01—Abstract
Summary
Summary of the 10-Q filed June 11, 2024. Cited figures are marked; the original filing is the authoritative source.
Dell Technologies Inc. reported revenue of $22.24 billiona for the first quarter of Fiscal 2025, an increase of 6% year-over-year, primarily driven by a 22% surge in its Infrastructure Solutions Group (ISG), which benefited from strong demand for AI-optimized servers.
However, profitability saw a decline, with operating income down 14% to $920 millionb, impacted by a competitive pricing environment and a product mix shift in ISG. The Client Solutions Group (CSG) revenue remained flat, with commercial sales up 3% but consumer sales down 15%, also affected by pricing pressures. Despite a challenging gross margin environment, Dell Technologies demonstrated effective cost management, leading to a decrease in operating expense as a percentage of net revenue.
The company ended the quarter with $5.96 billionc in cash, cash equivalents, and restricted cash. Dell Technologies also announced a 20% increase in its quarterly dividend and continued its share repurchase program, returning capital to shareholders.
02—Key points
Key Highlights
- Total net revenue increased by 6% year-over-year to $22.24 billion, driven by ISG's strong performance.
- Infrastructure Solutions Group (ISG) revenue grew 22% to $9.23 billion, largely due to demand for AI-optimized servers.
- Client Solutions Group (CSG) revenue was flat at $11.97 billion, with commercial revenue up 3% but consumer revenue down 15% due to pricing pressures.
- Operating income decreased by 14% to $920 million, reflecting competitive pricing and a shift in product mix.
- Gross margin percentage declined to 21.6% from 24.0% in the prior year, impacted by competitive pricing and the AI server mix.
- The company declared a 20% increase in its quarterly dividend to $0.445 per share.
- Dell Technologies repurchased approximately $0.7 billion of its Class C common stock during the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Dell Technologies Inc. kept $0.04.
- Revenue$22.24B100.0%
- Cost of revenue−$17.39B78.2%
- Gross profit$4.85B21.8%
- Operating costs−$3.89B17.5%
- Operating income$965.0M4.3%
- Interest, other & tax$27.0M0.1%
- Net income$992.0M4.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed June 11, 2024Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $22.24B$20.92B | +6.3% |
| Cost of Revenue | $17.39B$15.84B | +9.8% |
| Gross Profit | $4.85B$5.08B | −4.5% |
| R&D Expenses | $763.00M$688.00M | +10.9% |
| SG&A Expenses | $3.12B$3.26B | −4.2% |
| Operating Expenses | $3.89B$3.95B | −1.6% |
| Operating Income | $965.00M$1.13B | −14.7% |
| Interest Expense | $343.00M$405.00M | −15.3% |
| Net Income | $992.00M$637.00M | +55.7% |
| EPS (Basic) | $1.41$0.88 | +60.2% |
| EPS (Diluted) | $1.37$0.86 | +59.3% |
| Shares Outstanding (Basic) | 708.00M724.00M | −2.2% |
| Shares Outstanding (Diluted) | 727.00M737.00M | −1.4% |
05—Questions
Frequently Asked Questions
How did Dell's revenue perform in this quarter compared to the prior year?
Dell Technologies' total net revenue increased by 6% year-over-year, reaching $22.24 billion. This growth was primarily fueled by a significant 22% increase in the Infrastructure Solutions Group (ISG), largely driven by demand for AI-optimized servers.
What is impacting Dell's profitability?
Profitability, as measured by operating income, decreased by 14% to $920 million. This decline is attributed to a competitive pricing environment across both ISG and CSG segments, along with a shift in product mix towards AI-optimized servers which have different margin profiles. Gross margin percentage also saw a decline.
What is the outlook for the Client Solutions Group (CSG)?
CSG's revenue remained flat year-over-year at $11.97 billion. Commercial revenue saw a modest 3% increase, while consumer revenue declined by 15%. The segment is facing competitive pricing pressures that are impacting average selling prices, although unit sales in the commercial segment showed growth.
How is Dell returning capital to shareholders?
Dell Technologies announced a 20% increase in its quarterly dividend to $0.445 per share and continued its share repurchase program. During the quarter, the company repurchased approximately $0.7 billion of its Class C common stock.
06—Continue