Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $1,560 million, up 1% year over year, exceeding the midpoint of guidance [21] - Excluding the divested spot business, total revenue increased by 3% year on year [21] - Q1 hybrid cloud revenue was $1,400 million, also up 1% year over year [21] - Product revenue decreased by 2% year over year to $654 million [21] - Public cloud revenue increased by 1% year over year to $161 million, and excluding spot, it was up 18% year over year [21] - Q1 consolidated gross margin improved by 1.6 percentage points sequentially to 71.1% [23] - Operating profit was $400 million with an operating margin of 25.7% [25] - Diluted EPS was $1.55, aligned with expectations [25] Business Line Data and Key Metrics Changes - All flash array revenue grew 6% year over year to $893 million, with an annualized run rate of $3,600 million [8] - Professional services revenue grew 18% year over year to $97 million, driven by Keystone, which was up approximately 80% compared to the same period last year [21] - Recurring support business maintained a gross margin of 92.3% [23] - Public cloud gross margin was 80.1%, up 80 basis points sequentially and nine percentage points year over year [24] Market Data and Key Metrics Changes - Strong performance in The Americas enterprise offset declines in the U.S. Public sector and EMEA [5] - The company secured approximately 125 AI infrastructure and data lake modernization deals across various geographies and industries in Q1 [15] - The emerging enterprise AI market is driving urgency among customers to modernize data infrastructure [6] Company Strategy and Development Direction - The company is focused on helping customers modernize their data infrastructure and advance cloud transformations [5] - The strategy includes enhancing profitability and free cash flow while delivering value to customers and shareholders [27] - The company aims to capitalize on growing opportunities in the enterprise AI sector [18] Management's Comments on Operating Environment and Future Outlook - Management noted some macro-related spending caution but emphasized strong demand for AI solutions [6] - The company expects revenue for Q2 to be $1,690 million, implying 2% growth year over year at the midpoint [26] - Full year guidance for fiscal year 2026 remains between $6,625 million and $6,875 million, reflecting 3% growth year over year [27] Other Important Information - The company ended Q1 with $4,530 million in deferred revenue, up 9% year over year [22] - Cash flow from operations reached a record $673 million in Q1 [25] - The company redeemed senior notes due in June 2025 for $757 million [25] Q&A Session Summary Question: All flash revenue growth has decelerated from double digits to just 5%. What is driving this? - Management indicated that softness in the U.S. Public sector and EMEA contributed to lower growth, but they anticipate improvement for the rest of the year [34][36] Question: What is the outlook for enterprise AI adoption? - Management reported strong momentum with over 125 AI wins in Q1, indicating a shift from proof of concept to production [40] Question: How does the availability of 128 terabyte QLC based NAND impact search solutions for AI applications? - Management stated that they have a broad range of NAND technologies available and do not feel gated by any specific technology [44] Question: What is the competitive landscape for all flash storage? - Management expressed confidence in their competitive position despite challenges in certain markets, noting that high-performance flash outgrew capacity flash year on year [110] Question: Can you elaborate on the gross margin guidance for public cloud business? - Management explained that improvements in gross margin are driven by depreciation roll-off and increased software content in revenue [57]

Financial Data and Key Metrics Changes - Record revenue for Q4 and fiscal year 2025 was $1,730 million, up 4% year over year and up 6% sequentially [21] - Q4 billings were $2,030 million, up 12% year over year, marking the sixth consecutive quarter of year-over-year revenue and billings growth [21] - Total revenue for fiscal year 2025 was $6,570 million, up 5% year over year, with billings at $6,780 million, up 8% year over year [27] - Q4 operating margin was 28.6%, up 50 basis points year over year, representing the highest for Q4 in the company's history [26] - EPS for Q4 was $1.93, up 7% year over year, driven by lower operating expenses and effective tax rate [26] Business Line Data and Key Metrics Changes - Hybrid cloud revenue for Q4 was $1,570 million, up 3% year over year [22] - Product revenue was $845 million, up 5% year over year, while support revenue was flat at $625 million [23] - Public cloud revenue was $164 million, up 8% year over year; excluding the divested SPOT business, it grew 22% year over year [23][29] - First-party and marketplace cloud storage services grew 44% year over year in Q4, comprising roughly 75% of public cloud segment revenue [12][23] Market Data and Key Metrics Changes - All flash array annualized revenue run rate grew 14% year over year to a record $4,100 million in Q4 [9] - The company gained almost 300 basis points of all flash market share in calendar 2024, more than any other vendor [10] - Public cloud revenue growth was 22% year over year in Q4, excluding the divested SPOT business, indicating strong underlying growth [50] Company Strategy and Development Direction - The company refreshed its entire systems portfolio and sharpened the focus on cloud services to lead in the enterprise AI market [7] - The strategy emphasizes investments in AI and data infrastructure modernization, cloud transformation, and cyber resilience [18][29] - The company plans to make prudent investments in R&D and sales capacity to drive ongoing innovation and capture additional market share [18] Management's Comments on Operating Environment and Future Outlook - The global macroeconomic outlook shows mixed signals with a general slowdown in growth and lingering inflation concerns [17] - The company expects some increased spending caution and ongoing friction in the US public sector and EMEA [17] - Management remains confident in the company's ability to capitalize on significant opportunities in the enterprise AI market [18] Other Important Information - The company exited fiscal year 2025 with $4,540 million in deferred revenue, an increase of 7% year over year [24] - Operating cash flow was $1,510 million, and free cash flow was $1,340 million, both metrics down due to changes in working capital [28] - The company announced an increase in share repurchase authorization by $1,100 million [27] Q&A Session Summary Question: Guidance for Q1 and full year - Management acknowledged Q1 guidance appears light but emphasized strong momentum and large deals in the pipeline for revenue and EPS growth throughout the year [36][39] Question: Execution and timing of deals - Management noted strong Q4 performance and addressed concerns about political instability and macroeconomic factors affecting customer spending [45][46] Question: AI infrastructure deals - Management confirmed ongoing work with large cloud and enterprise providers on data modernization transactions, contributing to FY '26 outlook [55][56] Question: Public cloud revenue performance - Public cloud revenue in Q4, excluding SPOT, was up 22% year on year, with expectations for continued acceleration in FY '26 [50][51] Question: Product gross margins outlook - Management expects product gross margins to improve gradually throughout the fiscal year, with Q1 margins anticipated to be flattish [41][75] Question: Public sector exposure - US public sector accounts for low teens percentage of business, with federal making up 75% to 80% of that, and management is optimistic about upcoming spending bills [104]