Dell Technologies(US:DELL)2025-11-25 22:32Financial Data and Key Metrics Changes - Total revenue reached $27 billion, up 11% year-over-year, with year-to-date revenue up 12% [5][12] - Earnings per share (EPS) increased 17% to $2.59, driven by improved profitability in AI and storage [5][12] - Gross margin was up 4% to $5.7 billion, or 21.1% of revenue, primarily due to a mix shift to AI servers [12][14] - Operating income grew 11% to $2.5 billion, or 9.3% of revenue, supported by higher revenue and lower operating expenses [12][14] Business Line Data and Key Metrics Changes - ISG revenue was a record $14.1 billion, up 24%, marking seven consecutive quarters of double-digit growth [14] - AI server orders reached a record $12.3 billion in the quarter, with shipments of $5.6 billion, totaling $15.6 billion year-to-date [7][14] - CSG revenue increased 3% to $12.5 billion, with commercial revenue up 5% and consumer revenue down 7% [9][15] Market Data and Key Metrics Changes - Demand for traditional servers grew double digits, particularly in EMEA and North America [8] - International growth in CSG accelerated sequentially, up double digits year-over-year [9] - The PC refresh cycle remains durable, supported by an aging installed base and a significant portion of systems not yet upgraded to Windows 11 [9] Company Strategy and Development Direction - The company aims to capitalize on AI infrastructure buildouts and ongoing PC refresh cycles [10][11] - Competitive edge in AI is attributed to the ability to engineer bespoke, high-performance solutions and rapid deployment capabilities [11] - The focus remains on driving shareholder value through strong cash generation and capital returns [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current commodity supply environment and securing supply [10] - The outlook for Q4 includes expected revenue between $31 billion and $32 billion, with ISG and CSG combined expected to grow 34% at the midpoint [17] - Management remains optimistic about AI demand, with a strong backlog and pipeline supporting future growth [18][19] Other Important Information - The company returned $1.6 billion of capital to shareholders, including share repurchases and dividends [15] - The five-quarter pipeline continues to grow, indicating robust demand across various customer segments [7][19] Q&A Session Summary Question: Customer reaction to pricing discussions across product categories - Management acknowledged the unprecedented cost movements and emphasized their experience in navigating supply chain challenges [24][25] Question: Impact of NVIDIA's vertical integration on Dell's strategy - Management remains confident in their ability to differentiate and deliver complex solutions at scale, despite potential changes in the supply chain [36][37] Question: AI server margins and future expectations - AI server margins improved sequentially, with expectations for continued strength in Q4 driven by a broader customer mix [42][44] Question: Outlook on the PC refresh cycle - Management highlighted that the Windows 11 transition is not yet complete, indicating further opportunities for growth in the PC market [51][52] Question: AI business conviction and financing issues - Management expressed strong conviction in AI demand, supported by a robust backlog and pipeline across various customer types [58][60] Question: ISG margins and future guidance - ISG margins improved significantly, driven by strong demand for Dell's IP storage portfolio and pricing discipline [67][70] Question: Traditional server demand and upgrade cycle - Management noted that a significant portion of the install base consists of older generation servers, presenting opportunities for modernization [76][77]