Dell Technologies Reports Fiscal Year 2018 Fourth Quarter and Full Year Financial Results

Dell Technologies Reports Fiscal Year 2018 Fourth Quarter and Full Year Financial Results

ROUND ROCK, Texas, March 8, 2018 /PRNewswire/ --

News summary

    --  Strong velocity with record revenue of $21.9 billion for the fourth
        quarter, up 9 percent
    --  $6.8 billion cash flow from operations for the full year and paid $10
        billion of debt since EMC transaction close
    --  Exited the fiscal year with growth across all segments; strong customer
        acceptance across the Dell Technologies portfolio
    --  Leader in 21 of the top market share categories

Full story

Dell Technologies (NYSE: DVMT) announces its fiscal 2018 fourth quarter and full year results. For the fourth quarter, consolidated revenue was $21.9 billion, up 9 percent, and non-GAAP revenue was $22.2 billion, up 8 percent from the prior period. During the quarter, the company generated a GAAP operating loss of $321 million(1), with a non-GAAP operating income of $2.1 billion, up 15 percent.

For the full year, consolidated revenue was $78.7 billion and non-GAAP revenue was $79.9 billion. The company generated an annual GAAP operating loss of $3.3 billion, with a non-GAAP operating income of $6.9 billion.

"I was pleased with our results in fiscal 2018. We finished the year with good revenue and profitability momentum, with non-GAAP operating income up 15 percent year-over-year," said Tom Sweet, chief financial officer, Dell Technologies. "We drove velocity at or above market rate in multiple areas of the business and generated strong operating cash flow as we brought the full capabilities of Dell Technologies together. In fiscal 2019 we'll continue to execute our long-term strategy, capitalizing on our broad portfolio of solutions for customers at every stage of the digital transformation journey."

The company ended the year with a cash and investments balance of $20.3 billion, an increase of $2.3 billion from the third quarter and an increase of $5.0 billion from last year. Since closing the EMC transaction, Dell Technologies has paid down approximately $10 billion in gross debt, excluding Dell Financial Services debt.

Fiscal year 2018 fourth quarter and full year results


                                                   Three Months Ended                                                                         Fiscal Year Ended
                                                   ------------------                                                                         -----------------

                                                    February 2, 2018                                               February 3, 2017           Change            February 2, 2018            February 3, 2017             Change
                                                    ----------------                                               ----------------           ------            ----------------            ----------------             ------

                                                                      (in millions, except percentages; unaudited)


    Net revenue                                                               $21,935                                                 $20,074              9 %                      $78,660                      $61,642            28 %

    Operating loss                                                             $(321)                                               $(1,668)            81 %                     $(3,333)                    $(3,252)           (2)%

    Net loss from continuing operations                                        $(553)                                               $(1,414)            61 %                     $(3,855)                    $(3,737)           (3)%


    Non-GAAP net revenue                                                      $22,219                                                 $20,581              8 %                      $79,929                      $62,822            27 %

    Non-GAAP operating income                                                  $2,120                                                  $1,843             15 %                       $6,855                       $5,113            34 %

    Non-GAAP net income from continuing operations                             $1,097                                                  $1,091              1 %                       $3,660                       $2,687            36 %

    Adjusted EBITDA                                                            $2,466                                                  $2,184             13 %                       $8,217                       $5,941            38 %

Dell Technologies' fiscal year 2017 included an additional week, which is incorporated into the company's fourth quarter results for FY2017. Fourth quarter fiscal 2018 non-GAAP operating income excludes approximately $2.4 billion of adjustments, and full year fiscal 2018 non-GAAP operating income excludes approximately $10.2 billion of adjustments, primarily related to purchase accounting and amortization of intangible assets.

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.

"We exited the year with growth across all of our segments, with particular strength in commercial client and in servers and networking. In addition, we saw demand growth up double digits for all-flash and triple digits for hyper-converged infrastructure in the fourth quarter, and we see a significant opportunity to ignite momentum in traditional storage in fiscal 2019," said Jeff Clarke, vice-chairman, Products & Operations, Dell Technologies. "With our industry leadership, innovation and laser-like focus on making our solutions easy to buy and own, we'll continue in fiscal year 2019 to deliver on the commitments we make to customers."

Operating segments summary

Client Solutions Group revenue for the fiscal fourth quarter was $10.6 billion, up 8 percent versus the fourth quarter of last year. Commercial revenue grew 9 percent to $7.3 billion and Consumer revenue was up 6 percent to $3.3 billion. Revenue for the full year was $39.5 billion. Operating income for the fourth quarter was $581 million, a 70 percent increase, and was $2.2 billion for the full year.

Key fourth quarter highlights include:

    --  Year-over-year worldwide PC share growth for 20(th) consecutive
        quarter(2)
    --  No. 1 share position worldwide for displays, gaining unit share year
        over year for the 18(th) consecutive quarter(3)
    --  Record holiday season sales for consumer and gaming products
    --  Record-high 87 product awards at the Consumer Electronics Show

Infrastructure Solutions Group revenue for the fourth quarter was $8.8 billion, a 5 percent increase. This was driven by $4.6 billion in servers and networking, a 27 percent increase, and $4.2 billion in storage. Revenue for the full year was $30.7 billion, with servers and networking revenue at $15.4 billion and storage revenue at $15.3 billion. Operating income was $748 million for the fourth quarter and $2.2 billion for the full year.

Key fourth quarter highlights:

    --  Third consecutive quarter of record server revenue, fueled by
        double-digit growth for both PowerEdge and Cloud servers
    --  Worldwide leader for x86 servers in calendar fourth quarter, both in
        units and revenue(4)
    --  No. 1 market share position in all-flash arrays(4)
    --  Demand for all-flash offerings exited fiscal 2018 at a nearly $5 billion
        run rate

VMware revenue for the fourth quarter was $2.3 billion, up 20 percent, with operating income of $834 million, up 48 percent, and 35.8 percent of revenue.

Fourth quarter revenue from other businesses, including Pivotal, RSA, Secureworks and Virtustream, was $492 million, up 3 percent.

Conference call information

As previously announced, the company will hold a conference call to discuss its fourth quarter and full-year performance today at 7 a.m. CDT. The conference call will be broadcast live over the internet and can be accessed at investors.delltechnologies.com. 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 investors.delltechnologies.com.

Dell Technologies World

Join us April 30 - May 3 in Las Vegas at Dell Technologies World, the company's flagship event that brings together latest emerging trends, technology and gurus, from the edge to the core to the cloud. During the event, experts from all seven 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. Learn more at www.delltechnologiesworld.com.

About Dell Technologies

Dell Technologies is a unique family of businesses that provides the essential infrastructure for organizations to build their digital future, transform IT and protect their most important asset, information. The company services customers of all sizes across 180 countries - ranging from 99 percent of the Fortune 500 to individual consumers - with the industry's most comprehensive and innovative portfolio from the edge to the core to the cloud.

Copyright © 2018 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 Due to the EMC transaction as well as the Dell going-private transaction, significant non-cash bridging items will remain between GAAP and non-GAAP results for the next few years. Prior-year historical Dell Technologies financials do not include EMC historical results for the first and second quarters and a portion of the third quarter in fiscal 2017, thereby impacting any year-over-year comparisons for the full year. EMC results are included for the full fourth quarter of Fiscal 2017, thereby year-over-year results are comparable for the fourth quarter.
2 IDC WW Quarterly Personal Computing Device (PCD) Tracker CY17Q4
3 DisplaySearch Desktop Monitor Market Tracker CY17Q3
4 IDC WW Quarterly Server Tracker CY17Q4

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 from continuing operations, 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 of the foregoing historical non-GAAP financial measures to the most directly comparable historical GAAP financial measures 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. 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; 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; the impact of the financial performance of VMware; 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 the Dell Technologies' business, financial condition, results of operations, and prospects, in its reports filed with the Securities and Exchange Commission, including Dell Technologies' Annual Report on Form 10-K for the fiscal year ended February 3, 2017, quarterly reports on Form 10-Q, and current reports on Form 8-K. These filings are available for review through the Securities and Exchange Commission'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 per share amounts and percentages; unaudited)


                                                                                Three Months Ended                                                                             Fiscal Year Ended
                                                                                ------------------                                                                             -----------------

                                                                                 February 2, 2018                         February 3, 2017                                     Change            February 2, 2018            February 3, 2017             Change
                                                                                 ----------------                         ----------------                                     ------            ----------------            ----------------             ------

    Net revenue:

    Products                                                                                       $16,798                                         $15,196                                 11 %                      $58,801                      $48,706              21 %

    Services                                                                                         5,137                                           4,878                                  5 %                       19,859                       12,936              54 %

    Total net revenue                                                                               21,935                                          20,074                                  9 %                       78,660                       61,642              28 %
                                                                                                    ------                                          ------                                                            ------                       ------


    Cost of net revenue:

    Products                                                                                        14,009                                          13,313                                  5 %                       50,215                       42,169              19 %

    Services                                                                                         2,146                                           2,230                                 (4)%                        8,391                        6,514              29 %

    Total cost of net revenue                                                                       16,155                                          15,543                                  4 %                       58,606                       48,683              20 %
                                                                                                    ------                                          ------                                                            ------                       ------


    Gross margin                                                                                     5,780                                           4,531                                 28 %                       20,054                       12,959              55 %


    Operating expenses:

    Selling, general, and administrative                                                             5,014                                           4,928                                  2 %                       19,003                       13,575              40 %

    Research and development                                                                         1,087                                           1,271                                (14)%                        4,384                        2,636              66 %

    Total operating expenses                                                                         6,101                                           6,199                                 (2)%                       23,387                       16,211              44 %
                                                                                                     -----                                           -----                                                            ------                       ------


    Operating loss                                                                                   (321)                                        (1,668)                                81 %                      (3,333)                     (3,252)             (2)%


    Interest and other, net                                                                          (555)                                          (742)                                25 %                      (2,355)                     (2,104)            (12)%
                                                                                                      ----                                            ----                                                            ------                       ------

    Loss from continuing operations before income taxes                                              (876)                                        (2,410)                                64 %                      (5,688)                     (5,356)             (6)%

    Income tax benefit                                                                               (323)                                          (996)                                68 %                      (1,833)                     (1,619)            (13)%
                                                                                                      ----                                            ----                                                            ------                       ------

    Net loss from continuing operations                                                              (553)                                        (1,414)                                61 %                      (3,855)                     (3,737)             (3)%

    Income from discontinued operations, net of income taxes                                             -                                          1,144                               (100)%                            -                       2,019            (100)%

    Net loss                                                                                         (553)                                          (270)                              (105)%                      (3,855)                     (1,718)           (124)%

    Less: Net loss attributable to non-controlling interests                                          (42)                                           (34)                               (24)%                        (127)                        (46)           (176)%

    Net loss attributable to Dell Technologies Inc.                                                 $(511)                                         $(236)                              (117)%                     $(3,728)                    $(1,672)           (123)%
                                                                                                     =====                                           =====                                                           =======                      =======


    Earnings (loss) per share attributable to Dell Technologies Inc. - basic:

    Continuing operations - Class V Common Stock - basic                                           $(1.12)                                          $0.64                                                             $1.41                        $1.44

    Continuing operations - DHI Group - basic                                                      $(0.51)                                        $(2.68)                                                          $(7.08)                     $(8.52)

    Discontinued operations - DHI Group - basic                                      $                   -                                          $2.02                                              $                  -                       $4.30


    Earnings (loss) per share attributable to Dell Technologies Inc. - diluted:

    Continuing operations - Class V Common Stock - diluted                                         $(1.12)                                          $0.64                                                             $1.39                        $1.43

    Continuing operations - DHI Group - diluted                                                    $(0.51)                                        $(2.68)                                                          $(7.08)                     $(8.52)

    Discontinued operations - DHI Group - diluted                                    $                   -                                          $2.02                                              $                  -                       $4.30


    Weighted-average shares outstanding:

    Basic - Class V Common Stock                                                                       199                                             215                                                               203                          217

    Diluted - Class V Common Stock                                                                     199                                             215                                                               203                          217

    Basic - DHI Group                                                                                  568                                             566                                                               567                          470

    Diluted - DHI Group                                                                                568                                             566                                                               567                          470


    Percentage of Total Net Revenue:
    --------------------------------

    Gross margin                                                                                      26 %                                           23 %                                                             25 %                        21 %

    Selling, general, and administrative                                                              23 %                                           25 %                                                             24 %                        22 %

    Research and development                                                                           5 %                                            6 %                                                              6 %                         4 %

    Operating expenses                                                                                28 %                                           31 %                                                             30 %                        26 %

    Operating loss                                                                                    (1)%                                           (8)%                                                             (4)%                        (5)%

    Loss from continuing operations before income taxes                                               (4)%                                          (12)%                                                             (7)%                        (9)%

    Net loss from continuing operations                                                               (3)%                                           (7)%                                                             (5)%                        (6)%


    Income tax rate                                                                                   37 %                                           41 %                                                             32 %                        30 %


                                                     DELL TECHNOLOGIES INC.

                                         Consolidated Statements of Financial Position

                                                    (in millions; unaudited)


                                                    February 2, 2018                       February 3, 2017
                                                    ----------------                       ----------------

                                                           ASSETS

    Current assets:

    Cash and cash equivalents                                               $13,942                           $9,474

    Short-term investments                                                    2,187                            1,975

    Accounts receivable, net                                                 11,177                            9,420

    Short-term financing
     receivables, net                                                         3,919                            3,222

    Inventories, net                                                          2,678                            2,538

    Other current assets                                                      5,054                            4,144

      Total current assets                                                   38,957                           30,773

    Property, plant, and
     equipment, net                                                           5,390                            5,653

    Long-term investments                                                     4,163                            3,802

    Long-term financing
     receivables, net                                                         3,724                            2,651

    Goodwill                                                                 39,920                           38,910

    Intangible assets, net                                                   28,265                           35,053

    Other non-current assets                                                  1,862                            1,364


    Total assets                                                           $122,281                         $118,206
                                                                           ========                         ========


                                  LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY

    Current liabilities:

    Short-term debt                                                          $7,873                           $6,329

    Accounts payable                                                         18,334                           14,422

    Accrued and other                                                         7,661                            7,119

    Short-term deferred revenue                                              12,024                           10,265

       Total current liabilities                                             45,892                           38,135

    Long-term debt                                                           43,998                           43,061

    Long-term deferred revenue                                               10,223                            8,431

    Other non-current liabilities                                             6,797                            9,339
                                                                              -----                            -----

    Total liabilities                                                       106,910                           98,966
                                                                            -------                           ------


    Redeemable shares                                                           384                              231

    Stockholders' equity:

    Total Dell Technologies Inc.
     stockholders' equity                                                     9,326                           13,243

    Non-controlling interests                                                 5,661                            5,766
                                                                              -----

    Total stockholders' equity                                               14,987                           19,009

    Total liabilities, redeemable
     shares, and stockholders'
     equity                                                                $122,281                         $118,206
                                                                           ========                         ========


                                                                                                   DELL TECHNOLOGIES INC.

                                                                                       Condensed Consolidated Statements of Cash Flows

                                                                                                  (in millions; unaudited)


                                                                 Three Months Ended                                   Fiscal Year Ended
                                                                 ------------------                                   -----------------

                                                                  February 2, 2018                                     February 3, 2017          February 2, 2018            February 3, 2017
                                                                  ----------------                                     ----------------          ----------------            ----------------

    Cash flows from operating activities:

    Net loss                                                                         $(553)                                              $(270)                   $(3,855)                    $(1,718)

    Adjustments to reconcile net loss to net cash provided by
     operating activities                                                             3,684                                                1,010                      10,665                        4,027


    Change in cash from operating activities                                          3,131                                                  740                       6,810                        2,309
                                                                                      -----                                                  ---                       -----                        -----

    Cash flows from investing activities:

    Investments:

     Purchases                                                                        (935)                                               (267)                    (4,389)                       (778)

     Maturities and sales                                                               885                                                  612                       3,878                        1,173

    Capital expenditures                                                              (310)                                               (282)                    (1,212)                       (699)

    Proceeds from sale of facilities, land, and other assets                              -                                                   -                          -                          24

    Capitalized software development costs                                             (88)                                               (122)                      (369)                       (207)

    Collections on purchased financing receivables                                        5                                                    4                          30                           35

    Acquisition of businesses, net                                                    (435)                                                (15)                      (658)                    (37,629)

    Divestitures of businesses, net                                                       -                                               6,873                           -                       6,873

    Asset acquisitions, net                                                             (1)                                                   -                       (96)                           -

    Asset dispositions, net                                                             (6)                                                   -                       (59)                           -

    Other                                                                               (6)                                                   -                        (6)                        (48)
                                                                                        ---                                                  ---                        ---                          ---

    Change in cash from investing activities                                          (891)                                               6,803                     (2,881)                    (31,256)
                                                                                       ----                                                -----                      ------                      -------

    Cash flows from financing activities:

    Payment of dissenting shares obligation                                               -                                                   -                          -                       (446)

    Share repurchases for tax withholdings on vesting of equity
     awards                                                                            (86)                                                (65)                      (385)                        (93)

    Proceeds from the issuance of DHI Group Common Stock                                  -                                                  18                           -                       4,422

    Proceeds from the issuance of common stock of subsidiaries                           21                                                   63                         131                          164

    Repurchases of DHI Group Common Stock                                                 -                                                   -                        (6)                        (10)

    Repurchases of Class V Common Stock                                                 (1)                                               (569)                      (723)                       (701)

    Repurchases of common stock of subsidiaries                                       (169)                                                   -                      (724)                       (611)

    Payments for debt issuance costs                                                    (4)                                                 (4)                       (48)                       (853)

    Proceeds from debt                                                                1,247                                                  907                      14,439                       46,893

    Repayments of debt                                                              (1,140)                                             (7,322)                   (12,321)                    (16,960)

    Other                                                                                 -                                                   6                           1                           16


    Change in cash from financing activities                                          (132)                                             (6,966)                        364                       31,821
                                                                                       ----                                               ------                         ---                       ------


    Effect of exchange rate changes on cash and cash equivalents                        128                                                  (7)                        175                           24


    Change in cash and cash equivalents                                               2,236                                                  570                       4,468                        2,898


    Cash and cash equivalents at beginning of period, including
     amounts held for sale                                                           11,706                                                8,904                       9,474                        6,576


    Cash and cash equivalents at end of the period                                  $13,942                                               $9,474                     $13,942                       $9,474
                                                                                    =======                                               ======                     =======                       ======


                                                                                                                                                                                          DELL TECHNOLOGIES INC.

                                                                                                                                                                                           Segment Information

                                                                                                                                                                               (in millions, except percentages; unaudited)


                                                                                                               Three Months Ended                                                                                                  Fiscal Year Ended
                                                                                                               ------------------                                                                                                  -----------------

                                                                                                                February 2, 2018                                             February 3, 2017                                      Change                                     February 2, 2018                                          February 3, 2017             Change
                                                                                                                ----------------                                             ----------------                                      ------                                     ----------------                                          ----------------             ------

    Client Solutions Group (CSG):
    -----------------------------

    Net Revenue:

      Commercial                                                                                                                          $7,294                                                        $6,663                                  9 %                                                      $27,747                                             $26,006          7 %

      Consumer                                                                                                                             3,295                                                         3,113                                  6 %                                                       11,708                                              10,748          9 %

      Total CSG net revenue                                                                                                              $10,589                                                        $9,776                                  8 %                                                      $39,455                                             $36,754          7 %
                                                                                                                                         -------                                                        ------                                                                                           -------                                             -------


    Operating Income:

      CSG operating income                                                                                                                  $581                                                          $342                                 70 %                                                       $2,193                                              $1,845         19 %
                                                                                                                                            ----                                                          ----                                                                                            ------                                              ------

      % of CSG net revenue                                                                                                                   5 %                                                          3 %                                                                                              6 %                                                5 %

      % of total segment operating income                                                                                                   27 %                                                         18 %                                                                                             32 %                                               34 %


    Infrastructure Solutions Group (ISG):
    -------------------------------------

    Net Revenue:

      Servers and networking                                                                                                              $4,576                                                        $3,612                                 27 %                                                      $15,398                                             $12,834         20 %

      Storage                                                                                                                              4,236                                                         4,783                                (11)%                                                       15,254                                               8,942         71 %

      Total ISG net revenue                                                                                                               $8,812                                                        $8,395                                  5 %                                                      $30,652                                             $21,776         41 %
                                                                                                                                          ------                                                        ------                                                                                           -------                                             -------


    Operating Income:

      ISG operating income                                                                                                                  $748                                                        $1,004                                (25)%                                                       $2,179                                              $2,393         (9)%
                                                                                                                                            ----                                                        ------                                                                                            ------                                              ------

      % of ISG net revenue                                                                                                                   8 %                                                         12 %                                                                                              7 %                                               11 %

      % of total segment operating income                                                                                                   35 %                                                         53 %                                                                                             32 %                                               45 %


    VMware:
    -------

    Net Revenue:

      Total VMware net revenue                                                                                                            $2,329                                                        $1,936                                 20 %                                                       $7,925                                              $3,225        146 %
                                                                                                                                          ------                                                        ------                                                                                            ------                                              ------


    Operating Income:

      VMware operating income                                                                                                               $834                                                          $565                                 48 %                                                       $2,520                                              $1,113        126 %
                                                                                                                                            ----                                                          ----                                                                                            ------                                              ------

      % of VMware net revenue                                                                                                               36 %                                                         29 %                                                                                             32 %                                               35 %

      % of total segment operating income                                                                                                   38 %                                                         30 %                                                                                             36 %                                               21 %


    Reconciliation to consolidated net revenue:
    -------------------------------------------

    Reportable segment net revenue                                                                                                       $21,730                                                       $20,107                                                                                           $78,032                                             $61,755

      Other businesses (a)                                                                                                                   492                                                           480                                                                                             1,901                                               1,026

      Unallocated transactions (b)                                                                                                           (3)                                                          (6)                                                                                              (4)                                                 41

      Impact of purchase accounting (c)                                                                                                    (284)                                                        (507)                                                                                          (1,269)                                            (1,180)

      Total net revenue                                                                                                                  $21,935                                                       $20,074                                                                                           $78,660                                             $61,642
                                                                                                                                         =======                                                       =======                                                                                           =======                                             =======


    Reconciliation to consolidated operating income (loss):
    -------------------------------------------------------

    Reportable segment operating income                                                                                                   $2,163                                                        $1,911                                                                                            $6,892                                              $5,351

      Other businesses (a)                                                                                                                  (31)                                                          (3)                                                                                             (21)                                               (39)

      Unallocated transactions (b)                                                                                                          (12)                                                         (65)                                                                                             (16)                                              (199)

      Impact of purchase accounting (c)                                                                                                    (351)                                                      (1,240)                                                                                          (1,546)                                            (2,294)

      Amortization of intangibles                                                                                                        (1,730)                                                      (1,535)                                                                                          (6,980)                                            (3,681)

      Transaction-related expenses (d)                                                                                                      (87)                                                        (159)                                                                                            (502)                                            (1,488)

      Other corporate expenses (e)                                                                                                         (273)                                                        (577)                                                                                          (1,160)                                              (902)

      Total operating loss                                                                                                                $(321)                                                     $(1,668)                                                                                         $(3,333)                                           $(3,252)
                                                                                                                                           =====                                                       =======                                                                                           =======                                             =======

    _________________

    (a) Other businesses consist of RSA Information Security, SecureWorks, Pivotal, and Boomi, and do not constitute a reportable segment, either individually or collectively, as the results of the businesses are not material to the Company's overall results and the businesses do not meet the criteria for reportable segments.

    (b) Unallocated transactions includes long-term incentives, certain short-term incentive compensation expenses, and other corporate items that are not allocated to Dell Technologies' reportable segments.

    (c) Impact of purchase accounting includes non-cash purchase accounting adjustments that are primarily related to the EMC merger transaction.

    (d) Transaction-related expenses includes acquisition, integration, and divestiture related costs.

    (e) Other corporate expenses includes severance and facility action costs as well as stock-based compensation expense.


      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 from continuing operations, 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 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
                                                   ------------------                                                        -----------------

                                                    February 2, 2018          February 3, 2017                               Change            February 2, 2018         February 3, 2017         Change
                                                    ----------------          ----------------                               ------            ----------------         ----------------         ------


    Non-GAAP net revenue                                              $22,219                    $20,581                                  8 %                   $79,929                  $62,822        27 %


    Non-GAAP gross margin                                              $7,022                     $6,595                                  6 %                   $25,185                  $16,819        50 %

    % of non-GAAP net revenue                                            32 %                      32 %                                                          32 %                    27 %


    Non-GAAP operating expenses                                        $4,902                     $4,752                                  3 %                   $18,330                  $11,706        57 %

    % of non-GAAP net revenue                                            22 %                      23 %                                                          23 %                    19 %


    Non-GAAP operating income                                          $2,120                     $1,843                                 15 %                    $6,855                   $5,113        34 %

    % of non-GAAP net revenue                                            10 %                       9 %                                                           9 %                     8 %


    Non-GAAP net income from continuing operations                     $1,097                     $1,091                                  1 %                    $3,660                   $2,687        36 %

    % of non-GAAP net revenue                                             5 %                       5 %                                                           5 %                     4 %


    Adjusted EBITDA                                                    $2,466                     $2,184                                 13 %                    $8,217                   $5,941        38 %

    % of non-GAAP net revenue                                            11 %                      11 %                                                          10 %                     9 %


                                                                                                DELL TECHNOLOGIES INC.

                                                                                Reconciliation of Selected Non-GAAP Financial Measures

                                                                                     (in millions, except percentages; unaudited)


                                                     Three Months Ended                                                                Fiscal Year Ended
                                                     ------------------                                                                -----------------

                                                      February 2, 2018             February 3, 2017                                    Change            February 2, 2018            February 3, 2017             Change
                                                      ----------------             ----------------                                    ------            ----------------            ----------------             ------


    Net revenue                                                         $21,935                              $20,074                                9 %                      $78,660                      $61,642            28 %

    Non-GAAP adjustments:

      Impact of purchase accounting                                         284                                  507                                                           1,269                        1,180
                                                                            ---

      Non-GAAP net revenue                                              $22,219                              $20,581                                8 %                      $79,929                      $62,822            27 %
                                                                        =======                              =======                                                         =======                      =======


    Gross margin                                                         $5,780                               $4,531                               28 %                      $20,054                      $12,959            55 %

    Non-GAAP adjustments:

      Amortization of intangibles                                           910                                  847                                                           3,694                        1,653

      Impact of purchase accounting                                         292                                1,110                                                           1,312                        2,007

      Transaction-related expenses                                            2                                   18                                                              24                           43

      Other corporate expenses                                               38                                   89                                                             101                          157
                                                                            ---

      Non-GAAP gross margin                                              $7,022                               $6,595                                6 %                      $25,185                      $16,819            50 %
                                                                         ======                               ======                                                         =======                      =======


    Operating expenses                                                   $6,101                               $6,199                               (2)%                      $23,387                      $16,211            44 %

    Non-GAAP adjustments:

      Amortization of intangibles                                         (820)                               (688)                                                        (3,286)                     (2,028)

      Impact of purchase accounting                                        (59)                               (130)                                                          (234)                       (287)

      Transaction-related expenses                                         (85)                               (141)                                                          (478)                     (1,445)

      Other corporate expenses                                            (235)                               (488)                                                        (1,059)                       (745)

      Non-GAAP operating expenses                                        $4,902                               $4,752                                3 %                      $18,330                      $11,706            57 %
                                                                         ======                               ======                                                         =======                      =======


    Operating loss                                                       $(321)                            $(1,668)                              81 %                     $(3,333)                    $(3,252)           (2)%

    Non-GAAP adjustments:

      Amortization of intangibles                                         1,730                                1,535                                                           6,980                        3,681

      Impact of purchase accounting                                         351                                1,240                                                           1,546                        2,294

      Transaction-related expenses                                           87                                  159                                                             502                        1,488

      Other corporate expenses                                              273                                  577                                                           1,160                          902

      Non-GAAP operating income                                          $2,120                               $1,843                               15 %                       $6,855                       $5,113            34 %
                                                                         ======                               ======                                                          ======                       ======


    Net loss from continuing operations                                  $(553)                            $(1,414)                              61 %                     $(3,855)                    $(3,737)           (3)%

    Non-GAAP adjustments:

      Amortization of intangibles                                         1,730                                1,535                                                           6,980                        3,681

      Impact of purchase accounting                                         351                                1,240                                                           1,546                        2,294

      Transaction-related expenses                                           87                                  159                                                             502                        1,485

      Other corporate expenses                                              273                                  577                                                           1,160                          902

      Aggregate adjustment for income taxes                               (791)                             (1,006)                                                        (2,673)                     (1,938)

      Non-GAAP net income from continuing operations                     $1,097                               $1,091                                1 %                       $3,660                       $2,687            36 %
                                                                         ======                               ======                                                          ======                       ======


    Net loss from continuing operations                                  $(553)                            $(1,414)                              61 %                     $(3,855)                    $(3,737)           (3)%

    Adjustments:

      Interest and other, net                                               555                                  742                                                           2,355                        2,104

      Income tax benefit                                                  (323)                               (996)                                                        (1,833)                     (1,619)

      Depreciation and amortization                                       2,143                                2,041                                                           8,634                        4,840

      EBITDA                                                             $1,822                                 $373                              388 %                       $5,301                       $1,588           234 %
                                                                         ======                                 ====                                                          ======                       ======


    EBITDA                                                               $1,822                                 $373                              388 %                       $5,301                       $1,588           234 %

    Adjustments:

      Stock-based compensation expense                                      205                                  215                                                             835                          392

      Impact of purchase accounting                                         284                                1,075                                                           1,274                        1,926

      Transaction-related expenses                                           87                                  159                                                             502                        1,525

      Other corporate expenses                                               68                                  362                                                             305                          510

      Adjusted EBITDA                                                    $2,466                               $2,184                               13 %                       $8,217                       $5,941            38 %
                                                                         ======                               ======                                                          ======                       ======

CONTACT: MEDIA CONTACTS: Dave Farmer, (508) 293-7206, dave.farmer@dell.com, Lauren Lee, (512) 728-4374, lauren.lee@dell.com; INVESTOR RELATIONS CONTACTS: Karen Litzler-Hollier, (512) 728-0388, karen.litzler-hollie@dell.com, Hall Butler, (512) 723-4963, hall.butler@dell.com

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SOURCE Dell Technologies