Dell Technologies, Inc. Q1 FY2026 earnings call

• AI Momentum: Exceptional demand for AI-optimized servers, $12.1 billion in Q1 orders, surpassing FY 2025 shipments. Ecosystem with key partners like NVIDIA, AMD, etc. <br>- Traditional Servers: Revenue up double digits, six consecutive quarters of year-over-year demand growth. Focus on data center modernization with 16th and 17th-generation servers. <br>- Storage: Revenue up 6%, third consecutive quarter of P&L growth. PowerStore demand up double digits, five consecutive quarters. Dell IP storage mix growing, margin rates expanding. <br>- CSG Commercial PCs: Revenue up 5%, three consecutive quarters of P&L growth, five consecutive quarters of demand growth. Strong commercial demand in North America, EMEA, APJ. Consumer market challenged. <br>- Innovation: Dell AI factory advancements, industry-first AI PCs, new Pro Max notebooks/desktops, server platforms, data platform, partnerships, private cloud, and automation.

Total Revenue: Reached $23.4 billion, up 5%. <br>ISG (Infrastructure Solutions Group): Revenue $10.3 billion, up 12%. Servers and networking revenue $6.3 billion, up 16%. Storage revenue up 6%, third consecutive quarter of growth. ISG operating income $1 billion, up 36%, operating income rate 9.7% of revenue. <br>CSG (Client Solutions Group): Revenue $12.5 billion, up 5%. Commercial revenue up 9%, consumer revenue down 19%. CSG operating income $700 million, 5.2% of revenue. <br>AI: Booked $12.1 billion in orders, shipped $1.8 billion, backlog $400 million. Five-quarter pipeline continued to grow.

• Q2 Guidance: Revenue between $28.5B - $29.5B, up 16% midpoint. ISG and CSG combined grow 19% midpoint. OpEx down low single digits, operating income up ~8%. Diluted non-GAAP EPS $2.25 ± $0.10. <br>- Full-Year Guidance: Revenue $101B - $105B, midpoint $103B, up 8%. ISG growth high teens, CSG low to mid-single digits. Operating income up ~9%. Diluted non-GAAP EPS $9.4 ± $0.25, up 15% midpoint.

• Macro Environment: Impact on customer IT spend evaluation. <br>- Tariffs: Navigating tariffs, but guidance includes current tariff knowledge. <br>- Competitive Dynamics: Intense competition, especially in CSG consumer PCs and traditional servers/storage. <br>- Lumpy Demand: Nonlinear nature of AI server demand with dependencies on data centers, power, infrastructure.

Q: On AI server revenues, backlog, and fiscal 2026 target<br>A: Jeff Clarke talks about $12.1B orders in Q1, backlog $400M, optimistic on 15+ billion target, pipeline growth. <br>Q: Second-half guidance, AI server profit outlook<br>A: Yvonne McGill and Jeff Clarke discuss Q2 AI server shipments, ISG margins expanding, AI orders driving income growth. <br>Q: Storage and services attach opportunity with AI servers<br>A: Jeff Clarke talks about storage portfolio expansion, data management platform, deployment services, unstructured space advantage. <br>Q: Tariffs, gross margin progression, AI server profit<br>A: Jeff Clarke and Yvonne McGill discuss tariffs included in guidance, gross margin dollar growth from AI servers. <br>Q: Customer behavior, pull forward, competitive response<br>A: Jeff Clarke talks about customer pull forward, North American speed bump, competitive dynamics in CSG and ISG. <br>Q: Storage competitive dynamics, AI training vs inference<br>A: Jeff Clarke discusses storage portfolio for AI workloads, disaggregated storage advantage. <br>Q: ISG operating margin trends, inventory write-downs<br>A: Yvonne McGill talks about seasonality, traditional server mix impact, Dell IP storage mix improvement. <br>Q: Backlog booking, fiscal year order expectation<br>A: Jeff Clarke talks about $12B orders, backlog composition, optimistic on 15+ billion target. <br>Q: Servers, cache flow, cash flow<br>A: Jeff Clarke and Tyler Johnson talk about traditional server growth, cash flow from profitability and working capital.