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01/10 16:36
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue $29.8 billion, up 19% year-over-year. The increase was driven by record AI shipments and strong operational execution.
Earnings Per Share (EPS) $2.32, up 19% year-over-year. This was attributed to higher revenue and lower operating expenses.
Operating Expenses $3.3 billion, down 4% year-over-year. The decrease was due to modernization efforts and internal efficiencies.
Net Income $1.6 billion, up 13% year-over-year. This was primarily driven by stronger operating income.
Gross Margin $5.6 billion or 18.7% of revenue. The margin rate was influenced by a mix shift to AI servers.
ISG Revenue $16.8 billion, up 44% year-over-year. Growth was driven by record AI shipments and strong demand for servers and networking.
Servers and Networking Revenue $12.9 billion, up 69% year-over-year. This was fueled by strong demand for AI servers and traditional servers.
Storage Revenue $3.9 billion, down 3% year-over-year. The decline was due to softer-than-expected demand.
CSG Revenue $12.5 billion, up 1% year-over-year. Commercial revenue grew 2%, while consumer revenue declined 7%.
Cash Flow from Operations $2.5 billion. This was driven by profitability and revenue growth.
AI servers: Record AI shipments with $8.2 billion shipped in Q2, $5.6 billion in orders, and a backlog of $11.7 billion. Shipped more AI servers in the first half of the year than all of last year. Launched NVIDIA RTX Pro 6000 AI Factory solutions.
17th generation servers: Completed launch of 17th generation servers designed for performance, reliability, and security, enabling AI and data center efficiencies.
PowerStore: Double-digit demand growth for 6 consecutive quarters, with 46% of buyers being new customers.
Business notebook: Launched a new business notebook targeting the entry-level commercial PC market.
AI market: AI hardware and services TAM expected to double from $184 billion in 2023 to $356 billion in 2028.
International markets: Growth in international markets for traditional servers, despite continued weakness in North America.
Revenue growth: Record revenue of $29.8 billion in Q2, up 19% year-over-year.
Operational efficiencies: Operating expenses down 4% while continuing R&D investments. Gross margin of $5.6 billion driven by AI server mix.
Cash flow: Generated $2.5 billion in cash flow from operations, with $1.3 billion returned to shareholders.
AI focus: Increased AI server shipment guidance to $20 billion for FY26, with shipments weighted to Q3. Focus on engineering differentiation and integration to improve AI margins.
PC TAM expansion: Strategic actions to expand PC TAM, including targeting the entry-level commercial PC market.
Storage Revenue Decline: Storage revenue was down 3% to $3.9 billion as demand was softer than anticipated, indicating potential challenges in maintaining growth in this segment.
Consumer Revenue Decline: Consumer revenue declined 7%, reflecting weaker demand in the consumer segment, which could impact overall profitability.
North America Market Weakness: The April weakness in North America continued, suggesting ongoing challenges in this key market.
AI Margin Pressure: The mix of AI business impacted margin rates, with a significant shift to AI affecting operating income rate. This could pose challenges in maintaining profitability as AI demand grows.
Traditional Server and Storage Demand: Demand for traditional servers and storage is expected to remain soft into the second half, potentially impacting revenue growth in these segments.
AI Server Shipments: Dell raised its AI server shipment guidance by $5 billion to $20 billion for FY '26, with shipments slightly weighted to the third quarter.
Revenue Guidance for Q3 FY '26: Expected Q3 revenue to be between $26.5 billion and $27.5 billion, up 11% at the midpoint of $27 billion. ISG and CSG combined are expected to grow 13% at the midpoint, with ISG in the low 20s and CSG up mid-single digits.
Full-Year Revenue Guidance for FY '26: Raised full-year revenue guidance to between $105 billion and $109 billion, with a midpoint of $107 billion, up 12%. ISG is expected to grow mid- to high 20s, driven by AI server shipments and growth in traditional servers, while storage is expected to remain flat. CSG is expected to grow low to mid-single digits.
Profitability Outlook: Profitability is expected to improve in the second half across CSG and ISG, specifically within AI servers. Operating income is expected to grow roughly 10% for the full year.
Diluted Non-GAAP EPS Guidance: Increased full-year diluted non-GAAP EPS guidance to $9.55, plus or minus $0.25, up 17% at the midpoint.
Operating Expense Outlook: Operating expenses are expected to decline by low single digits for the full year.
Dividend Payment: Dell Technologies paid a dividend of approximately $0.53 per share during the second quarter of fiscal year 2026.
Total Dividends Paid: The company has returned $14.5 billion to shareholders through stock repurchases and dividends since the beginning of fiscal year 2023.
Share Repurchase: Dell repurchased 8 million shares of stock at an average price of $114 per share during the second quarter of fiscal year 2026.
Total Share Repurchase Program: Since the beginning of fiscal year 2023, Dell has returned $14.5 billion to shareholders 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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