• FY25 Revenue: $95.6 billion, up 8% year-over-year.
• Operating Income: $8.5 billion.
• EPS: Record $8.14, up 10% year-over-year.
• Cash Flow: $4.5 billion.
• Q4 Revenue: $23.9 billion, up 7% year-over-year.
• Q4 EPS: $2.68, up 18% year-over-year.
• ISG Revenue: $11.4 billion in Q4, up 22% year-over-year.
• Servers and Networking Revenue: $6.6 billion in Q4, up 37% year-over-year.
• Storage Revenue: $4.7 billion in Q4, up 5% year-over-year.
• CSG Revenue: $11.9 billion in Q4, up 1% year-over-year.
• Commercial Revenue: $10 billion in Q4, up 5% year-over-year.
• Consumer Revenue: $1.9 billion in Q4, down 12% year-over-year.
• Operating Expense: Down 6% to $3.1 billion in Q4.
• Gross Margin: $5.8 billion or 24.3% of revenue in Q4.
• Q4 Net Income: $1.9 billion, up 15% year-over-year.
• Dividend Increase: 18% increase to $2.10 per share annually.
• Share Repurchase Authorization: $10 billion increase approved.
• FY26 Revenue Guidance: $101 billion to $105 billion, up 8% at midpoint.
• FY26 EPS Guidance: $9.30 plus or minus $0.25, up 14% at midpoint.

• Warning! GuruFocus has detected 5 Warning Signs with DELL.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Dell Technologies Inc (NYSE:DELL) reported FY25 revenue of $95.6 billion, an 8% increase, with operating income of $8.5 billion.
• The company achieved record EPS of $8.14, up 10%, and generated $4.5 billion in cash flow.
• Dell Technologies Inc (NYSE:DELL) introduced several innovative products, including AI-optimized platforms and advancements in storage solutions like PowerStore Prime.
• The company maintained its leadership in commercial AI PCs and PC monitors, launching new products with advanced features.
• Dell Technologies Inc (NYSE:DELL) announced an 18% increase in its annual dividend to $2.10 per share and a $10 billion increase in share repurchase authorization, reflecting confidence in its business outlook.

Negative Points

• The consumer segment faced challenges with softer demand and increased discounting, impacting profitability.
• Gross margin was slightly down due to a competitive pricing environment, particularly in the CSG segment.
• The company noted a slowdown in demand in January, despite some strength in small and medium business sectors.
• Dell Technologies Inc (NYSE:DELL) faces a competitive environment in the AI server market, with concerns about ODM encroachment.
• The company anticipates a decline in gross margin rate by roughly 100 basis points in FY26 due to a higher mix of AI-optimized servers and competitive pressures.

Q & A Highlights

Q: Yvonne, could you talk through the fiscal '26 guide? What assumptions are incorporated beyond what you stated, especially regarding ISG and CSG margins? How much is coming from buybacks, and have you made any tariff-related assumptions in these margin guides? A: Thanks, Wamsi. We guided to $103 billion at midpoint, up 8%, with ISG and CSG expected to grow about 10% combined. ISG is expected to grow in the high teens, fueled by $15 billion of AI server shipments and continued growth in traditional server and storage. CSG is expected to grow mid-single digits, more weighted towards the second half of the year. OpEx is expected to be down low single digits year-over-year, continuing our efficiency drive. We expect ISG operating income to be roughly flat year-over-year, with continued competition in CSG. We are balancing growth and profitability, managing pricing, and driving shareholder value.

Q: Jeff, how do you respond to concerns about ODM encroachment in the AI server market, potentially leading to margin pressure? A: Thanks, Erik. We do see ODMs in large opportunities, but Dell's strength lies in custom work requiring significant engineering and architecture capabilities. Our customers value our end-to-end solutions, including service, global footprint, financing capabilities, and go-to-market coverage. We differentiate by providing unique solutions, and our ability to deploy large clusters faster than competitors is a key advantage. We continue to invest in differentiation and provide a one-stop solution that others may not offer.

Q: Could you give us your thoughts on your exposure to the US federal government and how you see trends given budget cuts and spending cuts? A: We do business in over 170 countries, with the US being the largest. While I can't parse out specific details, we continue to lean into opportunities and navigate cycles successfully. The US government will need technology, and AI plays a significant role. We expect demand to materialize, and we have a broad business to support this, whether in PCs, servers, storage, or AI solutions.

Q: Jeff, as the Blackwell product cycle materializes through your AI backlog, how do you compare the margin profile of rack scale configurations relative to the Hopper product cycle? A: Blackwell margins are lower than Hopper margins, as deals are large and competitive. However, system design and architecture work allow us to extract value and reduce costs. We focus on engineering unique solutions, attaching networking and storage, and providing services. AI servers are margin rate-dilutive but margin dollar-accretive and operating margin-positive. Our experience shows better margins in enterprise AI, and we continue to focus on this area.

Q: Can you talk about the expectations for ISG margins, considering AI server revenues growing 50%? How do you plan to keep ISG margins flat despite the dilutive effect from AI server margins? A: We plan to grow at least $15 billion in AI servers while maintaining ISG margins by leveraging traditional servers and storage. Storage leverage is crucial, with a focus on Dell IP storage, which has superior margins. PowerStore has shown strong growth, and we continue to invest in innovation and differentiation. Our broad coverage and specialty capabilities help grow the customer base, and we aim to attach more storage to AI opportunities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.