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01/10 16:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with record EPS, increased revenue, and robust cash flow. Positive guidance for FY '26 and a significant AI server backlog suggest growth potential. The increase in dividends and share repurchase authorization further supports a positive outlook. Despite some competitive pricing pressures and demand variability, management's optimistic guidance and strategic focus on AI and shareholder returns indicate a likely positive stock price movement.
Revenue $23.4 billion, up 5% year-over-year, driven by growth across all core markets.
Earnings Per Share (EPS) $1.55, up 17% year-over-year, growing three times faster than revenue.
Gross Margin $5.1 billion, or 21.6% of revenue, down 80 basis points due to a more competitive pricing environment in CSG and geographical mix.
Operating Income $1.7 billion, up 10% year-over-year, driven by higher revenue and lower operating expenses.
Net Income $1.1 billion, up 13% year-over-year, primarily driven by stronger operating income.
Cash Flow from Operations $2.8 billion, record Q1 cash flow, driven by profitability and working capital improvement.
Cash and Investments $9.3 billion, up $4.2 billion sequentially.
Shareholder Returns $2.4 billion returned to shareholders, including stock repurchases and dividends.
ISG Revenue $10.3 billion, up 12% year-over-year.
CSG Revenue $12.5 billion, up 5% year-over-year, with Commercial revenue up 9% and Consumer revenue down 19%.
ISG Operating Income $1.0 billion, up 36% year-over-year, driven by higher revenue.
ISG Operating Income Rate 9.7% of revenue, up approximately 170 basis points year-over-year.
CSG Operating Income $0.7 billion, or 5.2% of revenue.
Total Share Repurchases 22.1 million shares at an average price of $90 per share.
Total Capital Returned Since FY 2023 $13.2 billion through stock repurchases and dividends.
AI-Optimized Servers: Dell experienced unprecedented demand for AI-optimized servers, achieving $12.1 billion in orders in Q1, surpassing all shipments from FY 2025.
Dell Pro Max Notebooks and Desktops: Introduced new Dell Pro Max notebooks and desktops equipped with advanced NVIDIA and Intel processors, enhancing AI capabilities.
Dell AI Data Platform: Launched the Dell AI Data Platform with significant enhancements to PowerScale and ObjectScale, showcasing fast and scalable storage.
Commercial PCs: CSG revenue rose by 5%, driven by strong Commercial revenue growth of 9%, with double-digit demand growth across small, medium, and large enterprises.
Consumer Market: Consumer revenue declined by 19%, indicating challenges in the consumer segment.
Cash Flow: Achieved record Q1 cash flow from operations of $2.8 billion, driven by profitability and working capital improvements.
Operating Expenses: Operating expenses decreased by 2% to $3.4 billion, reflecting ongoing efforts to unlock efficiencies.
AI Leadership: Dell is focused on expanding its leadership in AI by investing in innovation and deepening customer partnerships.
Capital Return Program: Returned $2.4 billion to shareholders through stock repurchases and dividends, reflecting confidence in the business.
Competitive Pressures: The consumer market remains challenged, with a 19% decline in consumer revenue and competitive pricing pressures affecting gross margins, particularly in the CSG segment.
Regulatory Issues: No specific regulatory issues were mentioned, but the company acknowledged the dynamic macro environment affecting IT spending.
Supply Chain Challenges: The company highlighted the importance of its industry-leading supply chain, which has been built over four decades to navigate challenges and minimize impacts on customers and shareholders.
Economic Factors: The company expressed caution regarding customer IT spending due to the dynamic macro environment, which may affect traditional server and storage performance.
Demand Variability: There is inherent variability in demand and associated shipments, particularly in AI servers, which may impact revenue projections.
AI-Optimized Servers Demand: Dell experienced unprecedented demand for AI-optimized servers, building on momentum from previous quarters, with $12.1 billion in orders in Q1.
Innovation and Partnerships: Dell is focused on expanding leadership in AI by investing in innovation and deepening customer partnerships, collaborating with key partners like NVIDIA and Google.
Dell AI Factory: Significant advancements were made in the Dell AI Factory, including the introduction of AI PCs and enhancements in data center infrastructure.
Product Portfolio Expansion: Dell announced new products including AI PCs and advanced server platforms, showcasing a commitment to leading in AI infrastructure.
Customer Solutions: Dell is innovating bespoke solutions for customers, ensuring reliability and performance in data centers, and offering flexible financing solutions.
Q2 Revenue Guidance: Expected revenue between $28.5 billion and $29.5 billion, up 16% at the midpoint.
Full Year Revenue Guidance: Reiterating FY 2026 revenue guidance of $101 billion to $105 billion, with a midpoint of $103 billion, up 8%.
Operating Income Expectations: Expecting operating income to be up roughly 9% for the full year.
Diluted EPS Guidance: Increasing diluted non-GAAP EPS guidance to $9.40, plus or minus $0.25, up 15% at the midpoint.
ISG and CSG Growth: Expecting ISG to grow high-teens driven by over $15 billion in AI server shipments, and CSG to grow low-to-mid single digits.
Dividend per share: $0.53 per share
Total capital returned to shareholders: $2.4 billion
Shares repurchased: 22.1 million shares at an average price of $90 per share
Total capital returned since FY 2023: $13.2 billion through stock repurchases and dividends
Dell's earnings call presents a positive outlook with increased revenue and EPS guidance, strong cash flow, and substantial capital returns to shareholders. The Q&A highlighted proactive strategies to manage rising costs and leverage AI growth, despite some uncertainties. The raised AI revenue forecast and improved margins indicate potential stock price growth over the next two weeks.
Dell's earnings call highlights strong demand for AI-optimized servers, positive revenue guidance, and strategic partnerships with NVIDIA and Google. Despite some challenges in traditional server demand, Dell's innovation in AI and IP storage is expected to drive growth. The Q&A reveals optimism about margin improvements and profitability, supported by strategic initiatives like the Dell Automation Platform. Overall, the positive guidance, strategic advancements, and strong partnerships suggest a positive stock price movement over the next two weeks.
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