News summary
- Record second quarter revenue of $26.4
billion, up 9%, driven by continued growth across client and
infrastructure business units
- Operating income up 25% at $1.3
billion, and non-GAAP operating income up 4% at $2 billion
- Diluted earnings per share of $0.68 and non-GAAP diluted earnings per share of
$1.68
ROUND
ROCK, Texas, Aug. 25,
2022 /PRNewswire/ --
Full story
Dell Technologies (NYSE: DELL) announces financial results
for its fiscal 2023 second quarter. Revenue was a second quarter
record of $26.4 billion, up 9%,
driven by growth across Client Solutions Group (CSG) and
Infrastructure Solutions Group (ISG). Operating income was
$1.3 billion, up 25%, representing
4.8% of revenue, and non-GAAP operating income was $2 billion, up 4%, representing 7.4% of revenue.
Net income from continuing operations was $506 million and
non-GAAP net income was $1.3 billion.
Diluted earnings per share was $0.68,
and non-GAAP diluted earnings per share was $1.68.
Second Quarter Fiscal 2023 Financial Results
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
|
(in millions, except
per share amounts and percentages; unaudited)
|
Total net
revenue
|
$
26,425
|
|
$
24,191
|
|
9 %
|
|
$
52,541
|
|
$
46,781
|
|
12 %
|
Operating
income
|
$
1,270
|
|
$
1,017
|
|
25 %
|
|
$
2,820
|
|
$
2,004
|
|
41 %
|
Net income from
continuing operations
|
$
506
|
|
$
629
|
|
(20) %
|
|
$
1,575
|
|
$
1,288
|
|
22 %
|
Earnings per share -
diluted
|
$
0.68
|
|
$
0.80
|
|
(15) %
|
|
$
2.06
|
|
$
1.65
|
|
25 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
revenue
|
$
26,425
|
|
$
24,199
|
|
9 %
|
|
$
52,541
|
|
$
46,797
|
|
12 %
|
Non-GAAP operating
income
|
$
1,952
|
|
$
1,868
|
|
4 %
|
|
$
4,087
|
|
$
3,638
|
|
12 %
|
Non-GAAP net
income
|
$
1,266
|
|
$
1,166
|
|
9 %
|
|
$
2,700
|
|
$
2,221
|
|
22 %
|
Non-GAAP earnings per
share - diluted
|
$
1.68
|
|
$
1.48
|
|
14 %
|
|
$
3.52
|
|
$
2.83
|
|
24 %
|
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.
Operating segments summary
Client Solutions Group delivered second quarter record
revenue of $15.5
billion, up 9% year-over-year.
Commercial revenue was $12.1
billion, a 15% increase year-over-year,
and Consumer revenue was $3.3
billion, down 9% year-over-year. Focus
on the commercial market continues to drive differentiated share
results, with share gains in 34 of the last 38
quarters.1 Operating income was
$1 billion, or
approximately 6.3% of Client Solutions Group
revenue.
Key areas of innovation:
- Precision 7865 Tower delivers on 25 years of
commercial workstation innovation, supporting demanding,
multi-application workloads.
- Alienware m15 R5 launches as the most powerful
17-inch AMD Advantage™ gaming laptop.
- New commercial devices for hybrid work are available, including
the Latitude 9330, the world's first laptop with a
collaboration touchpad that lets users mute, turn video on/off,
screen share and chat.
- This year's rollout of premium laptops continues with the
launch of the XPS 13 and reveal of the versatile XPS
2-in-1.
Infrastructure Solutions Group
delivered record second quarter revenue of $9.5 billion, up 12% and its sixth consecutive
quarter of year-over-year growth. Storage revenue was $4.3 billion, up 6%, with growth across the
portfolio and demand strength in high-end storage and our marquee
mid-range product PowerStore, which has now grown every quarter
since its launch. Servers and networking revenue was $5.2 billion, up 16% year-over-year. Operating
income was $1 billion or
approximately 11% of Infrastructure Solutions Group
revenue.
Key areas of innovation:
The largest release in PowerStore history and new
PowerMaxOS10 software are now available, delivering
more than 500 new Dell storage software advancements that help
customers drive faster insights, achieve better multicloud data
control and increase cyber resiliency.
- PowerProtect Cyber Recovery vault purchases grew
30% year-over-year, as customers seek multiple layers
of protection from ransomware and other sophisticated threats.
- Dell Validated Design for Analytics – Data
Lakehouse, consisting of Dell's end-to-end ISG portfolio,
provides secure access to reliable, quality data, so users can run
analytics, AI, ML and other data-driven workloads.
- T-Mobile and Dell Technologies join
forces to pair a private 5G network with Dell
edge-computing technologies, so data can be processed, stored and
acted upon at locations like large business campuses, factories or
universities.
Dell Technologies ended the quarter with remaining performance
obligations of $41 billion, up 2% year-over-year,
deferred revenue of $28 billion, and cash and
investments of $7.1 billion. Recurring revenue for
the second quarter was approximately $5.2 billion, up 8%
year-over-year. APEX annual recurring revenue is now over
$1 billion, with second
quarter orders growth of 78% year-over-year.
Executive Quotes:
- "We continued to execute well in an increasingly challenging
environment with record second quarter revenue of
$26.4 billion, up 9%,"
said Jeff Clarke, vice chairman and
co-chief operating officer, Dell Technologies. "We also advanced
our long-term strategy – growing the core while innovating for our
customers and enabling their opportunities in the data era."
- "We delivered strong CSG and ISG growth and profitability –
with revenue up 12% and 9% respectively – although we observed more
cautious customer behavior as the quarter progressed," said
Chuck Whitten, co-chief operating
officer, Dell Technologies. "Customers continue to prioritize
advanced technology solutions to compete and succeed in the years
ahead, and we are confident in our long-term opportunities."
- "Another quarter of record revenue, together with
our operating income of $1.3
billion and non-GAAP operating income of
$2 billion, affirms our
industry strength and competitive position," said Tom Sweet, chief financial officer, Dell
Technologies. "We remain focused on what we can control, staying
flexible and opportunistic, and delivering revenue and EPS growth
with strong free cash flow to our shareholders over time."
Conference call information
As previously announced, the Company will hold a conference call
to discuss its performance and financial guidance on Aug. 25, 2022, at 4:30
p.m. CDT. Prior to the start of the conference call,
prepared remarks and a presentation containing additional financial
and operating information prior to guidance may be downloaded from
investors.delltechnologies.com. The conference call will be
broadcast live over the internet can be accessed at
https://investors.delltechnologies.com/events-and-presentations/upcoming-events
For those unable to listen to the live broadcast, the final
remarks and presentation with guidance will be available following
the broadcast, and an archived version will be available at the
same location for one year.
Customer Highlights Blog
Read our quarterly blog from Bill
Scannell, Dell Technologies president of Global Sales &
Customer Operations, to learn more about how we are helping
customers with their digital transformations:
https://www.dell.com/en-us/blog/technology-investments-are-key-to-customers-competitive-advantage/
Environmental, Social and Governance (ESG)
Our Environmental, Social and Governance (ESG) efforts focus on
driving positive impact for people and our planet while delivering
long-term value for our stakeholders. The FY22 ESG report was
published June 30, 2022, and the
Company held a conference call to discuss on July 21. ESG resources can be accessed at
https://www.dell.com/en-us/dt/corporate/social-impact/reporting/esg-governance.htm
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 © 2022 Dell Inc. or its subsidiaries. All Rights
Reserved. Dell Technologies, Dell, EMC and Dell EMC are trademarks
of Dell Inc. or its subsidiaries. Other trademarks may be
trademarks of their respective owners.
Non-GAAP Financial Measures:
This press release presents information about Dell
Technologies' non-GAAP net revenue, non-GAAP gross margin, non-GAAP
operating expenses, non-GAAP operating income, non-GAAP net income,
non-GAAP net income attributable to non-controlling interests,
non-GAAP net income attributable to Dell Technologies Inc. - basic,
non-GAAP net income attributable to Dell Technologies Inc. -
diluted, non-GAAP earnings per share attributable to Dell
Technologies Inc. - basic, and non-GAAP earnings per share
attributable to Dell Technologies Inc. - diluted, 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:
risks and uncertainties relating to our spin-off of VMware, Inc.,
including the potential effects on our business of the transaction;
the effects of the COVID-19 pandemic; 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, software, and services; cyber attacks or
other data security incidents; Dell Technologies' foreign
operations and ability to generate substantial non-U.S. net
revenue; Dell Technologies' product, services, 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; material impairment
of the value of goodwill or intangible assets; weak economic
conditions and the effect of additional regulation on Dell
Technologies' financial services activities; counterparty default
risks; the loss by Dell Technologies of any contracts for ISG
services and solutions and its ability to perform such contracts at
their estimated costs; loss by Dell Technologies of government
contracts; Dell Technologies' ability to develop and protect its
proprietary intellectual property or obtain licenses to
intellectual property developed by others on commercially
reasonable and competitive terms; disruptions in Dell Technologies'
infrastructure; 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; compliance requirements
of changing environmental and safety laws or other laws; the effect
of armed hostilities, terrorism, natural disasters, and public
health issues; the effect of global climate change and legal,
regulatory, or market measures to address climate change; Dell
Technologies' dependence on the services of Michael Dell and key employees; Dell
Technologies' level of indebtedness; the effect of the transition
from LIBOR as a reference rate to calculate interest rates under
our variable-rate indebtedness; and business and financial factors
and legal restrictions affecting continuation of Dell Technologies'
quarterly cash dividend policy and dividend rate.
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 28, 2022, 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.
1 Based on units, as of Q2 CY2022 IDC data. Data
between Q1 CY2013 and Q2 CY2022.
DELL TECHNOLOGIES INC. FINANCIAL
INFORMATION
Basis of Presentation
Spin-Off of VMware, Inc. — On November 1, 2021, Dell Technologies Inc.
completed its spin-off of VMware, Inc. ("VMware") by means of a
special stock dividend (the "VMware Spin-off"). In accordance with
applicable accounting guidance, the results of VMware, excluding
Dell's resale of VMware offerings, are presented as discontinued
operations in the Condensed Consolidated Statements of Income and,
as such, have been excluded from both continuing operations and
segment results for the three and six months ended July 30, 2021. The Condensed Consolidated
Statements of Cash Flows are presented on a consolidated basis for
both continuing operations and discontinued operations.
DELL TECHNOLOGIES
INC.
|
Consolidated
Statements of Income and Related Financial
Highlights
|
(in millions, except
percentages; unaudited)
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
Net
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
$ 20,810
|
|
$ 18,895
|
|
10 %
|
|
$
41,274
|
|
$
36,382
|
|
13 %
|
Services
|
5,615
|
|
5,296
|
|
6 %
|
|
11,267
|
|
10,399
|
|
8 %
|
Total net
revenue
|
26,425
|
|
24,191
|
|
9 %
|
|
52,541
|
|
46,781
|
|
12 %
|
Cost of net
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
17,671
|
|
15,692
|
|
13 %
|
|
34,680
|
|
30,126
|
|
15 %
|
Services
|
3,315
|
|
3,024
|
|
10 %
|
|
6,638
|
|
5,916
|
|
12 %
|
Total cost of net
revenue
|
20,986
|
|
18,716
|
|
12 %
|
|
41,318
|
|
36,042
|
|
15 %
|
Gross
margin
|
5,439
|
|
5,475
|
|
(1) %
|
|
11,223
|
|
10,739
|
|
5 %
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
3,543
|
|
3,761
|
|
(6) %
|
|
7,096
|
|
7,419
|
|
(4) %
|
Research and
development
|
626
|
|
697
|
|
(10) %
|
|
1,307
|
|
1,316
|
|
(1) %
|
Total operating
expenses
|
4,169
|
|
4,458
|
|
(6) %
|
|
8,403
|
|
8,735
|
|
(4) %
|
Operating
income
|
1,270
|
|
1,017
|
|
25 %
|
|
2,820
|
|
2,004
|
|
41 %
|
Interest and other,
net
|
(635)
|
|
(292)
|
|
(117) %
|
|
(972)
|
|
(580)
|
|
(68) %
|
Income before income
taxes
|
635
|
|
725
|
|
(12) %
|
|
1,848
|
|
1,424
|
|
30 %
|
Income tax
expense
|
129
|
|
96
|
|
34 %
|
|
273
|
|
136
|
|
101 %
|
Net income from
continuing operations
|
506
|
|
629
|
|
(20) %
|
|
1,575
|
|
1,288
|
|
22 %
|
Income from
discontinued operations, net of income taxes
|
—
|
|
251
|
|
(100) %
|
|
—
|
|
530
|
|
(100) %
|
Net income
|
506
|
|
880
|
|
(43) %
|
|
1,575
|
|
1,818
|
|
(13) %
|
Less: Net loss
attributable to non-controlling interests
|
(5)
|
|
(2)
|
|
(150) %
|
|
(8)
|
|
(3)
|
|
(167) %
|
Less: Net income
attributable to non-controlling interests of discontinued
operations
|
—
|
|
51
|
|
(100) %
|
|
—
|
|
103
|
|
(100) %
|
Net income attributable
to Dell Technologies Inc.
|
$
511
|
|
$
831
|
|
(39) %
|
|
$ 1,583
|
|
$ 1,718
|
|
(8) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total
Net Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
20.6 %
|
|
22.6 %
|
|
|
|
21.4 %
|
|
23.0 %
|
|
|
Selling, general, and
administrative
|
13.4 %
|
|
15.5 %
|
|
|
|
13.5 %
|
|
15.9 %
|
|
|
Research and
development
|
2.4 %
|
|
2.9 %
|
|
|
|
2.5 %
|
|
2.8 %
|
|
|
Operating
expenses
|
15.8 %
|
|
18.4 %
|
|
|
|
16.0 %
|
|
18.7 %
|
|
|
Operating
income
|
4.8 %
|
|
4.2 %
|
|
|
|
5.4 %
|
|
4.3 %
|
|
|
Income before income
taxes
|
2.4 %
|
|
3.0 %
|
|
|
|
3.5 %
|
|
3.0 %
|
|
|
Net income from
continuing operations
|
1.9 %
|
|
2.6 %
|
|
|
|
3.0 %
|
|
2.8 %
|
|
|
Income tax
rate
|
20.3 %
|
|
13.2 %
|
|
|
|
14.8 %
|
|
9.6 %
|
|
|
|
Amounts are based on
underlying data and may not visually foot due to
rounding.
|
DELL TECHNOLOGIES
INC.
|
Consolidated
Statements of Financial Position
|
(in millions;
unaudited)
|
|
|
July 29,
2022
|
|
January 28,
2022
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
5,507
|
|
$
9,477
|
Accounts receivable,
net
|
13,431
|
|
12,912
|
Due from related
party, net
|
195
|
|
131
|
Short-term financing
receivables, net
|
4,860
|
|
5,089
|
Inventories
|
5,883
|
|
5,898
|
Other current
assets
|
12,386
|
|
11,526
|
Total current
assets
|
42,262
|
|
45,033
|
Property, plant, and
equipment, net
|
5,772
|
|
5,415
|
Long-term
investments
|
1,520
|
|
1,839
|
Long-term financing
receivables, net
|
5,450
|
|
5,522
|
Goodwill
|
19,505
|
|
19,770
|
Intangible assets,
net
|
6,972
|
|
7,461
|
Due from related party,
net
|
609
|
|
710
|
Other non-current
assets
|
6,685
|
|
6,985
|
Total
assets
|
$
88,775
|
|
$
92,735
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
Short-term
debt
|
$
6,647
|
|
$
5,823
|
Accounts
payable
|
25,339
|
|
27,143
|
Due to related
party
|
1,269
|
|
1,414
|
Accrued and
other
|
6,810
|
|
7,578
|
Short-term deferred
revenue
|
14,724
|
|
14,261
|
Total current
liabilities
|
54,789
|
|
56,219
|
Long-term
debt
|
20,287
|
|
21,131
|
Long-term deferred
revenue
|
13,301
|
|
13,312
|
Other non-current
liabilities
|
3,153
|
|
3,653
|
Total
liabilities
|
91,530
|
|
94,315
|
Stockholders' equity
(deficit):
|
|
|
|
Total Dell Technologies
Inc. stockholders' equity (deficit)
|
(2,860)
|
|
(1,685)
|
Non-controlling
interests
|
105
|
|
105
|
Total stockholders'
equity (deficit)
|
(2,755)
|
|
(1,580)
|
Total liabilities and
stockholders' equity
|
$
88,775
|
|
$
92,735
|
DELL TECHNOLOGIES
INC.
|
Consolidated
Statements of Cash Flows
|
(in millions;
unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
July 29,
2022
|
|
July 30,
2021
|
|
July 29,
2022
|
|
July 30,
2021
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
506
|
|
$
880
|
|
$
1,575
|
|
$
1,818
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
218
|
|
845
|
|
(1,120)
|
|
2,145
|
Change in cash from
operating activities
|
724
|
|
1,725
|
|
455
|
|
3,963
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Purchases of
investments
|
(28)
|
|
(124)
|
|
(80)
|
|
(270)
|
Maturities and sales of
investments
|
50
|
|
79
|
|
68
|
|
335
|
Capital expenditures
and capitalized software development costs
|
(807)
|
|
(632)
|
|
(1,497)
|
|
(1,257)
|
Acquisition of
businesses and assets, net
|
—
|
|
(6)
|
|
—
|
|
(16)
|
Other
|
7
|
|
14
|
|
11
|
|
20
|
Change in cash from
investing activities
|
(778)
|
|
(669)
|
|
(1,498)
|
|
(1,188)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from the
issuance of common stock
|
1
|
|
26
|
|
5
|
|
186
|
Repurchases of parent
common stock (a)
|
(689)
|
|
(8)
|
|
(2,468)
|
|
(17)
|
Repurchases of
subsidiary common stock (a)
|
(1)
|
|
(544)
|
|
(8)
|
|
(978)
|
Payments of dividends
to stockholders
|
(242)
|
|
—
|
|
(490)
|
|
—
|
Proceeds from
debt
|
3,431
|
|
1,209
|
|
6,465
|
|
3,935
|
Repayments of
debt
|
(3,539)
|
|
(4,353)
|
|
(6,242)
|
|
(8,423)
|
Debt-related costs and
other, net
|
(7)
|
|
(3)
|
|
(14)
|
|
(14)
|
Change in cash from
financing activities
|
(1,046)
|
|
(3,673)
|
|
(2,752)
|
|
(5,311)
|
Effect of exchange rate
changes on cash, cash equivalents, and restricted cash
|
(83)
|
|
(16)
|
|
(194)
|
|
(21)
|
Change in cash, cash
equivalents, and restricted cash
|
(1,183)
|
|
(2,633)
|
|
(3,989)
|
|
(2,557)
|
Cash, cash equivalents,
and restricted cash at beginning of the period, including cash
attributable to discontinued operations
|
7,276
|
|
15,260
|
|
10,082
|
|
15,184
|
Cash, cash equivalents,
and restricted cash at end of the period, including cash
attributable to discontinued operations
|
6,093
|
|
12,627
|
|
6,093
|
|
12,627
|
Less: Cash, cash
equivalents, and restricted cash attributable to discontinued
operations
|
—
|
|
5,922
|
|
—
|
|
5,922
|
Cash, cash equivalents,
and restricted cash from continuing operations
|
$
6,093
|
|
$
6,705
|
|
$
6,093
|
|
$
6,705
|
_________________
(a)
|
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
|
|
|
|
Six Months
Ended
|
|
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
Infrastructure
Solutions Group (ISG):
|
Net
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Servers and
networking
|
$
5,209
|
|
$
4,480
|
|
16 %
|
|
$
10,257
|
|
$
8,620
|
|
19 %
|
Storage
|
4,327
|
|
4,070
|
|
6 %
|
|
8,564
|
|
7,963
|
|
8 %
|
Total ISG net
revenue
|
$
9,536
|
|
$
8,550
|
|
12 %
|
|
$
18,821
|
|
$
16,583
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income:
|
|
|
|
|
|
|
|
|
|
|
|
ISG operating
income
|
$
1,046
|
|
$
962
|
|
9 %
|
|
$
2,128
|
|
$
1,740
|
|
22 %
|
% of ISG net
revenue
|
11.0 %
|
|
11.3 %
|
|
|
|
11.3 %
|
|
10.5 %
|
|
|
% of total
reportable segment operating income
|
52 %
|
|
49 %
|
|
|
|
50 %
|
|
46 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Client Solutions
Group (CSG):
|
Net
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
$
12,141
|
|
$
10,577
|
|
15 %
|
|
$
24,112
|
|
$
20,385
|
|
18 %
|
Consumer
|
3,349
|
|
3,691
|
|
(9) %
|
|
6,965
|
|
7,194
|
|
(3) %
|
Total CSG net
revenue
|
$
15,490
|
|
$
14,268
|
|
9 %
|
|
$
31,077
|
|
$
27,579
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income:
|
|
|
|
|
|
|
|
|
|
|
|
CSG operating
income
|
$
978
|
|
$
986
|
|
(1) %
|
|
$
2,093
|
|
$
2,066
|
|
1 %
|
% of CSG net
revenue
|
6.3 %
|
|
6.9 %
|
|
|
|
6.7 %
|
|
7.5 %
|
|
|
% of total
reportable segment operating income
|
48 %
|
|
51 %
|
|
|
|
50 %
|
|
54 %
|
|
|
|
Amounts are
based on underlying data and may not visually foot due to
rounding.
|
DELL TECHNOLOGIES
INC.
|
Segment
Information
|
(in millions, except
percentages; unaudited; continued)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
July 29,
2022
|
|
July 30,
2021
|
|
July 29,
2022
|
|
July 30,
2021
|
Reconciliation to
consolidated net revenue:
|
|
|
|
|
|
|
Reportable segment net
revenue
|
$
25,026
|
|
$
22,818
|
|
$
49,898
|
|
$
44,162
|
Other businesses
(a)
|
1,399
|
|
1,378
|
|
2,638
|
|
2,630
|
Unallocated
transactions (b)
|
—
|
|
3
|
|
5
|
|
5
|
Impact of purchase
accounting (c)
|
—
|
|
(8)
|
|
—
|
|
(16)
|
Total consolidated net
revenue
|
$
26,425
|
|
$
24,191
|
|
$
52,541
|
|
$
46,781
|
|
|
|
|
|
|
|
|
Reconciliation to
consolidated operating income:
|
|
|
|
|
|
|
|
Reportable segment
operating income
|
$
2,024
|
|
$
1,948
|
|
$
4,221
|
|
$
3,806
|
Other businesses
(a)
|
(71)
|
|
(77)
|
|
(135)
|
|
(167)
|
Unallocated
transactions (b)
|
(1)
|
|
(3)
|
|
1
|
|
(1)
|
Impact of purchase
accounting (c)
|
(3)
|
|
(15)
|
|
(12)
|
|
(35)
|
Amortization of
intangibles
|
(244)
|
|
(442)
|
|
(487)
|
|
(887)
|
Transaction-related
expenses (d)
|
(3)
|
|
(37)
|
|
(8)
|
|
(66)
|
Stock-based
compensation expense (e)
|
(236)
|
|
(206)
|
|
(468)
|
|
(378)
|
Other corporate
expenses (f)
|
(196)
|
|
(151)
|
|
(292)
|
|
(268)
|
Total consolidated
operating income
|
$
1,270
|
|
$
1,017
|
|
$
2,820
|
|
$
2,004
|
_________________
(a)
|
Other businesses
consists of: 1) Dell's resale of standalone VMware, Inc. products
and services, "VMware Resale," 2) Secureworks, and 3) Virtustream,
and do not meet the requirements for a reportable segment, either
individually or collectively.
|
(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.
|
(d)
|
Transaction-related
expenses includes acquisition, integration, and divestiture related
costs.
|
(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, incentive charges related to
equity investments, severance, payroll taxes associated with
stock-based compensation, facilities action, and other costs.
During the three and six months ended Fiscal 2023, other corporate
expenses includes impairment and other costs incurred in connection
with exiting our business in Russia.
|
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 Dell Technologies Inc. - basic and diluted,
non-GAAP earnings per share attributable to Dell Technologies Inc.
- basic, and non-GAAP earnings per share attributable to Dell
Technologies Inc. - diluted which are non-GAAP financial measures
provided as a supplement to the results provided in accordance with
generally accepted accounting principles in the United States of America ("GAAP"). A
detailed discussion of Dell Technologies' reasons for including
these non-GAAP financial measures, the limitations
associated with these measures, the items excluded from these
measures, and our reason for excluding those items are presented in
"Management's Discussion and Analysis of Financial Condition and
Results of Operations — Non-GAAP Financial Measures" in our
periodic reports filed with the SEC. Dell Technologies encourages
investors to review the non-GAAP discussion in these reports in
conjunction with the presentation of non-GAAP financial
measures.
DELL TECHNOLOGIES
INC.
|
Selected Non-GAAP
Financial Measures
|
(in millions, except
per share amounts and percentages; unaudited)
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
Non-GAAP net
revenue
|
$
26,425
|
|
$
24,199
|
|
9 %
|
|
$
52,541
|
|
$
46,797
|
|
12 %
|
Non-GAAP gross
margin
|
$
5,650
|
|
$
5,673
|
|
— %
|
|
$
11,591
|
|
$
11,137
|
|
4 %
|
% of non-GAAP net
revenue
|
21.4 %
|
|
23.4 %
|
|
|
|
22.1 %
|
|
23.8 %
|
|
|
Non-GAAP operating
expenses
|
$
3,698
|
|
$
3,805
|
|
(3) %
|
|
$
7,504
|
|
$
7,499
|
|
— %
|
% of non-GAAP net
revenue
|
14.0 %
|
|
15.7 %
|
|
|
|
14.3 %
|
|
16.0 %
|
|
|
Non-GAAP operating
income
|
$
1,952
|
|
$
1,868
|
|
4 %
|
|
$
4,087
|
|
$
3,638
|
|
12 %
|
% of non-GAAP net
revenue
|
7.4 %
|
|
7.7 %
|
|
|
|
7.8 %
|
|
7.8 %
|
|
|
Non-GAAP net
income
|
$
1,266
|
|
$
1,166
|
|
9 %
|
|
$
2,700
|
|
$
2,221
|
|
22 %
|
% of non-GAAP net
revenue
|
4.8 %
|
|
4.8 %
|
|
|
|
5.1 %
|
|
4.7 %
|
|
|
Non-GAAP earnings per
share - diluted
|
$
1.68
|
|
$
1.48
|
|
14 %
|
|
$
3.52
|
|
$
2.83
|
|
24 %
|
|
Amounts are based on
underlying data and may not visually foot due to
rounding.
|
DELL TECHNOLOGIES
INC.
|
Reconciliation of
Selected Non-GAAP Financial Measures
|
(in millions, except
percentages; unaudited; continued on next page)
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
Net revenue
|
$
26,425
|
|
$
24,191
|
|
9 %
|
|
$
52,541
|
|
$
46,781
|
|
12 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Impact of purchase
accounting
|
—
|
|
8
|
|
|
|
—
|
|
16
|
|
|
Non-GAAP net
revenue
|
$
26,425
|
|
$
24,199
|
|
9 %
|
|
$
52,541
|
|
$
46,797
|
|
12 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
$
5,439
|
|
$
5,475
|
|
(1) %
|
|
$
11,223
|
|
$
10,739
|
|
5 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
105
|
|
150
|
|
|
|
209
|
|
300
|
|
|
Impact of purchase
accounting
|
—
|
|
9
|
|
|
|
2
|
|
18
|
|
|
Stock-based
compensation expense
|
37
|
|
32
|
|
|
|
75
|
|
60
|
|
|
Other corporate
expenses
|
69
|
|
7
|
|
|
|
82
|
|
20
|
|
|
Non-GAAP gross
margin
|
$
5,650
|
|
$
5,673
|
|
— %
|
|
$
11,591
|
|
$
11,137
|
|
4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
4,169
|
|
$
4,458
|
|
(6) %
|
|
$
8,403
|
|
$
8,735
|
|
(4) %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
(139)
|
|
(292)
|
|
|
|
(278)
|
|
(587)
|
|
|
Impact of purchase
accounting
|
(3)
|
|
(6)
|
|
|
|
(10)
|
|
(17)
|
|
|
Transaction-related
expenses
|
(3)
|
|
(37)
|
|
|
|
(8)
|
|
(66)
|
|
|
Stock-based
compensation expense
|
(199)
|
|
(174)
|
|
|
|
(393)
|
|
(318)
|
|
|
Other corporate
expenses
|
(127)
|
|
(144)
|
|
|
|
(210)
|
|
(248)
|
|
|
Non-GAAP operating
expenses
|
$
3,698
|
|
$
3,805
|
|
(3) %
|
|
$
7,504
|
|
$
7,499
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
1,270
|
|
$
1,017
|
|
25 %
|
|
$
2,820
|
|
$
2,004
|
|
41 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
244
|
|
442
|
|
|
|
487
|
|
887
|
|
|
Impact of purchase
accounting
|
3
|
|
15
|
|
|
|
12
|
|
35
|
|
|
Transaction-related
expenses
|
3
|
|
37
|
|
|
|
8
|
|
66
|
|
|
Stock-based
compensation expense
|
236
|
|
206
|
|
|
|
468
|
|
378
|
|
|
Other corporate
expenses
|
196
|
|
151
|
|
|
|
292
|
|
268
|
|
|
Non-GAAP operating
income
|
$
1,952
|
|
$
1,868
|
|
4 %
|
|
$
4,087
|
|
$
3,638
|
|
12 %
|
DELL TECHNOLOGIES
INC.
|
Reconciliation of
Selected Non-GAAP Financial Measures
|
(in millions, except
percentages; unaudited; continued)
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
Net income from
continuing operations
|
$
506
|
|
$
629
|
|
(20) %
|
|
$
1,575
|
|
$
1,288
|
|
22 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
244
|
|
442
|
|
|
|
487
|
|
887
|
|
|
Impact of purchase
accounting
|
3
|
|
15
|
|
|
|
12
|
|
35
|
|
|
Transaction-related
(income) expenses
|
(4)
|
|
25
|
|
|
|
(6)
|
|
54
|
|
|
Stock-based
compensation expense
|
236
|
|
206
|
|
|
|
468
|
|
378
|
|
|
Other corporate
expenses
|
212
|
|
151
|
|
|
|
308
|
|
268
|
|
|
Fair value adjustments
on equity investments
|
255
|
|
(168)
|
|
|
|
241
|
|
(362)
|
|
|
Aggregate adjustment
for income taxes
|
(186)
|
|
(134)
|
|
|
|
(385)
|
|
(327)
|
|
|
Non-GAAP net
income
|
$
1,266
|
|
$
1,166
|
|
9 %
|
|
$
2,700
|
|
$
2,221
|
|
22 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations attributable to Dell Technologies
Inc.
|
$
511
|
|
$
631
|
|
(19) %
|
|
$
1,583
|
|
$
1,291
|
|
23 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
244
|
|
442
|
|
|
|
487
|
|
887
|
|
|
Impact of purchase
accounting
|
3
|
|
15
|
|
|
|
12
|
|
35
|
|
|
Transaction-related
(income) expenses
|
(4)
|
|
25
|
|
|
|
(6)
|
|
54
|
|
|
Stock-based
compensation expense
|
236
|
|
206
|
|
|
|
468
|
|
378
|
|
|
Other corporate
expenses
|
212
|
|
151
|
|
|
|
308
|
|
268
|
|
|
Fair value adjustments
on equity investments
|
255
|
|
(168)
|
|
|
|
241
|
|
(362)
|
|
|
Aggregate adjustment
for income taxes
|
(186)
|
|
(134)
|
|
|
|
(385)
|
|
(327)
|
|
|
Total non-GAAP
adjustments attributable to non-controlling interests
|
(3)
|
|
(2)
|
|
|
|
(5)
|
|
(3)
|
|
|
Non-GAAP net income
attributable to Dell Technologies Inc.
|
$
1,268
|
|
$
1,166
|
|
9 %
|
|
$
2,703
|
|
$
2,221
|
|
22 %
|
DELL TECHNOLOGIES
INC.
|
Reconciliation of
Selected Non-GAAP Financial Measures
|
(in millions, except
percentages and per share amounts; unaudited;
continued)
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
|
July 29,
2022
|
|
July 30,
2021
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share from continuing operations attributable to Dell Technologies
Inc.
|
|
|
|
|
Net income from
continuing operations attributable to Dell Technologies Inc.
— basic
|
$
511
|
|
$
631
|
|
|
|
$
1,583
|
|
$
1,291
|
|
|
Weighted-average
shares outstanding — basic
|
739
|
|
763
|
|
|
|
746
|
|
760
|
|
|
Earnings per share
attributable to Dell Technologies Inc. — basic
|
$
0.69
|
|
$
0.83
|
|
(17) %
|
|
$
2.12
|
|
$
1.70
|
|
25 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations attributable to Dell Technologies Inc.
— diluted
|
$
511
|
|
$
631
|
|
|
|
$
1,583
|
|
$
1,291
|
|
|
Weighted-average
shares outstanding — diluted
|
755
|
|
786
|
|
|
|
768
|
|
784
|
|
|
Earnings per share
attributable to Dell Technologies Inc. — diluted:
|
$
0.68
|
|
$
0.80
|
|
(15) %
|
|
$
2.06
|
|
$
1.65
|
|
25 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share from discontinued operations attributable to Dell
Technologies Inc.
|
|
|
|
|
Net income from
discontinued operations attributable to Dell Technologies Inc.
— basic
|
$
—
|
|
$
200
|
|
|
|
$
—
|
|
$
427
|
|
|
Weighted-average
shares outstanding — basic
|
—
|
|
763
|
|
|
|
—
|
|
760
|
|
|
Earnings per share
attributable to Dell Technologies Inc. — basic
|
$
—
|
|
$
0.26
|
|
NM
|
|
$
—
|
|
$
0.56
|
|
NM
|
Incremental dilution
from VMware, Inc. attributable to Dell Technologies
|
—
|
|
(3)
|
|
|
|
—
|
|
(5)
|
|
|
Net income from
discontinued operations attributable to Dell Technologies Inc.
— diluted
|
$
—
|
|
$
197
|
|
|
|
$
—
|
|
$
422
|
|
|
Weighted-average
shares outstanding — diluted
|
—
|
|
786
|
|
|
|
—
|
|
784
|
|
|
Earnings per share
attributable to Dell Technologies Inc. — diluted
|
$
—
|
|
$
0.25
|
|
NM
|
|
$
—
|
|
$
0.53
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP earnings
per share attributable to Dell Technologies Inc.
|
|
|
Non-GAAP net income
attributable to Dell Technologies Inc. — basic
|
$
1,268
|
|
$
1,166
|
|
|
|
$
2,703
|
|
$
2,221
|
|
|
Weighted-average
shares outstanding — basic
|
739
|
|
763
|
|
|
|
746
|
|
760
|
|
|
Earnings per share
attributable to Dell Technologies Inc. — basic
|
$
1.72
|
|
$
1.53
|
|
12 %
|
|
$
3.62
|
|
$
2.92
|
|
24 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
attributable to Dell Technologies Inc. — diluted
|
$
1,268
|
|
$
1,166
|
|
|
|
$
2,703
|
|
$
2,221
|
|
|
Weighted-average
shares outstanding — diluted
|
755
|
|
786
|
|
|
|
768
|
|
784
|
|
|
Earnings per share
attributable to Dell Technologies Inc. — diluted
|
$
1.68
|
|
$
1.48
|
|
14 %
|
|
$
3.52
|
|
$
2.83
|
|
24 %
|
|
Amounts may not
visually recalculate due to rounding.
|
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SOURCE Dell Technologies