Three Months Ended

May 3, 2024

May 5, 2023

Change

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

Net revenue

$          22,244

$           20,922

6 %

Operating income

$               920

$             1,069

(14) %

Net income

$               955

$                578

65 %

Change in cash from operating activities

$            1,043

$             1,777

(41) %

Earnings per share – diluted

$              1.32

$               0.79

67 %

Non-GAAP operating income

$            1,474

$             1,598

(8) %

Non-GAAP net income

$               923

$                963

(4) %

Adjusted free cash flow

$               623

$                687

(9) %

Non-GAAP earnings per share – diluted

$              1.27

$               1.31

(3) %

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.

Three Months Ended

May 3, 2024

May 5, 2023

Change

(in millions, except percentages;
unaudited)

Infrastructure Solutions Group (ISG):

Net revenue:

Servers and networking

$         5,466

$       3,837

42 %

Storage

3,761

3,756

— %

Total ISG net revenue

$         9,227

$       7,593

22 %

Operating Income:

ISG operating income

$            736

$          740

(1) %

% of ISG net revenue

8.0 %

9.7 %

% of total reportable segment operating income

50 %

45 %

Client Solutions Group (CSG):

Net revenue:

Commercial

$       10,154

$       9,862

3 %

Consumer

1,813

2,121

(15) %

Total CSG net revenue

$       11,967

$     11,983

— %

Operating Income:

CSG operating income

$            732

$          892

(18) %

% of CSG net revenue

6.1 %

7.4 %

% of total reportable segment operating income

50 %

55 %

DELL TECHNOLOGIES INC.

Condensed Consolidated Statements of Income and Related Financial Highlights

(in millions, except percentages; unaudited)

Three Months Ended

May 3, 2024

May 5, 2023

Change

Net revenue:

Products

$    16,127

$    15,036

7 %

Services

6,117

5,886

4 %

Total net revenue

22,244

20,922

6 %

Cost of net revenue:

Products

13,766

12,375

11 %

Services

3,672

3,529

4 %

Total cost of net revenue

17,438

15,904

10 %

Gross margin

4,806

5,018

(4) %

Operating expenses:

Selling, general, and administrative

3,123

3,261

(4) %

Research and development

763

688

11 %

Total operating expenses

3,886

3,949

(2) %

Operating income

920

1,069

(14) %

Interest and other, net

(373)

(364)

(2) %

Income before income taxes

547

705

(22) %

Income tax expense (benefit)

(408)

127

(421) %

Net income

955

578

65 %

Net income attributable to Dell Technologies Inc.

$          960

$          583

65 %

Percentage of Total Net Revenue:

Gross margin

21.6 %

24.0 %

Selling, general, and administrative

14.1 %

15.6 %

Research and development

3.4 %

3.3 %

Operating expenses

17.5 %

18.9 %

Operating income

4.1 %

5.1 %

Income before income taxes

2.5 %

3.4 %

Net income

4.3 %

2.8 %

Income tax rate

(74.6) %

18.0 %

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

DELL TECHNOLOGIES INC.

Condensed Consolidated Statements of Financial Position

(in millions; unaudited)

May 3, 2024

February 2, 2024

ASSETS

Current assets:

Cash and cash equivalents

$                           5,830

$                           7,366

Accounts receivable, net of allowance of $66 and $71

8,563

9,343

Short-term financing receivables, net of allowance of $86 and $79

4,660

4,643

Inventories

4,782

3,622

Other current assets

10,792

10,973

Total current assets

34,627

35,947

Property, plant, and equipment, net

6,237

6,432

Long-term investments

1,293

1,316

Long-term financing receivables, net of allowance of $109 and $91

5,941

5,877

Goodwill

19,640

19,700

Intangible assets, net

5,538

5,701

Other non-current assets

6,914

7,116

Total assets

$                         80,190

$                         82,089

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Short-term debt

$                           6,098

$                           6,982

Accounts payable

20,586

19,389

Accrued and other

6,016

6,805

Short-term deferred revenue

15,034

15,318

Total current liabilities

47,734

48,494

Long-term debt

19,382

19,012

Long-term deferred revenue

13,116

13,827

Other non-current liabilities

2,681

3,065

Total liabilities

82,913

84,398

Stockholders’ equity (deficit):

Total Dell Technologies Inc. stockholders’ equity (deficit)

(2,822)

(2,404)

Non-controlling interests

99

95

Total stockholders’ equity (deficit)

(2,723)

(2,309)

Total liabilities and stockholders’ equity

$                         80,190

$                         82,089

DELL TECHNOLOGIES INC.

Condensed Consolidated Statements of Cash Flows

(in millions; unaudited)

Three Months Ended

May 3, 2024

May 5, 2023

Cash flows from operating activities:

Net income

$                  955

$                  578

Adjustments to reconcile net income to net cash provided by operating activities:

88

1,199

Change in cash from operating activities

1,043

1,777

Cash flows from investing activities:

Purchases of investments

(39)

(15)

Maturities and sales of investments

119

19

Capital expenditures and capitalized software development costs

(596)

(701)

Other

60

13

Change in cash from investing activities

(456)

(684)

Cash flows from financing activities:

Proceeds from the issuance of common stock

—

2

Repurchases of common stock

(700)

(240)

Repurchases of common stock for employee tax withholdings

(521)

(306)

Payments of dividends and dividend equivalents

(336)

(276)

Proceeds from debt

2,992

2,521

Repayments of debt

(3,477)

(3,698)

Debt-related costs and other, net

(35)

(5)

Change in cash from financing activities

(2,077)

(2,002)

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

(55)

(58)

Change in cash, cash equivalents, and restricted cash

(1,545)

(967)

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

7,507

8,894

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

$               5,962

$               7,927

DELL TECHNOLOGIES INC.

Segment Information

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

Three Months Ended

May 3, 2024

May 5, 2023

Change

Infrastructure Solutions Group (ISG):

Net revenue:

Servers and networking

$      5,466

$      3,837

42 %

Storage

3,761

3,756

— %

Total ISG net revenue

$      9,227

$      7,593

22 %

Operating Income:

ISG operating income

$         736

$         740

(1) %

% of ISG net revenue

8.0 %

9.7 %

% of total reportable segment operating income

50 %

45 %

Client Solutions Group (CSG):

Net revenue:

Commercial

$   10,154

$      9,862

3 %

Consumer

1,813

2,121

(15) %

Total CSG net revenue

$   11,967

$    11,983

— %

Operating Income:

CSG operating income

$         732

$         892

(18) %

% of CSG net revenue

6.1 %

7.4 %

% of total reportable segment operating income

50 %

55 %

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

May 3, 2024

May 5, 2023

Reconciliation to consolidated net revenue:

Reportable segment net revenue

$              21,194

$              19,576

Other businesses (a)

1,049

1,343

Unallocated transactions (b)

1

3

Total consolidated net revenue

$              22,244

$              20,922

Reconciliation to consolidated operating income:

Reportable segment operating income

$                 1,468

$                 1,632

Other businesses (a)

6

(36)

Unallocated transactions (b)

—

2

Amortization of intangibles (c)

(168)

(203)

Stock-based compensation expense (d)

(210)

(225)

Other corporate expenses (e)

(176)

(101)

Total consolidated operating income

$                    920

$                 1,069

_________________

(a)   

Other businesses consists of: 1) Dell’s resale of standalone VMware, Inc. products and services, “VMware Resale,” 2) Secureworks, and 3) Virtustream, and do not meet the requirements for a reportable segment, either individually or collectively.

(b) 

Unallocated transactions includes other corporate items that are not allocated to Dell Technologies’ reportable segments.

(c)

Amortization of intangibles includes non-cash purchase accounting adjustments that are primarily related to the EMC merger transaction.

(d) 

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

(e)   

Other corporate expenses consist primarily of severance expenses, payroll taxes associated with stock-based compensation, facility action costs, transaction-related expenses, impairment charges, and incentive charges related to equity investments. 

DELL TECHNOLOGIES INC.

Selected Financial Measures

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

Three Months Ended

May 3, 2024

May 5, 2023

% Change

Net revenue

$   22,244

$    20,922

6 %

Non-GAAP gross margin

$     4,947

$      5,164

(4) %

% of net revenue

22.2 %

24.7 %

Non-GAAP operating expenses

$      3,473

$      3,566

(3) %

% of net revenue

15.6 %

17.1 %

Non-GAAP operating income

$      1,474

$      1,598

(8) %

% of net revenue

6.6 %

7.6 %

Non-GAAP net income

$         923

$         963

(4) %

% of net revenue

4.1 %

4.6 %

Non-GAAP earnings per share – diluted

$        1.27

$        1.31

(3) %

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

May 3, 2024

May 5, 2023

% Change

Gross margin

$         4,806

$         5,018

(4) %

Non-GAAP adjustments:

Amortization of intangibles

60

79

Stock-based compensation expense

38

38

Other corporate expenses

43

29

Non-GAAP gross margin

$         4,947

$         5,164

(4) %

Operating expenses

$         3,886

$         3,949

(2) %

Non-GAAP adjustments:

Amortization of intangibles

(108)

(124)

Stock-based compensation expense

(172)

(187)

Other corporate expenses

(133)

(72)

Non-GAAP operating expenses

$         3,473

$         3,566

(3) %

Operating income

$            920

$         1,069

(14) %

Non-GAAP adjustments:

Amortization of intangibles

168

203

Stock-based compensation expense

210

225

Other corporate expenses

176

101

Non-GAAP operating income

$         1,474

$         1,598

(8) %

Net income

$            955

$            578

65 %

Non-GAAP adjustments:

Amortization of intangibles

168

203

Stock-based compensation expense

210

225

Other corporate expenses

170

98

Fair value adjustments on equity investments

30

15

Aggregate adjustment for income taxes (a)

(610)

(156)

Non-GAAP net income

$            923

$            963

(4) %

____________________

(a) 

Beginning in Fiscal 2025, our non-GAAP income tax is calculated using a fixed estimated annual tax rate.

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

(unaudited; continued)

Three Months Ended

May 3, 2024

May 5, 2023

% Change

Earnings per share attributable to Dell Technologies, Inc. — diluted

$           1.32

$           0.79

67 %

Non-GAAP adjustments:

Amortization of intangibles

0.23

0.28

Stock-based compensation expense

0.29

0.30

Other corporate expenses

0.24

0.13

Fair value adjustments on equity investments

0.04

0.02

Aggregate adjustment for income taxes (a)

(0.84)

(0.21)

Total non-GAAP adjustments attributable to non-controlling interests

(0.01)

—

Non-GAAP earnings per share attributable to Dell Technologies, Inc. — diluted

$           1.27

$           1.31

(3) %

____________________

(a)

Beginning in Fiscal 2025, our non-GAAP income tax is calculated using a fixed estimated annual tax rate.

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

(in millions, except percentages; unaudited; continued)

Three Months Ended

May 3, 2024

May 5, 2023

% Change

Cash flow from operations

$        1,043

$        1,777

(41) %

Non-GAAP adjustments:

Capital expenditures and capitalized software development costs, net (a)

(586)

(698)

Free cash flow

$            457

$        1,079

(58) %

Free cash flow

$            457

$        1,079

(58) %

Non-GAAP adjustments:

Financing receivables (b)

165

(367)

Equipment under operating leases (c)

1

(25)

Adjusted free cash flow

$            623

$            687

(9) %

____________________

(a) 

Capital expenditures and capitalized software development costs is net of proceeds from sales of facilities, land, and other assets.

(b)

Financing receivables represent the operating cash flow impact from the change in DFS financing receivables.

(c)

Equipment under operating leases represents the net change of capital expenditures and depreciation expense for DFS leases and contractually embedded leases identified within flexible consumption arrangements.