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Dell Technologies Tops Revenue Forecasts

March 1, 2019

Dell Technologies reported its fiscal 2019 fourth quarter and full year results. For the fourth quarter, revenue was $23.8 billion, up 9 percent, and non-GAAP revenue was $24.0 billion, up 8 percent over the same period in the prior year. During the quarter, the company generated operating income of $331 million1, versus an operating loss of $69 million in the fourth quarter of the prior year. Fourth quarter non-GAAP operating income was $2.7 billion. Cash flow from operations was approximately $2.4 billion.

Wall Street was only expecting revenue of $23.83 billion. Dell did not report earnings per share for fiscal 2019. Additionally, VMware topped fourth-quarter revenue and profit estimates.

Dell guided full-year 2020 revenue between $93 billion and $96 billion, with analysts pegging at $94.11 billion. But on annual adjusted earnings  per share, Dell looks for a range of $6.05 and $6.70. Which is less than Street EPS estimates of $6.81.

 

For the full year, revenue was $90.6 billion, up 15 percent, and non-GAAP revenue was $91.3 billion, up 14 percent over the prior year. The company reduced its operating loss by 92 percent to $191 million, and generated a non-GAAP operating income of $8.9 billion, up 14 percent over the prior year. Cash flow from operations was $7.0 billion. During the year, net loss decreased 25 percent to $2.1 billion and adjusted EBITDA increased 13 percent to $10.3 billion.

"I am pleased with our strong fourth quarter and fiscal 2019 velocity and financial performance, including double-digit revenue growth for the year across all three business units and profitable share gains across our portfolio," said Tom Sweet, chief financial officer, Dell Technologies. "In fiscal 2020 we’ll continue to run the business in a

disciplined way. We will remain focused on generating long-term relative growth, share gain and cash flow while driving long-term value for shareholders and serving our customers’ full range of needs."

The company ended the year with a cash and investments balance of $10.7 billion. Since closing the EMC transaction, Dell Technologies has paid down approximately $14.6 billion in gross debt, excluding Dell Financial Services related and subsidiary debt.

"Fiscal 2019 was a year of great progress and momentum. We advanced our leading portfolio through a focus on innovation, added new customers through both direct and channel growth, and delivered solutions from the edge to the core to the cloud," said Jeff Clarke, vice chairman, Products & Operations, Dell Technologies. "As data growth continues to explode alongside technology trends like 5G, AI and machine learning, we’ll continue to drive a wave of innovations to unlock the power of our customers’ data capital."

Operating segments summary

Infrastructure Solutions Group revenue for the fourth quarter was $9.9 billion, a 10 percent increase year over year. This was driven by $5.3 billion in servers and networking revenue, a 14 percent increase, and $4.6 billion in storage revenue, a 7 percent increase year over year. Revenue for the full year was $36.7 billion, up 19 percent with servers and networking revenue of $20.0 billion, up 28 percent, and storage revenue of $16.7 billion, up 9 percent year over year. Operating income was $1.3 billion for the fourth quarter, up 21 percent, and $4.2 billion for the full year, up 35 percent year over year.

Key highlights:

  • • Double-digit ISG revenue growth across all four quarters
  • • Storage revenue growth in all four quarters
  • • Servers and networking delivered 28 percent revenue growth for the fiscal year, achieving nine consecutive quarters of revenue growth
  • • Industry leading x86 server share2 increased another 1.4 percent through the third quarter of calendar year 2018 (calendar fourth quarter results will be published on March 6)
  • • Gained storage share3 for three straight quarters in calendar year 2018 (calendar fourth quarter results will be published on March 7)
  • • VxRail grew triple digits on a demand basis again in the fourth quarter

Client Solutions Group revenue for the fiscal fourth quarter was $10.9 billion, up 4 percent versus the fourth quarter of last year. Commercial revenue grew 9 percent to $7.8 billion, and Consumer revenue was down 6 percent to $3.1 billion. Client Solutions Group revenue for the full year was $43.2 billion, up 10 percent. Operating income was $555 million for the fourth quarter, or 5.1 percent of Client Solutions Group revenue, and $2.0 billion for the full year.

Key highlights:

  • • Year-over-year worldwide PC share4 growth for 24th consecutive quarter
  • • Double-digit revenue growth in commercial notebooks and workstations, as well as high-end consumer notebooks and displays
  • • Reached 20 percent worldwide share position in displays, gaining unit share5 year-over-year for the 23rd consecutive quarter
  • • Record-high 144 product awards and honors at the Consumer Electronics Show, more than any other company in our industry

VMware revenue was $2.6 billion for the quarter, up 17 percent, and $9.1 billion for the full year, up 14 percent. Operating income for the quarter was $872 million, or 33 percent of VMware revenue, and $3.0 billion for the full year, or 33 percent of VMware revenue.

Key fourth quarter collaboration highlights:

  • • VMware and Pivotal announced availability of the new VMware PKS Solution Competency
  • • Dell EMC PowerMax and Dell EMC Unity qualified as external storage arrays with VMware Cloud Foundation
  • • Virtustream Enterprise Cloud announced as a VMware Cloud Verified service

Fourth quarter revenue from other businesses, including Pivotal, Secureworks, RSA Security, Virtustream and Boomi, was $593 million, up 5 percent year over year. Revenue from other businesses for the full year was $2.3 billion, up 6 percent.

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