CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
July 30, | July 31, | July 30, | July 31, | |||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
License | $ | 738 | $ | 719 | $ | 1,384 | $ | 1,379 | ||||||||||||||||||
Subscription and SaaS | 776 | 631 | 1,516 | 1,204 | ||||||||||||||||||||||
Services | 1,624 | 1,525 | 3,232 | 3,026 | ||||||||||||||||||||||
Total revenue | 3,138 | 2,875 | 6,132 | 5,609 | ||||||||||||||||||||||
Operating expenses(1): | ||||||||||||||||||||||||||
Cost of license revenue | 37 | 35 | 75 | 74 | ||||||||||||||||||||||
Cost of subscription and SaaS revenue | 170 | 132 | 327 | 258 | ||||||||||||||||||||||
Cost of services revenue | 352 | 321 | 689 | 639 | ||||||||||||||||||||||
Research and development | 775 | 679 | 1,483 | 1,344 | ||||||||||||||||||||||
Sales and marketing | 1,023 | 897 | 1,981 | 1,814 | ||||||||||||||||||||||
General and administrative | 256 | 277 | 492 | 523 | ||||||||||||||||||||||
Realignment | — | — | 1 | 4 | ||||||||||||||||||||||
Operating income | 525 | 534 | 1,084 | 953 | ||||||||||||||||||||||
Investment income | 1 | 1 | 1 | 7 | ||||||||||||||||||||||
Interest expense | (49) | (55) | (99) | (104) | ||||||||||||||||||||||
Other income (expense), net | 3 | 15 | (19) | 8 | ||||||||||||||||||||||
Income before income tax | 480 | 495 | 967 | 864 | ||||||||||||||||||||||
Income tax provision | 69 | 48 | 131 | 31 | ||||||||||||||||||||||
Net income | $ | 411 | $ | 447 | $ | 836 | $ | 833 | ||||||||||||||||||
Net income per weighted-average share, basic for Classes A and B | $ | 0.98 | $ | 1.06 | $ | 1.99 | $ | 1.99 | ||||||||||||||||||
Net income per weighted-average share, diluted for Classes A and B | $ | 0.97 | $ | 1.06 | $ | 1.98 | $ | 1.97 | ||||||||||||||||||
Weighted-average shares, basic for Classes A and B | 419,355 | 420,031 | 419,235 | 419,208 | ||||||||||||||||||||||
Weighted-average shares, diluted for Classes A and B | 422,802 | 423,050 | 422,419 | 422,428 | ||||||||||||||||||||||
__________ | ||||||||||||||||||||||||||
(1) Includes stock-based compensation as follows: | ||||||||||||||||||||||||||
Cost of license revenue | $ | — | $ | — | $ | 1 | $ | 1 | ||||||||||||||||||
Cost of subscription and SaaS revenue | 5 | 5 | 11 | 9 | ||||||||||||||||||||||
Cost of services revenue | 24 | 26 | 49 | 48 | ||||||||||||||||||||||
Research and development | 150 | 132 | 277 | 257 | ||||||||||||||||||||||
Sales and marketing | 81 | 88 | 153 | 159 | ||||||||||||||||||||||
General and administrative | 33 | 42 | 64 | 91 | ||||||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | |||||||||||
(unaudited) | |||||||||||
July 30, | January 29, | ||||||||||
2021 | 2021 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 5,855 | $ | 4,692 | |||||||
Short-term investments | 82 | 23 | |||||||||
Accounts receivable, net of allowance of $4 and $5 | 1,718 | 1,929 | |||||||||
Due from related parties, net | 915 | 1,438 | |||||||||
Other current assets | 604 | 530 | |||||||||
Total current assets | 9,174 | 8,612 | |||||||||
Property and equipment, net | 1,373 | 1,334 | |||||||||
Other assets | 2,678 | 2,697 | |||||||||
Deferred tax assets | 5,785 | 5,781 | |||||||||
Intangible assets, net | 856 | 993 | |||||||||
Goodwill | 9,598 | 9,599 | |||||||||
Total assets | $ | 29,464 | $ | 29,016 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 220 | $ | 131 | |||||||
Accrued expenses and other | 2,176 | 2,382 | |||||||||
Unearned revenue | 5,879 | 5,873 | |||||||||
Total current liabilities | 8,275 | 8,386 | |||||||||
Note payable to Dell | 270 | 270 | |||||||||
Long-term debt | 4,721 | 4,717 | |||||||||
Unearned revenue | 4,459 | 4,441 | |||||||||
Income tax payable | 768 | 805 | |||||||||
Operating lease liabilities | 912 | 891 | |||||||||
Other liabilities | 439 | 455 | |||||||||
Total liabilities | 19,844 | 19,965 | |||||||||
Contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Class A common stock, par value $0.01; authorized 2,500,000 shares; issued and outstanding 111,753 and 112,082 shares | 1 | 1 | |||||||||
Class B convertible common stock, par value $0.01; authorized 1,000,000 shares; issued and outstanding 307,222 shares | 3 | 3 | |||||||||
Additional paid-in capital | 1,716 | 1,985 | |||||||||
Accumulated other comprehensive loss | (3) | (5) | |||||||||
Retained earnings | 7,903 | 7,067 | |||||||||
Total stockholders’ equity | 9,620 | 9,051 | |||||||||
Total liabilities and stockholders’ equity | $ | 29,464 | $ | 29,016 | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 30, | July 31, | July 30, | July 31, | ||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Operating activities: | |||||||||||||||||||||||
Net income | $ | 411 | $ | 447 | $ | 836 | $ | 833 | |||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||
Depreciation and amortization | 275 | 252 | 544 | 496 | |||||||||||||||||||
Stock-based compensation | 293 | 293 | 555 | 565 | |||||||||||||||||||
Deferred income taxes, net | 17 | (98) | (31) | (196) | |||||||||||||||||||
Unrealized (gain) loss on equity securities, net | (1) | — | 34 | (6) | |||||||||||||||||||
(Gain) Loss on disposition of assets, revaluation and impairment, net | 2 | 1 | 3 | 7 | |||||||||||||||||||
Loss on extinguishment of debt | — | 8 | — | 8 | |||||||||||||||||||
Other | 2 | 2 | 4 | (2) | |||||||||||||||||||
Changes in assets and liabilities, net of acquisitions: | |||||||||||||||||||||||
Accounts receivable | (189) | (432) | 206 | (79) | |||||||||||||||||||
Other current assets and other assets | (229) | (173) | (390) | (345) | |||||||||||||||||||
Due to/from related parties, net | (162) | (130) | 522 | 560 | |||||||||||||||||||
Accounts payable | 5 | 21 | 70 | 11 | |||||||||||||||||||
Accrued expenses and other liabilities | 412 | 455 | (218) | 207 | |||||||||||||||||||
Income taxes payable | (110) | (66) | (29) | (51) | |||||||||||||||||||
Unearned revenue | 138 | 139 | 24 | 86 | |||||||||||||||||||
Net cash provided by operating activities | 864 | 719 | 2,130 | 2,094 | |||||||||||||||||||
Investing activities: | |||||||||||||||||||||||
Additions to property and equipment | (87) | (76) | (157) | (163) | |||||||||||||||||||
Sales of investments in equity securities | 26 | — | 34 | — | |||||||||||||||||||
Purchases of strategic investments | (6) | (6) | (7) | (11) | |||||||||||||||||||
Proceeds from disposition of assets | 1 | 18 | 1 | 21 | |||||||||||||||||||
Business combinations, net of cash acquired, and purchases of intangible assets | (6) | (296) | (15) | (335) | |||||||||||||||||||
Net cash used in investing activities | (72) | (360) | (144) | (488) | |||||||||||||||||||
Financing activities: | |||||||||||||||||||||||
Proceeds from issuance of common stock | 8 | 36 | 139 | 142 | |||||||||||||||||||
Net proceeds from issuance of long-term debt | — | (5) | — | 1,979 | |||||||||||||||||||
Repayment of current portion of long-term debt | — | (1,257) | — | (1,257) | |||||||||||||||||||
Repurchase of common stock | (358) | (130) | (729) | (311) | |||||||||||||||||||
Shares repurchased for tax withholdings on vesting of restricted stock | (186) | (161) | (242) | (276) | |||||||||||||||||||
Payment to acquire non-controlling interests | — | (91) | — | (91) | |||||||||||||||||||
Principal payments on finance lease obligations | (1) | (1) | (2) | (1) | |||||||||||||||||||
Net cash provided by (used in) financing activities | (537) | (1,609) | (834) | 185 | |||||||||||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | — | 1 | — | — | |||||||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 255 | (1,249) | 1,152 | 1,791 | |||||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of the period | 5,667 | 6,071 | 4,770 | 3,031 | |||||||||||||||||||
Cash, cash equivalents and restricted cash at end of the period | $ | 5,922 | $ | 4,822 | $ | 5,922 | $ | 4,822 | |||||||||||||||
Supplemental disclosures of cash flow information: | |||||||||||||||||||||||
Cash paid for interest | $ | 50 | $ | 17 | $ | 97 | $ | 91 | |||||||||||||||
Cash paid for taxes, net | 166 | 206 | 204 | 282 | |||||||||||||||||||
Non-cash items: | |||||||||||||||||||||||
Changes in capital additions, accrued but not paid | $ | 8 | $ | (1) | $ | 11 | $ | (7) | |||||||||||||||
GROWTH IN REVENUE PLUS SEQUENTIAL CHANGE IN UNEARNED REVENUE | |||||||||||
(in millions) | |||||||||||
(unaudited) | |||||||||||
Growth in Total Revenue Plus Sequential Change in Unearned Revenue | |||||||||||
Three Months Ended | |||||||||||
July 30, | July 31, | ||||||||||
2021 | 2020 | ||||||||||
Total revenue, as reported | $ | 3,138 | $ | 2,875 | |||||||
Sequential change in unearned revenue(1) | 138 | 167 | |||||||||
Total revenue plus sequential change in unearned revenue | $ | 3,276 | $ | 3,042 | |||||||
Change (%) over prior year, as reported | 8 | % | |||||||||
Growth in License and Subscription and SaaS Revenue Plus Sequential Change in Unearned License and Subscription and SaaS Revenue | |||||||||||
Three Months Ended | |||||||||||
July 30, | July 31, | ||||||||||
2021 | 2020 | ||||||||||
Total license and subscription and SaaS revenue, as reported | $ | 1,514 | $ | 1,350 | |||||||
Sequential change in unearned license and subscription and SaaS revenue(2) | 148 | 36 | |||||||||
Total license and subscription and SaaS revenue plus sequential change in unearned license and subscription and SaaS revenue | $ | 1,662 | $ | 1,386 | |||||||
Change (%) over prior year, as reported | 20 | % | |||||||||
__________ | |||||||||||
(1) Consists of the change in total unearned revenue from the preceding quarter. Total unearned revenue consists of current and non-current unearned revenue amounts presented in the consolidated balance sheets. | |||||||||||
(2) Consists of the change in unearned license and subscription and SaaS revenue from the preceding quarter. | |||||||||||
REMAINING PERFORMANCE OBLIGATIONS | |||||||||||
(in millions) | |||||||||||
(unaudited) | |||||||||||
Growth in Remaining Performance Obligations | |||||||||||
July 30, | July 31, | ||||||||||
2021 | 2020 | ||||||||||
Remaining performance obligations(3) | $ | 11,201 | $ | 10,335 | |||||||
Change (%) over prior year | 8 | % | |||||||||
Remaining performance obligations, current(4) | $ | 6,249 | $ | 5,625 | |||||||
Change (%) over prior year | 11 | % | |||||||||
__________ | |||||||||||
(3) Remaining performance obligations represent the aggregate amount of the transaction price in contracts allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations include unearned revenue, multi-year contracts with future installment payments and certain unfulfilled orders against accepted customer contracts at the end of any given period. | |||||||||||
(4) Current remaining performance obligations represent the amount expected to be recognized as revenue over the next twelve months. |
SUPPLEMENTAL UNEARNED REVENUE SCHEDULE | |||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||
July 30, | April 30, | January 29, | October 30, | July 31, | May 1, | ||||||||||||||||||||||||||||||
2021 | 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||||||||||||||||||
Unearned revenue as reported: | |||||||||||||||||||||||||||||||||||
License | $ | 20 | $ | 16 | $ | 15 | $ | 11 | $ | 11 | $ | 15 | |||||||||||||||||||||||
Subscription and SaaS | 2,208 | 2,064 | 1,998 | 1,596 | 1,619 | 1,579 | |||||||||||||||||||||||||||||
Services | |||||||||||||||||||||||||||||||||||
Software maintenance | 6,916 | 6,957 | 7,092 | 6,574 | 6,696 | 6,611 | |||||||||||||||||||||||||||||
Professional services | 1,194 | 1,163 | 1,209 | 1,054 | 1,059 | 1,013 | |||||||||||||||||||||||||||||
Total unearned revenue | $ | 10,338 | $ | 10,200 | $ | 10,314 | $ | 9,235 | $ | 9,385 | $ | 9,218 | |||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA | |||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended July 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | |||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||
GAAP | Stock-Based Compensation | Employer Payroll Taxes on Employee Stock Transactions | Intangible Amortization | Acquisition, Disposition and Other Items | Tax Adjustment(1) | Non-GAAP As Adjusted(2) | |||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||
Cost of license revenue | $ | 37 | — | — | (10) | — | — | $ | 27 | ||||||||||||||||||||||||||||||||
Cost of subscription and SaaS revenue | $ | 170 | (5) | — | (43) | — | — | $ | 121 | ||||||||||||||||||||||||||||||||
Cost of services revenue | $ | 352 | (24) | (1) | — | — | — | $ | 326 | ||||||||||||||||||||||||||||||||
Research and development | $ | 775 | (150) | (1) | (2) | — | — | $ | 622 | ||||||||||||||||||||||||||||||||
Sales and marketing | $ | 1,023 | (81) | (3) | (22) | — | — | $ | 919 | ||||||||||||||||||||||||||||||||
General and administrative | $ | 256 | (33) | (1) | — | (23) | — | $ | 199 | ||||||||||||||||||||||||||||||||
Operating income | $ | 525 | 293 | 6 | 77 | 23 | — | $ | 924 | ||||||||||||||||||||||||||||||||
Operating margin(2) | 16.7 | % | 9.3 | % | 0.2 | % | 2.4 | % | 0.7 | % | — | 29.4 | % | ||||||||||||||||||||||||||||
Other income (expense), net(3) | $ | 3 | — | — | — | 1 | — | $ | 4 | ||||||||||||||||||||||||||||||||
Income before income tax | $ | 480 | 293 | 6 | 77 | 24 | — | $ | 880 | ||||||||||||||||||||||||||||||||
Income tax provision | $ | 69 | 71 | $ | 141 | ||||||||||||||||||||||||||||||||||||
Tax rate(2) | 14.4 | % | 16.0 | % | |||||||||||||||||||||||||||||||||||||
Net income | $ | 411 | 293 | 6 | 77 | 24 | (71) | $ | 739 | ||||||||||||||||||||||||||||||||
Net income per weighted-average share, diluted for Classes A and B(2)(4) | $ | 0.97 | $ | 0.69 | $ | 0.02 | $ | 0.18 | $ | 0.06 | $ | (0.17) | $ | 1.75 | |||||||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. | |||||||||||||||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. | |||||||||||||||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. | |||||||||||||||||||||||||||||||||||||||||
(4) Calculated based upon 422,802 diluted weighted-average shares for Classes A and B. | |||||||||||||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA | |||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended July 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | |||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||
GAAP | Stock-Based Compensation | Employer Payroll Taxes on Employee Stock Transactions | Intangible Amortization | Acquisition, Disposition and Other Items | Tax Adjustment(1) | Non-GAAP As Adjusted(2) | |||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||
Cost of license revenue | $ | 35 | — | — | (9) | — | — | $ | 25 | ||||||||||||||||||||||||||||||||
Cost of subscription and SaaS revenue | $ | 132 | (5) | — | (48) | — | — | $ | 79 | ||||||||||||||||||||||||||||||||
Cost of services revenue | $ | 321 | (26) | — | — | — | — | $ | 294 | ||||||||||||||||||||||||||||||||
Research and development | $ | 679 | (132) | (1) | — | (1) | — | $ | 545 | ||||||||||||||||||||||||||||||||
Sales and marketing | $ | 897 | (88) | (3) | (24) | — | — | $ | 784 | ||||||||||||||||||||||||||||||||
General and administrative | $ | 277 | (42) | — | — | (37) | — | $ | 198 | ||||||||||||||||||||||||||||||||
Operating income | $ | 534 | 293 | 4 | 81 | 38 | — | $ | 950 | ||||||||||||||||||||||||||||||||
Operating margin(2) | 18.6 | % | 10.2 | % | 0.1 | % | 2.8 | % | 1.3 | % | — | 33.0 | % | ||||||||||||||||||||||||||||
Other income (expense), net(3) | $ | 15 | — | — | — | 1 | — | $ | 16 | ||||||||||||||||||||||||||||||||
Income before income tax | $ | 495 | 293 | 4 | 81 | 39 | — | $ | 912 | ||||||||||||||||||||||||||||||||
Income tax provision | $ | 48 | 98 | $ | 146 | ||||||||||||||||||||||||||||||||||||
Tax rate(2) | 9.8 | % | 16.0 | % | |||||||||||||||||||||||||||||||||||||
Net income | $ | 447 | 293 | 4 | 81 | 39 | (98) | $ | 766 | ||||||||||||||||||||||||||||||||
Net income per weighted-average share, diluted for Classes A and B(2)(4) | $ | 1.06 | $ | 0.69 | $ | 0.01 | $ | 0.19 | $ | 0.09 | $ | (0.23) | $ | 1.81 | |||||||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. | |||||||||||||||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. | |||||||||||||||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. | |||||||||||||||||||||||||||||||||||||||||
(4) Calculated based upon 423,050 diluted weighted-average shares for Classes A and B. |
RECONCILIATION OF GAAP TO NON-GAAP DATA | |||||||||||||||||||||||||||||||||||||||||||||||
For the Six Months Ended July 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
GAAP | Stock-Based Compensation | Employer Payroll Taxes on Employee Stock Transactions | Intangible Amortization | Realignment Charges | Acquisition, Disposition and Other Items | Tax Adjustment(1) | Non-GAAP As Adjusted(2) | ||||||||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Cost of license revenue | $ | 75 | (1) | — | (20) | — | — | — | $ | 54 | |||||||||||||||||||||||||||||||||||||
Cost of subscription and SaaS revenue | $ | 327 | (11) | — | (85) | — | — | — | $ | 231 | |||||||||||||||||||||||||||||||||||||
Cost of services revenue | $ | 689 | (49) | (1) | — | — | — | — | $ | 639 | |||||||||||||||||||||||||||||||||||||
Research and development | $ | 1,483 | (277) | (1) | (4) | — | — | — | $ | 1,200 | |||||||||||||||||||||||||||||||||||||
Sales and marketing | $ | 1,981 | (153) | (4) | (45) | — | — | — | $ | 1,779 | |||||||||||||||||||||||||||||||||||||
General and administrative | $ | 492 | (64) | (1) | — | — | (45) | — | $ | 383 | |||||||||||||||||||||||||||||||||||||
Realignment | $ | 1 | — | — | — | (1) | — | — | $ | — | |||||||||||||||||||||||||||||||||||||
Operating income | $ | 1,084 | 555 | 7 | 154 | 1 | 45 | — | $ | 1,846 | |||||||||||||||||||||||||||||||||||||
Operating margin(2) | 17.7 | % | 9.1 | % | 0.1 | % | 2.5 | % | — | % | 0.7 | % | — | 30.1 | % | ||||||||||||||||||||||||||||||||
Other income (expense), net(3) | $ | (19) | — | — | — | — | 36 | — | $ | 17 | |||||||||||||||||||||||||||||||||||||
Income before income tax | $ | 967 | 555 | 7 | 154 | 1 | 81 | — | $ | 1,765 | |||||||||||||||||||||||||||||||||||||
Income tax provision | $ | 131 | 152 | $ | 282 | ||||||||||||||||||||||||||||||||||||||||||
Tax rate(2) | 13.5 | % | 16.0 | % | |||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 836 | 555 | 7 | 154 | 1 | 81 | (152) | $ | 1,483 | |||||||||||||||||||||||||||||||||||||
Net income per weighted-average share, diluted for Classes A and B(2)(4) | $ | 1.98 | $ | 1.31 | $ | 0.02 | $ | 0.36 | $ | — | $ | 0.19 | $ | (0.36) | $ | 3.51 | |||||||||||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. | |||||||||||||||||||||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. | |||||||||||||||||||||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. | |||||||||||||||||||||||||||||||||||||||||||||||
(4) Calculated based upon 422,419 diluted weighted-average shares for Classes A and B. | |||||||||||||||||||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA | |||||||||||||||||||||||||||||||||||||||||||||||
For the Six Months Ended July 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
GAAP | Stock-Based Compensation | Employer Payroll Taxes on Employee Stock Transactions | Intangible Amortization | Realignment Charges | Acquisition, Disposition and Other Items | Tax Adjustment(1) | Non-GAAP As Adjusted(2) | ||||||||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Cost of license revenue | $ | 74 | (1) | — | (21) | — | — | — | $ | 52 | |||||||||||||||||||||||||||||||||||||
Cost of subscription and SaaS revenue | $ | 258 | (9) | — | (89) | — | — | — | $ | 160 | |||||||||||||||||||||||||||||||||||||
Cost of services revenue | $ | 639 | (48) | (1) | (1) | — | — | — | $ | 589 | |||||||||||||||||||||||||||||||||||||
Research and development | $ | 1,344 | (257) | (1) | (1) | — | (1) | — | $ | 1,085 | |||||||||||||||||||||||||||||||||||||
Sales and marketing | $ | 1,814 | (159) | (3) | (49) | — | (2) | — | $ | 1,600 | |||||||||||||||||||||||||||||||||||||
General and administrative | $ | 523 | (91) | (1) | — | — | (76) | — | $ | 355 | |||||||||||||||||||||||||||||||||||||
Realignment | $ | 4 | — | — | — | (4) | — | — | $ | — | |||||||||||||||||||||||||||||||||||||
Operating income | $ | 953 | 565 | 6 | 161 | 4 | 79 | — | $ | 1,768 | |||||||||||||||||||||||||||||||||||||
Operating margin(2) | 17.0 | % | 10.1 | % | 0.1 | % | 2.9 | % | 0.1 | % | 1.4 | % | — | 31.5 | % | ||||||||||||||||||||||||||||||||
Other income (expense), net(3) | $ | 8 | — | — | — | — | (6) | — | $ | 3 | |||||||||||||||||||||||||||||||||||||
Income before income tax | $ | 864 | 565 | 6 | 161 | 4 | 73 | — | $ | 1,674 | |||||||||||||||||||||||||||||||||||||
Income tax provision | $ | 31 | 237 | $ | 268 | ||||||||||||||||||||||||||||||||||||||||||
Tax rate(2) | 3.5 | % | 16.0 | % | |||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 833 | 565 | 6 | 161 | 4 | 73 | (237) | $ | 1,406 | |||||||||||||||||||||||||||||||||||||
Net income per weighted-average share, diluted for Classes A and B(2)(4) | $ | 1.97 | $ | 1.34 | $ | 0.01 | $ | 0.38 | $ | 0.01 | $ | 0.17 | $ | (0.56) | $ | 3.33 | |||||||||||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||||||||||||||||||
(1) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. | |||||||||||||||||||||||||||||||||||||||||||||||
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data. | |||||||||||||||||||||||||||||||||||||||||||||||
(3) Non-GAAP adjustment to other income (expense), net includes gains or losses on investments in equity securities, whether realized or unrealized. | |||||||||||||||||||||||||||||||||||||||||||||||
(4) Calculated based upon 422,428 diluted weighted-average shares for Classes A and B. |
REVENUE BY TYPE | ||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
July 30, | July 31, | July 30, | July 31, | |||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
License | $ | 738 | $ | 719 | $ | 1,384 | $ | 1,379 | ||||||||||||||||||
Subscription and SaaS | 776 | 631 | 1,516 | 1,204 | ||||||||||||||||||||||
Total license and subscription and SaaS | 1,514 | 1,350 | 2,900 | 2,583 | ||||||||||||||||||||||
Services: | ||||||||||||||||||||||||||
Software maintenance | 1,336 | 1,270 | 2,657 | 2,515 | ||||||||||||||||||||||
Professional services | 288 | 255 | 575 | 511 | ||||||||||||||||||||||
Total services | 1,624 | 1,525 | 3,232 | 3,026 | ||||||||||||||||||||||
Total revenue | $ | 3,138 | $ | 2,875 | $ | 6,132 | $ | 5,609 | ||||||||||||||||||
Percentage of revenue: | ||||||||||||||||||||||||||
License | 23.5 | % | 25.0 | % | 22.6 | % | 24.6 | % | ||||||||||||||||||
Subscription and SaaS | 24.7 | % | 22.0 | % | 24.7 | % | 21.4 | % | ||||||||||||||||||
Total license and subscription and SaaS | 48.2 | % | 47.0 | % | 47.3 | % | 46.0 | % | ||||||||||||||||||
Services: | ||||||||||||||||||||||||||
Software maintenance | 42.6 | % | 44.2 | % | 43.3 | % | 44.8 | % | ||||||||||||||||||
Professional services | 9.2 | % | 8.8 | % | 9.4 | % | 9.2 | % | ||||||||||||||||||
Total services | 51.8 | % | 53.0 | % | 52.7 | % | 54.0 | % | ||||||||||||||||||
Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||
REVENUE BY GEOGRAPHY | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 30, | July 31, | July 30, | July 31, | ||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
United States | $ | 1,539 | $ | 1,439 | $ | 3,005 | $ | 2,802 | |||||||||||||||
International | 1,599 | 1,436 | 3,127 | 2,807 | |||||||||||||||||||
Total revenue | $ | 3,138 | $ | 2,875 | $ | 6,132 | $ | 5,609 | |||||||||||||||
Percentage of revenue: | |||||||||||||||||||||||
United States | 49.1 | % | 50.0 | % | 49.0 | % | 50.0 | % | |||||||||||||||
International | 50.9 | % | 50.0 | % | 51.0 | % | 50.0 | % | |||||||||||||||
Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
RECONCILIATION OF GAAP CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||||||||
TO FREE CASH FLOWS | |||||||||||||||||||||||
(A NON-GAAP FINANCIAL MEASURE) | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 30, | July 31, | July 30, | July 31, | ||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
GAAP cash flows from operating activities | $ | 864 | $ | 719 | $ | 2,130 | $ | 2,094 | |||||||||||||||
Capital expenditures | (87) | (76) | (157) | (163) | |||||||||||||||||||
Free cash flows | $ | 777 | $ | 643 | $ | 1,973 | $ | 1,931 | |||||||||||||||