The News: Dell’s Q4 2023 revenue totaled $25 billion, an 11 percent drop from $28 billion one year ago, while its overall revenue for the full fiscal year of 2023 rose to a record $102.3 billion from $101.1 billion one year ago. The divergent figures were announced on March 2 by the server, networking, PC, and storage vendor as it reported its earnings for the fourth quarter and its fiscal year ending February 3, 2023. Read the full Q4 and FY2023 earnings Press Release from Dell Technologies.
Dell Q4 Revenue Dips 11%, as FY2023 Revenue Hits Record $102.3B
Analyst Take: Dell’s Q4 revenue and full FY2023 revenue may be going in different directions in Dell Technologies latest earnings report, but the overall earnings numbers for the company remain positive despite continuing drops in PC and laptop sales following the boom that came during the height of the pandemic.
The latest earnings results show that commercial and consumer PC sales continue to lag for a third consecutive quarter for Dell, while the company’s servers and networking and storage divisions rose by a combined seven percent in Q4 and 12 percent for FY2023.
This resiliency is coming in handy for the company as it continues to work to find new sales and revenue in a still-challenging global macroeconomic picture. Of course, these issues are not just affecting Dell but have been ongoing for a wide range of tech companies in recent months.
Yet despite an incredibly tough market for PCs, Dell showed record infrastructure group sales that drove a beat on top and bottom. This is great news for the company and for CEO, Chairman and Founder Michael Dell and his leadership team.
Here are Dell’s Q4 and full FY2023 earnings by the numbers:
- Q4 2023 net revenue of $25 billion, down 11 percent from $28 billion for the same quarter one year ago. The Q4 revenue did, however, beat analyst consensus estimates of $23.5 billion from Investing.com.
- Q4 2023 non-GAAP net income of $1.32 billion, down five percent from $1.39 billion one year ago.
- Q4 2023 non-GAAP diluted earnings per share (EPS) of $1.80, up five percent from $1.72 per share one year ago. The Q4 EPS beat consensus estimates of $1.65 per share from analysts at Investing.com.
- Q4 2023 non-GAAP gross margin of $5.97 billion, which is up three percent from $5.81 billion for the same quarter one year ago.
- Q4 2023 non-GAAP operating income of $2.17 billion, down one percent from $2.19 billion one year ago.
- Full year FY2023 net revenue of $102.3 billion, up one percent from $101.2 billion one year ago.
- Full year FY2023 non-GAAP net income of $5.7 billion, up 16 percent from $4.9 billion one year ago.
- Full year FY2023 non-GAAP diluted EPS of $7.61, up 22 percent from $6.22 per diluted share one year ago.
- Full year FY2023 non-GAAP gross margin of $23.4 billion, up three percent from $22.7 billion one year ago.
- Full year FY2023 non-GAAP operating income of $8.6 billion, up 11 percent from $7.8 billion one year ago.
These were good overall numbers for Dell, which also ended the quarter with remaining performance obligations of $40 billion, deferred revenue of $30.3 billion, and recurring revenue of approximately $5.6 billion, which was up 12 percent from one year ago.
Dell’s Q4 and FY2023 Sales by Divisions
Dell Q4 revenue was perked up by some continuing welcome good news in its Infrastructure Solutions Group (ISG) for yet another consecutive quarter.
Dell’s ISG posted record Q4 revenue of $9.9 billion, up seven percent from $9.2 billion one year ago, which marked its eighth consecutive quarter of growth. The ISG unit includes the servers and networking division, which saw revenue of $4.92 billion, up five percent from $4.7 billion one year ago; and the storage division, which reported Q4 revenue of $4.96 billion, up 10 percent from $4.5 billion one year ago. The ISG unit’s operating income was $1.5 billion, up 40 percent from $1.1 billion one year ago.
Dell’s Client Solutions Group (CSG) posted Q4 2023 revenue of $13.36 billion, down 23 percent from $17.3 billion a year ago. That includes revenue of $10.7 billion from its commercial PC division, which is down 17 percent from $12.9 billion one year ago. Dell’s consumer PC division earned Q4 2023 net revenue of $2.7 billion, which is down 40 percent from $4.4 billion one year ago. CSG operating income was $671 million, down 42 percent from $1.16 billion one year ago.
For the full FY2023, the ISG unit brought in record revenue of $38.4 billion, up 12 percent from $34.4 billion one year ago, and record operating income of $5 billion, up 35 percent from $3.7 billion one year ago. That includes full FY2023 revenue for the servers and networking division, which saw revenue of $20.4 billion, up 14 percent from $18 billion one year ago; and the storage division, which reported full FY2023 revenue of $18 billion, up nine percent from $16.5 billion one year ago.
Meanwhile, the full FY2023 results for the Dell CSG unit includes full year revenue of $58.2 billion, down five percent from $61.5 billion a year ago. That includes revenue of $45.6 billion from its commercial PC division, which is flat from $45.6 billion one year ago. Dell’s consumer PC division earned full FY2023 net revenue of $12.7 billion, which is down 20 percent from $16 billion one year ago. CSG operating income was $3.8 billion, down 12 percent from $4.4 billion one year ago.
Based on these numbers, we believe that Dell, like many other tech companies, is undergoing a new normal over the next few quarters as the pandemic continues to recede and market conditions begin to stabilize again. We expect to see this happen over time and we believe that Dell Technologies has the experience, business knowledge, and leadership team to navigate these ongoing challenges.
Dell Q4 FY2023 Guidance
Dell’s Q4 revenue and earnings report also provided earnings guidance for Q1 2024 and for the full FY2024.
For Q1 2024, Dell said it expects revenue to be seasonally lower than average, down sequentially between -17 percent and -21 percent, with an expected foreign exchange headwind of about 300 basis points. Dell also expects ISG revenue to be down sequentially in the mid-20s, and CSG revenue to be down sequentially in the mid-teens. Diluted non-GAAP EPS for Q1 is expected to be $0.80 plus or minus $0.15, down sequentially primarily driven by lower revenue.
For full FY2024, revenue is expected to be down between -12 percent to -18 percent while diluted non-GAAP EPS is expected to be $5.30 plus or minus $0.30.
Dell Q4 and FY2023 Earnings Overview
One of the highlights from the Dell earnings call with analysts was the message from the company that it will head into FY2024 focusing on the things it can control in the marketplace, including delivering value to its customers as well as driving differentiated performance compared to competitors. Dell also said it will execute against its innovation agenda throughout FY2024, while managing its cost position and maintaining pricing discipline.
We believe these are important words of wisdom from Dell’s leadership that will help guide the company through FY2024 and beyond. Dell also announced that current CFO Tom Sweet will retire this later this year. He will be replaced by the company’s first female CFO Yvonne McGill. McGill has been the company controller since 2020.
This is a company that certainly knows the PC business, hybrid and multicloud environments, edge computing, enterprise computing, data management, and more.
Dell is one of the premier technology players in the world and it consistently meets its business challenges by anticipating and delivering on customer needs and expectations in its markets. It will be interesting to track this company’s progress throughout FY2024 and into the future.
Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.
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Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
