Dell Technologies Inc. Q1 FY2025 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Revenue was $22.2B, up 6% year-over-year, driven by strong AI-related demand and stabilization in PCs.
  • Operating income was $1.5B, down 8% year-over-year due to lower gross margins.
  • Diluted EPS was $1.27, down 3% year-over-year.
  • Cash flow from operations reached $1B.

Key Business Segment Highlights

Infrastructure Solutions Group (ISG)

  • Revenue was $9.2B, up 22% year-over-year.
  • Server and networking revenue reached a record $5.5B, up 42% year-over-year, boosted by AI-optimized servers.
  • Storage revenue was $3.8B, flat year-over-year but expected to grow in the second half of FY25.
  • Operating income was $736M (8% of revenue), down 1% year-over-year.
  • AI-optimized server orders reached $2.6B; shipments increased over 100% sequentially to $1.7B.
  • AI server backlog reached $3.8B, up ~$900M sequentially.

Client Solutions Group (CSG)

  • Revenue was $12B, flat year-over-year.
  • Commercial revenue was $10.2B, up 3%; consumer revenue was $1.8B, down 15% year-over-year.
  • Operating income was $732M (6.1% of revenue), pressured by competitive pricing.
  • Dell highlighted optimism for a multi-year PC refresh cycle driven by aging install base, Windows 10 end-of-life, and AI PC momentum.

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Operator: Good afternoon, and welcome to the Fiscal Year 2025 First Quarter Financial Results Conference Call for Dell Technologies, Inc. I'd like to inform all participants this call is being recorded at the request of Dell Technologies. This broadcast is the copyrighted property of Dell Technologies, Inc. Any rebroadcast of this information in whole or part without the prior written permission of Dell Technologies is prohibited. Following prepared remarks, we will conduct a question-and-answer session. [Operator Instructions]. I'd like to turn the call over to Rob Williams, Head of Investor Relations. Mr. Williams, you may begin. Rob Williams: Thanks, everyone, and thanks for joining us. With me today are Jeff Clarke, Yvonne McGill and Tyler Johnson. Our earnings materials are available on our IR website, and I encourage you to review these materials and the presentation which includes content to complement our discussion this afternoon. Guidance will be covered on today's call. During this call, unless otherwise indicated, all references to financial measures refer to non-GAAP financial measures, including non-GAAP gross margin, operating expenses, operating income, net income, diluted earnings per share and adjusted free cash flow. Reconciliation of these measures to their most directly comparable GAAP measures can be found in our web deck and our press release. Growth percentages refer to year-over-year change, unless otherwise specified. Statements made during this call

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