01—Abstract
Summary
Summary of the 10-Q filed June 10, 2025. Cited figures are marked; the original filing is the authoritative source.
Dell Technologies Inc. reported a 5% increase in total net revenue for the first quarter of Fiscal Year 2026, reaching $23.4 billiona, driven by a strong performance in its Infrastructure Solutions Group (ISG) and, to a lesser extent, its Client Solutions Group (CSG).
The ISG segment saw a significant 12% revenue jump, largely fueled by demand for AI-optimized servers and continued strength in storage solutions. The CSG segment experienced a 5% increase in revenue, primarily from commercial offerings, though consumer demand saw a decline. Profitability showed robust improvement, with operating income increasing by 21% year-over-year to $1.2 billionb.
This was supported by an increase in ISG operating income and disciplined cost management across the company. Despite a slight decrease in overall net income due to higher income tax expenses, non-GAAP net income saw a healthy 13%c increase.
The company also demonstrated strong cash flow generation, with cash from operations increasing significantly to $2.8 billiond, bolstered by working capital dynamics and strong AI-driven demand. Dell Technologies continues to focus on returning capital to shareholders through share repurchases and dividends, with substantial remaining authorization for its stock repurchase program.
02—Key points
Key Highlights
- Total net revenue increased by 5% to $23.4 billion, driven by ISG and CSG growth.
- Infrastructure Solutions Group (ISG) revenue grew 12% to $10.3 billion, powered by AI-optimized servers and storage solutions.
- Client Solutions Group (CSG) revenue increased 5% to $12.5 billion, primarily due to commercial offerings.
- Operating income surged 21% to $1.2 billion, reflecting strong ISG performance and cost management.
- Net income slightly decreased to $965 million, impacted by higher income tax expenses, but non-GAAP net income rose 13% to $1.1 billion.
- Cash flow from operations significantly increased to $2.8 billion, benefiting from working capital improvements.
- The company repurchased approximately $2.0 billion of Class C Common Stock during the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Dell Technologies Inc. kept $0.04.
- Revenue$23.38B100.0%
- Cost of revenue−$18.44B78.9%
- Gross profit$4.94B21.1%
- Operating costs−$3.77B16.1%
- Operating income$1.17B5.0%
- Interest, other & tax−$200.0M0.9%
- Net income$965.0M4.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed June 10, 2025Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $23.38B$22.24B | +5.1% |
| Cost of Revenue | $18.44B$17.39B | +6.0% |
| Gross Profit | $4.94B$4.85B | +1.8% |
| R&D Expenses | $808.00M$763.00M | +5.9% |
| SG&A Expenses | $2.96B$3.12B | −5.1% |
| Operating Expenses | $3.77B$3.89B | −2.9% |
| Operating Income | $1.17B$965.00M | +20.7% |
| Net Income | $965.00M$992.00M | −2.7% |
| EPS (Basic) | $1.39$1.41 | −1.4% |
| EPS (Diluted) | $1.37$1.37 | 0.0% |
| Shares Outstanding (Basic) | 692.00M708.00M | −2.3% |
| Shares Outstanding (Diluted) | 702.00M727.00M | −3.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of Dell's revenue growth in this quarter?
Revenue growth was primarily driven by Dell's Infrastructure Solutions Group (ISG), which saw a 12% increase year-over-year. This growth was particularly fueled by strong demand for AI-optimized servers and continued strength in storage solutions. The Client Solutions Group (CSG) also contributed positively with a 5% revenue increase, mainly from its commercial offerings.
How did the company's profitability fare in this quarter?
Dell Technologies demonstrated improved profitability, with operating income rising 21% to $1.2 billion. This enhancement was supported by the strong performance of the ISG segment and effective cost management initiatives. While net income saw a slight decrease due to higher income tax expenses, the non-GAAP net income increased by 13%, indicating underlying operational strength.
What is the company's outlook on AI-related demand and its impact on ISG?
The company continues to experience significant demand for its AI-optimized server offerings, which has led to a substantial increase in backlog levels. While this demand is a key growth driver for ISG, Dell notes that the timing of revenue recognition for these solutions can be non-linear due to customer readiness and component supply dynamics. Despite potential near-term moderation in overall IT spending due to macroeconomic uncertainty, the long-term trend for AI solutions remains strong.
How is Dell managing its cash flow and capital allocation?
Dell generated robust cash flow from operations, increasing to $2.8 billion, driven by profitability and positive working capital dynamics, particularly related to increased AI-optimized server demand. The company continues to prioritize returning capital to shareholders through share repurchases and dividend payments. Dell has significant authorization remaining under its stock repurchase program, indicating a continued focus on shareholder returns.
06—Continue