Strong Storage, VMware and PC Performance Power Dell Technologies' Third Quarter Results

November 26, 2019 at 4:25 PM EST

ROUND ROCK, Texas, Nov. 26, 2019 /PRNewswire/ --

News summary

  • Storage revenue up 7%; Client Solutions Group revenue up 5%
  • VMware revenue up 11%
  • Operating income of $836 million; non-GAAP operating income of $2.4 billion
  • Cash flow from operations of $1.8 billion
  • Diluted earnings per share of $0.66; non-GAAP diluted earnings per share of $1.75

Full story
Dell Technologies (NYSE: DELL) announces financial results for its fiscal 2020 third quarter.  Third quarter revenue was $22.8 billion, up 2 percent, and non-GAAP revenue was $22.9 billion, up 1 percent over the same period last year.  Operating income was $836 million1 compared to an operating loss of $356 million last year, and non-GAAP operating income was up 18 percent to $2.4 billion.  Net income was $552 million or 2.4 percent of revenue, non-GAAP net income was $1.4 billion or 6.3 percent of non-GAAP revenue, and adjusted EBITDA was $2.9 billion or 12.5 percent of non-GAAP revenue.  Cash flow from operations was $1.8 billion.  Diluted earnings per share was $0.66 and non-GAAP diluted earnings per share was $1.75.

"Dell Technologies is innovating and integrating solutions across our entire portfolio to create the technology infrastructure of the future for our customers," said Jeff Clarke, vice chairman, Dell Technologies. "Our highly differentiated set of offerings enables us to continue to win in a consolidating industry, while also driving long-term value for all stakeholders."

Third Quarter Fiscal 2020 Financial Results


Three Months Ended




Nine Months Ended




November 1,
2019


November 2,
2018


Change


November 1,
2019


November 2,
2018


Change


(in millions, except percentages; unaudited)

Total net revenue

$

22,844



$

22,482



2%


$

68,122



$

66,780



2%

Operating income (loss)

$

836



$

(356)



335%


$

1,905



$

(522)



465%

Net income (loss)

$

552



$

(895)



162%


$

5,113



$

(1,894)



370%













Non-GAAP net revenue

$

22,928



$

22,651



1%


$

68,372



$

67,316



2%

Non-GAAP operating income

$

2,442



$

2,064



18%


$

7,381



$

6,198



19%

Non-GAAP net income

$

1,445



$

1,197



21%


$

4,405



$

3,635



21%

Adjusted EBITDA

$

2,857



$

2,426



18%


$

8,586



$

7,268



18%


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

 

Dell Technologies ended the quarter with a cash and investments balance of $9.4 billion.  The company repaid approximately $1.1 billion of gross debt in the quarter and approximately $3.5 billion year-to-date.  The company has paid down more than $18 billion in gross debt over the three years since closing the EMC transaction and remains on track to repay approximately $5 billion of gross debt in fiscal 2020.

"This quarter's results were driven by the strength of our diverse model, with our storage, commercial client and VMware businesses performing very well," said Tom Sweet, chief financial officer, Dell Technologies. "We remain focused on long-term profitable growth, growing faster than competitors and the industry, growing operating income and EPS faster than revenue and generating strong cash flow over time."

Operating segments summary

Client Solutions Group revenue for the third quarter was $11.4 billion, up 5 percent versus the third quarter of last year. Commercial revenue grew 9 percent to $8.3 billion, and Consumer revenue was down 6 percent to $3.1 billion. Operating income was $739 million or 6.5 percent of Client Solutions Group revenue.

Key highlights:

  • Double-digit unit and revenue growth in commercial desktops and workstations
  • Outperformed the PC industry, gaining year-over-year worldwide share in total and commercial client units2
  • Expanded PC as a service to include small businesses, offering growing companies full PC lifecycle management for a single, predictable price per month

Infrastructure Solutions Group revenue for the third quarter was $8.4 billion, a 6 percent decrease year-over-year. Storage revenue was $4.1 billion, up 7 percent year-over-year, while servers and networking decreased 16 percent to $4.2 billion. Operating income was $1.0 billion for the third quarter or 11.9 percent of Infrastructure Solutions Group revenue.

Key highlights:

  • Strong adoption of the Dell Technologies Cloud with recent customer wins in the logistics, transportation, financial, communications and retail sectors
  • Continued strong demand for our leading HCI solutions, with VxRail orders up 82 percent year-over-year
  • Announced availability of Dell EMC PowerOne autonomous infrastructure to make deploying, managing and consuming IT easier for organizations

VMware revenue was $2.5 billion for the third quarter, up 11 percent driven by broad-based strength across a diverse product portfolio. Operating income for the third quarter was $717 million, or 28.9 percent of VMware revenue.

Earlier this month at the Dell Technologies Summit, the company ushered in a new decade of responsibility and innovation with the announcement of moonshot goals that will propel the company's social impact worldwide. The ambitious goals are the linchpin of the company's 2030 Progress Made Real plan, and are grounded in the belief that technology and data combined with human spirit are, and will always be, positive forces in the world.

Conference call information
As previously announced, the company will hold a conference call to discuss its third quarter performance and financial guidance today, November 26, 2019 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.

A slide presentation containing additional financial and operating information may be downloaded from Dell Technologies' website at https://investors.delltechnologies.com/financial-information/quarterly-results

About Dell Technologies
Dell Technologies (NYSE:DELL) is a unique family of businesses that helps organizations and individuals build their digital future and transform how they work and live.  The company provides customers with the industry's broadest and most innovative technology and services portfolio spanning from edge to core to cloud.  The Dell Technologies family includes Dell, Dell EMC, Pivotal, RSA, Secureworks, Virtustream and VMware.

Copyright © 2019 Dell Inc. or its subsidiaries.  All Rights Reserved. Dell Technologies, Dell, EMC and Dell EMC are trademarks of Dell Inc. or its subsidiaries.  Other trademarks may be trademarks of their respective owners.



1

Due to the EMC transaction, significant non-cash bridging items will remain between GAAP and non-GAAP results for the next few years.

2

IDC WW Quarterly Personal Computing Device (PDC) Tracker CY19Q3.

 

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

Special Note on Forward-Looking Statements:
Statements in this press release that relate to future results and events are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933 and are based on Dell Technologies' current expectations. In some cases, you can identify these statements by such forward-looking words as "anticipate," "believe," "confidence," "could," "estimate," "expect," "guidance," "intend," "may," "objective," "outlook," "plan," "project," "possible," "potential," "should," "will" and "would," or similar words or expressions that refer to future events or outcomes.

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

This list of risks, uncertainties, and other factors is not complete. Dell Technologies discusses some of these matters more fully, as well as certain risk factors that could affect Dell Technologies' business, financial condition, results of operations, and prospects, in its reports filed with the SEC, including Dell Technologies' annual report on Form 10-K for the fiscal year ended February 1, 2019, quarterly reports on Form 10-Q, and current reports on Form 8-K. These filings are available for review through the SEC's website at www.sec.gov. Any or all forward-looking statements Dell Technologies makes may turn out to be wrong and can be affected by inaccurate assumptions Dell Technologies might make or by known or unknown risks, uncertainties and other factors, including those identified in this press release. Accordingly, you should not place undue reliance on the forward-looking statements made in this press release, which speak only as of its date. Dell Technologies does not undertake to update, and expressly disclaims any duty to update, its forward-looking statements, whether as a result of circumstances or events that arise after the date they are made, new information, or otherwise.

 

DELL TECHNOLOGIES INC.

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

(in millions, except percentages; unaudited)




Three Months Ended




Nine Months Ended




November 1,
2019


November 2,
2018


Change


November 1,
2019


November 2,
2018


Change

Net revenue:












Products

$

17,485



$

17,625



(1)%


$

52,349



$

52,445



—%

Services

5,359



4,857



10%


15,773



14,335



10%

Total net revenue

22,844



22,482



2%


68,122



66,780



2%

Cost of net revenue:












Products

13,558



14,565



(7)%


40,526



43,114



(6)%

Services

2,160



1,974



9%


6,347



5,722



11%

Total cost of net revenue

15,718



16,539



(5)%


46,873



48,836



(4)%

Gross margin

7,126



5,943



20%


21,249



17,944



18%

Operating expenses:












Selling, general, and administrative

5,028



5,159



(3)%


15,677



15,064



4%

Research and development

1,262



1,140



11%


3,667



3,402



8%

Total operating expenses

6,290



6,299



—%


19,344



18,466



5%

Operating income (loss)

836



(356)



335%


1,905



(522)



465%

Interest and other, net

(677)



(639)



(6)%


(2,000)



(1,564)



(28)%

Income (loss) before income taxes

159



(995)



116%


(95)



(2,086)



95%

Income tax benefit

(393)



(100)



(293)%


(5,208)



(192)



NM

Net income (loss)

552



(895)



162%


5,113



(1,894)



370%

Less: Net income (loss)
attributable to non-controlling
interests

53



(19)



379%


905



117



674%

Net income (loss) attributable
to Dell Technologies Inc.

$

499



$

(876)



157%


$

4,208



$

(2,011)



309%













Percentage of Total Net Revenue:











Gross margin

31

%


26

%




31

%


27

%



Selling, general, and administrative

22

%


23

%




23

%


23

%



Research and development

6

%


5

%




5

%


5

%



Operating expenses

28

%


28

%




28

%


28

%



Operating income (loss)

4

%


(2)

%




3

%


(1)

%



Income (loss) before income taxes

1

%


(4)

%




%


(3)

%



Net income (loss)

2

%


(4)

%




8

%


(3)

%



Income tax rate

(247.2)

%


10.1

%




5482.1

%


9.2

%




 

DELL TECHNOLOGIES INC.

Consolidated Statements of Financial Position

(in millions; unaudited)




November 1,
2019


February 1,
2019

ASSETS

Current assets:




Cash and cash equivalents

$

8,555



$

9,676


Accounts receivable, net

11,447



12,371


Short-term financing receivables, net

4,589



4,398


Inventories, net

3,257



3,649


Other current assets

6,924



6,044


Total current assets

34,772



36,138


Property, plant, and equipment, net

5,787



5,259


Long-term investments

838



1,005


Long-term financing receivables, net

4,465



4,224


Goodwill

41,688



40,089


Intangible assets, net

19,174



22,270


Other non-current assets

10,090



2,835


Total assets

$

116,814



$

111,820



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

Current liabilities:




Short-term debt

$

7,664



$

4,320


Accounts payable

19,443



19,213


Accrued and other

8,161



8,495


Short-term deferred revenue

13,787



12,944


Total current liabilities

49,055



44,972


Long-term debt

44,727



49,201


Long-term deferred revenue

12,116



11,066


Other non-current liabilities

6,105



6,327


Total liabilities

112,003



111,566


Redeemable shares

934



1,196


Stockholders' equity (deficit):




Total Dell Technologies Inc. stockholders' equity (deficit)

(1,804)



(5,765)


Non-controlling interests

5,681



4,823


Total stockholders' equity (deficit)

3,877



(942)


Total liabilities, redeemable shares, and stockholders' equity (deficit)

$

116,814



$

111,820


 

DELL TECHNOLOGIES INC.

Condensed Consolidated Statements of Cash Flows

(in millions; unaudited)




Three Months Ended


Nine Months Ended


November 1,
2019


November 2,
2018


November 1,
2019


November 2,
2018

Cash flows from operating activities:








Net income (loss)

$

552



$

(895)



$

5,113



$

(1,894)


Adjustments to reconcile net income (loss) to net
cash provided by operating activities

1,269



1,728



670



6,519


Change in cash from operating activities

1,821



833



5,783



4,625


Cash flows from investing activities:








Investments:








Purchases

(72)



(24)



(142)



(912)


Maturities and sales

19



863



449



2,185


Capital expenditures

(529)



(300)



(1,612)



(861)


Capitalized software development costs

(80)



(86)



(264)



(246)


Acquisition of businesses, net

(2,045)



(493)



(2,429)



(493)


Divestitures of businesses, net







142


Asset acquisitions, net

(8)



(21)



(8)



(59)


Asset dispositions, net



(6)



(3)



(12)


Other

16



8



27



35


Change in cash from investing activities

(2,699)



(59)



(3,982)



(221)


Cash flows from financing activities:








Share repurchases for tax withholdings of equity awards

(44)



(52)



(407)



(251)


Proceeds from the issuance of common stock of subsidiaries

143



114



294



767


Repurchases of common stock of subsidiaries

(241)



(1)



(1,285)



(1)


Proceeds from debt

5,455



1,806



17,656



6,443


Repayments of debt

(5,037)



(2,721)



(18,948)



(9,669)


Other

46



(3)



90



(133)


Change in cash from financing activities

322



(857)



(2,600)



(2,844)


Effect of exchange rate changes on cash, cash
equivalents, and restricted cash

(38)



(46)



(100)



(262)


Change in cash, cash equivalents, and restricted cash

(594)



(129)



(899)



1,298


Cash, cash equivalents, and restricted cash at
beginning of the period

9,935



15,805



10,240



14,378


Cash, cash equivalents, and restricted cash at end of
the period

$

9,341



$

15,676



$

9,341



$

15,676


 

DELL TECHNOLOGIES INC.

Segment Information

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




Three Months Ended




Nine Months Ended




November 1,
2019


November 2,
2018


Change


November 1,
2019


November 2,
2018


Change

Infrastructure Solutions Group (ISG):

Net Revenue:












Servers and networking

$

4,241



$

5,054



(16)%


$

12,858



$

14,700



(13)%

Storage

4,149



3,883



7%


12,355



12,131



2%

Total ISG net revenue

$

8,390



$

8,937



(6)%


$

25,213



$

26,831



(6)%













Operating Income:












ISG operating income

$

996



$

935



7%


$

2,889



$

2,886



—%

% of ISG net revenue

12

%


10

%




11

%


11

%



% of total reportable segment operating income

41

%


43

%




39

%


45

%















Client Solutions Group (CSG):

Net Revenue:












Commercial

$

8,330



$

7,613



9%


$

25,714



$

23,085



11%

Consumer

3,080



3,292



(6)%


8,354



9,219



(9)%

Total CSG net revenue

$

11,410



$

10,905



5%


$

34,068



$

32,304



5%













Operating Income:












CSG operating income

$

739



$

447



65%


$

2,514



$

1,405



79%

% of CSG net revenue

6

%


4

%




7

%


4

%



% of total reportable segment operating income

30

%


21

%




34

%


22

%















VMware:

Net Revenue:












Total VMware net revenue

$

2,483



$

2,229



11%


$

7,231



$

6,451



12%













Operating Income:












VMware operating income

$

717



$

768



(7)%


$

2,093



$

2,117



(1)%

% of VMware net revenue

29

%


34

%




29

%


33

%



% of total reportable segment operating income

29

%


36

%




28

%


33

%



 

DELL TECHNOLOGIES INC.

Segment Information

(in millions, except percentages; unaudited; continued)




Three Months Ended


Nine Months Ended


November 1,
2019


November 2,
2018


November 1,
2019


November 2,
2018

Reconciliation to consolidated net revenue:







Reportable segment net revenue

$

22,283



$

22,071



$

66,512



$

65,586


Other businesses (a)

644



583



1,859



1,736


Unallocated transactions (b)

1



(3)



1



(6)


Impact of purchase accounting (c)

(84)



(169)



(250)



(536)


Total consolidated net revenue

$

22,844



$

22,482



$

68,122



$

66,780










Reconciliation to consolidated operating income (loss):





Reportable segment operating income

$

2,452



$

2,150



$

7,496



$

6,408


Other businesses (a)

(8)



(40)



(86)



(139)


Unallocated transactions (b)

(2)



(46)



(29)



(71)


Impact of purchase accounting (c)

(96)



(193)



(299)



(630)


Amortization of intangibles

(1,057)



(1,546)



(3,334)



(4,594)


Transaction-related expenses (d)

(76)



(167)



(165)



(437)


Stock-based compensation expense (e)

(322)



(256)



(886)



(671)


Other corporate expenses (f)

(55)



(258)



(792)



(388)


Total consolidated operating income (loss)

$

836



$

(356)



$

1,905



$

(522)











(a) 

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

(b) 

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

(c) 

Impact of purchase accounting includes non-cash purchase accounting adjustments that are primarily related to the EMC merger transaction that closed in September 2016.

(d) 

Transaction-related expenses includes acquisition, integration, and divestiture related costs, as well as the costs incurred in the Class V transaction that closed in December 2018.

(e) 

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

(f) 

Other corporate expenses includes impairment charges and severance, facility action, and other costs.

 

SUPPLEMENTAL SELECTED NON-GAAP FINANCIAL MEASURES

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




Nine Months Ended




November 1,
2019


November 2,
2018


Change


November 1,
2019


November 2,
2018


Change

Non-GAAP net revenue

$

22,928



$

22,651



1%


$

68,372



$

67,316



2%

Non-GAAP gross margin

$

7,768



$

7,000



11%


$

23,188



$

20,985



10%

% of non-GAAP net revenue

34

%


31

%




34

%


31

%



Non-GAAP operating expenses

$

5,326



$

4,936



8%


$

15,807



$

14,787



7%

% of non-GAAP net revenue

23

%


22

%




23

%


22

%



Non-GAAP operating income

$

2,442



$

2,064



18%


$

7,381



$

6,198



19%

% of non-GAAP net revenue

11

%


9

%




11

%


9

%



Non-GAAP net income (a)

$

1,445



$

1,197



21%


$

4,405



$

3,635



21%

% of non-GAAP net revenue

6

%


5

%




6

%


5

%



Adjusted EBITDA

$

2,857



$

2,426



18%


$

8,586



$

7,268



18%

% of non-GAAP net revenue

12

%


11

%




13

%


11

%












(a)

Non-GAAP net income has been recast to exclude fair value adjustments on equity investments, the corresponding tax effects of those adjustments, and discrete tax items.


 

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

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




Three Months Ended




Nine Months Ended




November 1,
2019


November 2,
2018


Change


November 1,
2019


November 2,
2018


Change

Net revenue

$

22,844



$

22,482



2%


$

68,122



$

66,780



2%

Non-GAAP adjustments:












Impact of purchase accounting

84



169





250



536




Non-GAAP net revenue

$

22,928



$

22,651



1%


$

68,372



$

67,316



2%













Gross margin

$

7,126



$

5,943



20%


$

21,249



$

17,944



18%

Non-GAAP adjustments:












Amortization of intangibles

517



726





1,555



2,154




Impact of purchase accounting

86



171





255



549




Transaction-related expenses



102





(5)



239




Stock-based compensation expense

33



20





91



54




Other corporate expenses

6



38





43



45




Non-GAAP gross margin

$

7,768



$

7,000



11%


$

23,188



$

20,985



10%













Operating expenses

$

6,290



$

6,299



—%


$

19,344



$

18,466



5%

Non-GAAP adjustments:












Amortization of intangibles

(540)



(820)





(1,779)



(2,440)




Impact of purchase accounting

(10)



(22)





(44)



(81)




Transaction-related expenses

(76)



(65)





(170)



(198)




Stock-based compensation expense

(289)



(236)





(795)



(617)




Other corporate expenses

(49)



(220)





(749)



(343)




Non-GAAP operating expenses

$

5,326



$

4,936



8%


$

15,807



$

14,787



7%













Operating income (loss)

$

836



$

(356)



335%


$

1,905



$

(522)



465%

Non-GAAP adjustments:












Amortization of intangibles

1,057



1,546





3,334



4,594




Impact of purchase accounting

96



193





299



630




Transaction-related expenses

76



167





165



437




Stock-based compensation expense

322



256





886



671




Other corporate expenses

55



258





792



388




Non-GAAP operating income

$

2,442



$

2,064



18%


$

7,381



$

6,198



19%

 

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

(in millions, except percentages; unaudited; continued)




Three Months Ended




Nine Months Ended




November 1,
2019


November 2,
2018


Change


November 1,
2019


November 2,
2018


Change

Net income (loss)

$

552



$

(895)



162%


$

5,113



$

(1,894)



370%

Non-GAAP adjustments:












Amortization of intangibles

1,057



1,546





3,334



4,594




Impact of purchase accounting

96



193





299



630




Transaction-related expenses

76



167





165



437




Stock-based compensation expense

322



256





886



671




Other corporate expenses

55



258





792



388




Fair value adjustments on equity investments

(18)



17





(160)



(229)




Aggregate adjustment for income taxes

(695)



(345)





(6,024)



(962)




Non-GAAP net income (a)

$

1,445



$

1,197



21%


$

4,405



$

3,635



21%













Net income (loss)

$

552



$

(895)



162%


$

5,113



$

(1,894)



370%

Adjustments:












Interest and other, net

677



639





2,000



1,564




Income tax benefit

(393)



(100)





(5,208)



(192)




Depreciation and amortization

1,494



1,961





4,608



5,806




EBITDA

$

2,330



$

1,605



45%


$

6,513



$

5,284



23%













EBITDA

$

2,330



$

1,605



45%


$

6,513



$

5,284



23%

Adjustments:












Stock-based compensation expense

322



256





886



671




Impact of purchase accounting

84



169





251



536




Transaction-related expenses

76



158





165



409




Other corporate expenses

45



238





771



368




Adjusted EBITDA

$

2,857



$

2,426



18%


$

8,586



$

7,268



18%










(a)  

Non-GAAP net income has been recast to exclude fair value adjustments on equity investments, the corresponding tax effects of those adjustments, and discrete tax items.

 

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

For the Three Months Ended November 1, 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

$

552



1,057



96



76



322



55



(18)



(695)



$

1,445


Less: Net income attributable to non-controlling
interests (a)

53



75



5



13



55





(50)



(27)



124


Net income attributable to Dell Technologies Inc. -
basic

499



982



91



63



267



55



32



(668)



1,321


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

(6)

















(6)


Net income attributable to Dell Technologies Inc. -
diluted

$

493

















$

1,315




















Earnings per share - basic

$

0.69

















$

1.82


Earnings per share - diluted

$

0.66

















$

1.75




















Weighted-average shares outstanding - basic

725

















725


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.

 

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

For the Nine Months Ended November 1, 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

$

5,113



3,334



299



165



886



792



(160)



(6,024)



$

4,405


Less: Net income attributable to non-controlling
interests (a)

905



219



17



18



152





24



(971)



364


Net income attributable to Dell Technologies Inc. -
basic

4,208



3,115



282



147



734



792



(184)



(5,053)



4,041


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

(81)

















(25)


Net income attributable to Dell Technologies Inc. -
diluted

$

4,127

















$

4,016




















Earnings per share - basic

$

5.84

















$

5.61


Earnings per share - diluted

$

5.50

















$

5.35




















Weighted-average shares outstanding - basic

720

















720


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.

 

Cision View original content:http://www.prnewswire.com/news-releases/strong-storage-vmware-and-pc-performance-power-dell-technologies-third-quarter-results-300965629.html

SOURCE Dell Technologies

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