Q2 FY'18 Performance Review

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Q2 FY'18 Performance Review 2Q FY’18 Performance Review September 7, 2017 Legal Note Non-GAAP Financial Measures This presentation includes information about non-GAAP revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, EBITDA, and Adjusted EBITDA (collectively the “non-GAAP financial measures”), which are not measurements of financial performance prepared in accordance with U.S. generally accepted accounting principles. We have provided a reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP measures in the slides captioned “Supplemental Non-GAAP Measures.” Special Note on Forward Looking Statements Statements in this material that relate to future results and events are forward-looking statements and are based on Dell Technologies' current expectations. In some cases, you can identify these statements by such forward-looking words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “confidence,” “may,” “plan,” “potential,” “should,” “will” and “would,” or similar expressions. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors, including those discussed in Dell Technologies’ periodic reports filed with the Securities and Exchange Commission. Dell Technologies assumes no obligation to update its forward-looking statements. Special Note on the Divestiture On March 27, 2016, Dell entered into a definitive agreement with NTT Data International L.L.C. to divest substantially all of Dell Services for cash consideration of approximately $3.0 billion. On June 19, 2016, Dell entered into a definitive agreement with Francisco Partners and Elliot Management Corporation to divest substantially all of Dell Software Group ("DSG") for cash consideration of approximately $2.4 billion. On September 12, 2016, EMC entered into a definitive agreement with OpenText to divest the Dell EMC Enterprise Content Division ("ECD") for cash consideration of approximately $1.6 billion. In accordance with applicable accounting guidance, the results of Dell Services, DSG, and ECD are presented as discontinued operations in the Condensed Consolidated Statements of Income (Loss) and, as such, have been excluded from both continuing operations and segment results for all periods presented. 2 One Year Anniversary One year ago today, Dell and EMC came together to create the world’s largest privately-controlled technology company, Dell Technologies. We formed the essential infrastructure company for the digital future by bringing together Dell, Dell EMC, VMware, Pivotal, RSA, SecureWorks and Virtustream. In the past 12 months, we have: De-levered the balance Led in the technology of Continued the pace of Unified two global, world- Combined our teams and sheet by paying down today – servers, storage, innovation by investing class sales forces and cultures, including over more than $9.5B in PCs, virtualization – and $4.5B in R&D annually, launched an integrated 140,000 team members in gross debt, excluding tomorrow – cloud and an additional $100M Channel Program 180 countries, while DFS-related debt, while infrastructure, CI and HCI, per year in startups in remaining committed to the completing three major PaaS - by shipping the areas like AI, machine communities in which we divestitures – Dell company’s first learning, IoT, genomics work and live, and our Services, Dell Software integrated Dell and EMC and others through Dell planet and EMC Enterprise product just 27 days Technologies Capital Content Division after the merger close 3 Combined Company Reporting Considerations in Financial Reporting Non-Cash Purchase Accounting Adjustments1 GAAP to Non-GAAP OpInc Impact ($B) • 4Q’17 results included a full quarter for EMC / VMware while 3Q’17 included only a 52-day period for EMC / VMware (Sept. 7th – Oct. 28th). $3 • Historical results prior to 3Q’17 do not include EMC / VMware. $2 • FY17 includes an extra week of results (in 4Q’17) relative to a typical year. $1 $0 • GAAP results will include substantial non-cash purchase accounting for the next 4Q'17 2 1Q'18 2Q'18 3Q'18E 4Q'18E several years related to the EMC merger and going-private transaction. • VMware moved to Dell Technologies’ fiscal calendar starting in 1Q’18 (Feb. $8 2017) after previously reporting results on a calendar quarter basis. $6 • Dell Services, Dell Software Group, and Enterprise Content Division are $4 presented as discontinued operations in the prior quarters due to the recent $2 divestitures of these businesses. $0 FY17 2 FY18E FY19E FY20E FY21E FY22E Revenue COGS Operating Expenses 1 Purchase accounting adjustments (including amortization of intangibles and impact of purchasing accounting) reflect continuing operations only. 2 FY17 periods presented on a continuing operations basis. Discontinued operations included Dell Services, Dell Software, and Enterprise Content Division. 4 2Q FY’18 Consolidated GAAP Results $ in millions 2Q'17 1, 2 1Q'18 1 2Q'181 Y/Y Q/Q Revenue 13,080 17,816 19,299 48% 8% Gross Margin 2,336 4,302 4,809 106% 12% GM % of revenue 17.9% 24.1% 24.9% 700 bps 80 bps Operating Expense 2,269 5,802 5,788 155% 0% OpEx % of revenue 17.4% 32.5% 30.0% 1,260 bps -250 bps Operating Income (Loss) 67 (1,500) (979) OpInc % of revenue 0.5% -8.4% -5.1% Income Tax (20) (690) (546) Effective tax rate % 7.1% 33.3% 35.8% Net Income (Loss) (262) (1,383) (978) NI % of revenue -2.0% -7.8% -5.1% 1 Includes substantial adjustments to Net Income related to purchase accounting and other items. For additional detail on these adjustments, please refer to supplemental slides at the end of this presentation. 2 Presented on continuing operations basis. 5 2Q FY’18 Consolidated Non-GAAP Results1 $ in millions 2Q'17 2 1Q'18 2Q'18 Y/Y Q/Q Revenue 13,145 18,171 19,634 49% 8% Y/Y increase in revenue primarily attributable to EMC acquired businesses and, to a lesser Gross Margin 2,515 5,646 6,100 143% 8% extent, an increase in revenue from CSG GM % of revenue 19.1% 31.1% 31.1% 1,200 bps 0 bps Operating Expense 1,759 4,449 4,548 159% 2% Y/Y increases in gross margin and operating OpEx % of revenue 13.4% 24.5% 23.2% 980 bps -130 bps expenses primarily attributable to EMC acquired businesses Operating Income (Loss) 756 1,197 1,552 105% 30% OpInc % of revenue 5.8% 6.6% 7.9% 210 bps 130 bps 2Q’18 excludes $2.5B of adjustments to Net Income (Loss) 362 581 873 141% 50% operating income (amortization of intangible NI % of revenue 2.8% 3.2% 4.4% 160 bps 120 bps assets and non-cash purchase accounting adjustments) Adjusted EBITDA 884 1,567 1,866 111% 19% Adj EBITDA % of revenue 6.7% 8.6% 9.5% 280 bps 90 bps 1 See Appendix for reconciliation of GAAP to Non-GAAP Measures. 2 Presented on continuing operations basis. 6 2Q FY’18 Cash Flows from Operations and Adjusted EBITDA Cash Flow from Operations1 $1.9B $1.8B Cash and investments balance of $15.3B $0.7B Cash flow from operations was $1.8B: $0.2B • Driven predominantly by profitability and ongoing working capital initiatives • Impacted by interest payments, tax ($0.3B) payments and strong growth in our DFS business Adjusted EBITDA2 $2.2B $2.2B $1.9B Adjusted EBITDA 9.5% of non-GAAP $1.6B revenue $0.9B 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 1 2Q’17 – Q4’17 include Discontinued Operations. 2Q’17 does not include EMC. 3Q’17 only includes 52 days of EMC results. 2 Results represent Continuing Operations. 2Q’17 does not include EMC. 3Q’17 only includes 52 days of EMC results. See appendix for reconciliation of GAAP to Non-GAAP measures. 7 2Q FY’18 Capital Structure As of EMC Repaid ~$9.5B of gross debt, excluding DFS- $ in billions 1Q'18 2Q'18 As of Today Close related debt, since closing the EMC transaction, including the $1.5B Mirror Loan Revolver 2.0 0.4 - - Term Loan A 9.4 6.2 5.7 5.6 repaid after Q2 close Term Loan B 5.0 5.5 5.5 5.5 Investment Grade Notes 20.0 20.0 20.0 20.0 DFS Allocated Debt (1.0) (1.4) (1.8) (1.8) Growth in our DFS business continued with Total Core Secured Debt 35.4 30.7 29.3 29.3 1 originations of ~$1.6B and financing High Yield Notes 3.3 3.3 3.3 3.3 receivables growing to ~$6.7B; expanded our Asset Sale Bridge 2.2 - - - Legacy Dell Unsecured Notes 2.5 2.5 2.5 2.5 operations to Australia and New Zealand Legacy EMC Unsecured Notes 5.5 5.5 5.5 5.5 Total Unsecured Core Debt 13.4 11.2 11.2 11.2 Total Core Debt 48.8 41.9 40.5 40.5 Recently approved a second amendment to 2, 4, 5 existing repurchase program for up to $300M Margin Loan 2.5 2.0 2.0 2.0 over 6 months, solely funded through a new Mirror Loan 1.5 1.5 1.5 - VMware Class A Stock Purchase Agreement Other - 0.1 0.1 0.1 Total Other Debt 4.0 3.6 3.6 2.1 with VMware DFS Structured 3.5 3.9 4.1 4.1 DFS Allocated Debt 1.0 1.4 1.8 1.8 Total DFS Related Debt 4.5 5.3 5.8 5.8 Since closing the EMC transaction, we’ve Total Debt, Excluding Subsidiaries 57.3 50.7 49.9 48.4 repurchased ~19.7M shares of Class V 3, 4 Common Stock Total Subsidiary Debt - - - 4.0 Total Debt, Including Subsidiaries 57.3 50.7 49.9 52.4 Remain committed to our long-term de-levering efforts while continuing to invest 1 Core Secured Debt represents secured term loans, investment grade notes, and revolver.
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