Sweet on Dell Technologies: 1Q FY20 Financial Results

This is the third installment of an ongoing series “Sweet on Dell Technologies.”

The seasons are changing again.

Here in Central Texas, we’re sliding head-first into summer. The temperature is cranking up and the school year has wound down. Seasons provide a rhythm. And even in the life of a CFO, there comes a highly anticipated set of seasons – earnings.

Here at Dell Technologies, we’re focused on the results for our first quarter of FY20. As hectic as it can sometimes be, I like earnings season. Why? Because as the CFO at Dell Technologies, along with our vice-chairman, Jeff Clarke, we’re responsible for helping shape our corporate strategy.  

We continually evaluate our strategy. Are we leading our customers’ journeys to becoming digital organizations? Are we still becoming the essential infrastructure company—from the edge to the core to the cloud? Are we staying true to our purpose to create technologies that drive human progress?

The numbers are important in and of themselves. But they’re also what shows us if we’re on course with regard to our purpose, our vision, and the mission we have in service to our customers.

So, what do the 1Q FY20 financial results say to us?

I think they show us we’re on track.

Did you know that 90 percent of the world’s data was created in the last two years? We are in the middle of a technology-led investment cycle, where data and analytics are driving business outcomes.

And what that means for Dell Technologies is that we gained share and improved profitability as we balanced revenue growth with the market conditions in this first quarter.

Take a look at what we did in the first three months of our fiscal year on a non-GAAP basis[1]:

  • Non-GAAP revenue was $22B, up 2 percent (GAAP revenue $21.9B, up 3 percent)
  • Non-GAAP gross margin was up 7 percent to $7.4B, driven by lower component costs, mix and pricing discipline (GAAP gross margin $6.8B, up 16%)
  • Our non-GAAP diluted earnings per share was $1.45 (GAAP diluted earnings per share $0.38)
  • And we repaid approximately $400M of gross debt in the quarter. That’s $15B of gross debt paid down since the merger, and we remain on track to repay approximately $4.8B in FY20.
  • And there’s more—you can read our full 1Q FY20 financial results here on the Dell Technologies Investor Relations page at: https://investors.delltechnologies.com/financial-information/quarterly-results

And check out more on what I had to say about these results in this short video clip.

Please click onto the image or here to view this one-minute video clip.

So, what’s just around the corner?

Well, as we head further into 2Q, we’ll continue to monitor the macroeconomic environment—specifically, we’re watching how IT spending continues to trend and the ongoing trade discussions between the U.S., China and Mexico.

Our Supply Chain team has helped us navigate China tariff lists so far, and we will continue to be disciplined on pricing as we move through the year. We will adjust appropriately given the market and competitive dynamics.

We’re well-positioned. The Dell Technologies portfolio is one of the strongest in the industry. We’ve built this business to succeed in any environment. Whether the market expands or contracts, we expect to outperform the industry.

When you pair that with a focus on long-term value creation, I believe that adds up to remaining on track for our overall vision, purpose and strategy. Dell Technologies is helping our customers realize their digital futures.

And that’s something that’s always in season.

Special Note on Forward-Looking Statements

Statements in this material that relate to future results and events are forward-looking and are based on Dell Technologies’ current expectations. In some cases, you can identify these statements by such forward-looking words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “confidence,” “may,” “plan,” “potential,” “should,” “will” and “would,” or similar expressions. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors, including those discussed in Dell Technologies’ periodic reports filed with the Securities and Exchange Commission. Dell Technologies assumes no obligation to update its forward-looking statements.

[1] This article presents information about Dell Technologies’ 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 historical GAAP financial measure is provided in the financial tables on the Dell Technologies Investor Relations page at: https://investors.delltechnologies.com/financial-information/quarterly-results.

About the Author: Tom Sweet

Tom Sweet was previously Chief Financial Officer (CFO) of Dell Technologies.