Dell Technologies (NYSE:DELL) reported non-GAAP earnings of $2.20 per share in the fourth quarter of fiscal 2024, surpassing the Consensus Estimate by 27.17%. This marks a 22% increase from the previous year.

However, revenues on a non-GAAP basis dropped 11% year-over-year to $22.3 billion, slightly beating the consensus estimate by 0.84%. Recurring revenues saw a 3% increase year-over-year, reaching $5.8 billion.

Product revenues declined by 15% year-over-year to $16.14 billion, primarily due to increased pricing pressure. Services revenues, on the other hand, rose by 3% year-over-year to $6.16 billion.

Detailed Revenue Breakdown

The Infrastructure Solutions Group (ISG) revenues declined by 6% year-over-year to $9.332 billion. This decrease can be attributed to a 2% decline in servers and networking revenues, totaling $4.85 billion, and a 10% drop in storage revenues, totaling $4.47 billion.

Dell experienced a significant increase in orders for its AI-optimized servers, with a sequential increase of approximately 40% in the reported quarter. The flagship PowerEdge XE9680 contributed to this 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 by 12% year-over-year. Commercial revenues declined by 11% year-over-year to $9.56 billion, while consumer revenues fell by 19% to $2.15 billion.

Operating Details

Dell’s fiscal fourth-quarter non-GAAP gross profit decreased by 8% year-over-year to $5.46 billion, with a gross margin expansion of 70 basis points year-over-year to 24.5%.

Selling, general, and administrative (SG&A) expenses declined by 18% year-over-year to $3.10 billion. Research and development (R&D) expenses also declined by 10% year-over-year to $716 million in the reported quarter.

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

The non-GAAP operating income was $2.13 billion, down by 1% year-over-year, with an operating margin expansion of 90 basis points year-over-year to 9.6%.

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

Balance Sheet and Guidance

As of February 2, 2024, Dell had $7.366 billion in cash and cash equivalents, compared with $8.298 billion as of November 3, 2023. Total debt was $25.994 billion as of February 2, 2024, compared with $26.617 billion as of November 3, 2023.

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

For the first quarter of fiscal 2025, Dell expects revenues to be between $21 billion and $22 billion, with a midpoint of $21.5 billion reflecting a 3% growth. Earnings are expected to be $1.15 per share (+/- 10 cents).

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