Remote Work and Learn Solutions Drive Dell Technologies' Third Quarter Fiscal 2021 Financial Results
ROUND ROCK, Texas, Nov. 24, 2020 /PRNewswire/ --
News summary
-- Third quarter total revenue up 3% to $23.5 billion
-- Record Client Solutions Group revenue of $12.3 billion, up 8%, operating
income of $1.0 billion
-- Diluted earnings per share up 64% to $1.08, non-GAAP diluted earnings
per share up 16% to $2.03
-- Operating income up 35% to $1.1 billion, non-GAAP operating income up
12% to $2.7 billion
Full story
Dell Technologies (NYSE: DELL) announces financial results for its fiscal 2021 third quarter. Revenue was up 3% to $23.5 billion. The company generated operating income of $1.1 billion, a 35% increase over the same period in the prior year, and non-GAAP operating income of $2.7 billion, up 12%. Net income was $881 million, non-GAAP net income was $1.7 billion and adjusted EBITDA was $3.2 billion. Net cash from operating activities was $3.0 billion. Diluted earnings per share was $1.08, up 64% and non-GAAP diluted earnings per share was $2.03, up 16%.
"Technology has never been more important, and as the world evolves, so does our business," said Jeff Clarke, vice chairman and chief operating officer, Dell Technologies. "We met unprecedented demand for remote work and learn solutions this quarter while increasing revenue to $23.5 billion. At the same time, we accelerated our as-a-Service strategy and hybrid cloud capabilities at the edge - positioning us to win in these growing markets and making it easy for customers to manage data and workloads across all their operations."
In October, at Dell Technologies World Experience, the company announced the expansion of its as-a-Service capabilities with Project APEX to simplify how customers and partners access technology on-demand - across storage, servers, networking, hyperconverged infrastructure, PCs and broader solutions. Project APEX will unify the company's as-a-Service and cloud strategies, technology offerings, and go-to-market efforts. Businesses will have a consistent as-a-Service experience wherever they run workloads including on-premises, edge locations and public clouds.
Third Quarter Fiscal 2021 Financial Results
Three Months Ended
Nine Months Ended
October 30, November 1, Change October 30, November 1, Change
2020 2019 2020 2019
(in millions, except per share amounts and percentages; unaudited)
Total net revenue $
23,482 $
22,844 3% $
68,112 $
68,122 -%
Operating income $
1,129 $
836 35% $
2,967 $
1,905 56%
Net income $
881 $
552 60% $
2,162 $
5,113 (58)%
Earnings per share - diluted $
1.08 $
0.66 64% $
2.64 $
5.50 (52)%
Non-GAAP net revenue $
23,521 $
22,928 3% $
68,241 $
68,372 -%
Non-GAAP operating income $
2,725 $
2,442 12% $
7,504 $
7,381 2%
Non-GAAP net income $
1,711 $
1,445 18% $
4,475 $
4,405 2%
Adjusted EBITDA $
3,231 $
2,857 13% $
8,938 $
8,586 4%
Non-GAAP earnings per share - $
2.03 $
1.75 16% $
5.28 $
5.35 (1)%
diluted
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 cash and investments of $13 billion and paid down $4.6 billion in debt during the quarter. The company had total deferred revenue of $28.7 billion as of quarter end, up 11% year-over-year. Recurring revenue, which includes deferred revenue amortization, utility and as-a-Service models was approximately $6 billion for the quarter, up 13% year-over-year.
"We delivered differentiated performance through our diversified portfolio and are leaning into growth opportunities while managing operating expenses in a disciplined way," said Tom Sweet, chief financial officer, Dell Technologies. "In the third quarter, we drove value by expanding profitability at a significant multiple of revenue and generated $3 billion in operating cash flow."
Operating segments summary
Client Solutions Group revenue for the third quarter was a record $12.3 billion. Operating income was a record $1.0 billion, up 36% and 8.2% of Client Solutions Group revenue. The company saw continued demand for remote work, learning and gaming solutions. Consumer revenue was $3.5 billion, up 14%, while commercial client revenue was $8.8 billion, up 5%.
Key highlights:
-- Consumer direct business up 47% with consumer direct online business up
62%, based on orders.
-- Strong performance with double-digit revenue growth in Latitude and
Precision notebooks and triple-digit revenue growth in Commercial
Chromebooks.
-- Strength in the XPS premium line and gaming systems including Alienware,
with strong double-digit revenue growth for both notebooks and desktops.
Infrastructure Solutions Group revenue for the third quarter was $8.0 billion, with customers continuing to direct more spending towards remote work and business continuity solutions. Storage revenue was $3.9 billion, while servers and networking revenue was $4.2 billion. Operating income was $882 million for the third quarter, or approximately 11% of Infrastructure Solutions Group revenue.
Key highlights:
-- Launch of new HCI, cloud, storage and data protection integration with
latest VMware releases to help customers innovate across edge locations,
data centers and hybrid clouds.
-- Continued strong demand for VxRail and PowerMax solutions, with
double-digit orders growth in both for the third straight quarter.
-- PowerEdge server orders up single digits sequentially.
VMware revenue was $2.9 billion for the third quarter, up 8% driven by broad-based strength across a diverse product portfolio. Operating income for the quarter was $837 million, or 28.9% of VMware revenue.
Conference call information
As previously announced, the Company will hold a conference call to discuss its third quarter performance today, November 24, 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.
Additional financial and operating information may be downloaded from 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.
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. The words "may," "will," "anticipate," "estimate," "expect," "intend," "plan," "aim," "seek," and similar expressions as they relate to Dell Technologies or its management are intended to identify these forward-looking statements.
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, including as a result of the COVID-19 pandemic; 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; effects of customer defaults or the exercise of customer rights on the ability of Dell Technologies to produce revenue under its contracts for services and solutions at expected levels and to perform such contracts at estimated costs; the loss by Dell Technologies of government contracts; 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; 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, climate change, and public health issues, including those relating to the COVID-19 pandemic; 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 January 31, 2020, 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 the date such statements are made. Dell Technologies does not undertake to update any forward-looking statement after the date as of which such statement was made, whether to reflect changes in circumstances or Dell Technologies' expectations, the occurrence of unanticipated events, or otherwise.
DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Income (Loss) and Related Financial Highlights
(in millions, except percentages; unaudited)
Three Months Ended
Nine Months Ended
October 30, November 1, Change October 30, November 1, Change
2020 2019 2020 2019
---
Net revenue (a):
Products $
17,352 $
17,275 -% $
50,127 $
51,765 (3)%
Services 6,130 5,569 10% 17,985 16,357 10%
Total net revenue 23,482 22,844 3% 68,112 68,122 -%
Cost of net revenue:
Products 13,789 13,558 2% 39,923 40,526 (1)%
Services 2,432 2,160 13% 6,919 6,347 9%
Total cost of net revenue 16,221 15,718 3% 46,842 46,873 -%
Gross margin 7,261 7,126 2% 21,270 21,249 -%
Operating expenses:
Selling, general, and administrative 4,772 5,028 (5)% 14,419 15,677 (8)%
Research and development 1,360 1,262 8% 3,884 3,667 6%
Total operating expenses 6,132 6,290 (3)% 18,303 19,344 (5)%
Operating income 1,129 836 35% 2,967 1,905 56%
Interest and other, net 273 (677) 140% (929) (2,000) 54%
Income (loss) before income taxes 1,402 159 782% 2,038 (95)
NM
Income tax provision (benefit) 521 (393) 233% (124) (5,208) 98%
Net income 881 552 60% 2,162 5,113 (58)%
Less: Net income attributable 49 53 (8)% 139 905 (85)%
to non-controlling interests
Net income attributable to $
832 $
499 67% $
2,023 $
4,208 (52)%
Dell Technologies Inc.
Percentage of Total Net Revenue:
---
Gross margin 31
% 31
% 31
% 31
%
Selling, general, and administrative 20
% 22
% 21
% 23
%
Research and development 6
% 6
% 6
% 5
%
Operating expenses 26
% 28
% 27
% 28
%
Operating income 5
% 4
% 4
% 3
%
Income (loss) before income taxes 6
% 1
% 3
% %
Net income 4
% 2
% 3
% 8
%
Income tax rate 37.2
% -247.2 -6.1
% 5482.1
% %
____________________
(a)
During 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)
October 30, 2020 January 31, 2020
---
ASSETS
Current assets:
Cash and cash equivalents $
11,304 $
9,302
Accounts receivable, net 11,377 12,484
Short-term financing receivables, net 4,872 4,895
Inventories, net 3,393 3,281
Other current assets 7,668 6,906
Total current assets 38,614 36,868
Property, plant, and equipment, net 6,344 6,055
Long-term investments 1,655 864
Long-term financing receivables, net 5,374 4,848
Goodwill 40,643 41,691
Intangible assets, net 15,257 18,107
Other non-current assets 11,061 10,428
Total assets $
118,948 $
118,861
LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $
6,536 $
7,737
Accounts payable 19,792 20,065
Accrued and other 8,715 9,773
Short-term deferred revenue 15,259 14,881
Total current liabilities 50,302 52,456
Long-term debt 43,325 44,319
Long-term deferred revenue 13,422 12,919
Other non-current liabilities 5,433 5,383
Total liabilities 112,482 115,077
Redeemable shares 527 629
Stockholders' equity (deficit):
Total Dell Technologies Inc. stockholders' equity (deficit) 883 (1,574)
Non-controlling interests 5,056 4,729
Total stockholders' equity 5,939 3,155
Total liabilities, redeemable shares, and stockholders' equity $
118,948 $
118,861
DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(in millions; unaudited)
Three Months Ended Nine Months Ended
---
October 30, November 1, October 30, November 1,
2020 2019 2020 2019
---
Cash flows from operating activities:
Net income $
881 $
552 $
2,162 $
5,113
Adjustments to reconcile net income to net cash 2,113 1,269 3,368 670
provided by (used in) operating activities:
Change in cash from operating activities 2,994 1,821 5,530 5,783
Cash flows from investing activities:
Purchases of investments (122) (72) (296) (142)
Maturities and sales of investments 27 19 98 449
Capital expenditures and capitalized software (480) (609) (1,584) (1,876)
development costs
Acquisition of businesses and assets, net (71) (2,053) (405) (2,437)
Divestitures of businesses and assets, net 2,067 2,187 (3)
Other 14 16 26 27
Change in cash from investing activities 1,435 (2,699) 26 (3,982)
Cash flows from financing activities:
Proceeds from the issuance of common stock 168 212 389 451
Repurchases of parent common stock - (2) (240) (6)
Repurchases of subsidiary common stock (a) (299) (283) (890) (1,686)
Proceeds from debt 2,925 5,455 14,772 17,656
Repayments of debt (7,024) (5,037) (17,244) (18,948)
Other (80) (23) (270) (67)
Change in cash from financing activities (4,310) 322 (3,483) (2,600)
Effect of exchange rate changes on cash, cash (15) (38) (67) (100)
equivalents, and restricted cash
Change in cash, cash equivalents, and restricted cash 104 (594) 2,006 (899)
Cash, cash equivalents, and restricted cash at beginning 12,053 9,935 10,151 10,240
of the period
Cash, cash equivalents, and restricted cash at end of the $
12,157 $
9,341 $
12,157 $
9,341
period
_________________
(a)
Subsidiary common stock repurchases are inclusive of employee tax withholding on stock-based compensation.
DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued on next page)
Three Months Ended
Nine Months Ended
October 30, November 1, Change October 30, November 1, Change
2020 2019 2020 2019
---
Infrastructure Solutions Group (ISG):
---
Net Revenue:
Servers and networking $
4,164 $
4,241 (2)% $
12,118 $
12,858 (6)%
Storage 3,860 4,149 (7)% 11,682 12,355 (5)%
Total ISG net revenue $
8,024 $
8,390 (4)% $
23,800 $
25,213 (6)%
Operating Income:
ISG operating income $
882 $
996 (11)% $
2,587 $
2,889 (10)%
% of ISG net revenue 11 12 11 11
% % % %
% of total reportable 32 41 35 39
% % % %
segment operating income
Client Solutions Group (CSG):
---
Net Revenue:
Commercial $
8,783 $
8,330 5% $
25,456 $
25,714 (1)%
Consumer 3,503 3,080 14% 9,137 8,354 9%
Total CSG net revenue $
12,286 $
11,410 8% $
34,593 $
34,068 2%
Operating Income:
CSG operating income $
1,002 $
739 36% $
2,309 $
2,514 (8)%
% of CSG net revenue 8 6 7 7
% % % %
% of total reportable 37 30 31 34
% % % %
segment operating income
VMware (a):
---
Net Revenue:
Total VMware net revenue $
2,893 $
2,671 8% $
8,556 $
7,779 10%
Operating Income:
VMware operating income $
837 $
709 18% $
2,504 $
2,055 22%
% of VMware net revenue 29 27 29 26
% % % %
% of total reportable 31 29 34 27
% % % %
segment operating income
____________________
(a)
During 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 Nine Months Ended
---
October 30, November 1, October 30, November 1,
2020 2019 2020 2019
---
Reconciliation to consolidated net revenue:
---
Reportable segment net revenue (a) $
23,203 $
22,471 $
66,949 $
67,060
Other businesses (a) (b) 314 456 1,288 1,311
Unallocated transactions (c) 4 1 4 1
Impact of purchase accounting (d) (39) (84) (129) (250)
Total consolidated net revenue $
23,482 $
22,844 $
68,112 $
68,122
Reconciliation to consolidated operating income:
---
Reportable segment operating income (a) $
2,721 $
2,444 $
7,400 $
7,458
Other businesses (a) (b) 3 105 (48)
Unallocated transactions (c) 1 (2) (1) (29)
Impact of purchase accounting (d) (49) (96) (165) (299)
Amortization of intangibles (845) (1,057) (2,547) (3,334)
Transaction-related expenses (e) (52) (76) (211) (165)
Stock-based compensation expense (f) (436) (322) (1,219) (886)
Other corporate expenses (g) (214) (55) (395) (792)
Total consolidated operating income $
1,129 $
836 $
2,967 $
1,905
_________________
(a)
During 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, Virtustream, and Boomi constitute "Other businesses" and do not meet the requirements for a reportable
segment, either individually or collectively. The Company completed the sale of RSA Security on September 1, 2020;
prior to divestiture, RSA Security's operating results were also included in Other Businesses and did not meet the
requirements for a reportable segment. 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.
(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, 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 per share amounts and percentages; unaudited)
Three Months Ended
Nine Months Ended
October 30, November 1, Change October 30, November 1, Change
2020 2019 2020 2
019
Non-GAAP net revenue $
23,521 $
22,928 3% $
68,241 $
68,372 -%
Non-GAAP gross margin $
7,771 $
7,768 -% $
22,722 $
23,188 (2)%
% of non-GAAP net revenue 33 34 33 34
% % % %
Non-GAAP operating expenses $
5,046 $
5,326 (5)% $
15,218 $
15,807 (4)%
% of non-GAAP net revenue 21 23 22 23
% % % %
Non-GAAP operating income $
2,725 $
2,442 12% $
7,504 $
7,381 2%
% of non-GAAP net revenue 12 11 11 11
% % % %
Non-GAAP net income $
1,711 $
1,445 18% $
4,475 $
4,405 2%
% of non-GAAP net revenue 7 6 7 6
% % % %
Adjusted EBITDA $
3,231 $
2,857 13% $
8,938 $
8,586 4%
% of non-GAAP net revenue 14 12 13 13
% % % %
Non-GAAP earnings per share - $
2.03 $
1.75 16% $
5.28 $
5.35 (1)%
diluted
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued on next page)
Three Months Ended
Nine Months Ended
October 30, November 1, Change October 30, November 1, Change
2020 2019 2020 2019
---
Net revenue $
23,482 $
22,844 3% $
68,112 $
68,122 -%
Non-GAAP adjustments:
Impact of purchase 39 84 129 250
accounting
Non-GAAP net revenue $
23,521 $
22,928 3% $
68,241 $
68,372 -%
Gross margin $
7,261 $
7,126 2% $
21,270 $
21,249 -%
Non-GAAP adjustments:
Amortization of intangibles 375 517 1,122 1,555
Impact of purchase 40 86 134 255
accounting
Transaction-related expenses - (5)
Stock-based compensation 51 33 141 91
expense
Other corporate expenses 44 6 55 43
Non-GAAP gross margin $
7,771 $
7,768 -% $
22,722 $
23,188 (2)%
Operating expenses $
6,132 $
6,290 (3)% $
18,303 $
19,344 (5)%
Non-GAAP adjustments:
Amortization of intangibles (470) (540) (1,425) (1,779)
Impact of purchase (9) (10) (31) (44)
accounting
Transaction-related expenses (52) (76) (211) (170)
Stock-based compensation (385) (289) (1,078) (795)
expense
Other corporate expenses (170) (49) (340) (749)
Non-GAAP operating $
5,046 $
5,326 (5)% $
15,218 $
15,807 (4)%
expenses
Operating income $
1,129 $
836 35% $
2,967 $
1,905 56%
Non-GAAP adjustments:
Amortization of intangibles 845 1,057 2,547 3,334
Impact of purchase 49 96 165 299
accounting
Transaction-related expenses 52 76 211 165
Stock-based compensation 436 322 1,219 886
expense
Other corporate expenses 214 55 395 792
Non-GAAP operating $
2,725 $
2,442 12% $
7,504 $
7,381 2%
income
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued)
Three Months Ended Nine Months Ended
October 30, November 1, Change October 30, November 1, Change
2020 2019 2020 2019
---
Net income $
881 $
552 60% $
2,162 $
5,113 (58)%
Non-GAAP adjustments:
Amortization of intangibles 845 1,057 2,547 3,334
Impact of purchase accounting 49 96 165 299
Transaction-related expenses (286) 76 (247) 165
Stock-based compensation 436 322 1,219 886
expense
Other corporate expenses 106 55 287 792
Fair value adjustments on (489) (18) (591) (160)
equity investments
Aggregate adjustment for 169 (695) (1,067) (6,024)
income taxes
Non-GAAP net income $
1,711 $
1,445 18% $
4,475 $
4,405 2%
Net income $
881 $
552 60% $
2,162 $
5,113 (58)%
Adjustments:
Interest and other, net (273) 677 929 2,000
Income tax benefit 521 (393) (124) (5,208)
Depreciation and amortization 1,361 1,494 4,017 4,608
EBITDA $
2,490 $
2,330 7% $
6,984 $
6,513 7%
EBITDA $
2,490 $
2,330 7% $
6,984 $
6,513 7%
Adjustments:
Stock-based compensation 436 322 1,219 886
expense
Impact of purchase 39 84 129 251
accounting
Transaction-related expenses 52 76 211 165
Other corporate expenses 214 45 395 771
Adjusted EBITDA $
3,231 $
2,857 13% $
8,938 $
8,586 4%
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Three Months Ended October 30, 2020
(in millions, except per share amounts; unaudited)
GAAP Amortization Impact of Transaction- Stock-based Other Fair value Aggregate Non-
of intangibles purchase related compensation corporate adjustment GAAP
accounting expenses expense expenses adjustments for income
on equity
investments taxes
Net income $
881 845 49 (286) 436 106 (489) 169 $
1,711
Less: Net income attributable to non-controlling 49 63 3 5 61 9 (34) (13) 143
interests (a)
Net income attributable to Dell Technologies Inc. - 832 782 46 (291) 375 97 (455) 182 1,568
basic
Incremental dilution from VMware, Inc. attributable (3) (4)
to Dell Technologies Inc. (b)
Net income attributable to Dell Technologies Inc. - $
829 $
1,564
diluted
Earnings per share - basic $
1.11 $
2.10
Earnings per share - diluted $
1.08 $
2.03
Weighted-average shares outstanding - basic 747 747
Weighted-average shares outstanding - diluted 771 771
_________________
(a)
Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, 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 Nine Months Ended October 30, 2020
(in millions, except per share amounts; unaudited)
GAAP Amortization Impact of Transaction- Stock-based Other Fair value Aggregate Non-
of intangibles purchase related compensation corporate adjustments GAAP
accounting expenses expense expenses on equity adjustment
investments
for income t
axes
Net income $
2,162 2,547 165 (247) 1,219 287 (591) (1,067) $
4,475
Less: Net income attributable to non-controlling 139 187 10 20 172 9 (35) (77) 425
interests (a)
Net income attributable to Dell Technologies Inc. - 2,023 $
2,360 $
155 $
(267) $
1,047 $
278 $
(556) $
(990) 4,050
basic
Incremental dilution from VMware, Inc. attributable (8) (13)
to Dell Technologies Inc. (b)
Net income attributable to Dell Technologies Inc. - $
2,015 $
4,037
diluted
Earnings per share - basic $
2.73 $
5.46
Earnings per share - diluted $
2.64 $
5.28
Weighted-average shares outstanding - basic 742 742
Weighted-average shares outstanding - diluted 764 764
_________________
(a)
Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, 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 Three Months Ended November 1, 2019
(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 $
552 1,057 96 76 322 55 (18) (695) $
1,445
Less: Net income attributable to non-controlling 53 75 5 13 55 (50) (27) 124
interests (a)
Net income attributable to Dell Technologies Inc. - 499 982 91 63 267 55 32 (668) 1,321
basic
Incremental dilution from VMware, Inc. attributable (6) (6)
to Dell Technologies Inc. (b)
Net income attributable to Dell Technologies Inc. - $
493 $
1,315
diluted
Earnings per share - basic $
0.69 $
1.82
Earnings per share - diluted $
0.66 $
1.75
Weighted-average shares outstanding - basic 725 725
Weighted-average shares outstanding - diluted 750 750
_________________
(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 Nine Months Ended November 1, 2019
(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 $
5,113 3,334 299 165 886 792 (160) (6,024) $
4,405
Less: Net income attributable to non-controlling 905 219 17 18 152 24 (971) 364
interests (a)
Net income attributable to Dell Technologies Inc. - 4,208 3,115 282 147 734 792 (184) (5,053) 4,041
basic
Incremental dilution from VMware, Inc. attributable (81) (25)
to Dell Technologies Inc. (b)
Net income attributable to Dell Technologies Inc. - $
4,127 $
4,016
diluted
Earnings per share - basic $
5.84 $
5.61
Earnings per share - diluted $
5.50 $
5.35
Weighted-average shares outstanding - basic 720 720
Weighted-average shares outstanding - diluted 750 750
_________________
(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.
View original content:http://www.prnewswire.com/news-releases/remote-work-and-learn-solutions-drive-dell-technologies-third-quarter-fiscal-2021-financial-results-301179997.html
SOURCE Dell Technologies
