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Dell Technologies Reports Fiscal Year 2020 Fourth Quarter and Full Year Financial Results

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ROUND ROCK, Texas , Feb. 27, 2020 /PRNewswire/ --

News summary

  • Record full year revenue of $92.2 billion
  • Full year net income of $5.5 billion ; adjusted EBITDA of $11.8 billion
  • Record Client Solutions Group full year revenue of $45.8 billion
  • Share repurchase program of up to $1 billion over the next 24 months

Full story
Dell Technologies (NYSE: DELL) announces financial results for its fiscal 2020 fourth quarter and full year.

Fourth quarter revenue was $24.0 billion , up 1 percent, and non-GAAP revenue was $24.1 billion , up 1 percent, over the same period last year. During the quarter, the company generated operating income of $717 million , a 117 percent increase over the same period in the prior year, and non-GAAP operating income of $2.8 billion , up 4 percent over the prior year. Net income was $416 million or approximately 2 percent of revenue. Non-GAAP net income was $1.7 billion or 7 percent of non-GAAP revenue. Diluted earnings per share was $0.54 and non-GAAP diluted earnings per share was $2.00 .

For the full year, revenue was $92.2 billion , up 2 percent, and non-GAAP revenue was $92.5 billion , up 1 percent, over the prior year. The company increased its operating income to $2.6 billion from a $0.2 billion loss in the prior year and generated non-GAAP operating income of $10.1 billion , up 15 percent over the prior year. Cash flow from operations was $9.3 billion , up 33 percent from fiscal year 2019. For the full year, net income was $5.5 billion and non-GAAP net income was $6.1 billion . Diluted earnings per share was $6.03 and non-GAAP diluted earnings per share was $7.35 .

"In fiscal 2020, we focused on integration and simplicity across our businesses and product portfolio to accelerate winning go-to-market solutions for our customers," said Jeff Clarke , chief operating officer, Dell Technologies. "With more than $180 billion in revenue over the past two years and significant investments in research, innovation and breadth of capability, we have a uniquely advantaged position heading into the next digital decade."

Fourth Quarter and Full Year Fiscal 2020 Financial Results



Three Months Ended




Fiscal Year Ended




January 31,
2020


February 1,
2019


Change


January 31,
2020


February 1,

2019


Change



(in millions, except percentages; unaudited)


Total net revenue

$

24,032


$

23,841


1%


$

92,154


$

90,621


2%

Operating income (loss)

$

717


$

331


117%


$

2,622


$

(191)


NM

Net income (loss)

$

416


$

(287)


245%


$

5,529


$

(2,181)


354%

















Non-GAAP net revenue

$

24,129


$

24,008


1%


$

92,501


$

91,324


1%

Non-GAAP operating income

$

2,767


$

2,656


4%


$

10,148


$

8,854


15%

Non-GAAP net income

$

1,684


$

1,592


6%


$

6,089


$

5,227


16%

Adjusted EBITDA

$

3,201


$

3,028


6%


$

11,787


$

10,296


14%


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 a cash and investments balance of $10.2 billion . The company repaid approximately $1.5 billion of gross debt in the quarter and $5 billion for the year, achieving its fiscal 2020 target. The company has paid down $19.5 billion in gross debt since closing the EMC transaction in September 2016 .

"This year's results were driven by operational focus and expanding synergies across Dell Technologies and our ability to adjust to win in any environment," said Tom Sweet , chief financial officer, Dell Technologies. "We delivered full year net income of $5.5 billion and adjusted EBITDA of $11.8 billion in fiscal 2020. I'm pleased with our profitability and remain committed to maximizing Dell Technologies' equity value for all aligned shareholders."

The company also announced today a new share repurchase program of up to $1 billion over the next 24 months, effective immediately. While de-levering remains the primary capital allocation goal, the company sees an opportunity to take advantage of what it believes is a significant discount in the current stock price. This share repurchase plan is another lever the company will use as it continues to focus on creating value for shareholders.

Operating segments summary

Client Solutions Group  revenue for the fourth quarter was $11.8 billion , up 8 percent year over year. This was driven by $8.6 billion in commercial revenue, a 10 percent increase, and $3.2 billion in consumer revenue, a 4 percent increase. Operating income was $624 million or approximately 5 percent of Client Solutions Group revenue. For the full year, the Client Solutions Group delivered record revenue of $45.8 billion , up 6 percent versus the prior year, with commercial up 11 percent. Client Solutions Group full year operating income was $3.1 billion .

Key highlights:

  • Shipped a record 46.5 million units during the 2019 calendar year 1
  • Gained PC unit share for the last seven years in a row 1
  • Achieved double-digit unit and revenue growth in commercial desktops and workstations, completing a full fiscal year of quarterly double-digit growth in the segment

Infrastructure Solutions Group  revenue for the fourth quarter was $8.8 billion , down 11 percent. Storage revenue was $4.5 billion , down 3 percent, while servers and networking revenue was $4.3 billion , down 19 percent. Operating income for the group was $1.1 billion or approximately 13 percent of revenue. Revenue for full fiscal 2020 was $34.0 billion , with operating income of $4.0 billion .

Key highlights:

  • Gained 590 basis points of mainstream server revenue share over the last 3 years, and have been the #1 worldwide provider for 7 quarters 2
  • Strong customer traction with our co-engineered first and best" solutions, including Dell Technologies Cloud, Unified Workspace, VxRail and smart fabric director
  • Announced the latest advancements to Dell Technologies Cloud, including a new subscription-based model that makes it easier for customers to accelerate hybrid cloud deployments and simplify IT operations

VMware  revenue for the fourth quarter was $3.1 billion , with operating income of $1.0 billion . The segment delivered $10.9 billion in revenue and $3.1 billion in operating income for the full fiscal year. During the fourth quarter, VMware, Inc. acquired Pivotal Software, Inc. ("Pivotal"), and VMware's segment results are inclusive of Pivotal.  Prior periods have been recast to conform with current period presentation.

Dell Technologies World

Join us May 4 - May 7 in Las Vegas at Dell Technologies World, the company's flagship event that brings together latest emerging trends, technology and gurus. During the event, experts from all of Dell Technologies businesses will demonstrate to customers and partners the connected ecosystem of IT infrastructure, applications, devices and security that can enable real transformation across their organizations. Register here .  

Conference call information
As previously announced, the company will hold a conference call to discuss its fourth quarter and full year performance and financial guidance today, February 27, 2020 , at 4:30 p.m. CST .  The conference call will be broadcast live over the internet and can be accessed at https://investors.delltechnologies.com/events-and-presentations/upcoming-events

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

A slide presentation containing additional financial and operating information may be downloaded from Dell Technologies' website at https://investors.delltechnologies.com/financial-information/quarterly-results .

About Dell Technologies

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

Copyright © 2020 Dell Inc. or its subsidiaries.  All Rights Reserved. Dell Technologies, Dell, EMC and Dell EMC are trademarks of Dell Inc. or its subsidiaries.  Other trademarks may be trademarks of their respective owners.

1

IDC WW Quarterly Personal Computing Device (PDC) Tracker CY19Q4.

2

IDC WW Quarterly Server Tracker CY19Q3; share gains calculated on a trailing-twelve-months basis.

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, including its current expectations for fiscal 2021 GAAP and non-GAAP revenue, GAAP and non-GAAP operating income, and GAAP and non-GAAP earnings per share. 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: competitive pressures; Dell Technologies' reliance on third-party suppliers for products and components, including reliance on single-source or limited-source suppliers; Dell Technologies' ability to achieve favorable pricing from its vendors; adverse global economic conditions and instability in financial markets; Dell Technologies' execution of its growth, business and acquisition strategies; the success of Dell Technologies' cost efficiency measures; Dell Technologies' ability to manage solutions and products and services transitions in an effective manner; Dell Technologies' ability to deliver high-quality products and services; Dell Technologies' foreign operations and ability to generate substantial non-U.S. net revenue; Dell Technologies' product, customer, and geographic sales mix, and seasonal sales trends; the performance of Dell Technologies' sales channel partners; access to the capital markets by Dell Technologies or its customers; weak economic conditions and additional regulation including tariffs and other effects of trade regulation; counterparty default risks; the loss by Dell Technologies of any services contracts with its customers, including government contracts, and its ability to perform such contracts at its estimated costs; Dell Technologies' ability to develop and protect its proprietary intellectual property or obtain licenses to intellectual property developed by others on commercially reasonable and competitive terms; infrastructure disruptions, cyberattacks, or other data security breaches; Dell Technologies' ability to hedge effectively its exposure to fluctuations in foreign currency exchange rates and interest rates; expiration of tax holidays or favorable tax rate structures, or unfavorable outcomes in tax audits and other tax compliance matters; impairment of portfolio investments; unfavorable results of legal proceedings; increased costs and additional regulations and requirements as a result of Dell Technologies' operation as a public company; Dell Technologies' ability to develop and maintain effective internal control over financial reporting; compliance requirements of changing environmental and safety laws; the effect of armed hostilities, terrorism, natural disasters, and public health issues; Dell Technologies' substantial level of indebtedness; the impact of the financial performance of VMware, Inc.; and the market volatility of Dell Technologies' pension plan assets.

This list of risks, uncertainties, and other factors is not complete. Dell Technologies discusses some of these matters more fully, as well as certain risk factors that could affect Dell Technologies' business, financial condition, results of operations, and prospects, in its reports filed with the SEC, including Dell Technologies' annual report on Form 10-K for the fiscal year ended February 1, 2019 , 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 (Loss) and Related Financial Highlights
(in millions, except percentages; unaudited)



Three Months Ended




Fiscal Year Ended




January 31,
2020


February 1,
2019


Change


January 31,
2020


February 1,
2019


Change

Net revenue (a):












Products

$

18,153



$

18,676



(3)%


$

69,918



$

70,751



(1)%

Services

5,879



5,165



14%


22,236



19,870



12%

Total net revenue

24,032



23,841



1%


92,154



90,621



2%

Cost of net revenue:












Products

13,999



14,775



(5)%


54,525



57,889



(6)%

Services

2,349



1,957



20%


8,696



7,679



13%

Total cost of net revenue

16,348



16,732



(2)%


63,221



65,568



(4)%

Gross margin

7,684



7,109



8%


28,933



25,053



15%

Operating expenses:












Selling, general, and
administrative

5,642



5,576



1%


21,319



20,640



3%

Research and development

1,325



1,202



10%


4,992



4,604



8%

Total operating expenses

6,967



6,778



3%


26,311



25,244



4%

Operating income (loss)

717



331



117%


2,622



(191)



NM

Interest and other, net

(626)



(606)



(3)%


(2,626)



(2,170)



(21)%

Income (loss) before income taxes

91



(275)



133%


(4)



(2,361)



100%

Income tax provision (benefit)

(325)



12



NM


(5,533)



(180)



NM

Net income (loss)

416



(287)



245%


5,529



(2,181)



354%

Less: Net income attributable to
non-controlling interests

8



12



(33)%


913



129



608%

Net income (loss) attributable
to Dell Technologies Inc.

$

408



$

(299)



236%


$

4,616



$

(2,310)



300%













Percentage of Total Net Revenue:











Gross margin

32%



30%





31%



28%




Selling, general, and
administrative

23%



23%





23%



23%




Research and development

6%



5%





5%



5%




Operating expenses

29%



28%





29%



28%




Operating income (loss)

3%



1%





3%



%




Income (loss) before income
taxes

%



(1)%





%



(3)%




Net income (loss)

2%



(1)%





6%



(2)%




Income tax rate

(357.1)%



(4.4)%





138325.0%



7.6%




____________________



(a)

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

 

...

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



January 31, 2020


February 1, 2019

ASSETS

Current assets:




Cash and cash equivalents

$

9,302



$

9,676


Accounts receivable, net

12,484



12,371


Short-term financing receivables, net

4,895



4,398


Inventories, net

3,281



3,649


Other current assets

6,934



6,044


Total current assets

36,896



36,138


Property, plant, and equipment, net

6,027



5,259


Long-term investments

864



1,005


Long-term financing receivables, net

4,848



4,224


Goodwill

41,691



40,089


Intangible assets, net

18,107



22,270


Other non-current assets

10,428



2,835


Total assets

$

118,861



$

111,820


LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:




Short-term debt

$

7,737



$

4,320


Accounts payable

20,065



19,213


Accrued and other

9,359



8,495


Short-term deferred revenue

14,881



12,944


Total current liabilities

52,042



44,972


Long-term debt

44,319



49,201


Long-term deferred revenue

12,919



11,066


Other non-current liabilities

5,797



6,327


Total liabilities

115,077



111,566


Redeemable shares

629



1,196