Michael Dell at the Allen & Company Sun Valley Conference on July 12, 2024 in Sun Valley, Idaho.
David Grogan | CNBC
Dingle reported quarterly results Thursday that beat Wall Street expectations, thanks to an 80 percent increase in server sales. The stock rose more than 3% in extended trading.
Here’s how the company did for the fiscal second quarter against LSEG’s consensus estimates:
- Annuity: $25.03 billion versus $24.53 billion expected
- EPS: $1.89 adjusted, vs. $1.71 expected
Net income rose 85% to $841 million, or $1.17 per share, from $455 million, or 63 cents per share, in the prior period. Revenue rose about 9% from $22.93 billion a year ago.
The stock fell after Dell revised its full-year revenue guidance to between $95.5 billion and $98.5 billion, a slight upward revision from the company’s previous forecast. Earlier this year, the company told investors to expect full-year revenue of between $93.5 billion and $97.5 billion, up from $88.4 billion a year earlier.
For the current quarter, Dell said it expects revenue of between $24 billion and $25 billion, compared to StreetAccount’s estimate of $24.6 billion.
Dell has emerged as a leading vendor of servers that can handle AI workloads, especially those based on Nvidia chip as demand surges from cloud providers. Earlier this year, Nvidia CEO Jensen Huang named Dell founder Michael Dell as the person to contact to place orders for systems that include the company’s new chips.
Dell shares are up 48% so far this year, but have fallen 34% since the company’s last report.
AI sales are made in the company’s Infrastructure Solutions group, which makes servers and systems for data centers. It is the fastest growing unit of the company. Total ISG sales rose 38% to $11.65 billion, beating StreetAccount expectations of $10.44 billion.
The standout in Dell’s report was Servers and Networking revenue, which includes both GPU-based AI-oriented servers from Nvidia and AMD, as well as more traditional servers for older applications. It is part of ISG.
“We’re competing in all the big AI deals and winning significant deployments at scale,” the company’s chief executive, Jeff Clarke, said in an earnings call with analysts.
The unit reported sales of $7.76 billion, up 80% year over year and beating StreetAccount expectations of $6.37 billion. Dell said $3.1 billion of that was AI server sales, up from $1.7 billion in the May quarter.
Clarke attributed the revenue increase to server demand continuing to grow and said there is a growing “backlog” of $3.8 billion in AI server orders that have yet to be fulfilled. There’s also a multibillion-dollar pipeline of AI server deals from enterprises and cloud providers that haven’t been finalized.
However, Dell’s storage business, also part of ISG, fell 5% to $4 billion in sales.
Dell’s Client Solutions Group, which focuses on PCs and laptops, fell 4% year over year to $12.41 billion in revenue. Consumer sales fell 22% to $1.86 billion, and the company’s PC business was flat at $10.55 billion in sales.
Dell said it spent $1 billion in the quarter on share buybacks and dividends.
Correction: Dell reported fiscal second-quarter revenue of $25.03 billion. An earlier version provided the number incorrectly.
