Future-of-Work Solutions Power Dell Technologies' Second Quarter Fiscal 2021 Financial Results
ROUND ROCK, Texas, Aug. 27, 2020 /PRNewswire/ --
News summary
-- Second quarter revenue of $22.7 billion, non-GAAP revenue of $22.8
billion
-- Operating income up 119% to $1.1 billion, non-GAAP operating income of
$2.6 billion
-- Dell Technologies continues to effectively navigate COVID-19
environment, providing the essential work- and learn-from-home, cloud
and storage solutions customers need
Full story
Dell Technologies (NYSE: DELL) announces financial results for its fiscal 2021 second quarter. Second quarter revenue was $22.7 billion, and non-GAAP revenue was $22.8 billion. During the quarter, the company generated operating income of $1.1 billion, a 119 percent increase over the same period in the prior year, and non-GAAP operating income of $2.6 billion. Net income was $1.1 billion, non-GAAP net income was $1.6 billion and adjusted EBITDA was $3.1 billion. Net cash from operating activities was $3.3 billion. Diluted earnings per share was $1.37 and non-GAAP diluted earnings per share was $1.92.
"We provide the technology solutions customers need to be productive and collaborative no matter where they work or learn, while delivering the data-driven insights and automation they need to innovate and transform," said Jeff Clarke, vice chairman and chief operating officer, Dell Technologies. "In Q2, we saw strength in the government sector and in education, with orders up 16 and 24 percent, respectively, as parents, teachers and school districts prepare for a new frontier in virtual learning."
Second Quarter Fiscal 2021 Financial Results
Three Months Ended
Six Months Ended
July 31, 2020 August 2, 2019 Change July 31, 2020 August 2, 2019 Change
(in millions, except per share amounts and percentages; unaudited)
Total net
revenue $
22,733 $
23,370 (3)% $
44,630 $
45,278 (1)%
Operating
income $
1,136 $
519 119% $
1,838 $
1,069 72%
Net income $
1,099 $
4,232 (74)% $
1,281 $
4,561 (72)%
Earnings
per share
-diluted $
1.37 $
4.47 (69)% $
1.56 $
4.84 (68)%
Non-GAAP
net
revenue $
22,775 $
23,454 (3)% $
44,720 $
45,444 (2)%
Non-GAAP
operating
income $
2,618 $
2,743 (5)% $
4,779 $
4,939 (3)%
Non-GAAP
net income $
1,621 $
1,751 (7)% $
2,764 $
2,960 (7)%
Adjusted
EBITDA $
3,100 $
3,156 (2)% $
5,707 $
5,729 -%
Non-GAAP
earnings
per share
- diluted $
1.92 $
2.15 (11)% $
3.26 $
3.60 (9)%
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 $12.3 billion and paid down $3.5 billion in debt during the quarter. The company had total deferred revenue of $28.8 billion during the quarter, 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, was approximately $6 billion for the quarter, up 15 percent year-over-year.
"Now more than ever, customers need flexibility. We're seeing increased adoption of our portfolio delivered as-a-service through flexible consumption solutions, which are now on a $1.3 billion revenue run-rate, up 30 percent year-over-year," said Tom Sweet, chief financial officer, Dell Technologies. "As needs of the market shift, we continue to execute on our strategy of winning in the consolidating markets in which we compete and investing in long-term drivers of value creation for Dell Technologies and our stakeholders."
Operating segments summary
Client Solutions Group revenue for the second quarter was $11.2 billion. Operating income was $715 million, or 6.4 percent of Client Solutions Group revenue. The company saw continued demand for remote work and learning solutions. Consumer revenue was $3.2 billion, up 18 percent, while commercial client revenue was $8.0 billion, down 11 percent.
Key highlights:
-- Strong performance driven by double-digit revenue growth across
notebooks and consumer client
-- Strength in the XPS premium line and gaming systems including Alienware,
with combined orders growth of 25 percent
-- The launch of new intelligent Latitude PCs, the world's most intelligent
PC with built-in AI and 5G connectivity, and a reengineered
industry-leading Precision workstation portfolio
Infrastructure Solutions Group revenue for the second quarter was $8.2 billion, with customers continuing to direct more spending towards remote work and business continuity solutions. Storage revenue was $4.0 billion, while servers and networking revenue was $4.2 billion. Operating income was $973 million for the second quarter, or approximately 11.9 percent of Infrastructure Solutions Group revenue.
Key highlights:
-- Continued strong demand for VxRail, with double-digit orders growth for
the second straight quarter. Triple-digit orders growth for high-end
PowerMax solution and double-digit orders growth in Data Protection
-- The announcement of two new VxRail systems--including the first
ruggedized VxRail model and introduction of AMD EPYC
processors--bringing the power and simplicity of HCI to the most
challenging and space-constrained edge environments
-- Announced Dell EMC PowerScale, storage systems that help customers
capture and capitalize on unstructured data, such as documents, images,
videos and social media content in core data centers, edge locations and
public cloud
VMware revenue was $2.9 billion for the second quarter, up 10 percent driven by broad-based strength across a diverse product portfolio. Operating income for the quarter was $894 million, or 30.7 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 27, 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.
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
Six Months Ended
July 31, 2020 August 2, 2019 Change July 31, 2020 August 2, 2019 Change
Net revenue (a):
Products $
16,737 $
17,915 (7)% $
32,775 $
34,490 (5)%
Services 5,996 5,455 10% 11,855 10,788 10%
Total net revenue 22,733 23,370 (3)% 44,630 45,278 (1)%
Cost of net revenue:
Products 13,330 13,889 (4)% 26,134 26,968 (3)%
Services 2,247 2,155 4% 4,487 4,187 7%
Total cost of net
revenue 15,577 16,044 (3)% 30,621 31,155 (2)%
Gross margin 7,156 7,326 (2)% 14,009 14,123 (1)%
Operating expenses:
Selling, general, and
administrative 4,761 5,578 (15)% 9,647 10,649 (9)%
Research and
development 1,259 1,229 2% 2,524 2,405 5%
Total operating
expenses 6,020 6,807 (12)% 12,171 13,054 (7)%
Operating income 1,136 519 119% 1,838 1,069 72%
Interest and other, net (636) (630) (1)% (1,202) (1,323) 9%
Income (loss) before
income taxes 500 (111) 550% 636 (254) 350%
Income tax benefit (599) (4,343) 86% (645) (4,815) 87%
Net income 1,099 4,232 (74)% 1,281 4,561 (72)%
Less: Net income
attributable to non-
controlling interests 51 816 (94)% 90 852 (89)%
Net income attributable
to Dell Technologies
Inc. $
1,048 $
3,416 (69)% $
1,191 $
3,709 (68)%
Percentage of Total Net Revenue:
---
Gross margin 31
% 31
% 31
% 31
%
Selling, general, and
administrative 21
% 24
% 22
% 24
%
Research and
development 6
% 5
% 6
% 5
%
Operating expenses 26
% 29
% 27
% 29
%
Operating income 5
% 2
% 4
% 2
%
Income (loss) before
income taxes 2
% % 1
% (1)
%
Net income 5
% 18
% 3
% 10
%
Income tax rate -119.8 3912.6 -101.4 1895.7
% % % %
(a) During Fiscal 2020, the
Company reclassified
revenue associated with
certain service and
software-as-a-service
offerings from product
revenue to services
revenue. There was no
change to total revenue
as a result of the
reclassifications. Prior
period results have been
recast to conform with
current period
presentation.
DELL TECHNOLOGIES INC.
Consolidated Statements of Financial Position
(in millions; unaudited)
July 31, 2020 January 31, 2020
---
ASSETS
Current assets:
Cash and cash equivalents $
11,221 $
9,302
Accounts receivable, net 11,643 12,484
Short-term financing receivables,
net 4,855 4,895
Inventories, net 3,602 3,281
Other current assets 7,711 6,906
Current assets held for sale 2,058
Total current assets 41,090 36,868
Property, plant, and equipment,
net 6,380 6,055
Long-term investments 1,073 864
Long-term financing receivables,
net 5,378 4,848
Goodwill 40,644 41,691
Intangible assets, net 16,064 18,107
Other non-current assets 10,647 10,428
Total assets $
121,276 $
118,861
LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Short-term debt $
10,345 $
7,737
Accounts payable 19,500 20,065
Accrued and other 8,758 9,773
Short-term deferred revenue 15,341 14,881
Current liabilities held for sale 344
Total current liabilities 54,288 52,456
Long-term debt 43,608 44,319
Long-term deferred revenue 13,450 12,919
Other non-current liabilities 4,762 5,383
Total liabilities 116,108 115,077
Redeemable shares 610 629
Stockholders' equity (deficit):
Total Dell Technologies Inc.
stockholders' deficit (419) (1,574)
Non-controlling interests 4,977 4,729
Total stockholders' equity
(deficit) 4,558 3,155
Total liabilities, redeemable
shares, and stockholders' equity
(deficit) $
121,276 $
118,861
DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(in millions; unaudited)
Three Months Ended Six Months Ended
July 31, 2020 August 2, 2019 July 31, 2020 August 2, 2019
Cash flows from operating activities:
Net income $
1,099 $
4,232 $
1,281 $
4,561
Adjustments to
reconcile net income
to net cash provided
by (used in)
operating activities: 2,233 (952) 1,255 (599)
Change in cash from
operating activities 3,332 3,280 2,536 3,962
Cash flows from investing activities:
Purchases of
investments (118) (32) (174) (70)
Maturities and sales
of investments 32 93 71 430
Capital expenditures
and capitalized
software development
costs (545) (551) (1,104) (1,267)
Acquisition of
businesses and
assets, net (296) (339) (334) (384)
Divestitures of
businesses and
assets, net - 120 (3)
Other 3 4 12 11
Change in cash from
investing activities (924) (825) (1,409) (1,283)
Cash flows from financing activities:
Proceeds from the
issuance of common
stock 105 105 221 239
Repurchases of parent
common stock - 2 (240) (4)
Repurchases of
subsidiary common
stock (291) (600) (591) (1,403)
Proceeds from debt 1,712 2,638 11,847 12,201
Repayments of debt (4,815) (4,342) (10,220) (13,911)
Other (148) (6) (190) (44)
Change in cash from
financing activities (3,437) (2,203) 827 (2,922)
Effect of exchange
rate changes on cash,
cash equivalents, and
restricted cash 84 (26) (52) (62)
Change in cash, cash
equivalents, and
restricted cash (945) 226 1,902 (305)
Cash, cash
equivalents, and
restricted cash at
beginning of the
period 12,998 9,709 10,151 10,240
Cash, cash
equivalents, and
restricted cash at
end of the period $
12,053 $
9,935 $
12,053 $
9,935
DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued on next page)
Three Months Ended
Six Months Ended
July 31, 2020 August 2, 2019 Change July 31, 2020 August 2, 2019 Change
---
Infrastructure Solutions Group (ISG):
---
Net Revenue:
Servers and networking $
4,196 $
4,437 (5)% $
7,954 $
8,617 (8)%
Storage 4,011 4,184 (4)% 7,822 8,206 (5)%
Total ISG net revenue $
8,207 $
8,621 (5)% $
15,776 $
16,823 (6)%
Operating Income:
ISG operating income $
973 $
1,050 (7)% $
1,705 $
1,893 (10)%
% of ISG net revenue 12% 12% 11% 11%
% of total reportable
segment operating
income 38% 38% 36% 38%
Client Solutions Group (CSG):
---
Net Revenue:
Commercial $
8,039 $
9,077 (11)% $
16,673 $
17,384 (4)%
Consumer 3,164 2,671 18% 5,634 5,274 7%
Total CSG net revenue $
11,203 $
11,748 (5)% $
22,307 $
22,658 (2)%
Operating Income:
CSG operating income $
715 $
982 (27)% $
1,307 $
1,775 (26)%
% of CSG net revenue 6% 8% 6% 8%
% of total reportable
segment operating
income 28% 35% 28% 35%
VMware (a):
---
Net Revenue:
Total VMware net
revenue $
2,908 $
2,651 10% $
5,663 $
5,108 11%
Operating Income:
VMware operating
income $
894 $
751 19% $
1,667 $
1,346 24%
% of VMware net revenue 31% 28% 29% 26%
% of total reportable
segment operating
income 35% 27% 36% 27%
(a) During Fiscal 2020, the
Company reclassified
Pivotal operating
results from Other
businesses to the VMware
reportable segment.
There was no change to
consolidated results as
a result of the
reclassification. Prior
period results have been
recast to conform with
current period
presentation.
DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued)
Three Months Ended Six Months Ended
July 31, 2020 August 2, 2019 July 31, 2020 August 2, 2019
Reconciliation to consolidated net revenue:
---
Reportable segment net
revenue (a) $
22,318 $
23,020 $
43,746 $
44,589
Other businesses (a) (b) 457 434 974 855
Impact of purchase
accounting (d) (42) (84) (90) (166)
Total consolidated net
revenue $
22,733 $
23,370 $
44,630 $
45,278
Reconciliation to consolidated operating income:
---
Reportable segment
operating income (a) $
2,582 $
2,783 $
4,679 $
5,014
Other businesses (a) (b) 37 (14) 102 (48)
Unallocated transactions
(c) (1) (26) (2) (27)
Impact of purchase
accounting (d) (53) (102) (116) (203)
Amortization of intangibles (847) (1,060) (1,702) (2,277)
Transaction-related
expenses (e) (83) (47) (159) (89)
Stock-based compensation
expense (f) (413) (301) (783) (564)
Other corporate expenses
(g) (86) (714) (181) (737)
Total consolidated
operating income $
1,136 $
519 $
1,838 $
1,069
(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 impairment
charges, severance,
facility action, and
other costs.
SUPPLEMENTAL SELECTED NON-GAAP FINANCIAL MEASURES
These tables present information about the Company's non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to non-controlling interests, non-GAAP net income attributable to Dell Technologies Inc. - basic, non-GAAP net income attributable to Dell Technologies Inc. - diluted, non-GAAP earnings per share attributable to Dell Technologies Inc. - basic, non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, EBITDA, and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America ("GAAP"). A detailed discussion of Dell Technologies' reasons for including these non-GAAP financial measures, the limitations associated with these measures, the items excluded from these measures, and our reason for excluding those items are presented in "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Non-GAAP Financial Measures" in our periodic reports filed with the SEC. Dell Technologies encourages investors to review the non-GAAP discussion in these reports in conjunction with the presentation of non-GAAP financial measures.
DELL TECHNOLOGIES INC.
Selected Non-GAAP Financial Measures
(in millions, except per share amounts and percentages; unaudited)
Three Months Ended
Six Months Ended
July 31, 2020 August 2, 2019 Change July 31, 2020 August 2, 2019 Change
Non-GAAP net
revenue $
22,775 $
23,454 (3)% $
44,720 $
45,444 (2)%
Non-GAAP gross
margin $
7,626 $
7,986 (5)% $
14,951 $
15,420 (3)%
% of non-GAAP
net revenue 33% 34% 33% 34%
Non-GAAP
operating
expenses $
5,008 $
5,243 (4)% $
10,172 $
10,481 (3)%
% of non-GAAP
net revenue 22% 22% 23% 23%
Non-GAAP
operating
income $
2,618 $
2,743 (5)% $
4,779 $
4,939 (3)%
% of non-GAAP
net revenue 11% 12% 11% 11%
Non-GAAP net
income $
1,621 $
1,751 (7)% $
2,764 $
2,960 (7)%
% of non-GAAP
net revenue 7% 7% 6% 7%
Adjusted EBITDA $
3,100 $
3,156 (2)% $
5,707 $
5,729 -%
% of non-GAAP
net revenue 14% 13% 13% 13%
Non-GAAP
earnings per
share -
diluted $
1.92 $
2.15 (11)% $
3.26 $
3.60 (9)%
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
July 31, 2020 August 2, 2019 Change July 31, 2020 August 2, 2019 Change
Net revenue $
22,733 $
23,370 (3)% $
44,630 $
45,278 (1)%
Non-GAAP adjustments:
Impact of purchase
accounting 42 84 90 166
Non-GAAP net revenue $
22,775 $
23,454 (3)% $
44,720 $
45,444 (2)%
Gross margin $
7,156 $
7,326 (2)% $
14,009 $
14,123 (1)%
Non-GAAP adjustments:
Amortization of
intangibles 375 519 747 1,038
Impact of purchase
accounting 43 85 94 169
Transaction-related
expenses - (5)
Stock-based compensation
expense 50 32 90 58
Other corporate expenses 2 24 11 37
Non-GAAP gross margin $
7,626 $
7,986 (5)% $
14,951 $
15,420 (3)%
Operating expenses $
6,020 $
6,807 (12)% $
12,171 $
13,054 (7)%
Non-GAAP adjustments:
Amortization of
intangibles (472) (541) (955) (1,239)
Impact of purchase
accounting (10) (17) (22) (34)
Transaction-related
expenses (83) (47) (159) (94)
Stock-based compensation
expense (363) (269) (693) (506)
Other corporate expenses (84) (690) (170) (700)
Non-GAAP operating
expenses $
5,008 $
5,243 (4)% $
10,172 $
10,481 (3)%
Operating income $
1,136 $
519 119% $
1,838 $
1,069 72%
Non-GAAP adjustments:
Amortization of
intangibles 847 1,060 1,702 2,277
Impact of purchase
accounting 53 102 116 203
Transaction-related
expenses 83 47 159 89
Stock-based compensation
expense 413 301 783 564
Other corporate expenses 86 714 181 737
Non-GAAP operating income $
2,618 $
2,743 (5)% $
4,779 $
4,939 (3)%
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued)
Three Months Ended Six Months Ended
July 31, 2020 August 2, 2019 Change July 31, 2020 August 2, 2019 Change
Net income $
1,099 $
4,232 (74)% $
1,281 $
4,561 (72)%
Non-GAAP adjustments:
Amortization of
intangibles 847 1,060 1,702 2,277
Impact of purchase
accounting 53 102 116 203
Transaction-related
expenses 83 47 39 89
Stock-based compensation
expense 413 301 783 564
Other corporate expenses 86 714 181 737
Fair value adjustments on
equity investments (8) (80) (102) (142)
Aggregate adjustment for
income taxes (952) (4,625) (1,236) (5,329)
Non-GAAP net income $
1,621 $
1,751 (7)% $
2,764 $
2,960 (7)%
Net income $
1,099 $
4,232 (74)% $
1,281 $
4,561 (72)%
Adjustments:
Interest and other, net 636 630 1,202 1,323
Income tax benefit (599) (4,343) (645) (4,815)
Depreciation and
amortization 1,340 1,498 2,656 3,114
EBITDA $
2,476 $
2,017 23% $
4,494 $
4,183 7%
EBITDA $
2,476 $
2,017 23% $
4,494 $
4,183 7%
Adjustments:
Stock-based compensation
expense 413 301 783 564
Impact of purchase
accounting 42 84 90 167
Transaction-related
expenses 83 47 159 89
Other corporate expenses 86 707 181 726
Adjusted EBITDA $
3,100 $
3,156 (2)% $
5,707 $
5,729 -%
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Three Months Ended July 31, 2020
(in millions, except per share amounts; unaudited)
GAAP Amortization of Impact of Transaction- Stock-based Other Fair value Aggregate Non-
intangibles purchase related compensation corporate adjustments adjustment GAAP
accounting expenses expense expenses on equity for income
investments taxes
Net income $
1,099 847 53 83 413 86 (8) (952) $
1,621
Less: Net income
attributable to
non-controlling
interests (a) 51 64 4 8 57 (29) 155
Net income
attributable to
Dell Technologies
Inc. -basic 1,048 783 49 75 356 86 (8) (923) 1,466
Incremental
dilution from
VMware, Inc.
attributable to
Dell Technologies
Inc. (b) (3) (5)
Net income
attributable to
Dell Technologies
Inc. -diluted $
1,045 $
1,461
Earnings per share
-basic $
1.41 $
1.98
Earnings per share
-diluted $
1.37 $
1.92
Weighted-average
shares
outstanding -
basic 741 741
Weighted-average
shares
outstanding -
diluted 761 761
(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 Six Months Ended July 31, 2020
(in millions, except per share amounts; unaudited)
GAAP Amortization of Impact of Transaction- Stock-based Other Fair value Aggregate Non-
intangibles purchase related compensation corporate adjustments adjustment GAAP
accounting expenses expense expenses on equity for income
investments taxes
Net income $
1,281 1,702 116 39 783 181 (102) (1,236) $
2,764
Less: Net income
attributable to
non-controlling
interests (a) 90 124 7 15 111 (1) (64) 282
Net income
attributable to
Dell Technologies
Inc. -basic 1,191 $
1,578 $
109 $
24 $
672 $
181 $
(101) $
(1,172) 2,482
Incremental
dilution from
VMware, Inc.
attributable to
Dell Technologies
Inc. (b) (5) (9)
Net income
attributable to
Dell Technologies
Inc. -diluted $
1,186 $
2,473
Earnings per share
-basic $
1.61 $
3.35
Earnings per share
-diluted $
1.56 $
3.26
Weighted-average
shares
outstanding -
basic 740 740
Weighted-average
shares
outstanding -
diluted 758 758
(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 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 $
4,232 1,060 102 47 301 714 (80) (4,625) $
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 3,416 989 96 45 250 714 (180) (3,710) 1,620
Incremental
dilution from
VMware, Inc.
attributable to
Dell Technologies
Inc. (b) (62) (9)
Net income
attributable to
Dell Technologies
Inc. -diluted $
3,354 $
1,611
Earnings per share
-basic $
4.75 $
2.25
Earnings per share
-diluted $
4.47 $
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, 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 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 $
4,561 2,277 203 89 564 737 (142) (5,329) $
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 3,709 2,133 191 84 467 737 (216) (4,385) 2,720
Incremental
dilution from
VMware, Inc.
attributable to
Dell Technologies
Inc. (b) (78) (17)
Net income
attributable to
Dell Technologies
Inc. -diluted $
3,631 $
2,703
Earnings per share
-basic $
5.17 $
3.79
Earnings per share
-diluted $
4.84 $
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, Inc.'s basic
and diluted earnings
per share by the
number of shares of
VMware, Inc. common
stock held by Dell
Technologies Inc.
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SOURCE Dell Technologies
