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Future of Work Solutions Fuel Dell Technologies’ Record Fiscal Year 2021 Financial Results


ROUND ROCK, Texas, Feb. 25, 2021 /PRNewswire/ —

News summary

  • Record full-year revenue of $94.2 billion
  • Record full-year operating income of $5.1 billion and record non-GAAP operating income of $10.8 billion
  • Record cash flow from operations of $11.4 billion
  • Record Client Solutions Group shipments, revenue and operating income

Full story
Dell Technologies (NYSE: DELL) announces financial results for its fiscal 2021 fourth quarter and full year.

Full-year revenue was a record $94.2 billion, up 2% over the prior year. The company generated record operating income of $5.1 billion, a 96% increase over the prior year, and record non-GAAP operating income of $10.8 billion, up 6%. For the full year, net income was $3.5 billion and non-GAAP net income was $6.8 billion. Cash flow from operations was a record $11.4 billion. Full-year diluted earnings per share was $4.22, and non-GAAP diluted earnings per share was $8.00.

Fourth quarter revenue was up 9% to $26.1 billion. The company generated operating income of $2.2 billion, a 204% increase over the same period in the prior year, and non-GAAP operating income of $3.3 billion, up 19%. Net income was $1.3 billion, non-GAAP net income was $2.3 billion and adjusted EBITDA was $3.8 billion. Cash flow from operations was $5.9 billion. Fourth quarter diluted earnings per share was $1.57 and non-GAAP diluted earnings per share was $2.70.

“In the past year, our team rallied to support our customers and partners worldwide as technology played a central role in keeping our society, economy and lives moving forward,” said Jeff Clarke, chief operating officer, Dell Technologies. “We generated record revenue of $94.2 billion this year by helping customers adapt to new work-and-learn-from-anywhere realities and are in an advantaged position to capitalize on the projected mid-single digits growth in IT spending in 2021.”

Fourth Quarter and Full-Year Fiscal 2021 Financial Results



Three Months Ended




Fiscal Year Ended




January 29,
2021


January 31,
2020


Change


January 29,
2021


January 31,
2020


Change


(in millions, except per share amounts and percentages; unaudited)

Total net revenue

$

26,112



$

24,032



9%


$

94,224



$

92,154



2%

Operating income

$

2,177



$

717



204%


$

5,144



$

2,622



96%

Net income

$

1,343



$

416



223%


$

3,505



$

5,529



(37)%

Earnings per share – diluted

$

1.57



$

0.54



191%


$

4.22



$

6.03



(30)%













Non-GAAP net revenue

$

26,148



$

24,129



8%


$

94,389



$

92,501



2%

Non-GAAP operating income

$

3,294



$

2,767



19%


$

10,798



$

10,148



6%

Non-GAAP net income

$

2,288



$

1,684



36%


$

6,763



$

6,089



11%

Adjusted EBITDA

$

3,809



$

3,201



19%


$

12,747



$

11,787



8%

Non-GAAP earnings per share – diluted

$

2.70



$

2.00



35%


$

8.00



$

7.35



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 fiscal year with cash and investments of $15.8 billion and delivered on its fiscal 2021 core debt paydown target of $5.5 billion. The company ended the year with total deferred revenue of $30.8 billion, up $3 billion year-over-year. Recurring revenue, which includes deferred revenue amortization, utility and as-a-Service models was approximately $6 billion for the quarter, up 8% year-over-year, as the company’s aaS models give customers greater flexibility to scale IT to meet business needs and budgets.

“This year’s strong results are a testament to the flexibility of Dell Technologies’ business model and the resilience of our team,” said Tom Sweet, chief financial officer, Dell Technologies. “Focus on our people, customers, innovation and execution resulted in record cash flow from operations of $11.4 billion, and we’ll continue to deliver differentiated value for our all stakeholders.”

Operating segments summary
Client Solutions Group delivered record results, with revenue for the fourth quarter of $13.8 billion, up 17% year over year. This was driven by $9.9 billion in commercial revenue – a 16% increase – and $3.8 billion in consumer revenue – a 19% increase. Operating income was $1.0 billion or approximately 7.6% of Client Solutions Group revenue. For the full year, the Client Solutions Group delivered record revenue of $48.4 billion, up 5% versus the prior year. Client Solutions Group full-year operating income was $3.4 billion, a 7% increase.

Key highlights:

  • Shipped a record 50.3 million units during the 2020 calendar year1, an 8% increase year-over-year
  • Only big 3 vendor to gain Commercial PC share in calendar year 20201
  • Continued to see strong growth in Latitude and Precision notebooks and Commercial Chromebooks

Infrastructure Solutions Group revenue for the fourth quarter was $8.8 billion, flat year-over-year. Storage revenue was $4.4 billion – down 2% – while servers and networking revenue was $4.4 billion – up 3%. Operating income was a record $1.2 billion or approximately 13.5% of Infrastructure Solutions Group revenue. For the full year, revenue was $32.6 billion, with operating income of $3.8 billion.

Key highlights:

  • PowerStore orders up 4X quarter-over-quarter, as customers embrace the next generation of modern data center technology and applications
  • Strong year-over-year growth in PowerMax, HCI and PowerProtect Data Domain
  • Launch of new HCI, cloud, storage and data protection integration with latest VMware releases to help customers innovate across edge locations, data centers and hybrid clouds

VMware revenue for the fourth quarter was $3.3 billion, with operating income of $1.1 billion driven by broad-based strength across a diverse product portfolio. For the full year, VMware delivered $11.9 billion in revenue and $3.6 billion in operating income.

Dell Technologies World 
Join us May 5May 6 for the Dell Technologies World Experience, the company’s flagship event that brings together latest emerging trends, technology and gurus. During the event, we will demonstrate to customers and partners the connected ecosystem of IT infrastructure, applications, devices and security – and our new APEX as-a-Service portfolio and simplified IT consumption experience that gives customers greater flexibility to scale IT to meet business needs and budgets. Register here.   

Conference call information
As previously announced, the Company will hold a conference call to discuss its fiscal 2021 fourth quarter/full year performance and financial guidance, February 25, 2021 at 4:30 p.m. CST. 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 © 2021 Dell Inc. or its subsidiaries.  All Rights Reserved. Dell Technologies, Dell, EMC and Dell EMC are trademarks of Dell Inc. or its subsidiaries.  Other trademarks may be trademarks of their respective owners.

1      IDC WW Personal Computing Device Tracker CY20Q4, WW commercial PC, on a Y/Y basis

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. 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, 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; 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, including as a result of 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 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




Fiscal Year Ended




January 29,
2021


January 31,
2020


Change


January 29,
2021


January 31,
2020


Change

Net revenue (a):












Products

$

19,784



$

18,153



9%


$

69,911



$

69,918



—%

Services

6,328



5,879



8%


24,313



22,236



9%

   Total net revenue

26,112



24,032



9%


94,224



92,154



2%

Cost of net revenue:












Products

15,424



13,999



10%


55,347



54,525



2%

Services

2,541



2,349



8%


9,460



8,696



9%

   Total cost of net revenue

17,965



16,348



10%


64,807



63,221



3%

Gross margin

8,147



7,684



6%


29,417



28,933



2%

Operating expenses:












Selling, general, and administrative

4,579



5,642



(19)%


18,998



21,319



(11)%

Research and development

1,391



1,325



5%


5,275



4,992



6%

   Total operating expenses

5,970



6,967



(14)%


24,273



26,311



(8)%

Operating income

2,177



717



204%


5,144



2,622



96%

Interest and other, net

(545)



(626)



13%


(1,474)



(2,626)



44%

Income (loss) before income taxes

1,632



91



NM


3,670



(4)



NM

Income tax provision (benefit)

289



(325)



189%


165



(5,533)



103%

Net income

1,343



416



223%


3,505



5,529



(37)%

Less: Net income attributable to non-controlling interests

116



8



NM


255



913



(72)%

Net income attributable to Dell Technologies Inc.

$

1,227



$

408



201%


$

3,250



$

4,616



(30)%













Percentage of Total Net Revenue:











Gross margin

31

%


32

%




31

%


31

%



Selling, general, and administrative

18

%


23

%




20

%


23

%



Research and development

5

%


6

%




6

%


5

%



Operating expenses

23

%


29

%




26

%


29

%



Operating income

8

%


3

%




5

%


3

%



Income (loss) before income taxes

6

%


%




4

%


%



Net income

5

%


2

%




4

%


6

%



Income tax rate

17.7

%


-357.1

%




4.5

%


138325.0

%




____________________

(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.

DELL TECHNOLOGIES INC.

Consolidated Statements of Financial Position

(in millions; unaudited)



January 29, 2021


January 31, 2020

ASSETS

Current assets:




Cash and cash equivalents

$

14,201



$

9,302


Accounts receivable, net

12,788



12,484


Short-term financing receivables, net

5,155



4,895


Inventories, net

3,402



3,281


Other current assets

8,021



6,906


Total current assets

43,567



36,868


Property, plant, and equipment, net

6,431



6,055


Long-term investments

1,624



864


Long-term financing receivables, net

5,339



4,848


Goodwill

40,829



41,691


Intangible assets, net

14,429



18,107


Other non-current assets

11,196



10,428


Total assets

$

123,415



$

118,861






LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS’ EQUITY

Current liabilities:




Short-term debt

$

6,362



$

7,737


Accounts payable

21,696



20,065


Accrued and other

9,549



9,773


Short-term deferred revenue

16,525



14,881


Total current liabilities

54,132



52,456


Long-term debt

41,622



44,319


Long-term deferred revenue

14,276



12,919


Other non-current liabilities

5,360



5,383


Total liabilities

115,390



115,077


Redeemable shares

472



629


Stockholders’ equity (deficit):




Total Dell Technologies Inc. stockholders’ equity (deficit)

2,479



(1,574)


Non-controlling interests

5,074



4,729


Total stockholders’ equity

7,553



3,155


Total liabilities, redeemable shares, and stockholders’ equity

$

123,415



$

118,861


DELL TECHNOLOGIES INC.

Condensed Consolidated Statements of Cash Flows

(in millions; unaudited)



Three Months Ended


Fiscal Year Ended


January 29,
2021


January 31,
2020


January 29,
2021


January 31,
2020

Cash flows from operating activities:








Net income

$

1,343



$

416



$

3,505



$

5,529


Adjustments to reconcile net income to net cash provided by operating activities:

4,534



3,092



7,902



3,762


Change in cash from operating activities

5,877



3,508



11,407



9,291


Cash flows from investing activities:








Purchases of investments

(42)



(39)



(338)



(181)


Maturities and sales of investments

71



48



169



497


Capital expenditures and capitalized software development costs

(498)



(700)



(2,082)



(2,576)


Acquisition of businesses and assets, net

(19)



(26)



(424)



(2,463)


Divestitures of businesses and assets, net





2,187



(3)


Other

2



13



28



40


Change in cash from investing activities

(486)



(704)



(460)



(4,686)


Cash flows from financing activities:








Proceeds from the issuance of common stock

63



207



452



658


Repurchases of parent common stock

(1)



(2)



(241)



(8)


Repurchases of subsidiary common stock (a)

(473)



(1,861)



(1,363)



(3,547)


Proceeds from debt

1,619



2,825



16,391



20,481


Repayments of debt

(3,675)



(3,169)



(20,919)



(22,117)


Other



(4)



(270)



(71)


Change in cash from financing activities

(2,467)



(2,004)



(5,950)



(4,604)


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

103



10



36



(90)


Change in cash, cash equivalents, and restricted cash

3,027



810



5,033



(89)


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

12,157



9,341



10,151



10,240


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

$

15,184



$

10,151



$

15,184



$

10,151



_________________

(a) 

Subsidiary common stock repurchases are inclusive of employee tax withholding on stock-based compensation.

DELL TECHNOLOGIES INC.

Segment Information

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



Three Months Ended




Fiscal Year Ended




January 29,
2021


January 31,
2020


Change


January 29,
2021


January 31,
2020


Change

Infrastructure Solutions Group (ISG):

Net Revenue:












Servers and networking

$

4,379



$

4,269



3%


$

16,497



$

17,127



(4)%

Storage

4,409



4,487



(2)%


16,091



16,842



(4)%

Total ISG net revenue

$

8,788



$

8,756



—%


$

32,588



$

33,969



(4)%













Operating Income:












ISG operating income

$

1,189



$

1,112



7%


$

3,776



$

4,001



(6)%

% of ISG net revenue

14

%


13

%




12

%


12

%



% of total reportable segment operating income

36

%


40

%




35

%


39

%















Client Solutions Group (CSG):

Net Revenue:












Commercial

$

9,940



$

8,563



16%


$

35,396



$

34,277



3%

Consumer

3,822



3,207



19%


12,959



11,561



12%

Total CSG net revenue

$

13,762



$

11,770



17%


$

48,355



$

45,838



5%













Operating Income:












CSG operating income

$

1,043



$

624



67%


$

3,352



$

3,138



7%

% of CSG net revenue

8

%


5

%




7

%


7

%



% of total reportable segment operating income

32

%


23

%




31

%


31

%















VMware (a):

Net Revenue:












Total VMware net revenue

$

3,317



$

3,126



6%


$

11,873



$

10,905



9%













Operating Income:












VMware operating income

$

1,067



$

1,026



4%


$

3,571



$

3,081



16%

% of VMware net revenue

32

%


33

%




30

%


28

%



% of total reportable segment operating income

32

%


37

%




33

%


30

%




____________________

(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.

DELL TECHNOLOGIES INC.

Segment Information

(in millions, except percentages; unaudited; continued)



Three Months Ended


Fiscal Year Ended


January 29,
2021


January 31,
2020


January 29,
2021


January 31,
2020

Reconciliation to consolidated net revenue:







Reportable segment net revenue (a)

$

25,867



$

23,652



$

92,816



$

90,712


Other businesses (a) (b)

279



477



1,567



1,788


Unallocated transactions (c)

2





6



1


Impact of purchase accounting (d)

(36)



(97)



(165)



(347)


Total consolidated net revenue

$

26,112



$

24,032



$

94,224



$

92,154










Reconciliation to consolidated operating income:





Reportable segment operating income (a)

$

3,299



$

2,762



$

10,699



$

10,220


Other businesses (a) (b)

(6)



5



99



(43)


Unallocated transactions (c)

1







(29)


Impact of purchase accounting (d)

(48)



(112)



(213)



(411)


Amortization of intangibles

(846)



(1,074)



(3,393)



(4,408)


Transaction-related expenses (e)

(46)



(120)



(257)



(285)


Stock-based compensation expense (f)

(390)



(376)



(1,609)



(1,262)


Other corporate expenses (g)

213



(368)



(182)



(1,160)


Total consolidated operating income

$

2,177



$

717



$

5,144



$

2,622



_________________

(a)

During Fiscal 2020, the Company reclassified Pivotal operating results from Other businesses to the VMware reportable segment.

(b) 

Secureworks, Virtustream, and Boomi constitute “Other businesses” and do not meet the requirements for a reportable segment, either individually or collectively. The Company completed the sale of RSA Security on September 1, 2020; prior to divestiture, RSA Security’s operating results were also included in Other Businesses and did not meet the requirements for a reportable segment. 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.  The fourth quarter of Fiscal 2021 includes derecognition of a $237 million previously accrued litigation loss as a result of a jury verdict in January 2020 against VMware, Inc. in a patent litigation matter. On December 21, 2020, the United States District Court of the District of Delaware set aside the jury verdict and ordered a new trial.

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




Fiscal Year Ended




January 29,
2021


January 31,
2020


Change


January 29,
2021


January 31,
2020


Change

Non-GAAP net revenue

$

26,148



$

24,129



8%


$

94,389



$

92,501



2%

Non-GAAP gross margin

$

8,624



$

8,375



3%


$

31,346



$

31,563



(1)%

% of non-GAAP net revenue

33

%


35

%




33

%


34

%



Non-GAAP operating expenses

$

5,330



$

5,608



(5)%


$

20,548



$

21,415



(4)%

% of non-GAAP net revenue

20

%


23

%




22

%


23

%



Non-GAAP operating income

$

3,294



$

2,767



19%


$

10,798



$

10,148



6%

% of non-GAAP net revenue

13

%


11

%




11

%


11

%



Non-GAAP net income

$

2,288



$

1,684



36%


$

6,763



$

6,089



11%

% of non-GAAP net revenue

9

%


7

%




7

%


7

%



Adjusted EBITDA

$

3,809



$

3,201



19%


$

12,747



$

11,787



8%

% of non-GAAP net revenue

15

%


13

%




14

%


13

%



Non-GAAP earnings per share – diluted

$

2.70



$

2.00



35%


$

8.00



$

7.35



9%

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

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



Three Months Ended




Fiscal Year Ended




January 29,
2021


January 31,
2020


Change


January 29,
2021


January 31,
2020


Change

Net revenue

$

26,112



$

24,032



9%


$

94,224



$

92,154



2%

Non-GAAP adjustments:












Impact of purchase accounting

36



97





165



347




Non-GAAP net revenue

$

26,148



$

24,129



8%


$

94,389



$

92,501



2%













Gross margin

$

8,147



$

7,684



6%


$

29,417



$

28,933



2%

Non-GAAP adjustments:












  Amortization of intangibles

380



526





1,502



2,081




  Impact of purchase accounting

37



98





171



353




  Transaction-related expenses









(5)




  Stock-based compensation expense

53



38





194



129




  Other corporate expenses

7



29





62



72




Non-GAAP gross margin

$

8,624



$

8,375



3%


$

31,346



$

31,563



(1)%













Operating expenses

$

5,970



$

6,967



(14)%


$

24,273



$

26,311



(8)%

Non-GAAP adjustments:












  Amortization of intangibles

(466)



(548)





(1,891)



(2,327)




  Impact of purchase accounting

(11)



(14)





(42)



(58)




  Transaction-related expenses

(46)



(120)





(257)



(290)




  Stock-based compensation expense

(337)



(338)





(1,415)



(1,133)




  Other corporate expenses

220



(339)





(120)



(1,088)




Non-GAAP operating expenses

$

5,330



$

5,608



(5)%


$

20,548



$

21,415



(4)%













Operating income

$

2,177



$

717



204%


$

5,144



$

2,622



96%

Non-GAAP adjustments:












  Amortization of intangibles

846



1,074





3,393



4,408




  Impact of purchase accounting

48



112





213



411




  Transaction-related expenses

46



120





257



285




  Stock-based compensation expense

390



376





1,609



1,262




  Other corporate expenses

(213)



368





182



1,160




Non-GAAP operating income

$

3,294



$

2,767



19%


$

10,798



$

10,148



6%

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

(in millions, except percentages; unaudited; continued)



Three Months Ended




Fiscal Year Ended




January 29,
2021


January 31,
2020


Change


January 29,
2021


January 31,
2020


Change

Net income

$

1,343



$

416



223%


$

3,505



$

5,529



(37)%

Non-GAAP adjustments:












  Amortization of intangibles

846



1,074





3,393



4,408




  Impact of purchase accounting

48



112





213



411




  Transaction-related expenses

46



120





(201)



285




  Stock-based compensation expense

390



376





1,609



1,262




  Other corporate expenses

(213)



368





74



1,160




  Fair value adjustments on equity investments

9



(34)





(582)



(194)




  Aggregate adjustment for income taxes

(181)



(748)





(1,248)



(6,772)




Non-GAAP net income

$

2,288



$

1,684



36%


$

6,763



$

6,089



11%













Net income

$

1,343



$

416



223%


$

3,505



$

5,529



(37)%

Adjustments:












  Interest and other, net

545



626





1,474



2,626




  Income tax provision (benefit)

289



(325)





165



(5,533)




  Depreciation and amortization

1,373



1,535





5,390



6,143




EBITDA

$

3,550



$

2,252



58%


$

10,534



$

8,765



20%













EBITDA

$

3,550



$

2,252



58%


$

10,534



$

8,765



20%

Adjustments:












  Stock-based compensation expense

390



376





1,609



1,262




  Impact of purchase accounting

36



96





165



347




  Transaction-related expenses

46



120





257



285




  Other corporate expenses

(213)



357





182



1,128




Adjusted EBITDA

$

3,809



$

3,201



19%


$

12,747



$

11,787



8%

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

For the Three Months Ended January 29, 2021

(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

$

1,343



846



48



46



390



(213)



9



(181)



$

2,288


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

116



62



3



6



51



(47)



4



(10)



185


Net income attributable to Dell Technologies Inc. – basic

1,227



784



45



40



339



(166)



5



(171)



2,103


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

(5)

















(5)


Net income attributable to Dell Technologies Inc. – diluted

$

1,222

















$

2,098




















Earnings per share – basic

$

1.64

















$

2.80


Earnings per share – diluted

$

1.57

















$

2.70




















Weighted-average shares outstanding – basic

750

















750


Weighted-average shares outstanding – diluted

776

















776



_________________

(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 Fiscal Year Ended January 29, 2021

(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

$

3,505



3,393



213



(201)



1,609



74



(582)



(1,248)



$

6,763


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

255



249



13



26



223



(38)



(31)



(87)



610


Net income attributable to Dell Technologies Inc. – basic

3,250



$

3,144



$

200



$

(227)



$

1,386



$

112



$

(551)



$

(1,161)



6,153


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

(13)

















(20)


Net income attributable to Dell Technologies Inc. – diluted

$

3,237

















$

6,133




















Earnings per share – basic

$

4.37

















$

8.27


Earnings per share – diluted

$

4.22

















$

8.00




















Weighted-average shares outstanding – basic

744

















744


Weighted-average shares outstanding – diluted

767

















767







































_________________

(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 January 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

$

416



1,074



112



120



376



368



(34)



(748)



$

1,684


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

8



76



6



32



65



45





(61)



171


Net income attributable to Dell Technologies Inc. – basic

408



998



106



88



311



323



(34)



(687)



1,513


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

(3)

















(8)


Net income attributable to Dell Technologies Inc. – diluted

$

405

















$

1,505




















Earnings per share – basic

$

0.56

















$

2.06


Earnings per share – diluted

$

0.54

















$

2.00




















Weighted-average shares outstanding – basic

734

















734


Weighted-average shares outstanding – diluted

754

















754



_________________

(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 Fiscal Year Ended January 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

$

5,529



4,408



411



285



1,262



1,160



(194)



(6,772)



$

6,089


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

913



295



23



50



217



45



24



(1,032)



535


Net income attributable to Dell Technologies Inc. – basic

4,616



4,113



388



235



1,045



1,115



(218)



(5,740)



5,554


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

(84)

















(35)


Net income attributable to Dell Technologies Inc. – diluted

$

4,532

















$

5,519




















Earnings per share – basic

$

6.38

















$

7.67


Earnings per share – diluted

$

6.03

















$

7.35




















Weighted-average shares outstanding – basic

724

















724


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.

SOURCE Dell Technologies

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