Innovation and Resiliency Drive Dell Technologies' First Quarter Fiscal 2021 Financial Results

ROUND ROCK, Texas, May 28, 2020 /PRNewswire/ --

News summary

    --  Dell Technologies effectively navigates COVID-19 environment with
        innovative products, broad capabilities, flexible supply chain and
        resilient global workforce
    --  First quarter revenue of $21.9 billion
    --  Operating income up 28% to $702 million, non-GAAP operating income of
        $2.2 billion
    --  Client Solutions Group revenue up 2% to $11.1 billion; VMware revenue up
        12%

Full story
Dell Technologies (NYSE: DELL) announces financial results for its fiscal 2021 first quarter. First quarter revenue was $21.9 billion. During the quarter, the company generated operating income of $702 million, a 28 percent increase over the same period in the prior year, and non-GAAP operating income of $2.2 billion. Net income was $182 million, non-GAAP net income was $1.1 billion and adjusted EBITDA was $2.6 billion. Net cash used in operating activities was $0.8 billion. Diluted earnings per share was $0.19 and non-GAAP diluted earnings per share was $1.34.

"Customers need essential technology now more than ever to put business continuity, remote working and learning plans into practice," said Jeff Clarke, vice chairman and chief operating officer, Dell Technologies. "In Q1, we saw orders with banking and financial services, government, healthcare and life sciences customers up 15 to 20 percent - all to meet immediate needs of their customers, communities and patients. As the world pivots from response to recovery, we'll continue to put our broad capabilities to work to deliver differentiated results for our customers and our company."

First Quarter Fiscal 2021 Financial Results


                              Three Months Ended


                 May 1, 2020                                  May 3, 2019              Change



                 (in millions, except percentages; unaudited)


     Total net
      revenue                  $
            21,897                           $
        21,908             
     %


     Operating                    $
            702                              $
        550          28
      income                                                                                   %


     Net income                   $
            182                              $
        329        (45)
                                                                                               %




     Non-GAAP
      net
      revenue                  $
            21,945                           $
        21,990             
     %


     Non-GAAP                   $
            2,161                            $
        2,196         (2)
      operating
      income                                                                                   %


     Non-GAAP                   $
            1,143                            $
        1,209         (5)
      net income
                                                                                               %


     Adjusted                   $
            2,607                            $
        2,573           1
      EBITDA                                                                                   %

Information about Dell Technologies' use of non-GAAP financial information is provided under "Non-GAAP Financial Measures" below. All comparisons in this press release are year-over-year unless otherwise noted.

Dell Technologies ended the quarter with cash and investments of $13.2 billion, and total deferred revenue of $27.6 billion, up 14 percent year-over-year. Recurring revenue, which includes deferred revenue amortization, utility, and as-a-Service delivered as part of Dell Technologies on Demand, is now approximately $6 billion a quarter, up 16 percent year-over-year.

"Since February, almost everything in the world has changed. What remains unchanged is our ability to deliver for customers and run the business in a disciplined way for the long-term - with an emphasis on growth, share gain, and a strong capital structure," said Tom Sweet, chief financial officer, Dell Technologies.

Operating segments summary

Client Solutions Group revenue for the first quarter was $11.1 billion, up 2 percent versus the first quarter of last year. Operating income was $592 million or more than 5 percent of Client Solutions Group revenue.

Key highlights:

    --  Double-digit unit and revenue growth in commercial notebooks and
        high-single-digit revenue growth in mobile workstations.
    --  Powered by a resilient supply chain, outperformed the PC industry, as
        the only top 5 vendor gaining year-over-year worldwide share in total
        and commercial client units.(1 )
    --  Moved up to #2 worldwide in commercial PC sales with a 26.2 percent-unit
        share.(1)

Infrastructure Solutions Group revenue for the first quarter was $7.6 billion, an 8 percent decrease year-over-year, with customers directing more spend towards remote work and business continuity solutions. Storage revenue was $3.8 billion, down 5 percent year-over-year, while servers and networking revenue was $3.8 billion, down 10 percent. Operating income was $732 million for the first quarter, or approximately 10 percent of Infrastructure Solutions Group revenue.

Key highlights:

    --  Began shipping PowerStore - an innovative autonomous storage platform
        built from the ground up to support multiple workloads for the midrange
        segment, the biggest part of the external storage market. PowerStore
        includes CloudIQ storage monitoring and analytics software that combines
        machine learning and human intelligence. Dell Technologies will
        integrate CloudIQ across the full Dell Technologies infrastructure
        portfolio for greater insights. Dell EMC Cloud Storage Services can
        connect PowerStore to all of the big three public clouds as a managed
        service.
    --  Earlier this month, announced Dell Technologies Cloud OneFS for Google
        Cloud to help organizations control exponential data and application
        growth and ease the flow of files across their private clouds and Google
        Cloud.
    --  Added a one-year term to Dell Technologies On Demand flexible
        consumption offerings, which can also be used with the Dell Technologies
        Cloud Platform to consume cloud infrastructure and rapidly get a hybrid
        cloud up and running.

VMware revenue was $2.8 billion for the first quarter, up 12 percent driven by broad-based strength across a diverse product portfolio. Operating income for the quarter was $773 million, or approximately 28 percent of VMware revenue.

Key highlights:

    --  Announced the new VMware Tanzu Portfolio and its suite of tools for
        deploying and managing Kubernetes and the new VMware vSphere 7.
    --  Released VMware Cloud Foundation 4, which delivers intrinsic security
        and lifecycle management across software-defined compute, storage and
        networking, and hybrid cloud environments.

Conference call information
As previously announced, the Company will hold a conference call to discuss its first quarter performance today, May 28, 2020 at 4:30 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.

Additional financial and operating information may be downloaded from https://investors.delltechnologies.com/financial-information/quarterly-results

About Dell Technologies
Dell Technologies (NYSE:DELL) helps organizations and individuals build their digital future and transform how they work, live and play. The company provides customers with the industry's broadest and most innovative technology and services portfolio for the data era.

Copyright © 2020 Dell Inc. or its subsidiaries. All Rights Reserved. Dell Technologies, Dell, EMC and Dell EMC are trademarks of Dell Inc. or its subsidiaries. Other trademarks may be trademarks of their respective owners.

1. IDC WW Quarterly Personal Computing Device (PDC) Tracker CY20Q1.

Non-GAAP Financial Measures:
This press release presents information about Dell Technologies' non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to non-controlling interests, non-GAAP net income attributable to Dell Technologies Inc. - basic, non-GAAP net income attributable to Dell Technologies Inc. - diluted, non-GAAP earnings per share attributable to Dell Technologies Inc. - basic, non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, EBITDA, and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America ("GAAP"). A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in the attached tables for each of the fiscal periods indicated.

Special Note on Forward-Looking Statements:
Statements in this press release that relate to future results and events are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933 and are based on Dell Technologies' current expectations. The words "may," "will," "anticipate," "estimate," "expect," "intend," "plan," "aim," "seek," and similar expressions as they relate to Dell Technologies or its management are intended to identify these forward-looking statements.

Dell Technologies' results or events in future periods could differ materially from those expressed or implied by these forward-looking statements because of risks, uncertainties, and other factors that include, but are not limited to, the following: competitive pressures; Dell Technologies' reliance on third-party suppliers for products and components, including reliance on single-source or limited-source suppliers; Dell Technologies' ability to achieve favorable pricing from its vendors; adverse global economic conditions and instability in financial markets, including as a result of the COVID-19 pandemic; Dell Technologies' execution of its growth, business and acquisition strategies; the success of Dell Technologies' cost efficiency measures; Dell Technologies' ability to manage solutions and products and services transitions in an effective manner; Dell Technologies' ability to deliver high-quality products and services; Dell Technologies' foreign operations and ability to generate substantial non-U.S. net revenue; Dell Technologies' product, customer, and geographic sales mix, and seasonal sales trends; the performance of Dell Technologies' sales channel partners; access to the capital markets by Dell Technologies or its customers; weak economic conditions and additional regulation including tariffs and other effects of trade regulation; counterparty default risks; effects of customer defaults or the exercise of customer rights on the ability of Dell Technologies to produce revenue under its contracts for services and solutions at expected levels and to perform such contracts at estimated costs; the loss by Dell Technologies of government contracts; Dell Technologies' ability to develop and protect its proprietary intellectual property or obtain licenses to intellectual property developed by others on commercially reasonable and competitive terms; infrastructure disruptions, cyberattacks, or other data security breaches; Dell Technologies' ability to hedge effectively its exposure to fluctuations in foreign currency exchange rates and interest rates; expiration of tax holidays or favorable tax rate structures, or unfavorable outcomes in tax audits and other tax compliance matters; impairment of portfolio investments; unfavorable results of legal proceedings; Dell Technologies' ability to develop and maintain effective internal control over financial reporting; compliance requirements of changing environmental and safety laws; the effect of armed hostilities, terrorism, natural disasters, climate change, and public health issues, including those relating to the COVID-19 pandemic; Dell Technologies' substantial level of indebtedness; the impact of the financial performance of VMware Inc.; and the market volatility of Dell Technologies' pension plan assets.

This list of risks, uncertainties, and other factors is not complete. Dell Technologies discusses some of these matters more fully, as well as certain risk factors that could affect Dell Technologies' business, financial condition, results of operations, and prospects, in its reports filed with the SEC, including Dell Technologies' annual report on Form 10-K for the fiscal year ended January 31, 2020, quarterly reports on Form 10-Q, and current reports on Form 8-K. These filings are available for review through the SEC's website at www.sec.gov. Any or all forward-looking statements Dell Technologies makes may turn out to be wrong and can be affected by inaccurate assumptions Dell Technologies might make or by known or unknown risks, uncertainties and other factors, including those identified in this press release. Accordingly, you should not place undue reliance on the forward-looking statements made in this press release, which speak only as of the date such statements are made. Dell Technologies does not undertake to update any forward-looking statement after the date as of which such statement was made, whether to reflect changes in circumstances or Dell Technologies' expectations, the occurrence of unanticipated events, or otherwise.


                                                                              
              
                DELL TECHNOLOGIES INC.

                                                  
              
              Condensed Consolidated Statements of Income (Loss) and Related Financial Highlights

                                                                   
              
                (in millions, except percentages; unaudited)




                                                                                    Three Months Ended


                                                       May 1, 2020                                              May 3, 2019                                 Change

                                                                                                                                                               ---


       Net revenue (a):



       Products                                                   $
              16,038                                                                              $
        16,575         (3)

                                                                                                                                                                                        %



       Services                                             5,859                                                                     5,333                                      10
                                                                                                                                                                                 %


        Total net revenue                                   21,897                                                                    21,908                                         %




       Cost of net revenue:



       Products                                            12,804                                                                    13,079                                     (2)

                                                                                                                                                                                 %



       Services                                             2,240                                                                     2,032                                      10
                                                                                                                                                                                 %


        Total cost of net
         revenue                                            15,044                                                                    15,111                                         %



        Gross margin                                         6,853                                                                     6,797                                       1
                                                                                                                                                                                 %



       Operating expenses:


        Selling, general, and                                4,886                                                                     5,071                                     (4)
         administrative
                                                                                                                                                                                 %


        Research and                                         1,265                                                                     1,176                                       8
         development                                                                                                                                                             %


        Total operating                                      6,151                                                                     6,247                                     (2)
         expenses
                                                                                                                                                                                 %



        Operating income                                       702                                                                       550                                      28
                                                                                                                                                                                 %


        Interest and other,                                  (566)                                                                    (693)                                     18
         net                                                                                                                                                                     %



        Income (loss) before                                   136                                                                     (143)                                    195
         income taxes
                                                                                                                                                                                 %


        Income tax benefit                                    (46)                                                                    (472)                                     90
                                                                                                                                                                                 %




       Net income                                             182                                                                       329                                    (45)

                                                                                                                                                                                 %


        Less: Net income
         attributable to non-                                                                                                                                                    %
         controlling
         interests                                              39                                                                        36                                       8


        Net income                                                    $
              143                                                                                 $
        293        (51)
         attributable to Dell
         Technologies Inc.                                                                                                                                                              %






       
                
            Percentage of Total Net Revenue:

    ---

        Gross margin                                  31
            %                                                             31
            %


        Selling, general, and
         administrative                               22
            %                                                             23
            %


        Research and
         development                                   6
            %                                                              5
            %


        Operating expenses                            28
            %                                                             29
            %


        Operating income                               3
            %                                                              3
            %


        Income (loss) before
         income taxes                                  1
            %                                                            (1)
            %



       Net income                                     1
            %                                                              2
            %


        Income tax rate                                     (33.8)                                                                    330.1
                                                                 %                                                                        %



               (a)               During the fourth quarter of
                                  Fiscal 2020, the Company
                                  reclassified revenue
                                  associated with certain
                                  service and software-as-a-
                                  service offerings from product
                                  revenue to services revenue.
                                  There was no change to total
                                  revenue as a result of the
                                  reclassifications.  Prior
                                  period results have been
                                  recast to conform with current
                                  period presentation.


                                                                    
              
                DELL TECHNOLOGIES INC.

                                                        
              
                Consolidated Statements of Financial Position

                                                                   
              
                (in millions; unaudited)




                                                                                                            May 1, 2020                                January 31, 2020

                                                                                                                                                ---



                                                                            
              
                ASSETS



     Current assets:



     Cash and cash equivalents                                                                                            $
              12,229                        $
       9,302



     Accounts receivable, net                                                                                   10,797                         12,484



     Short-term financing receivables, net                                                                       4,752                          4,895



     Inventories, net                                                                                            3,616                          3,281



     Other current assets                                                                                        7,437                          6,906



     Current assets held for sale                                                                                2,100



     Total current assets                                                                                       40,931                         36,868




     Property, plant, and equipment, net                                                                         6,100                          6,055



     Long-term investments                                                                                         974                            864



     Long-term financing receivables, net                                                                        4,710                          4,848



     Goodwill                                                                                                   40,248                         41,691



     Intangible assets, net                                                                                     16,827                         18,107



     Other non-current assets                                                                                   10,446                         10,428




     Total assets                                                                                                        $
              120,236                      $
       118,861





                                              
              
                LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY (DEFICIT)



     Current liabilities:



     Short-term debt                                                                                                       $
              8,375                        $
       7,737



     Accounts payable                                                                                           18,432                         20,065



     Accrued and other                                                                                           8,073                          9,773



     Short-term deferred revenue                                                                                14,766                         14,881



     Current liabilities held for sale                                                                             365




     Total current liabilities                                                                                  50,011                         52,456




     Long-term debt                                                                                             48,353                         44,319



     Long-term deferred revenue                                                                                 12,851                         12,919



     Other non-current liabilities                                                                               5,340                          5,383




     Total liabilities                                                                                         116,555                        115,077




     Redeemable shares                                                                                             441                            629



     Stockholders' equity (deficit):



     Total Dell Technologies Inc. stockholders' deficit                                                        (1,614)                       (1,574)



     Non-controlling interests                                                                                   4,854                          4,729




     Total stockholders' equity (deficit)                                                                        3,240                          3,155


      Total liabilities, redeemable shares, and stockholders' equity
       (deficit)                                                                                                          $
              120,236                      $
       118,861


                                             
            
                DELL TECHNOLOGIES INC.

                                          
     
              Condensed Consolidated Statements of Cash Flows

                                            
            
                (in millions; unaudited)




                                                                       Three Months Ended


                                               May 1, 2020                                             May 3, 2019

                                                                                                               ---

      Cash flows from operating activities:


      Net income                                                $
              182                                               $
       329


      Adjustments to
       reconcile net
       income to net cash
       provided by (used
       in) operating
       activities:                                   (978)                                                             353


      Change in cash from
       operating
       activities                                    (796)                                                             682



      Cash flows from investing activities:


      Purchases of
       investments                                    (56)                                                            (38)


      Maturities and sales
       of investments                                   39                                                              337


      Capital expenditures
       and capitalized
       software
       development costs                             (559)                                                           (716)


      Acquisition of
       businesses and
       assets, net                                    (38)                                                            (45)


      Divestitures of
       businesses and
       assets, net                                     120                                                              (3)



     Other                                              9                                                                7


      Change in cash from
       investing
       activities                                    (485)                                                           (458)



      Cash flows from financing activities:


      Proceeds from the
       issuance of common
       stock                                           116                                                              134


      Repurchases of
       parent common stock
       inclusive of tax
       withholdings                                  (240)                                                             (6)


      Repurchases of
       subsidiary common
       stock inclusive of
       tax withholdings                              (300)                                                           (803)


      Proceeds from debt                            10,135                                                            9,563


      Repayments of debt                           (5,405)                                                         (9,569)



     Other                                           (42)                                                            (38)


      Change in cash from
       financing
       activities                                    4,264                                                            (719)



      Effect of exchange
       rate changes on
       cash, cash
       equivalents, and
       restricted cash                               (136)                                                            (36)



      Change in cash, cash
       equivalents, and
       restricted cash                               2,847                                                            (531)


      Cash, cash
       equivalents, and
       restricted cash at
       beginning of the
       period                                       10,151                                                           10,240


      Cash, cash
       equivalents, and
       restricted cash at
       end of the period                                     $
              12,998                                             $
       9,709


                                                                                       
              
                DELL TECHNOLOGIES INC.

                                                                                        
              
                Segment Information

                                                                  
              
              (in millions, except percentages; unaudited; continued on next page)




                                                                                            Three Months Ended


                                                                      May 1, 2020                                              May 3, 2019                   Change

                                                                                                                                                                ---


       
                
                  Infrastructure Solutions Group (ISG):

    ---


       Net Revenue:


        Servers and                                                                $
              3,758                                                                 $
        4,180     (10)
         networking
                                                                                                                                                                                      %



       Storage                                                             3,811                                                                   4,022                        (5)

                                                                                                                                                                                 %


        Total ISG net revenue                                                      $
              7,569                                                                 $
        8,202      (8)

                                                                                                                                                                                      %






       Operating Income:


        ISG operating income                                                         $
              732                                                                   $
        843     (13)

                                                                                                                                                                                      %



                     % of ISG net revenue                                      10                                                                      10
                                                                       
            %                                                             
            %


                     % of total reportable
                      segment operating                                
            %                                                             
            %
                      income                                                   35                                                                      38





       
                
                  Client Solutions Group (CSG):

    ---


       Net Revenue:



       Commercial                                                                 $
              8,634                                                                 $
        8,307        4

                                                                                                                                                                                      %



       Consumer                                                            2,470                                                                   2,603                        (5)

                                                                                                                                                                                 %


        Total CSG net revenue                                                     $
              11,104                                                                $
        10,910        2

                                                                                                                                                                                      %






       Operating Income:


        CSG operating income                                                         $
              592                                                                   $
        793     (25)

                                                                                                                                                                                      %



                     % of CSG net revenue                                       5                                                                       7
                                                                       
            %                                                             
            %


                     % of total reportable
                      segment operating                                
            %                                                             
            %
                      income                                                   28                                                                      36





       
                
                  VMware (a):

    ---


       Net Revenue:


        Total VMware net                                                           $
              2,755                                                                 $
        2,457       12
         revenue
                                                                                                                                                                                      %






       Operating Income:


        VMware operating                                                             $
              773                                                                   $
        595       30
         income
                                                                                                                                                                                      %



                     % of VMware net                                           28                                                                      24
                      revenue                                          
            %                                                             
            %


                     % of total reportable
                      segment operating                                
            %                                                             
            %
                      income                                                   37                                                                      27



               (a)               During the fourth quarter of
                                  Fiscal 2020, the Company
                                  reclassified Pivotal operating
                                  results from Other businesses
                                  to the VMware reportable
                                  segment.  There was no change
                                  to consolidated results as a
                                  result of the
                                  reclassification.  Prior
                                  period results have been
                                  recast to conform with current
                                  period presentation.


                                                        
              
                DELL TECHNOLOGIES INC.

                                                          
              
                Segment Information

                                        
              
                (in millions, except percentages; unaudited; continued)




                                                                                          Three Months Ended


                                                              May 1, 2020                                               May 3, 2019

                                                                                                                                ---

                                 Reconciliation to consolidated net revenue:

    ---

        Reportable segment net
         revenue (a)                                                        $
              21,428                                               $
        21,569


        Other businesses (a) (b)                                      517                                                                421


        Unallocated transactions
         (c)                                                            -


        Impact of purchase
         accounting (d)                                              (48)                                                              (82)


        Total consolidated net
         revenue                                                            $
              21,897                                               $
        21,908






       
                
               Reconciliation to consolidated operating income:

    ---

        Reportable segment
         operating income (a)                                                $
              2,097                                                $
        2,231


        Other businesses (a) (b)                                       65                                                               (34)


        Unallocated transactions
         (c)                                                          (1)                                                               (1)


        Impact of purchase
         accounting (d)                                              (63)                                                             (101)


        Amortization of
         intangibles                                                (855)                                                           (1,217)


        Transaction-related
         expenses (e)                                                (76)                                                              (42)


        Stock-based compensation
         expense (f)                                                (370)                                                             (263)


        Other corporate expenses
         (g)                                                         (95)                                                              (23)


        Total consolidated
         operating income                                                      $
              702                                                  $
        550



               (a)               During Fiscal 2020, the Company
                                  reclassified Pivotal operating
                                  results from Other businesses
                                  to the VMware reportable
                                  segment.  Prior period results
                                  have been recast to conform
                                  with current period
                                  presentation.


               (b)               Secureworks, RSA Security,
                                  Virtustream, and Boomi
                                  constitute "Other businesses"
                                  and do not meet the
                                  requirements for a reportable
                                  segment, either individually
                                  or collectively.  The results
                                  of Other businesses are not
                                  material to the Company's
                                  overall results.


               (c)               Unallocated transactions
                                  includes other corporate items
                                  that are not allocated to Dell
                                  Technologies' reportable
                                  segments.


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


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


               (f)               Stock-based compensation
                                  expense consists of equity
                                  awards granted based on the
                                  estimated fair value of those
                                  awards at grant date.


               (g)               Other corporate expenses
                                  includes severance, facility
                                  action, and other costs.

SUPPLEMENTAL SELECTED NON-GAAP FINANCIAL MEASURES

These tables present information about the Company's non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to non-controlling interests, non-GAAP net income attributable to Dell Technologies Inc. - basic, non-GAAP net income attributable to Dell Technologies Inc. - diluted, non-GAAP earnings per share attributable to Dell Technologies Inc. - basic, non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, EBITDA, and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America ("GAAP"). A detailed discussion of Dell Technologies' reasons for including these non-GAAP financial measures, the limitations associated with these measures, the items excluded from these measures, and our reason for excluding those items are presented in "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Non-GAAP Financial Measures" in our periodic reports filed with the SEC. Dell Technologies encourages investors to review the non-GAAP discussion in these reports in conjunction with the presentation of non-GAAP financial measures.


                                                  
              
                DELL TECHNOLOGIES INC.

                                                
         
                Selected Non-GAAP Financial Measures

                                            
         
                (in millions, except percentages; unaudited)




                                                  Three Months Ended


                                May 1, 2020                                          May 3, 2019               Change

                                                                                                                  ---

     Non-GAAP net
      revenue                                $
         21,945                                                            $
      21,990     %


     Non-GAAP                                 $
         7,325                                                             $
      7,434 (1)
      gross margin
                                                                                                                                 %


                  % of non-GAAP          33                                                                 34
                   net revenue   
            %                                                         
           %


     Non-GAAP                                 $
         5,164                                                             $
      5,238 (1)
      operating
      expenses                                                                                                                   %


                  % of non-GAAP          24                                                                 24
                   net revenue   
            %                                                         
           %


     Non-GAAP                                 $
         2,161                                                             $
      2,196 (2)
      operating
      income                                                                                                                     %


                  % of non-GAAP          10                                                                 10
                   net revenue   
            %                                                         
           %


     Non-GAAP net                             $
         1,143                                                             $
      1,209 (5)
      income
                                                                                                                                 %


                  % of non-GAAP           5                                                                  5
                   net revenue            %                                                                 %


     Adjusted                                 $
         2,607                                                             $
      2,573   1
      EBITDA
                                                                                                                                 %


                  % of non-GAAP          12                                                                 12
                   net revenue   
            %                                                         
           %


                                                  
              
                DELL TECHNOLOGIES INC.

                                    
            
                Reconciliation of Selected Non-GAAP Financial Measures

                               
            
              (in millions, except percentages; unaudited; continued on next page)




                                                           Three Months Ended


                                 May 1, 2020                                              May 3, 2019                   Change

                                                                                                                           ---


     Net revenue                            $
              21,897                                                                $
        21,908     %



     Non-GAAP adjustments:


      Impact of purchase
       accounting                         48                                                                  82


      Non-GAAP net revenue                   $
              21,945                                                                $
        21,990     %






     Gross margin                            $
              6,853                                                                 $
        6,797   1

                                                                                                                                            %



     Non-GAAP adjustments:


      Amortization of
       intangibles                       372                                                                 519


      Impact of purchase
       accounting                         51                                                                  84


      Transaction-related
       expenses                            -                                                                (5)


      Stock-based compensation
       expense                            40                                                                  26


      Other corporate expenses             9                                                                  13


      Non-GAAP gross margin                   $
              7,325                                                                 $
        7,434 (1)

                                                                                                                                            %





      Operating expenses                      $
              6,151                                                                 $
        6,247 (2)

                                                                                                                                            %



     Non-GAAP adjustments:


      Amortization of
       intangibles                     (483)                                                              (698)


      Impact of purchase
       accounting                       (12)                                                               (17)


      Transaction-related
       expenses                         (76)                                                               (47)


      Stock-based compensation
       expense                         (330)                                                              (237)


      Other corporate expenses          (86)                                                               (10)


      Non-GAAP operating                      $
              5,164                                                                 $
        5,238 (1)
       expenses
                                                                                                                                            %





      Operating income                          $
              702                                                                   $
        550  28

                                                                                                                                            %



     Non-GAAP adjustments:


      Amortization of
       intangibles                       855                                                               1,217


      Impact of purchase
       accounting                         63                                                                 101


      Transaction-related
       expenses                           76                                                                  42


      Stock-based compensation
       expense                           370                                                                 263


      Other corporate expenses            95                                                                  23


      Non-GAAP operating                      $
              2,161                                                                 $
        2,196 (2)
       income
                                                                                                                                            %


                                               
         
                DELL TECHNOLOGIES INC.

                                
              
          Reconciliation of Selected Non-GAAP Financial Measures

                                
              
          (in millions, except percentages; unaudited; continued)




                                                  Three Months Ended


                                May 1, 2020                                         May 3, 2019            Change

                                                                                                              ---


     Net income                               $
         182                                                           $
       329 (45)

                                                                                                                              %



     Non-GAAP adjustments:


      Amortization of
       intangibles                      855                                                          1,217


      Impact of purchase
       accounting                        63                                                            101


      Transaction-related
       expenses                        (44)                                                            42


      Stock-based compensation
       expense                          370                                                            263


      Other corporate expenses           95                                                             23


      Fair value adjustments on
       equity investments              (94)                                                          (62)


      Aggregate adjustment for
       income taxes                   (284)                                                         (704)



      Non-GAAP net income                    $
         1,143                                                         $
       1,209  (5)

                                                                                                                              %






     Net income                               $
         182                                                           $
       329 (45)

                                                                                                                              %



     Adjustments:


      Interest and other, net           566                                                            693


      Income tax benefit               (46)                                                         (472)


      Depreciation and
       amortization                   1,316                                                          1,616



     EBITDA                                 $
         2,018                                                         $
       2,166  (7)

                                                                                                                              %






     EBITDA                                 $
         2,018                                                         $
       2,166  (7)

                                                                                                                              %



     Adjustments:


      Stock-based compensation
       expense                          370                                                            263


      Impact of purchase
       accounting                        48                                                             83


      Transaction-related
       expenses                          76                                                             42


      Other corporate expenses           95                                                             19


      Adjusted EBITDA                        $
         2,607                                                         $
       2,573    1
                                                                                                                              %


                                                                                                                                
             
                DELL TECHNOLOGIES INC.

                                                                                                                    
           
              Reconciliation of Selected Non-GAAP Financial Measures

                                                                                                                          
           
                For the Three Months Ended May 1, 2020

                                                                                                                      
           
              (in millions, except per share amounts; unaudited)




                        GAAP                      Amortization of                Impact of           Transaction-                               Stock-based                                   Other                Fair value                    Aggregate         Non-
                                      intangibles                      purchase              related                              compensation                                  corporate              adjustments                    adjustment              GAAP
                                                                      accounting            expenses                                expense                                      expenses               on equity                     for income
                                                                                                                                                                                                       investments                       taxes

                                                                                                                                                                                                                                                                    ---

     Net income               $
      182                                                   855                             63                                                                        (44)                            370                                   95                  (94)       (284)           $
     1,143


     Less: Net income
      attributable to
      non-controlling
      interests (a)       39                                       60                                             3                                                    7                                                       54                                                            (1)        (35)       127



     Net income
      attributable to
      Dell Technologies
      Inc. -basic        143                                      795                                            60                                                 (51)                                                     316                           95                   (93)             (249)       1,016



     Incremental
      dilution from
      VMware, Inc.
      attributable to
      Dell Technologies
      Inc. (b)           (2)                                                                                                                                                                                                                                               (4)



     Net income
      attributable to
      Dell Technologies
      Inc. -diluted           $
      141                                                                                                                                                                                                                                              $
      1,012





     Earnings per share
      -basic                 $
      0.19                                                                                                                                                                                                                                               $
      1.37


     Earnings per share
      -diluted               $
      0.19                                                                                                                                                                                                                                               $
      1.34




     Weighted-average
      shares
      outstanding -
      basic              740                                                                                                                                                                                                                                                740


     Weighted-average
      shares
      outstanding -
      diluted            755                                                                                                                                                                                                                                                755



               (a)               Net income attributable to non-
                                  controlling interests is
                                  calculated by multiplying the
                                  minority interest percentage
                                  of VMware, Inc. and
                                  SecureWorks Corp. by their
                                  non-GAAP net income
                                  adjustments for the period
                                  presented.


               (b)               Incremental dilution from
                                  VMware, Inc. attributable to
                                  Dell Technologies Inc.
                                  represents the impact of
                                  VMware, Inc.'s dilutive
                                  securities on the diluted
                                  earnings per share of Dell
                                  Technologies Inc. and is
                                  calculated by multiplying the
                                  difference between VMware,
                                  Inc.'s basic and diluted
                                  earnings per share by the
                                  number of shares of VMware,
                                  Inc. common stock held by Dell
                                  Technologies Inc.


                                                                                                                                    
              
                DELL TECHNOLOGIES INC.

                                                                                                                      
             
               Reconciliation of Selected Non-GAAP Financial Measures

                                                                                                                              
            
                For the Three Months Ended May 3, 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               $
      329                                                   1,217                             101                                                                            42                            263                                   23                  (62)       (704)           $
     1,209


     Less: Net income
      attributable to
      non-controlling
      interests (a)       36                                         73                                             6                                                      3                                                        46                                                          (26)        (29)        109



     Net income
      attributable to
      Dell Technologies
      Inc. -basic        293                                      1,144                                            95                                                     39                                                       217                          23                   (36)             (675)       1,100



     Incremental
      dilution from
      VMware, Inc.
      attributable to
      Dell Technologies
      Inc. (b)           (8)                                                                                                                                                                                                                                                    (8)



     Net income
      attributable to
      Dell Technologies
      Inc. -diluted           $
      285                                                                                                                                                                                                                                                  $
      1,092





     Earnings per share
      -basic                 $
      0.41                                                                                                                                                                                                                                                   $
      1.53


     Earnings per share
      -diluted               $
      0.38                                                                                                                                                                                                                                                   $
      1.45




     Weighted-average
      shares
      outstanding -
      basic              717                                                                                                                                                                                                                                                     717


     Weighted-average
      shares
      outstanding -
      diluted            751                                                                                                                                                                                                                                                     751



               (a)               Net income attributable to non-
                                  controlling interests is
                                  calculated by multiplying the
                                  minority interest percentage
                                  of VMware, Inc., Pivotal
                                  Software, Inc., and
                                  SecureWorks Corp. by their
                                  non-GAAP net income
                                  adjustments for the period
                                  presented.


               (b)               Incremental dilution from
                                  VMware, Inc. attributable to
                                  Dell Technologies Inc.
                                  represents the impact of
                                  VMware, Inc.'s dilutive
                                  securities on the diluted
                                  earnings per share of Dell
                                  Technologies Inc. and is
                                  calculated by multiplying the
                                  difference between VMware,
                                  Inc.'s basic and diluted
                                  earnings per share by the
                                  number of shares of VMware,
                                  Inc. common stock held by Dell
                                  Technologies Inc.

View original content:http://www.prnewswire.com/news-releases/innovation-and-resiliency-drive-dell-technologies-first-quarter-fiscal-2021-financial-results-301067246.html

SOURCE Dell Technologies