Dell Technologies Inc. Q3 FY2025 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q3 revenue was 24.4 billion dollars, up 10 percent year-over-year, driven by strong AI and traditional server momentum.
  • Diluted EPS was 2 dollars and 15 cents, up 14 percent year-over-year.
  • Cash flow from operations reached 1.6 billion dollars.
  • Year-to-date EPS is 5 dollars and 31 cents and combined ISG and CSG revenue growth is 10 percent.

ISG (Infrastructure Solutions Group)

  • ISG revenue was 11.4 billion dollars, up 34 percent year-over-year.
  • Servers and networking revenue grew 58 percent to 7.4 billion dollars, a Q3 record.
  • Storage revenue increased 4 percent to 4 billion dollars.
  • ISG operating income was up 41 percent to 1.5 billion dollars, with operating margin improving to 13.3 percent, up 230 basis points sequentially and 530 basis points since Q1.
  • AI server demand momentum remains very strong:
    • AI server shipments were 2.9 billion dollars in Q3.
    • AI server backlog is now 4.5 billion dollars.
    • Five‑quarter AI pipeline grew more than 50 percent sequentially.
    • AI orders reached 3.6 billion dollars, up 11 percent sequentially.
    • Over 2,000 enterprise customers have purchased Dell AI servers since launch.

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Operator: Ladies and gentlemen, good afternoon, and welcome to the Fiscal Year 2025 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 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 Paul Frantz, Head of Investor Relations. Mr. Frantz, you may begin. Paul Frantz: 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. Also, please take some time to view 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, free cash flow, and adjusted free cash flow. A reconciliation of these measures to their most directly comparable GAAP measures can be found in our webdeck and our press release. Growth percentages refer to year-over-year change un

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