Dell Technologies(DELL) - 2025 Q2 - Quarterly Results

Financial Highlights Dell Technologies reported strong Q2 FY2025 results, with total revenue reaching $25.0 billion (up 9% YoY) and diluted EPS increasing 86% to $1.17, alongside $1.0 billion returned to shareholders Q2 FY2025 Key Financial Metrics (YoY) | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $25.0B | $22.9B | +9% | | Operating Income | $1.3B | $1.2B | +15% | | Non-GAAP Operating Income | $2.0B | $2.0B | +3% | | Diluted EPS | $1.17 | $0.63 | +86% | | Non-GAAP Diluted EPS | $1.89 | $1.74 | +9% | - The combined revenue from the Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG) was $24.1 billion, up 12% year-over-year, indicating strong momentum for the second half of the year[2] - The company generated $1.3 billion in cash flow from operations and returned $1.0 billion to shareholders through share repurchases and dividends, ending the quarter with $6.0 billion in cash and investments[2] Operating Segments Performance The company's Q2 FY2025 performance was driven by record Infrastructure Solutions Group revenue, up 38% to $11.6 billion, while Client Solutions Group revenue declined 4% to $12.4 billion Infrastructure Solutions Group (ISG) ISG achieved record Q2 revenue of $11.6 billion, up 38% YoY, driven by an 80% surge in Servers and Networking to $7.7 billion, despite a 5% decline in Storage revenue ISG Q2 FY2025 Revenue (YoY) | Category | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Servers and networking | $7.7B | $4.3B | +80% | | Storage | $4.0B | $4.2B | -5% | | Total ISG net revenue | $11.6B | $8.5B | +38% | - AI momentum accelerated in Q2, with AI-optimized server demand reaching $3.2 billion (up 23% sequentially)[3] - The company reported an AI server backlog of $3.8 billion and a pipeline several multiples of the backlog[3] - ISG operating income for the quarter was $1.3 billion, representing 11.0% of ISG net revenue[3][4] Client Solutions Group (CSG) CSG revenue decreased 4% YoY to $12.4 billion, primarily due to a 22% drop in Consumer revenue, while Commercial client revenue remained flat CSG Q2 FY2025 Revenue (YoY) | Category | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Commercial | $10.6B | $10.6B | 0% | | Consumer | $1.9B | $2.4B | -22% | | Total CSG net revenue | $12.4B | $12.9B | -4% | - CSG operating income was $767 million, a decrease of 21% YoY, with an operating margin of 6.2% of CSG net revenue[3][4] Consolidated Financial Statements This section provides detailed unaudited GAAP financial statements, including the Condensed Consolidated Statements of Income, Financial Position, and Cash Flows, for a comprehensive financial overview Condensed Consolidated Statements of Income Q2 FY2025 saw total net revenue increase 9% to $25.0 billion, with operating income rising 15% to $1.3 billion and net income surging 85% to $841 million, despite a slight gross margin dip Q2 FY2025 Income Statement Highlights (YoY) | Line Item | Q2 FY2025 (in millions) | Q2 FY2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Total net revenue | $25,026 | $22,934 | +9% | | Gross margin | $5,311 | $5,387 | -1% | | Operating income | $1,342 | $1,165 | +15% | | Net income | $841 | $455 | +85% | Condensed Consolidated Statements of Financial Position As of August 2, 2024, total assets marginally increased to $82.7 billion, while total liabilities rose to $85.5 billion, resulting in a stockholders' deficit of $2.8 billion, notably impacted by increased accounts payable Balance Sheet Highlights | Item | August 2, 2024 (in millions) | February 2, 2024 (in millions) | | :--- | :--- | :--- | | Total current assets | $37,543 | $35,947 | | Total assets | $82,687 | $82,089 | | Total current liabilities | $52,033 | $48,494 | | Total liabilities | $85,484 | $84,398 | | Total stockholders' equity (deficit) | $(2,797) | $(2,309) | Condensed Consolidated Statements of Cash Flows Q2 FY2025 net cash from operations decreased 58% to $1.3 billion, with a $2.0 billion net outflow from financing activities due to debt repayments and shareholder returns, ending with $4.7 billion in cash Q2 FY2025 Cash Flow Highlights (YoY) | Cash Flow Activity | Q2 FY2025 (in millions) | Q2 FY2024 (in millions) | | :--- | :--- | :--- | | From Operating Activities | $1,340 | $3,214 | | From Investing Activities | $(557) | $(605) | | From Financing Activities | $(2,032) | $(1,827) | - Key uses of cash in financing activities included $725 million for common stock repurchases and $316 million for dividend payments[18] Non-GAAP Financial Measures and Reconciliations This section provides non-GAAP financial metrics, including non-GAAP operating income of $2.0 billion (up 3% YoY) and diluted EPS of $1.89 (up 9% YoY), with detailed reconciliations to GAAP results Q2 FY2025 Non-GAAP Highlights (YoY) | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Non-GAAP Operating Income | $2,034M | $1,977M | +3% | | Non-GAAP Net Income | $1,371M | $1,283M | +7% | | Non-GAAP Diluted EPS | $1.89 | $1.74 | +9% | | Adjusted Free Cash Flow | $1,284M | $3,050M | -58% | - The reconciliation from GAAP to non-GAAP operating income for Q2 included adjustments for amortization of intangibles ($168 million), stock-based compensation expense ($191 million), and other corporate expenses ($333 million)[28] - Adjusted free cash flow was $1.3 billion, a 58% decrease from the prior year, calculated from $1.3 billion in operating cash flow, adjusted for capital expenditures and changes in financing receivables and operating leases[32] Other Information This section provides investor logistical details, including the earnings conference call information, company description, and important legal disclaimers regarding forward-looking statements and potential risks - The company held a conference call to discuss its performance and financial guidance on August 29 at 3:30 p.m. CDT, with materials available on its investor relations website[5] - The press release contains forward-looking statements based on current expectations, which are subject to risks and uncertainties that could cause actual results to differ materially[10][11]