Dell Technologies Delivers First Quarter Fiscal 2024 Financial Results
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Dell Technologies Delivers First Quarter Fiscal 2024 Financial Results

ROUND ROCK, Texas, June 1, 2023 — (PRNewswire) —  

Full story
Dell Technologies (NYSE: DELL) announces financial results for its fiscal 2024 first quarter. Revenue was $20.9 billion, down 20%. The company generated operating income of $1.1 billion and non-GAAP operating income of $1.6 billion, down 31% and 25%, respectively. Diluted earnings per share was $0.79, and non-GAAP diluted earnings per share was $1.31, down 42% and 29%, respectively. Cash flow from operations was $1.8 billion.

"We executed well against a challenging economic backdrop," said Chuck Whitten, co-chief operating officer, Dell Technologies. "We maintained pricing discipline, reduced operating expenses, and our supply chain continued to perform well after normalizing ahead of competitors. We announced a record number of innovations, making good on our promise to extend Dell APEX as-a-Service capabilities across our full portfolio and simplifying multicloud and edge computing for our customers."

Dell ended the quarter with remaining performance obligations of $39 billion, recurring revenue of $5.6 billion, up 6%, and deferred revenue of $29.7 billion, up 8%, due to increases in service and software maintenance agreements. Cash and investments were $9.2 billion, and the company returned $527 million to shareholders in the first quarter through share repurchases and dividends.

"We continue to create value for stakeholders, with strong first quarter cash flow from operations of $1.8 billion," said Tom Sweet, chief financial officer, Dell Technologies. "We've returned $5 billion to shareholders over the last six quarters, well ahead of our free cash flow return target, and we continue to invest in innovation that will fuel our growth."

First Quarter Fiscal 2024 Financial Results


Three Months Ended




May 5, 2023


April 29, 2022


Change


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

Total net revenue

$            20,922


$            26,116


(20) %

Operating income

$              1,069


$              1,550


(31) %

Net income

$                 578


$              1,069


(46) %

Earnings per share - diluted

$                0.79


$                1.37


(42) %







Non-GAAP operating income

$              1,598


$              2,135


(25) %

Non-GAAP net income

$                 963


$              1,434


(33) %

Non-GAAP earnings per share - diluted

$                1.31


$                1.84


(29) %


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.


Infrastructure Solutions Group delivered first quarter revenue of $7.6 billion, down 18%. Storage revenue was $3.8 billion, with demand growth in the company's software-defined storage and leading midrange storage array. Servers and networking revenue was $3.8 billion, with demand growth in AI optimized high value workload servers. Operating income was $740 million, or approximately 10% of Infrastructure Solutions Group revenue.  

Client Solutions Group delivered first quarter revenue of $12 billion, down 23%. Commercial revenue was $9.9 billion, and Consumer revenue was $2.1 billion. Operating income was $892 million, or approximately 7% of Client Solutions Group revenue. 

Key areas of innovation:

Operating Segments Results


Three Months Ended




May 5, 2023


April 29, 2022


Change

Infrastructure Solutions Group (ISG):    






Net revenue:






Servers and networking

$             3,837


$             5,048


(24) %

Storage

3,756


4,237


(11) %

Total ISG net revenue

$             7,593


$             9,285


(18) %







Operating Income:






ISG operating income

$                740


$             1,082


(32) %

% of ISG net revenue

9.7 %


11.7 %









Client Solutions Group (CSG):






Net revenue:






Commercial

$             9,862


$           11,971


(18) %

Consumer

2,121


3,616


(41) %

Total CSG net revenue

$           11,983


$           15,587


(23) %







Operating Income:






CSG operating income

$                892


$             1,115


(20) %

% of CSG net revenue

7.4 %


7.2 %




Conference call information
As previously announced, the company will hold a conference call to discuss its performance and financial guidance on June 1, 2023, at 3:30 p.m. CDT. Prior to the start of the conference call, prepared remarks and a presentation containing additional financial and operating information prior to financial guidance may be downloaded from investors.delltechnologies.com. The conference call will be broadcast live over the internet and can be accessed at https://investors.delltechnologies.com/news-events/upcoming-events

For those unable to listen to the live broadcast, the final remarks and presentation with financial guidance will be available following the broadcast, and an archived version will be available at the same location for one year.

Environmental, Social and Governance (ESG)
Our Environmental, Social and Governance (ESG) efforts focus on driving positive impact for people and our planet while delivering long-term value for our stakeholders. The FY23 ESG report will be published in June, and the company will hold its annual investor conference call to discuss its ESG strategy on July 27. ESG resources can be accessed at https://www.dell.com/en-us/dt/corporate/social-impact/reporting/esg-governance.htm 

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 © 2023 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. 

Non-GAAP Financial Measures:
This press release presents information about 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, and non-GAAP earnings per share attributable to Dell Technologies Inc. – diluted, 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: adverse global economic conditions and instability in financial markets; 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; Dell Technologies' ability to achieve  the intended benefits of its continuing strategic relationship with VMware, Inc.; Dell Technologies' execution of its strategy; Dell Technologies' ability to manage solutions and products and services transitions in an effective manner; Dell Technologies' ability to deliver high-quality products, software, and services; cyber attacks or other data security incidents; Dell Technologies' ability to successfully execute on strategic initiatives including acquisitions, divestitures or cost savings measures; Dell Technologies' foreign operations and ability to generate substantial non-U.S. net revenue; Dell Technologies' product, services, 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; material impairment of the value of goodwill or intangible assets; weak economic conditions and the effect of additional regulation on Dell Technologies' financial services activities; counterparty default risks; the loss by Dell Technologies of any contracts for ISG services and solutions and its ability to perform such contracts at their estimated costs; loss by Dell Technologies of government contracts; 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; disruptions in Dell Technologies' infrastructure; 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; expectations relating to environmental, social and governance (ESG) considerations; compliance requirements of changing environmental and safety laws, human rights laws, or other laws; the effect of armed hostilities, terrorism, natural disasters, or public health issues; the effect of global climate change and legal, regulatory, or market measures to address climate change; Dell Technologies' dependence on the services of Michael Dell and key employees; Dell Technologies' level of indebtedness; and business and financial factors and legal restrictions affecting continuation of Dell Technologies' quarterly cash dividend policy and dividend rate.

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 3, 2023, 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.
Consolidated Statements of Income and Related Financial Highlights
(in millions, except percentages; unaudited)



Three Months Ended




May 5, 2023


April 29, 2022


Change

Net revenue:






Products

$       15,036


$         20,464


(27) %

Services

5,886


5,652


4 %

Total net revenue

20,922


26,116


(20) %

Cost of net revenue:






Products

12,375


17,009


(27) %

Services

3,529


3,323


6 %

Total cost of net revenue

15,904


20,332


(22) %

Gross margin

5,018


5,784


(13) %

Operating expenses:






Selling, general, and administrative

3,261


3,553


(8) %

Research and development

688


681


1 %

Total operating expenses

3,949


4,234


(7) %

Operating income

1,069


1,550


(31) %

Interest and other, net

(364)


(337)


(8) %

Income before income taxes

705


1,213


(42) %

Income tax expense

127


144


(12) %

Net income

578


1,069


(46) %

Less: Net loss attributable to non-controlling interests

(5)


(3)


(67) %

Net income attributable to Dell Technologies Inc.

$            583


$            1,072


(46) %







Percentage of Total Net Revenue:






Gross margin

24.0 %


22.1 %



Selling, general, and administrative

15.6 %


13.6 %



Research and development

3.3 %


2.6 %



Operating expenses

18.9 %


16.2 %



Operating income

5.1 %


5.9 %



Income before income taxes

3.4 %


4.6 %



Net income

2.8 %


4.1 %



Income tax rate

18.0 %


11.9 %




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

 

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



May 5, 2023


February 3, 2023

ASSETS

Current assets:




Cash and cash equivalents

$                           7,631


$                           8,607

Accounts receivable, net

9,399


12,482

Due from related party, net

384


378

Short-term financing receivables, net

5,013


5,281

Inventories

4,016


4,776

Other current assets

10,949


10,827

Total current assets

37,392


42,351

Property, plant, and equipment, net

6,261


6,209

Long-term investments

1,399


1,518

Long-term financing receivables, net

5,524


5,638

Goodwill

19,661


19,676

Intangible assets, net

6,269


6,468

Due from related party, net

442


440

Other non-current assets

7,146


7,311

Total assets

$                         84,094


$                         89,611





LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:




Short-term debt

$                           5,470


$                           6,573

Accounts payable

17,796


18,598

Due to related party

594


2,067

Accrued and other

7,438


8,874

Short-term deferred revenue

15,527


15,542

Total current liabilities

46,825


51,654

Long-term debt

22,962


23,015

Long-term deferred revenue

14,168


14,744

Other non-current liabilities

3,063


3,223

Total liabilities

87,018


92,636

Stockholders' equity (deficit):




Total Dell Technologies Inc. stockholders' equity (deficit)

(3,023)


(3,122)

Non-controlling interests

99


97

Total stockholders' equity (deficit)

(2,924)


(3,025)

Total liabilities and stockholders' equity

$                         84,094


$                         89,611

 

DELL TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(in millions; unaudited)



Three Months Ended


May 5, 2023


April 29, 2022

Cash flows from operating activities:




Net income

$                578


$              1,069

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

1,199


(1,338)

Change in cash from operating activities

1,777


(269)

Cash flows from investing activities:




Purchases of investments

(15)


(52)

Maturities and sales of equity and other investments

19


18

Capital expenditures and capitalized software development costs

(701)


(690)

Other

13


4

Change in cash from investing activities

(684)


(720)

Cash flows from financing activities:




Proceeds from the issuance of common stock

2


4

Repurchases of common stock

(240)


(1,436)

Repurchases of common stock - withholdings on employee equity awards

(306)


(350)

Payments of dividends and dividend equivalents

(276)


(248)

Proceeds from debt

2,521


3,034

Repayments of debt

(3,698)


(2,703)

Debt-related costs and other, net

(5)


(7)

Change in cash from financing activities

(2,002)


(1,706)

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

(58)


(111)

Change in cash, cash equivalents, and restricted cash

(967)


(2,806)

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

8,894


10,082

Cash, cash equivalents, and restricted cash

$             7,927


$              7,276

 

DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued on next page)



Three Months Ended




May 5, 2023


April 29, 2022


Change

Infrastructure Solutions Group (ISG):

Net revenue:






Servers and networking

$             3,837


$             5,048


(24) %

Storage

3,756


4,237


(11) %

Total ISG net revenue

$             7,593


$             9,285


(18) %







Operating Income:






ISG operating income

$                740


$             1,082


(32) %

% of ISG net revenue

9.7 %


11.7 %



% of total reportable segment operating income

45 %


49 %









Client Solutions Group (CSG):

Net revenue:






Commercial

$             9,862


$           11,971


(18) %

Consumer

2,121


3,616


(41) %

Total CSG net revenue

$           11,983


$           15,587


(23) %







Operating Income:






CSG operating income

$                892


$             1,115


(20) %

% of CSG net revenue

7.4 %


7.2 %



% of total reportable segment operating income

55 %


51 %




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 5, 2023


April 29, 2022

Reconciliation to consolidated net revenue:



Reportable segment net revenue

$             19,576


$             24,872

Other businesses (a)

1,343


1,239

Unallocated transactions (b)

3


5

Total consolidated net revenue

$             20,922


$             26,116





Reconciliation to consolidated operating income:




Reportable segment operating income

$                1,632


$                2,197

Other businesses (a)

(36)


(64)

Unallocated transactions (b)

2


2

Impact of purchase accounting (c)

(4)


(9)

Amortization of intangibles

(199)


(243)

Transaction-related (income) expenses (d)

(3)


(5)

Stock-based compensation expense (e)

(225)


(232)

Other corporate expenses (f)

(98)


(96)

Total consolidated operating income

$                1,069


$                1,550

_________________

(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)

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

(d)

Transaction-related (income) expenses includes acquisition, integration, and divestiture related costs. From time to time, this category also may include transaction-related income related to divestitures of businesses or asset sales.

(e)

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

(f)

Other corporate expenses includes impairment charges, incentive charges related to equity investments, severance, payroll taxes associated with stock-based compensation, facilities action, and other costs.



SUPPLEMENTAL SELECTED NON-GAAP FINANCIAL MEASURES

These tables present information about the Company's non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to Dell Technologies Inc. - basic and diluted, non-GAAP earnings per share attributable to Dell Technologies Inc. - basic, and non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, 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 Financial Measures
(in millions, except per share amounts and percentages; unaudited)



Three Months Ended




May 5, 2023


April 29, 2022


Change

Net revenue (a)

$           20,922


$           26,116


(20) %

Non-GAAP gross margin

$             5,164


$             5,941


(13) %

% of non-GAAP net revenue

24.7 %


22.7 %



Non-GAAP operating expenses

$             3,566


$             3,806


(6) %

% of non-GAAP net revenue

17.1 %


14.5 %



Non-GAAP operating income

$             1,598


$             2,135


(25) %

% of non-GAAP net revenue

7.6 %


8.2 %



Non-GAAP net income

$                963


$             1,434


(33) %

% of non-GAAP net revenue

4.5 %


5.5 %



Non-GAAP earnings per share - diluted

$               1.31


$               1.84


(29) %

____________________

(a)

Effective in the first quarter of Fiscal 2023, non-GAAP net revenue no longer differs from net revenue, the most
comparable GAAP financial measure.


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 5, 2023


April 29, 2022


Change

Gross margin

$              5,018


$              5,784


(13) %

Non-GAAP adjustments:






Amortization of intangibles

79


104



Impact of purchase accounting


2



Stock-based compensation expense

38


38



Other corporate expenses

29


13



Non-GAAP gross margin

$              5,164


$              5,941


(13) %







Operating expenses

$              3,949


$              4,234


(7) %

Non-GAAP adjustments:






Amortization of intangibles

(120)


(139)



Impact of purchase accounting

(4)


(7)



Transaction-related (income) expenses

(3)


(5)



Stock-based compensation expense

(187)


(194)



Other corporate expenses

(69)


(83)



Non-GAAP operating expenses

$              3,566


$              3,806


(6) %







Operating income

$              1,069


$              1,550


(31) %

Non-GAAP adjustments:






Amortization of intangibles

199


243



Impact of purchase accounting

4


9



Transaction-related expenses

3


5



Stock-based compensation expense

225


232



Other corporate expenses

98


96



Non-GAAP operating income

$              1,598


$              2,135


(25) %


Net income 

$                 578


$              1,069


(46) %

Non-GAAP adjustments:






Amortization of intangibles

199


243



Impact of purchase accounting

4


9



Transaction-related (income) expenses

(1)


(2)



Stock-based compensation expense

225


232



Other corporate expenses

99


96



Fair value adjustments on equity investments

15


(14)



Aggregate adjustment for income taxes

(156)


(199)



Non-GAAP net income

$                 963


$              1,434


(33) %

 

DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages and per share amounts; unaudited; continued)



For the Three Months Ended May 5, 2023


GAAP


Amortization
of intangibles


Impact of
purchase
accounting


Transaction-
related
expenses


Stock-based
compensation
expense


Other
corporate
expenses


Fair value
adjustments
on equity
investments


Aggregate
adjustment
for income
taxes


Aggregate
adjustment
for non-
controlling
interests


Non-
GAAP

Net income attributable to Dell Technologies
Inc. - basic

$      583


199


4


(1)


225


99


15


(156)


(2)


$       966





















Earnings per share - basic

$     0.81


















$      1.33

Earnings per share - diluted

$     0.79


















$      1.31





















Weighted-average shares outstanding - basic

724


















724

Weighted-average shares outstanding - diluted

737


















737

 


For the Three Months Ended April 29, 2022


GAAP


Amortization
of intangibles


Impact of
purchase
accounting


Transaction-
related
expenses


Stock-based
compensation
expense


Other
corporate
expenses


Fair value
adjustments
on equity
investments


Aggregate
adjustment
for income
taxes


Aggregate
adjustment
for non-
controlling
interests


Non-
GAAP

Net income attributable to Dell Technologies
Inc. - basic

$  1,072


243


9


(2)


232


96


(14)


(199)


(2)


$   1,435





















Earnings per share - basic

$     1.42


















$      1.90

Earnings per share - diluted

$     1.37


















$      1.84





















Weighted-average shares outstanding - basic

754


















754

Weighted-average shares outstanding - diluted

780


















780

 

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SOURCE Dell Technologies

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