ROUND ROCK, Texas, June 4, 2018 /PRNewswire/ --
News summary
- Strong quarter with revenue of $21.4
billion, up 19 percent
- Double-digit growth in commercial client, servers, storage and
VMware
- First quarter of storage share gain since closing the EMC
transaction
- Delivered cash flow from operations of $1.2 billion
Full story
Dell Technologies (NYSE: DVMT) announces its fiscal 2019 first
quarter results. For the first quarter, revenue was $21.4 billion, up 19 percent, and non-GAAP
revenue was $21.5 billion, up 17
percent from the prior period. During the quarter, the company
generated a GAAP operating loss of $153
million1, with a non-GAAP operating income of
$2.0 billion, up 42 percent.
"We had a strong first quarter with balanced growth across all
business units, regions, and customer segments," said Tom Sweet, chief financial officer, Dell
Technologies. "Our broad set of capabilities, enhanced by our
targeted investments over the last year, drove strong top-line
momentum and improved profitability, allowing us to generate good
operating cash flow and make progress paying down our core
debt2."
The company ended the quarter with a cash and investments
balance of $21.7 billion, an increase
of $1.4 billion from the prior
quarter and an increase of $6.7
billion from last year. Cash generation in the first quarter
was seasonally strong given the overall velocity in the business.
During the first quarter, Dell Technologies paid down approximately
$600 million of core debt, ending the
quarter with a core debt balance of $39.8
billion. Subsequent to the end of the quarter, the company
paid down another $2.5 billion of
core debt bringing the gross debt paid down to $13 billion since the close of the EMC
transaction.
Fiscal first quarter 2019 results
|
Three Months
Ended
|
|
|
|
May 4,
2018
|
|
May 5,
2017
|
|
Change
|
|
(in millions, except
percentages; unaudited)
|
|
|
|
|
|
|
Total net
revenue
|
$
21,356
|
|
$
18,000
|
|
19 %
|
Operating
loss
|
$
(153)
|
|
$
(1,272)
|
|
88 %
|
Net loss
|
$
(538)
|
|
$
(1,203)
|
|
55 %
|
|
|
|
|
|
|
Non-GAAP net
revenue
|
$
21,543
|
|
$
18,355
|
|
17 %
|
Non-GAAP operating
income
|
$
2,026
|
|
$
1,425
|
|
42 %
|
Non-GAAP net
income
|
$
1,174
|
|
$
761
|
|
54 %
|
Adjusted
EBITDA
|
$
2,383
|
|
$
1,795
|
|
33 %
|
Dell Technologies' first quarter fiscal 2019 non-GAAP
operating income excludes approximately $2.2
billion of adjustments, primarily related to purchase
accounting and amortization of intangible assets.
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.
"The great momentum we saw exiting last year for servers and
commercial client continued through the first quarter. We gained
share in PCs and servers during the first calendar quarter and,
when the numbers are revealed, expect to gain share in storage, as
well," said Jeff Clarke,
vice-chairman, Products & Operations, Dell Technologies. "We're pleased but not
satisfied and will continue focusing our energy and resources on
what matters most to our customers."
Operating segments summary
Infrastructure Solutions Group revenue for the first
quarter was $8.7 billion, a 25
percent increase. This was driven by 41 percent year-over-year
growth in servers and networking to $4.6
billion and 10 percent growth in storage to $4.1 billion. Operating income was $939 million or 10.8 percent of revenue for the
first quarter.
Key highlights:
- Sixth consecutive quarter of server revenue growth, driven by
double-digit growth for both PowerEdge and Cloud servers
- Remained the worldwide share leader in x86 servers, for both
units and revenue3
- Strong demand for Dell EMC's market-leading hyper-converged
portfolio, including triple-digit growth in its VxRail and VxRack
offerings
- Following positive demand growth in its fiscal fourth quarter,
Dell expects to gain share year-over-year in storage when the first
calendar quarter 2018 storage industry share numbers are final.
This will be its first quarter of storage share gain since closing
the EMC transaction.
"Storage systems spending is forecasted to grow 9.8 percent
year-over-year in the first quarter of 2018 and we expect, when IDC
releases first quarter market share, Dell EMC's storage business
will outperform the market and gain share," said Matt Eastwood, senior vice president of IDC's
enterprise, datacenter, cloud infrastructure and developer research
groups.
Client Solutions Group revenue for the first quarter was
$10.3 billion, up 14 percent versus
the first quarter of last year. Commercial revenue grew 16 percent
to $7.4 billion and Consumer revenue
was up 7 percent to $2.9 billion.
Operating income for the first quarter was $533 million, a 64 percent increase and was 5.2
percent of revenue.
Key highlights:
- Increased PC shipments by 6.4 percent year-over-year, with 21
consecutive quarters of year-over-year PC unit share
growth4
- Maintained No. 1 share position worldwide for displays, marking
the 19th consecutive quarter5
- No. 1 provider of workstations worldwide, outgrowing the
industry4
VMware segment revenue for the first quarter was
$2.0 billion, up 12 percent, with
operating income of $613 million or
30.2 percent of revenue.
First quarter revenue from other businesses, including
RSA, Pivotal, Secureworks, Virtustream and Boomi was $579 million, up 9 percent.
Additional highlights
Dell Technologies hosted its annual Dell Technologies World
conference in May, its largest ever with more than 14,000 attendees
from 131 countries and more than 70,000 joining online through an
online virtual video experience. Digital transformation is
fundamentally changing how every business in every industry is
built and operated, and Dell Technologies provides IT practitioners
with a one-stop shop for the essential infrastructure they need to
build their digital future, transform IT and protect their most
important digital assets from the edge, to the core to the
cloud.
Dell Technologies demonstrated the power of its broad and
innovative portfolio of IT infrastructure, applications, devices
and security that enable real transformation. The company announced
breakthrough modern data center solutions including the new Dell
EMC PowerMax storage array, with end-to-end NVMe and a built-in,
real-time machine learning engine. It also previewed Dell EMC
PowerEdge MX (coming in the second half of this year), a new
modular infrastructure solution designed to enable customers to
flexibly configure and optimize their IT infrastructure for new and
emerging workloads. In addition, Dell and Dell EMC are uniquely
delivering artificial intelligence, machine learning and deep
learning capabilities from the desktop to the data center,
unveiling two new 14th generation Dell EMC PowerEdge four-socket
servers and the new Dell Precision Optimizer 5.0, which uses AI to
automatically adjust applications running on Dell Precision
workstations to customize and optimize performance.
Conference call information
As previously announced, the company will hold a conference call
to discuss its first quarter performance today at 7 a.m. CDT. The conference call will be broadcast
live over the internet and can be accessed at
investors.delltechnologies.com. 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 investors.delltechnologies.com.
About Dell Technologies
Dell Technologies is a unique family of businesses that provides
the essential infrastructure for organizations to build their
digital future, transform IT and protect their most important
asset, information. The company services customers of all sizes
across 180 countries – ranging from 99 percent of the Fortune 500
to individual consumers – with the industry's most comprehensive
and innovative portfolio from the edge to the core to the
cloud.
Copyright © 2018. All Rights Reserved. Dell, Dell EMC, Pivotal,
RSA, Secureworks, Virtustream, VMware and the Dell Technologies
logo are trademarks of Dell Technologies in the United States
and/or other jurisdictions. All other marks and names mentioned
herein may be trademarks of their respective companies.
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 Core Debt represents the total principal amount of the company's
debt, less unrestricted subsidiary debt, DFS related debt, and
other debt.
3 IDC WW Quarterly Server Tracker CY18Q1
4 IDC WW Quarterly Personal Computing Device (PCD) Tracker
CY18Q1
5 DisplaySearch Desktop Monitor Market Tracker CY17Q4
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, 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 of the foregoing historical non-GAAP
financial measures to the most directly comparable historical GAAP
financial measures 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;
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 the Dell
Technologies' business, financial condition, results of operations,
and prospects, in its reports filed with the Securities and
Exchange Commission, including Dell Technologies' Annual Report on
Form 10-K for the fiscal year ended February
2, 2018, quarterly reports on Form 10-Q, and current reports
on Form 8-K. These filings are available for review through the
Securities and Exchange Commission'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 per share amounts and percentages; unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
May 4,
2018
|
|
May 5,
2017
|
|
Change
|
Net
revenue:
|
|
|
|
|
|
Products
|
$
16,671
|
|
$
13,634
|
|
22 %
|
Services
|
4,685
|
|
4,366
|
|
7 %
|
Total net
revenue
|
21,356
|
|
18,000
|
|
19 %
|
|
|
|
|
|
|
Cost of net
revenue:
|
|
|
|
|
|
Products
|
13,606
|
|
11,823
|
|
15 %
|
Services
|
1,872
|
|
1,720
|
|
9 %
|
Total cost of net
revenue
|
15,478
|
|
13,543
|
|
14 %
|
|
|
|
|
|
|
Gross
margin
|
5,878
|
|
4,457
|
|
32 %
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Selling, general, and
administrative
|
4,944
|
|
4,596
|
|
8 %
|
Research and
development
|
1,087
|
|
1,133
|
|
(4)%
|
Total operating
expenses
|
6,031
|
|
5,729
|
|
5 %
|
|
|
|
|
|
|
Operating
loss
|
(153)
|
|
(1,272)
|
|
88 %
|
|
|
|
|
|
|
Interest and other,
net
|
(470)
|
|
(572)
|
|
18 %
|
Loss before income
taxes
|
(623)
|
|
(1,844)
|
|
66 %
|
Income tax
benefit
|
(85)
|
|
(641)
|
|
87 %
|
Net loss
|
(538)
|
|
(1,203)
|
|
55 %
|
Less: Net income
(loss) attributable to non-controlling interests
|
98
|
|
(32)
|
|
406 %
|
Net loss attributable
to Dell Technologies Inc.
|
$
(636)
|
|
$
(1,171)
|
|
46 %
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to Dell Technologies Inc. - basic:
|
|
|
|
|
|
Class V Common Stock
- basic
|
$
2.36
|
|
$
0.60
|
|
|
DHI Group -
basic
|
$
(1.95)
|
|
$
(2.29)
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to Dell Technologies Inc. - diluted:
|
|
|
|
|
|
Class V Common Stock
- diluted
|
$
2.33
|
|
$
0.59
|
|
|
DHI Group -
diluted
|
$
(1.95)
|
|
$
(2.29)
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
Basic - Class V
Common Stock
|
199
|
|
207
|
|
|
Diluted - Class V
Common Stock
|
199
|
|
207
|
|
|
Basic - DHI
Group
|
568
|
|
566
|
|
|
Diluted - DHI
Group
|
568
|
|
566
|
|
|
|
|
|
|
|
|
Percentage of
Total Net Revenue:
|
|
|
|
|
|
Gross
margin
|
28 %
|
|
25 %
|
|
|
Selling, general, and
administrative
|
23 %
|
|
26 %
|
|
|
Research and
development
|
5 %
|
|
6 %
|
|
|
Operating
expenses
|
28 %
|
|
32 %
|
|
|
Operating
loss
|
(1)%
|
|
(7)%
|
|
|
Loss before income
taxes
|
(3)%
|
|
(10)%
|
|
|
Net loss
|
(3)%
|
|
(7)%
|
|
|
|
|
|
|
|
|
Income tax
rate
|
14 %
|
|
35 %
|
|
|
DELL TECHNOLOGIES
INC.
|
Condensed
Consolidated Statements of Financial Position
|
(in millions;
unaudited)
|
|
|
|
|
|
May 4,
2018
|
|
February 2,
2018
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
15,324
|
|
$
13,942
|
Short-term
investments
|
2,402
|
|
2,187
|
Accounts receivable,
net
|
10,561
|
|
11,721
|
Short-term financing
receivables, net
|
3,962
|
|
3,919
|
Inventories,
net
|
2,933
|
|
2,678
|
Other current
assets
|
6,049
|
|
5,881
|
Total current
assets
|
41,231
|
|
40,328
|
Property, plant, and
equipment, net
|
5,303
|
|
5,390
|
Long-term
investments
|
3,943
|
|
4,163
|
Long-term financing
receivables, net
|
3,799
|
|
3,724
|
Goodwill
|
39,656
|
|
39,920
|
Intangible assets,
net
|
26,737
|
|
28,265
|
Other non-current
assets
|
2,548
|
|
2,403
|
Total
assets
|
$
123,217
|
|
$
124,193
|
|
|
|
|
LIABILITIES,
REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
Short-term
debt
|
$
7,133
|
|
$
7,873
|
Accounts
payable
|
18,534
|
|
18,334
|
Accrued and
other
|
6,952
|
|
8,026
|
Short-term deferred
revenue
|
11,495
|
|
11,606
|
Total current
liabilities
|
44,114
|
|
45,839
|
Long-term
debt
|
44,770
|
|
43,998
|
Long-term deferred
revenue
|
9,464
|
|
9,210
|
Other non-current
liabilities
|
7,045
|
|
7,277
|
Total
liabilities
|
105,393
|
|
106,324
|
|
|
|
|
Redeemable
shares
|
844
|
|
384
|
Stockholders'
equity:
|
|
|
|
Total Dell
Technologies Inc. stockholders' equity
|
10,485
|
|
11,719
|
Non-controlling
interests
|
6,495
|
|
5,766
|
Total stockholders'
equity
|
16,980
|
|
17,485
|
Total liabilities,
redeemable shares, and stockholders' equity
|
$
123,217
|
|
$
124,193
|
DELL TECHNOLOGIES
INC.
|
Condensed
Consolidated Statements of Cash Flows
|
(in millions;
unaudited)
|
|
|
|
|
|
Three Months
Ended
|
|
May 4,
2018
|
|
May 5,
2017
|
Cash flows from
operating activities:
|
|
|
|
Net loss
|
$
(538)
|
|
$
(1,203)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities
|
1,697
|
|
1,488
|
Change in cash from
operating activities
|
1,159
|
|
285
|
Cash flows from
investing activities:
|
|
|
|
Investments:
|
|
|
|
Purchases
|
(439)
|
|
(559)
|
Maturities and
sales
|
531
|
|
973
|
Capital
expenditures
|
(273)
|
|
(245)
|
Proceeds from sale of
facilities, land, and other assets
|
10
|
|
—
|
Capitalized software
development costs
|
(89)
|
|
(89)
|
Collections on
purchased financing receivables
|
10
|
|
3
|
Acquisition of
businesses, net
|
—
|
|
(12)
|
Divestitures of
businesses, net
|
142
|
|
(20)
|
Asset acquisitions,
net
|
(38)
|
|
—
|
Asset dispositions,
net
|
(3)
|
|
—
|
Change in cash from
investing activities
|
(149)
|
|
51
|
Cash flows from
financing activities:
|
|
|
|
Share repurchases for
tax withholdings of equity awards
|
(100)
|
|
(126)
|
Proceeds from the
issuance of common stock of subsidiaries
|
642
|
|
8
|
Repurchases of DHI
Group Common Stock
|
(37)
|
|
(2)
|
Repurchases of Class V
Common Stock
|
—
|
|
(368)
|
Payments for debt
issuance costs
|
(3)
|
|
(5)
|
Proceeds from
debt
|
1,863
|
|
3,421
|
Repayments of
debt
|
(1,822)
|
|
(3,116)
|
Other
|
—
|
|
1
|
Change in cash from
financing activities
|
543
|
|
(187)
|
|
|
|
|
Effect of exchange
rate changes on cash, cash equivalents, and restricted
cash
|
(86)
|
|
(6)
|
|
|
|
|
Change in cash, cash
equivalents, and restricted cash
|
1,467
|
|
143
|
|
|
|
|
Cash, cash
equivalents, and restricted cash at beginning of the
period
|
14,378
|
|
9,832
|
Cash, cash
equivalents, and restricted cash at end of the period
|
$
15,845
|
|
$
9,975
|
DELL TECHNOLOGIES
INC.
|
Segment
Information
|
(in millions,
except percentages; unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
May 4,
2018
|
|
May 5,
2017
|
|
Change
|
Infrastructure
Solutions Group (ISG):
|
|
|
|
|
|
Net Revenue:
|
|
|
|
|
|
Servers
and networking
|
$
4,585
|
|
$
3,256
|
|
41 %
|
Storage
|
4,082
|
|
3,705
|
|
10 %
|
Total
ISG net revenue
|
$
8,667
|
|
$
6,961
|
|
25 %
|
|
|
|
|
|
|
Operating
Income:
|
|
|
|
|
|
ISG
operating income
|
$
939
|
|
$
506
|
|
86 %
|
%
of ISG net revenue
|
11
%
|
|
7 %
|
|
|
%
of total segment operating income
|
45
%
|
|
35
%
|
|
|
|
|
|
|
|
|
Client
Solutions Group (CSG):
|
|
|
|
|
|
Net Revenue:
|
|
|
|
|
|
Commercial
|
$
7,363
|
|
$
6,342
|
|
16 %
|
Consumer
|
2,908
|
|
2,706
|
|
7 %
|
Total
CSG net revenue
|
$
10,271
|
|
$
9,048
|
|
14 %
|
|
|
|
|
|
|
Operating
Income:
|
|
|
|
|
|
CSG
operating income
|
$
533
|
|
$
325
|
|
64 %
|
%
of CSG net revenue
|
5 %
|
|
4 %
|
|
|
%
of total segment operating income
|
26
%
|
|
23
%
|
|
|
|
|
|
|
|
|
VMware:
|
|
|
|
|
|
Net Revenue:
|
|
|
|
|
|
Total VMware net
revenue
|
$
2,028
|
|
$
1,818
|
|
12 %
|
|
|
|
|
|
|
Operating
Income:
|
|
|
|
|
|
VMware
operating income
|
$
613
|
|
$
611
|
|
0 %
|
%
of VMware net revenue
|
30
%
|
|
34
%
|
|
|
%
of total segment operating income
|
29
%
|
|
42
%
|
|
|
|
|
|
|
|
|
Reconciliation
to consolidated net revenue:
|
|
|
|
|
|
Reportable segment net
revenue
|
$
20,966
|
|
$
17,827
|
|
|
Other
businesses (a)
|
579
|
|
529
|
|
|
Unallocated
transactions (b)
|
(2)
|
|
(1)
|
|
|
Impact
of purchase accounting (c)
|
(187)
|
|
(355)
|
|
|
Total
net revenue
|
$
21,356
|
|
$
18,000
|
|
|
|
|
|
|
|
|
Reconciliation
to consolidated operating income (loss):
|
|
|
|
|
|
Reportable segment
operating income
|
$
2,085
|
|
$
1,442
|
|
|
Other businesses
(a)
|
(50)
|
|
(23)
|
|
|
Unallocated
transactions (b)
|
(9)
|
|
6
|
|
|
Impact of purchase
accounting (c)
|
(222)
|
|
(423)
|
|
|
Amortization of
intangibles
|
(1,522)
|
|
(1,776)
|
|
|
Transaction-related
expenses (d)
|
(166)
|
|
(191)
|
|
|
Other corporate
expenses (e)
|
(269)
|
|
(307)
|
|
|
Total operating
loss
|
$
(153)
|
|
$
(1,272)
|
|
|
_________________
|
|
|
|
|
|
(a) Other businesses
consist of RSA Information Security, Pivotal, SecureWorks,
Virtustream, and Boomi and do not constitute a reportable segment,
either individually or collectively, as the results of the
businesses are not material to the Company's overall results and
the businesses do not meet the criteria for reportable
segments.
|
(b) Unallocated
transactions includes long-term incentives, certain short-term
incentive compensation expenses, and 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.
|
(d)
Transaction-related expenses includes acquisition, integration, and
divestiture related costs.
|
(e) Other corporate
expenses includes severance and facility action costs as well as
stock-based compensation expense.
|
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, 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 conjunction with the presentation of non-GAAP
financial measures.
|
DELL TECHNOLOGIES
INC.
|
Selected Non-GAAP
Financial Measures
|
(in millions,
except percentages; unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
May 4,
2018
|
|
May 5,
2017
|
|
Change
|
|
|
|
|
|
|
Non-GAAP net
revenue
|
$
21,543
|
|
$
18,355
|
|
17 %
|
|
|
|
|
|
|
Non-GAAP gross
margin
|
$
6,919
|
|
$
5,801
|
|
19 %
|
% of non-GAAP net
revenue
|
32
%
|
|
32
%
|
|
|
|
|
|
|
|
|
Non-GAAP operating
expenses
|
$
4,893
|
|
$
4,376
|
|
12 %
|
% of non-GAAP net
revenue
|
23
%
|
|
24
%
|
|
|
|
|
|
|
|
|
Non-GAAP operating
income
|
$
2,026
|
|
$
1,425
|
|
42 %
|
% of non-GAAP net
revenue
|
9 %
|
|
8 %
|
|
|
|
|
|
|
|
|
Non-GAAP net
income
|
$
1,174
|
|
$
761
|
|
54 %
|
% of non-GAAP net
revenue
|
5 %
|
|
4 %
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
2,383
|
|
$
1,795
|
|
33 %
|
% of non-GAAP net
revenue
|
11
%
|
|
10
%
|
|
|
DELL TECHNOLOGIES
INC.
|
Reconciliation of
Selected Non-GAAP Financial Measures
|
(in millions,
except percentages; unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
May 4,
2018
|
|
May 5,
2017
|
|
Change
|
|
|
|
|
|
|
Net
revenue
|
$
21,356
|
|
$
18,000
|
|
19 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Impact of purchase
accounting
|
187
|
|
355
|
|
|
Non-GAAP net
revenue
|
$
21,543
|
|
$
18,355
|
|
17 %
|
|
|
|
|
|
|
Gross
margin
|
$
5,878
|
|
$
4,457
|
|
32 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Amortization of
intangibles
|
710
|
|
950
|
|
|
Impact of purchase
accounting
|
193
|
|
365
|
|
|
Transaction
related
|
116
|
|
7
|
|
|
Other corporate
expenses
|
22
|
|
22
|
|
|
Non-GAAP gross
margin
|
$
6,919
|
|
$
5,801
|
|
19 %
|
|
|
|
|
|
|
Operating
expenses
|
$
6,031
|
|
$
5,729
|
|
5 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Amortization of
intangibles
|
(812)
|
|
(826)
|
|
|
Impact of purchase
accounting
|
(29)
|
|
(58)
|
|
|
Transaction
related
|
(50)
|
|
(184)
|
|
|
Other corporate
expenses
|
(247)
|
|
(285)
|
|
|
Non-GAAP operating
expenses
|
$
4,893
|
|
$
4,376
|
|
12 %
|
|
|
|
|
|
|
Operating
loss
|
$
(153)
|
|
$
(1,272)
|
|
88 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Amortization of
intangibles
|
1,522
|
|
1,776
|
|
|
Impact of purchase
accounting
|
222
|
|
423
|
|
|
Transaction
related
|
166
|
|
191
|
|
|
Other corporate
expenses
|
269
|
|
307
|
|
|
Non-GAAP operating
income
|
$
2,026
|
|
$
1,425
|
|
42 %
|
|
|
|
|
|
|
Net loss
|
$
(538)
|
|
$
(1,203)
|
|
55 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Amortization of
intangibles
|
1,522
|
|
1,776
|
|
|
Impact of purchase
accounting
|
222
|
|
423
|
|
|
Transaction
related
|
166
|
|
191
|
|
|
Other corporate
expenses
|
269
|
|
307
|
|
|
Aggregate adjustment
for income taxes
|
(467)
|
|
(733)
|
|
|
Non-GAAP net
income
|
$
1,174
|
|
$
761
|
|
54 %
|
|
|
|
|
|
|
Net loss
|
$
(538)
|
|
$
(1,203)
|
|
55 %
|
Adjustments:
|
|
|
|
|
|
Interest and other,
net
|
470
|
|
572
|
|
|
Income tax
benefit
|
(85)
|
|
(641)
|
|
|
Depreciation and
amortization
|
1,914
|
|
2,212
|
|
|
EBITDA
|
$
1,761
|
|
$
940
|
|
87 %
|
|
|
|
|
|
|
EBITDA
|
$
1,761
|
|
$
940
|
|
87 %
|
Adjustments:
|
|
|
|
|
|
Stock-based
compensation expense
|
199
|
|
201
|
|
|
Impact of purchase
accounting
|
222
|
|
357
|
|
|
Transaction-related
expenses
|
166
|
|
191
|
|
|
Other corporate
expenses
|
35
|
|
106
|
|
|
Adjusted
EBITDA
|
$
2,383
|
|
$
1,795
|
|
33 %
|
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SOURCE Dell Technologies