The News: Dell’s revenue for Q1 2024 totaled $20.9 billion, a 20% drop from $26.1 billion one year ago, as the server, networking, PC, and storage vendor continued to be hit by difficult global macroeconomic issues across its operations. Yet despite the lower Q1 revenue, Dell beat analyst expectations for revenue and earnings per share for the quarter ending May 5, 2023. Read the full Q1 FY2024 Dell earnings press release, which was announced on the Dell Technologies website.
Dell Revenue Hits $20.9 Billion for Q1 FY2024, Beating Estimates
Analyst Take: Dell’s revenue drop for Q1 FY2024 certainly provides evidence of the incredibly difficult macroeconomic environment that continues around the world, but there are signs of hope as other Dell earnings numbers show promise for the future.
Most impressive is that Dell’s Q1 revenue and earnings per share (EPS) numbers beat analyst estimates for the quarter, which is a good result for the company.
And while Dell saw decreases in revenue for the quarter across its servers and networking, storage, commercial computing, and consumer computing segments, we do expect that revenues will soon be pumped back up as Dell sees increased infrastructure business from customers that are increasing their critical investments in AI in the near term. This will benefit Dell even as the PC industry slowdown continues. And those AI investment dollars will likely make a significant difference for Dell across its business units.
Here are Dell’s Q1 FY2024 earnings by the numbers:
- Q1 2024 net revenue of $20.9 billion, down 20% from $26.1 billion for the same quarter one year ago. The Q1 revenue did, however, beat analyst consensus estimates of $20.3 billion from Investing.com.
- Q1 2024 non-GAAP net income of $963 million, down 33% YoY from $1.4 billion.
- Q1 2024 non-GAAP diluted EPS of $1.31, down 29% YoY from $1.84 per share. The Q1 EPS beat consensus estimates of $0.86 per share from analysts at Investing.com.
- Q1 2024 non-GAAP gross margin of $5.16 billion, which is down 13% from $5.9 billion on a YoY basis.
- Q1 2024 non-GAAP operating income of $1.59 billion, down 25% YoY from $2.13 billion.
Dell also ended the quarter with remaining performance obligations of $39 billion, deferred revenue of $29.7 billion – up 8% from a year ago – and recurring revenue of $5.6 billion, which was up 6% YoY.
We are also bullish on Dell’s continuing expansion of its Dell APEX-as-a-Service offerings to the company’s full portfolio of products and services, giving customers more options for consuming IT services in the cloud, on-premises, or at the edge. We see this move as positive for customers as they build out their IT plans and infrastructure. The APEX offerings will also certainly be revenue generators for Dell and will be showing results quickly, which will help to bolster the company’s future earnings figures even as PC sales lag.
Dell’s introduction of new cloud operating models with industry leaders including Microsoft, Red Hat, and VMware for on-premises, as well as storage updates that bring enterprise block and file storage capabilities to public cloud with AWS and Microsoft will also help drive new growth and revenue for the company in these important areas.
New Dell innovations and work in AI, edge, as-a-Service and cybersecurity are also happening and will drive revenue in these critical markets as well. There are a lot of positives coming for Dell and we are impressed with this expanded roadmap.
Dell’s Revenue for Q1 by Market Segments
Dell revenue took a hit in Q1 FY2024 across every segment.
Dell’s Infrastructure Solutions Group (ISG) brought in $7.59 billion in net revenue, which dropped 18% from $9.28 billion one year ago. The ISG unit includes the servers and networking division, which saw revenue of $3.8 billion, down 24% YoY from $5.04 billion; and the storage division, which reported Q1 revenue of $3.75 billion, down 11% YoY from $4.2 billion. The ISG unit’s operating income was $740 million, down 32% YoY from $1.08 billion.
Dell’s Client Solutions Group (CSG) posted Q1 2024 net revenue of $11.98 billion, down 23% YoY from $15.58 billion. That includes revenue of $9.8 billion from its commercial PC division, which is down 18% YoY from $11.9 billion. Dell’s consumer PC division earned Q1 2024 net revenue of $2.12 billion, which is down 41% from $3.6 billion on a YoY basis. CSG operating income was $892 million, down 20% YoY from $1.15 billion.
So, where does all this leave Dell?
We believe that Dell, like many other tech and consumer companies, is adjusting to new revenue patterns as the pandemic continues to recede and market conditions remain fluid. This dynamic is to be expected following the dramatic and destabilizing conditions brought about by the pandemic and the effects of work-from-home, community shutdowns, and related factors.
At the same time, we continue to believe that Dell Technologies has the experience, business knowledge, and leadership team to navigate these ongoing challenges and come out on top again.
Dell Q2 FY2024 Guidance
Dell’s Q1 earnings report also provided earnings guidance for Q2 2024 and for the full FY2024.
For Q2 2024, Dell said it expects revenue to be between $20.2 billion to $21.2 billion, with CSG revenue to be flat sequentially and ISG to be down in the low single digits sequentially. Diluted non-GAAP EPS is expected to be $1.10 plus or minus $0.10, down sequentially, primarily driven by lower revenue, the company said.
For the full FY2024, Dell said it is maintaining its FY24 expectations with revenue down between 12% and 18% and a return to sequential growth in the second half of the year. Dell said it is increasing FY24 EPS guidance, with diluted non-GAAP EPS expected to be $5.50 plus or minus $0.25.
Dell Revenue and Earnings Overview
Dell executives insist that the company is executing well in a world that continues in the grip of challenging macroeconomic conditions, and we see evidence of that progress. Dell is continuing to innovate and deliver important new services and products, which is a testament to CEO, Chairman and Founder Michael Dell and his leadership team.
We see good operating discipline in Dell’s numbers, and we remain confident of the company’s direction, strategy, and overall health as 2024 approaches. This company is experienced in the PC business, hybrid and multi-cloud environments, edge computing, enterprise computing, data management, and more, and we see it continuing to anticipate and deliver on customer needs and expectations long into the future.
Daniel Newman and his co-host of The Six Five Webcast, Patrick Moorhead of Moor Insights and Strategy discussed Dell Technologies earnings in their latest episode. Check it out here and be sure to subscribe to The Six Five Webcast so you never miss an episode.
Disclosure: The Futurum Group 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 The Futurum Group as a whole.
Other insights from The Futurum Group:
The Six Five – On The Road with Varun Chhabra at Dell Tech World
The Six Five – On The Road with Mindy Cancila at Dell Tech World
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.
