Dell Technologies Reports Second Quarter Results; Revenue and Profits Grow Year-Over-Year
ROUND ROCK, Texas, Aug. 29, 2019 /PRNewswire/ --
News summary
-- Operating income of $519 million; non-GAAP operating income of $2.7
billion
-- Client Solutions Group posts record revenue and units
-- VMware revenue up 12%
-- Record cash flow from operations of $3.3 billion
Full story
Dell Technologies (NYSE: DELL) today announced financial results for its fiscal 2020 second quarter ended August 2, 2019. Second quarter revenue was $23.4 billion, up 2 percent, and non-GAAP revenue was $23.5 billion, up 1 percent over the same period last year. Operating income was $519 million(1) compared to an operating loss of $13 million last year, and non-GAAP operating income was $2.7 billion compared to $2.1 billion in fiscal 2019. Net income was $4.5 billion or 19.3 percent of revenue, non-GAAP net income was $1.8 billion or 7.5 percent of non-GAAP revenue, and adjusted EBITDA was $3.2 billion or 13.5 percent of non-GAAP revenue. Record cash flow from operations was $3.3 billion. Diluted earnings per share was $4.83 and non-GAAP diluted earnings per share was $2.15.
"We are in the early stages of a technology-led investment cycle. IT spending remains healthy and our business drivers remain strong," said Jeff Clarke, vice chairman, Dell Technologies. "We are innovating and integrating across the Dell Technologies portfolio, from the edge to the core to the cloud, with a diverse business designed to succeed in any macro environment. For example, core Dell orders were up four percent in the quarter excluding China."
Second Quarter Fiscal 2020 Financial Results
Three Months Ended Six Months Ended
August 2, August 3, Change August 2, August 3, Change
2019 2018 2019 2018
---
(in millions, except percentages; unaudited)
Total net revenue $
23,370 $
22,942 2% $
45,278 $
44,298 2%
Operating income (loss) $
519 $
(13)
NM $
1,069 $
(166) 744%
Net income (loss) $
4,505 $
(461)
NM $
4,834 $
(999) 584%
Non-GAAP net revenue $
23,454 $
23,122 1% $
45,444 $
44,665 2%
Non-GAAP operating income $
2,743 $
2,108 30% $
4,939 $
4,134 19%
Non-GAAP net income $
1,751 $
1,259 39% $
2,960 $
2,438 21%
Adjusted EBITDA $
3,156 $
2,459 28% $
5,729 $
4,842 18%
Information about Dell Technologies' use of non-GAAP financial information is provided under "Non-GAAP Financial Measures" below. All comparisons in this press release are year-over-year unless otherwise noted.
Dell Technologies ended the quarter with a cash and investments balance of $10 billion. The company repaid approximately $2 billion of gross debt in the quarter and approximately $2.4 billion year-to-date. The company has paid down approximately $17 billion in gross debt over the three years since closing the EMC transaction and is on track to repay approximately $5 billion of gross debt in fiscal 2020.
"This quarter's results are strong thanks to our leading and diverse portfolio and consistent execution. Operating income, gross margin and deferred revenue are up double digits, our PC business produced record results, and we saw record cash flow," said Tom Sweet, chief financial officer, Dell Technologies. "Couple this with our focus on long-term value creation, growing faster than competitors and the industry, growing operating income and EPS faster than revenue, and generating strong cash flow over time. We are well-positioned for the future."
Operating segments summary
Infrastructure Solutions Group revenue for the second quarter was $8.6 billion, a 7 percent decrease year-over-year. Storage revenue was flat at $4.2 billion, while servers and networking decreased 12 percent to $4.4 billion. Operating income was $1.1 billion for the second quarter or 12.2 percent of Infrastructure Solutions Group revenue.
Key highlights:
-- Launch of the Dell Technologies Cloud, which combines the power of
VMware and Dell Technologies to make hybrid cloud environments simpler
to deploy and manage with consistent infrastructure, operations, and
services
-- Initial availability of VMware Cloud on Dell EMC, the industry's first
fully managed on-premises Data Center-as-a-Service
-- Strong customer receptivity to the recently launched Unity XT midrange
storage solution
Client Solutions Group revenue for the second quarter was $11.7 billion, up 6 percent versus the second quarter of last year. Commercial revenue grew 12 percent to $9.1 billion, and Consumer revenue was down 12 percent to $2.7 billion. Operating income was $982 million for the second quarter or 8.4 percent of Client Solutions Group revenue.
Key highlights:
-- Record revenue and units
-- Double-digit revenue growth in commercial notebooks, desktops, and
workstations
-- Launch of the new OptiPlex 7070 Ultra, an innovative desktop with the
industry's most flexible, zero-footprint desktop design
-- Launch of Unified Workspace, an integrated solution for end-user
computing that simplifies the entire device lifecycle for IT while
providing workers with the personalized, frictionless, ready-to-work
experience they demand
VMware revenue was $2.5 billion for the second quarter, up 12 percent driven by broad-based strength across a diverse product portfolio. Operating income for the second quarter was $762 million, or 30.9 percent of VMware revenue.
Conference call information
As previously announced, the company will hold a conference call to discuss its second quarter performance today, August 29, 2019 at 4:00 p.m. CDT. The conference call will be broadcast live over the internet and can be accessed at https://investors.delltechnologies.com/events-and-presentations/upcoming-events
For those unable to listen to the live broadcast, an archived version will be available at the same location for one year.
A slide presentation containing additional financial and operating information may be downloaded from Dell Technologies' website at https://investors.delltechnologies.com/financial-information/quarterly-results
About Dell Technologies
Dell Technologies (NYSE: DELL) is a unique family of businesses that helps organizations and individuals build their digital future and transform how they work and live. The company provides customers with the industry's broadest and most innovative technology and services portfolio spanning from edge to core to cloud. The Dell Technologies family includes Dell, Dell EMC, Pivotal, RSA, Secureworks, Virtustream and VMware.
Copyright © 2019 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, significant non-cash bridging items will remain between GAAP and non-GAAP results for the next few years.
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 historical 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. 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; Dell Technologies' substantial level of indebtedness; 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 Dell Technologies' business, financial condition, results of operations, and prospects, in its reports filed with the SEC, including Dell Technologies' annual report on Form 10-K for the fiscal year ended February 1, 2019, quarterly reports on Form 10-Q, and current reports on Form 8-K. These filings are available for review through the SEC's website at www.sec.gov. Any or all forward-looking statements Dell Technologies makes may turn out to be wrong and can be affected by inaccurate assumptions Dell Technologies might make or by known or unknown risks, uncertainties and other factors, including those identified in this press release. Accordingly, you should not place undue reliance on the forward-looking statements made in this press release, which speak only as of its date. Dell Technologies does not undertake to update, and expressly disclaims any duty to update, its forward-looking statements, whether as a result of circumstances or events that arise after the date they are made, new information, or otherwise.
DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Income (Loss) and Related Financial Highlights
(in millions, except percentages; unaudited)
Three Months Ended
Six Months Ended
August 2, 2019 August 3, 2018 Change August 2, 2019 August 3, 2018 Change
---
Net revenue:
Products $
18,110 $
18,149 -% $
34,864 $
34,820 -%
Services 5,260 4,793 10% 10,414 9,478 10%
Total net revenue 23,370 22,942 2% 45,278 44,298 2%
Cost of net revenue:
Products 13,889 14,943 (7)% 26,968 28,549 (6)%
Services 2,155 1,876 15% 4,187 3,748 12%
Total cost of net revenue 16,044 16,819 (5)% 31,155 32,297 (4)%
Gross margin 7,326 6,123 20% 14,123 12,001 18%
Operating expenses:
Selling, general, and administrative 5,578 4,961 12% 10,649 9,905 8%
Research and development 1,229 1,175 5% 2,405 2,262 6%
Total operating expenses 6,807 6,136 11% 13,054 12,167 7%
Operating income (loss) 519 (13)
NM 1,069 (166) 744%
Interest and other, net (630) (455) (38)% (1,323) (925) (43)%
Loss before income taxes (111) (468) 76% (254) (1,091) 77%
Income tax benefit (4,616) (7)
NM (5,088) (92)
NM
Net income (loss) 4,505 (461)
NM 4,834 (999) 584%
Less: Net income attributable to non-controlling
interests 816 38
NM 852 136 526%
Net income (loss) attributable to Dell
Technologies Inc. $
3,689 $
(499) 839% $
3,982 $
(1,135) 451%
Percentage of Total Net Revenue:
---
Gross margin 31
% 27
% 31
% 27
%
Selling, general, and administrative 24
% 22
% 24
% 22
%
Research and development 5
% 5
% 5
% 5
%
Operating expenses 29
% 27
% 29
% 28
%
Operating income (loss) 2
% % 2
% %
Loss before income taxes - % (2)
% (1)
% (3)
%
Net income (loss) 19
% (2)
% 11
% (2)
%
Income tax rate 4158.6 1.5
% 2003.1
% % 8.4
%
DELL T
ECHNOLOGIES INC.
Consolidated Statements of Financial Position
(in millions; unaudited)
August 2, 2019 February 1, 2019
---
ASSETS
Current assets:
Cash and cash equivalents $
9,193 $
9,676
Accounts receivable, net 11,586 12,371
Short-term financing receivables, net 4,473 4,398
Inventories, net 3,135 3,649
Other current assets 6,929 6,044
Total current assets 35,316 36,138
Property, plant, and equipment, net 5,568 5,259
Long-term investments 768 1,005
Long-term financing receivables, net 4,350 4,224
Goodwill 39,998 40,089
Intangible assets, net 19,719 22,270
Other non-current assets 9,801 2,835
Total assets $
115,520 $
111,820
===
LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Short-term debt $
5,949 $
4,320
Accounts payable 19,411 19,213
Accrued and other 8,092 8,495
Short-term deferred revenue 13,568 12,944
Total current liabilities 47,020 44,972
Long-term debt 45,973 49,201
Long-term deferred revenue 11,780 11,066
Other non-current liabilities 6,355 6,327
---
Total liabilities 111,128 111,566
---
Redeemable shares 1,024 1,196
Stockholders' equity (deficit):
Total Dell Technologies Inc. stockholders' equity (deficit) (2,176) (5,765)
Non-controlling interests 5,544 4,823
Total stockholders' equity (deficit) 3,368 (942)
Total liabilities, redeemable shares, and stockholders' equity (deficit) $
115,520 $
111,820
===
DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(in millions; unaudited)
Three Months Ended Six Months Ended
August 2, 2019 August 3, 2018 August 2, 2019 August 3, 2018
---
Cash flows from operating activities:
Net income (loss) $
4,505 $
(461) $
4,834 $
(999)
Adjustments to reconcile net income (loss) to net cash provided by operating activities (1,225) 3,094 (872) 4,791
Change in cash from operating activities 3,280 2,633 3,962 3,792
---
Cash flows from investing activities:
Investments:
Purchases (32) (449) (70) (888)
Maturities and sales 93 791 430 1,322
Capital expenditures (473) (288) (1,083) (561)
Capitalized software development costs (78) (71) (184) (160)
Acquisition of businesses, net (339) (384)
Divestitures of businesses, net - 142
Asset acquisitions, net - (38)
Asset dispositions, net - (3) (3) (6)
Other 4 7 11 27
---
Change in cash from investing activities (825) (13) (1,283) (162)
---
Cash flows from financing activities:
Share repurchases for tax withholdings of equity awards (148) (99) (363) (199)
Proceeds from the issuance of common stock of subsidiaries 18 11 151 653
Repurchases of common stock of subsidiaries (452) (1,044)
Proceeds from debt 2,638 2,774 12,201 4,637
Repayments of debt (4,342) (5,126) (13,911) (6,948)
Other 83 (90) 44 (130)
Change in cash from financing activities (2,203) (2,530) (2,922) (1,987)
---
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (26) (130) (62) (216)
---
Change in cash, cash equivalents, and restricted cash 226 (40) (305) 1,427
Cash, cash equivalents, and restricted cash at beginning of the period 9,709 15,845 10,240 14,378
Cash, cash equivalents, and restricted cash at end of the period $
9,935 $
15,805 $
9,935 $
15,805
===
DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued on next page)
Three Months Ended
Six Months Ended
August 2, 2019 August 3, 2018 Change August 2, 2019 August 3, 2018 Change
---
Infrastructure Solutions Group (ISG):
---
Net Revenue:
Servers and networking $
4,437 $
5,061 (12)% $
8,617 $
9,646 (11)%
Storage 4,184 4,166 -% 8,206 8,248 (1)%
Total ISG net revenue $
8,621 $
9,227 (7)% $
16,823 $
17,894 (6)%
Operating Income:
ISG operating income $
1,050 $
1,012 4% $
1,893 $
1,951 (3)%
% of ISG net revenue 12 11 11 11
% % % %
% of total reportable segment operating income 38 47 38 46
% % % %
Client Solutions Group (CSG):
---
Net Revenue:
Commercial $
9,077 $
8,109 12% $
17,384 $
15,472 12%
Consumer 2,671 3,019 (12)% 5,274 5,927 (11)%
Total CSG net revenue $
11,748 $
11,128 6% $
22,658 $
21,399 6%
Operating Income:
CSG operating income $
982 $
425 131% $
1,775 $
958 85%
% of CSG net revenue 8 4 8 4
% % % %
% of total reportable segment operating income 35 20 35 22
% % % %
VMware:
---
Net Revenue:
Total VMware net revenue $
2,466 $
2,194 12% $
4,748 $
4,222 12%
Operating Income:
VMware operating income $
762 $
736 4% $
1,376 $
1,349 2%
% of VMware net revenue 31 34 29 32
% % % %
% of total reportable segment operating income 27 34 27 32
% % % %
DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued)
Three Months Ended Six Months Ended
August 2, 2019 August 3, 2018 August 2, 2019 August 3, 2018
---
Reconciliation to consolidated net revenue:
---
Reportable segment net revenue $
22,835 $
22,549 $
44,229 $
43,515
Other businesses (a) 619 574 1,215 1,153
Unallocated transactions (b) - (1) (3)
Impact of purchase accounting (c) (84) (180) (166) (367)
Total consolidated net revenue $
23,370 $
22,942 $
45,278 $
44,298
===
Reconciliation to consolidated operating income (loss):
---
Reportable segment operating income $
2,794 $
2,173 $
5,044 $
4,258
Other businesses (a) (25) (49) (78) (99)
Unallocated transactions (b) (26) (16) (27) (25)
Impact of purchase accounting (c) (102) (215) (203) (437)
Amortization of intangibles (1,060) (1,526) (2,277) (3,048)
Transaction-related expenses (d) (47) (104) (89) (270)
Stock-based compensation expense (e) (301) (216) (564) (415)
Other corporate expenses (f) (714) (60) (737) (130)
Total consolidated operating income (loss) $
519 $
(13) $
1,069 $
(166)
===
_________________
(a) Pivotal, SecureWorks, RSA Security,
Virtustream, and Boomi constitute
"Other businesses" and do not meet
the requirements for a reportable
segment, either individually or
collectively. The results of Other
businesses are not material to the
Company's overall results.
(b) Unallocated transactions includes
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, as well as
the costs incurred in the Class V
transaction.
(e) Stock-based compensation expense
consists of equity awards granted
based on the estimated fair value of
those awards at grant date.
(f) Other corporate expenses includes
impairment charges and severance,
facility action, and other costs.
SUPPLEMENTAL SELECTED NON-GAAP FINANCIAL MEASURES
These tables present information about the Company's non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to non-controlling interests, non-GAAP net income attributable to Dell Technologies Inc. - basic, non-GAAP net income attributable to Dell Technologies Inc. - diluted, non-GAAP earnings per share attributable to Dell Technologies Inc. - basic, non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, EBITDA, and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America ("GAAP"). A detailed discussion of Dell Technologies' reasons for including these non-GAAP financial measures, the limitations associated with these measures, the items excluded from these measures, and our reason for excluding those items are presented in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" in our periodic reports filed with the SEC. Dell Technologies encourages investors to review the non-GAAP discussion in 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
Six Months Ended
August 2, 2019 August 3, 2018 Change August 2, 2019 August 3, 2018 Change
---
Non-GAAP net revenue $
23,454 $
23,122 1% $
45,444 $
44,665 2%
Non-GAAP gross margin $
7,986 $
7,066 13% $
15,420 $
13,985 10%
% of non-GAAP net revenue 34 31 34 31
% % % %
Non-GAAP operating expenses $
5,243 $
4,958 6% $
10,481 $
9,851 6%
% of non-GAAP net revenue 22 21 23 22
% % % %
Non-GAAP operating income $
2,743 $
2,108 30% $
4,939 $
4,134 19%
% of non-GAAP net revenue 12 9 11 9
% % % %
Non-GAAP net income (a) $
1,751 $
1,259 39% $
2,960 $
2,438 21%
% of non-GAAP net revenue 7 5 7 5
% % % %
Adjusted EBITDA $
3,156 $
2,459 28% $
5,729 $
4,842 18%
% of non-GAAP net revenue 13 11 13 11
% % % %
(a) Non-GAAP net income has been
recast to exclude fair value
adjustments on equity investments,
the corresponding tax effects of
those adjustments, and discrete
tax items.
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued on next page)
Three Months Ended Six Months Ended
August 2, 2019 August 3, 2018 Change August 2, 2019 August 3, 2018 Change
---
Net revenue $
23,370 $
22,942 2% $
45,278 $
44,298 2%
Non-GAAP adjustments:
Impact of purchase accounting 84 180 166 367
Non-GAAP net revenue $
23,454 $
23,122 1% $
45,444 $
44,665 2%
Gross margin $
7,326 $
6,123 20% $
14,123 $
12,001 18%
Non-GAAP adjustments:
Amortization of intangibles 519 718 1,038 1,428
Impact of purchase accounting 85 185 169 378
Transaction-related expenses - 21 (5) 137
Stock-based compensation expense 32 18 58 34
Other corporate expenses 24 1 37 7
Non-GAAP gross margin $
7,986 $
7,066 13% $
15,420 $
13,985 10%
Operating expenses $
6,807 $
6,136 11% $
13,054 $
12,167 7%
Non-GAAP adjustments:
Amortization of intangibles (541) (808) (1,239) (1,620)
Impact of purchase accounting (17) (30) (34) (59)
Transaction-related expenses (47) (83) (94) (133)
Stock-based compensation expense (269) (198) (506) (381)
Other corporate expenses (690) (59) (700) (123)
Non-GAAP operating expenses $
5,243 $
4,958 6% $
10,481 $
9,851 6%
Operating income (loss) $
519 $
(13)
NM $
1,069 $
(166) 744%
Non-GAAP adjustments:
Amortization of intangibles 1,060 1,526 2,277 3,048
Impact of purchase accounting 102 215 203 437
Transaction-related expenses 47 104 89 270
Stock-based compensation expense 301 216 564 415
Other corporate expenses 714 60 737 130
Non-GAAP operating income $
2,743 $
2,108 30% $
4,939 $
4,134 19%
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued)
Three Months Ended Six Months Ended
August 2, 2019 August 3, 2018 Change August 2, 2019 August 3, 2018 Change
---
Net income (loss) $
4,505 $
(461)
NM $
4,834 $
(999) 584%
Non-GAAP adjustments:
Amortization of intangibles 1,060 1,526 2,277 3,048
Impact of purchase accounting 102 215 203 437
Transaction-related expenses 47 104 89 270
Stock-based compensation expense 301 216 564 415
Other corporate expenses 714 60 737 130
Fair value adjustments on equity investments (80) (139) (142) (246)
Aggregate adjustment for income taxes (4,898) (262) (5,602) (617)
Non-GAAP net income (a) $
1,751 $
1,259 39% $
2,960 $
2,438 21%
Net income (loss) $
4,505 $
(461)
NM $
4,834 $
(999) 584%
Adjustments:
Interest and other, net 630 455 1,323 925
Income tax benefit (4,616) (7) (5,088) (92)
Depreciation and amortization 1,498 1,931 3,114 3,845
EBITDA $
2,017 $
1,918 5% $
4,183 $
3,679 14%
EBITDA $
2,017 $
1,918 5% $
4,183 $
3,679 14%
Adjustments:
Stock-based compensation expense 301 216 564 415
Impact of purchase accounting 84 145 167 367
Transaction-related expenses 47 85 89 251
Other corporate expenses 707 95 726 130
Adjusted EBITDA $
3,156 $
2,459 28% $
5,729 $
4,842 18%
________________
Non-GAAP net income has been
recast to exclude fair value
adjustments on equity investments,
the corresponding tax effects of
those adjustments, and discrete
(a) tax items.
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Three Months Ended August 2, 2019
(in millions, except per share amounts; unaudited)
GAAP
Amortization of Impact of Transaction-
Stock-based Other Fair value Aggregate Non-GAAP
intangibles purchase related compensation corporate adjustments adjustment
accounting expenses expense expenses on equity for income
investments taxes
Net income $
4,505 1,060 102 47 301 714 (80) (4,898) $
1,751
Less: Net income attributable to non-controlling interests (a) 816 71 6 2 51 100 (915) 131
---
Net income attributable to Dell Technologies Inc. - basic 3,689 989 96 45 250 714 (180) (3,983) 1,620
---
Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. (b) (62) (9)
Net income attributable to Dell Technologies Inc. - diluted $
3,627 $
1,611
Earnings per share - basic $
5.13 $
2.25
Earnings per share - diluted $
4.83 $
2.15
Weighted-average shares outstanding - basic 719 719
Weighted-average shares outstanding - diluted 751 751
_________________
(a) Net income attributable to non-
controlling interests is calculated
by multiplying the minority interest
percentage of VMware, Inc., Pivotal
Software, Inc., and SecureWorks
Corp. by their non-GAAP net income
adjustments for the period
presented.
(b) Incremental dilution from VMware,
Inc. attributable to Dell
Technologies Inc. represents the
impact of VMware, Inc.'s dilutive
securities on the diluted earnings
per share of Dell Technologies Inc.
and is calculated by multiplying the
difference between VMware'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 Six Months Ended August 2, 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 $
4,834 2,277 203 89 564 737 (142) (5,602) $
2,960
Less: Net income attributable to non-controlling interests (a) 852 144 12 5 97 74 (944) 240
---
Net income attributable to Dell Technologies Inc. - basic 3,982 2,133 191 84 467 737 (216) (4,658) 2,720
---
Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. (b) (78) (17)
Net income attributable to Dell Technologies Inc. - diluted $
3,904 $
2,703
Earnings per share - basic $
5.55 $
3.79
Earnings per share - diluted $
5.21 $
3.60
Weighted-average shares outstanding - basic 718 718
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's basic
and diluted earnings per share by
the number of shares of VMware,
Inc. common stock held by Dell
Technologies Inc.
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SOURCE Dell
