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Dell (DELL) Q4 Earnings Top Estimates, Revenues Down Y/Y

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Dell Technologies (DELL - Free Report) reported non-GAAP earnings of $2.20 per share in fourth-quarter fiscal 2024, beating the Zacks Consensus Estimate by 27.17%. The bottom line increased 22% year over year.

Revenues, on a non-GAAP basis, declined 11% year over year to $22.3 billion and beat the consensus mark by 0.84%. Recurring revenues increased 3% year over year to $5.8 billion.

Product revenues fell 15% year over year to $16.14 billion. The company witnessed increased pricing pressure in the reported quarter.

Services revenues rose 3% year over year to $6.16 billion.

Dell Technologies Inc. Price, Consensus and EPS Surprise

 

Dell Technologies Inc. Price, Consensus and EPS Surprise

Dell Technologies Inc. price-consensus-eps-surprise-chart | Dell Technologies Inc. Quote

 

Top-Line Detail

Infrastructure Solutions Group (“ISG”) revenues declined 6% year over year to $9.332 billion.

The downside can be attributed to a 2% decrease in servers and networking revenues that totaled $4.85 billion. Storage revenues fell 10% year over year to $4.47 billion.

In the reported quarter, Dell's AI-optimized server momentum saw a sequential increase of approximately 40% in orders. The flagship PowerEdge XE9680 experienced strong demand, contributing to the momentum in the AI space.

The backlog for AI-optimized servers nearly doubled quarter-over-quarter, reaching $2.9 billion in the reported quarter.

Client Solutions Group (CSG) revenues were $11.71 billion, down 12% year over year. Commercial revenues declined 11% year over year to $9.56 billion. Consumer revenues fell 19% to $2.15 billion.

Operating Details

Dell’s fiscal fourth-quarter non-GAAP gross profit decreased 8% year over year to $5.46 billion. The gross margin expanded 70 bps year over year to 24.5%.

SG&A expenses declined 18% year over year to $3.10 billion. Research and development expenses declined 10% year over year to $716 million in the reported quarter.

Non-GAAP operating expenses decreased 12% year over year to $3.32 billion. Operating expenses, as a percentage of revenues, decreased 20 bps on a year-over-year basis to 14.9%.

The non-GAAP operating income was $2.13 billion, down 1% year over year. The operating margin expanded 90 bps year over year to 9.6%.

The ISG segment’s operating income decreased 7% year over year to $1.42 billion. Meanwhile, the CSG segment’s operating income was $726 million, up 8% year over year.

Balance Sheet

As of Feb 2, 2024, DELL had $7.366 billion in cash and cash equivalents compared with $8.298 billion as of Nov 3, 2023.

Total Debt was $25.994 billion as of Feb 2, 2024, compared with $26.617 billion as of Nov 3, 2023.

The company generated a cash flow of $8.7 billion in fiscal 2024.

Dell returned $836 million to its shareholders through share repurchases and paid $261 million in dividends, resulting in a total capital return of $1.1 billion.

Guidance

For the first quarter of fiscal 2025, revenues are expected to be between $21 billion and $22 billion, with a midpoint of $21.5 billion reflecting a 3% growth.

Dell anticipates a 5% growth at the midpoint for the combined ISG and CSG, with ISG expected to increase in the mid to high teens.

Earnings are expected to be $1.15 per share (+/- 10 cents).

Zacks Rank & Stocks to Consider

Currently, Dell Technologies has a Zacks Rank #2 (Buy).

DELL’s shares have gained 23.7% year to date compared with the Zacks Computer & Technology sector’s increase of 8.5%.

Crowdstrike (CRWD - Free Report) , SEMrush (SEMR - Free Report) and Adobe (ADBE - Free Report) are some top-ranked stocks that investors can consider in the broader sector.

CRWD currently sports Zacks Rank#1(Strong Buy), while SEMR and ADBE have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Crowdstrike shares have returned 24% year to date. CRWD is scheduled to release fourth-quarter and fiscal year 2024 results on Mar 5.

SEMrush’s shares have declined 8.6% year to date. SEMR is set to report its first-quarter 2024 results on Mar 4.

Adobe’s shares have declined 6.1% year to date. ADBE is set to release its fourth-quarter fiscal 2024 results on Mar 14.

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