Dell Technologies Inc. Q2 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Overall Performance

  • Revenue was 23.5 billion dollars, up 1 percent year-over-year (core orders up 4 percent excluding China).
  • Gross margin rose 13 percent to 8 billion dollars, driven by lower component costs and pricing discipline.
  • Operating income was 2.7 billion dollars, up 30 percent year-over-year, reaching 11.7 percent of revenue.
  • EPS was 2 dollars and 15 cents, benefiting from strong profitability and a lower tax rate.
  • Adjusted EBITDA was 3.2 billion dollars and 11.2 billion dollars on a trailing twelve‑month basis.
  • Record adjusted free cash flow of 3.4 billion dollars, aided by improved working capital and reduced inventory.
  • Deferred revenue increased 17 percent to 25.3 billion dollars; recurring revenue now represents 20 to 25 percent of quarterly revenue.
  • Dell repaid 2 billion dollars of gross debt during Q2 and 2.4 billion dollars year‑to‑date; on track to repay 5 billion dollars for FY20.

Business Unit Performance

Infrastructure Solutions Group (ISG)

  • ISG revenue was 8.6 billion dollars, down 7 percent year-over-year.
  • Storage revenue was flat at 4.2 billion dollars; orders up 1 percent in Q2 and 4 percent in the first half.
  • Strong demand in Isilon, HCI solutions, and new Unity XT products.

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Operator: Good afternoon, and welcome to the Fiscal Year 2020 Second 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 prior written permission of Dell Technologies is prohibited. Following prepared remarks, we will conduct a question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Rob Williams, Head of Investor Relations. Mr. Williams, you may begin. Robert Williams: Thanks, Erika, and thanks for joining us. With me today are Vice Chairman, Jeff Clarke; our CFO, Tom Sweet; and our Treasurer, Tyler Johnson. During this call, we will reference non-GAAP financial measures, including non-GAAP revenues, gross margins, operating expenses, operating income, net income, EPS, EBITDA, adjusted EBITDA, and adjusted free cash flow. A reconciliation of these measures to their most directly comparable GAAP measures can be found in our web deck and press release. Please also note that all growth percentages refer to year-over-year change, unless otherwise specified. I want to mention that we will not be taking questions related to the Pivotal or Carbon Black transactions that VMware announced on August 22. Finally, I'd like to remind you that all statements made during this call that relate to future result

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