David Goulden, EMC Executive Vice President and Chief Financial Officer
EMC Corporation has reported record fourth-quarter and full-year 2010 financial results. For the fourth quarter 2010, the company achieved all-time record consolidated revenue, net income and free cash flow. Full-year 2010 results were highlighted by all-time record consolidated revenue and profit that exceeded prior company outlook and record free cash flow.
For the fourth quarter, consolidated revenue was $4.9 billion, an increase of 19% compared with the year-ago quarter; GAAP net income attributable to EMC increased 61% year over year to $628.6 million; and GAAP diluted earnings per share were $0.29, up 53% year over year. Non-GAAP1 net income attributable to EMC for the fourth quarter was $920.1 million, an increase of 32% compared with the year-ago quarter, and non-GAAP1 earnings per diluted share were $0.42, an increase of 27% year over year.
During the quarter EMC generated record quarterly operating cash flow and free cash flow of $1.5 billion and $1.2 billion, which grew 50% and 54% year over year, respectively. For the quarter and full-year 2010, EMC expanded gross margin and operating margin percentages substantially on a year-over-year basis. The company completed the quarter with $9.5 billion in cash and investments.
For the full year 2010, consolidated revenue was $17.0 billion, an increase of 21% year over year; GAAP net income attributable to EMC increased 75% year over year to $1.9 billion; and GAAP diluted earnings per share were $0.88, up 66% year over year. Non-GAAP2 net income attributable to EMC for 2010 was $2.7 billion, an increase of 46% year over year, and non- GAAP2 earnings per diluted share were $1.26, an increase of 40% year over year. The company achieved record full-year operating cash flow and free cash flow of $4.5 billion and $3.4 billion, which grew 36% and 31%, respectively, compared with 2009.
Joe Tucci, EMC Chairman and Chief Executive Officer, said, “EMC’s performance in 2010 was the best in company history, marked by rapid growth, market share gains, financial leverage and significant investment in technology innovation. The platform for change in the IT industry has arrived with the biggest opportunity residing at the intersection of trusted cloud computing, enterprise data and ‘Big Data.’ Equipped with the strongest, most distinctive product and services portfolio and strategic partners, we have never been more confident in EMC’s position to lead this transformational shift to IT as a service.”
David Goulden, EMC Executive Vice President and Chief Financial Officer, said, “In 2010 we executed our triple play impressively – simultaneously taking market share, reinvesting meaningfully in our business and delivering improved profitability. Tremendous progress on all of these objectives throughout the year puts EMC in its best financial and operational shape ever. We are in great position to continue to deliver our triple play results in 2011; continue to achieve solid double-digit revenue and profit growth, expand operating margins and grow free cash flow for the year; and further strengthen EMC’s strategic position for the long term.”
Fourth-Quarter and 2010 Highlights
Fourth-quarter highlights included strong customer demand and double-digit revenue growth for the company’s market-leading high-end EMC Symmetrix storage product portfolio, which increased 19% compared with the year-ago quarter, and EMC’s mid-tier storage product portfolio3, which grew revenue 23% year over year. Revenues from EMC’s RSA information security business and VMware (NYSE: VMW), which is majority-owned by EMC, hit record amounts, growing 28% and 38% year over year, respectively. Additional fourth-quarter highlights included continued strong customer demand for EMC’s backup and recovery solutions as part of the company’s fast-growing Backup and Recovery Systems Division. Also in the fourth quarter, EMC completed its acquisition of Isilon Systems, a leader in fast-growing “scale-out” network attached storage.
EMC consolidated fourth-quarter revenue from the United States reached $2.6 billion, an increase of 20% year over year, representing 53% of consolidated fourth-quarter revenue. Revenue from EMC’s business operations outside of the United States reached $2.3 billion, an increase of 19% year over year, representing 47% of consolidated fourth-quarter revenue. Within this, revenue increased 13%, 30% and 34% year over year, respectively, in EMC’s Europe, Middle East and Africa; Asia Pacific and Japan; and Latin America regions.
Throughout 2010, EMC executed on numerous strategic initiatives that collectively helped strengthen the company’s technology leadership and services expertise in enterprise data, cloud computing and “Big Data”; advance its competitive lead; and gain market share. This included sustained aggressive investment in research and development, totaling 11% of annual consolidated 2010 revenue, which resulted in broad and deep innovation across all of EMC’s business units. EMC also continued to use its financial strength to make strategic acquisitions targeted at high-growth areas, including Isilon, data warehousing and business analytics pioneer Greenplum, and leading enterprise governance, risk and compliance (eGRC) software provider Archer Technologies. Additionally, the company further strengthened alignment with strategic partners demonstrated by the strong momentum of VCE, The Virtual Computing Environment Company, and expanded relationships with technology, solutions and service providers around the world.