Dell Technologies(DELL) - 2026 Q2 - Quarterly Results

Executive Summary & Highlights This section provides an overview of Dell Technologies' strong Q2 FY26 financial performance, capital returns to shareholders, and optimistic fiscal year 2026 guidance Second Quarter Fiscal 2026 Performance Overview Dell Technologies achieved strong top-line results and profitability in Q2 FY26, reaching record revenue of $29.8 billion, driven by exceptional demand for AI solutions, particularly in the Servers and Networking business which grew 69%. The company also generated robust cash flow from operations and delivered significant shareholder returns Q2 FY26 Key Financial Highlights | Metric | Value | Change Year-over-Year | | :---------------------- | :---------------- | :-------------------- | | Record Revenue | $29.8 billion | +19% | | Operating Income | $1.8 billion | +27% | | Non-GAAP Operating Income | $2.3 billion | +10% | | Diluted EPS | $1.70 | +38% | | Non-GAAP Diluted EPS | $2.32 | +19% | | Cash Flow from Operations | $2.5 billion | N/A | - Dell Technologies shipped $10 billion of AI solutions in the first half of FY26, surpassing all shipments in FY25, indicating exceptional demand[2] - The Servers and Networking business achieved record revenue, growing 69% year-over-year[2][5] Capital Return Dell Technologies returned a substantial amount of capital to its shareholders in the second quarter of fiscal 2026 through a combination of share repurchases and dividends - Dell Technologies returned $1.3 billion to shareholders in Q2 FY26[3] - Capital was returned through share repurchases and dividends[3] Fiscal 2026 Guidance Dell Technologies provided optimistic guidance for both the third quarter and the full fiscal year 2026, projecting significant growth in revenue and EPS, and raising its AI server shipment guidance Fiscal 2026 Guidance Summary | Metric | Q3 FY26 Midpoint | Change YoY | Full-Year FY26 Midpoint | Change YoY | | :---------------------- | :--------------- | :--------- | :---------------------- | :--------- | | Revenue | $27.0 billion | +11% | $107.0 billion | +12% | | GAAP Diluted EPS | $2.07 | +26% | $7.98 | +25% | | Non-GAAP Diluted EPS | $2.45 | +11% | $9.55 | +17% | - Dell Technologies is raising its AI server shipment guidance for FY26 to $20 billion[2] Detailed Financial Results (GAAP) This section presents Dell Technologies' GAAP financial statements, including condensed consolidated statements of income, financial position, and cash flows, highlighting key financial metrics and changes Condensed Consolidated Statements of Income Dell Technologies reported strong GAAP income statement results for Q2 FY26, with significant year-over-year growth in net revenue, operating income, and net income, primarily driven by product sales, despite a slight decline in services revenue Condensed Consolidated Statements of Income (Three Months Ended August 1, 2025) | Metric | Amount ($ millions) | Change YoY | | :---------------------- | :------------------ | :--------- | | Net revenue | 29,776 | 19% | | Products revenue | 23,935 | 26% | | Services revenue | 5,841 | (4)% | | Gross margin | 5,447 | 2% | | Operating income | 1,773 | 27% | | Net income | 1,164 | 32% | | Diluted EPS | $1.70 | 38% | | Income tax rate | 19.2% | 4.1 ppt | Condensed Consolidated Statements of Financial Position As of August 1, 2025, Dell Technologies' total assets increased significantly to $89.18 billion from $79.75 billion at January 31, 2025, primarily driven by substantial increases in cash and cash equivalents and accounts receivable. Total liabilities also rose, leading to an increased stockholders' deficit Condensed Consolidated Statements of Financial Position (August 1, 2025 vs. January 31, 2025) | Metric | August 1, 2025 ($ millions) | January 31, 2025 ($ millions) | Change ($ millions) | | :-------------------------------- | :-------------------------- | :---------------------------- | :------------------ | | Total assets | 89,176 | 79,746 | +9,430 | | Cash and cash equivalents | 8,145 | 3,633 | +4,512 | | Accounts receivable, net | 15,023 | 10,298 | +4,725 | | Total liabilities | 91,942 | 81,133 | +10,809 | | Total stockholders' equity (deficit) | (2,766) | (1,387) | -1,379 | Condensed Consolidated Statements of Cash Flows Dell Technologies demonstrated strong cash generation in Q2 FY26, with a significant year-over-year increase in cash flow from operating activities, while investing and financing activities resulted in net cash outflows Condensed Consolidated Statements of Cash Flows (Three Months Ended August 1, 2025) | Metric | Amount ($ millions) | Change YoY | | :------------------------------------------------ | :------------------ | :--------- | | Cash flow from operating activities | 2,543 | 90% | | Cash flow from investing activities | (655) | (17.6)% | | Cash flow from financing activities | (1,465) | (27.9)% | | Net change in cash, cash equivalents, and restricted cash | 438 | N/A | Segment Performance This section analyzes the financial performance of Dell Technologies' Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG), along with a reconciliation to consolidated results Infrastructure Solutions Group (ISG) The Infrastructure Solutions Group (ISG) experienced robust growth in Q2 FY26, primarily driven by a significant increase in Servers and Networking revenue, while Storage revenue saw a slight decline. ISG's operating income also increased, though its percentage of net revenue decreased ISG Segment Performance (Three Months Ended August 1, 2025) | Metric | Amount ($ millions) | Change YoY | | :-------------------------------- | :------------------ | :--------- | | Total ISG net revenue | 16,800 | 44% | | Servers and networking revenue | 12,944 | 69% | | Storage revenue | 3,856 | (3)% | | ISG operating income | 1,470 | 14% | | ISG operating income % of net revenue | 8.8% | (2.2) ppt | Client Solutions Group (CSG) The Client Solutions Group (CSG) showed modest overall revenue growth in Q2 FY26, with commercial client revenue increasing slightly and consumer revenue declining. Operating income for CSG decreased marginally, and its percentage of net revenue also saw a slight dip CSG Segment Performance (Three Months Ended August 1, 2025) | Metric | Amount ($ millions) | Change YoY | | :-------------------------------- | :------------------ | :--------- | | Total CSG net revenue | 12,503 | 1% | | Commercial Client revenue | 10,781 | 2% | | Consumer revenue | 1,722 | (7)% | | CSG operating income | 803 | (2)% | | CSG operating income % of net revenue | 6.4% | (0.2) ppt | Reconciliation to Consolidated Results This section reconciles the reportable segment net revenue and operating income to the total consolidated figures, accounting for corporate and other items, amortization of intangibles, stock-based compensation expense, and other corporate expenses Reconciliation to Consolidated Net Revenue and Operating Income (Three Months Ended August 1, 2025) | Metric | Amount ($ millions) | | :-------------------------------------- | :------------------ | | Reportable segment net revenue | 29,303 | | Corporate and other net revenue | 473 | | Total consolidated net revenue | 29,776 | | Reportable segment operating income | 2,273 | | Corporate and other operating income | 11 | | Amortization of intangibles | (125) | | Stock-based compensation expense | (179) | | Other corporate expenses | (207) | | Total consolidated operating income | 1,773 | - Corporate and other includes results of divested businesses or non-reportable segments and other items managed at the corporate level not allocated to reportable segments[31] - Amortization of intangibles primarily relates to non-cash purchase accounting adjustments from the EMC merger transaction in 3QFY17[32] Non-GAAP Financial Measures & Reconciliations This section provides an overview of Dell Technologies' non-GAAP financial measures, including detailed reconciliations for gross margin, operating income, net income, EPS, cash flow, and future guidance Non-GAAP Financial Measures Overview Dell Technologies provides non-GAAP financial measures to supplement its GAAP results, believing they offer additional insights into the company's core operations and performance by excluding certain items that may not be indicative of ongoing business trends - Non-GAAP financial measures are provided as a supplement to GAAP results[14][37] - These measures include non-GAAP gross margin, operating expenses, operating income, net income, diluted EPS, free cash flow, and adjusted free cash flow[14][37] - A detailed discussion of the reasons for including these measures, their limitations, and excluded items is available in the company's periodic reports filed with the SEC[37] Selected Non-GAAP Financial Measures Summary Dell Technologies reported strong non-GAAP financial results for Q2 FY26, with increases in non-GAAP operating income, net income, and diluted EPS, despite a slight decrease in non-GAAP gross margin percentage Selected Non-GAAP Financial Measures (Three Months Ended August 1, 2025) | Metric | Amount ($ millions) | Change YoY | | :-------------------------------- | :------------------ | :--------- | | Non-GAAP gross margin | 5,572 | 1% | | Non-GAAP gross margin % of net revenue | 18.7% | (3.3) ppt | | Non-GAAP operating expenses | 3,288 | (4)% | | Non-GAAP operating income | 2,284 | 10% | | Non-GAAP net income | 1,591 | 13% | | Non-GAAP diluted EPS | $2.32 | 19% | Reconciliation of Non-GAAP Gross Margin, Operating Expenses, and Operating Income This section details the adjustments made to reconcile GAAP gross margin, operating expenses, and operating income to their respective non-GAAP figures, primarily involving the exclusion of amortization of intangibles, stock-based compensation expense, and other corporate expenses Reconciliation of GAAP to Non-GAAP (Three Months Ended August 1, 2025) | Metric | GAAP ($ millions) | Non-GAAP Adjustments ($ millions) | Non-GAAP ($ millions) | | :---------------------- | :---------------- | :-------------------------------- | :-------------------- | | Gross margin | 5,447 | +39 (Amortization) | 5,572 | | | | +37 (Stock-based comp) | | | | | +49 (Other corporate) | | | Operating expenses | 3,674 | -86 (Amortization) | 3,288 | | | | -142 (Stock-based comp) | | | | | -158 (Other corporate) | | | Operating income | 1,773 | +125 (Amortization) | 2,284 | | | | +179 (Stock-based comp) | | | | | +207 (Other corporate) | | Reconciliation of Non-GAAP Net Income and EPS The reconciliation from GAAP to non-GAAP net income and diluted EPS involves adjustments for amortization of intangibles, stock-based compensation expense, other corporate expenses, fair value adjustments on equity investments, and an aggregate adjustment for income taxes Reconciliation of GAAP to Non-GAAP Net Income and EPS (Three Months Ended August 1, 2025) | Metric | GAAP ($ millions/share) | Non-GAAP Adjustments ($ millions/share) | Non-GAAP ($ millions/share) | | :---------------------- | :---------------------- | :-------------------------------------- | :-------------------------- | | Net income | 1,164 | +125 (Amortization) | 1,591 | | | | +179 (Stock-based comp) | | | | | +200 (Other corporate) | | | | | -4 (Fair value adj.) | | | | | -73 (Income taxes) | | | Diluted EPS | $1.70 | +0.19 (Amortization) | $2.32 | | | | +0.26 (Stock-based comp) | | | | | +0.29 (Other corporate) | | | | | -0.01 (Fair value adj.) | | | | | -0.11 (Income taxes) | | - The company's non-GAAP income tax is calculated using a fixed estimated annual tax rate[42][46] Reconciliation of Non-GAAP Cash Flow Measures This section reconciles cash flow from operations to free cash flow and adjusted free cash flow by accounting for capital expenditures, capitalized software development costs, changes in financing receivables, and equipment under operating leases Reconciliation of GAAP to Non-GAAP Cash Flow Measures (Three Months Ended August 1, 2025) | Metric | Amount ($ millions) | Change YoY | | :------------------------------------------------ | :------------------ | :--------- | | Cash flow from operations | 2,543 | 90% | | Capital expenditures and capitalized software development costs, net | (675) | N/A | | Free cash flow | 1,868 | 165% | | Financing receivables | 592 | N/A | | Equipment under operating leases | 58 | N/A | | Adjusted free cash flow | 2,518 | 96% | Reconciliation of Non-GAAP Guidance Dell Technologies provides a reconciliation of its GAAP diluted EPS guidance to non-GAAP diluted EPS guidance for Q3 and full-year FY26, primarily adjusting for amortization of intangibles, stock-based compensation, other corporate expenses, fair value adjustments, and income taxes Reconciliation of Non-GAAP Guidance (Q3 and Full-Year FY26) | Metric (Q3 FY26 Guidance) | GAAP EPS | Non-GAAP Adjustments | Non-GAAP EPS | | :------------------------ | :------- | :------------------- | :----------- | | Diluted EPS | $2.07 | +0.18 (Amortization) | $2.45 | | | | +0.26 (Stock-based) | | | | | -0.06 (Income taxes) | | | Metric (Full-Year FY26 Guidance) | GAAP EPS | Non-GAAP Adjustments | Non-GAAP EPS | | :------------------------ | :------- | :------------------- | :----------- | | Diluted EPS | $7.98 | +0.72 (Amortization) | $9.55 | | | | +1.05 (Stock-based) | | | | | +0.22 (Other corp) | | | | | -0.03 (Fair value) | | | | | -0.39 (Income taxes) | | - Amortization of intangibles estimates are for acquisitions completed as of August 1, 2025, excluding potential future acquisitions[52] - Other corporate expenses primarily include severance, payroll taxes on stock-based compensation, facility action costs, and transaction-related expenses, with no estimate for future severance[53] Additional Information This section provides details on Dell Technologies' conference call, company overview, and important disclosures regarding forward-looking statements and associated risk factors Conference Call Information Dell Technologies announced details for its conference call to discuss Q2 FY26 performance and FY26 guidance, providing access information for live broadcast and archived recordings - A conference call to discuss performance and financial guidance was held on August 28 at 3:30 p.m. CST[9] - Prepared remarks, a presentation, and the live broadcast are accessible via investors.delltechnologies.com, with an archived version available for one year[9][10] About Dell Technologies Dell Technologies is a global technology leader focused on enabling digital transformation for organizations and individuals, offering a comprehensive and innovative portfolio of technology and services tailored for the AI era - Dell Technologies helps organizations and individuals build their digital future and transform how they work, live, and play[11] - The company provides the industry's broadest and most innovative technology and services portfolio for the AI era[11] Forward-Looking Statements and Risk Factors This section highlights that the press release contains forward-looking statements regarding future results and events, which are inherently subject to various risks, uncertainties, and other factors that could cause actual outcomes to differ materially from expectations - Statements relating to future results and events are forward-looking and based on current expectations[15] - Risks and uncertainties include adverse global economic conditions, competitive pressures, reliance on third-party suppliers, effects of AI solution demand, security incidents, and foreign operations[17][18] - Investors should not place undue reliance on forward-looking statements, as actual results may differ materially due to various factors detailed in SEC filings[19]