Durable Competitive Advantages Power Dell Technologies' Record Second Quarter Results in "Do-Anything-from-Anywhere" Economy

ROUND ROCK, Texas, Aug. 26, 2021 /PRNewswire/ --

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Full story

Dell Technologies (NYSE: DELL) announces record financial results for its fiscal 2022 second quarter. Revenue was up 15% to $26.1 billion. The company generated operating income of $1.4 billion, a 21% increase over the same period in the prior year, and a second quarter record non-GAAP operating income of $2.8 billion, up 7%. Net income was $0.9 billion, non-GAAP net income was $1.9 billion and adjusted EBITDA was $3.3 billion. Net cash from operating activities was $1.7 billion. Diluted earnings per share was $1.05, down 23% and non-GAAP diluted earnings per share was $2.24, up 17%.

"We're well known for our unique ability to adjust and lean into growth opportunities, as evidenced by our results with record second quarter revenue of $26.1 billion," said Jeff Clarke, vice chairman and co-chief operating officer, Dell Technologies. "We're innovating and helping customers grow with a focus on multi-cloud solutions and modern infrastructure delivered traditionally and as-a-Service."

Second Quarter Fiscal 2022 Financial Results

Three Months Ended

Six Months Ended

July 30, 2021

July 31, 2020

Change

July 30, 2021

July 31, 2020

Change

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

Total net revenue

$

26,122

$

22,733

15%

$

50,609

$

44,630

13%

Operating income

$

1,372

$

1,136

21%

$

2,747

$

1,838

49%

Net income

$

880

$

1,099

(20)%

$

1,818

$

1,281

42%

Earnings per share - diluted

$

1.05

$

1.37

(23)%

$

2.18

$

1.56

40%

Non-GAAP net revenue

$

26,133

$

22,775

15%

$

50,632

$

44,720

13%

Non-GAAP operating income

$

2,811

$

2,618

7%

$

5,525

$

4,779

16%

Non-GAAP net income

$

1,911

$

1,621

18%

$

3,730

$

2,764

35%

Adjusted EBITDA

$

3,331

$

3,100

7%

$

6,566

$

5,707

15%

Non-GAAP earnings per share - diluted

$

2.24

$

1.92

17%

$

4.38

$

3.26

34%

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 $46 billion, up 24% and cash and investments of $13.6 billion. The company has paid down $5.5 billion in debt year-to-date and expects to pay down at least $16.0 billion for its fiscal year 2022.

"We had strong results again this quarter, with all business units growing," said Tom Sweet, chief financial officer, Dell Technologies. "We are creating long-term value by taking share, pursuing high-value growth opportunities and profitably growing and modernizing our core business. For example, in the storage space, VxRail orders were up 34% and PowerStore continues to ramp up nicely."

Operating segments summary

Client Solutions Group revenue for the second quarter was up 27% to a record $14.3 billion. Operating income was a second quarter record $995 million, up 39%, and 7% of Client Solutions Group revenue, as the company innovates across the ecosystem to deliver an enhanced experience for customers looking to work and play effectively from anywhere. Commercial client revenue was $10.6 billion, up 32%, and consumer revenue was a second quarter record of $3.7 billion, up 17%.

Key highlights:

Infrastructure Solutions Group revenue for the second quarter was $8.4 billion, up 3% as customers accelerate their IT investments with focus on multi-cloud solutions. Servers and networking revenue was $4.5 billion, up 6%, and storage revenue was $4.0 billion, down 1%. Operating income was $970 million for the second quarter, or approximately 11.5% of Infrastructure Solutions Group revenue.

Key highlights:

VMware revenue was $3.1 billion for the second quarter, up 8% driven by broad-based strength across a diverse product portfolio. Operating income for the quarter was $849 million, or 27.0% of VMware revenue.

Conference call information

As previously announced, the Company will hold a conference call to discuss its second quarter performance today, August 26, 2021 at 4:30 p.m. CDT. 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

Dell Technologies will hold a Securities Analyst Meeting on September 23, 2021 at 9:00 a.m. CDT. Speakers will include chairman and chief executive officer, Michael Dell, along with other key members of the executive leadership team with significant time allotted for Q&A. Registration information can be accessed online here.

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 © 2021 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. 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 agreement to spin off VMware, Inc., including risks that could affect our ability to complete the transaction on the terms announced or at all and the potential effects on our business of the announcement and consummation of the transaction; the effects of the COVID-19 pandemic; competitive pressures; Dell Technologies' reliance on third-party suppliers for products and components, including reliance on single-source or limited-source suppliers; Dell Technologies' ability to achieve favorable pricing from its vendors; adverse global economic conditions and instability in financial markets; Dell Technologies' execution of its growth, business and acquisition strategies; the success of Dell Technologies' cost efficiency measures; Dell Technologies' ability to manage solutions and products and services transitions in an effective manner; Dell Technologies' ability to deliver high-quality products, software, and services; cyber attacks or other data security incidents; Dell Technologies' foreign operations and ability to generate substantial non-U.S. net revenue; Dell Technologies' product, services, customer, and geographic sales mix, and seasonal sales trends; the performance of Dell Technologies' sales channel partners; access to the capital markets by Dell Technologies or its customers; material impairment of the value of goodwill or intangible assets; weak economic conditions and the effect of additional regulation on Dell Technologies' financial services activities; counterparty default risks; the loss by Dell Technologies of any contracts for ISG services and solutions and its ability to perform such contracts at their estimated costs; loss by Dell Technologies of government contracts; Dell Technologies' ability to develop and protect its proprietary intellectual property or obtain licenses to intellectual property developed by others on commercially reasonable and competitive terms; disruptions in Dell Technologies' infrastructure; Dell Technologies' ability to hedge effectively its exposure to fluctuations in foreign currency exchange rates and interest rates; expiration of tax holidays or favorable tax rate structures, or unfavorable outcomes in tax audits and other tax compliance matters; impairment of portfolio investments; unfavorable results of legal proceedings; compliance requirements of changing environmental and safety laws or other laws; the effect of armed hostilities, terrorism, natural disasters, and public health issues; Dell Technologies' dependence on the services of Michael Dell and key employees; Dell Technologies' level of indebtedness; and the impact of the financial performance of VMware, Inc.

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.

DELL TECHNOLOGIES INC.

Condensed Consolidated Statements of Income and Related Financial Highlights

(in millions, except percentages; unaudited)

Three Months Ended

Six Months Ended

July 30, 2021

July 31, 2020

Change

July 30, 2021

July 31, 2020

Change

Net revenue:

Products

$

19,394

$

16,737

16%

$

37,428

$

32,775

14%

Services

6,728

5,996

12%

13,181

11,855

11%

Total net revenue

26,122

22,733

15%

50,609

44,630

13%

Cost of net revenue:

Products

15,371

13,330

15%

29,585

26,134

13%

Services

2,766

2,247

23%

5,381

4,487

20%

Total cost of net revenue

18,137

15,577

16%

34,966

30,621

14%

Gross margin

7,985

7,156

12%

15,643

14,009

12%

Operating expenses:

Selling, general, and administrative

5,145

4,761

8%

10,105

9,647

5%

Research and development

1,468

1,259

17%

2,791

2,524

11%

Total operating expenses

6,613

6,020

10%

12,896

12,171

6%

Operating income

1,372

1,136

21%

2,747

1,838

49%

Interest and other, net

(359)

(636)

44%

(747)

(1,202)

38%

Income before income taxes

1,013

500

103%

2,000

636

214%

Income tax expense (benefit)

133

(599)

122%

182

(645)

128%

Net income

880

1,099

(20)%

1,818

1,281

42%

Less: Net income attributable to non-controlling interests

49

51

(4)%

100

90

11%

Net income attributable to Dell Technologies Inc.

$

831

$

1,048

(21)%

$

1,718

$

1,191

44%

Percentage of Total Net Revenue:

Gross margin

31

%

31

%

31

%

31

%

Selling, general, and administrative

20

%

21

%

20

%

22

%

Research and development

6

%

6

%

6

%

6

%

Operating expenses

25

%

26

%

25

%

27

%

Operating income

5

 Durable Competitive Advantages Power Dell Technologies' Record Second Quarter Results in

%

5

 Durable Competitive Advantages Power Dell Technologies' Record Second Quarter Results in

%

5

 Durable Competitive Advantages Power Dell Technologies' Record Second Quarter Results in

%

4

%

Income before income taxes

4

%

2

%

4

%

1

%

Net income

3

%

5

 Durable Competitive Advantages Power Dell Technologies' Record Second Quarter Results in

%

4

%

3

%

Income tax rate

13.1

%

-119.8

%

9.1

%

-101.4

%

Amounts are based on underlying data and may not visually foot due to rounding.

DELL TECHNOLOGIES INC.

Consolidated Statements of Financial Position

(in millions; unaudited)

July 30, 2021

January 29, 2021

ASSETS

Current assets:

Cash and cash equivalents

$

11,719

$

14,201

Accounts receivable, net

12,914

12,788

Short-term financing receivables, net

4,955

5,155

Inventories, net

4,223

3,402

Other current assets

9,556

8,021

Current assets held for sale

188

Total current assets

43,555

43,567

Property, plant, and equipment, net

6,661

6,431

Long-term investments

1,875

1,624

Long-term financing receivables, net

5,330

5,339

Goodwill

40,741

40,829

Intangible assets, net

13,014

14,429

Other non-current assets

11,502

11,196

Total assets

$

122,678

$

123,415

LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY

Current liabilities:

Short-term debt

$

6,427

$

6,362

Accounts payable

23,029

21,696

Accrued and other

8,808

9,549

Short-term deferred revenue

17,003

16,525

Current liabilities held for sale

216

Total current liabilities

55,483

54,132

Long-term debt

37,167

41,622

Long-term deferred revenue

14,840

14,276

Other non-current liabilities

5,245

5,360

Total liabilities

112,735

115,390

Redeemable shares

472

Stockholders' equity:

Total Dell Technologies Inc. stockholders' equity

4,825

2,479

Non-controlling interests

5,118

5,074

Total stockholders' equity

9,943

7,553

Total liabilities, redeemable shares, and stockholders' equity

$

122,678

$

123,415

DELL TECHNOLOGIES INC.

Condensed Consolidated Statements of Cash Flows

(in millions; unaudited)

Three Months Ended

Six Months Ended

July 30, 2021

July 31, 2020

July 30, 2021

July 31, 2020

Cash flows from operating activities:

Net income

$

880

$

1,099

$

1,818

$

1,281

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

845

2,233

2,145

1,255

Change in cash from operating activities

1,725

3,332

3,963

2,536

Cash flows from investing activities:

Purchases of investments

(124)

(118)

(270)

(174)

Maturities and sales of investments

79

32

335

71

Capital expenditures and capitalized software development costs

(632)

(545)

(1,257)

(1,104)

Acquisition of businesses and assets, net

(6)

(296)

(16)

(334)

Divestitures of businesses and assets, net

120

Other

14

3

20

12

Change in cash from investing activities

(669)

(924)

(1,188)

(1,409)

Cash flows from financing activities:

Proceeds from the issuance of common stock

26

105

186

221

Repurchases of parent common stock (a)

(8)

(17)

(240)

Repurchases of subsidiary common stock (a)

(544)

(291)

(978)

(591)

Proceeds from debt

1,209

1,712

3,935

11,847

Repayments of debt

(4,353)

(4,815)

(8,423)

(10,220)

Other

(3)

(148)

(14)

(190)

Change in cash from financing activities

(3,673)

(3,437)

(5,311)

827

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

(16)

84

(21)

(52)

Change in cash, cash equivalents, and restricted cash

(2,633)

(945)

(2,557)

1,902

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

15,260

12,998

15,184

10,151

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

$

12,627

$

12,053

$

12,627

$

12,053

_________________

(a)

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

DELL TECHNOLOGIES INC.

Segment Information

(in millions, except percentages; unaudited; continued on next page)

Three Months Ended

Six Months Ended

July 30, 2021

July 31, 2020

Change

July 30, 2021

July 31, 2020

Change

Infrastructure Solutions Group (ISG):

Net Revenue:

Servers and networking

$

4,462

$

4,196

6

%

$

8,571

$

7,954

8

%

Storage

3,970

4,011

(1)

%

7,772

7,822

(1)

%

Total ISG net revenue

$

8,432

$

8,207

3

%

$

16,343

$

15,776

4

%

Operating Income:

ISG operating income

$

970

$

973

%

$

1,758

$

1,705

3

%

% of ISG net revenue

12

%

12

%

11

%

11

%

% of total reportable segment operating income

34

%

38

%

32

%

36

%

Client Solutions Group (CSG):

Net Revenue:

Commercial

$

10,573

$

8,039

32

%

$

20,376

$

16,673

22

%

Consumer

3,690

3,164

17

%

7,192

5,634

28

%

Total CSG net revenue

$

14,263

$

11,203

27

%

$

27,568

$

22,307

24

%

Operating Income:

CSG operating income

$

995

$

715

39

%

$

2,085

$

1,307

60

%

% of CSG net revenue

7

%

6

%

8

%

6

%

% of total reportable segment operating income

35

%

28

%

38

%

28

%

VMware:

Net Revenue:

Total VMware net revenue

$

3,148

$

2,908

8

%

$

6,139

$

5,663

8

%

Operating Income:

VMware operating income

$

849

$

894

(5)

%

$

1,690

$

1,667

1

%

% of VMware net revenue

27

%

31

%

28

%

29

%

% of total reportable segment operating income

30

%

35

%

31

%

36

%

Amounts are based on underlying data and may not visually foot due to rounding.

DELL TECHNOLOGIES INC.

Segment Information

(in millions, except percentages; unaudited; continued)

Three Months Ended

Six Months Ended

July 30, 2021

July 31, 2020

July 30, 2021

July 31, 2020

Reconciliation to consolidated net revenue:

Reportable segment net revenue

$

25,843

$

22,318

$

50,050

$

43,746

Other businesses (a)

288

457

578

974

Unallocated transactions (b)

2

4

Impact of purchase accounting (c)

(11)

(42)

(23)

(90)

Total consolidated net revenue

$

26,122

$

22,733

$

50,609

$

44,630

Reconciliation to consolidated operating income:

Reportable segment operating income

$

2,814

$

2,582

$

5,533

$

4,679

Other businesses (a)

(3)

37

(8)

102

Unallocated transactions (b)

(1)

(2)

Impact of purchase accounting (c)

(20)

(53)

(45)

(116)

Amortization of intangibles

(711)

(847)

(1,420)

(1,702)

Transaction-related expenses (d)

(60)

(83)

(111)

(159)

Stock-based compensation expense (e)

(499)

(413)

(934)

(783)

Other corporate expenses (f)

(149)

(86)

(268)

(181)

Total consolidated operating income

$

1,372

$

1,136

$

2,747

$

1,838

_________________

(a)

Secureworks, Virtustream, and Boomi constitute "Other businesses" and do not meet the requirements for a reportable segment, either individually or collectively. The results of Other businesses are not material to the Company's overall results. On September 1, 2020, the Company completed the sale of RSA Security. Prior to divestiture, RSA Security's results 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.

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.

DELL TECHNOLOGIES INC.

Selected Non-GAAP Financial Measures

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

Three Months Ended

Six Months Ended

July 30, 2021

July 31, 2020

Change

July 30, 2021

July 31, 2020

Change

Non-GAAP net revenue

$

26,133

$

22,775

15

%

$

50,632

$

44,720

13

%

Non-GAAP gross margin

$

8,342

$

7,626

9

%

$

16,360

$

14,951

9

%

% of non-GAAP net revenue

32

%

33

%

32

%

33

%

Non-GAAP operating expenses

$

5,531

$

5,008

10

%

$

10,835

$

10,172

7

%

% of non-GAAP net revenue

21

%

22

%

21

%

23

%

Non-GAAP operating income

$

2,811

$

2,618

7

%

$

5,525

$

4,779

16

%

% of non-GAAP net revenue

11

%

11

%

11

%

11

%

Non-GAAP net income

$

1,911

$

1,621

18

%

$

3,730

$

2,764

35

%

% of non-GAAP net revenue

7

%

7

%

7

%

6

%

Adjusted EBITDA

$

3,331

$

3,100

7

%

$

6,566

$

5,707

15

%

% of non-GAAP net revenue

13

%

14

%

13

%

13

%

Non-GAAP earnings per share - diluted

$

2.24

$

1.92

17

%

$

4.38

$

3.26

34

%

Amounts are based on underlying data and may not visually foot due to rounding.

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

(in millions, except percentages; unaudited; continued on next page)

Three Months Ended

Six Months Ended

July 30, 2021

July 31, 2020

Change

July 30, 2021

July 31, 2020

Change

Net revenue

$

26,122

$

22,733

15%

$

50,609

$

44,630

13%

Non-GAAP adjustments:

Impact of purchase accounting

11

42

23

90

Non-GAAP net revenue

$

26,133

$

22,775

15%

$

50,632

$

44,720

13%

Gross margin

$

7,985

$

7,156

12%

$

15,643

$

14,009

12%

Non-GAAP adjustments:

Amortization of intangibles

275

375

551

747

Impact of purchase accounting

12

43

25

94

Transaction-related expenses

Stock-based compensation expense

63

50

121

90

Other corporate expenses

7

2

20

11

Non-GAAP gross margin

$

8,342

$

7,626

9%

$

16,360

$

14,951

9%

Operating expenses

$

6,613

$

6,020

10%

$

12,896

$

12,171

6%

Non-GAAP adjustments:

Amortization of intangibles

(436)

(472)

(869)

(955)

Impact of purchase accounting

(8)

(10)

(20)

(22)

Transaction-related expenses

(60)

(83)

(111)

(159)

Stock-based compensation expense

(436)

(363)

(813)

(693)

Other corporate expenses

(142)

(84)

(248)

(170)

Non-GAAP operating expenses

$

5,531

$

5,008

10%

$

10,835

$

10,172

7%

Operating income

$

1,372

$

1,136

21%

$

2,747

$

1,838

49%

Non-GAAP adjustments:

Amortization of intangibles

711

847

1,420

1,702

Impact of purchase accounting

20

53

45

116

Transaction-related expenses

60

83

111

159

Stock-based compensation expense

499

413

934

783

Other corporate expenses

149

86

268

181

Non-GAAP operating income

$

2,811

$

2,618

7%

$

5,525

$

4,779

16%

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

(in millions, except percentages; unaudited; continued)

Three Months Ended

Six Months Ended

July 30, 2021

July 31, 2020

Change

July 30, 2021

July 31, 2020

Change

Net income

$

880

$

1,099

(20)%

$

1,818

$

1,281

42%

Non-GAAP adjustments:

Amortization of intangibles

711

847

1,420

1,702

Impact of purchase accounting

20

53

45

116

Transaction-related expenses

48

83

99

39

Stock-based compensation expense

499

413

934

783

Other corporate expenses

149

86

268

181

Fair value adjustments on equity investments

(168)

(8)

(325)

(102)

Aggregate adjustment for income taxes

(228)

(952)

(529)

(1,236)

Non-GAAP net income

$

1,911

$

1,621

18%

$

3,730

$

2,764

35%

Net income

$

880

$

1,099

(20)%

$

1,818

$

1,281

42%

Adjustments:

Interest and other, net

359

636

747

1,202

Income tax expense (benefit)

133

(599)

182

(645)

Depreciation and amortization

1,240

1,340

2,479

2,656

EBITDA

$

2,612

$

2,476

5%

$

5,226

$

4,494

16%

EBITDA

$

2,612

$

2,476

5%

$

5,226

$

4,494

16%

Adjustments:

Stock-based compensation expense

499

413

934

783

Impact of purchase accounting

11

42

27

90

Transaction-related expenses

60

83

111

159

Other corporate expenses

149

86

268

181

Adjusted EBITDA

$

3,331

$

3,100

7%

$

6,566

$

5,707

15%

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

For the Three Months Ended July 30, 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

$

880

711

20

48

499

149

(168)

(228)

$

1,911

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

49

55

1

5

 Durable Competitive Advantages Power Dell Technologies' Record Second Quarter Results in

58

(1)

(22)

145

Net income attributable to Dell Technologies Inc. - basic

831

656

19

43

441

150

(168)

(206)

1,766

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

(3)

(5)

Net income attributable to Dell Technologies Inc. - diluted

$

828

$

1,761

Earnings per share - basic

$

1.09

$

2.31

Earnings per share - diluted

$

1.05

$

2.24

Weighted-average shares outstanding - basic

763

763

Weighted-average shares outstanding - diluted

786

786

_________________

(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.

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

For the Six Months Ended July 30, 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

1,818

1,420

45

99

934

268

(325)

(529)

3,730

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

100

108

2

9

110

7

(45)

291

Net income attributable to Dell Technologies Inc. - basic

$

1,718

$

1,312

$

43

$

90

$

824

$

268

$

(332)

$

(484)

$

3,439

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

$

(5)

$

(9)

Net income attributable to Dell Technologies Inc. - diluted

$

1,713

$

3,430

Earnings per share - basic

$

2.26

$

4.53

Earnings per share - diluted

$

2.18

$

4.38

Weighted-average shares outstanding - basic

760

760

Weighted-average shares outstanding - diluted

784

784

_________________

(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.

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

For the Three Months Ended July 31, 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

$

1,099

847

53

83

413

86

(8)

(952)

$

1,621

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

51

64

4

8

57

(29)

155

Net income attributable to Dell Technologies Inc. - basic

1,048

783

49

75

356

86

(8)

(923)

1,466

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

(3)

(5)

Net income attributable to Dell Technologies Inc. - diluted

$

1,045

$

1,461

Earnings per share - basic

$

1.41

$

1.98

Earnings per share - diluted

$

1.37

$

1.92

Weighted-average shares outstanding - basic

741

741

Weighted-average shares outstanding - diluted

761

761

_________________

(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.

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

For the Six Months Ended July 31, 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

1,281

1,702

116

39

783

181

(102)

(1,236)

2,764

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

90

124

7

15

111

(1)

(64)

282

Net income attributable to Dell Technologies Inc. - basic

$

1,191

$

1,578

$

109

$

24

$

672

$

181

$

(101)

$

(1,172)

$

2,482

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

$

(5)

$

(9)

Net income attributable to Dell Technologies Inc. - diluted

$

1,186

$

2,473

Earnings per share - basic

$

1.61

$

3.35

Earnings per share - diluted

$

1.56

$

3.26

Weighted-average shares outstanding - basic

740

740

Weighted-average shares outstanding - diluted

758

758

_________________

(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.

SOURCE Dell Technologies

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