Dell Technologies Delivers Second Quarter Fiscal 2025 Financial Results
News summary
- Second quarter revenue of
$25.0 billion , up 9% year over year Record Infrastructure Solutions Group (ISG) revenue of $11.6 billion, up 38% year over year, with record servers and networking revenue of$7.7 billion , up 80%- Client Solutions Group (CSG) revenue of
$12.4 billion , down 4% year over year, with commercial client revenue flat at$10.6 billion - Diluted earnings per share of
$1.17 , up 86% year over year, and non-GAAP diluted earnings per share of$1.89 , up 9%
Full story
"In Q2 our combined ISG and CSG revenue was
Cash flow from operations was
Second Quarter Fiscal 2025 Financial Results
Three Months Ended |
Six Months Ended |
||||||||||
|
|
Change |
|
|
Change |
||||||
(in millions, except per share amounts and percentages; unaudited) |
|||||||||||
Net revenue |
$ 25,026 |
$ 22,934 |
9 % |
$ 47,270 |
$ 43,856 |
8 % |
|||||
Operating income |
$ 1,342 |
$ 1,165 |
15 % |
$ 2,262 |
$ 2,234 |
1 % |
|||||
Net income |
$ 841 |
$ 455 |
85 % |
$ 1,796 |
$ 1,033 |
74 % |
|||||
Change in cash from operating activities |
$ 1,340 |
$ 3,214 |
(58) % |
$ 2,383 |
$ 4,991 |
(52) % |
|||||
Earnings per share - diluted |
$ 1.17 |
$ 0.63 |
86 % |
$ 2.49 |
$ 1.42 |
75 % |
|||||
Non-GAAP operating income |
$ 2,034 |
$ 1,977 |
3 % |
$ 3,508 |
$ 3,575 |
(2) % |
|||||
Non-GAAP net income |
$ 1,371 |
$ 1,283 |
7 % |
$ 2,294 |
$ 2,246 |
2 % |
|||||
Adjusted free cash flow |
$ 1,284 |
$ 3,050 |
(58) % |
$ 1,907 |
$ 3,737 |
(49) % |
|||||
Non-GAAP earnings per share - diluted |
$ 1.89 |
$ 1.74 |
9 % |
$ 3.16 |
$ 3.05 |
4 % |
Information about
Infrastructure Solutions Group (ISG) delivered record second quarter revenue of
"Our AI momentum accelerated in Q2, and we've seen an increase in the number of enterprise customers buying AI solutions each quarter," said
Client Solutions Group (CSG) delivered second quarter revenue of
Operating Segments Results
Three Months Ended |
Six Months Ended |
||||||||||
|
|
Change |
|
|
Change |
||||||
(in millions, except percentages; unaudited) |
|||||||||||
Infrastructure Solutions Group (ISG): |
|||||||||||
Net revenue: |
|||||||||||
Servers and networking |
$ 7,672 |
$ 4,274 |
80 % |
$ 13,138 |
$ 8,111 |
62 % |
|||||
Storage |
3,974 |
4,187 |
(5) % |
7,735 |
7,943 |
(3) % |
|||||
Total ISG net revenue |
$ 11,646 |
$ 8,461 |
38 % |
$ 20,873 |
$ 16,054 |
30 % |
|||||
Operating Income: |
|||||||||||
ISG operating income |
$ 1,284 |
$ 1,049 |
22 % |
$ 2,020 |
$ 1,789 |
13 % |
|||||
% of ISG net revenue |
11.0 % |
12.4 % |
9.7 % |
11.1 % |
|||||||
% of total reportable segment operating income |
63 % |
52 % |
57 % |
49 % |
|||||||
Client Solutions Group (CSG): |
|||||||||||
Net revenue: |
|||||||||||
Commercial |
$ 10,556 |
$ 10,554 |
— % |
$ 20,710 |
$ 20,416 |
1 % |
|||||
Consumer |
1,858 |
2,388 |
(22) % |
3,671 |
4,509 |
(19) % |
|||||
Total CSG net revenue |
$ 12,414 |
$ 12,942 |
(4) % |
$ 24,381 |
$ 24,925 |
(2) % |
|||||
Operating Income: |
|||||||||||
CSG operating income |
$ 767 |
$ 969 |
(21) % |
$ 1,499 |
$ 1,861 |
(19) % |
|||||
% of CSG net revenue |
6.2 % |
7.5 % |
6.1 % |
7.5 % |
|||||||
% of total reportable segment operating income |
37 % |
48 % |
43 % |
51 % |
Conference call information
As previously announced, the company will hold a conference call to discuss its performance and financial guidance on
For those unable to listen to the live broadcast, the final remarks and presentation with financial guidance will be available following the broadcast, and an archived version will be available at the same location for one year.
About
Copyright © 2024 Dell Inc. or its subsidiaries. All Rights Reserved.
Non-GAAP Financial Measures:
This press release presents information about non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to
Special Note on Forward-Looking Statements:
Statements in this press release that relate to future results and events are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933 and are based on
This list of risks, uncertainties, and other factors is not complete.
Condensed Consolidated Statements of Income and Related Financial Highlights (in millions, except percentages; unaudited) |
|||||||||||
Three Months Ended |
Six Months Ended |
||||||||||
|
|
Change |
|
|
Change |
||||||
Net revenue: |
|||||||||||
Products |
|
|
12 % |
|
|
10 % |
|||||
Services |
6,072 |
5,999 |
1 % |
12,189 |
11,885 |
3 % |
|||||
Total net revenue |
25,026 |
22,934 |
9 % |
47,270 |
43,856 |
8 % |
|||||
Cost of net revenue: |
|||||||||||
Products |
16,079 |
14,002 |
15 % |
29,845 |
26,377 |
13 % |
|||||
Services |
3,636 |
3,545 |
3 % |
7,308 |
7,074 |
3 % |
|||||
Total cost of net revenue |
19,715 |
17,547 |
12 % |
37,153 |
33,451 |
11 % |
|||||
Gross margin |
5,311 |
5,387 |
(1) % |
10,117 |
10,405 |
(3) % |
|||||
Operating expenses: |
|||||||||||
Selling, general, and administrative |
3,189 |
3,517 |
(9) % |
6,312 |
6,778 |
(7) % |
|||||
Research and development |
780 |
705 |
11 % |
1,543 |
1,393 |
11 % |
|||||
Total operating expenses |
3,969 |
4,222 |
(6) % |
7,855 |
8,171 |
(4) % |
|||||
Operating income |
1,342 |
1,165 |
15 % |
2,262 |
2,234 |
1 % |
|||||
Interest and other, net |
(353) |
(451) |
22 % |
(726) |
(815) |
11 % |
|||||
Income before income taxes |
989 |
714 |
39 % |
1,536 |
1,419 |
8 % |
|||||
Income tax expense (benefit) |
148 |
259 |
(43) % |
(260) |
386 |
(167) % |
|||||
Net income |
841 |
455 |
85 % |
1,796 |
1,033 |
74 % |
|||||
Less: Net loss attributable to non-controlling |
(5) |
(7) |
29 % |
(10) |
(12) |
17 % |
|||||
Net income attributable to |
$ 846 |
$ 462 |
83 % |
$ 1,806 |
$ 1,045 |
73 % |
|||||
Percentage of Total Net Revenue: |
|||||||||||
Gross margin |
21.2 % |
23.5 % |
21.4 % |
23.7 % |
|||||||
Selling, general, and administrative |
12.7 % |
15.3 % |
13.3 % |
15.4 % |
|||||||
Research and development |
3.1 % |
3.1 % |
3.3 % |
3.2 % |
|||||||
Operating expenses |
15.8 % |
18.4 % |
16.6 % |
18.6 % |
|||||||
Operating income |
5.4 % |
5.1 % |
4.8 % |
5.1 % |
|||||||
Income before income taxes |
4.0 % |
3.1 % |
3.2 % |
3.2 % |
|||||||
Net income |
3.4 % |
2.0 % |
3.8 % |
2.4 % |
|||||||
Income tax rate |
15.0 % |
36.3 % |
(16.9) % |
27.2 % |
|||||||
Amounts are based on underlying data and may not visually foot due to rounding. |
Condensed Consolidated Statements of Financial Position (in millions; unaudited) |
|||
|
|
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 4,550 |
$ 7,366 |
|
Accounts receivable, net of allowance of |
11,391 |
9,343 |
|
Short-term financing receivables, net of allowance of |
4,968 |
4,643 |
|
Inventories |
5,953 |
3,622 |
|
Other current assets |
10,681 |
10,973 |
|
Total current assets |
37,543 |
35,947 |
|
Property, plant, and equipment, net |
6,300 |
6,432 |
|
Long-term investments |
1,302 |
1,316 |
|
Long-term financing receivables, net of allowance of |
6,124 |
5,877 |
|
|
19,654 |
19,700 |
|
Intangible assets, net |
5,374 |
5,701 |
|
Other non-current assets |
6,390 |
7,116 |
|
Total assets |
$ 82,687 |
$ 82,089 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current liabilities: |
|||
Short-term debt |
$ 6,711 |
$ 6,982 |
|
Accounts payable |
24,095 |
19,389 |
|
Accrued and other |
6,374 |
6,805 |
|
Short-term deferred revenue |
14,853 |
15,318 |
|
Total current liabilities |
52,033 |
48,494 |
|
Long-term debt |
17,811 |
19,012 |
|
Long-term deferred revenue |
12,859 |
13,827 |
|
Other non-current liabilities |
2,781 |
3,065 |
|
Total liabilities |
85,484 |
84,398 |
|
Stockholders' equity (deficit): |
|||
|
(2,894) |
(2,404) |
|
Non-controlling interests |
97 |
95 |
|
Total stockholders' equity (deficit) |
(2,797) |
(2,309) |
|
Total liabilities and stockholders' equity |
$ 82,687 |
$ 82,089 |
Condensed Consolidated Statements of Cash Flows (in millions; unaudited) |
|||||||
Three Months Ended |
Six Months Ended |
||||||
|
|
|
|
||||
Cash flows from operating activities: |
|||||||
Net income |
$ 841 |
$ 455 |
$ 1,796 |
$ 1,033 |
|||
Adjustments to reconcile net income to net cash provided |
499 |
2,759 |
587 |
3,958 |
|||
Change in cash from operating activities |
1,340 |
3,214 |
2,383 |
4,991 |
|||
Cash flows from investing activities: |
|||||||
Purchases of investments |
(25) |
(98) |
(64) |
(113) |
|||
Maturities and sales of investments |
97 |
108 |
216 |
127 |
|||
Capital expenditures and capitalized software |
(682) |
(624) |
(1,278) |
(1,325) |
|||
Other |
53 |
9 |
113 |
22 |
|||
Change in cash from investing activities |
(557) |
(605) |
(1,013) |
(1,289) |
|||
Cash flows from financing activities: |
|||||||
Proceeds from the issuance of common stock |
1 |
2 |
1 |
4 |
|||
Repurchases of common stock |
(725) |
(260) |
(1,425) |
(500) |
|||
Repurchases of common stock for employee tax |
(14) |
(6) |
(535) |
(312) |
|||
Payments of dividends and dividend equivalents |
(316) |
(269) |
(652) |
(545) |
|||
Proceeds from debt |
1,941 |
2,134 |
4,933 |
4,655 |
|||
Repayments of debt |
(2,917) |
(3,384) |
(6,394) |
(7,082) |
|||
Debt-related costs and other, net |
(2) |
(44) |
(37) |
(49) |
|||
Change in cash from financing activities |
(2,032) |
(1,827) |
(4,109) |
(3,829) |
|||
Effect of exchange rate changes on cash, cash equivalents, |
(42) |
(59) |
(97) |
(117) |
|||
Change in cash, cash equivalents, and restricted cash |
(1,291) |
723 |
(2,836) |
(244) |
|||
Cash, cash equivalents, and restricted cash at beginning of |
5,962 |
7,927 |
7,507 |
8,894 |
|||
Cash, cash equivalents, and restricted cash at end of the |
$ 4,671 |
$ 8,650 |
$ 4,671 |
$ 8,650 |
Segment Information (in millions, except percentages; unaudited; continued on next page) |
|||||||||||
Three Months Ended |
Six Months Ended |
||||||||||
|
|
Change |
|
|
Change |
||||||
Infrastructure Solutions Group (ISG): |
|||||||||||
Net revenue: |
|||||||||||
Servers and networking |
$ 7,672 |
$ 4,274 |
80 % |
$ 13,138 |
$ 8,111 |
62 % |
|||||
Storage |
3,974 |
4,187 |
(5) % |
7,735 |
7,943 |
(3) % |
|||||
Total ISG net revenue |
$ 11,646 |
$ 8,461 |
38 % |
$ 20,873 |
|
30 % |
|||||
Operating Income: |
|||||||||||
ISG operating income |
$ 1,284 |
$ 1,049 |
22 % |
$ 2,020 |
$ 1,789 |
13 % |
|||||
% of ISG net revenue |
11.0 % |
12.4 % |
9.7 % |
11.1 % |
|||||||
% of total reportable segment operating income |
63 % |
52 % |
57 % |
49 % |
|||||||
Client Solutions Group (CSG): |
|||||||||||
Net revenue: |
|||||||||||
Commercial |
$ 10,556 |
$ 10,554 |
— % |
$ 20,710 |
|
1 % |
|||||
Consumer |
1,858 |
2,388 |
(22) % |
3,671 |
4,509 |
(19) % |
|||||
Total CSG net revenue |
$ 12,414 |
$ 12,942 |
(4) % |
$ 24,381 |
|
(2) % |
|||||
Operating Income: |
|||||||||||
CSG operating income |
$ 767 |
$ 969 |
(21) % |
$ 1,499 |
$ 1,861 |
(19) % |
|||||
% of CSG net revenue |
6.2 % |
7.5 % |
6.1 % |
7.5 % |
|||||||
% of total reportable segment operating income |
37 % |
48 % |
43 % |
51 % |
|||||||
Amounts are based on underlying data and may not visually foot due to rounding. |
Segment Information (in millions, except percentages; unaudited; continued) |
|||||||
Three Months Ended |
Six Months Ended |
||||||
|
|
|
|
||||
Reconciliation to consolidated net revenue: |
|||||||
Reportable segment net revenue |
$ 24,060 |
$ 21,403 |
$ 45,254 |
$ 40,979 |
|||
Other businesses (a) |
966 |
1,528 |
2,015 |
2,871 |
|||
Unallocated transactions (b) |
— |
3 |
1 |
6 |
|||
Total consolidated net revenue |
$ 25,026 |
$ 22,934 |
$ 47,270 |
$ 43,856 |
|||
Reconciliation to consolidated operating income: |
|||||||
Reportable segment operating income |
$ 2,051 |
$ 2,018 |
$ 3,519 |
$ 3,650 |
|||
Other businesses (a) |
(17) |
(44) |
(11) |
(80) |
|||
Unallocated transactions (b) |
— |
3 |
— |
5 |
|||
Amortization of intangibles (c) |
(168) |
(213) |
(336) |
(416) |
|||
Stock-based compensation expense (d) |
(191) |
(223) |
(401) |
(448) |
|||
Other corporate expenses (e) |
(333) |
(376) |
(509) |
(477) |
|||
Total consolidated operating income |
$ 1,342 |
$ 1,165 |
$ 2,262 |
$ 2,234 |
_________________ |
|
(a) |
Other businesses consists of: 1) Dell's resale of standalone VMware, Inc. products and services, "VMware Resale," 2) Secureworks, and 3) Virtustream, and do not meet the requirements for a reportable segment, either individually or collectively. |
(b) |
Unallocated transactions includes other corporate items that are not allocated to |
(c) |
Amortization of intangibles includes non-cash purchase accounting adjustments that are primarily related to the EMC merger transaction. |
(d) |
Stock-based compensation expense consists of equity awards granted based on the estimated fair value of those awards at grant date. |
(e) |
Other corporate expenses consist primarily of severance expenses, payroll taxes associated with stock-based compensation, facility action costs, transaction-related expenses, impairment charges, and incentive charges related to equity investments. Other corporate expenses included |
SUPPLEMENTAL SELECTED NON-GAAP FINANCIAL MEASURES
These tables present information about the Company's non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to
Selected Financial Measures (in millions, except per share amounts and percentages; unaudited) |
|||||||||||
Three Months Ended |
Six Months Ended |
||||||||||
|
|
Change |
|
|
Change |
||||||
Net revenue |
$ 25,026 |
$ 22,934 |
9 % |
$ 47,270 |
$ 43,856 |
8 % |
|||||
Non-GAAP gross margin |
$ 5,464 |
$ 5,536 |
(1) % |
$ 10,411 |
$ 10,700 |
(3) % |
|||||
% of net revenue |
21.8 % |
24.1 % |
22.0 % |
24.4 % |
|||||||
Non-GAAP operating expenses |
$ 3,430 |
$ 3,559 |
(4) % |
$ 6,903 |
$ 7,125 |
(3) % |
|||||
% of net revenue |
13.7 % |
15.5 % |
14.6 % |
16.2 % |
|||||||
Non-GAAP operating income |
$ 2,034 |
$ 1,977 |
3 % |
$ 3,508 |
$ 3,575 |
(2) % |
|||||
% of net revenue |
8.1 % |
8.6 % |
7.4 % |
8.2 % |
|||||||
Non-GAAP net income |
$ 1,371 |
$ 1,283 |
7 % |
$ 2,294 |
$ 2,246 |
2 % |
|||||
% of net revenue |
5.5 % |
5.6 % |
4.9 % |
5.1 % |
|||||||
Non-GAAP earnings per share - diluted |
$ 1.89 |
$ 1.74 |
9 % |
$ 3.16 |
$ 3.05 |
4 % |
|||||
Amounts are based on underlying data and may not visually foot due to rounding. |
Reconciliation of Selected Non-GAAP Financial Measures (in millions, except percentages; unaudited; continued on next page) |
|||||||||||
Three Months Ended |
Six Months Ended |
||||||||||
|
|
Change |
|
|
Change |
||||||
Gross margin |
$ 5,311 |
$ 5,387 |
(1) % |
$ 10,117 |
$ 10,405 |
(3) % |
|||||
Non-GAAP adjustments: |
|||||||||||
Amortization of intangibles |
59 |
84 |
119 |
163 |
|||||||
Stock-based compensation expense |
38 |
37 |
76 |
75 |
|||||||
Other corporate expenses |
56 |
28 |
99 |
57 |
|||||||
Non-GAAP gross margin |
$ 5,464 |
$ 5,536 |
(1) % |
$ 10,411 |
$ 10,700 |
(3) % |
|||||
Operating expenses |
$ 3,969 |
$ 4,222 |
(6) % |
$ 7,855 |
$ 8,171 |
(4) % |
|||||
Non-GAAP adjustments: |
|||||||||||
Amortization of intangibles |
(109) |
(129) |
(217) |
(253) |
|||||||
Stock-based compensation expense |
(153) |
(186) |
(325) |
(373) |
|||||||
Other corporate expenses |
(277) |
(348) |
(410) |
(420) |
|||||||
Non-GAAP operating expenses |
$ 3,430 |
$ 3,559 |
(4) % |
$ 6,903 |
$ 7,125 |
(3) % |
|||||
Operating income |
$ 1,342 |
$ 1,165 |
15 % |
$ 2,262 |
$ 2,234 |
1 % |
|||||
Non-GAAP adjustments: |
|||||||||||
Amortization of intangibles |
168 |
213 |
336 |
416 |
|||||||
Stock-based compensation expense |
191 |
223 |
401 |
448 |
|||||||
Other corporate expenses |
333 |
376 |
509 |
477 |
|||||||
Non-GAAP operating income |
$ 2,034 |
$ 1,977 |
3 % |
$ 3,508 |
$ 3,575 |
(2) % |
|||||
Net income |
$ 841 |
$ 455 |
85 % |
$ 1,796 |
$ 1,033 |
74 % |
|||||
Non-GAAP adjustments: |
|||||||||||
Amortization of intangibles |
168 |
213 |
336 |
416 |
|||||||
Stock-based compensation expense |
191 |
223 |
401 |
448 |
|||||||
Other corporate expenses |
329 |
432 |
499 |
530 |
|||||||
Fair value adjustments on equity |
(5) |
29 |
25 |
44 |
|||||||
Aggregate adjustment for income |
(153) |
(69) |
(763) |
(225) |
|||||||
Non-GAAP net income |
$ 1,371 |
$ 1,283 |
7 % |
$ 2,294 |
$ 2,246 |
2 % |
____________________ |
(a) Beginning in Fiscal 2025, our non-GAAP income tax is calculated using a fixed estimated annual tax rate. |
Reconciliation of Selected Non-GAAP Financial Measures (unaudited; continued) |
|||||||||||
Three Months Ended |
Six Months Ended |
||||||||||
|
|
Change |
|
|
Change |
||||||
Earnings per share attributable to |
$ 1.17 |
$ 0.63 |
86 % |
$ 2.49 |
$ 1.42 |
75 % |
|||||
Non-GAAP adjustments: |
|||||||||||
Amortization of intangibles |
0.23 |
0.29 |
0.46 |
0.56 |
|||||||
Stock-based compensation expense |
0.26 |
0.30 |
0.55 |
0.61 |
|||||||
Other corporate expenses |
0.46 |
0.58 |
0.69 |
0.72 |
|||||||
Fair value adjustments on equity investments |
(0.01) |
0.04 |
0.04 |
0.06 |
|||||||
Aggregate adjustment for income taxes (a) |
(0.21) |
(0.09) |
(1.05) |
(0.31) |
|||||||
Total non-GAAP adjustments attributable to non- |
(0.01) |
(0.01) |
(0.02) |
(0.01) |
|||||||
Non-GAAP earnings per share attributable to Dell |
$ 1.89 |
$ 1.74 |
9 % |
$ 3.16 |
$ 3.05 |
4 % |
____________________ |
(a) Beginning in Fiscal 2025, our non-GAAP income tax is calculated using a fixed estimated annual tax rate. |
Reconciliation of Selected Non-GAAP Financial Measures (in millions, except percentages; unaudited; continued) |
|||||||||||
Three Months Ended |
Six Months Ended |
||||||||||
|
|
Change |
|
|
Change |
||||||
Cash flow from operations |
$ 1,340 |
$ 3,214 |
(58) % |
$ 2,383 |
$ 4,991 |
(52) % |
|||||
Non-GAAP adjustments: |
|||||||||||
Capital expenditures and capitalized software |
(636) |
(624) |
(1,222) |
(1,322) |
|||||||
Free cash flow |
$ 704 |
$ 2,590 |
(73) % |
$ 1,161 |
$ 3,669 |
(68) % |
|||||
Free cash flow |
$ 704 |
$ 2,590 |
(73) % |
$ 1,161 |
$ 3,669 |
(68) % |
|||||
Non-GAAP adjustments: |
|||||||||||
Financing receivables (b) |
487 |
497 |
652 |
130 |
|||||||
Equipment under operating leases (c) |
93 |
(37) |
94 |
(62) |
|||||||
Adjusted free cash flow |
$ 1,284 |
$ 3,050 |
(58) % |
$ 1,907 |
$ 3,737 |
(49) % |
____________________ |
|
(a) |
Capital expenditures and capitalized software development costs is net of proceeds from sales of facilities, land, and other assets. |
(b) |
Financing receivables represent the operating cash flow impact from the change in DFS financing receivables. |
(c) |
Equipment under operating leases represents the net change of capital expenditures and depreciation expense for DFS leases and contractually embedded leases identified within flexible consumption arrangements. |
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SOURCE
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