10-QPeriod: Q3 FY2021

Dell Technologies Inc. Quarterly Report for Q3 Ended Oct 30, 2020

Filed December 7, 2020For Securities:DELL

Summary

Dell Technologies Inc. reported its third-quarter fiscal year 2021 results, showcasing a 3% increase in total net revenue to $23.5 billion year-over-year. This growth was primarily driven by strong performance in the Client Solutions Group (CSG) and VMware, which more than offset a decline in the Infrastructure Solutions Group (ISG). CSG benefited from robust demand for remote work and learning solutions, particularly in notebooks, while VMware saw growth from its subscription and software-as-a-service offerings. Operating income saw a significant increase of 35% due to cost reduction initiatives and lower SG&A expenses, contributing to a healthy net income of $881 million. The company also highlighted its continued focus on debt reduction, with total debt decreasing by $2.2 billion during the first nine months of fiscal year 2021. Despite the positive top-line and profitability improvements, the ISG segment experienced a revenue decline, primarily attributed to enterprise customers shifting their IT spending towards remote work solutions amidst the COVID-19 pandemic. Dell is navigating these market dynamics by focusing on its integrated technology portfolio and flexible consumption models, aiming to provide essential solutions for its customers' digital transformation needs.

Financial Highlights

54 data points
Beta

Revenue

$21.59B

23.3% Gross Margin

Net Income

$832.00M

3.9% Net Margin

EPS (Diluted)

$1.08

Total Assets

$118.95B

Cash & Equivalents

$11.30B

Free Cash Flow

$5.30B

Financial Statements
Beta
Revenue$21.59B
Cost of Revenue$16.22B
Gross Profit$5.02B
R&D Expenses$1.36B
SG&A Expenses$4.77B
Operating Expenses$6.13B
Operating Income$1.13B
Interest Expense$566.00M
Net Income$832.00M
EPS (Basic)$1.11
EPS (Diluted)$1.08
Shares Outstanding (Basic)747.00M
Shares Outstanding (Diluted)771.00M

Key Highlights

  • 1Total net revenue increased by 3% to $23.5 billion in Q3 FY21, driven by CSG and VMware.
  • 2Operating income surged by 35% due to lower SG&A expenses and cost-saving measures.
  • 3The Client Solutions Group (CSG) saw an 8% revenue increase, fueled by strong demand for notebooks.
  • 4VMware revenue grew by 8%, primarily from subscription and SaaS offerings.
  • 5The Infrastructure Solutions Group (ISG) experienced a 4% revenue decline, impacted by shifts in IT spending.
  • 6Dell Technologies reduced its total debt by $2.2 billion during the first nine months of FY21.
  • 7The company continues to manage costs effectively, with operating expenses decreasing by 3% in Q3 FY21.

Frequently Asked Questions

In the third quarter of fiscal year 2021, Dell Technologies reported a 3% increase in total net revenue, reaching $23.5 billion. This growth was driven by strong performance in the Client Solutions Group (CSG) and VMware, which helped to offset a decline in the Infrastructure Solutions Group (ISG).

The ISG segment experienced a 4% decrease in net revenue during the third quarter of fiscal year 2021. This decline was attributed to a weaker demand environment as enterprise customers redirected investments towards remote work and business continuity solutions due to the COVID-19 pandemic. Dell expects continued softness in data center spending.

Dell Technologies has made significant progress in reducing its debt. During the first nine months of fiscal year 2021, the company reduced its total debt by $2.2 billion, bringing the total debt principal amount to $50.4 billion as of October 30, 2020. The company remains focused on paying down core debt.

Operating income saw a substantial increase of 35% in the third quarter of fiscal year 2021. This improvement was primarily driven by effective cost reduction initiatives, leading to lower selling, general, and administrative (SG&A) expenses. Additionally, increases in operating income from CSG and VMware, along with a reduction in amortization of intangible assets, contributed to the growth.