Dell Technologies Delivers Record Third Quarter Fiscal 2022 Results
News summary
•Best third quarter in Dell Technologies history, driven by robust demand, durable competitive advantages and strong execution
•Record third quarter revenue of $28.4 billion, up 21%
•Third quarter diluted earnings per share of $4.87, non-GAAP diluted earnings per share of $2.37
ROUND ROCK, Texas — November 23, 2021
Full story
Dell Technologies (NYSE: DELL) announces record financial results for its fiscal 2022 third quarter. The company generated record revenue of $28.4 billion, up 21%, driven by growth in all business units, customer segments and geographies, as well as broad strength across commercial PCs, servers and storage. Operating income was a third quarter record of $1.3 billion, a 19% increase over the same period the prior year, and non-GAAP operating income was a third quarter record of $2.9 billion, up 5%. Net income was $3.9 billion, non-GAAP net income was $2.0 billion and adjusted EBITDA was $3.4 billion. Net cash from operating activities was $3.3 billion. Diluted earnings per share was $4.87, up 351% and non-GAAP diluted earnings per share was $2.37, up 17%.
1
Third Quarter Fiscal 2022 Financial Results
Three Months Ended
Nine Months Ended
October 29, 2021
October 30, 2020
Change
October 29, 2021
October 30, 2020
Change
(in millions, except per share amounts and percentages; unaudited)
Total net revenue
$
28,394
$
23,482
21%
$
79,003
$
68,112
16%
Operating income
$
1,349
$
1,129
19%
$
4,096
$
2,967
38%
Net income
$
3,888
$
881
341%
$
5,706
$
2,162
164%
Earnings per share - diluted
$
4.87
$
1.08
351%
$
7.08
$
2.64
168%
Non-GAAP net revenue
$
28,405
$
23,521
21%
$
79,037
$
68,241
16%
Non-GAAP operating income
$
2,868
$
2,725
5%
$
8,393
$
7,504
12%
Non-GAAP net income
$
2,015
$
1,711
18%
$
5,745
$
4,475
28%
Adjusted EBITDA
$
3,410
$
3,231
6%
$
9,976
$
8,938
12%
Non-GAAP earnings per share - diluted
$
2.37
$
2.03
17%
$
6.75
$
5.28
28%
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 remaining performance obligations of $47 billion, up 26%, deferred revenue of $31 billion, and cash and investments of $24.2 billion. The company has paid down a total of $15.9 billion of debt year-to-date and received an Investment Grade corporate family rating from all three of the major credit rating agencies.
Operating Segments Summary
Client Solutions Group revenue for the third quarter was up 35% to a record $16.5 billion. Operating income was a third quarter record of $1.1 billion, up 14%, and 6.9% of Client Solutions Group revenue. Commercial revenue was a record $12.3 billion, up an unprecedented 40%, and consumer revenue was also a record $4.3 billion, up 21%.
Key highlights:
•Continued growth in high-value segments, including commercial PCs, high-end consumer and gaming – which will drive long-term profitable share gains.
•Achieved highest year-over-year PC share gain in Dell’s history for calendar third quarter, with shipments up 26.6% and global PC share up 3.0 points to 17.4%.1
•Announced new Latitude Rugged notebooks – including the industry’s smallest 5G-capable 13” fully-rugged laptop.
•Timed to the 25th anniversary of Alienware – released the redesigned Alienware Aurora, the pinnacle of gaming desktop experiences. With a special focus on airflow and thermals, the open-air design provides better accessibility and improved performance – enriching the gaming experience in every possible way.
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Infrastructure Solutions Group revenue for the third quarter was $8.4 billion, up 5% and the third consecutive quarter of positive year-over-year revenue growth, as customers accelerate IT investments. Storage revenue was $3.9 billion, up 1%. Servers and networking revenue was $4.5 billion, up 9% for a fourth consecutive quarter of year-over-year growth. Operating income was $892 million or approximately 10.6% of Infrastructure Solutions Group revenue. Customer investments in IT infrastructure and digital transformation will continue to drive strong demand for compute and storage and create future growth opportunities for new innovations in multi-cloud, telecom and 5G.
Key highlights:
•Introduced updates to the network-attached storage (NAS) portfolio, including new Dell EMC PowerScale systems and software enhancements, all focused on providing customers with the flexible and secure consumption and management of unstructured data.
•Launched the industry’s first end-to-end NVMe/TCP solution, featuring SmartFabric Storage Software, which provides the intelligence for automated storage connectivity at scale.
•Announced edge innovations across the portfolio to help organizations simplify deployments and capture more value from data generated and processed outside the traditional data center and public cloud.
•Introduced new telecom software, solutions and services to help communications service providers (CSPs) accelerate their open, cloud-native network deployments and create new revenue opportunities at the edge.
•Announced APEX Cloud Services with VMware Cloud, which gives organizations the ability to move workloads across multiple cloud environments and scale resources quickly with predictable pricing and transparent costs.
VMware revenue was $3.2 billion for the third quarter, up 10% driven by broad-based strength across a diverse product portfolio. Operating income for the quarter was $837 million, or 26.3% of VMware revenue.
Executive Quotes:
•“We continue to deliver strong results, with more than $13 billion in cash flow from operations on a trailing-twelve-month basis,” said Tom Sweet, chief financial officer, Dell Technologies. “The digital trends are tailwinds for our business, and along with our strategy and financial flexibility, lead us to be optimistic about our long-term growth prospects.”
•“Technology is more essential today than ever before and we are clearly winning in our core, keeping us at the center of customers' IT and digital agendas,” said Jeff Clarke, vice chairman and co-chief operating officer, Dell Technologies. “Our product, global operations and sales teams did an outstanding job this quarter as we shipped a record number of products and delivered record revenue of $28.4 billion.”
•“We’re three quarters into what will prove to be a historic year for Dell, and we are just beginning to write the next chapter of the Dell Technologies story,” said Chuck Whitten, co-chief operating officer, Dell Technologies. “We are uniquely positioned in the data era, with durable advantages and market-leading positions. Our strategy is focused on growing our core business and in adjacent multi-billion-dollar markets including multi-cloud, edge, telecom and as-a-Service.”
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Conference call information
As previously announced, the Company will hold a conference call to discuss its third quarter performance today, Nov. 23, 2021 at 4:30 p.m. CST. The conference call will be broadcast live over the internet and can be accessed at
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:
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.
1. IDC WW Quarterly Personal Computing Device (PCD) Tracker CY21Q3.
Non-GAAP Financial Measures:
This press release presents information about Dell Technologies’ non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to non-controlling interests, non-GAAP net income attributable to Dell Technologies Inc. - basic, non-GAAP net income attributable to Dell Technologies Inc. - diluted, non-GAAP earnings per share attributable to Dell Technologies Inc. - basic, non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, EBITDA, and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America (“GAAP”). A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in the attached tables for each of the fiscal periods indicated.
Special Note on Forward-Looking Statements:
Statements in this press release that relate to future results and events are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933 and are based on Dell Technologies’ current expectations. In some cases, you can identify these statements by such forward-looking words as “anticipate,” “believe,” “confidence,” “could,” “estimate,” “expect,” “guidance,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will” and “would,” or similar words or expressions that refer to future events or outcomes.
Dell Technologies’ results or events in future periods could differ materially from those expressed or implied by these forward-looking statements because of risks, uncertainties, and other factors that include, but are not limited to, the following: 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;
4
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; Dell Technologies’ dependence on the services of Michael Dell and key employees; and Dell Technologies’ level of indebtedness.
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 29, 2021, 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.
5
DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Income and Related Financial Highlights
(in millions, except percentages; unaudited)
Three Months Ended
Nine Months Ended
October 29, 2021
October 30, 2020
Change
October 29, 2021
October 30, 2020
Change
Net revenue:
Products
$
21,540
$
17,352
24%
$
58,968
$
50,127
18%
Services
6,854
6,130
12%
20,035
17,985
11%
Total net revenue
28,394
23,482
21%
79,003
68,112
16%
Cost of net revenue:
Products
17,552
13,789
27%
47,137
39,923
18%
Services
2,783
2,432
14%
8,164
6,919
18%
Total cost of net revenue
20,335
16,221
25%
55,301
46,842
18%
Gross margin
8,059
7,261
11%
23,702
21,270
11%
Operating expenses:
Selling, general, and administrative
5,293
4,772
11%
15,398
14,419
7%
Research and development
1,417
1,360
4%
4,208
3,884
8%
Total operating expenses
6,710
6,132
9%
19,606
18,303
7%
Operating income
1,349
1,129
19%
4,096
2,967
38%
Interest and other, net
3,436
273
NM
2,689
(929)
389%
Income before income taxes
4,785
1,402
241%
6,785
2,038
233%
Income tax expense (benefit)
897
521
72%
1,079
(124)
970%
Net income
3,888
881
341%
5,706
2,162
164%
Less: Net income attributable to non-controlling interests
45
49
(8)%
145
139
4%
Net income attributable to Dell Technologies Inc.
$
3,843
$
832
362%
$
5,561
$
2,023
175%
Percentage of Total Net Revenue:
Gross margin
28
%
31
%
30
%
31
%
Selling, general, and administrative
19
%
20
%
19
%
21
%
Research and development
5
%
6
%
5
%
6
%
Operating expenses
24
%
26
%
25
%
27
%
Operating income
5
%
5
%
5
%
4
%
Income before income taxes
17
%
6
%
9
%
3
%
Net income
14
%
4
%
7
%
3
%
Income tax rate
18.7
%
37.2
%
15.9
%
-6.1
%
Amounts are based on underlying data and may not visually foot due to rounding.
6
DELL TECHNOLOGIES INC.
Consolidated Statements of Financial Position
(in millions; unaudited)
October 29, 2021
January 29, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
22,406
$
14,201
Accounts receivable, net
14,177
12,788
Short-term financing receivables, net
4,970
5,155
Inventories, net
5,442
3,402
Other current assets
10,184
8,021
Total current assets
57,179
43,567
Property, plant, and equipment, net
6,925
6,431
Long-term investments
1,827
1,624
Long-term financing receivables, net
5,270
5,339
Goodwill
40,701
40,829
Intangible assets, net
12,319
14,429
Other non-current assets
11,456
11,196
Total assets
$
135,677
$
123,415
LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt
$
16,280
$
6,362
Accounts payable
26,772
21,696
Accrued and other
10,081
9,549
Short-term deferred revenue
16,569
16,525
Total current liabilities
69,702
54,132
Long-term debt
31,699
41,622
Long-term deferred revenue
14,885
14,276
Other non-current liabilities
5,197
5,360
Total liabilities
121,483
115,390
Redeemable shares
—
472
Stockholders’ equity:
Total Dell Technologies Inc. stockholders’ equity
8,954
2,479
Non-controlling interests
5,240
5,074
Total stockholders’ equity
14,194
7,553
Total liabilities, redeemable shares, and stockholders’ equity
$
135,677
$
123,415
7
DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(in millions; unaudited)
Three Months Ended
Nine Months Ended
October 29, 2021
October 30, 2020
October 29, 2021
October 30, 2020
Cash flows from operating activities:
Net income
$
3,888
$
881
$
5,706
$
2,162
Adjustments to reconcile net income to net cash provided by (used in) operating activities
(637)
2,113
1,508
3,368
Change in cash from operating activities
3,251
2,994
7,214
5,530
Cash flows from investing activities:
Purchases of investments
(50)
(122)
(320)
(296)
Maturities and sales of investments
119
27
454
98
Capital expenditures and capitalized software development costs
(799)
(480)
(2,056)
(1,584)
Acquisition of businesses and assets, net
—
(71)
(16)
(405)
Divestitures of businesses and assets, net
3,957
2,067
3,957
2,187
Other
14
14
34
26
Change in cash from investing activities
3,241
1,435
2,053
26
Cash flows from financing activities:
Proceeds from the issuance of common stock
140
168
326
389
Repurchases of parent common stock (a)
(18)
—
(35)
(240)
Repurchases of subsidiary common stock (a)
(196)
(299)
(1,174)
(890)
Proceeds from debt
9,102
2,925
13,037
14,772
Repayments of debt
(4,646)
(7,024)
(13,069)
(17,244)
Other
(99)
(80)
(113)
(270)
Change in cash from financing activities
4,283
(4,310)
(1,028)
(3,483)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(33)
(15)
(54)
(67)
Change in cash, cash equivalents, and restricted cash
10,742
104
8,185
2,006
Cash, cash equivalents, and restricted cash at beginning of the period
12,627
12,053
15,184
10,151
Cash, cash equivalents, and restricted cash at end of the period
$
23,369
$
12,157
$
23,369
$
12,157
_________________
(a) Common stock repurchases are inclusive of employee tax withholding on stock-based compensation.
8
DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued on next page)
Three Months Ended
Nine Months Ended
October 29, 2021
October 30, 2020
Change
October 29, 2021
October 30, 2020
Change
Infrastructure Solutions Group (ISG):
Net Revenue:
Servers and networking
$
4,533
$
4,164
9%
$
13,104
$
12,118
8%
Storage
3,895
3,860
1%
11,667
11,682
—%
Total ISG net revenue
$
8,428
$
8,024
5%
$
24,771
$
23,800
4%
Operating Income:
ISG operating income
$
892
$
882
1%
$
2,650
$
2,587
2%
% of ISG net revenue
11
%
11
%
11
%
11
%
% of total reportable segment operating income
31
%
32
%
32
%
35
%
Client Solutions Group (CSG):
Net Revenue:
Commercial
$
12,292
$
8,783
40%
$
32,668
$
25,456
28%
Consumer
4,254
3,503
21%
11,446
9,137
25%
Total CSG net revenue
$
16,546
$
12,286
35%
$
44,114
$
34,593
28%
Operating Income:
CSG operating income
$
1,147
$
1,002
14%
$
3,232
$
2,309
40%
% of CSG net revenue
7
%
8
%
7
%
7
%
% of total reportable segment operating income
40
%
37
%
38
%
31
%
VMware:
Net Revenue:
Total VMware net revenue
$
3,178
$
2,893
10%
$
9,317
$
8,556
9%
Operating Income:
VMware operating income
$
837
$
837
—%
$
2,527
$
2,504
1%
% of VMware net revenue
26
%
29
%
27
%
29
%
% of total reportable segment operating income
29
%
31
%
30
%
34
%
Amounts are based on underlying data and may not visually foot due to rounding.
9
DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued)
Three Months Ended
Nine Months Ended
October 29, 2021
October 30, 2020
October 29, 2021
October 30, 2020
Reconciliation to consolidated net revenue:
Reportable segment net revenue
$
28,152
$
23,203
$
78,202
$
66,949
Other businesses (a)
251
314
829
1,288
Unallocated transactions (b)
2
4
6
4
Impact of purchase accounting (c)
(11)
(39)
(34)
(129)
Total consolidated net revenue
$
28,394
$
23,482
$
79,003
$
68,112
Reconciliation to consolidated operating income:
Reportable segment operating income
$
2,876
$
2,721
$
8,409
$
7,400
Other businesses (a)
(9)
3
(17)
105
Unallocated transactions (b)
1
1
1
(1)
Impact of purchase accounting (c)
(17)
(49)
(62)
(165)
Amortization of intangibles
(694)
(845)
(2,114)
(2,547)
Transaction-related expenses (d)
(311)
(52)
(422)
(211)
Stock-based compensation expense (e)
(472)
(436)
(1,406)
(1,219)
Other corporate expenses (f)
(25)
(214)
(293)
(395)
Total consolidated operating income
$
1,349
$
1,129
$
4,096
$
2,967
_________________
(a)Secureworks and Virtustream 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. On September 1, 2020, the Company completed the sale of RSA Security. On October 1, 2021, the Company completed the sale of Boomi. Prior to the divestitures, the results of Boomi and RSA Security were included within Other businesses.
(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, severance, facilities action, and other costs.
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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.
11
DELL TECHNOLOGIES INC.
Selected Non-GAAP Financial Measures
(in millions, except per share amounts and percentages; unaudited)
Three Months Ended
Nine Months Ended
October 29, 2021
October 30, 2020
Change
October 29, 2021
October 30, 2020
Change
Non-GAAP net revenue
$
28,405
$
23,521
21%
$
79,037
$
68,241
16%
Non-GAAP gross margin
$
8,410
$
7,771
8%
$
24,770
$
22,722
9%
% of non-GAAP net revenue
30
%
33
%
31
%
33
%
Non-GAAP operating expenses
$
5,542
$
5,046
10%
$
16,377
$
15,218
8%
% of non-GAAP net revenue
20
%
21
%
21
%
22
%
Non-GAAP operating income
$
2,868
$
2,725
5%
$
8,393
$
7,504
12%
% of non-GAAP net revenue
10
%
12
%
11
%
11
%
Non-GAAP net income
$
2,015
$
1,711
18%
$
5,745
$
4,475
28%
% of non-GAAP net revenue
7
%
7
%
7
%
7
%
Adjusted EBITDA
$
3,410
$
3,231
6%
$
9,976
$
8,938
12%
% of non-GAAP net revenue
12
%
14
%
13
%
13
%
Non-GAAP earnings per share - diluted
$
2.37
$
2.03
17%
$
6.75
$
5.28
28%
Amounts are based on underlying data and may not visually foot due to rounding.
12
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 29, 2021
October 30, 2020
Change
October 29, 2021
October 30, 2020
Change
Net revenue
$
28,394
$
23,482
21%
$
79,003
$
68,112
16%
Non-GAAP adjustments:
Impact of purchase accounting
11
39
34
129
Non-GAAP net revenue
$
28,405
$
23,521
21%
$
79,037
$
68,241
16%
Gross margin
$
8,059
$
7,261
11%
$
23,702
$
21,270
11%
Non-GAAP adjustments:
Amortization of intangibles
275
375
826
1,122
Impact of purchase accounting
12
40
37
134
Transaction-related expenses
—
—
—
—
Stock-based compensation expense
62
51
183
141
Other corporate expenses
2
44
22
55
Non-GAAP gross margin
$
8,410
$
7,771
8%
$
24,770
$
22,722
9%
Operating expenses
$
6,710
$
6,132
9%
$
19,606
$
18,303
7%
Non-GAAP adjustments:
Amortization of intangibles
(419)
(470)
(1,288)
(1,425)
Impact of purchase accounting
(5)
(9)
(25)
(31)
Transaction-related expenses
(311)
(52)
(422)
(211)
Stock-based compensation expense
(410)
(385)
(1,223)
(1,078)
Other corporate expenses
(23)
(170)
(271)
(340)
Non-GAAP operating expenses
$
5,542
$
5,046
10%
$
16,377
$
15,218
8%
Operating income
$
1,349
$
1,129
19%
$
4,096
$
2,967
38%
Non-GAAP adjustments:
Amortization of intangibles
694
845
2,114
2,547
Impact of purchase accounting
17
49
62
165
Transaction-related expenses
311
52
422
211
Stock-based compensation expense
472
436
1,406
1,219
Other corporate expenses
25
214
293
395
Non-GAAP operating income
$
2,868
$
2,725
5%
$
8,393
$
7,504
12%
13
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued)
Three Months Ended
Nine Months Ended
October 29, 2021
October 30, 2020
Change
October 29, 2021
October 30, 2020
Change
Net income
$
3,888
$
881
341%
$
5,706
$
2,162
164%
Non-GAAP adjustments:
Amortization of intangibles
694
845
2,114
2,547
Impact of purchase accounting
17
49
62
165
Transaction-related expenses
(3,607)
(286)
(3,508)
(247)
Stock-based compensation expense
472
436
1,406
1,219
Other corporate expenses
25
106
293
287
Fair value adjustments on equity investments
(27)
(489)
(352)
(591)
Aggregate adjustment for income taxes
553
169
24
(1,067)
Non-GAAP net income
$
2,015
$
1,711
18%
$
5,745
$
4,475
28%
Net income
$
3,888
$
881
341%
$
5,706
$
2,162
164%
Adjustments:
Interest and other, net
(3,436)
(273)
(2,689)
929
Income tax expense (benefit)
897
521
1,079
(124)
Depreciation and amortization
1,242
1,361
3,721
4,017
EBITDA
$
2,591
$
2,490
4%
$
7,817
$
6,984
12%
EBITDA
$
2,591
$
2,490
4%
$
7,817
$
6,984
12%
Adjustments:
Stock-based compensation expense
472
436
1,406
1,219
Impact of purchase accounting
11
39
38
129
Transaction-related expenses
311
52
422
211
Other corporate expenses
25
214
293
395
Adjusted EBITDA
$
3,410
$
3,231
6%
$
9,976
$
8,938
12%
14
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Three Months Ended October 29, 2021
(in millions, except per share amounts; unaudited)
GAAP
Amortization of intangibles
Impact of purchase accounting
Transaction-related expenses
Stock-based compensation expense
Other corporate expenses
Fair value adjustments on equity investments
Aggregate adjustment for income taxes
Non-GAAP
Net income
$
3,888
694
17
(3,607)
472
25
(27)
553
$
2,015
Less: Net income attributable to non-controlling interests (a)
45
54
1
15
52
—
(2)
(22)
143
Net income attributable to Dell Technologies Inc. - basic
3,843
640
16
(3,622)
420
25
(25)
575
1,872
Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. (b)
(2)
(3)
Net income attributable to Dell Technologies Inc. - diluted
$
3,841
$
1,869
Earnings per share - basic
$
5.02
$
2.44
Earnings per share - diluted
$
4.87
$
2.37
Weighted-average shares outstanding - basic
766
766
Weighted-average shares outstanding - diluted
788
788
_________________
(a) Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, Inc. and SecureWorks Corp. by their respective 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.
15
DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Nine Months Ended October 29, 2021
(in millions, except per share amounts; unaudited)
GAAP
Amortization of intangibles
Impact of purchase accounting
Transaction-related expenses
Stock-based compensation expense
Other corporate expenses
Fair value adjustments on equity investments
Aggregate adjustment for income taxes
Non-GAAP
Net income
$
5,706
2,114
62
(3,508)
1,406
293
(352)
24
$
5,745
Less: Net income attributable to non-controlling interests (a)
145
162
3
24
162
—
5
(67)
434
Net income attributable to Dell Technologies Inc. - basic
5,561
1,952
59
(3,532)
1,244
293
(357)
91
5,311
Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. (b)
(7)
(12)
Net income attributable to Dell Technologies Inc. - diluted
$
5,554
$
5,299
Earnings per share - basic
$
7.30
$
6.97
Earnings per share - diluted
$
7.08
$
6.75
Weighted-average shares outstanding - basic
762
762
Weighted-average shares outstanding - diluted
785
785
_________________
(a) Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, Inc. and SecureWorks Corp. by their respective 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.
16
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 respective 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.
17
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 taxes
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 respective 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.
