Dell Technologies Inc. Q2 FY2025 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Total revenue: $25 billion, up 9% year-over-year despite VMware resale exit headwinds.
  • Diluted EPS: $1.89, up 9% year-over-year.
  • Cash from operations: $1.3 billion.
  • Strong AI momentum: AI server orders $3.2 billion, shipments $3.1 billion, backlog $3.8 billion.
  • AI pipeline now “several multiples” of the backlog, with growing enterprise participation.

Business Segment Highlights

Infrastructure Solutions Group (ISG)
  • Record revenue: $11.6 billion, up 38% year-over-year.
  • Server and networking revenue: $7.7 billion, up 80% year-over-year.
  • AI-optimized server demand grew sequentially; margin improved through pricing discipline and expanded value-add (rack-level engineering, networking integration, deployment services).
  • Storage revenue: $4 billion, down 5% year-over-year due to weakness in partner IP HCI offerings, despite double-digit demand growth in Dell-owned IP storage (PowerMax, PowerScale, PowerStore, PowerProtect).
  • ISG operating income: $1.3 billion, up 22% year-over-year; operating margin improved to 11%, up 300 bps sequentially.
Client Solutions Group (CSG)
  • Revenue: $12.4 billion, down 4% year-over-year.
  • Commercial revenue: flat at $10.6 billion; Consumer revenue: down 22%.

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Operator: Good afternoon, and welcome to the Fiscal Year 2025 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 rebroadcasting 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, 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 additional 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. A 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

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