"The second quarter completes a strong first half of fiscal 2019, where we continued to demonstrate our commitment to innovation across our entire portfolio―including new solutions that give our customers the ability to drive better business outcomes through the power of their data," said Jeff Clarke, vice chairman, Products & Operations. "We are able to provide our customers with a differentiated experience, given Dell Technologies' unique family of businesses. We continue to collaborate on new solutions and enhanced integrations to provide a unified, seamless experience across PC and mobile devices, software-defined data centers, hyper-converged infrastructures and multi-cloud platforms."

Operating segments summary

Infrastructure Solutions Group revenue for the second quarter was a record $9.2 billion, a 24 percent increase. This was driven by revenue of $4.2 billion in storage, a 13 percent increase, and revenue of $5.1 billion in servers and networking, a 34 percent increase. Operating income for the second quarter was $1.0 billion, or 11 percent of revenue and a 230 basis-point increase from the previous year, driven primarily by improved storage performance and operating expense leverage.

Key second quarter highlights:

• Worldwide leader for x86 servers in calendar second quarter, both in units and revenue⁴
• Triple-digit growth for VxRail and VxRack, including $1 billion of cumulative revenue for VxRail since launching
• Enhancements to the Storage and Data Protection portfolio, including the new Integrated Data Protection Appliance DP4400 for the cloud
• Storage share gain for the second consecutive quarter expected when IDC reports results later today

"IDC has forecasted second quarter server and external storage systems spending will grow 19.6 percent and 5.5 percent, respectively, and we fully expect Dell Technologies' Infrastructure Solutions Group will gain share in both segments when IDC releases second quarter share data," said Matt Eastwood, senior vice president of IDC's enterprise, datacenter, cloud infrastructure and developer research groups.

Client Solutions Group revenue for the second quarter was $11.1 billion, up 13 percent, with double-digit growth across both Commercial and Consumer. Commercial revenue grew 13 percent to $8.1 billion and Consumer revenue was up 14 percent to $3.0 billion. Operating income for the second quarter was $425 million, a 20 percent decrease and 3.8 percent of revenue.

Key second quarter highlights:

• Shipped a record number of client units in the second fiscal quarter, while also expanding average selling prices
• Outperformed the PC industry and hit highest share position to date for total worldwide units and for commercial units at 18.2 percent and 22.8 percent, respectively⁵
• No. 1 share position worldwide for displays, gaining unit share year-over-year for the 20^th consecutive quarter⁶
• Maintained position as No. 1 provider of workstations worldwide⁷; launched world's most powerful 1-unit rack workstation

VMware revenue for the second quarter was $2.2 billion, up 11 percent, with operating income of $736 million and 33.5 percent of revenue. The company continues to see revenue synergies through the collaboration across the Dell Technologies family of businesses. The second quarter showed continued strong demand for Dell Technologies' market-leading VxRail and VxRack hyperconverged offerings, and the company completed one of the largest VxRail hyperconverged infrastructure deals in its history. Additionally, VMworld last week showcased several announcements illustrating leveraged innovation across Dell Technologies. These new solutions and enhanced integrations provide customers with a unified, seamless experience across PC and mobile devices, software-defined data centers, hyper-converged infrastructures and multi-cloud platforms.

Second quarter revenue from other businesses, including Pivotal, Secureworks, RSA Security, Virtustream and Boomi was $574 million, up 6 percent.

Company outlook

For fiscal 2019, the company is adjusting upward the guidance ranges provided on July 2, given the momentum it has seen year-to-date. The company now expects non-GAAP revenue to be between $90.5 billion and $92.0 billion for the full fiscal year, non-GAAP operating income to be between $8.4 billion and $8.8 billion, and non-GAAP net income to be between $4.9 billion and $5.3 billion.

Conference call information

As previously announced, the company will hold a conference call to discuss its second quarter results today at 7:00 a.m. CDT. The conference call will be broadcast live over the internet and can be accessed at investors.delltechnologies.com. For those unable to listen to the live broadcast, an archived version will be available at the same location for one year.

A slide presentation containing additional financial and operating information may be downloaded from Dell Technologies' website at investors.delltechnologies.com.

Dell Technologies analyst meeting

Dell Technologies will host a live meeting for analysts Tues., Sept. 18, at 9:00 a.m. EDT/8:00 a.m. CDT. The invitation-only event will feature presentations and discussions from the company's executive team with a focus on its transformation, strategy and financial overview. A live webcast and replay of the meeting will be available on the event page of Dell Technologies' Investor Relations website at investors.delltechnologies.com.

About Dell Technologies

Dell Technologies is a unique family of businesses that provides the essential infrastructure for organizations to build their digital future, transform IT and protect their most important asset, information. The company services customers of all sizes across 180 countries – ranging from 99 percent of the Fortune 500 to individual consumers – with the industry's most comprehensive and innovative portfolio from the edge to the core to the cloud.

 

Copyright © 2018 Dell Inc. or its subsidiaries. All Rights Reserved. Dell Technologies, Dell, EMC and Dell EMC are trademarks of Dell Inc. or its subsidiaries. Other trademarks may be trademarks of their respective owners. 

1. Due to the EMC transaction, significant non-cash bridging items will remain between GAAP and non-GAAP results for the next few years.
2. Dell Technologies initially funds DFS financing receivables with cash on hand, thereby impacting its cash flow from operations; however, the impact is offset in cash flow from financing when subsequently funded through third-party financing.
3. Core debt represents the total principal amount of the company's debt, less unrestricted subsidiary debt, DFS related debt, and other debt. See slide presentation on the FY19Q2 Earnings Event page for full reconciliation of the core debt amount.
4. IDC WW Quarterly Server Tracker CY18Q2
5. IDC WW Quarterly Personal Computing Device (PCD) Tracker CY18Q2
6. DisplaySearch Desktop Monitor Market Tracker CY18Q1
7. IDC WW Workstation Tracker CY18Q2

Non-GAAP Financial Measures:
This press release presents information about Dell Technologies' non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, EBITDA and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America ("GAAP"). A reconciliation of each historical non-GAAP financial measure to the most directly comparable historical GAAP financial measure is provided in the attached tables for each of the fiscal periods indicated.

No reconciliation of Dell Technologies' non-GAAP revenue, non-GAAP operating income or non-GAAP net income guidance for fiscal year 2019 to the most comparable GAAP financial measures is included in the attached tables. These non-GAAP financial measures exclude the impact of purchase accounting and in some instances amortization of intangibles, transaction-related expenses, other corporate expenses and adjustments for income taxes. Dell Technologies is not able, without unreasonable efforts, to accurately forecast the excluded items at the level of precision that would be required to be included in the reconciliations.

Special Note on Forward-Looking Statements:
Statements in this press release that relate to future results and events (including the financial guidance with respect to non-GAAP revenue, non-GAAP operating income and non-GAAP net income) are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933 and are based on Dell Technologies' current expectations. In some cases, you can identify these statements by such forward-looking words as "anticipate," "believe," "confidence," "could," "estimate," "expect," "guidance," "intend," "may," "objective," "outlook," "plan," "project," "possible," "potential," "should," "will" and "would," or similar words or expressions that refer to future events or outcomes.