Hopkinton, Mass. - Thursday, October 25, 2007
EMC Corporation (NYSE:EMC), the world leader in information infrastructure solutions, today announced record third-quarter revenue and net income. EMC has now delivered seventeen consecutive quarters of double-digit revenue growth marked by strong, balanced execution across all its business lines and major geographies.
Total consolidated revenue for the third quarter of 2007 was $3.3 billion, an increase of 17% over the $2.8 billion reported for the third quarter of 2006. GAAP net income for the third quarter of 2007 was $492.9 million or $0.23 per diluted share, 77% higher than the GAAP earnings per diluted share of $0.13 reported for the year-ago period. GAAP net income for the third quarter of 2007 includes net gains of $115.2 million, primarily from the sale of six million shares of EMC's interest in VMware to Cisco Systems. Excluding this item, net income was $377.8 million or $0.17 per diluted share, an increase of 31% year-over-year. During the quarter, EMC generated operating cash flow of $718 million, an increase of 57% compared with the same period a year ago and free cash flow of $475 million, an increase of 124% year-over-year.
"Solid global execution of our strategy resulted in record third-quarter financial results," said Joe Tucci, EMC Chairman, President and Chief Executive Officer. "Customers around the world are benefiting from the breadth and quality of our information infrastructure product and services portfolio, which provides them with the most cost-effective way to store, protect, optimize, and leverage their vast and growing quantities of strategic information. We see broad opportunities in the global marketplace, and we will continue to drive profitable growth by furthering technology integration across our portfolio, investing in research and development, and expanding into the fastest-growing global markets."
Tucci continued, "Among the many standouts during the quarter was VMware's quarterly performance and the completion of the initial public offering of approximately 10% of VMware. VMware is not only one of the fastest-growing businesses in the history of the software industry, but it has also created an entire IT category based on one of the very few game-changing technologies out there today. The IPO has enabled EMC to expose and unlock more of VMware's value for shareholders."
EMC systems revenue increased 9% year-over-year and represented 43% of total third-quarter revenue. Software license and maintenance revenue increased 25% year-over-year and accounted for 41% of total third-quarter revenue. Professional services, systems maintenance and other services revenue grew by 25% year-over-year and represented 16% of total third-quarter revenue.
Revenue from North America increased 15% compared with the same period a year ago and represented 59% of total third-quarter revenue. Revenue from operations outside of North America grew 21% year-over-year, highlighted by double-digit year-over-year revenue growth in EMC's Europe, Middle East and Africa (EMEA) and Asia-Pacific and Japan (APJ) regions.
"We demonstrated crisp business and financial execution around the world with operating income growing faster than revenue and free cash flow more than doubling compared to the same period a year ago," said David Goulden, EMC Executive Vice President and Chief Financial Officer. "We remain focused on driving operating leverage across the business. To continue to return value back to shareholders, we are also increasing our previously announced stock buyback commitment from $1 billion to $2 billion. Based on our results year-to-date and our expectations for a solid fourth quarter, we are now very clearly on track to exceed the annual financial targets we set in January."
EMC's Information Storage business, which includes revenue from storage systems, storage software and related customer and professional services, reached $2.6 billion, an increase of 8% compared with the year-ago period. Third-quarter growth in this business was largely driven by strong customer demand for EMC's industry-leading CLARiiON and Celerra networked storage systems and from EMC's expansive information protection portfolio, including the EMC Disk Library for back-up to disk, EMC Avamar for data de-duplication and EMC Recoverpoint for CDP. EMC Smarts resource management and EMC Rainfinity global file virtualization software experienced double-digit, year-over-year revenue growth. In the third quarter, EMC also announced its expansion of the industry's broadest set of storage technologies spanning from entry-level to the high-end, helping customers of all sizes store information more cost-effectively, securely and intelligently.
EMC's Content Management and Archiving business posted double-digit revenue growth, increasing third-quarter revenue 27% year-over-year to $189 million. New license revenue increased 34% on a year-over-year basis. During the quarter, EMC announced the Documentum 6 platform, a key component of EMC's suite of enterprise content management products. With the release of Documentum 6, EMC continues to lead the industry into the next generation of enterprise content management, as it moves from a separate application platform to an integral part of an organization's information infrastructure.
RSA information security revenues for the third quarter of 2007 grew 22% when compared with the results of the division's constituent companies in the year-ago period, reaching $133 million in revenue. This growth was primarily driven by RSA's core authentication business, as well as its consumer-facing applications and information and event management offerings. The division also continued to see success in its comprehensive security solutions for businesses seeking to comply with regulatory mandates and managing information risk holistically across the enterprise.
VMware Inc. (NYSE: VMW), which is the global leader in virtual infrastructure software for industry-standard systems and is majority-owned by EMC, had third-quarter revenues of $354 million, an increase of approximately 90% compared to the year-ago quarter. Visit http://ir.vmware.com for more information about the virtualization software leader's third-quarter financial results.
EMC Corporation (NYSE: EMC) is the world's leading developer and provider of information infrastructure technology and solutions that enable organizations of all sizes to transform the way they compete and create value from their information. Information about EMC's products and services can be found at www.EMC.com.