Dell Technologies Inc. Q3 FY2024 Earnings Call

· Earnings call transcript and AI-powered summary

Headline Results

  • Q3 revenue: $22.3B, down 10% year-over-year (YoY).
  • Operating income: $2B, down 17% YoY.
  • Diluted EPS: $1.88, down 18% YoY.
  • Cash flow from operations: $2.2B.
  • Shareholder returns: $1B via buybacks and dividends.

Business Segment Performance

Infrastructure Solutions Group (ISG)

  • ISG revenue: $8.5B, down 12% YoY; flat sequentially.
  • Servers and networking revenue: $4.7B, up 9% sequentially; driven by AI-optimized servers.
  • Storage revenue: $3.8B, down 13% YoY; in line with expectations.
  • ISG operating income: $1.1B (12.6% margin), down 170 bps YoY.
  • AI server shipments: Over $0.5B, demand nearly doubled sequentially.
  • AI-related backlog: $1.6B exiting Q3 (nearly doubled vs Q2).
  • AI pipeline: Tripled sequentially; lead times remain long at 39 weeks.

Client Solutions Group (CSG)

  • CSG revenue: $12.3B, down 11% YoY; below internal expectations.
  • Commercial revenue: $9.8B; consumer revenue: $2.4B.
  • CSG operating income: $0.9B (7.5% margin), down slightly YoY due to revenue declines.
  • PC demand slowed through the quarter after early strength in June–August.
  • Large commercial customers more cautious; pricing pressure intensified late in the quarter.

Cash Flow & Balance Sheet

  • Cash & investments: $9.9B.

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Operator: Good afternoon, and welcome to the Fiscal Year 2024 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 in 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 and diluted earnings per share. 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 call that relate to futu

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