Remote Work and Learn Solutions Drive Dell Technologies’ Third Quarter Fiscal 2021 Financial Results

ROUND ROCK, Texas, Nov. 24, 2020 /PRNewswire/ —

News summary

  • Third quarter total revenue up 3% to $23.5 billion
  • Record Client Solutions Group revenue of $12.3 billion, up 8%, operating income of $1.0 billion
  • Diluted earnings per share up 64% to $1.08, non-GAAP diluted earnings per share up 16% to $2.03
  • Operating income up 35% to $1.1 billion, non-GAAP operating income up 12% to $2.7 billion

Full story
Dell Technologies (NYSE: DELL) announces financial results for its fiscal 2021 third quarter. Revenue was up 3% to $23.5 billion. The company generated operating income of $1.1 billion, a 35% increase over the same period in the prior year, and non-GAAP operating income of $2.7 billion, up 12%. Net income was $881 million, non-GAAP net income was $1.7 billion and adjusted EBITDA was $3.2 billion. Net cash from operating activities was $3.0 billion. Diluted earnings per share was $1.08, up 64% and non-GAAP diluted earnings per share was $2.03, up 16%.

“Technology has never been more important, and as the world evolves, so does our business,” said Jeff Clarke, vice chairman and chief operating officer, Dell Technologies. “We met unprecedented demand for remote work and learn solutions this quarter while increasing revenue to $23.5 billion. At the same time, we accelerated our as-a-Service strategy and hybrid cloud capabilities at the edge – positioning us to win in these growing markets and making it easy for customers to manage data and workloads across all their operations.”

In October, at Dell Technologies World Experience, the company announced the expansion of its as-a-Service capabilities with Project APEX to simplify how customers and partners access technology on-demand – across storage, servers, networking, hyperconverged infrastructure, PCs and broader solutions. Project APEX will unify the company’s as-a-Service and cloud strategies, technology offerings, and go-to-market efforts. Businesses will have a consistent as-a-Service experience wherever they run workloads including on-premises, edge locations and public clouds.

Third Quarter Fiscal 2021 Financial Results

Three Months Ended

Nine Months Ended

October 30,
2020

November 1,
2019

Change

October 30,
2020

November 1,
2019

Change

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

Total net revenue

$

23,482

$

22,844

3%

$

68,112

$

68,122

—%

Operating income

$

1,129

$

836

35%

$

2,967

$

1,905

56%

Net income

$

881

$

552

60%

$

2,162

$

5,113

(58)%

Earnings per share – diluted

$

1.08

$

0.66

64%

$

2.64

$

5.50

(52)%

Non-GAAP net revenue

$

23,521

$

22,928

3%

$

68,241

$

68,372

—%

Non-GAAP operating income

$

2,725

$

2,442

12%

$

7,504

$

7,381

2%

Non-GAAP net income

$

1,711

$

1,445

18%

$

4,475

$

4,405

2%

Adjusted EBITDA

$

3,231

$

2,857

13%

$

8,938

$

8,586

4%

Non-GAAP earnings per share –
diluted

$

2.03

$

1.75

16%

$

5.28

$

5.35

(1)%

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

Dell Technologies ended the quarter with cash and investments of $13 billion and paid down $4.6 billion in debt during the quarter. The company had total deferred revenue of $28.7 billion as of quarter end, up 11% year-over-year. Recurring revenue, which includes deferred revenue amortization, utility and as-a-Service models was approximately $6 billion for the quarter, up 13% year-over-year.

“We delivered differentiated performance through our diversified portfolio and are leaning into growth opportunities while managing operating expenses in a disciplined way,” said Tom Sweet, chief financial officer, Dell Technologies. “In the third quarter, we drove value by expanding profitability at a significant multiple of revenue and generated $3 billion in operating cash flow.”

Operating segments summary

Client Solutions Group revenue for the third quarter was a record $12.3 billion. Operating income was a record $1.0 billion, up 36% and 8.2% of Client Solutions Group revenue. The company saw continued demand for remote work, learning and gaming solutions. Consumer revenue was $3.5 billion, up 14%, while commercial client revenue was $8.8 billion, up 5%.

Key highlights:

  • Consumer direct business up 47% with consumer direct online business up 62%, based on orders.
  • Strong performance with double-digit revenue growth in Latitude and Precision notebooks and triple-digit revenue growth in Commercial Chromebooks.
  • Strength in the XPS premium line and gaming systems including Alienware, with strong double-digit revenue growth for both notebooks and desktops.

Infrastructure Solutions Group revenue for the third quarter was $8.0 billion, with customers continuing to direct more spending towards remote work and business continuity solutions. Storage revenue was $3.9 billion, while servers and networking revenue was $4.2 billion. Operating income was $882 million for the third quarter, or approximately 11% of Infrastructure Solutions Group revenue.

Key highlights:

  • Launch of new HCI, cloud, storage and data protection integration with latest VMware releases to help customers innovate across edge locations, data centers and hybrid clouds.
  • Continued strong demand for VxRail and PowerMax solutions, with double-digit orders growth in both for the third straight quarter.
  • PowerEdge server orders up single digits sequentially.

VMware revenue was $2.9 billion for the third quarter, up 8% driven by broad-based strength across a diverse product portfolio. Operating income for the quarter was $837 million, or 28.9% of VMware revenue.

Conference call information
As previously announced, the Company will hold a conference call to discuss its third quarter performance today, November 24, 2020 at 4:30 p.m. CST. The conference call will be broadcast live over the internet and can be accessed at https://investors.delltechnologies.com/events-and-presentations/upcoming-events

For those unable to listen to the live broadcast, an archived version will be available at the same location for one year.

Additional financial and operating information may be downloaded from https://investors.delltechnologies.com/financial-information/quarterly-results

About Dell Technologies
Dell Technologies (NYSE:DELL) helps organizations and individuals build their digital future and transform how they work, live and play. The company provides customers with the industry’s broadest and most innovative technology and services portfolio for the data era.

Copyright © 2020 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, non-GAAP earnings per share attributable to Dell Technologies Inc. – diluted, EBITDA, and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America (“GAAP”). A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in the attached tables for each of the fiscal periods indicated.

Special Note on Forward-Looking Statements:
Statements in this press release that relate to future results and events are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933 and are based on Dell Technologies’ current expectations. The words “may,” “will,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “aim,” “seek,” and similar expressions as they relate to Dell Technologies or its management are intended to identify these forward-looking statements.

Dell Technologies’ results or events in future periods could differ materially from those expressed or implied by these forward-looking statements because of risks, uncertainties, and other factors that include, but are not limited to, the following: competitive pressures; Dell Technologies’ reliance on third-party suppliers for products and components, including reliance on single-source or limited-source suppliers; Dell Technologies’ ability to achieve favorable pricing from its vendors; adverse global economic conditions and instability in financial markets, including as a result of the COVID-19 pandemic; Dell Technologies’ execution of its growth, business and acquisition strategies; the success of Dell Technologies’ cost efficiency measures; Dell Technologies’ ability to manage solutions and products and services transitions in an effective manner; Dell Technologies’ ability to deliver high-quality products and services; Dell Technologies’ foreign operations and ability to generate substantial non-U.S. net revenue; Dell Technologies’ product, customer, and geographic sales mix, and seasonal sales trends; the performance of Dell Technologies’ sales channel partners; access to the capital markets by Dell Technologies or its customers; weak economic conditions and additional regulation including tariffs and other effects of trade regulation; counterparty default risks; effects of customer defaults or the exercise of customer rights on the ability of Dell Technologies to produce revenue under its contracts for services and solutions at expected levels and to perform such contracts at estimated costs; the 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; 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; 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, climate change, and public health issues, including those relating to the COVID-19 pandemic; Dell Technologies’ substantial level of indebtedness; the impact of the financial performance of VMware, Inc.; and the market volatility of Dell Technologies’ pension plan assets.

This list of risks, uncertainties, and other factors is not complete. Dell Technologies discusses some of these matters more fully, as well as certain risk factors that could affect Dell Technologies’ business, financial condition, results of operations, and prospects, in its reports filed with the SEC, including Dell Technologies’ annual report on Form 10-K for the fiscal year ended January 31, 2020, quarterly reports on Form 10-Q, and current reports on Form 8-K. These filings are available for review through the SEC’s website at www.sec.gov. Any or all forward-looking statements Dell Technologies makes may turn out to be wrong and can be affected by inaccurate assumptions Dell Technologies might make or by known or unknown risks, uncertainties and other factors, including those identified in this press release. Accordingly, you should not place undue reliance on the forward-looking statements made in this press release, which speak only as of the date such statements are made. Dell Technologies does not undertake to update any forward-looking statement after the date as of which such statement was made, whether to reflect changes in circumstances or Dell Technologies’ expectations, the occurrence of unanticipated events, or otherwise.

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DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Income (Loss) and Related Financial Highlights
(in millions, except percentages; unaudited)

Three Months Ended

Nine Months Ended

October 30,
2020

November 1,
2019

Change

October 30,
2020

November 1,
2019

Change

Net revenue (a):

Products

$

17,352

$

17,275

—%

$

50,127

$

51,765

(3)%

Services

6,130

5,569

10%

17,985

16,357

10%

Total net revenue

23,482

22,844

3%

68,112

68,122

—%

Cost of net revenue:

Products

13,789

13,558

2%

39,923

40,526

(1)%

Services

2,432

2,160

13%

6,919

6,347

9%

Total cost of net revenue

16,221

15,718

3%

46,842

46,873

—%

Gross margin

7,261

7,126

2%

21,270

21,249

—%

Operating expenses:

Selling, general, and administrative

4,772

5,028

(5)%

14,419

15,677

(8)%

Research and development

1,360

1,262

8%

3,884

3,667

6%

Total operating expenses

6,132

6,290

(3)%

18,303

19,344

(5)%

Operating income

1,129

836

35%

2,967

1,905

56%

Interest and other, net

273

(677)

140%

(929)

(2,000)

54%

Income (loss) before income taxes

1,402

159

782%

2,038

(95)

NM

Income tax provision (benefit)

521

(393)

233%

(124)

(5,208)

98%

Net income

881

552

60%

2,162

5,113

(58)%

Less: Net income attributable
to non-controlling interests

49

53

(8)%

139

905

(85)%

Net income attributable to
Dell Technologies Inc.

$

832

$

499

67%

$

2,023

$

4,208

(52)%

Percentage of Total Net Revenue:

Gross margin

31

%

31

%

31

%

31

%

Selling, general, and administrative

20

%

22

%

21

%

23

%

Research and development

6

%

6

%

6

%

5

%

Operating expenses

26

%

28

%

27

%

28

%

Operating income

5

%

4

%

4

%

3

%

Income (loss) before income taxes

6

%

1

%

3

%

%

Net income

4

%

2

%

3

%

8

%

Income tax rate

37.2

%

-247.2

%

-6.1

%

5482.1

%

____________________

(a)

During Fiscal 2020, the Company reclassified revenue associated with certain service and software-as-a-service offerings
from product revenue to services revenue. There was no change to total revenue as a result of the reclassifications. Prior
period results have been recast to conform with current period presentation.

DELL TECHNOLOGIES INC.
Consolidated Statements of Financial Position
(in millions; unaudited)

October 30, 2020

January 31, 2020

ASSETS

Current assets:

Cash and cash equivalents

$

11,304

$

9,302

Accounts receivable, net

11,377

12,484

Short-term financing receivables, net

4,872

4,895

Inventories, net

3,393

3,281

Other current assets

7,668

6,906

Total current assets

38,614

36,868

Property, plant, and equipment, net

6,344

6,055

Long-term investments

1,655

864

Long-term financing receivables, net

5,374

4,848

Goodwill

40,643

41,691

Intangible assets, net

15,257

18,107

Other non-current assets

11,061

10,428

Total assets

$

118,948

$

118,861

LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS’ EQUITY

Current liabilities:

Short-term debt

$

6,536

$

7,737

Accounts payable

19,792

20,065

Accrued and other

8,715

9,773

Short-term deferred revenue

15,259

14,881

Total current liabilities

50,302

52,456

Long-term debt

43,325

44,319

Long-term deferred revenue

13,422

12,919

Other non-current liabilities

5,433

5,383

Total liabilities

112,482

115,077

Redeemable shares

527

629

Stockholders’ equity (deficit):

Total Dell Technologies Inc. stockholders’ equity (deficit)

883

(1,574)

Non-controlling interests

5,056

4,729

Total stockholders’ equity

5,939

3,155

Total liabilities, redeemable shares, and stockholders’ equity

$

118,948

$

118,861

DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(in millions; unaudited)

Three Months Ended

Nine Months Ended

October 30,
2020

November 1,
2019

October 30,
2020

November 1,
2019

Cash flows from operating activities:

Net income

$

881

$

552

$

2,162

$

5,113

Adjustments to reconcile net income to net cash
provided by (used in) operating activities:

2,113

1,269

3,368

670

Change in cash from operating activities

2,994

1,821

5,530

5,783

Cash flows from investing activities:

Purchases of investments

(122)

(72)

(296)

(142)

Maturities and sales of investments

27

19

98

449

Capital expenditures and capitalized software
development costs

(480)

(609)

(1,584)

(1,876)

Acquisition of businesses and assets, net

(71)

(2,053)

(405)

(2,437)

Divestitures of businesses and assets, net

2,067

2,187

(3)

Other

14

16

26

27

Change in cash from investing activities

1,435

(2,699)

26

(3,982)

Cash flows from financing activities:

Proceeds from the issuance of common stock

168

212

389

451

Repurchases of parent common stock

(2)

(240)

(6)

Repurchases of subsidiary common stock (a)

(299)

(283)

(890)

(1,686)

Proceeds from debt

2,925

5,455

14,772

17,656

Repayments of debt

(7,024)

(5,037)

(17,244)

(18,948)

Other

(80)

(23)

(270)

(67)

Change in cash from financing activities

(4,310)

322

(3,483)

(2,600)

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

(15)

(38)

(67)

(100)

Change in cash, cash equivalents, and restricted cash

104

(594)

2,006

(899)

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

12,053

9,935

10,151

10,240

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

$

12,157

$

9,341

$

12,157

$

9,341

_________________

(a)  

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

DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued on next page)

Three Months Ended

Nine Months Ended

October 30,
2020

November 1,
2019

Change

October 30,
2020

November 1,
2019

Change

Infrastructure Solutions Group (ISG):

Net Revenue:

Servers and networking

$

4,164

$

4,241

(2)%

$

12,118

$

12,858

(6)%

Storage

3,860

4,149

(7)%

11,682

12,355

(5)%

Total ISG net revenue

$

8,024

$

8,390

(4)%

$

23,800

$

25,213

(6)%

Operating Income:

ISG operating income

$

882

$

996

(11)%

$

2,587

$

2,889

(10)%

% of ISG net revenue

11

%

12

%

11

%

11

%

% of total reportable
segment operating income

32

%

41

%

35

%

39

%

Client Solutions Group (CSG):

Net Revenue:

Commercial

$

8,783

$

8,330

5%

$

25,456

$

25,714

(1)%

Consumer

3,503

3,080

14%

9,137

8,354

9%

Total CSG net revenue

$

12,286

$

11,410

8%

$

34,593

$

34,068

2%

Operating Income:

CSG operating income

$

1,002

$

739

36%

$

2,309

$

2,514

(8)%

% of CSG net revenue

8

%

6

%

7

%

7

%

% of total reportable
segment operating income

37

%

30

%

31

%

34

%

VMware (a):

Net Revenue:

Total VMware net revenue

$

2,893

$

2,671

8%

$

8,556

$

7,779

10%

Operating Income:

VMware operating income

$

837

$

709

18%

$

2,504

$

2,055

22%

% of VMware net revenue

29

%

27

%

29

%

26

%

% of total reportable
segment operating income

31

%

29

%

34

%

27

%

____________________

(a)  

During Fiscal 2020, the Company reclassified Pivotal operating results from Other businesses to the VMware reportable
segment. There was no change to consolidated results as a result of the reclassification. Prior period results have been
recast to conform with current period presentation.

DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued)

Three Months Ended

Nine Months Ended

October 30,
2020

November 1,
2019

October 30,
2020

November 1,
2019

Reconciliation to consolidated net revenue:

Reportable segment net revenue (a)

$

23,203

$

22,471

$

66,949

$

67,060

Other businesses (a) (b)

314

456

1,288

1,311

Unallocated transactions (c)

4

1

4

1

Impact of purchase accounting (d)

(39)

(84)

(129)

(250)

Total consolidated net revenue

$

23,482

$

22,844

$

68,112

$

68,122

Reconciliation to consolidated operating income:

Reportable segment operating income (a)

$

2,721

$

2,444

$

7,400

$

7,458

Other businesses (a) (b)

3

105

(48)

Unallocated transactions (c)

1

(2)

(1)

(29)

Impact of purchase accounting (d)

(49)

(96)

(165)

(299)

Amortization of intangibles

(845)

(1,057)

(2,547)

(3,334)

Transaction-related expenses (e)

(52)

(76)

(211)

(165)

Stock-based compensation expense (f)

(436)

(322)

(1,219)

(886)

Other corporate expenses (g)

(214)

(55)

(395)

(792)

Total consolidated operating income

$

1,129

$

836

$

2,967

$

1,905

_________________

(a) 

During Fiscal 2020, the Company reclassified Pivotal operating results from Other businesses to the VMware reportable
segment. Prior period results have been recast to conform with current period presentation.

(b)

Secureworks, Virtustream, and Boomi constitute “Other businesses” and do not meet the requirements for a reportable
segment, either individually or collectively. The Company completed the sale of RSA Security on September 1, 2020;
prior to divestiture, RSA Security’s operating results were also included in Other Businesses and did not meet the
requirements for a reportable segment. The results of Other businesses are not material to the Company’s overall results.

(c) 

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

(d) 

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

(e) 

Transaction-related expenses includes acquisition, integration, and divestiture related costs.

(f) 

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

(g) 

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

SUPPLEMENTAL SELECTED NON-GAAP FINANCIAL MEASURES

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

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DELL TECHNOLOGIES INC.
Selected Non-GAAP Financial Measures
(in millions, except per share amounts and percentages; unaudited)

Three Months Ended

Nine Months Ended

October 30,
2020

November 1,
2019

Change

October 30,
2020

November 1,
2
019

Change

Non-GAAP net revenue

$

23,521

$

22,928

3%

$

68,241

$

68,372

—%

Non-GAAP gross margin

$

7,771

$

7,768

—%

$

22,722

$

23,188

(2)%

% of non-GAAP net revenue

33

%

34

%

33

%

34

%

Non-GAAP operating expenses

$

5,046

$

5,326

(5)%

$

15,218

$

15,807

(4)%

% of non-GAAP net revenue

21

%

23

%

22

%

23

%

Non-GAAP operating income

$

2,725

$

2,442

12%

$

7,504

$

7,381

2%

% of non-GAAP net revenue

12

%

11

%

11

%

11

%

Non-GAAP net income

$

1,711

$

1,445

18%

$

4,475

$

4,405

2%

% of non-GAAP net revenue

7

%

6

%

7

%

6

%

Adjusted EBITDA

$

3,231

$

2,857

13%

$

8,938

$

8,586

4%

% of non-GAAP net revenue

14

%

12

%

13

%

13

%

Non-GAAP earnings per share –
diluted

$

2.03

$

1.75

16%

$

5.28

$

5.35

(1)%

DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued on next page)

Three Months Ended

Nine Months Ended

October 30,
2020

November 1,
2019

Change

October 30,
2020

November 1,
2019

Change

Net revenue

$

23,482

$

22,844

3%

$

68,112

$

68,122

—%

Non-GAAP adjustments:

Impact of purchase
accounting

39

84

129

250

Non-GAAP net revenue

$

23,521

$

22,928

3%

$

68,241

$

68,372

—%

Gross margin

$

7,261

$

7,126

2%

$

21,270

$

21,249

—%

Non-GAAP adjustments:

Amortization of intangibles

375

517

1,122

1,555

Impact of purchase
accounting

40

86

134

255

Transaction-related expenses

(5)

Stock-based compensation
expense

51

33

141

91

Other corporate expenses

44

6

55

43

Non-GAAP gross margin

$

7,771

$

7,768

—%

$

22,722

$

23,188

(2)%

Operating expenses

$

6,132

$

6,290

(3)%

$

18,303

$

19,344

(5)%

Non-GAAP adjustments:

Amortization of intangibles

(470)

(540)

(1,425)

(1,779)

Impact of purchase
accounting

(9)

(10)

(31)

(44)

Transaction-related expenses

(52)

(76)

(211)

(170)

Stock-based compensation
 expense

(385)

(289)

(1,078)

(795)

Other corporate expenses

(170)

(49)

(340)

(749)

Non-GAAP operating
expenses

$

5,046

$

5,326

(5)%

$

15,218

$

15,807

(4)%

Operating income

$

1,129

$

836

35%

$

2,967

$

1,905

56%

Non-GAAP adjustments:

Amortization of intangibles

845

1,057

2,547

3,334

Impact of purchase
accounting

49

96

165

299

Transaction-related expenses

52

76

211

165

Stock-based compensation
expense

436

322

1,219

886

Other corporate expenses

214

55

395

792

Non-GAAP operating
income

$

2,725

$

2,442

12%

$

7,504

$

7,381

2%

DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued)

Three Months Ended

Nine Months Ended

October 30,
2020

November 1,
2019

Change

October 30,
2020

November 1,
2019

Change

Net income

$

881

$

552

60%

$

2,162

$

5,113

(58)%

Non-GAAP adjustments:

Amortization of intangibles

845

1,057

2,547

3,334

Impact of purchase accounting

49

96

165

299

Transaction-related expenses

(286)

76

(247)

165

Stock-based compensation
expense

436

322

1,219

886

Other corporate expenses

106

55

287

792

Fair value adjustments on
equity investments

(489)

(18)

(591)

(160)

Aggregate adjustment for
income taxes

169

(695)

(1,067)

(6,024)

Non-GAAP net income

$

1,711

$

1,445

18%

$

4,475

$

4,405

2%

Net income

$

881

$

552

60%

$

2,162

$

5,113

(58)%

Adjustments:

Interest and other, net

(273)

677

929

2,000

Income tax benefit

521

(393)

(124)

(5,208)

Depreciation and amortization

1,361

1,494

4,017

4,608

EBITDA

$

2,490

$

2,330

7%

$

6,984

$

6,513

7%

EBITDA

$

2,490

$

2,330

7%

$

6,984

$

6,513

7%

Adjustments:

Stock-based compensation
expense

436

322

1,219

886

Impact of purchase
accounting

39

84

129

251

Transaction-related expenses

52

76

211

165

Other corporate expenses

214

45

395

771

Adjusted EBITDA

$

3,231

$

2,857

13%

$

8,938

$

8,586

4%

DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Three Months Ended October 30, 2020
(in millions, except per share amounts; unaudited)

GAAP

Amortization
of intangibles

Impact of
purchase
accounting

Transaction-
related
expenses

Stock-based
compensation
expense

Other
corporate
expenses

Fair value

 adjustments
on equity
investments

Aggregate
adjustment
for income

 taxes

Non-
GAAP

Net income

$

881

845

49

(286)

436

106

(489)

169

$

1,711

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

49

63

3

5

61

9

(34)

(13)

143

Net income attributable to Dell Technologies Inc.
basic

832

782

46

(291)

375

97

(455)

182

1,568

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

(3)

(4)

Net income attributable to Dell Technologies Inc.
diluted

$

829

$

1,564

Earnings per share – basic

$

1.11

$

2.10

Earnings per share – diluted

$

1.08

$

2.03

Weighted-average shares outstanding – basic

747

747

Weighted-average shares outstanding – diluted

771

771

_________________

(a)  

Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, Inc. and SecureWorks Corp. by their
non-GAAP net income adjustments for the period presented.

(b)

  Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.’s dilutive securities on the diluted earnings
per share of Dell Technologies Inc. and is calculated by multiplying the difference between VMware, Inc.’s basic and diluted earnings per share by the number of shares of VMware, Inc. common stock held by Dell Technologies Inc.

DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Nine Months Ended October 30, 2020
(in millions, except per share amounts; unaudited)

GAAP

Amortization
of intangibles

Impact of
purchase
accounting

Transaction-
related
expenses

Stock-based
compensation
expense

Other
corporate
expenses

Fair value
adjustments
on equity
investments

Aggregate

adjustment

for income t

axes

Non-
GAAP

Net income

$

2,162

2,547

165

(247)

1,219

287

(591)

(1,067)

$

4,475

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

139

187

10

20

172

9

(35)

(77)

425

Net income attributable to Dell Technologies Inc.
basic

2,023

$

2,360

$

155

$

(267)

$

1,047

$

278

$

(556)

$

(990)

4,050

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

(8)

(13)

Net income attributable to Dell Technologies Inc.
diluted

$

2,015

$

4,037

Earnings per share – basic

$

2.73

$

5.46

Earnings per share – diluted

$

2.64

$

5.28

Weighted-average shares outstanding – basic

742

742

Weighted-average shares outstanding – diluted

764

764

_________________

(a)

Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, Inc. and SecureWorks Corp. by their
non-GAAP net income adjustments for the period presented.

(b)

Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.’s dilutive securities on the diluted earnings
per share of Dell Technologies Inc. and is calculated by multiplying the difference between VMware, Inc.’s basic and diluted earnings per share by the number
of shares of VMware, Inc. common stock held by Dell Technologies Inc.

DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Three Months Ended November 1, 2019
(in millions, except per share amounts; unaudited)

GAAP

Amortization of
intangibles

Impact of
purchase
accounting

Transaction-
related
expenses

Stock-based
compensation
expense

Other
corporate
expenses

Fair value
adjustments
on equity
investments

Aggregate
adjustment
for income
taxes

Non-
GAAP

Net income

$

552

1,057

96

76

322

55

(18)

(695)

$

1,445

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

53

75

5

13

55

(50)

(27)

124

Net income attributable to Dell Technologies Inc.
basic

499

982

91

63

267

55

32

(668)

1,321

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

(6)

(6)

Net income attributable to Dell Technologies Inc.
diluted

$

493

$

1,315

Earnings per share – basic

$

0.69

$

1.82

Earnings per share – diluted

$

0.66

$

1.75

Weighted-average shares outstanding – basic

725

725

Weighted-average shares outstanding – diluted

750

750

_________________

(a)  

Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, Inc., Pivotal Software, Inc., and SecureWorks Corp. by their
non-GAAP net income adjustments for the period presented.

(b)

Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.’s dilutive securities on the diluted earnings per share of Dell
Technologies Inc. and is calculated by multiplying the difference between VMware, Inc.’s basic and diluted earnings per share by the number of shares of VMware, Inc. common
stock held by Dell Technologies Inc.

DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Nine Months Ended November 1, 2019
(in millions, except per share amounts; unaudited)

GAAP

Amortization of
intangibles

Impact of
purchase
accounting

Transaction-
related
expenses

Stock-based
compensation
expense

Other
corporate
expenses

Fair value
adjustments
on equity
investments

Aggregate
adjustment
for income
taxes

Non-
GAAP

Net income

$

5,113

3,334

299

165

886

792

(160)

(6,024)

$

4,405

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

905

219

17

18

152

24

(971)

364

Net income attributable to Dell Technologies Inc.
basic

4,208

3,115

282

147

734

792

(184)

(5,053)

4,041

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

(81)

(25)

Net income attributable to Dell Technologies Inc.
diluted

$

4,127

$

4,016

Earnings per share – basic

$

5.84

$

5.61

Earnings per share – diluted

$

5.50

$

5.35

Weighted-average shares outstanding – basic

720

720

Weighted-average shares outstanding – diluted

750

750

_________________

(a)  

Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, Inc., Pivotal Software, Inc., and SecureWorks Corp. by their
non-GAAP net income adjustments for the period presented.

(b)

  Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.’s dilutive securities on the diluted earnings per share of Dell
Technologies Inc. and is calculated by multiplying the difference between VMware, Inc.’s basic and diluted earnings per share by the number of shares of VMware, Inc. common
stock held by Dell Technologies Inc.

Cision View original content:http://www.prnewswire.com/news-releases/remote-work-and-learn-solutions-drive-dell-technologies-third-quarter-fiscal-2021-financial-results-301179997.html

SOURCE Dell Technologies

Investors: Investor_Relations@Dell.com; Media: Media.Relations@Dell.com


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