The following is a summary of the Dell Technologies Inc. (DELL) Q2 2025 Earnings Call Transcript:
Financial Performance:
- Dell reported Q2 2025 revenue of $25 billion, up 9% year-over-year, with diluted EPS of $1.89, also up 9%.
- Gross margin was reported at $5.5 billion, or 21.8% of total revenue, facing a decrease due to a rise in AI optimized server mix and increased competition.
- Operating income increased by 3% to $2 billion or 8.1% of revenue, benefiting from higher revenues and reduced operating expenses, partially offset by a lower gross margin rate.
- Net income rose by 7% to $1.37 billion.
Business Progress:
- Dell’s AI server orders and shipments increased, emphasizing accelerated AI momentum, with a total backlog of $3.8 billion at the end of the quarter.
- The company expanded its engineering capabilities, including data center networking design, to support ongoing AI developments.
- Dell highlighted the optimization of sales coverage to better focus on AI opportunities across various customer segments and geographies.
Opportunities:
- Dell is pursuing growth in AI solutions, leveraging their leading position with AI-optimized servers and networking, which is primarily driven by Tier-2 cloud service providers and an increasing number of enterprise customers adopting AI.
- Dell sees potential in the emerging sovereign AI market, aligning strengths with government ties worldwide.
- The upcoming PC refresh cycle driven by Windows 10 end-of-life presents a significant opportunity for growth in the commercial PC segment.
Risks:
- The company noted challenges in AI server deliveries due to constraints in GPU availability and customer readiness, which might limit their ability to convert backlog into revenue in the short term.