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Classified in: Science and technology, Business, Covid-19 virus
Subjects: ERN, CCA

Future-of-Work Solutions Power Dell Technologies' Second Quarter Fiscal 2021 Financial Results


ROUND ROCK, Texas, Aug. 27, 2020 /PRNewswire/ --

News summary

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:

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:

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
intangibles


Impact of
purchase
accounting


Transaction-
related
expenses


Stock-based
compensation
expense


Other
corporate
expenses


Fair value
adjustments
on equity
investments


Aggregate
adjustment
for income
taxes


Non-
GAAP

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
intangibles


Impact of
purchase
accounting


Transaction-
related
expenses


Stock-based
compensation
expense


Other
corporate
expenses


Fair value
adjustments
on equity
investments


Aggregate
adjustment
for income
taxes


Non-
GAAP

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
intangibles


Impact of
purchase
accounting


Transaction-
related
expenses


Stock-based
compensation
expense


Other
corporate
expenses


Fair value
adjustments
on equity
investments


Aggregate
adjustment
for income
taxes


Non-
GAAP

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
intangibles


Impact of
purchase
accounting


Transaction-
related
expenses


Stock-based
compensation
expense


Other
corporate
expenses


Fair value
adjustments
on equity
investments


Aggregate
adjustment
for income
taxes


Non-
GAAP

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.

 

SOURCE Dell Technologies


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