Dell Technologies’ (DELL - Free Report) fourth-quarter fiscal 2020 non-GAAP earnings of $2 per share increased 14.3% on a sequential basis.
Revenues inched up 1% year over year and 5% sequentially to $24.13 billion.
The Zacks Consensus Estimate for earnings and revenues was pegged at $1.59 per share and $24.12 billion, respectively.
Quarter in Detail
Product revenues (75.2% of revenues) declined 2.8% year over year to $18.15 billion. Services revenues (24.4%) increased 13.8% year over year to $5.88 billion.
Infrastructure Solutions Group (ISG) revenues were down 11.5% year over year to $8.76 billion. The segment accounted for 36.3% of revenues.
This year-over-year drop was due to 18.7% fall in servers and networking revenues. Moreover, storage revenues slid 3.2% year over year to $4.49 billion.
Client Solutions Group (CSG) revenues were $11.77 billion, up 8.1% year over year. The segment accounted for 48.8% of revenues.
Commercial revenues grew 9.7% year over year to $8.56 billion. Moreover, consumer revenues were up 4% to $3.21 billion.
VMware revenues were $3.13 billion in the reported quarter, up 11.7% year over year, driven by portfolio strength. Notably, Dell has a majority stake in VMware.
Operating Details
Non-GAAP gross profit increased 4.2% year over year to $8.38 billion. Gross margin expanded 120 basis points (bps) from the year-ago quarter to 34.7%.
Adjusted EBITDA rose 5.7% year over year to $3.20 billion. Adjusted EBITDA margin expanded 70 bps year over year to 13.3%.
Non-GAAP operating expenses grew 4.2% year over year to $5.61 billion. Moreover, operating expenses as a percentage of revenues increased 80 bps year over year to 23.2%.
ISG operating income fell 12.1% year over year to $1.11 billion. CSG operating income increased 12.4% year over year to $624 million.
VMware’s operating income increased 20.7% year over year to $1.03 billion.
Non-GAAP operating income was $2.77 billion, up 4.2% from the year-ago quarter. Operating margin expanded 40 bps year over year to 11.5%.
Balance Sheet and Cash Flow
As of Jan 31, 2020, Dell had $10.17 billion in cash and cash equivalents compared with $9.4 billion as of Nov 2, 2019.
Long-term debt as of Jan 31, 2020 was $44.32 billion.
The company repaid $1.5 billion of gross debt in the reported quarter and $5 billion in fiscal 2020. The company paid down $19.5 billion in gross debt since closing the EMC transaction in September 2016.
Cash flow from operations was $3.51 billion in the reported quarter compared with $1.82 billion in the previous quarter.
Dell also announced a new share repurchase program of $1 billion to be completed over the next 24 months.
Guidance
For fiscal 2021, Dell expects revenues between $92 billion and $95 billion. Operating income is expected in the range of $8.9-$9.5 billion.
Moreover, fiscal 2021 earnings are expected between $5.90 and $6.60 per share.
Zacks Rank & Key Picks
Dell currently carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the broader Computer and Technology sector are Microsoft (MSFT - Free Report) and SAP SE (SAP - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Microsoft and SAP SE is currently pegged at 13.2% and 9.6%, respectively.
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Dell Technologies’ (DELL - Free Report) fourth-quarter fiscal 2020 non-GAAP earnings of $2 per share increased 14.3% on a sequential basis.
Revenues inched up 1% year over year and 5% sequentially to $24.13 billion.
The Zacks Consensus Estimate for earnings and revenues was pegged at $1.59 per share and $24.12 billion, respectively.
Quarter in Detail
Product revenues (75.2% of revenues) declined 2.8% year over year to $18.15 billion. Services revenues (24.4%) increased 13.8% year over year to $5.88 billion.
Infrastructure Solutions Group (ISG) revenues were down 11.5% year over year to $8.76 billion. The segment accounted for 36.3% of revenues.
This year-over-year drop was due to 18.7% fall in servers and networking revenues. Moreover, storage revenues slid 3.2% year over year to $4.49 billion.
Client Solutions Group (CSG) revenues were $11.77 billion, up 8.1% year over year. The segment accounted for 48.8% of revenues.
Commercial revenues grew 9.7% year over year to $8.56 billion. Moreover, consumer revenues were up 4% to $3.21 billion.
VMware revenues were $3.13 billion in the reported quarter, up 11.7% year over year, driven by portfolio strength. Notably, Dell has a majority stake in VMware.
Operating Details
Non-GAAP gross profit increased 4.2% year over year to $8.38 billion. Gross margin expanded 120 basis points (bps) from the year-ago quarter to 34.7%.
Adjusted EBITDA rose 5.7% year over year to $3.20 billion. Adjusted EBITDA margin expanded 70 bps year over year to 13.3%.
Non-GAAP operating expenses grew 4.2% year over year to $5.61 billion. Moreover, operating expenses as a percentage of revenues increased 80 bps year over year to 23.2%.
ISG operating income fell 12.1% year over year to $1.11 billion. CSG operating income increased 12.4% year over year to $624 million.
VMware’s operating income increased 20.7% year over year to $1.03 billion.
Non-GAAP operating income was $2.77 billion, up 4.2% from the year-ago quarter. Operating margin expanded 40 bps year over year to 11.5%.
Balance Sheet and Cash Flow
As of Jan 31, 2020, Dell had $10.17 billion in cash and cash equivalents compared with $9.4 billion as of Nov 2, 2019.
Long-term debt as of Jan 31, 2020 was $44.32 billion.
The company repaid $1.5 billion of gross debt in the reported quarter and $5 billion in fiscal 2020. The company paid down $19.5 billion in gross debt since closing the EMC transaction in September 2016.
Cash flow from operations was $3.51 billion in the reported quarter compared with $1.82 billion in the previous quarter.
Dell also announced a new share repurchase program of $1 billion to be completed over the next 24 months.
Guidance
For fiscal 2021, Dell expects revenues between $92 billion and $95 billion. Operating income is expected in the range of $8.9-$9.5 billion.
Moreover, fiscal 2021 earnings are expected between $5.90 and $6.60 per share.
Zacks Rank & Key Picks
Dell currently carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the broader Computer and Technology sector are Microsoft (MSFT - Free Report) and SAP SE (SAP - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Microsoft and SAP SE is currently pegged at 13.2% and 9.6%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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