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Dell Technologies (DELL - Free Report) reported non-GAAP earnings of $1.89 per share in second-quarter fiscal 2025, beating the Zacks Consensus Estimate by 8.62%. The bottom line increased 9% year over year.
Revenues, on a non-GAAP basis, increased 9% year over year to $25 billion and beat the consensus mark by 3.03%. The upside was driven by exceptional performance in AI servers and a return to growth in the commercial PC business.
DELL shares have surged 49% year to date compared with the Zacks Computer & Technology sector’s increase of 20.3%.
Considering impressive second-quarter performance, DELL initiated a strong fiscal 2025 guidance for both revenues and earnings which is expected to boost share price momentum.
Dell Technologies Inc. Price, Consensus and EPS Surprise
Product revenues rose 12% year over year to $18.9 billion, beating the Zacks Consensus Estimate by 6.41%.
Services revenues moved up 1% year over year to $6.07 billion, missing the Zacks Consensus Estimate by 2.97%.
Infrastructure Solutions Group (ISG) revenues increased 38% year over year to $11.6 billion.
The upside can be attributed to servers and networking revenues of 7.6 billion, which grew 80% year over year, with demand strength across AI and traditional servers. However, Storage revenues declined 5% year over year to $3.9 billion.
In the reported quarter, Dell’s AI-optimized server momentum saw an increase of $3.2 billion in orders. The flagship PowerEdge XE9680 experienced strong demand, contributing to the momentum in the AI space.
Dell shipped $3.1 billion worth of AI servers in the second quarter and the AI server backlog remained healthy at $3.8 billion.
Client Solutions Group (CSG) revenues were $12 billion, declining 4% year over year. Commercial Client revenues were flat year over year to $10.5 billion. Consumer revenues fell 22% to $1.85 billion.
DELL’s Operating Details
Dell’s fiscal second-quarter non-GAAP gross profit dropped 1% year over year to $5.46 billion. The gross margin contracted 230 basis points (bps) year over year to 21.8%.
SG&A expenses fell 6.3% year over year to $2.74 billion. Research and development expenses increased 9.1% year over year to $682 million in the reported quarter.
Non-GAAP operating expenses declined 4% year over year to $3.43 billion. Operating expenses, as a percentage of revenues, contracted 180 bps on a year-over-year basis to 13.7%.
The non-GAAP operating income was $2.03 billion, up 3% year over year. The operating margin contracted 50 bps year over year to 8.1%.
The ISG segment’s operating income surged 22% year over year to $1.2 billion. The CSG segment’s operating income was $767 million, down 21% year over year.
DELL’s Balance Sheet Details
As of Aug. 2, 2024, DELL had $4.55 billion in cash and cash equivalents compared with $5.83 billion as of May 3, 2024.
Total Debt was $24.5 billion as of Aug. 2, 2024, compared with $25 billion as of May 3, 2024.
The company generated a cash flow from the operation of $1.3 billion and the adjusted free cash flow was $1.28 billion in second-quarter fiscal 2025.
Dell returned $712 million to its shareholders through share repurchases and paid $316 million in dividends, resulting in a total capital return of $1 billion.
DELL’s Raised Fiscal 2025 Guidance
For the third quarter of fiscal 2025, revenues are expected to be between $24 billion and $25 billion, with a midpoint of $24.5 billion, reflecting 10% growth.
Dell anticipates 14% growth at the midpoint for the combined ISG and CSG, with ISG expected to increase in the low thirties.
Earnings are expected to be 2 cents per share (+/- 10 cents).
For the fiscal 2025, revenues are expected to be between $95.5 billion and $98.5 billion, with a midpoint of $97 billion, reflecting 10% growth.
Dell anticipates 13% growth at the midpoint for the combined ISG and CSG, with ISG expected to increase roughly 30% and CSG to be flat to up low single digits.
Earnings are expected to be $7.80 per share (+/- 25 cents), up 9% at the midpoint.
Zacks Rank & Other Stocks to Consider
Dell Technologies has a Zacks Rank #3 (Hold) at present.
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DELL Beats Q2 Earnings Estimates: Will Higher FY25 View Lift Shares?
Dell Technologies (DELL - Free Report) reported non-GAAP earnings of $1.89 per share in second-quarter fiscal 2025, beating the Zacks Consensus Estimate by 8.62%. The bottom line increased 9% year over year.
Revenues, on a non-GAAP basis, increased 9% year over year to $25 billion and beat the consensus mark by 3.03%. The upside was driven by exceptional performance in AI servers and a return to growth in the commercial PC business.
DELL shares have surged 49% year to date compared with the Zacks Computer & Technology sector’s increase of 20.3%.
Considering impressive second-quarter performance, DELL initiated a strong fiscal 2025 guidance for both revenues and earnings which is expected to boost share price momentum.
Dell Technologies Inc. Price, Consensus and EPS Surprise
Dell Technologies Inc. price-consensus-eps-surprise-chart | Dell Technologies Inc. Quote
DELL’s Q2 Top-Line Detail
Product revenues rose 12% year over year to $18.9 billion, beating the Zacks Consensus Estimate by 6.41%.
Services revenues moved up 1% year over year to $6.07 billion, missing the Zacks Consensus Estimate by 2.97%.
Infrastructure Solutions Group (ISG) revenues increased 38% year over year to $11.6 billion.
The upside can be attributed to servers and networking revenues of 7.6 billion, which grew 80% year over year, with demand strength across AI and traditional servers. However, Storage revenues declined 5% year over year to $3.9 billion.
In the reported quarter, Dell’s AI-optimized server momentum saw an increase of $3.2 billion in orders. The flagship PowerEdge XE9680 experienced strong demand, contributing to the momentum in the AI space.
Dell shipped $3.1 billion worth of AI servers in the second quarter and the AI server backlog remained healthy at $3.8 billion.
Client Solutions Group (CSG) revenues were $12 billion, declining 4% year over year. Commercial Client revenues were flat year over year to $10.5 billion. Consumer revenues fell 22% to $1.85 billion.
DELL’s Operating Details
Dell’s fiscal second-quarter non-GAAP gross profit dropped 1% year over year to $5.46 billion. The gross margin contracted 230 basis points (bps) year over year to 21.8%.
SG&A expenses fell 6.3% year over year to $2.74 billion. Research and development expenses increased 9.1% year over year to $682 million in the reported quarter.
Non-GAAP operating expenses declined 4% year over year to $3.43 billion. Operating expenses, as a percentage of revenues, contracted 180 bps on a year-over-year basis to 13.7%.
The non-GAAP operating income was $2.03 billion, up 3% year over year. The operating margin contracted 50 bps year over year to 8.1%.
The ISG segment’s operating income surged 22% year over year to $1.2 billion. The CSG segment’s operating income was $767 million, down 21% year over year.
DELL’s Balance Sheet Details
As of Aug. 2, 2024, DELL had $4.55 billion in cash and cash equivalents compared with $5.83 billion as of May 3, 2024.
Total Debt was $24.5 billion as of Aug. 2, 2024, compared with $25 billion as of May 3, 2024.
The company generated a cash flow from the operation of $1.3 billion and the adjusted free cash flow was $1.28 billion in second-quarter fiscal 2025.
Dell returned $712 million to its shareholders through share repurchases and paid $316 million in dividends, resulting in a total capital return of $1 billion.
DELL’s Raised Fiscal 2025 Guidance
For the third quarter of fiscal 2025, revenues are expected to be between $24 billion and $25 billion, with a midpoint of $24.5 billion, reflecting 10% growth.
Dell anticipates 14% growth at the midpoint for the combined ISG and CSG, with ISG expected to increase in the low thirties.
Earnings are expected to be 2 cents per share (+/- 10 cents).
For the fiscal 2025, revenues are expected to be between $95.5 billion and $98.5 billion, with a midpoint of $97 billion, reflecting 10% growth.
Dell anticipates 13% growth at the midpoint for the combined ISG and CSG, with ISG expected to increase roughly 30% and CSG to be flat to up low single digits.
Earnings are expected to be $7.80 per share (+/- 25 cents), up 9% at the midpoint.
Zacks Rank & Other Stocks to Consider
Dell Technologies has a Zacks Rank #3 (Hold) at present.
Adobe (ADBE - Free Report) , Daktronics (DAKT - Free Report) and Smartsheet (SMAR - Free Report) are some better-ranked stocks that investors can consider in the broader sector.
Adobe, Daktronics and Smartsheet each carry a Zacks Rank 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Adobe’s shares have declined 4.5% year to date. ADBE is scheduled to release third-quarter fiscal 2024 results on Sept. 12.
Daktronics shares have gained 72.3% year to date. DAKT is set to report its first-quarter fiscal 2025 results on Sept. 4.
Smartsheet shares have surged 2.2% year to date. SMAR is scheduled to release second-quarter fiscal 2025 results on Sept. 5.