Dell Technologies Inc. Q3 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Overview

  • Q3 revenue was $22.9B, up 1% year-over-year (FX a 110 bps headwind).
  • Strong profitability driven by lower component costs and pricing discipline.
  • Non‑GAAP operating income guidance range raised on the low end; revenue range narrowed due to Intel CPU shortages.
  • Demand environment mixed: strength in small/medium business and commercial accounts; weakness in China and large enterprise.

Key Business Highlights

  • Infrastructure Solutions Group (ISG)
    • Revenue: $8.4B, down 6% YoY.
    • Storage: $4.1B, flat overall but underlying 7% demand growth. Strong performance in data protection and VxRail (orders up 82%). Expected market share gains.
    • Servers & Networking: $4.2B, down 16% YoY, driven largely by weakness in China and large enterprise digestion of prior-year growth. Ex‑China orders down mid-to-high single digits.
    • Operating income: $1B (11.9% of revenue), up 140 bps YoY due to mix improvements.
  • VMware
    • Revenue: $2.5B, up 11% YoY.
    • Strong license bookings: NSX +50%, vSAN +35%.
    • Closed Carbon Black acquisition; Pivotal acquisition expected by Q4 end.

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Operator: Good afternoon and welcome to the Fiscal Year 2020 Third 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 now like to turn to calling over to Robert Williams, Head of Investor Relations. Mr. Williams, you may begin. Robert Williams: Thanks, Erica, and thanks everyone for joining us. With me today are Vice Chairman, Jeff Clarke; our CFO, Tom Sweet; and our Treasurer, Tyler Johnson. During this call unless we indicate otherwise all references to financial measures refer to non-GAAP financial measures, including non-GAAP revenue, gross margin, 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 our growth percentages refer to a year-over-year change unless otherwise specified. Finally, I’d like to remind you that all statements made during this call that relate to future results and events are forward-looking statements based on current expectations. Ac

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