Q3 FY21 Financial Results Press Release
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News Release Remote Work and Learn Solutions Drive Dell Technologies’ Third Quarter Fiscal 2021 Financial Results ROUND ROCK, Texas — November 24, 2020 News summary • Third quarter total revenue up 3% to $23.5 billion • Record Client Solutions Group revenue of $12.3 billion, up 8%, operating income of $1.0 billion • Diluted earnings per share up 64% to $1.08, non-GAAP diluted earnings per share up 16% to $2.03 • Operating income up 35% to $1.1 billion, non-GAAP operating income up 12% to $2.7 billion Full story Dell Technologies (NYSE: DELL) announces financial results for its fiscal 2021 third quarter. Revenue was up 3% to $23.5 billion. The company generated operating income of $1.1 billion, a 35% increase over the same period in the prior year, and non-GAAP operating income of $2.7 billion, up 12%. Net income was $881 million, non-GAAP net income was $1.7 billion and adjusted EBITDA was $3.2 billion. Net cash from operating activities was $3.0 billion. Diluted earnings per share was $1.08, up 64% and non-GAAP diluted earnings per share was $2.03, up 16%. “Technology has never been more important, and as the world evolves, so does our business,” said Jeff Clarke, vice chairman and chief operating officer, Dell Technologies. “We met unprecedented demand for remote work and learn solutions this quarter while increasing revenue to $23.5 billion. At the same time, we accelerated our as-a-Service strategy and hybrid cloud capabilities at the edge – positioning us to win in these growing markets and making it easy for customers to manage data and workloads across all their operations.” In October, at Dell Technologies World Experience, the company announced the expansion of its as-a-Service capabilities with Project APEX to simplify how customers and partners access technology on-demand – across storage, servers, networking, hyperconverged infrastructure, PCs and broader solutions. Project APEX will unify the company’s as-a-Service and cloud strategies, technology offerings, and go-to-market efforts. Businesses will have a consistent as- a-Service experience wherever they run workloads including on-premises, edge locations and public clouds. 1 Third Quarter Fiscal 2021 Financial Results Three Months Ended Nine Months Ended October 30, November 1, October 30, November 1, 2020 2019 Change 2020 2019 Change (in millions, except per share amounts and percentages; unaudited) Total net revenue $ 23,482 $ 22,844 3% $ 68,112 $ 68,122 —% Operating income $ 1,129 $ 836 35% $ 2,967 $ 1,905 56% Net income $ 881 $ 552 60% $ 2,162 $ 5,113 (58)% Earnings per share - diluted $ 1.08 $ 0.66 64% $ 2.64 $ 5.50 (52)% Non-GAAP net revenue $ 23,521 $ 22,928 3% $ 68,241 $ 68,372 —% Non-GAAP operating income $ 2,725 $ 2,442 12% $ 7,504 $ 7,381 2% Non-GAAP net income $ 1,711 $ 1,445 18% $ 4,475 $ 4,405 2% Adjusted EBITDA $ 3,231 $ 2,857 13% $ 8,938 $ 8,586 4% Non-GAAP earnings per share - diluted $ 2.03 $ 1.75 16% $ 5.28 $ 5.35 (1)% Information about Dell Technologies’ use of non-GAAP financial information is provided under “Non-GAAP Financial Measures” below. All comparisons in this press release are year-over-year unless otherwise noted. Dell Technologies ended the quarter with cash and investments of $13 billion and paid down $4.6 billion in debt during the quarter. The company had total deferred revenue of $28.7 billion as of quarter end, up 11% year-over-year. Recurring revenue, which includes deferred revenue amortization, utility and as-a-Service models was approximately $6 billion for the quarter, up 13% year-over-year. “We delivered differentiated performance through our diversified portfolio and are leaning into growth opportunities while managing operating expenses in a disciplined way,” said Tom Sweet, chief financial officer, Dell Technologies. “In the third quarter, we drove value by expanding profitability at a significant multiple of revenue and generated $3 billion in operating cash flow.” Operating segments summary Client Solutions Group revenue for the third quarter was a record $12.3 billion. Operating income was a record $1.0 billion, up 36% and 8.2% of Client Solutions Group revenue. The company saw continued demand for remote work, learning and gaming solutions. Consumer revenue was $3.5 billion, up 14%, while commercial client revenue was $8.8 billion, up 5%. Key highlights: • Consumer direct business up 47% with consumer direct online business up 62%, based on orders. • Strong performance with double-digit revenue growth in Latitude and Precision notebooks and triple-digit revenue growth in Commercial Chromebooks. • Strength in the XPS premium line and gaming systems including Alienware, with strong double-digit revenue growth for both notebooks and desktops. 2 Infrastructure Solutions Group revenue for the third quarter was $8.0 billion, with customers continuing to direct more spending towards remote work and business continuity solutions. Storage revenue was $3.9 billion, while servers and networking revenue was $4.2 billion. Operating income was $882 million for the third quarter, or approximately 11% of Infrastructure Solutions Group revenue. Key highlights: • Launch of new HCI, cloud, storage and data protection integration with latest VMware releases to help customers innovate across edge locations, data centers and hybrid clouds. • Continued strong demand for VxRail and PowerMax solutions, with double-digit orders growth in both for the third straight quarter. • PowerEdge server orders up single digits sequentially. VMware revenue was $2.9 billion for the third quarter, up 8% driven by broad-based strength across a diverse product portfolio. Operating income for the quarter was $837 million, or 28.9% of VMware revenue. Conference call information As previously announced, the Company will hold a conference call to discuss its third quarter performance today, November 24, 2020 at 4:30 p.m. CST. The conference call will be broadcast live over the internet and can be accessed at https://investors.delltechnologies.com/events-and- presentations/upcoming-events For those unable to listen to the live broadcast, an archived version will be available at the same location for one year. Additional financial and operating information may be downloaded from https://investors.delltechnologies.com/financial-information/quarterly-results About Dell Technologies Dell Technologies (NYSE:DELL) helps organizations and individuals build their digital future and transform how they work, live and play. The company provides customers with the industry’s broadest and most innovative technology and services portfolio for the data era. Contacts Investors: [email protected] Media: [email protected] # # # 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. 3 Non-GAAP Financial Measures: This press release presents information about Dell Technologies’ non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to non-controlling interests, non-GAAP net income attributable to Dell Technologies Inc. - basic, non-GAAP net income attributable to Dell Technologies Inc. - diluted, non-GAAP earnings per share attributable to Dell Technologies Inc. - basic, non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, EBITDA, and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America (“GAAP”). A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in the attached tables for each of the fiscal periods indicated. Special Note on Forward-Looking Statements: Statements in this press release that relate to future results and events are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933 and are based on Dell Technologies’ current expectations. The words “may,” “will,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “aim,” “seek,” and similar expressions as they relate to Dell Technologies or its management are intended to identify these forward-looking statements. Dell Technologies’ results or events in future periods could differ materially from those expressed or implied by these forward- looking statements because of risks, uncertainties, and other factors that include, but are not limited to, the following: competitive pressures; Dell Technologies’ reliance on third-party suppliers for products and components, including reliance on single-source or limited-source suppliers; Dell Technologies’ ability to achieve favorable pricing from its vendors; adverse global economic conditions and instability in financial markets, including as a result of the COVID-19 pandemic; Dell Technologies’ execution of its growth, business and acquisition strategies; the success of Dell Technologies’ cost efficiency measures; Dell Technologies’ ability to manage solutions and products and services transitions in an effective manner; Dell Technologies’ ability to deliver high-quality products and services; Dell Technologies’ foreign operations and ability to generate substantial non-U.S. net revenue; Dell Technologies’ product, customer, and geographic sales mix, and seasonal sales trends;