Dell Technologies Reports Fiscal Year 2020 Fourth Quarter and Full Year Financial Results
ROUND ROCK, Texas, Feb. 27, 2020 /PRNewswire/ --
News summary
-- Record full year revenue of $92.2 billion
-- Full year net income of $5.5 billion; adjusted EBITDA of $11.8 billion
-- Record Client Solutions Group full year revenue of $45.8 billion
-- Share repurchase program of up to $1 billion over the next 24 months
Full story
Dell Technologies (NYSE: DELL) announces financial results for its fiscal 2020 fourth quarter and full year.
Fourth quarter revenue was $24.0 billion, up 1 percent, and non-GAAP revenue was $24.1 billion, up 1 percent, over the same period last year. During the quarter, the company generated operating income of $717 million, a 117 percent increase over the same period in the prior year, and non-GAAP operating income of $2.8 billion, up 4 percent over the prior year. Net income was $416 million or approximately 2 percent of revenue. Non-GAAP net income was $1.7 billion or 7 percent of non-GAAP revenue. Diluted earnings per share was $0.54 and non-GAAP diluted earnings per share was $2.00.
For the full year, revenue was $92.2 billion, up 2 percent, and non-GAAP revenue was $92.5 billion, up 1 percent, over the prior year. The company increased its operating income to $2.6 billion from a $0.2 billion loss in the prior year and generated non-GAAP operating income of $10.1 billion, up 15 percent over the prior year. Cash flow from operations was $9.3 billion, up 33 percent from fiscal year 2019. For the full year, net income was $5.5 billion and non-GAAP net income was $6.1 billion. Diluted earnings per share was $6.03 and non-GAAP diluted earnings per share was $7.35.
"In fiscal 2020, we focused on integration and simplicity across our businesses and product portfolio to accelerate winning go-to-market solutions for our customers," said Jeff Clarke, chief operating officer, Dell Technologies. "With more than $180 billion in revenue over the past two years and significant investments in research, innovation and breadth of capability, we have a uniquely advantaged position heading into the next digital decade."
Fourth Quarter and Full Year Fiscal 2020 Financial Results
Three Months Ended Fiscal Year Ended
January 31, February 1, Change January 31, February 1, Change
2020 2019 2020
2019
---
(in millions, except percentages; unaudited)
Total net revenue $
24,032 $
23,841 1% $
92,154 $
90,621 2%
Operating income (loss) $
717 $
331 117% $
2,622 $
(191) NM
Net income (loss) $
416 $
(287) 245% $
5,529 $
(2,181) 354%
Non-GAAP net revenue $
24,129 $
24,008 1% $
92,501 $
91,324 1%
Non-GAAP operating income $
2,767 $
2,656 4% $
10,148 $
8,854 15%
Non-GAAP net income $
1,684 $
1,592 6% $
6,089 $
5,227 16%
Adjusted EBITDA $
3,201 $
3,028 6% $
11,787 $
10,296 14%
Information about Dell Technologies' use of non-GAAP financial information is provided under "Non-GAAP Financial Measures" below. All comparisons in this press release are year-over-year unless otherwise noted.
Dell Technologies ended the quarter with a cash and investments balance of $10.2 billion. The company repaid approximately $1.5 billion of gross debt in the quarter and $5 billion for the year, achieving its fiscal 2020 target. The company has paid down $19.5 billion in gross debt since closing the EMC transaction in September 2016.
"This year's results were driven by operational focus and expanding synergies across Dell Technologies and our ability to adjust to win in any environment," said Tom Sweet, chief financial officer, Dell Technologies. "We delivered full year net income of $5.5 billion and adjusted EBITDA of $11.8 billion in fiscal 2020. I'm pleased with our profitability and remain committed to maximizing Dell Technologies' equity value for all aligned shareholders."
The company also announced today a new share repurchase program of up to $1 billion over the next 24 months, effective immediately. While de-levering remains the primary capital allocation goal, the company sees an opportunity to take advantage of what it believes is a significant discount in the current stock price. This share repurchase plan is another lever the company will use as it continues to focus on creating value for shareholders.
Operating segments summary
Client Solutions Group revenue for the fourth quarter was $11.8 billion, up 8 percent year over year. This was driven by $8.6 billion in commercial revenue, a 10 percent increase, and $3.2 billion in consumer revenue, a 4 percent increase. Operating income was $624 million or approximately 5 percent of Client Solutions Group revenue. For the full year, the Client Solutions Group delivered record revenue of $45.8 billion, up 6 percent versus the prior year, with commercial up 11 percent. Client Solutions Group full year operating income was $3.1 billion.
Key highlights:
-- Shipped a record 46.5 million units during the 2019 calendar year(1)
-- Gained PC unit share for the last seven years in a row(1)
-- Achieved double-digit unit and revenue growth in commercial desktops and
workstations, completing a full fiscal year of quarterly double-digit
growth in the segment
Infrastructure Solutions Group revenue for the fourth quarter was $8.8 billion, down 11 percent. Storage revenue was $4.5 billion, down 3 percent, while servers and networking revenue was $4.3 billion, down 19 percent. Operating income for the group was $1.1 billion or approximately 13 percent of revenue. Revenue for full fiscal 2020 was $34.0 billion, with operating income of $4.0 billion.
Key highlights:
-- Gained 590 basis points of mainstream server revenue share over the last
3 years, and have been the #1 worldwide provider for 7 quarters(2)
-- Strong customer traction with our co-engineered ?first and best"
solutions, including Dell Technologies Cloud, Unified Workspace, VxRail
and smart fabric director
-- Announced the latest advancements to Dell Technologies Cloud, including
a new subscription-based model that makes it easier for customers to
accelerate hybrid cloud deployments and simplify IT operations
VMware revenue for the fourth quarter was $3.1 billion, with operating income of $1.0 billion. The segment delivered $10.9 billion in revenue and $3.1 billion in operating income for the full fiscal year. During the fourth quarter, VMware, Inc. acquired Pivotal Software, Inc. ("Pivotal"), and VMware's segment results are inclusive of Pivotal. Prior periods have been recast to conform with current period presentation.
Dell Technologies World
Join us May 4 - May 7 in Las Vegas at Dell Technologies World, the company's flagship event that brings together latest emerging trends, technology and gurus. During the event, experts from all of Dell Technologies businesses will demonstrate to customers and partners the connected ecosystem of IT infrastructure, applications, devices and security that can enable real transformation across their organizations. Register here.
Conference call information
As previously announced, the company will hold a conference call to discuss its fourth quarter and full year performance and financial guidance today, February 27, 2020, at 4:30 p.m. CST. The conference call will be broadcast live over the internet and can be accessed at https://investors.delltechnologies.com/events-and-presentations/upcoming-events
For those unable to listen to the live broadcast, an archived version will be available at the same location for one year.
A slide presentation containing additional financial and operating information may be downloaded from Dell Technologies' website at https://investors.delltechnologies.com/financial-information/quarterly-results.
About Dell Technologies
Dell Technologies (NYSE:DELL) helps organizations and individuals build their digital future and transform how they work, live and play. The company provides customers with the industry's broadest and most innovative technology and services portfolio for the data era.
Copyright © 2020 Dell Inc. or its subsidiaries. All Rights Reserved. Dell Technologies, Dell, EMC and Dell EMC are trademarks of Dell Inc. or its subsidiaries. Other trademarks may be trademarks of their respective owners.
1
IDC WW Quarterly Personal Computing Device (PDC) Tracker CY19Q4.
2
IDC WW Quarterly Server Tracker CY19Q3; share gains calculated on a trailing-twelve-months basis.
Non-GAAP Financial Measures:
This press release presents information about Dell Technologies' non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to non-controlling interests, non-GAAP net income attributable to Dell Technologies Inc. - basic, non-GAAP net income attributable to Dell Technologies Inc. - diluted, non-GAAP earnings per share attributable to Dell Technologies Inc. - basic, non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, EBITDA, and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America ("GAAP"). A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in the attached tables for each of the fiscal periods indicated.
Special Note on Forward-Looking Statements:
Statements in this press release that relate to future results and events are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933 and are based on Dell Technologies' current expectations, including its current expectations for fiscal 2021 GAAP and non-GAAP revenue, GAAP and non-GAAP operating income, and GAAP and non-GAAP earnings per share. In some cases, you can identify these statements by such forward-looking words as "anticipate," "believe," "confidence," "could," "estimate," "expect," "guidance," "intend," "may," "objective," "outlook," "plan," "project," "possible," "potential," "should," "will" and "would," or similar words or expressions that refer to future events or outcomes.
Dell Technologies' results or events in future periods could differ materially from those expressed or implied by these forward-looking statements because of risks, uncertainties, and other factors that include, but are not limited to, the following: competitive pressures; Dell Technologies' reliance on third-party suppliers for products and components, including reliance on single-source or limited-source suppliers; Dell Technologies' ability to achieve favorable pricing from its vendors; adverse global economic conditions and instability in financial markets; Dell Technologies' execution of its growth, business and acquisition strategies; the success of Dell Technologies' cost efficiency measures; Dell Technologies' ability to manage solutions and products and services transitions in an effective manner; Dell Technologies' ability to deliver high-quality products and services; Dell Technologies' foreign operations and ability to generate substantial non-U.S. net revenue; Dell Technologies' product, customer, and geographic sales mix, and seasonal sales trends; the performance of Dell Technologies' sales channel partners; access to the capital markets by Dell Technologies or its customers; weak economic conditions and additional regulation including tariffs and other effects of trade regulation; counterparty default risks; the loss by Dell Technologies of any services contracts with its customers, including government contracts, and its ability to perform such contracts at its estimated costs; Dell Technologies' ability to develop and protect its proprietary intellectual property or obtain licenses to intellectual property developed by others on commercially reasonable and competitive terms; infrastructure disruptions, cyberattacks, or other data security breaches; Dell Technologies' ability to hedge effectively its exposure to fluctuations in foreign currency exchange rates and interest rates; expiration of tax holidays or favorable tax rate structures, or unfavorable outcomes in tax audits and other tax compliance matters; impairment of portfolio investments; unfavorable results of legal proceedings; increased costs and additional regulations and requirements as a result of Dell Technologies' operation as a public company; Dell Technologies' ability to develop and maintain effective internal control over financial reporting; compliance requirements of changing environmental and safety laws; the effect of armed hostilities, terrorism, natural disasters, and public health issues; Dell Technologies' substantial level of indebtedness; the impact of the financial performance of VMware, Inc.; and the market volatility of Dell Technologies' pension plan assets.
This list of risks, uncertainties, and other factors is not complete. Dell Technologies discusses some of these matters more fully, as well as certain risk factors that could affect Dell Technologies' business, financial condition, results of operations, and prospects, in its reports filed with the SEC, including Dell Technologies' annual report on Form 10-K for the fiscal year ended February 1, 2019, quarterly reports on Form 10-Q, and current reports on Form 8-K. These filings are available for review through the SEC's website at www.sec.gov. Any or all forward-looking statements Dell Technologies makes may turn out to be wrong and can be affected by inaccurate assumptions Dell Technologies might make or by known or unknown risks, uncertainties and other factors, including those identified in this press release. Accordingly, you should not place undue reliance on the forward-looking statements made in this press release, which speak only as of its date. Dell Technologies does not undertake to update, and expressly disclaims any duty to update, its forward-looking statements, whether as a result of circumstances or events that arise after the date they are made, new information, or otherwise.
DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Income (Loss) and Related Financial Highlights
(in millions, except percentages; unaudited)
Three Months Ended
Fiscal Year Ended
January 31, February 1, Change January 31, February 1, Change
2020 2019 2020 2019
---
Net revenue (a):
Products $
18,153 $
18,676 (3)% $
69,918 $
70,751 (1)%
Services 5,879 5,165 14% 22,236 19,870 12%
Total net revenue 24,032 23,841 1% 92,154 90,621 2%
Cost of net revenue:
Products 13,999 14,775 (5)% 54,525 57,889 (6)%
Services 2,349 1,957 20% 8,696 7,679 13%
Total cost of net revenue 16,348 16,732 (2)% 63,221 65,568 (4)%
Gross margin 7,684 7,109 8% 28,933 25,053 15%
Operating expenses:
Selling, general, and 5,642 5,576 1% 21,319 20,640 3%
administrative
Research and development 1,325 1,202 10% 4,992 4,604 8%
Total operating expenses 6,967 6,778 3% 26,311 25,244 4%
Operating income (loss) 717 331 117% 2,622 (191)
NM
Interest and other, net (626) (606) (3)% (2,626) (2,170) (21)%
Income (loss) before income taxes 91 (275) 133% (4) (2,361) 100%
Income tax provision (benefit) (325) 12
NM (5,533) (180)
NM
Net income (loss) 416 (287) 245% 5,529 (2,181) 354%
Less: Net income attributable to 8 12 (33)% 913 129 608%
non-controlling interests
Net income (loss) attributable $
408 $
(299) 236% $
4,616 $
(2,310) 300%
to Dell Technologies Inc.
Percentage of Total Net Revenue:
---
Gross margin 32% 30% 31% 28%
Selling, general, and 23% 23% 23% 23%
administrative
Research and development 6% 5% 5% 5%
Operating expenses 29% 28% 29% 28%
Operating income (loss) 3% 1% 3% -%
Income (loss) before income -% (1)% -% (3)%
taxes
Net income (loss) 2% (1)% 6% (2)%
Income tax rate (357.1)% (4.4)% 138325.0% 7.6%
____________________
(a)
During the fourth quarter of Fiscal 2020, the Company reclassified revenue associated with certain service and software-as-
a-service offerings from product revenue to services revenue. There was no change to total revenue as a result of
the reclassifications. Prior period results have been recast to conform with current period presentation.
DELL TECHNOLOGIES INC.
Consolidated Statements of Financial Position
(in millions; unaudited)
January 31, 2020 February 1, 2019
---
ASSETS
Current assets:
Cash and cash equivalents $
9,302 $
9,676
Accounts receivable, net 12,484 12,371
Short-term financing receivables, net 4,895 4,398
Inventories, net 3,281 3,649
Other current assets 6,934 6,044
Total current assets 36,896 36,138
Property, plant, and equipment, net 6,027 5,259
Long-term investments 864 1,005
Long-term financing receivables, net 4,848 4,224
Goodwill 41,691 40,089
Intangible assets, net 18,107 22,270
Other non-current assets 10,428 2,835
Total assets $
118,861 $
111,820
LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Short-term debt $
7,737 $
4,320
Accounts payable 20,065 19,213
Accrued and other 9,359 8,495
Short-term deferred revenue 14,881 12,944
Total current liabilities 52,042 44,972
Long-term debt 44,319 49,201
Long-term deferred revenue 12,919 11,066
Other non-current liabilities 5,797 6,327
Total liabilities 115,077 111,566
Redeemable shares 629 1,196
Stockholders' equity (deficit):
Total Dell Technologies Inc. stockholders' deficit (1,574) (5,765)
Non-controlling interests 4,729 4,823
Total stockholders' equity (deficit) 3,155 (942)
Total liabilities, redeemable shares, and stockholders' equity (deficit) $
118,861 $
111,820
DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(in millions; unaudited)
Three Months Ended Fiscal Year Ended
January 31, February 1, January 31, February 1,
2020 2019 2020 2019
---
Cash flows from operating activities:
Net income (loss) $
416 $
(287) $
5,529 $
(2,181)
Adjustments to reconcile net income (loss) to net 3,092 2,653 3,762 9,172
cash provided by operating activities
Change in cash from operating activities 3,508 2,366 9,291 6,991
Cash flows from investing activities:
Investments:
Purchases (39) (13) (181) (925)
Maturities and sales 48 4,427 497 6,612
Capital expenditures (629) (297) (2,241) (1,158)
Capitalized software development costs (71) (93) (335) (339)
Acquisition of businesses, net (26) (419) (2,455) (912)
Divestitures of businesses, net - 142
Asset acquisitions, net - (8) (59)
Asset dispositions, net - (3) (12)
Other 13 5 40 40
Change in cash from investing activities (704) 3,610 (4,686) 3,389
Cash flows from financing activities:
Share repurchases for tax withholdings of equity (140) (136) (547) (387)
awards
Dividends paid to VMware, Inc.'s public - (2,134) (2,134)
stockholders
Proceeds from the issuance of common stock 207 37 658 805
Repurchases of Class V Common Stock - (14,000) (14,000)
Repurchases of common stock of subsidiaries (1,721) (55) (3,006) (56)
Proceeds from debt 2,982 6,602 20,638 13,045
Repayments of debt (3,326) (1,782) (22,274) (11,451)
Other (6) (17) (73) (151)
Change in cash from financing activities (2,004) (11,485) (4,604) (14,329)
Effect of exchange rate changes on cash, cash 10 73 (90) (189)
equivalents, and restricted cash
Change in cash, cash equivalents, and restricted cash 810 (5,436) (89) (4,138)
Cash, cash equivalents, and restricted cash at 9,341 15,676 10,240 14,378
beginning of the period
Cash, cash equivalents, and restricted cash at end of $
10,151 $
10,240 $
10,151 $
10,240
the period
DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued on next page)
Three Months Ended
Fiscal Year Ended
January 31, February 1, Change January 31, February 1, Change
2020 2019 2020 2019
---
Infrastructure Solutions Group (ISG):
---
Net Revenue:
Servers and networking $
4,269 $
5,253 (19)% $
17,127 $
19,953 (14)%
Storage 4,487 4,636 (3)% 16,842 16,767 -%
Total ISG net revenue $
8,756 $
9,889 (11)% $
33,969 $
36,720 (7)%
Operating Income:
ISG operating income $
1,112 $
1,265 (12)% $
4,001 $
4,151 (4)%
% of ISG net revenue 13% 13% 12% 11%
% of total reportable 40% 47% 39% 46%
segment operating income
Client Solutions Group (CSG):
---
Net Revenue:
Commercial $
8,563 $
7,808 10% $
34,277 $
30,893 11%
Consumer 3,207 3,084 4% 11,561 12,303 (6)%
Total CSG net revenue $
11,770 $
10,892 8% $
45,838 $
43,196 6%
Operating Income:
CSG operating income $
624 $
555 12% $
3,138 $
1,960 60%
% of CSG net revenue 5% 5% 7% 5%
% of total reportable 23% 21% 31% 22%
segment operating income
VMware (a):
---
Net Revenue:
Total VMware net revenue $
3,126 $
2,798 12% $
10,905 $
9,741 12%
Operating Income:
VMware operating income $
1,026 $
850 21% $
3,081 $
2,926 5%
% of VMware net revenue 33% 30% 28% 30%
% of total reportable 37% 32% 30% 32%
segment operating income
____________________
(a)
During the fourth quarter of Fiscal 2020, the Company reclassified Pivotal operating results from Other businesses to the
VMware reportable segment. There was no change to consolidated results as a result of the reclassification. Prior period
results have been recast to conform with current period presentation.
DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued)
Three Months Ended Fiscal Year Ended
January 31, February 1, January 31, February 1,
2020 2019 2020 2019
---
Reconciliation to consolidated net revenue:
---
Reportable segment net revenue (a) $
23,652 $
23,579 $
90,712 $
89,657
Other businesses (a) (b) 477 432 1,788 1,676
Unallocated transactions (c) - (3) 1 (9)
Impact of purchase accounting (d) (97) (167) (347) (703)
Total consolidated net revenue $
24,032 $
23,841 $
92,154 $
90,621
Reconciliation to consolidated operating income (loss):
---
Reportable segment operating income (a) $
2,762 $
2,670 $
10,220 $
9,037
Other businesses (a) (b) 5 (13) (43) (111)
Unallocated transactions (c) - (1) (29) (72)
Impact of purchase accounting (d) (112) (190) (411) (820)
Amortization of intangibles (1,074) (1,544) (4,408) (6,138)
Transaction-related expenses (e) (120) (313) (285) (750)
Stock-based compensation expense (f) (376) (247) (1,262) (918)
Other corporate expenses (g) (368) (31) (1,160) (419)
Total consolidated operating income (loss) $
717 $
331 $
2,622 $
(191)
_________________
(a)
During the fourth quarter of Fiscal 2020, the Company reclassified Pivotal operating results from Other businesses
to the VMware reportable segment. Prior period results have been recast to conform with current period presentation.
(b)
Secureworks, RSA Security, Virtustream, and Boomi constitute "Other businesses" and do not meet the requirements for a
reportable segment, either individually or collectively. The results of Other businesses are not material to the Company's
overall results.
(c)
Unallocated transactions includes other corporate items that are not allocated to Dell Technologies' reportable segments.
(d)
Impact of purchase accounting includes non-cash purchase accounting adjustments that are primarily related to the EMC
merger transaction.
(e)
Transaction-related expenses includes acquisition, integration, and divestiture related costs, as well as the costs incurred in the
Class V transaction.
(f)
Stock-based compensation expense consists of equity awards granted based on the estimated fair value of those awards at
grant date.
(g)
Other corporate expenses includes impairment charges and severance, facility action, and other costs.
SUPPLEMENTAL SELECTED NON-GAAP FINANCIAL MEASURES
These tables present information about the Company's non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to non-controlling interests, non-GAAP net income attributable to Dell Technologies Inc. - basic, non-GAAP net income attributable to Dell Technologies Inc. - diluted, non-GAAP earnings per share attributable to Dell Technologies Inc. - basic, non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, EBITDA, and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America ("GAAP"). A detailed discussion of Dell Technologies' reasons for including these non-GAAP financial measures, the limitations associated with these measures, the items excluded from these measures, and our reason for excluding those items are presented in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" in our periodic reports filed with the SEC. Dell Technologies encourages investors to review the non-GAAP discussion in these reports in conjunction with the presentation of non-GAAP financial measures.
DELL TECHNOLOGIES INC.
Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited)
Three Months Ended
Fiscal Year Ended
January 31, February 1, Change January 31, February 1, Change
2020 2019 2020 2019
---
Non-GAAP net revenue $
24,129 $
24,008 1% $
92,501 $
91,324 1%
Non-GAAP gross margin $
8,375 $
8,037 4% $
31,563 $
29,022 9%
% of non-GAAP net revenue 35% 33% 34% 32%
Non-GAAP operating expenses $
5,608 $
5,381 4% $
21,415 $
20,168 6%
% of non-GAAP net revenue 23% 22% 23% 22%
Non-GAAP operating income $
2,767 $
2,656 4% $
10,148 $
8,854 15%
% of non-GAAP net revenue 11% 11% 11% 10%
Non-GAAP net income $
1,684 $
1,592 6% $
6,089 $
5,227 16%
% of non-GAAP net revenue 7% 7% 7% 6%
Adjusted EBITDA $
3,201 $
3,028 6% $
11,787 $
10,296 14%
% of non-GAAP net revenue 13% 13% 13% 11%
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued on next page)
Three Months Ended
Fiscal Year Ended
January 31, February 1, Change January 31, February 1, Change
2020 2019 2020 2019
---
Net revenue $
24,032 $
23,841 1% $
92,154 $
90,621 2%
Non-GAAP adjustments:
Impact of purchase 97 167 347 703
accounting
Non-GAAP net revenue $
24,129 $
24,008 1% $
92,501 $
91,324 1%
Gross margin $
7,684 $
7,109 8% $
28,933 $
25,053 15%
Non-GAAP adjustments:
Amortization of intangibles 526 729 2,081 2,883
Impact of purchase accounting 98 171 353 720
Transaction-related expenses - (26) (5) 213
Stock-based compensation 38 37 129 91
expense
Other corporate expenses 29 17 72 62
Non-GAAP gross margin $
8,375 $
8,037 4% $
31,563 $
29,022 9%
Operating expenses $
6,967 $
6,778 3% $
26,311 $
25,244 4%
Non-GAAP adjustments:
Amortization of intangibles (548) (815) (2,327) (3,255)
Impact of purchase accounting (14) (19) (58) (100)
Transaction-related expenses (120) (339) (290) (537)
Stock-based compensation (338) (210) (1,133) (827)
expense
Other corporate expenses (339) (14) (1,088) (357)
Non-GAAP operating $
5,608 $
5,381 4% $
21,415 $
20,168 6%
expenses
Operating income (loss) $
717 $
331 117% $
2,622 $
(191)
NM
Non-GAAP adjustments:
Amortization of intangibles 1,074 1,544 4,408 6,138
Impact of purchase accounting 112 190 411 820
Transaction-related expenses 120 313 285 750
Stock-based compensation 376 247 1,262 918
expense
Other corporate expenses 368 31 1,160 419
Non-GAAP operating $
2,767 $
2,656 4% $
10,148 $
8,854 15%
income
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued)
Three Months Ended
Fiscal Year Ended
January 31, February 1, Change January 31, February 1, Change
2020 2019 2020 2019
---
Net income (loss) $
416 $
(287) 245% $
5,529 $
(2,181) 354%
Non-GAAP adjustments:
Amortization of intangibles 1,074 1,544 4,408 6,138
Impact of purchase accounting 112 190 411 820
Transaction-related expenses 120 387 285 824
Stock-based compensation 376 247 1,262 918
expense
Other corporate expenses 368 31 1,160 419
Fair value adjustments on (34) (113) (194) (342)
equity investments
Aggregate adjustment for (748) (407) (6,772) (1,369)
income taxes
Non-GAAP net income (a) $
1,684 $
1,592 6% $
6,089 $
5,227 16%
Net income (loss) $
416 $
(287) 245% $
5,529 $
(2,181) 354%
Adjustments:
Interest and other, net 626 606 2,626 2,170
Income tax provision (benefit) (325) 12 (5,533) (180)
Depreciation and amortization 1,535 1,940 6,143 7,746
EBITDA $
2,252 $
2,271 (1)% $
8,765 $
7,555 16%
EBITDA $
2,252 $
2,271 (1)% $
8,765 $
7,555 16%
Adjustments:
Stock-based compensation 376 247 1,262 918
expense
Impact of purchase 96 168 347 704
accounting
Transaction-related expenses 120 313 285 722
Other corporate expenses 357 29 1,128 397
Adjusted EBITDA $
3,201 $
3,028 6% $
11,787 $
10,296 14%
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Three Months Ended January 31, 2020
(in millions, except per share amounts; unaudited)
GAAP Amortization of Impact of Transaction- Stock-based Other Fair value Aggregate Non-
intangibles purchase related compensation Corporate adjustments adjustment GAAP
ccounting expenses expense expenses on equity for income
investments taxes
---
Net income $
416 1,074 112 120 376 368 (34) (748) $
1,684
Less: Net income attributable to non-controlling 8 76 6 32 65 45 (61) 171
interests (a)
Net income attributable to Dell Technologies Inc. 408 998 106 88 311 323 (34) (687) 1,513
- basic
Incremental dilution from VMware, Inc. (3) (8)
attributable to Dell Technologies Inc. (b)
Net income attributable to Dell Technologies Inc. $
405 $
1,505
- diluted
Earnings per share - basic $
0.56 $
2.06
Earnings per share - diluted $
0.54 $
2.00
Weighted-average shares outstanding - basic 734 734
Weighted-average shares outstanding - diluted 754 754
_________________
(a)
Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, Inc., Pivotal Software, Inc., and
SecureWorks Corp. by their non-GAAP net income adjustments for the period presented.
(b)
Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.'s dilutive securities on the diluted earnings per
share of Dell Technologies Inc. and is calculated by multiplying the difference between VMware, Inc.'s basic and diluted earnings per share by the number of shares of
VMware, Inc. common stock held by Dell Technologies Inc.
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Fiscal Year Ended January 31, 2020
(in millions, except per share amounts; unaudited)
GAAP Amortization of Impact of Transaction- Stock-based Other Fair value Aggregate Non-
intangibles purchase related compensation corporate adjustments adjustment GAAP
accounting expenses expense expenses on equity for income
investments taxes
---
Net income $
5,529 4,408 411 285 1,262 1,160 (194) (6,772) $
6,089
Less: Net income attributable to non-controlling 913 295 23 50 217 45 24 (1,032) 535
interests (a)
Net income attributable to Dell Technologies Inc. 4,616 4,113 388 235 1,045 1,115 (218) (5,740) 5,554
- basic
Incremental dilution from VMware, Inc. (84) (35)
attributable to Dell Technologies Inc. (b)
Net income attributable to Dell Technologies Inc. $
4,532 $
5,519
- diluted
Earnings per share - basic $
6.38 $
7.67
Earnings per share - diluted $
6.03 $
7.35
Weighted-average shares outstanding - basic 724 724
Weighted-average shares outstanding - diluted 751 751
_________________
(a)
Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, Inc., Pivotal Software, Inc., and
SecureWorks Corp. by their non-GAAP net income adjustments for the period presented.
(b)
Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.'s dilutive securities on the diluted earnings per
share of Dell Technologies Inc. and is calculated by multiplying the difference between VMware, Inc.'s basic and diluted earnings per share by the number of shares of
VMware, Inc. common stock held by Dell Technologies Inc.
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SOURCE Dell Technologies
