with cloud and edge and everything translating into financial
and value creation for them as investors?
Michael Dell: So, we laid out our framework about a year ago and as a long-term framework
we see our business growing a little bit faster than GDP and adding onto that ourshare repurchase program getting us up into the higher single digits of EPS
growth and, again, a massive TAM, consistent cash flow generation. We’ve
generated roughly $6 billion in free cash flow a year over the last four years. And
we’re biased to return that capital to shareholders.
We don’t have a capital intensive business. We don’t have a particularly laborintensive business. And so, we’ve been buying back our stock and obviously
initiated a dividend, all this post the spin where we became investment grade andthere’s – we’d like to get to 1.5 times on the debt. We’re at 1.7, so not a big
distance there.
Jim Suva:

And congratulations on that investment grade rating, because I know a lot of
investors were kind of skeptical on that given the amount of paydown that you
have to do and you did it successfully. You’ve been through a lot of cycles
through your career, a lot of these cycles, and Dell just recently closed its second
quarter. How would you characterize Dell’s performance?

Michael Dell: Pretty pleased with the second quarter. Our CSG business grew 9%, 15% incommercial, -9% in consumer. The pressure is definitely being felt on consumer
and retail. We don’t participate there as much. Our mix is much more commercial
and kind of high end consumer and gaming. But we’ve clearly seen customers
after the enormous growth that occurred in client, the 9% growth that we had in
CSG is also on top of last year’s second quarter where we grew I think it was
27%. So, these are enormous growth periods.
If you sort of look at where we are on the curve and you look at kind of overall
units going back to ’16, ’17, ’18, ’19, we’re kind of in the right place, although
there was some funny business that occurred in the middle there during the
pandemic as money was raining from the sky. I don’t think anybody wants toadmit that they benefited from that period, but the truth is we did, right? And so,
there’s some of that.
But long-term, there is an expanded TAM because hybrid work is real. The way
you make people more productive is you give them tools and the PC is an
essential tool.
On the ISG side, 12% growth in ISG. I believe it was 15% in servers and 6% instorage. Seventh consecutive quarter of growth in the server platform. We
continue to see customers building out their multi-cloud environments.
Customers are very active in I would say this move from public cloud or cloud
first to multi-cloud and that is to say there’s a realization that not all workloads
are going to work well in a particular type of infrastructure. Customers want theirapplication and data environment to be infrastructure-agnostic. And so, they'reoften turning to us to help them build out that multi-cloud environment. Those are
significant growth drivers for us.

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So, felt pretty good about the second quarter. Again, we continue to kind of grindout gaining share. We’ve gained 570 basis points in PC share in the last five
years, 590 basis points in servers. In PCs we’ve gained share in 34 out of thelast 38 quarters. There’s 89% of the time. And I think when the IDC data comesout for servers and storage later this month, we’re confident that it’ll show we
gained share again.
And so, again, very large TAM and we can continue to gain share andconsolidate. And when you’re meeting with customers, they don’t want to havemore providers. They want to have fewer. And because we have number one
positions in so many of these areas, we’re continually able to consolidate themarket. Our supply chain has been differentiated and continues to outperform
and we’ve done all that with lower DSI.
Jim Suva:And, Michael, those are some tremendous share gains and not off easycomparables from a year ago, actually off very difficult. So, congratulations toyou and your team.
Investors are a little concerned about a potential broader macroenvironment
downturn, whether it be interest rates going up, employment data and things likethat. How do you think about and compare your business now, say compared toprior economic downturns? Do you think about the core business any differently
about weathering a potential downturn?

Michael Dell: We’ve been through all these before and so we know the levers to pull and I'dsay we’re pretty good at it. I think it helps to have a broader portfolio and, again, I
think it also helps to be able to provide customers with a more complete solution.
But there’s no way you can be immune to overall macro things.
So, we’re managing our costs appropriately and we have a history of doing thatand we’ll take all the right steps to kind of manage through whatever comes ourway. Ultimately, we’re focused on relative performance, gaining share, andcoming out of whatever is in front of us stronger than when we went into it.
Jim Suva:Well, if we break it down to your two different business segments now, why don’t
we first start about, say, the PC market, because expectations have dramaticallychanged, say, from the start of the year to currently. Commercial is expected tohold up better than consumer, which seems to fit well for Dell’s strategy andplacement. What are you hearing from your enterprise customers in terms of
demand, specifically for the PC market?

Michael Dell: Again, we’re over 70% commercial. Roughly 80% is commercial and high end
gaming and high end consumer. There’s definitely tension in the budgets and allof the sort of macro noise that’s out there has caused customers to pause andscrutinize spending more carefully. Not super-surprising.
If you look at the PC units over 40 years, which is kind of how we think about it
because we’ve been doing it for 40 years, the volatility has been much more in
the consumer portion than the commercial portion, which makes a lot of sense.
It’s not like you’re going to in your business say to people, well, hey, economy’s

4not doing well; you can’t have a computer. You’re not going to. Like, it’s anessential tool for productivity.
You might slow down the purchase rate or refresh rate for a period. But it’s sortof like kind of pay me now or pay me later, you know? If you slowed down forthree months or six months, it’s just going to pop back up later.
And the attached motion that we had before we got started here, we were talking
about your 49-inch display that you have at Citibank. I happen to like our new 5K
monitor. It’s 11 million pixels. You all need one of these, 5120 x 2160 resolution.
The point is that we’re asking our machines to do more, whether it’s in the data
center or the client, and people are more productive when they have the righttools. And the only way you make people productive is to give them tools. And itturns out, the things that we sell are those productivity-enhancing tools.
We also have a substantial portion of our business which is direct, which allows
us to capture some more margins, higher services and financing attach rates.
But, again, there was a lot of purchasing that occurred. We had 27% growth lastyear in the second quarter. We’re also going to start to anniversary the third yearof the beginning of COVID where there were enormous deployments of clientsystems and I think that’s going to drive some refresh as well.
On the data center side, again, it is multi-cloud. It’s this explosion of data. If you
want to do autonomous transportation or AI drug discovery or fintech or whatever
you want to do, it involves data, right? Anything interesting in the world, data’s
right at the center of it. And the ASPs have been going up, because you havekind of this xPU phenomenon where it’s not just the CPU, it’s the GPUs, theDPU. It’s all these specialized offload engines that are allowing a kind ofrenaissance really in computer architecture.
And a lot of customers, there are some super-sophisticated customers who will
go and engineer those things themself. But most of them, like they don’t want todeal with that. So, they want us to bring them an appliance that allows theirworkloads to operate very efficiently.
There’s also a big shift in our business from products to outcomes and this ischaracterized by our APEX business. And generally speaking, we sort of havethree ways that customers can transact with us. We have the traditional buying
products. We have subscribing or consuming a product, where they pay basedon their consumption and it’s based on time and usage. And the third way isreally an outcome.
And as we move to the two latter models, the TAM expands significantly for us.
It’s quite a bit stickier. It involves more IP and we love that. So, we’re pushinghard to do that. We reached a nice milestone with APEX of a billion dollars of
ARR. Put it in context, we have over $5 billion in ARR for the whole business and$41 billion in remaining performance obligations for the whole business.
So, baby steps but we’re making progress there and we think that can continue
to grow. And, again, not only is it a – it’s a big TAM expansion for us and5customers want to dedicate more of their time and energy towards applications,data, and creating speed to competitive advantage. And so, they don’t want todeal with infrastructure and they want to consume it. For us, it’s an opportunity
and it’s not all public cloud.
We're working with the public clouds. We also see an active build out of thesehybrid private clouds. Many, many customers have told us that for certain
workloads the cost of building out their own infrastructure is roughly half of what it
costs to run those workloads in the public cloud. Now many of those customers
also say but I don’t want to be in the data center business. So, we see the rise ofcolos and we’re working very actively with I would say all of the major colos andthey have fantastic interconnectivity with all the different nodes that are out there
in the network and that’s also driving this move towards more of a consumption
model.
Jim Suva:And, Michael, on the ISG side you’ve also gained a tremendous amount of shareon the ISG side with servers and things like that. What are the main factors thathave been giving you this strength? Some people think it’s maybe inventory thatyour customers wanted because of supply chain challenges. Other people talkabout new workloads and edge and other compute. But can you spend a little bitof time talking about ISG and the factors that are driving this continue share gainthat you’re really outgrowing the market?

Michael Dell: I don’t think it’s one thing. I think it’s a number of things and even within each of
the things there are many parts of those. But supply chain is a big factor.
One of the first questions we’ll often get when we meet with customers is, hey,
I’ve got this big project I'm doing. I'm going to need to deploy this new
infrastructure. Can you deliver? You're not going to screw this up and mycareer’s going to go south. They want to know that we’re going to deliver forthem. And this has been a big differentiator us, the superior execution of our
supply chain.
Now, you’ve got to have a great solution that works really well. And, again, they
don’t want to be integrating all this stuff together. VMware is roughly 70% of theworkloads out there. So, that’s a kind of marquee partnership for us. But it’s not
all VMware. There are others as well. And being a reliable, consistent provider
who can deliver globally in a predictable way, that’s super-important.
Some of them have sharp pencils. But there’s not a lot of price discussion. It’s
more, hey, we’re counting on this for whatever it is, our modernization of ourretail environment, our advanced manufacturing, our next generation data
environment for financial services. And so, they want a reliable partner. And theingredients, we’re number one in just about all of the major areas ininfrastructure. And so, it’s not a super-difficult thing for them to give us more of
the business.
Jim Suva:

Michael...

Michael Dell: I’ll say I'm a little surprised that the advantage we’ve had in supply chain has
persisted for so long. It’s maybe, well, I’ll just leave it at that.

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Jim Suva:

Well, I was actually going to go into that. Next question is I’ve known you for two
decades now, 20 years. But you’ve been doing this much longer than that. You’re
actually dubbed a supply chain expert, all the way from you before your company
was public.
But yet, the supply chain has been, from my history, the most challenging now
through COVID and supply chain parts shortages ever. And now, we’re seeing
higher prices, input costs, raw materials going higher, shipping costs. How haveyou and your customers responded to this, whether it be mitigation efforts? Can
you talk a little bit about that?

Michael Dell: Sure. Well, it’s multifaceted and I think part of the answer is to understand kind of
the whole 360 view of this. And if you’re a provider of the components and theingredients, remember, you’re in the business of digging big holes in the groundand putting billions of dollars in the ground. And, yeah, you want to know who’s
going to buy the parts in the next six months or whatever. But what you reallywant to know is who’s going to buy them in three years, five years, seven years,ten years?
That's us. We, we’ve been doing this for – they’ve known us forever and we’ve
known them forever. And so, the relationships go back four decades. And wehave scale, $100 billion in revenue last year. We’ve also done quite a bit to build
resiliency in the supply chain.
Back in 2016, when there was a discussion of tariffs, we started moving capacity
out of the countries that we thought were going to be affected by that. Turned out
to be a really good thing to do. So, we’ve had more resiliency in the supply chain.
There’s definitely been component inflation. That's helped us with ASPs. And
generally, customers understand that because they see inflation in everythingelse. And so, they’re not super-surprised by it and there’s not an enormous
amount of pushback by it. It’s more about availability.
And it’s not over. I wish it was. We still have shortages in some of the trailingnodes and certain types of silicon are harder to get and on longer lead time. But,
again, our relationships and our design strategies, by that I mean we have taken
steps to design multiple platforms that can source from various providers. And
we’re not the guys who sort of showed up at the last minute and said, hey, weneed a bunch of parts.
I’ll give you one other element here. A number of companies, as they outsourced
to manufacturing, they decided to outsource the management of the components
at a granular level. I mean they kept the management of some of the big
components. We never did that. Big mistake, because any element of the supply
chain that goes wrong, you’re going to have a problem. And also, you can’t treat
these things like commodities because they, there’s no replacement for thecapacity. And so, you have to think about it over a long-term relationship andthat’s how we’ve done it.

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Jim Suva:

Michael, one thing that’s come up really new is kind of a flexible consumption
model. Can you talk a little bit about that, how Dell views it strategically andmaybe the impact on your financials and what you’re hearing about flexible
consumption models?

Michael Dell: This is what I was talking about earlier with APEX. And in some sense, it’s not
new because we've had managed services and things like that for a long, longtime and we’ve had various services that we’ve provided around the products.
But it’s continuing to advance and ultimately let’s not be confused, the plot ismore cash flow. That's the plot.
And we believe we’re very much on that path. And we’re kind of, I would say,going as fast as we can to build out more capabilities around APEX and figureout how we implement this across a broader set of our countries.
I think we’re in 38 countries now with APEX. We’ve rolled APEX out to ourpartners. We’ve continued to expand the solutions into cyber recovery andbackup, in addition to storage and infrastructure. And you’ll continue to see us
build out the portfolio around flexible consumption. And, again, we also think of it
as a material TAM expansion over time.
Jim Suva:

You've accomplished a lot over the years with your balance sheet. Investment
grade rating, congratulations. Capital allocation now, such as stock buyback,dividends, things like that. How should the investors who are in the audience
here think about your capital allocation policy and strategy that you're looking at?

Michael Dell: Well, first of all, I would say we are intrinsic value buyers of our stock. So, if thestock goes down, we buy more. And that’s what we’re doing. We did initiate a
dividend and we talked about our long-term framework. I'd say we’re at the highend of the framework in terms of capital return, maybe even a little bit higher than
the range that we gave. And we’re not opposed to M&A, but we haven’t seen a
lot that is compelling.
I know some of your investment bankers are kind of disappointed in that, but
sorry. You might see smaller tuck-in type things to accelerate some of the new
initiatives. But for the most part, we’re biased to return of capital through sharebuybacks and the dividend.
Jim Suva:

I mean I was just looking. Your dividend’s 3%. I mean that’s quite remarkable.
When people think about the history of Dell, about all the acquisitions you’ve
done and things like that, to think now I'm here on stage with you and a dividendof 3% and stock buyback. It’s a quite friendly capital deployment strategy.

Michael Dell: And I think you’re going to see us continue to enhance that. We’re quite focusedon – again, go back to this cash flow, free cash flow that we’ve generated
consistently. Even through some of the cycles in our industry, we’ve had a verystrong free cash flow. A significant majority of that free cash flow is going to be
returned to shareholders in the form of share repurchase and dividends.
Jim Suva:

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That's important. Michael, you have a packed house here, people standing along
the walls. As we kind of wrap it up now, maybe one last question. Why shouldinvestors be buying Dell stock? What’s the kind of couple points you want toleave with them about why this large audience should be shareholders today or
tomorrow or be buying Dell stock?
Michael Dell: Well, we’re an enormous TAM. It’s a $1.4 trillion TAM. We've got a $100 billion
business. We can continue to grow and consolidate that market space.
We have a history of execution and this is an environment where execution isgoing to continue to matter. You’ve seen it in our supply chain, in our free cash
flow generation, and I think you’ve got a management that’s very, very
shareholder friendly that is going to lean into actions that are going to continue toenhance shareholder value. You’ve seen that with the various spin transactions
that have created a ton of value for our shareholders and we won’t be shy about
exploring every opportunity to continue to create value for shareholders. And I
think we can continue to grind out gaining share in a large and growing market.
Jim Suva:

To all the investors in the audience, if you can please join me for a great thankyou round of applause for Michael Dell and his company here.

Michael Dell: Thank you.

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