ROUND ROCK, Texas, Sept. 6, 2018 /PRNewswire/ --
News summary
- GAAP revenue up 18 percent to $22.9
billion
- Double-digit growth across all reportable
segments—Infrastructure Solutions Group, Client Solutions Group and
VMware
- Strong operating cash flow and continued debt pay down
- Full-year guidance increased based on strong first half
results
Full story
Dell Technologies (NYSE: DVMT) announces
its fiscal 2019 second quarter results. For the second quarter,
revenue was $22.9 billion, up 18
percent, and non-GAAP revenue was $23.1
billion, up 16 percent from the prior period. During the
quarter, the company generated a GAAP operating loss of
$13 million1, with a
non-GAAP operating income of $2.1
billion, up 13 percent. Cash flow from operations was
$2.6 billion, and excluding the
impact of financing receivables, cash flow from operations would
have been $3.1
billion2.
"We are in the early stages of a global, technology-led
investment cycle in which every company is becoming a technology
company," said Michael Dell,
chairman and CEO, Dell Technologies.
"As our results indicate, Dell Technologies is perfectly positioned
to grow, gain share, drive innovation and be our customers' best,
most trusted partner on the journey to their digital future."
"Dell Technologies delivered another strong quarter, with
double-digit revenue growth across all three of our reportable
segments and strong cash flow generation for the first half of the
year," said Tom Sweet, chief
financial officer, Dell Technologies. "Looking toward the second
half of fiscal 2019, we'll balance this growth by executing across
strategic areas of the business, including driving additional share
gains, continuing to generate strong cash flow and addressing our
customers' needs with our full range of capabilities.
"Given our momentum in the first half of the fiscal year, we
increased the revenue, operating income and net income guidance
ranges we provided on July 2, in
conjunction with the Class V exchange transaction
announcement."
The company ended the second quarter with a cash and investments
balance of $21.5 billion. In the
quarter, Dell Technologies paid down approximately $2.6 billion of core debt3, and
subsequent to the end of the quarter, the company prepaid
$600 million of additional debt. Over
the past two years, Dell Technologies has paid down approximately
$13.7 billion in gross debt,
excluding Dell Financial Services related and subsidiary debt.
Fiscal year 2019
second quarter results
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
August 3,
2018
|
|
August 4,
2017
|
|
Change
|
|
August 3,
2018
|
|
August 4,
2017
|
|
Change
|
|
(in millions, except
percentages; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
revenue
|
$
|
22,942
|
|
$
|
19,521
|
|
18 %
|
|
$
|
44,298
|
|
$
|
37,521
|
|
18 %
|
Operating
loss
|
$
|
(13)
|
|
$
|
(665)
|
|
98 %
|
|
$
|
(166)
|
|
$
|
(1,937)
|
|
91 %
|
Net loss
|
$
|
(461)
|
|
$
|
(739)
|
|
38 %
|
|
$
|
(999)
|
|
$
|
(1,942)
|
|
49 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
revenue
|
$
|
23,122
|
|
$
|
19,856
|
|
16 %
|
|
$
|
44,665
|
|
$
|
38,211
|
|
17 %
|
Non-GAAP operating
income
|
$
|
2,108
|
|
$
|
1,866
|
|
13 %
|
|
$
|
4,134
|
|
$
|
3,291
|
|
26 %
|
Non-GAAP net
income
|
$
|
1,349
|
|
$
|
1,112
|
|
21 %
|
|
$
|
2,523
|
|
$
|
1,873
|
|
35 %
|
Adjusted
EBITDA
|
$
|
2,459
|
|
$
|
2,180
|
|
13 %
|
|
$
|
4,842
|
|
$
|
3,975
|
|
22 %
|
|
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 second quarter completes a strong first half of fiscal
2019, where we continued to demonstrate our commitment to
innovation across our entire portfolio―including new solutions that
give our customers the ability to drive better business outcomes
through the power of their data," said Jeff
Clarke, vice chairman, Products & Operations. "We are
able to provide our customers with a differentiated experience,
given Dell Technologies' unique family of businesses. We continue
to collaborate on new solutions and enhanced integrations to
provide a unified, seamless experience across PC and mobile
devices, software-defined data centers, hyper-converged
infrastructures and multi-cloud platforms."
Operating segments summary
Infrastructure Solutions Group revenue for the second
quarter was a record $9.2 billion, a
24 percent increase. This was driven by revenue of $4.2 billion in storage, a 13 percent increase,
and revenue of $5.1 billion in
servers and networking, a 34 percent increase. Operating income for
the second quarter was $1.0 billion,
or 11 percent of revenue and a 230 basis-point increase from the
previous year, driven primarily by improved storage performance and
operating expense leverage.
Key second quarter highlights:
- Worldwide leader for x86 servers in calendar second quarter,
both in units and revenue4
- Triple-digit growth for VxRail and VxRack, including
$1 billion of cumulative revenue for
VxRail since launching
- Enhancements to the Storage and Data Protection portfolio,
including the new Integrated Data Protection Appliance DP4400 for
the cloud
- Storage share gain for the second consecutive quarter expected
when IDC reports results later today
"IDC has forecasted second quarter server and external storage
systems spending will grow 19.6 percent and 5.5 percent,
respectively, and we fully expect Dell Technologies' Infrastructure
Solutions Group will gain share in both segments when IDC releases
second quarter share data," said Matt Eastwood, senior vice
president of IDC's enterprise, datacenter, cloud infrastructure and
developer research groups.
Client Solutions Group revenue for the second quarter was
$11.1 billion, up 13 percent, with
double-digit growth across both Commercial and Consumer. Commercial
revenue grew 13 percent to $8.1
billion and Consumer revenue was up 14 percent to
$3.0 billion. Operating income for
the second quarter was $425 million,
a 20 percent decrease and 3.8 percent of revenue.
Key second quarter highlights:
- Shipped a record number of client units in the second fiscal
quarter, while also expanding average selling prices
- Outperformed the PC industry and hit highest share position to
date for total worldwide units and for commercial units at 18.2
percent and 22.8 percent, respectively5
- No. 1 share position worldwide for displays, gaining unit share
year-over-year for the 20th consecutive
quarter6
- Maintained position as No. 1 provider of workstations
worldwide7; launched world's most powerful 1-unit rack
workstation
VMware revenue for the second quarter was $2.2 billion, up 11 percent, with operating
income of $736 million and 33.5
percent of revenue. The company continues to see revenue synergies
through the collaboration across the Dell Technologies family of
businesses. The second quarter showed continued strong demand for
Dell Technologies' market-leading VxRail and VxRack hyperconverged
offerings, and the company completed one of the largest VxRail
hyperconverged infrastructure deals in its history. Additionally,
VMworld last week showcased several announcements illustrating
leveraged innovation across Dell Technologies. These new solutions
and enhanced integrations provide customers with a unified,
seamless experience across PC and mobile devices, software-defined
data centers, hyper-converged infrastructures and multi-cloud
platforms.
Second quarter revenue from other businesses, including
Pivotal, Secureworks, RSA Security, Virtustream and Boomi was
$574 million, up 6 percent.
Company outlook
For fiscal 2019, the company is adjusting upward the guidance
ranges provided on July 2, given the
momentum it has seen year-to-date. The company now expects non-GAAP
revenue to be between $90.5 billion
and $92.0 billion for the full fiscal
year, non-GAAP operating income to be between $8.4 billion and $8.8
billion, and non-GAAP net income to be between $4.9 billion and $5.3
billion.
Conference call information
As previously announced, the company will hold a conference call
to discuss its second quarter results today at 7:00 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.
Dell Technologies analyst meeting
Dell Technologies will host a live meeting for analysts Tues.,
Sept. 18, at 9:00 a.m. EDT/8:00 a.m.
CDT. The invitation-only event will feature presentations
and discussions from the company's executive team with a focus on
its transformation, strategy and financial overview. A live webcast
and replay of the meeting will be available on the event page of
Dell Technologies' Investor Relations 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 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.
- Due to the EMC transaction, significant non-cash bridging items
will remain between GAAP and non-GAAP results for the next few
years.
- Dell Technologies initially funds DFS financing receivables
with cash on hand, thereby impacting its cash flow from operations;
however, the impact is offset in cash flow from financing when
subsequently funded through third-party financing.
- Core debt represents the total principal amount of the
company's debt, less unrestricted subsidiary debt, DFS related
debt, and other debt. See slide presentation on the FY19Q2 Earnings
Event page for full reconciliation of the core debt amount.
- IDC WW Quarterly Server Tracker CY18Q2
- IDC WW Quarterly Personal Computing Device (PCD) Tracker
CY18Q2
- DisplaySearch Desktop Monitor Market Tracker CY18Q1
- IDC WW Workstation Tracker CY18Q2
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
historical non-GAAP financial measure to the most directly
comparable historical GAAP financial measure is provided in the
attached tables for each of the fiscal periods indicated.
No reconciliation of Dell Technologies' non-GAAP revenue,
non-GAAP operating income or non-GAAP net income guidance for
fiscal year 2019 to the most comparable GAAP financial measures is
included in the attached tables. These non-GAAP financial measures
exclude the impact of purchase accounting and in some instances
amortization of intangibles, transaction-related expenses, other
corporate expenses and adjustments for income taxes. Dell
Technologies is not able, without unreasonable efforts, to
accurately forecast the excluded items at the level of precision
that would be required to be included in the
reconciliations.
Special Note on Forward-Looking Statements:
Statements in this press release that relate to future results
and events (including the financial guidance with respect to
non-GAAP revenue, non-GAAP operating income and non-GAAP net
income) 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 risks relating to the proposed exchange
of shares of Dell Technologies Class V common stock for shares of
Class C common stock or, at the holder's election, cash (the "Class
V transaction"), including the failure to consummate or delay in
consummating the Class V transaction, including the failure to
obtain the requisite stockholder approval or the failure of VMware
Inc. ("VMware") to pay the special dividend or any inability of
Dell Technologies to pay the cash consideration to Class V
holders; the risk as to the trading price of Class C common stock
to be issued by Dell Technologies in the Class V transaction
relative to the trading price of shares of Class V common
stock and VMware Class A common stock; the interests of directors
and executive officers of Dell Technologies in the Class V
transaction that may be different from, or in addition to, the
interests of stockholders generally; and other risks discussed in
the "Risk Factors" section of the proxy statement/prospectus filed
with the Securities and Exchange Commission on August 6, 2018, forming part of Dell
Technologies' Registration Statement on Form S-4. Other risks,
uncertainties and factors include 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 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.
No Offer or Solicitation:
This communication
does not constitute an offer to sell or a solicitation of an offer
to sell or a solicitation of an offer to buy any securities or a
solicitation of any vote or approval, nor shall there be any sale
of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. No offering of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended (the "Securities Act"), and otherwise in accordance with
applicable law.
Additional Information and Where to Find
It:
This communication is being made in respect of
the proposed merger of a wholly-owned subsidiary of Dell
Technologies Inc. ("Dell Technologies") with and into Dell
Technologies, with Dell Technologies as the surviving entity,
pursuant to which each share of Class V common stock of Dell
Technologies will, at the election of the holder, convert into the
right to receive shares of Class C common stock of Dell
Technologies or cash, without interest, and each existing share of
Class A common stock, Class B common stock and Class C common stock
of Dell Technologies will be unaffected by the merger and remain
outstanding. The proposed transaction requires the approval of a
majority of the aggregate voting power of the outstanding shares of
Class A common stock, Class B common stock and Class V common stock
other than those held by affiliates of Dell Technologies, in each
case, voting as a separate class, and all outstanding shares of
common stock of Dell Technologies, voting together as a single
class, and will be submitted to stockholders for their
consideration. Dell Technologies has filed a registration statement
on Form S-4 (File No. 333-226618) containing a preliminary proxy
statement/prospectus regarding the proposed transaction with the
Securities and Exchange Commission ("SEC"). The information in the
preliminary proxy statement/prospectus is not complete and may be
changed. After the registration statement has been declared
effective by the SEC, a definitive proxy statement/prospectus will
be mailed to each holder of Class A common stock, Class B common
stock, Class C common stock and Class V common stock entitled to
vote at the special meeting in connection with the proposed
transaction. INVESTORS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS RELATING TO THE
TRANSACTION TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR
ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You
may get these documents, when available, for free by visiting EDGAR
on the SEC Website at www.sec.gov or by visiting Dell Technologies'
website at http://investors.delltechnologies.com.
Participants in the Solicitation:
Dell
Technologies and its directors, executive officers and other
members of its management and employees may be deemed to be
participants in the solicitation of proxies from its stockholders
in favor of the proposed merger and the other transactions
contemplated by the merger agreement, including the exchange of
shares of Class V common stock of Dell Technologies for shares of
Class C common stock of Dell Technologies or cash. Information
concerning persons who may be considered participants in such
solicitation under the rules of the SEC, including a description of
their direct or indirect interests, by security holdings or
otherwise, is set forth in the aforementioned preliminary proxy
statement/prospectus that has been filed with the SEC.
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
|
|
|
|
Six Months
Ended
|
|
|
|
August 3,
2018
|
|
August 4,
2017
|
|
Change
|
|
August 3,
2018
|
|
August 4,
2017
|
|
Change
|
Net
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
$
|
18,149
|
|
$
|
15,102
|
|
20 %
|
|
$
|
34,820
|
|
$
|
28,736
|
|
21 %
|
Services
|
4,793
|
|
4,419
|
|
8 %
|
|
9,478
|
|
8,785
|
|
8 %
|
Total net
revenue
|
22,942
|
|
19,521
|
|
18 %
|
|
44,298
|
|
37,521
|
|
18 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of net
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
14,943
|
|
12,775
|
|
17 %
|
|
28,549
|
|
24,598
|
|
16 %
|
Services
|
1,876
|
|
1,778
|
|
6 %
|
|
3,748
|
|
3,498
|
|
7 %
|
Total cost of net
revenue
|
16,819
|
|
14,553
|
|
16 %
|
|
32,297
|
|
28,096
|
|
15 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
6,123
|
|
4,968
|
|
23 %
|
|
12,001
|
|
9,425
|
|
27 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
4,961
|
|
4,540
|
|
9 %
|
|
9,905
|
|
9,136
|
|
8 %
|
Research and
development
|
1,175
|
|
1,093
|
|
8 %
|
|
2,262
|
|
2,226
|
|
2 %
|
Total operating
expenses
|
6,136
|
|
5,633
|
|
9 %
|
|
12,167
|
|
11,362
|
|
7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
(13)
|
|
(665)
|
|
98 %
|
|
(166)
|
|
(1,937)
|
|
91 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other,
net
|
(455)
|
|
(545)
|
|
17 %
|
|
(925)
|
|
(1,117)
|
|
17 %
|
Loss before income
taxes
|
(468)
|
|
(1,210)
|
|
61 %
|
|
(1,091)
|
|
(3,054)
|
|
64 %
|
Income tax
benefit
|
(7)
|
|
(471)
|
|
99 %
|
|
(92)
|
|
(1,112)
|
|
92 %
|
Net loss
|
(461)
|
|
(739)
|
|
38 %
|
|
(999)
|
|
(1,942)
|
|
49 %
|
Less: Net income
(loss) attributable to non-controlling interests
|
38
|
|
(7)
|
|
(643)%
|
|
136
|
|
(39)
|
|
(449)%
|
Net loss attributable
to Dell Technologies Inc.
|
$
|
(499)
|
|
$
|
(732)
|
|
32 %
|
|
$
|
(1,135)
|
|
$
|
(1,903)
|
|
40 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to Dell Technologies Inc. - basic:
|
|
|
|
|
|
|
|
|
|
|
|
Class V Common Stock -
basic
|
$
|
1.61
|
|
$
|
1.00
|
|
|
|
$
|
3.97
|
|
$
|
1.60
|
|
|
DHI Group -
basic
|
$
|
(1.44)
|
|
$
|
(1.65)
|
|
|
|
$
|
(3.39)
|
|
$
|
(3.94)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to Dell Technologies Inc. - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Class V Common Stock -
diluted
|
$
|
1.58
|
|
$
|
1.00
|
|
|
|
$
|
3.91
|
|
$
|
1.59
|
|
|
DHI Group -
diluted
|
$
|
(1.45)
|
|
$
|
(1.66)
|
|
|
|
$
|
(3.40)
|
|
$
|
(3.95)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic - Class V Common
Stock
|
199
|
|
203
|
|
|
|
199
|
|
205
|
|
|
Diluted - Class V
Common Stock
|
199
|
|
203
|
|
|
|
199
|
|
205
|
|
|
Basic - DHI
Group
|
567
|
|
566
|
|
|
|
568
|
|
566
|
|
|
Diluted - DHI
Group
|
567
|
|
566
|
|
|
|
568
|
|
566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Total Net Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
27 %
|
|
25 %
|
|
|
|
27 %
|
|
25 %
|
|
|
Selling, general, and
administrative
|
22 %
|
|
23 %
|
|
|
|
22 %
|
|
24 %
|
|
|
Research and
development
|
5 %
|
|
6 %
|
|
|
|
5 %
|
|
6 %
|
|
|
Operating
expenses
|
27 %
|
|
29 %
|
|
|
|
28 %
|
|
30 %
|
|
|
Operating
loss
|
—%
|
|
(3)%
|
|
|
|
—%
|
|
(5)%
|
|
|
Loss before income
taxes
|
(2)%
|
|
(6)%
|
|
|
|
(3)%
|
|
(8)%
|
|
|
Net loss
|
(2)%
|
|
(4)%
|
|
|
|
(2)%
|
|
(5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
rate
|
1.5 %
|
|
38.9 %
|
|
|
|
8.4 %
|
|
36.4 %
|
|
|
DELL TECHNOLOGIES
INC.
|
Consolidated
Statements of Financial Position
|
(in millions;
unaudited)
|
|
|
|
|
|
August 3,
2018
|
|
February 2,
2018
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
15,312
|
|
$
|
13,942
|
Short-term
investments
|
2,504
|
|
2,187
|
Accounts receivable,
net
|
11,201
|
|
11,721
|
Short-term financing
receivables, net
|
4,140
|
|
3,919
|
Inventories,
net
|
3,642
|
|
2,678
|
Other current
assets
|
6,326
|
|
5,881
|
Total current
assets
|
43,125
|
|
40,328
|
Property, plant, and
equipment, net
|
5,240
|
|
5,390
|
Long-term
investments
|
3,649
|
|
4,163
|
Long-term financing
receivables, net
|
4,030
|
|
3,724
|
Goodwill
|
39,504
|
|
39,920
|
Intangible assets,
net
|
25,208
|
|
28,265
|
Other non-current
assets
|
2,625
|
|
2,403
|
Total
assets
|
$
|
123,381
|
|
$
|
124,193
|
|
|
|
|
LIABILITIES,
REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
Short-term
debt
|
$
|
9,144
|
|
$
|
7,873
|
Accounts
payable
|
20,853
|
|
18,334
|
Accrued and
other
|
7,216
|
|
8,026
|
Short-term deferred
revenue
|
11,965
|
|
11,606
|
Total current
liabilities
|
49,178
|
|
45,839
|
Long-term
debt
|
40,414
|
|
43,998
|
Long-term deferred
revenue
|
9,735
|
|
9,210
|
Other non-current
liabilities
|
6,787
|
|
7,277
|
Total
liabilities
|
106,114
|
|
106,324
|
|
|
|
|
Redeemable
shares
|
2,056
|
|
384
|
Stockholders'
equity:
|
|
|
|
Total Dell
Technologies Inc. stockholders' equity
|
8,563
|
|
11,719
|
Non-controlling
interests
|
6,648
|
|
5,766
|
Total stockholders'
equity
|
15,211
|
|
17,485
|
Total liabilities,
redeemable shares, and stockholders' equity
|
$
|
123,381
|
|
$
|
124,193
|
DELL TECHNOLOGIES
INC.
|
Condensed
Consolidated Statements of Cash Flows
|
(in millions;
unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
August 3,
2018
|
|
August 4,
2017
|
|
August 3,
2018
|
|
August 4,
2017
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net loss
|
$
|
(461)
|
|
$
|
(739)
|
|
$
|
(999)
|
|
$
|
(1,942)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities
|
3,094
|
|
2,559
|
|
4,791
|
|
4,047
|
Change in cash from
operating activities
|
2,633
|
|
1,820
|
|
3,792
|
|
2,105
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
Purchases
|
(449)
|
|
(1,701)
|
|
(888)
|
|
(2,260)
|
Maturities and
sales
|
791
|
|
1,085
|
|
1,322
|
|
2,058
|
Capital
expenditures
|
(288)
|
|
(316)
|
|
(561)
|
|
(561)
|
Proceeds from sale of
facilities, land, and other assets
|
—
|
|
—
|
|
10
|
|
—
|
Capitalized software
development costs
|
(71)
|
|
(98)
|
|
(160)
|
|
(187)
|
Collections on
purchased financing receivables
|
7
|
|
7
|
|
17
|
|
10
|
Acquisition of
businesses, net
|
—
|
|
(211)
|
|
—
|
|
(223)
|
Divestitures of
businesses, net
|
—
|
|
20
|
|
142
|
|
—
|
Asset acquisitions,
net
|
—
|
|
(86)
|
|
(38)
|
|
(86)
|
Asset dispositions,
net
|
(3)
|
|
(41)
|
|
(6)
|
|
(41)
|
Change in cash from
investing activities
|
(13)
|
|
(1,341)
|
|
(162)
|
|
(1,290)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Payment of dissenting
shares obligation
|
(76)
|
|
—
|
|
(76)
|
|
—
|
Share repurchases for
tax withholdings of equity awards
|
(99)
|
|
(68)
|
|
(199)
|
|
(194)
|
Proceeds from the
issuance of common stock of subsidiaries
|
11
|
|
72
|
|
653
|
|
80
|
Repurchases of DHI
Group Common Stock
|
(10)
|
|
—
|
|
(47)
|
|
(2)
|
Repurchases of Class V
Common Stock
|
—
|
|
(54)
|
|
—
|
|
(422)
|
Payments for debt
issuance costs
|
(5)
|
|
—
|
|
(8)
|
|
(5)
|
Proceeds from
debt
|
2,774
|
|
1,335
|
|
4,637
|
|
4,756
|
Repayments of
debt
|
(5,126)
|
|
(2,175)
|
|
(6,948)
|
|
(5,291)
|
Other
|
1
|
|
—
|
|
1
|
|
1
|
Change in cash from
financing activities
|
(2,530)
|
|
(890)
|
|
(1,987)
|
|
(1,077)
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash, cash equivalents, and restricted
cash
|
(130)
|
|
54
|
|
(216)
|
|
48
|
|
|
|
|
|
|
|
|
Change in cash, cash
equivalents, and restricted cash
|
(40)
|
|
(357)
|
|
1,427
|
|
(214)
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents, and restricted cash at beginning of the
period
|
15,845
|
|
9,975
|
|
14,378
|
|
9,832
|
Cash, cash
equivalents, and restricted cash at end of the period
|
$
|
15,805
|
|
$
|
9,618
|
|
$
|
15,805
|
|
$
|
9,618
|
DELL TECHNOLOGIES
INC.
|
Segment
Information
|
(in millions,
except percentages; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
August 3,
2018
|
|
August 4,
2017
|
|
Change
|
|
August 3,
2018
|
|
August 4,
2017
|
|
Change
|
Infrastructure
Solutions Group (ISG):
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Servers and
networking
|
$
|
5,061
|
|
$
|
3,777
|
|
34 %
|
|
$
|
9,646
|
|
$
|
7,033
|
|
37 %
|
Storage
|
4,166
|
|
3,690
|
|
13 %
|
|
8,248
|
|
7,395
|
|
12 %
|
Total ISG net
revenue
|
$
|
9,227
|
|
$
|
7,467
|
|
24 %
|
|
$
|
17,894
|
|
$
|
14,428
|
|
24 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income:
|
|
|
|
|
|
|
|
|
|
|
|
ISG operating
income
|
$
|
1,012
|
|
$
|
647
|
|
56 %
|
|
$
|
1,951
|
|
$
|
1,153
|
|
69 %
|
% of ISG net
revenue
|
11
%
|
|
9 %
|
|
|
|
11
%
|
|
8 %
|
|
|
% of total segment
operating income
|
47
%
|
|
34
%
|
|
|
|
46
%
|
|
34
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Client
Solutions Group (CSG):
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
$
|
8,109
|
|
$
|
7,207
|
|
13 %
|
|
$
|
15,472
|
|
$
|
13,549
|
|
14 %
|
Consumer
|
3,019
|
|
2,659
|
|
14 %
|
|
5,927
|
|
5,365
|
|
10 %
|
Total CSG net
revenue
|
$
|
11,128
|
|
$
|
9,866
|
|
13 %
|
|
$
|
21,399
|
|
$
|
18,914
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income:
|
|
|
|
|
|
|
|
|
|
|
|
CSG operating
income
|
$
|
425
|
|
$
|
528
|
|
(20)%
|
|
$
|
958
|
|
$
|
853
|
|
12 %
|
% of CSG net
revenue
|
4 %
|
|
5 %
|
|
|
|
4 %
|
|
5 %
|
|
|
% of total segment
operating income
|
20
%
|
|
28
%
|
|
|
|
22
%
|
|
26
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VMware:
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Total VMware net
revenue
|
$
|
2,194
|
|
$
|
1,984
|
|
11 %
|
|
$
|
4,222
|
|
$
|
3,802
|
|
11 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income:
|
|
|
|
|
|
|
|
|
|
|
|
VMware operating
income
|
$
|
736
|
|
$
|
728
|
|
1 %
|
|
$
|
1,349
|
|
$
|
1,339
|
|
1 %
|
% of VMware net
revenue
|
34
%
|
|
37
%
|
|
|
|
32
%
|
|
35
%
|
|
|
% of total segment
operating income
|
34
%
|
|
38
%
|
|
|
|
32
%
|
|
40
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
to consolidated net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Reportable segment
net revenue
|
$
|
22,549
|
|
$
|
19,317
|
|
|
|
$
|
43,515
|
|
$
|
37,144
|
|
|
Other businesses
(a)
|
574
|
|
543
|
|
|
|
1,153
|
|
1,072
|
|
|
Unallocated
transactions (b)
|
(1)
|
|
(4)
|
|
|
|
(3)
|
|
(5)
|
|
|
Impact of purchase
accounting (c)
|
(180)
|
|
(335)
|
|
|
|
(367)
|
|
(690)
|
|
|
Total net
revenue
|
$
|
22,942
|
|
$
|
19,521
|
|
|
|
$
|
44,298
|
|
$
|
37,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
to consolidated operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Reportable segment
operating income
|
$
|
2,173
|
|
$
|
1,903
|
|
|
|
$
|
4,258
|
|
$
|
3,345
|
|
|
Other businesses
(a)
|
(49)
|
|
(29)
|
|
|
|
(99)
|
|
(52)
|
|
|
Unallocated
transactions (b)
|
(16)
|
|
(8)
|
|
|
|
(25)
|
|
(2)
|
|
|
Impact of purchase
accounting (c)
|
(215)
|
|
(406)
|
|
|
|
(437)
|
|
(829)
|
|
|
Amortization of
intangibles
|
(1,526)
|
|
(1,740)
|
|
|
|
(3,048)
|
|
(3,516)
|
|
|
Transaction-related
expenses (d)
|
(104)
|
|
(138)
|
|
|
|
(270)
|
|
(329)
|
|
|
Other corporate
expenses (e)
|
(276)
|
|
(247)
|
|
|
|
(545)
|
|
(554)
|
|
|
Total operating
loss
|
$
|
(13)
|
|
$
|
(665)
|
|
|
|
$
|
(166)
|
|
$
|
(1,937)
|
|
|
_________________
|
|
|
|
|
|
|
|
|
|
|
|
(a) Pivotal,
SecureWorks, RSA Security, Virtustream, and Boomi constitute "Other
businesses" and do not meet the requirements for a reportable
segment, either individually or
collectively. The results of Other businesses are not
material to the Company's overall results.
|
(b) Unallocated
transactions includes 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
|
|
|
|
Six Months
Ended
|
|
|
|
August 3,
2018
|
|
August 4,
2017
|
|
Change
|
|
August 3,
2018
|
|
August 4,
2017
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
revenue
|
$
23,122
|
|
$
19,856
|
|
16 %
|
|
$
44,665
|
|
$
38,211
|
|
17 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross
margin
|
$
7,066
|
|
$
6,259
|
|
13 %
|
|
$
13,985
|
|
$
12,060
|
|
16 %
|
% of non-GAAP net
revenue
|
31
%
|
|
32
%
|
|
|
|
31
%
|
|
32
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating
expenses
|
$
4,958
|
|
$
4,393
|
|
13 %
|
|
$
9,851
|
|
$
8,769
|
|
12 %
|
% of non-GAAP net
revenue
|
21
%
|
|
22
%
|
|
|
|
22
%
|
|
23
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating
income
|
$
2,108
|
|
$
1,866
|
|
13 %
|
|
$
4,134
|
|
$
3,291
|
|
26 %
|
% of non-GAAP net
revenue
|
9 %
|
|
9 %
|
|
|
|
9 %
|
|
9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income
|
$
1,349
|
|
$
1,112
|
|
21 %
|
|
$
2,523
|
|
$
1,873
|
|
35 %
|
% of non-GAAP net
revenue
|
6 %
|
|
6 %
|
|
|
|
6 %
|
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
2,459
|
|
$
2,180
|
|
13 %
|
|
$
4,842
|
|
$
3,975
|
|
22 %
|
% of non-GAAP net
revenue
|
11
%
|
|
11
%
|
|
|
|
11
%
|
|
10
%
|
|
|
DELL TECHNOLOGIES
INC.
|
Reconciliation of
Selected Non-GAAP Financial Measures
|
(in millions,
except percentages; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
August 3,
2018
|
|
August 4,
2017
|
|
Change
|
|
August 3,
2018
|
|
August 4,
2017
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
22,942
|
|
$
19,521
|
|
18 %
|
|
$
44,298
|
|
$
37,521
|
|
18 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Impact of purchase
accounting
|
180
|
|
335
|
|
|
|
367
|
|
690
|
|
|
Non-GAAP net
revenue
|
$
23,122
|
|
$
19,856
|
|
16 %
|
|
$
44,665
|
|
$
38,211
|
|
17 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
$
6,123
|
|
$
4,968
|
|
23 %
|
|
$
12,001
|
|
$
9,425
|
|
27 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
718
|
|
920
|
|
|
|
1,428
|
|
1,870
|
|
|
Impact of purchase
accounting
|
185
|
|
348
|
|
|
|
378
|
|
713
|
|
|
Transaction-related
expenses
|
21
|
|
10
|
|
|
|
137
|
|
17
|
|
|
Other corporate
expenses
|
19
|
|
13
|
|
|
|
41
|
|
35
|
|
|
Non-GAAP gross
margin
|
$
7,066
|
|
$
6,259
|
|
13 %
|
|
$
13,985
|
|
$
12,060
|
|
16 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
6,136
|
|
$
5,633
|
|
9 %
|
|
$
12,167
|
|
$
11,362
|
|
7 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
(808)
|
|
(820)
|
|
|
|
(1,620)
|
|
(1,646)
|
|
|
Impact of purchase
accounting
|
(30)
|
|
(58)
|
|
|
|
(59)
|
|
(116)
|
|
|
Transaction-related
expenses
|
(83)
|
|
(128)
|
|
|
|
(133)
|
|
(312)
|
|
|
Other corporate
expenses
|
(257)
|
|
(234)
|
|
|
|
(504)
|
|
(519)
|
|
|
Non-GAAP operating
expenses
|
$
4,958
|
|
$
4,393
|
|
13 %
|
|
$
9,851
|
|
$
8,769
|
|
12 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
$
(13)
|
|
$
(665)
|
|
98 %
|
|
$
(166)
|
|
$
(1,937)
|
|
91 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
1,526
|
|
1,740
|
|
|
|
3,048
|
|
3,516
|
|
|
Impact of purchase
accounting
|
215
|
|
406
|
|
|
|
437
|
|
829
|
|
|
Transaction-related
expenses
|
104
|
|
138
|
|
|
|
270
|
|
329
|
|
|
Other corporate
expenses
|
276
|
|
247
|
|
|
|
545
|
|
554
|
|
|
Non-GAAP operating
income
|
$
2,108
|
|
$
1,866
|
|
13 %
|
|
$
4,134
|
|
$
3,291
|
|
26 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
(461)
|
|
$
(739)
|
|
38 %
|
|
$
(999)
|
|
$
(1,942)
|
|
49 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
1,526
|
|
1,740
|
|
|
|
3,048
|
|
3,516
|
|
|
Impact of purchase
accounting
|
215
|
|
406
|
|
|
|
437
|
|
829
|
|
|
Transaction-related
expenses
|
104
|
|
138
|
|
|
|
270
|
|
329
|
|
|
Other corporate
expenses
|
276
|
|
247
|
|
|
|
545
|
|
554
|
|
|
Aggregate adjustment
for income taxes
|
(311)
|
|
(680)
|
|
|
|
(778)
|
|
(1,413)
|
|
|
Non-GAAP net
income
|
$
1,349
|
|
$
1,112
|
|
21 %
|
|
$
2,523
|
|
$
1,873
|
|
35 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
(461)
|
|
$
(739)
|
|
38 %
|
|
$
(999)
|
|
$
(1,942)
|
|
49 %
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other,
net
|
455
|
|
545
|
|
|
|
925
|
|
1,117
|
|
|
Income tax
benefit
|
(7)
|
|
(471)
|
|
|
|
(92)
|
|
(1,112)
|
|
|
Depreciation and
amortization
|
1,931
|
|
2,142
|
|
|
|
3,845
|
|
4,354
|
|
|
EBITDA
|
$
1,918
|
|
$
1,477
|
|
30 %
|
|
$
3,679
|
|
$
2,417
|
|
52 %
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
$
1,918
|
|
$
1,477
|
|
30 %
|
|
$
3,679
|
|
$
2,417
|
|
52 %
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
216
|
|
208
|
|
|
|
415
|
|
409
|
|
|
Impact of purchase
accounting
|
145
|
|
335
|
|
|
|
367
|
|
692
|
|
|
Transaction-related
expenses
|
85
|
|
138
|
|
|
|
251
|
|
329
|
|
|
Other corporate
expenses
|
95
|
|
22
|
|
|
|
130
|
|
128
|
|
|
Adjusted
EBITDA
|
$
2,459
|
|
$
2,180
|
|
13 %
|
|
$
4,842
|
|
$
3,975
|
|
22 %
|
View original
content:http://www.prnewswire.com/news-releases/dell-technologies-reports-fiscal-year-2019-second-quarter-financial-results-300707749.html
SOURCE Dell Technologies