PR Newswire | Feb 25, 2021 04:26PM EST

Financial Results

02/25 16:25 CDT

Future of Work Solutions Fuel Dell Technologies' Record Fiscal Year 2021 Financial Results ROUND ROCK, Texas, Feb. 25, 2021

ROUND ROCK, Texas, Feb. 25, 2021 /PRNewswire/ --

News summary

* Record full-year revenue of $94.2 billion * Record full-year operating income of $5.1 billion and record non-GAAP operating income of $10.8 billion * Record cash flow from operations of $11.4 billion * Record Client Solutions Group shipments, revenue and operating income

Full storyDell Technologies (NYSE: DELL) announces financial results for its fiscal 2021 fourth quarter and full year.

Full-year revenue was a record $94.2 billion, up 2% over the prior year. The company generated record operating income of $5.1 billion, a 96% increase over the prior year, and record non-GAAP operating income of $10.8 billion, up 6%. For the full year, net income was $3.5 billion and non-GAAP net income was $6.8 billion. Cash flow from operations was a record $11.4 billion. Full-year diluted earnings per share was $4.22, and non-GAAP diluted earnings per share was $8.00.

Fourth quarter revenue was up 9% to $26.1 billion. The company generated operating income of $2.2 billion, a 204% increase over the same period in the prior year, and non-GAAP operating income of $3.3 billion, up 19%. Net income was $1.3 billion, non-GAAP net income was $2.3 billion and adjusted EBITDA was $3.8 billion. Cash flow from operations was $5.9 billion. Fourth quarter diluted earnings per share was $1.57 and non-GAAP diluted earnings per share was $2.70.

"In the past year, our team rallied to support our customers and partners worldwide as technology played a central role in keeping our society, economy and lives moving forward," said Jeff Clarke, chief operating officer, Dell Technologies. "We generated record revenue of $94.2 billion this year by helping customers adapt to new work-and-learn-from-anywhere realities and are in an advantaged position to capitalize on the projected mid-single digits growth in IT spending in 2021."

Fourth Quarter and Full-Year Fiscal 2021 Financial Results

Three Months Ended Fiscal Year Ended

January 29, January 31, Change January 29, January 31, Change 2021 2020 2021 2020

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

Total net revenue $ 26,112 $ 24,032 9% $ 94,224 $ 92,154 2%

Operating income $ 2,177 $ 717 204% $ 5,144 $ 2,622 96%

Net income $ 1,343 $ 416 223% $ 3,505 $ 5,529 (37)%

Earnings per share - diluted $ 1.57 $ 0.54 191% $ 4.22 $ 6.03 (30)%

Non-GAAP net revenue $ 26,148 $ 24,129 8% $ 94,389 $ 92,501 2%

Non-GAAP operating income $ 3,294 $ 2,767 19% $ 10,798 $ 10,148 6%

Non-GAAP net income $ 2,288 $ 1,684 36% $ 6,763 $ 6,089 11%

Adjusted EBITDA $ 3,809 $ 3,201 19% $ 12,747 $ 11,787 8%

Non-GAAP earnings per share $ 2.70 $ 2.00 35% $ 8.00 $ 7.35 9%- diluted

Information about Dell Technologies' use of non-GAAP financial information isprovided under "Non-GAAP Financial Measures" below. All comparisons in thispress release are year-over-year unless otherwise noted.

Dell Technologies ended the fiscal year with cash and investments of $15.8 billion and delivered on its fiscal 2021 core debt paydown target of $5.5 billion. The company ended the year with total deferred revenue of $30.8 billion, up $3 billion year-over-year. Recurring revenue, which includes deferred revenue amortization, utility and as-a-Service models was approximately $6 billion for the quarter, up 8% year-over-year, as the company's aaS models give customers greater flexibility to scale IT to meet business needs and budgets.

"This year's strong results are a testament to the flexibility of Dell Technologies' business model and the resilience of our team," said Tom Sweet, chief financial officer, Dell Technologies. "Focus on our people, customers, innovation and execution resulted in record cash flow from operations of $11.4 billion, and we'll continue to deliver differentiated value for our all stakeholders."

Operating segments summaryClient Solutions Group delivered record results, with revenue for the fourth quarter of $13.8 billion, up 17% year over year. This was driven by $9.9 billion in commercial revenue - a 16% increase - and $3.8 billion in consumer revenue - a 19% increase. Operating income was $1.0 billion or approximately 7.6% of Client Solutions Group revenue. For the full year, the Client Solutions Group delivered record revenue of $48.4 billion, up 5% versus the prior year. Client Solutions Group full-year operating income was $3.4 billion, a 7% increase.

Key highlights:

* Shipped a record 50.3 million units during the 2020 calendar year1, an 8% increase year-over-year * Only big 3 vendor to gain Commercial PC share in calendar year 20201 * Continued to see strong growth in Latitude and Precision notebooks and Commercial Chromebooks

Infrastructure Solutions Group revenue for the fourth quarter was $8.8 billion, flat year-over-year. Storage revenue was $4.4 billion - down 2% - while servers and networking revenue was $4.4 billion - up 3%. Operating income was a record $1.2 billion or approximately 13.5% of Infrastructure Solutions Group revenue. For the full year, revenue was $32.6 billion, with operating income of $3.8 billion.

Key highlights:

* PowerStore orders up 4X quarter-over-quarter, as customers embrace the next generation of modern data center technology and applications * Strong year-over-year growth in PowerMax, HCI and PowerProtect Data Domain * 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

VMware revenue for the fourth quarter was $3.3 billion, with operating income of $1.1 billion driven by broad-based strength across a diverse product portfolio. For the full year, VMware delivered $11.9 billion in revenue and $3.6 billion in operating income.

Dell Technologies WorldJoin us May 5 - May 6 for the Dell Technologies World Experience, the company's flagship event that brings together latest emerging trends, technology and gurus. During the event, we will demonstrate to customers and partners the connected ecosystem of IT infrastructure, applications, devices and security - and our new APEX as-a-Service portfolio and simplified IT consumption experience that gives customers greater flexibility to scale IT to meet business needs and budgets. Register here.

Conference call informationAs previously announced, the Company will hold a conference call to discuss its fiscal 2021 fourth quarter/full year performance and financial guidance, February 25, 2021 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 TechnologiesDell 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 (c) 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.

1 IDC WW Personal Computing Device Tracker CY20Q4, WW commercial PC, on a Y/Y 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. 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, 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; 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, including as a result of the COVID-19 pandemic; 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 January 31, 2020, 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 FinancialHighlights

(in millions, except percentages; unaudited)

Three Months Ended Fiscal Year Ended

January 29, January 31, Change January 29, January 31, Change 2021 2020 2021 2020

Net revenue (a):

Products $ 19,784 $ 18,153 9% $ 69,911 $ 69,918 -%

Services 6,328 5,879 8% 24,313 22,236 9%

Total net 26,112 24,032 9% 94,224 92,154 2%revenue

Cost of netrevenue:

Products 15,424 13,999 10% 55,347 54,525 2%

Services 2,541 2,349 8% 9,460 8,696 9%

Total cost of 17,965 16,348 10% 64,807 63,221 3%net revenue

Gross margin 8,147 7,684 6% 29,417 28,933 2%

Operatingexpenses:

Selling, general,and 4,579 5,642 (19)% 18,998 21,319 (11)%administrative

Research and 1,391 1,325 5% 5,275 4,992 6%development

Totaloperating 5,970 6,967 (14)% 24,273 26,311 (8)%expenses

Operating income 2,177 717 204% 5,144 2,622 96%

Interest and (545) (626) 13% (1,474) (2,626) 44%other, net

Income (loss)before income 1,632 91 NM 3,670 (4) NMtaxes

Income taxprovision 289 (325) 189% 165 (5,533) 103%(benefit)

Net income 1,343 416 223% 3,505 5,529 (37)%

Less: Net incomeattributable to 116 8 NM 255 913 (72)%non-controllinginterests

Net incomeattributable to $ 1,227 $ 408 201% $ 3,250 $ 4,616 (30)%Dell TechnologiesInc.

Percentage of Total NetRevenue:

Gross margin 31 % 32 % 31 % 31 %

Selling, general,and 18 % 23 % 20 % 23 %administrative

Research and 5 % 6 % 6 % 5 %development

Operating 23 % 29 % 26 % 29 %expenses

Operating income 8 % 3 % 5 % 3 %

Income (loss)before income 6 % - % 4 % - %taxes

Net income 5 % 2 % 4 % 6 %

Income tax rate 17.7 % -357.1 % 4.5 % 138325.0 %

____________________

During Fiscal 2020, the Company reclassified revenue associated with(a) 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.

DELL TECHNOLOGIES INC.

Consolidated Statements of Financial Position

(in millions; unaudited)

January 29, 2021 January 31, 2020

ASSETS

Current assets:

Cash and cash equivalents $ 14,201 $ 9,302

Accounts receivable, net 12,788 12,484

Short-term financing receivables, net 5,155 4,895

Inventories, net 3,402 3,281

Other current assets 8,021 6,906

Total current assets 43,567 36,868

Property, plant, and equipment, net 6,431 6,055

Long-term investments 1,624 864

Long-term financing receivables, net 5,339 4,848

Goodwill 40,829 41,691

Intangible assets, net 14,429 18,107

Other non-current assets 11,196 10,428

Total assets $ 123,415 $ 118,861

LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY

Current liabilities:

Short-term debt $ 6,362 $ 7,737

Accounts payable 21,696 20,065

Accrued and other 9,549 9,773

Short-term deferred revenue 16,525 14,881

Total current liabilities 54,132 52,456

Long-term debt 41,622 44,319

Long-term deferred revenue 14,276 12,919

Other non-current liabilities 5,360 5,383

Total liabilities 115,390 115,077

Redeemable shares 472 629

Stockholders' equity (deficit):

Total Dell Technologies Inc. stockholders' 2,479 (1,574)equity (deficit)

Non-controlling interests 5,074 4,729

Total stockholders' equity 7,553 3,155

Total liabilities, redeemable shares, and $ 123,415 $ 118,861stockholders' equity

DELL TECHNOLOGIES INC.

Condensed Consolidated Statements of Cash Flows

(in millions; unaudited)

Three Months Ended Fiscal Year Ended

January 29, January 31, January 29, January 31, 2021 2020 2021 2020

Cash flows from operatingactivities:

Net income $ 1,343 $ 416 $ 3,505 $ 5,529

Adjustments to reconcile netincome to net cash provided 4,534 3,092 7,902 3,762by operating activities:

Change in cash from 5,877 3,508 11,407 9,291operating activities

Cash flows from investingactivities:

Purchases of investments (42) (39) (338) (181)

Maturities and sales of 71 48 169 497investments

Capital expenditures andcapitalized software (498) (700) (2,082) (2,576)development costs

Acquisition of businesses (19) (26) (424) (2,463)and assets, net

Divestitures of businesses - - 2,187 (3)and assets, net

Other 2 13 28 40

Change in cash from (486) (704) (460) (4,686)investing activities

Cash flows from financingactivities:

Proceeds from the issuance 63 207 452 658of common stock

Repurchases of parent common (1) (2) (241) (8)stock

Repurchases of subsidiary (473) (1,861) (1,363) (3,547)common stock (a)

Proceeds from debt 1,619 2,825 16,391 20,481

Repayments of debt (3,675) (3,169) (20,919) (22,117)

Other - (4) (270) (71)

Change in cash from (2,467) (2,004) (5,950) (4,604)financing activities

Effect of exchange ratechanges on cash, cash 103 10 36 (90)equivalents, and restrictedcash

Change in cash, cashequivalents, and restricted 3,027 810 5,033 (89)cash

Cash, cash equivalents, andrestricted cash at beginning 12,157 9,341 10,151 10,240of the period

Cash, cash equivalents, andrestricted cash at end of $ 15,184 $ 10,151 $ 15,184 $ 10,151the period

_________________

(a) Subsidiary 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 Fiscal Year Ended

January 29, January 31, Change January 29, January 31, Change 2021 2020 2021 2020

Infrastructure Solutions Group (ISG):

Net Revenue:

Servers and $ 4,379 $ 4,269 3% $ 16,497 $ 17,127 (4)%networking

Storage 4,409 4,487 (2)% 16,091 16,842 (4)%

Total ISG net $ 8,788 $ 8,756 -% $ 32,588 $ 33,969 (4)%revenue

OperatingIncome:

ISG operating $ 1,189 $ 1,112 7% $ 3,776 $ 4,001 (6)%income

% of ISG net 14 % 13 % 12 % 12 %revenue

% of totalreportablesegment 36 % 40 % 35 % 39 %operatingincome

Client Solutions Group (CSG):

Net Revenue:

Commercial $ 9,940 $ 8,563 16% $ 35,396 $ 34,277 3%

Consumer 3,822 3,207 19% 12,959 11,561 12%

Total CSG net $ 13,762 $ 11,770 17% $ 48,355 $ 45,838 5%revenue

OperatingIncome:

CSG operating $ 1,043 $ 624 67% $ 3,352 $ 3,138 7%income

% of CSG net 8 % 5 % 7 % 7 %revenue

% of totalreportablesegment 32 % 23 % 31 % 31 %operatingincome

VMware (a):

Net Revenue:

Total VMware $ 3,317 $ 3,126 6% $ 11,873 $ 10,905 9%net revenue

OperatingIncome:

VMwareoperating $ 1,067 $ 1,026 4% $ 3,571 $ 3,081 16%income

% of VMware 32 % 33 % 30 % 28 %net revenue

% of totalreportablesegment 32 % 37 % 33 % 30 %operatingincome

____________________

(a) During Fiscal 2020, the Company reclassified Pivotal operating results from Other businesses to the VMware reportable segment. There was no change to consolidated results as a result of the reclassification.

DELL TECHNOLOGIES INC.

Segment Information

(in millions, except percentages; unaudited; continued)

Three Months Ended Fiscal Year Ended

January 29, January 31, January 29, January 31, 2021 2020 2021 2020

Reconciliation to consolidated netrevenue:

Reportable segment net $ 25,867 $ 23,652 $ 92,816 $ 90,712revenue (a)

Other businesses (a) (b) 279 477 1,567 1,788

Unallocated transactions (c) 2 - 6 1

Impact of purchase (36) (97) (165) (347)accounting (d)

Total consolidated net $ 26,112 $ 24,032 $ 94,224 $ 92,154revenue

Reconciliation to consolidated operating income:

Reportable segment operating $ 3,299 $ 2,762 $ 10,699 $ 10,220income (a)

Other businesses (a) (b) (6) 5 99 (43)

Unallocated transactions (c) 1 - - (29)

Impact of purchase (48) (112) (213) (411)accounting (d)

Amortization of intangibles (846) (1,074) (3,393) (4,408)

Transaction-related expenses (46) (120) (257) (285)(e)

Stock-based compensation (390) (376) (1,609) (1,262)expense (f)

Other corporate expenses (g) 213 (368) (182) (1,160)

Total consolidated operating $ 2,177 $ 717 $ 5,144 $ 2,622income

_________________

(a) During Fiscal 2020, the Company reclassified Pivotal operating results from Other businesses to the VMware reportable segment.

Secureworks, Virtustream, and Boomi constitute "Other businesses" and do not meet the requirements for a reportable segment, either individually or(b) collectively. The Company completed the sale of RSA Security on September 1, 2020; prior to divestiture, RSA Security's operating results were also included in Other Businesses and did not meet the requirements for a reportable segment. The results of Other businesses are not material to the Company's overall results.

(c) Unallocated transactions includes other corporate items that are not allocated to Dell Technologies' reportable segments.

(d) Impact of purchase accounting includes non-cash purchase accounting adjustments that are primarily related to the EMC merger transaction.

(e) Transaction-related expenses includes acquisition, integration, and divestiture related costs.

(f) Stock-based compensation expense consists of equity awards granted based on the estimated fair value of those awards at grant date.

Other corporate expenses includes impairment charges, severance, facility action, and other costs. The fourth quarter of Fiscal 2021 includes(g) derecognition of a $237 million previously accrued litigation loss as a result of a jury verdict in January 2020 against VMware, Inc. in a patent litigation matter. On December 21, 2020, the United States District Court of the District of Delaware set aside the jury verdict and ordered a new trial.

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 Fiscal Year Ended

January 29, January 31, Change January 29, January 31, Change 2021 2020 2021 2020

Non-GAAP net $ 26,148 $ 24,129 8% $ 94,389 $ 92,501 2%revenue

Non-GAAP $ 8,624 $ 8,375 3% $ 31,346 $ 31,563 (1)%gross margin

% of non-GAAP 33 % 35 % 33 % 34 %net revenue

Non-GAAPoperating $ 5,330 $ 5,608 (5)% $ 20,548 $ 21,415 (4)%expenses

% of non-GAAP 20 % 23 % 22 % 23 %net revenue

Non-GAAPoperating $ 3,294 $ 2,767 19% $ 10,798 $ 10,148 6%income

% of non-GAAP 13 % 11 % 11 % 11 %net revenue

Non-GAAP net $ 2,288 $ 1,684 36% $ 6,763 $ 6,089 11%income

% of non-GAAP 9 % 7 % 7 % 7 %net revenue

Adjusted $ 3,809 $ 3,201 19% $ 12,747 $ 11,787 8%EBITDA

% of non-GAAP 15 % 13 % 14 % 13 %net revenue

Non-GAAPearnings per $ 2.70 $ 2.00 35% $ 8.00 $ 7.35 9%share -diluted

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

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

Three Months Ended Fiscal Year Ended

January 29, January 31, Change January 29, January 31, Change 2021 2020 2021 2020

Net revenue $ 26,112 $ 24,032 9% $ 94,224 $ 92,154 2%

Non-GAAP adjustments:

Impact of purchase 36 97 165 347accounting

Non-GAAP net revenue $ 26,148 $ 24,129 8% $ 94,389 $ 92,501 2%

Gross margin $ 8,147 $ 7,684 6% $ 29,417 $ 28,933 2%

Non-GAAP adjustments:

Amortization of 380 526 1,502 2,081intangibles

Impact of purchase 37 98 171 353accounting

Transaction-related - - - (5)expenses

Stock-based 53 38 194 129compensation expense

Other corporate 7 29 62 72expenses

Non-GAAP gross margin $ 8,624 $ 8,375 3% $ 31,346 $ 31,563 (1)%

Operating expenses $ 5,970 $ 6,967 (14)% $ 24,273 $ 26,311 (8)%

Non-GAAP adjustments:

Amortization of (466) (548) (1,891) (2,327)intangibles

Impact of purchase (11) (14) (42) (58)accounting

Transaction-related (46) (120) (257) (290)expenses

Stock-based (337) (338) (1,415) (1,133)compensation expense

Other corporate 220 (339) (120) (1,088)expenses

Non-GAAP operating $ 5,330 $ 5,608 (5)% $ 20,548 $ 21,415 (4)%expenses

Operating income $ 2,177 $ 717 204% $ 5,144 $ 2,622 96%

Non-GAAP adjustments:

Amortization of 846 1,074 3,393 4,408intangibles

Impact of purchase 48 112 213 411accounting

Transaction-related 46 120 257 285expenses

Stock-based 390 376 1,609 1,262compensation expense

Other corporate (213) 368 182 1,160expenses

Non-GAAP operating $ 3,294 $ 2,767 19% $ 10,798 $ 10,148 6%income

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

(in millions, except percentages; unaudited; continued)

Three Months Ended Fiscal Year Ended

January 29, January 31, Change January 29, January 31, Change 2021 2020 2021 2020

Net income $ 1,343 $ 416 223% $ 3,505 $ 5,529 (37)%

Non-GAAPadjustments:

Amortization of 846 1,074 3,393 4,408intangibles

Impact of purchase 48 112 213 411accounting

Transaction-related 46 120 (201) 285expenses

Stock-based 390 376 1,609 1,262compensation expense

Other corporate (213) 368 74 1,160expenses

Fair valueadjustments on 9 (34) (582) (194)equity investments

Aggregateadjustment for (181) (748) (1,248) (6,772)income taxes

Non-GAAP net income $ 2,288 $ 1,684 36% $ 6,763 $ 6,089 11%

Net income $ 1,343 $ 416 223% $ 3,505 $ 5,529 (37)%

Adjustments:

Interest and 545 626 1,474 2,626other, net

Income tax 289 (325) 165 (5,533)provision (benefit)

Depreciation and 1,373 1,535 5,390 6,143amortization

EBITDA $ 3,550 $ 2,252 58% $ 10,534 $ 8,765 20%

EBITDA $ 3,550 $ 2,252 58% $ 10,534 $ 8,765 20%

Adjustments:

Stock-based 390 376 1,609 1,262compensation expense

Impact of purchase 36 96 165 347accounting

Transaction-related 46 120 257 285expenses

Other corporate (213) 357 182 1,128expenses

Adjusted EBITDA $ 3,809 $ 3,201 19% $ 12,747 $ 11,787 8%

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

For the Three Months Ended January 29, 2021

(in millions, except per share amounts; unaudited)

Impact of Transaction- Stock-based Other Fair value Aggregate GAAP Amortization of purchase related compensation corporate adjustments adjustment Non-GAAP intangibles accounting expenses expense expenses on equity for income investments taxes

Net income $ 1,343 846 48 46 390 (213) 9 (181) $ 2,288

Less: Net incomeattributable to 116 62 3 6 51 (47) 4 (10) 185non-controllinginterests (a)

Net incomeattributable to 1,227 784 45 40 339 (166) 5 (171) 2,103Dell TechnologiesInc. - basic

Incrementaldilution fromVMware, Inc. (5) (5)attributable toDell TechnologiesInc. (b)

Net incomeattributable to $ 1,222 $ 2,098Dell TechnologiesInc. - diluted

Earnings per share $ 1.64 $ 2.80- basic

Earnings per share $ 1.57 $ 2.70- diluted

Weighted-averageshares outstanding 750 750- basic

Weighted-averageshares outstanding 776 776- diluted

_________________

Net income attributable to non-controlling interests is calculated by(a) multiplying the minority interest percentage of VMware, Inc. and SecureWorks Corp. by their non-GAAP net income adjustments for the period presented.

Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.'s dilutive securities on the(b) 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 Fiscal Year Ended January 29, 2021

(in millions, except per share amounts; unaudited)

Fair value Aggregate Amortization of Impact of Transaction- Stock-based Other adjustments adjustment GAAP intangibles purchase related compensation corporate on equity Non-GAAP accounting expenses expense expenses investments for income taxes

Net income $ 3,505 3,393 213 (201) 1,609 74 (582) (1,248) $ 6,763

Less: Net incomeattributable to 255 249 13 26 223 (38) (31) (87) 610non-controllinginterests (a)

Net incomeattributable to 3,250 $ 3,144 $ 200 $ (227) $ 1,386 $ 112 $ (551) $ (1,161) 6,153Dell TechnologiesInc. - basic

Incrementaldilution fromVMware, Inc. (13) (20)attributable toDell TechnologiesInc. (b)

Net incomeattributable to $ 3,237 $ 6,133Dell TechnologiesInc. - diluted

Earnings per share $ 4.37 $ 8.27- basic

Earnings per share $ 4.22 $ 8.00- diluted

Weighted-averageshares outstanding 744 744- basic

Weighted-averageshares outstanding 767 767- diluted

_________________

Net income attributable to non-controlling interests is calculated by(a) multiplying the minority interest percentage of VMware, Inc. and SecureWorks Corp. by their non-GAAP net income adjustments for the period presented.

Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.'s dilutive securities on the(b) 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 January 31, 2020

(in millions, except per share amounts; unaudited)

Impact of Transaction- Stock-based Other Fair value Aggregate GAAP Amortization of purchase related compensation corporate adjustments adjustment Non-GAAP intangibles accounting expenses expense expenses on equity for income investments taxes

Net income $ 416 1,074 112 120 376 368 (34) (748) $ 1,684

Less: Net incomeattributable to 8 76 6 32 65 45 - (61) 171non-controllinginterests (a)

Net incomeattributable to 408 998 106 88 311 323 (34) (687) 1,513Dell TechnologiesInc. - basic

Incrementaldilution fromVMware, Inc. (3) (8)attributable toDell TechnologiesInc. (b)

Net incomeattributable to $ 405 $ 1,505Dell TechnologiesInc. - diluted

Earnings per $ 0.56 $ 2.06share - basic

Earnings per $ 0.54 $ 2.00share - diluted

Weighted-averageshares 734 734outstanding -basic

Weighted-averageshares 754 754outstanding -diluted

_________________

Net income attributable to non-controlling interests is calculated by(a) multiplying the minority interest percentage of VMware, Inc., Pivotal Software, Inc., and SecureWorks Corp. by their non-GAAP net income adjustments for the period presented.

Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.'s dilutive securities on the(b) 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 Fiscal Year Ended January 31, 2020

(in millions, except per share amounts; unaudited)

Impact of Transaction- Stock-based Other Fair value Aggregate GAAP Amortization of purchase related compensation corporate adjustments adjustment Non-GAAP intangibles accounting expenses expense expenses on equity for income investments taxes

Net income $ 5,529 4,408 411 285 1,262 1,160 (194) (6,772) $ 6,089

Less: Net incomeattributable to 913 295 23 50 217 45 24 (1,032) 535non-controllinginterests (a)

Net incomeattributable to 4,616 4,113 388 235 1,045 1,115 (218) (5,740) 5,554Dell TechnologiesInc. - basic

Incrementaldilution fromVMware, Inc. (84) (35)attributable toDell TechnologiesInc. (b)

Net incomeattributable to $ 4,532 $ 5,519Dell TechnologiesInc. - diluted

Earnings per share $ 6.38 $ 7.67- basic

Earnings per share $ 6.03 $ 7.35- diluted

Weighted-averageshares outstanding 724 724- basic

Weighted-averageshares outstanding 751 751- diluted

_________________

Net income attributable to non-controlling interests is calculated by(a) multiplying the minority interest percentage of VMware, Inc., Pivotal Software, Inc., and SecureWorks Corp. by their non-GAAP net income adjustments for the period presented.

Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.'s dilutive securities on the(b) 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.

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SOURCE Dell Technologies