Dell Technologies Inc. · NYSE:DELL
Dell Technologies — Presentation (April 2018)
30 slides from Dell Technologies's investor presentation, Apr 26, 2018
Slide 1: New Accounting Standard Revenue Recognition
New Accounting Standard Revenue Recognition April 26, 2018
Slide 2: Legal note
2 Legal note Non-GAAP Financial Measures This presentation includes information about non-GAAP revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, EBITDA and adjusted EBITDA (collectively the “non-GAAP financial measures”), which are not measurements of financial
Slide 3: Agenda
3 Agenda ASC 606 Overview and Impact to Dell Technologies Recast Consolidated Financial Results Recast Business Unit Financial Results Appendices
Slide 4: Considerations in Financial Reporting
4 Considerations in Financial Reporting • Dell Technologies has adopted ASC 606, Revenue From Contracts With Customers, in the first quarter of FY’19. • GAAP results will include substantial non-cash purchase accounting for the next several years related to the EMC acquired businesses. • An assessme
Slide 5: Overview of New Standard and Impact to FY'18
5 Overview of New Standard and Impact to FY’18 1 As Reported is defined as ASC 605, Revenue, and related guidance used for financial reporting prior to adoption of ASC 606, Revenue from Contracts with Customers. Net revenue change (FY’18) +$0.4 billion <1% vs. As Reported1 Gross margin change (FY’18
Slide 6: As Reported to As Recast FY'18 Revenue and Deferred Revenue
6 As Reported Upfront Revenue Recognition Recast to Prior Years As Recast FY’18: As Reported to Recast1 Revenue FY’18 ($ in billions) Deferred Revenue February 2, 2018 ($ in billions) 79.078.7 Timing of: Software License Offerings Third-party Software Extended Warranty Revenue Rebates 1Amounts prese
Slide 7: Consolidated Results
7 Consolidated Results1,2 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 See Appendix C for reconciliation of Non-GAAP to GAAP measures. 3 Non-GAAP FY’17 revenue includes a one-time $28 million ASC 606 impact to purch
Slide 8: Recast by Business Unit
8 Recast by Business Unit1 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 The VMware business unit results reflect the operations of VMware within Dell Technologies and are different from VMware’s results on a standal
Slide 9: Dell Technologies
Exhibit 99.1 D@LL Technologies @) D@LEMC Pivotal. RSA. Secureworks virtustfeom Vmware” DeLL Technologies
Slide 10: Appendix A New Accounting Standard ASC Examples
10 Appendix A New Accounting Standard ASC 606 Examples
Slide 11: Example: Product and Software Solution Offering
11 Example: Product and Software Solution Offering Income Statement change • Revenue value allocation between products and services • More upfront revenue and less deferred • Less value assigned to software maintenance Balance Sheet change • Deferred revenue impact commensurate with earlier revenue
Slide 12: Example: Extended Warranty Revenue
12 Example: Extended Warranty Revenue Year 1 Year 2 Year 3 Customer billings 2,000 Product revenue 1,400 - - Services revenue 200 200 200 Deferred revenue 400 200 - Income Statement change • Less value assigned to extended warranty • More upfront revenue to hardware • Revenue value allocation betwee
Slide 13: Example: Third-Party Software
13 Example: Third-Party Software Year 1 Year 2 Year 3 Customer billings 600 Product revenue - - - Services revenue 200 200 200 Deferred revenue 400 200 - Income Statement change • Revenue value allocation between products and services • Cost of revenue allocation between products and services • More
Slide 14: Example: Software License Offerings
14 Example: Software License Offerings Month 1 Month 2 Month 3 Customer billings 1,000 Product revenue - - 1,000 Deferred revenue 1,000 1,000 - Perpetual license with promised upgrade to be provided in month three. For illustrative purposes, the example excludes software maintenance. ASC 605 require
Slide 15: Example: Term-based Software Licenses
15 Example: Term-based Software Licenses Year 1 Year 2 Year 3 Customer billings 1,200 Product revenue 300 300 300 Services revenue 100 100 100 Deferred revenue 800 400 - Dell-owned term-based software license sold to customer with software maintenance provided over three years. Example impact on rev
Slide 16: Appendix B Supplemental financial results
16 Appendix B Supplemental financial results
Slide 17: Recast Income Statement Summary
17 Recast Income Statement Summary1,2 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 See Appendix C for reconciliation of Non-GAAP to GAAP measures. 3 Non-GAAP FY’17 revenue includes a one-time $28 million ASC 606 imp
Slide 18: Business Unit Revenue and Operating Income/(Loss) Summary
18 Business Unit Revenue and Operating Income/(Loss) Summary1 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 The VMware business unit results reflect the operations of VMware within Dell Technologies and are different
Slide 19: Selected Balance Sheet Amounts
19 Selected Balance Sheet Amounts1 1 The pre-tax impact to the opening Consolidated Statement of Financial Position as of January 29, 2016 is expected to be an approximately $1 billion benefit to accumulated deficit. 2 Does not include the tax impact of ASC 606. ($ in millions) 4Q'17 1Q'18 2Q'18 3Q'
Slide 20: Appendix C Supplemental Non-GAAP Measures
20 Appendix C Supplemental Non-GAAP Measures
Slide 21: Supplemental Non-GAAP Measures – Revenue (As Reported)
21 Supplemental Non-GAAP Measures1 – Revenue 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 This amount includes the non-cash purchase accounting adjustments related to the EMC merger transaction and the going-private
Slide 22: Supplemental Non-GAAP Measures – Revenue (As Recast)
22 Supplemental Non-GAAP Measures1 – Revenue 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 This amount includes the non-cash purchase accounting adjustments related to the EMC merger transaction and the going-private
Slide 23: Supplemental Non-GAAP Measures – Gross Margin (As Reported)
23 Supplemental Non-GAAP Measures1 – Gross Margin 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 This amount includes the non-cash purchase accounting adjustments related to the EMC merger transaction and the going-pr
Slide 24: Supplemental Non-GAAP Measures – Gross Margin (As Recast)
24 Supplemental Non-GAAP Measures1 – Gross Margin 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 This amount includes the non-cash purchase accounting adjustments related to the EMC merger transaction and the going-pr
Slide 25: Supplemental Non-GAAP Measures – Operating Expenses (As Reported)
25 Supplemental Non-GAAP Measures1 – Operating Expenses 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 This amount includes the non-cash purchase accounting adjustments related to the EMC merger transaction and the go
Slide 26: Supplemental Non-GAAP Measures – Operating Expenses (As Recast)
26 Supplemental Non-GAAP Measures1 – Operating Expenses 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 This amount includes the non-cash purchase accounting adjustments related to the EMC merger transaction and the go
Slide 27: Supplemental Non-GAAP Measures – Operating Income/(Loss) (As Reported)
27 Supplemental Non-GAAP Measures1 – Operating Income / (Loss) 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 This amount includes the non-cash purchase accounting adjustments related to the EMC merger transaction and
Slide 28: Supplemental Non-GAAP Measures – Operating Income/(Loss) (As Recast)
28 Supplemental Non-GAAP Measures1 – Operating Income / (Loss) 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 This amount includes the non-cash purchase accounting adjustments related to the EMC merger transaction and
Slide 29: Supplemental Non-GAAP Measures – Adjusted EBITDA (As Reported)
29 Supplemental Non-GAAP Measures1 – Adjusted EBITDA 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 This amount includes the non-cash purchase accounting adjustments related to the EMC merger transaction and the going
Slide 30: Supplemental Non-GAAP Measures – Adjusted EBITDA (As Recast)
30 Supplemental Non-GAAP Measures1 – Adjusted EBITDA 1 Results presented on a continuing operations basis. Historical results prior to 3Q’17 do not include EMC acquired businesses. 2 This amount includes the non-cash purchase accounting adjustments related to the EMC merger transaction and the going