Dell Reports Strong Second Quarter Financial Results Driven by Enterprise Solutions and Services

Information about Dell’s use of non-GAAP financial information is provided under “Non-GAAP Financial Measures” below. Non-GAAP financial information excludes costs related primarily to the amortization of purchased intangibles, severance and facility-action costs, certain settlement costs and acquisition-related charges. All comparisons in this press release are year over year unless otherwise noted.

Strategic Highlights:

  • Revenue for Dell’s commercial business was $12.8 billion, up 6 percent sequentially and 1 percent from a year ago.
  • Enterprise solutions and services revenue grew 4 percent to $4.6 billion in the quarter and represents 35 percent of Dell’s commercial revenue. Servers and networking revenue increased 9 percent year over year.
  • Dell Services revenue grew 6 percent to $2 billion. Dell’s total value of new services contracts signed in the last quarter is $1 billion and $1.3 billion year-to-date; and services backlog is now $15.4 billion up 11 percent from a year ago. Demand for Dell SecureWorks managed services offerings continued to expand, with more than 200 customers added during the quarter.
  • Dell-owned storage technology grew 15 percent in the quarter. The benefits of Dell’s mid-market design focus are evident in the success of EqualLogic, which continues to be a highly profitable line of storage products. In addition, revenue in the company’s Compellent storage business grew 97 percent sequentially, after closing the acquisition in Q1.
  • The launch of Dell EqualLogic FS7500 during the quarter brings the first scale-out NAS and unified storage capabilities to the Dell EqualLogic platform. The FS7500 provides up to 10 times more file share scalability than legacy unified storage offerings. It is the industry’s only scale-out solution optimized for mid-sized and smaller deployments. Dell also announced its next-generation Dell EqualLogic software, which includes enhanced, enterprise-class storage capability and automated load balancing.
  • Dell KACE, which added 600 new customers during Q2, also launched a significant addition to its portfolio of systems management solutions. The M300 Asset Management Appliance is the first desktop-management product designed specifically for small businesses with 20–200 employees, and demonstrates Dell’s commitment to mid-market design.
  • Dell expects to close its acquisition of Force10 Networks in the third quarter. Force10 Networks is a leader in high-performance data center networking capabilities that complement and extend Dell’s data center solutions portfolio, enabling the company to address a broader range of customer needs with Dell intellectual property.
  • Dell’s core business remains healthy. Revenue for client products – desktop and laptop computers – was up sequentially 6 percent to $8.5 billion driven by seasonal strength in Public.

Business Units and Regions:

  • Large Enterprise had $4.6 billion of revenue, up 1 percent from a year ago on strong demand for servers and services. Operating income was $448 million, or 9.8 percent of revenue. Enterprise solutions and services revenue was $1.9 billion, a 3 percent sequential increase. Revenue from client products grew 1 percent for the year and 4 percent sequentially.
  • Public had record operating income of $484 million or 10.9 percent of revenue. Revenue was $4.5 billion, up 18 percent sequentially and down 3 percent for the year. Enterprise solutions and services revenue was up 7 percent sequentially. Client product revenue increased 34 percent sequentially.
  • Small and Medium Business had revenue of $3.7 billion, up 5 percent. Operating income was $404 million or 10.9 percent of revenue. Enterprise solutions and services revenue was up 16 percent, driven by a gain in servers of 17 percent; services of 17 percent, and storage of 11 percent.
  • Consumer revenue was $2.9 billion, a 1 percent increase, with revenue for laptops and desktops up 4 percent. Operating income was $73 million or 2.5 percent of revenue.
  • Growth countries outside of the U.S. and Canada, Western Europe and Japan increased revenue 14 percent over the previous year and now account for 28 percent of Dell’s total revenue. Specifically, India and China were up 21 and 20 percent, respectively.

Quotes:

Michael Dell, chairman and chief executive officer: “We continue to see great momentum in the high-growth areas of our business, which is a direct reflection of the discipline and strong execution our global Dell team is applying to help solve real-world challenges for our customers. We’re creating efficiency across every step of the IT value chain and ultimately enabling all customers—from home users to large businesses and government organizations—to achieve the outcomes that matter most to them.”

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