0d6900779aaa355b0f5b9344311b4aef5002852b054c2ca33e5086dea7d0fbeb

| Metric (USD Billion) | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Infrastructure Solutions Group (ISG) Total** | **9.9**  **[0001571996-23-000002_exhibit991earnings8kq4fy23.htm:1]**  | **7.6**  **[DELL_3384349_3]**  | **8.5**  **[0001571996-23-000029_exhibit991earnings8kq2fy24.htm:3]**  | **8.5**  **[0001571996-23-000039_exhibit991earnings8kq3fy24.htm:3]**  | **9.3**  **[DELL_3375948_3]**  | **9.2**  **[DELL_3391187_3]**  | **11.6**  **[0001571996-24-000081_exhibit991earnings8kq2fy25.htm:0]**  | **11.4**  **[0001571996-24-000130_exhibit991earnings8kq3fy25.htm:0]**  |
| - Servers and Networking | 4.9  **[0001571996-23-000002_exhibit991earnings8kq4fy23.htm:1]**  | 3.8  **[0001571996-23-000019_dell-20230505.htm:38]**  | 4.3  **[0001571996-23-000029_exhibit991earnings8kq2fy24.htm:3]**  | 4.7  **[0001571996-23-000039_exhibit991earnings8kq3fy24.htm:3]**  | 4.9  **[DELL_3375948_3]**  | 5.5  **[DELL_3391187_3]**  | 7.7  **[0001571996-24-000081_exhibit991earnings8kq2fy25.htm:0]**  | 7.4  **[0001571996-24-000130_exhibit991earnings8kq3fy25.htm:0]**  |
| - Storage | 5.0  **[0001571996-23-000002_exhibit991earnings8kq4fy23.htm:1]**  | 3.8  **[0001571996-23-000019_dell-20230505.htm:38]**  | 4.2  **[0001571996-23-000029_exhibit991earnings8kq2fy24.htm:3]**  | 3.8  **[0001571996-23-000039_exhibit991earnings8kq3fy24.htm:3]**  | 4.5  **[DELL_3375948_3]**  | 3.8  **[DELL_3391187_3]**  | 4.0  **[0001571996-24-000081_exhibit991earnings8kq2fy25.htm:0]**  | 4.0  **[0001571996-24-000130_exhibit991earnings8kq3fy25.htm:0]**  |
| **Client Solutions Group (CSG) Total** | **13.4**  **[0001571996-23-000002_exhibit991earnings8kq4fy23.htm:1]**  | **12.0**  **[DELL_3384349_3]**  | **12.9**  **[0001571996-23-000029_exhibit991earnings8kq2fy24.htm:3]**  | **12.3**  **[0001571996-23-000039_exhibit991earnings8kq3fy24.htm:3]**  | **11.7**  **[DELL_3375948_3]**  | **12.0**  **[DELL_3391187_3]**  | **12.4**  **[0001571996-24-000081_exhibit991earnings8kq2fy25.htm:0]**  | **12.1**  **[0001571996-24-000130_exhibit991earnings8kq3fy25.htm:0]**  |
| - Commercial | 10.7  **[0001571996-23-000002_exhibit991earnings8kq4fy23.htm:1]**  | 9.9  **[0001571996-23-000019_dell-20230505.htm:38]**  | 10.6  **[0001571996-23-000029_exhibit991earnings8kq2fy24.htm:3]**  | 9.8  **[0001571996-23-000039_exhibit991earnings8kq3fy24.htm:3]**  | 9.6  **[DELL_3375948_3]**  | 10.2  **[DELL_3391187_3]**  | 10.6  **[0001571996-24-000081_exhibit991earnings8kq2fy25.htm:0]**  | 10.1  **[0001571996-24-000130_exhibit991earnings8kq3fy25.htm:0]**  |
| - Consumer | 2.7  **[0001571996-23-000002_exhibit991earnings8kq4fy23.htm:1]**  | 2.1  **[0001571996-23-000019_dell-20230505.htm:38]**  | 2.4  **[0001571996-23-000029_exhibit991earnings8kq2fy24.htm:3]**  | 2.4  **[0001571996-23-000039_exhibit991earnings8kq3fy24.htm:3]**  | 2.2  **[DELL_3375948_3]**  | 1.8  **[DELL_3391187_3]**  | 1.9  **[0001571996-24-000081_exhibit991earnings8kq2fy25.htm:0]**  | 2.0  **[0001571996-24-000130_exhibit991earnings8kq3fy25.htm:0]**  |
| **Other Businesses** | N/A | N/A | N/A | 1.5  **[0001571996-23-000046_dell-20231103.htm:47]**  | N/A | N/A | N/A | N/A |

4c7e11ef084331c6589d6046830e01db02a027e205ea8beedf8d9b8a62dde665

Dell Technologies is a global technology company that provides a broad and innovative solutions portfolio aimed at helping customers modernize their IT infrastructure and address workforce transformation **[0001571996-24-000036_dell-20240202.htm:3]** **[0001571996-24-000036_dell-20240202.htm:4]** **[0001571996-23-000046_dell-20231103.htm:46]** **[0001571996-24-000090_dell-20240802.htm:45]**. The company is organized into two main business units: the Infrastructure Solutions Group (ISG) and the Client Solutions Group (CSG) **[0001571996-24-000036_dell-20240202.htm:3]** **[0001571996-24-000036_dell-20240202.htm:4]** **[0001571996-23-000046_dell-20231103.htm:46]** **[0001571996-24-000090_dell-20240802.htm:45]**. Dell sells a range of products, including storage solutions, servers, networking solutions, branded PCs, peripherals, and third-party software **[0001571996-24-000036_dell-20240202.htm:4]** **[0001571996-23-000046_dell-20231103.htm:46]** **[0001571996-24-000090_dell-20240802.htm:41]** **[0001571996-23-000046_dell-20231103.htm:53]**.

1. **Client Solutions Group (CSG)** - Provides branded PCs, including notebooks, desktops, and workstations, along with branded peripherals and third-party software. Offers services such as configuration, support, and extended warranties **[0001571996-24-000036_dell-20240202.htm:4]** **[0001571996-23-000046_dell-20231103.htm:46]** **[0001571996-23-000046_dell-20231103.htm:53]**.
2. **Infrastructure Solutions Group (ISG)** - Enables digital transformations with solutions that address AI, machine learning, data analytics, and multicloud environments. Offers a comprehensive storage portfolio, including all-flash arrays and hyper-converged infrastructure, as well as a server portfolio with high-performance and AI-optimized servers. Includes networking solutions **[0001571996-24-000036_dell-20240202.htm:4]** **[0001571996-23-000046_dell-20231103.htm:46]** **[0001571996-24-000090_dell-20240802.htm:41]**.
3. **Other Businesses** - Engages in the resale of VMware products and services, integrating VMware products with its offerings, reflecting these results within ISG or CSG depending on the nature of the offering **[0001571996-23-000046_dell-20231103.htm:46]** **[0001571996-24-000090_dell-20240802.htm:41]** **[0001571996-23-000046_dell-20231103.htm:53]**.

689a2fc49f973b761a7fd5bb0d1f39560addda7e2a2662c08ab438f9b3e7acb2

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from Debt [USD, Millions]

Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

ee6905407d1b72b03c963d3a375369f39e77dfc35374f6359f424816887b6636

1. Despite a growing AI server backlog of $4.5 billion, AI server revenue is expected to be slightly down quarter-over-quarter; can you clarify if this is due to the shift towards Blackwell, component availability, or other factors, and how you plan to address these issues?
2. With the move to NBL systems featuring up to 72 GPUs per server, and given the higher GPU content that's harder to mark up, how should we think about the evolution of gross profit dollars and margins in your AI server business?
3. As enterprise and large customers become more cautious with PC and storage spending, particularly in your highest margin storage products, can you provide clarity on your expectations for storage growth next year?
4. You previously expected AI server sales to drive storage and services demand, but this hasn't materialized as anticipated; can you explain why storage demand hasn't matched AI server growth and what steps you're taking to capitalize on this opportunity?
5. With your key customers migrating AI platforms from Hopper to Blackwell and potential shifts from HGX to DGX and MGX platforms, what are your underlying assumptions for the platform mix, and how might this impact your AI server business strategy?

4663ef71064fe7b53b29e9972a80a0d21e7433c518a5dced2d9eb67d82a0e19f

e119242f4af26ad9cbc5f438cb19ea75cfb4a17fd3b6a3f0333585e503f5693a

### Q3 2025 Earnings Call
- **Issued Period**: Q3 2025
- **Guided Period**: Q4 2025 and FY 2026
- **Guidance**:
  1. **Q4 Revenue**: $24 billion to $25 billion, midpoint $24.5 billion, 10% increase at midpoint.
  2. **IHG Revenue Growth Rate**: Up mid-20s year-over-year.
  3. **CSG Revenue Growth Rate**: Up low single digits year-over-year.
  4. **Operating Expenses (OpEx)**: Decline mid-single digits year-over-year.
  5. **Operating Income Rate**: Up sequentially with ISG improvement.
  6. **Q4 Diluted Share Count**: 715 million to 719 million shares.
  7. **Q4 Diluted Non-GAAP EPS**: $2.50, plus or minus $0.10, up 14% at midpoint.
  8. **Full Year Revenue Growth**: 9% at midpoint.
  9. **Full Year Diluted Non-GAAP EPS**: $7.81, up 10% year-over-year.
  10. **Fiscal Year 2026 Outlook**: Growth driven by AI demand and refresh of PCs and servers  **[DELL_3410089_3]** .

### Q2 2025 Earnings Call
- **Issued Period**: Q2 2025
- **Guided Period**: Q3 2025 and FY 2025
- **Guidance**:
  1. **Fiscal Year 2025 Revenue**: $95.5 billion to $98.5 billion, midpoint $97 billion, 10% growth.
  2. **ISG Revenue**: Grow roughly 30%.
  3. **CSG Revenue**: Flat to low single digits.
  4. **Combined ISG and CSG Business Growth**: 13% at midpoint.
  5. **Gross Margin Rate**: Decline roughly 180 basis points.
  6. **Operating Expenses**: Down low single digits.
  7. **ISG and CSG Operating Margin Rates**: 11% to 14% and 5% to 7%, respectively.
  8. **Interest and Other Expenses**: Roughly $1.4 billion.
  9. **Annual Non-GAAP Tax Rate**: 18%.
  10. **Diluted Non-GAAP EPS**: $7.80 plus or minus $0.25, up 9% at midpoint.
  11. **Q3 Fiscal Year 2025 Revenue**: $24 billion to $25 billion, midpoint $24.5 billion, up 10%.
  12. **Combined ISG and CSG Business Growth for Q3**: 14% at midpoint.
  13. **Q3 Operating Expenses**: Down low single digits sequentially.
  14. **Q3 Operating Income Rate**: Improvement expected.
  15. **Q3 Diluted Share Count**: 714 million to 718 million shares.
  16. **Q3 Diluted Non-GAAP EPS**: $2 plus or minus $0.10  **[DELL_3400220_3]** .

### Q1 2025 Earnings Call
- **Issued Period**: Q1 2025
- **Guided Period**: FY 2025 and Q2 2025
- **Guidance**:
  1. **Fiscal Year 2025 Revenue**: $93.5 billion to $97.5 billion, midpoint $95.5 billion, 8% growth.
  2. **ISG Growth**: In excess of 20%.
  3. **CSG Growth**: Low single digits.
  4. **Combined ISG and CSG Business Growth**: 11% at midpoint.
  5. **Gross Margin Rate**: Decline roughly 150 basis points.
  6. **Operating Expenses (OpEx)**: Down low single digits.
  7. **Diluted Non-GAAP EPS**: $7.65 plus or minus $0.25, up 7% at midpoint.
  8. **Q2 Fiscal Year 2025 Revenue**: $23.5 billion to $24.5 billion, midpoint $24 billion, up 5%.
  9. **Combined ISG and CSG Growth for Q2**: 8% at midpoint.
  10. **Q2 Operating Expenses**: Down roughly 3% year-over-year.
  11. **Q2 Diluted Share Count**: 723 million to 727 million shares.
  12. **Q2 Diluted Non-GAAP EPS**: $1.65 plus or minus $0.10  **[DELL_3391187_4]** .

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: FY 2025 and Q1 2025
- **Guidance**:
  1. **FY '25 Revenue**: $91 billion to $95 billion, midpoint $93 billion, 5% growth.
  2. **ISG Growth**: Mid-teens.
  3. **CSG Growth**: Low single digits.
  4. **Gross Margin Rate**: Decline by roughly 100 basis points.
  5. **Operating Expenses (OpEx)**: Roughly flat.
  6. **Interest and Other (I&O)**: Roughly $1.4 billion.
  7. **Diluted Non-GAAP EPS**: $7.50 plus or minus $0.25, up 5% at midpoint.
  8. **Non-GAAP Tax Rate**: 18%.
  9. **Long-term Financial Framework**: Revenue growth of 3% to 4%, EPS growth of at least 8%.
  10. **Capital Returns**: 80% or more of adjusted free cash flow to shareholders.
  11. **Q1 FY '25 Revenue**: $21 billion to $22 billion, midpoint $21.5 billion, up 3%.
  12. **ISG and CSG Growth for Q1**: 5% at midpoint.
  13. **Gross Margin Rate for Q1**: Lower sequentially.
  14. **Operating Expenses (OpEx) for Q1**: Up slightly.
  15. **Q1 Diluted Share Count**: 723 million to 727 million shares.
  16. **Q1 Diluted Non-GAAP EPS**: $1.15 plus or minus $0.10  **[DELL_3375948_4]** .

ce092714db7a61fa48279e9214a877add68b6d2c18ea35bb723c4a8fa78a8e93

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Per Share]

EPS - Diluted [USD, Per Share]

3a3425e8e99c93efbc97e586b8bf9e868f48b86fb5d670015fe04a57af3942ba

d15e0ce5b9595fbdf5da7709d9b0a3531a235da0709e30a025f7283d6df5f615

**Quarterly guidance for Q4 2025:**
- **Revenue**: $24B to $25B, midpoint $24.5B, 10% increase at midpoint  **[DELL_3410089_3]**  (no change from $24B to $25B, midpoint $24.5B, 10% increase  **[DELL_3400220_3]** )  
- **IHG Revenue Growth Rate**: Up mid-20s year-over-year  **[DELL_3410089_3]**  (no prior guidance)  
- **CSG Revenue Growth Rate**: Up low single digits year-over-year  **[DELL_3410089_3]**  (no change from flat to low single digits  **[DELL_3400220_3]** )  
- **Operating Expenses**: Decline mid-single digits year-over-year  **[DELL_3410089_3]**  (lowered from down low single digits  **[DELL_3400220_3]** )  
- **Operating Income Rate**: Up sequentially with ISG improvement  **[DELL_3410089_3]**  (no change from improvement expected  **[DELL_3400220_3]** )  
- **Diluted Share Count**: 715M to 719M  **[DELL_3410089_3]**  (raised from 714M to 718M  **[DELL_3400220_3]** )  
- **Diluted Non-GAAP EPS**: $2.50 ± $0.10  **[DELL_3410089_3]**  (raised from $2.00 ± $0.10  **[DELL_3400220_3]** )  

**Annual guidance for FY 2026:**
- **Full Year Revenue Growth**: 9% at midpoint  **[DELL_3410089_3]**  (lowered from 10%  **[DELL_3400220_3]** )  
- **Full Year Diluted Non-GAAP EPS**: $7.81, up 10% year-over-year  **[DELL_3410089_3]**  (raised from $7.80 ± $0.25, up 9%  **[DELL_3400220_3]** )  
- **Fiscal Year 2026 Outlook**: Growth driven by AI demand and refresh of PCs and servers  **[DELL_3410089_3]**  (no prior guidance)  

041defb7a659822bd0e246e2d581645a2f7f452b45ce9177de3748ee11459661

| Name                  | Position                                          | Start Date         | Short Bio                                                                                                                                                                                                 |
|-----------------------|---------------------------------------------------|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Michael S. Dell       | Chairman and Chief Executive Officer              | 1984               | Michael S. Dell is the **Chairman of the Board and Chief Executive Officer** of Dell Technologies. He founded Dell Inc. and served as its CEO from **1984 until July 2004** and resumed the role in **January 2007**  **[0001571996-24-000036_dell-20240202.htm:18]** **[0001193125-24-141729_d645928ddef14a.htm:14]** .                   |
| Jeffrey W. Clarke     | Vice Chairman and Chief Operating Officer         | 1987               | Jeffrey W. Clarke is responsible for running Dell's day-to-day business operations and shaping the strategic agenda. He has been with Dell since **1987**, starting as a quality engineer  **[0001571996-24-000036_dell-20240202.htm:19]** **[DELL_3401289_0]** .                                               |
| Yvonne McGill         | Chief Financial Officer                           | August 5, 2023     | Yvonne McGill is responsible for all aspects of Dell's finance function. She has held the role of CFO since **August 5, 2023** and joined Dell in 1997  **[0001571996-24-000036_dell-20240202.htm:20]** **[0001571996-23-000026_dell-20230226.htm:0]** **[0001193125-24-141729_d645928ddef14a.htm:76]** .                                                                               |
| Richard J. Rothberg   | General Counsel                                   | November 2013      | Richard J. Rothberg oversees the global legal department and manages government affairs, compliance, and ethics. He has served as General Counsel since **November 2013** and joined Dell in 1999  **[0001571996-24-000036_dell-20240202.htm:20]** **[0001571996-23-000007_dell-20230203.htm:19]** .                                       |
| Jennifer D. Saavedra  | Chief Human Resources Officer                     | 2005               | Jennifer D. Saavedra leads Dell's Global Human Resources and Facilities function. She has been with Dell since **2005** and has held various key leadership roles within the Human Resources organization  **[0001571996-24-000036_dell-20240202.htm:20]** **[0001571996-23-000007_dell-20230203.htm:19]** .                              |
| William F. Scannell   | President, Global Sales and Customer Operations   | February 2020      | William F. Scannell is responsible for the global go-to-market strategy and driving global growth. He has been in this role since **February 2020** and previously held leadership roles at EMC  **[0001571996-24-000036_dell-20240202.htm:21]** **[0001571996-23-000007_dell-20230203.htm:19]** .                                         |
| Geraldine Tunnell     | Chief Marketing Officer                           | March 30, 2024     | Geraldine Tunnell was appointed as Chief Marketing Officer effective **March 30, 2024**, succeeding Allison Dew. She previously served as Senior Vice President of Global Field & Partner Marketing  **[0001571996-24-000036_dell-20240202.htm:19]** .                                        |

79d61fb08647b5a8f4e80a933aa6ca29d067f368f982e77f1759e9d590e5f1b2

| Program Details          | Program 1                  | Program 2                  |
|--------------------------|----------------------------|----------------------------|
| Approval Date            | September 23, 2021  **[0001571996-24-000143_dell-20241101.htm:42]** **[0001571996-24-000143_dell-20241101.htm:87]**   | October 5, 2023  **[0001571996-24-000143_dell-20241101.htm:42]** **[0001571996-24-000143_dell-20241101.htm:87]**      |
| End Date/Duration        | No fixed expiration date  **[0001571996-24-000143_dell-20241101.htm:42]** **[0001571996-24-000143_dell-20241101.htm:87]**  | No fixed expiration date  **[0001571996-24-000143_dell-20241101.htm:42]** **[0001571996-24-000143_dell-20241101.htm:87]**  |
| Total Additional Amount  | **$5 billion**  **[0001571996-24-000143_dell-20241101.htm:42]** **[0001571996-24-000143_dell-20241101.htm:87]**       | **$5 billion**  **[0001571996-24-000143_dell-20241101.htm:42]** **[0001571996-24-000143_dell-20241101.htm:87]**       |
| Remaining Authorization  | **$5.7 billion**  **[0001571996-24-000143_dell-20241101.htm:42]** **[0001571996-24-000143_dell-20241101.htm:87]**     | **$2.6 billion**  **[0001571996-24-000143_dell-20241101.htm:42]** **[0001571996-24-000143_dell-20241101.htm:87]**     |
| Details                  | Repurchase of Class C Common Stock  **[0001571996-24-000143_dell-20241101.htm:42]** **[0001571996-24-000143_dell-20241101.htm:87]**  | Repurchase of Class C Common Stock  **[0001571996-24-000143_dell-20241101.htm:42]** **[0001571996-24-000143_dell-20241101.htm:87]**  |

753efda7edd2fd3dcbe76eb0f27135931a34ddac15c469d4fc2d39be63aa5781

United States

Foreign countries

Americas

EMEA

Total Revenue

5d6469574a1ce9e2e7d5f0b4f67919df0ec5645195a37af12cc363de01862e56

| Name                        | Start Date | End Date | Reason for Change |
|-----------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP | 1986  **[0001571996-24-000036_dell-20240202.htm:96]**    | Present  | Current auditor   |

236b04531af5c5b00e8c1c49a603c317f92dd94ce70ba605128c7f32533214ce

2aa14ed0e3d21fbc14eee8a0a298e581b58b76091cef744bcaedc5e2b1f000f1

a4e98657f0d47a432a526b52b6f28c4e21a2d2102cddbe8dc064760040f23ddf

Remaining Performance Obligations (USD billions)

Percentage of Remaining Performance Obligations Expected to be Recognized in Next Twelve Months (percentage)

Principal charge-off rate for our financing receivables portfolio (percentage)

e3a7cfcab59ca845f5634d02fe33b3c22e3a85d4c683287625c5f3acd4235cf4

ae43a31d92b5fd30d8c5fd31b020f54014b3bb1064f03e74896eba4814895006

| Year | Amount Due (in millions) | Debt Type              | Interest Rate       | % of Total Debt                                                                 |
|----------|------------------------------|----------------------------|-------------------------|------------------------------------------------------------------------------------|
| 2025     | $2,023 **[0001571996-24-000143_dell-20241101.htm:27]**               | Short-term Debt **[0001571996-24-000143_dell-20241101.htm:2]**    | N/A                     | 8.0% = (2,023 / 25,252) * 100 **[0001571996-24-000143_dell-20241101.htm:27]** **[0001571996-24-000143_dell-20241101.htm:2]**                                      |
| 2026     | $3,996 **[0001571996-24-000143_dell-20241101.htm:27]**               | Senior Notes **[0001571996-24-000143_exhibit221q3fy25.htm:0]**       | 6.020%, 4.900% **[0001571996-24-000143_exhibit221q3fy25.htm:0]**  | 15.8% = (3,996 / 25,252) * 100 **[0001571996-24-000143_dell-20241101.htm:27]** **[0001571996-24-000143_exhibit221q3fy25.htm:0]**                                     |
| 2027     | $6,020 **[0001571996-24-000143_dell-20241101.htm:27]**               | Senior Notes **[0001571996-24-000143_exhibit221q3fy25.htm:0]**       | 6.100% **[0001571996-24-000143_exhibit221q3fy25.htm:0]**          | 23.8% = (6,020 / 25,252) * 100 **[0001571996-24-000143_dell-20241101.htm:27]** **[0001571996-24-000143_exhibit221q3fy25.htm:0]**                                     |
| 2028     | $1,308 **[0001571996-24-000143_dell-20241101.htm:27]**               | Senior Notes, Legacy Notes **[0001571996-24-000143_dell-20241101.htm:26]** **[0001571996-24-000143_exhibit221q3fy25.htm:0]** | 5.250% **[0001571996-24-000143_exhibit221q3fy25.htm:0]** | 5.2% = (1,308 / 25,252) * 100 **[0001571996-24-000143_dell-20241101.htm:27]** **[0001571996-24-000143_dell-20241101.htm:26]** **[0001571996-24-000143_exhibit221q3fy25.htm:0]**                              |
| 2029     | $1,372 **[0001571996-24-000143_dell-20241101.htm:27]**               | Senior Notes **[0001571996-24-000143_exhibit221q3fy25.htm:0]**       | 5.300% **[0001571996-24-000143_exhibit221q3fy25.htm:0]**          | 5.4% = (1,372 / 25,252) * 100 **[0001571996-24-000143_dell-20241101.htm:27]** **[0001571996-24-000143_exhibit221q3fy25.htm:0]**                                      |
| 2030     | N/A                          | Senior Notes **[0001571996-24-000143_exhibit221q3fy25.htm:0]**       | 4.350%, 6.200% **[0001571996-24-000143_exhibit221q3fy25.htm:0]**  | N/A                                                                                |
| 2033     | N/A                          | Senior Notes **[0001571996-24-000143_exhibit221q3fy25.htm:0]**       | 5.750% **[0001571996-24-000143_exhibit221q3fy25.htm:0]**          | N/A                                                                                |
| 2034     | N/A                          | Senior Notes **[0001571996-24-000143_exhibit221q3fy25.htm:0]**       | 5.400% **[0001571996-24-000143_exhibit221q3fy25.htm:0]**          | N/A                                                                                |
| 2035     | N/A                          | Senior Notes **[0001571996-24-000143_exhibit221q3fy25.htm:0]**       | 4.850% **[0001571996-24-000143_exhibit221q3fy25.htm:0]**          | N/A                                                                                |
| 2036     | N/A                          | Senior Notes **[0001571996-24-000143_exhibit221q3fy25.htm:0]**       | 8.100% **[0001571996-24-000143_exhibit221q3fy25.htm:0]**          | N/A                                                                                |
| 2040     | N/A                          | Legacy Notes **[0001571996-24-000143_dell-20241101.htm:26]**       | N/A                     | N/A                                                                                |
| 2041     | N/A                          | Senior Notes **[0001571996-24-000143_exhibit221q3fy25.htm:0]**       | 3.375% **[0001571996-24-000143_exhibit221q3fy25.htm:0]**          | N/A                                                                                |
| 2046     | N/A                          | Senior Notes **[0001571996-24-000143_exhibit221q3fy25.htm:0]**       | 8.350% **[0001571996-24-000143_exhibit221q3fy25.htm:0]**          | N/A                                                                                |
| 2051     | N/A                          | Senior Notes **[0001571996-24-000143_exhibit221q3fy25.htm:0]**       | 3.450% **[0001571996-24-000143_exhibit221q3fy25.htm:0]**          | N/A                                                                                |
| Thereafter | $10,533 **[0001571996-24-000143_dell-20241101.htm:27]**            | Various **[0001571996-24-000143_dell-20241101.htm:26]** **[0001571996-24-000143_exhibit221q3fy25.htm:0]**    | N/A                     | 41.7% = (10,533 / 25,252) * 100 **[0001571996-24-000143_dell-20241101.htm:27]** **[0001571996-24-000143_dell-20241101.htm:26]** **[0001571996-24-000143_exhibit221q3fy25.htm:0]**                            |

f1e94529e6413ac4a7c9b11742ce7c095fe8303e6ac3b6ff402e98d93747c7f6

- **AI server revenue is expected to decline sequentially in Q3**, despite a **backlog of \$3.8 billion** and a growing pipeline. This indicates potential bottlenecks in supply chain or customer readiness, which could delay revenue recognition and growth from AI initiatives.  **[DELL_3400220_12]** **[DELL_3400220_13]** **[DELL_3400220_15]**
- **Storage revenue declined 5% year-over-year**, despite double-digit growth in Dell IP core storage, due to significant headwinds in the partner IP portion of the hyperconverged infrastructure (HCI) portfolio. This suggests challenges in that segment that may offset internal growth and could persist.  **[DELL_3400220_9]**
- The competitive environment remains intense across all segments, including AI, and **Dell does not expect that to change**, potentially leading to margin pressure and difficulties in maintaining pricing power in the future.  **[DELL_3400220_17]**

6147eb382ab577434d24217fc7c4f8b5136c767a666024235af824688234f1e6

- Dell Technologies is experiencing strong momentum in **AI-optimized servers**, with AI server demand increasing by nearly **40% sequentially** in Q4. The backlog for AI-optimized servers nearly doubled sequentially, reaching **$2.9 billion** at the end of the fiscal year. The company is optimistic about the AI opportunity ahead, with an expanding pipeline and increasing customer interest across a wider range of customers and geographies.  **[DELL_3375948_6]** ,  **[DELL_3375948_17]**
- Dell's **AI server margins are improving** quarter-over-quarter, indicating enhanced profitability in this high-growth segment. Despite AI margins still being lower than traditional servers, they have improved for the second consecutive quarter, and the company is leveraging its engineering capabilities to further enhance margins.  **[DELL_3375948_10]** ,  **[DELL_3375948_17]**
- The **traditional server market is beginning to recover**, with Dell's traditional server demand growing year-over-year in Q4, marking the **third consecutive quarter of sequential growth**. The company sees momentum in traditional servers across all geographies and expects modest growth in this segment, contributing to overall revenue growth.  **[DELL_3375948_7]**

cea5389bc47a8c7ecbad221ed31213dd4c7492de891372ad4a259fbb0d189f01

1. **AI Server Demand and Margins**  
   **Q:** How is AI server demand affecting margins?  
   **A:** Dell is experiencing strong AI server shipments, with revenues of **$3.1 billion** in Q2 and a backlog of **$3.8 billion**. Margins on AI servers improved both in gross profit percentage and operating profit dollars quarter-over-quarter. The company expects continued AI momentum next year, with demand from enterprise customers growing and a pipeline that is multiples of the backlog. Supply is improving, but deployments are complex due to data center readiness and customer schedules.  **[DELL_3400220_5]** **[DELL_3400220_7]** **[DELL_3400220_8]** **[DELL_3400220_10]** **[DELL_3400220_15]** 

2. **ISG Margin Expansion**  
   **Q:** What drove ISG margins from 8% to 11%?  
   **A:** ISG operating income rate improved to **11%**, up **300 basis points** quarter-over-quarter, driven by revenue growth of **26%**, better price discipline, and a mix shift towards Dell's own IP storage offerings. Improvements were seen across the portfolio, including AI servers and traditional servers, with expectations to finish FY '25 within the **11% to 14%** long-term framework.  **[DELL_3400220_5]** 

3. **Storage Business Dynamics**  
   **Q:** Why did storage revenue decline despite Dell IP growth?  
   **A:** While Dell's own IP storage products saw double-digit growth on a demand basis, overall storage revenue declined **5%** year-over-year due to declines in hyperconverged infrastructure and data protection businesses. The mix shifted towards Dell IP products, which are more profitable, improving margins but offset by declines in other areas.  **[DELL_3400220_8]** **[DELL_3400220_9]** 

4. **CSG Growth Expectations**  
   **Q:** What is the outlook for CSG growth and PC refresh cycle?  
   **A:** Dell remains optimistic about CSG growth, expecting a recovery towards the end of 2024 into 2025. The upcoming Windows 10 end-of-life date and an aging installed base are anticipated to drive a significant PC refresh cycle. Exciting new products with AI capabilities are coming, and Dell expects increased demand as AI extends to edge devices like PCs.  **[DELL_3400220_10]** 

5. **Traditional Server Market Recovery**  
   **Q:** How is the traditional server market performing?  
   **A:** Dell has seen five consecutive quarters of sequential growth and three quarters of year-over-year growth in traditional servers, with unit growth and increased configurations—more cores, memory, and storage. Demand is driven by the need to refresh aging infrastructure, consolidation to make room for AI, and workloads repatriating from the cloud back to on-premises servers and storage.  **[DELL_3400220_14]** 

6. **Competitive Landscape and Pricing**  
   **Q:** How is Dell positioned against competition and pricing pressures?  
   **A:** Despite a competitive environment, Dell emphasizes its strengths: a broad coverage model combining direct sales and partner programs, unmatched supply chain, significant investments in R&D, and market leadership in categories like commercial PCs, servers, and storage. Dell continues to invest to differentiate and win in the market, offering services and support to customers of all sizes.  **[DELL_3400220_17]** 

7. **Enterprise AI Demand and Services**  
   **Q:** What opportunities does enterprise AI demand bring?  
   **A:** Dell sees early-stage AI adoption among enterprise customers, with many moving from experimentation to piloting. This presents opportunities to provide professional services in strategy, implementation, and scaling, as well as selling complex systems requiring engineering expertise. Margins in enterprise sales are better than with large CSPs, and Dell has a specialized sales team to address this market.  **[DELL_3400220_11]** 

8. **Partnerships and Storage Strategy**  
   **Q:** How do recent partnerships impact storage strategy?  
   **A:** Partnerships with companies like Nutanix for hyperconverged infrastructure and NVIDIA for SuperPOD certification expand customer choice and enhance storage offerings. These collaborations support consolidation efforts as enterprises make room for AI gear. Dell is investing in high-performance storage solutions, like Project Lightning, to meet the demands of AI workloads that require fast and scalable storage.  **[DELL_3400220_12]** 

9. **Supply Constraints and Outlook**  
   **Q:** Are supply constraints affecting AI server shipments?  
   **A:** Supply of GPUs and components is improving, but deployments are complex due to data center readiness, including power and cooling requirements. Dell is managing scheduled deliveries and expects to continue growing AI server shipments next year. The demand pipeline is strong, and the company is working to convert it into orders amidst improving supply conditions.  **[DELL_3400220_13]** **[DELL_3400220_15]** 

10. **Storage Benefits from AI**  
    **Q:** How will AI demand benefit storage?  
    **A:** AI workloads, especially large language models, consume vast amounts of data quickly, leading to significant opportunities for Dell's storage business. Dell is investing in high-performance storage systems, particularly in unstructured data, to meet these demands. Solutions like PowerScale and Project Lightning aim to provide fast data access for AI applications, benefiting both large and enterprise customers.  **[DELL_3400220_16]** 

1a699677c131beb9d38494807f4ca725d04e2f9d4c89032b6018c2e63edb9b39

- **Strong AI server and storage momentum:** Dell's AI server backlog remains healthy at **$3.8 billion**  **[DELL_3400220_13]** , with the AI server pipeline expanding and now several multiples of the backlog.  **[DELL_3400220_13]**  The company is investing in high-performance storage solutions to support AI workloads that require handling vast amounts of data efficiently.  **[DELL_3400220_16]**
- **Competitive advantages driving market leadership:** Dell leverages its **broadest coverage model** of direct sales force and partner programs, an **unmatched supply chain**, and significant R&D investments to maintain leadership positions in markets such as commercial PCs, workstations, servers, and storage.  **[DELL_3400220_17]**  Additionally, Dell's end-to-end services provide a strong value proposition to customers.  **[DELL_3400220_17]**
- **Growth in traditional server business due to market dynamics:** Dell's traditional server demand continues to improve, with **five consecutive quarters of sequential growth**.  **[DELL_3400220_14]**  Key drivers include an aging installed base after the longest digestion period of **eight quarters**, the need for server consolidation to support AI infrastructure, and the repatriation of workloads from cloud back to on-premises servers.  **[DELL_3400220_14]**

0d1ef184a9b4fe7c2599d7ad8755e0818ec9fa469cceb49b9cda0f456edb8897

- **ISG revenue is expected to grow over 20% fueled by AI**, indicating strong momentum in AI-optimized servers as a significant growth driver for Dell.  **[DELL_3391187_4]**
- **Dell Financial Services provides a competitive advantage**, offering value-added services and financing options to AI server customers, enabling them with working capital and flexible payment solutions.  **[DELL_3391187_11]**
- **ISG operating income rates are expected to improve and finish FY '25 within the long-term framework of 11% to 14%**, driven by scaling the storage business, growth in traditional servers, and the additive impact of AI momentum.  **[DELL_3391187_6]**

fa0bc0a172de8f63ae3658f84c2dd76524913aca99fb7d1071678ced5bc6aca4

- **Dilutive Gross Margins in AI Servers:** Despite the high average selling prices (ASPs) of AI-optimized servers, Dell acknowledges that the gross margin **rate is dilutive**, which could impact overall profitability. The company is working to improve rates through services and other offerings, but the competitive landscape remains challenging.  **[DELL_3410089_21]**
- **Lag in Storage and Services Demand from AI Servers:** Dell expected that AI server sales would drive growth in storage and services demand. However, there is indication that this opportunity **hasn't materialized yet**, which may limit the company's ability to capitalize fully on the AI market.  **[DELL_3410089_8]**
- **Supply Constraints Affecting AI Server Shipments:** Due to component availability and shifts towards new products like Blackwell, Dell anticipates that **AI server shipments will be down slightly quarter-over-quarter in Q4**, despite a growing backlog. Supply constraints could hinder near-term revenue growth in the AI segment.  **[DELL_3410089_17]**

ba337a24efa3ba6b90ee39dae4a87b19cc53e41906f473c7bb886c37ecc42de7

1. **AI Server Shipments Outlook**  
   **Q:** Will AI server revenue decline in Q4?  
   **A:** Yes, AI server shipments are expected to be slightly down sequentially in Q4 due to the shift in orders towards Blackwell products, which are now ramping up in production. The backlog reflects when we will receive components and can ship them. Despite this, our 5-quarter AI pipeline grew over **50%** quarter-over-quarter, and we continue to work on converting this pipeline into shipments.  **[DELL_3410089_9]** **[DELL_3410089_17]** 

2. **Guidance Revision Reasons**  
   **Q:** Why did full-year guidance decrease?  
   **A:** The midpoint of our full-year revenue guidance decreased from **$97 billion to $96.1 billion** due to two main factors: the delay in the PC refresh cycle, pushing demand into calendar 2025, and the shift in AI demand towards Blackwell, affecting shipment timing. These factors impact our fiscal year and Q4 outlook.  **[DELL_3410089_5]** **[DELL_3410089_9]** 

3. **AI Pipeline Growth and Composition**  
   **Q:** How is the AI pipeline growth and customer mix?  
   **A:** Our 5-quarter AI pipeline expanded over **50%** quarter-over-quarter, with the enterprise customer portion growing even faster. We have now sold AI solutions to over **2,000 enterprise customers**, and as enterprises increasingly adopt AI, we see significant growth opportunities ahead.  **[DELL_3410089_6]** **[DELL_3410089_11]** 

4. **AI Server Margins**  
   **Q:** How are AI server margins trending?  
   **A:** While AI servers have lower gross margin rates, they are margin dollar accretive. We've seen rate improvements fueled by services, installation, financing solutions, and opportunities in networking and storage. We are focused on continuing to improve margins across the portfolio.  **[DELL_3410089_9]** **[DELL_3410089_21]** 

5. **Storage Business Outlook**  
   **Q:** What's the outlook for storage growth?  
   **A:** We expect storage to grow next year, driven by investments in new solutions like our Dell IP storage portfolio. AI is creating new demands in storage architecture, and our offerings—such as **PowerStore**, **PowerScale**, and **PowerFlex**—are well-positioned to meet high-performance AI workloads.  **[DELL_3410089_10]** **[DELL_3410089_16]** **[DELL_3410089_20]** 

6. **Enterprise Server Growth Sustainability**  
   **Q:** Is enterprise server growth sustainable?  
   **A:** Yes, we believe the growth is sustainable as we're in the early stages of a modernization cycle. Customers are consolidating servers to free up resources for AI, with our **16G servers** offering significant consolidation benefits. We've seen six consecutive quarters of growth, indicating a strong recovery in the server market.  **[DELL_3410089_18]** 

7. **Tariffs and Supply Chain Resilience**  
   **Q:** Any impact from tariffs on operations?  
   **A:** We have a resilient global supply chain and extensive experience navigating geopolitical and macroeconomic challenges, including tariffs. We're well-equipped to respond to any changes in the best interests of our customers and shareholders.  **[DELL_3410089_19]** 

8. **Customer Concentration in AI Backlog**  
   **Q:** What's the customer mix in the AI backlog?  
   **A:** Our AI backlog includes both large enterprises and Tier 2 cloud service providers. The enterprise portion is growing faster, and we're only in the early stages of enterprise AI adoption. Our scale and go-to-market footprint position us well to capitalize on this expanding market.  **[DELL_3410089_11]** 

9. **Federal Spending Impact**  
   **Q:** How is federal spending affecting business?  
   **A:** We had a strong federal government business in Q3, with robust demand across all product types. Our AI pipeline currently has minimal sovereign demand, presenting additional future opportunities as we engage globally.  **[DELL_3410089_7]** 

10. **Advantage of Full Stack Solutions**  
    **Q:** How does offering full stack benefit attach rates?  
    **A:** Offering a full stack of servers and storage is a significant advantage, especially in AI. GPUs require substantial data storage, and our portfolio meets the high-performance needs of modern AI workloads, driving higher attach rates for storage and services.  **[DELL_3410089_16]** 

11. **Shift to Blackwell Architecture**  
    **Q:** How does migration to Blackwell affect product mix?  
    **A:** We have demand for both Hopper and Blackwell architectures, with orders shifting notably toward Blackwell. Our open-based architecture allows us to quickly adapt to new designs and meet customer needs at scale and speed, leveraging platforms like our new **IR 7000** rack.  **[DELL_3410089_12]** **[DELL_3410089_13]** 

12. **Outlook for Fiscal 2026**  
    **Q:** What's the early view on fiscal 2026?  
    **A:** While it's early, we're optimistic about fiscal 2026, expecting multiple tailwinds such as robust AI demand, an aging installed base of PCs and servers, and an upcoming enterprise refresh cycle. We anticipate growth across ISG, including AI servers, traditional servers, and storage, and expect **CSG** revenues to be up.  **[DELL_3410089_9]** **[DELL_3410089_10]** 

16631b930c8d62d3259cebfc26722a9850666a38182038c20abe2172e8d985a6

- **Strong Growth in AI Servers and Pipeline Expansion**: Dell's AI server momentum continued with orders demand reaching a record **$3.6 billion**, up **11% sequentially**, primarily driven by Tier 2 cloud service providers and enterprise customers  **[DELL_3410089_10]** **[DELL_3410089_8]** . The company shipped **$2.9 billion** of AI servers in Q3, resulting in an AI server backlog of **$4.5 billion**  **[DELL_3410089_10]** **[DELL_3410089_8]** . Their 5-quarter pipeline grew more than **50% sequentially**, demonstrating strong future demand  **[DELL_3410089_10]** **[DELL_3410089_8]** .
- **Improved ISG Operating Income and Margins**: Infrastructure Solutions Group (ISG) revenue grew **34%**, with server and networking revenue up **58%**  **[DELL_3410089_4]** . Operating income for ISG increased by **230 basis points** quarter-over-quarter and is up **530 basis points** since Q1, driven by improving gross margins, especially in servers, and reduced operating expenses percentage  **[DELL_3410089_4]** . Dell expects ISG operating income rates to continue to improve in Q4  **[DELL_3410089_4]** .
- **Storage Growth and Market Share Gains Expected**: Dell expects the storage marketplace to grow next year and aims to take share with their Dell IP storage portfolio, having invested in new solutions and capabilities  **[DELL_3410089_10]** **[DELL_3410089_20]** . The company is focusing on high-margin, differentiated products like PowerStore, PowerFlex, and PowerScale to drive future growth and profitability  **[DELL_3410089_10]** **[DELL_3410089_20]** .

faba422b5b1d91803b9bfc6cf27d15d6c12b5fc28e11b46ff4879c180b40b999

1. **AI Server Demand and Backlog**  
   **Q:** Can you expand on your AI optimized server backlog and pipeline?  
   **A:** Demand for AI optimized servers is up sequentially **40%**.  **[DELL_3375948_6]**  We have a growing and less concentrated customer base, with more Cloud Service Providers and enterprise customers purchasing from us.  **[DELL_3375948_6]**  Demand spans across the **H100, H800, H200, and MI300x** silicon offerings.  **[DELL_3375948_6]**  Our backlog is complex due to multiple variants and delivery schedules, but we expect to ship more in Q1 than in Q4.  **[DELL_3375948_6]**  Our five-quarter pipeline has also grown, indicating strong future demand.  **[DELL_3375948_6]** 

2. **Traditional Server Market Recovery**  
   **Q:** What's giving you confidence in the traditional server market recovery?  
   **A:** We saw year-over-year demand growth in traditional servers in Q4, marking the **third consecutive quarter** of sequential growth.  **[DELL_3375948_7]**  Our pipeline continues to improve, and we expect modest year-over-year growth in traditional servers.  **[DELL_3375948_7]**  The long digestion period appears to be ending, setting up for renewed investment in traditional server workloads.  **[DELL_3375948_7]** 

3. **Gross Margin Outlook**  
   **Q:** How does the higher AI mix impact gross margins?  
   **A:** We expect gross margin rate to be down about **200 basis points** quarter-over-quarter due to a seasonally lower storage mix, higher AI optimized server mix, an inflationary component cost environment, and increased competitive pressure.  **[DELL_3375948_8]**  While AI servers have lower margins than traditional servers, margins improved quarter-over-quarter with AI.  **[DELL_3375948_10]**  Operating margin rate will be down but is expected to improve as the year progresses.  **[DELL_3375948_8]** 

4. **AI Opportunity in Enterprises**  
   **Q:** How do you view the AI opportunity and your plans to capitalize on it?  
   **A:** We see significant AI opportunities as enterprises adopt AI where data is created, on-premise or at the edge.  **[DELL_3375948_9]**  Our broad portfolio and capabilities allow us to provide solutions at node, rack, and data center scale.  **[DELL_3375948_9]**  We believe the AI market is developing in alignment with our strengths, enabling us to access this market in a differentiated manner.  **[DELL_3375948_15]** 

5. **Storage Demand Related to AI**  
   **Q:** How does AI change the storage outlook, and how are you leveraging your portfolio?  
   **A:** Feeding GPUs for AI requires high-bandwidth, data-intensive storage solutions.  **[DELL_3375948_5]**  As AI moves into enterprise with richer data sets, there is a growing storage opportunity.  **[DELL_3375948_5]**  Our portfolio, including **PowerScale F710 and F210** and **object scale XF960**, offers increased performance for high-concurrency, latency-sensitive workloads.  **[DELL_3375948_5]**  These products position us well as customers move from training to inference in production.  **[DELL_3375948_5]** 

6. **Component Costs and Pricing**  
   **Q:** How are you managing pricing pressure and component cost inflation?  
   **A:** We are in an inflationary component cost environment and are pricing accordingly while considering market competitiveness.  **[DELL_3375948_11]**  The AI server market is competitive, but we focus on maximizing profitability and have seen margins improve quarter-over-quarter with AI.  **[DELL_3375948_10]**  We have accounted for cost considerations in our guidance and expect gross margins to improve as the year progresses.  **[DELL_3375948_11]** 

7. **Storage Growth Expectations**  
   **Q:** What are your expectations for storage growth related to AI server sales?  
   **A:** We observed demand growth in unstructured storage products like **ECS** and **PowerScale**, which are critical for AI workloads.  **[DELL_3375948_13]**  As AI deployments scale, especially moving from proof of concept to production, we anticipate significant storage opportunities.  **[DELL_3375948_14]**  However, the rate of enterprise adoption will influence the pace of storage growth.  **[DELL_3375948_14]** 

c39e13c919a857f64780319dd2fdcf940409e3bb62d2fbe3b869452fef4d3a7a

- **Declining Operating Margins Due to AI Servers:** Despite adding **$1.7 billion in AI server revenue**, Dell's operating profit remained flat, indicating that **operating margins for AI servers are effectively zero**. This suggests that AI servers are **margin rate dilutive**, impacting overall profitability.  **[DELL_3391187_6]**
- **Component Cost Inflation Leading to Margin Pressure:** Dell anticipates **inflation in component costs**, especially **DRAM and SSDs increasing mid-teens to 20% quarter-over-quarter** in the second half, which will place further **margin pressure** on the company.  **[DELL_3391187_17]**
- **Flat Storage Revenue and Low Operating Income in Storage:** **Storage revenue was flat year-over-year**, and **operating income in storage was low**, partly due to a **mix shift to lower-margin products** and lack of expected uplift from AI servers, challenging the anticipated **higher-margin opportunities** from associated storage sales.  **[DELL_3391187_6]**

6b4b7b07184be9cab90afc45ffb30e021822aca24883de0016ced312aab29680

- **Dell's gross margins are under pressure due to a higher mix of lower-margin AI servers, increased component costs, and a competitive pricing environment, particularly in traditional servers.**  **[DELL_3375948_8]** **[DELL_3375948_11]** **[DELL_3375948_10]**
- **The PC market remains soft, with recovery delayed to the second half of the fiscal year, impacting Dell's revenue in the near term.**  **[DELL_3375948_16]**
- **Supply constraints, particularly in GPUs for AI servers, may limit Dell's ability to meet the strong demand for AI-optimized servers, potentially impacting revenue growth.**  **[DELL_3375948_6]** **[DELL_3375948_17]**

4502c42e3f66fbe71c204b7d26b867cf68fcf47cc0486356dbc7b61d26267ea8

1. **AI Server Margins**  
   **Q:** Were AI server margins effectively zero?  
   **A:** Management explained that while AI-optimized servers are **margin rate dilutive but margin dollar accretive**. The lower operating income in ISG was due to seasonal factors in storage and a shift towards large enterprise deals with lower margin rates. They expect ISG operating income rates to improve over the year and deliver within their long-term framework of **11% to 14%**.  **[DELL_3391187_6]** 

2. **ISG Margin Outlook**  
   **Q:** What factors will support ISG margin expansion?  
   **A:** Management expects ISG operating income rates to improve due to scaling of the storage business, better mix towards Dell IP solutions, and recovery in traditional server margins with improved customer and geographic mix. They reaffirmed their expectation to deliver ISG operating income within the long-term framework of **11% to 14%** for FY'25.  **[DELL_3391187_8]** 

3. **Revenue from AI Servers**  
   **Q:** Will AI servers drive higher-margin sales in services and storage?  
   **A:** Management believes each AI server sold leads to additional opportunities in storage, networking, and services. AI deployments require significant storage for data training, high-bandwidth networking, and services to help customers with AI strategy and implementation. While these benefits may take time to reflect in the P&L due to deferred revenue recognition, they remain confident in the long-term **margin accretive** impact of AI server sales.  **[DELL_3391187_7]** 

4. **Competitive Pricing Impact**  
   **Q:** Is Dell driving competitive pricing to gain share?  
   **A:** Management noted that competitive pricing is influenced by market conditions, especially in PCs and large enterprise deals. They are **not leading on price** in AI servers and are getting a premium for their engineering value. In traditional servers, competitive pricing is seen in large enterprise and bid deals, and they aim to win new customers for long-term portfolio sales, accepting lower margins initially.  **[DELL_3391187_9]** **[DELL_3391187_10]** 

5. **AI Customer Mix**  
   **Q:** What's the customer mix for AI platforms?  
   **A:** Dell's AI server sales are currently skewed towards **Tier 2 CSPs**, but they are seeing growth in enterprise customers, with an increasing number of repeat buyers. They believe the opportunity in enterprise deployment of AI at scale is significant, and the number of enterprise customers and revenues in AI servers **increased quarter-over-quarter**.  **[DELL_3391187_14]** 

6. **Component Inflation Impact**  
   **Q:** How will component inflation affect margins?  
   **A:** Management expects component costs, particularly **DRAM and SSDs**, to increase **mid-teens to 20%** quarter-over-quarter in the second half of the year due to reduced supply. This will place margin pressure, and they plan to adjust pricing accordingly. They aim to recover about **two-thirds** of the cost increases over a **90-day period**.  **[DELL_3391187_17]** 

7. **PC Demand Outlook**  
   **Q:** What's the outlook for commercial PC demand and AI PCs?  
   **A:** Management is encouraged by signs of stabilization and growth in the PC business after **two years of decline**. The installed base is old, with many devices reaching **four years** in age, indicating a refresh cycle. The upcoming end-of-life for a version of Windows may drive upgrades. They are optimistic about AI PCs, with new models launched and more coming, expecting AI features to **drive demand**.  **[DELL_3391187_18]** 

8. **Inventory Increase**  
   **Q:** Why did inventory increase significantly this quarter?  
   **A:** Inventory increased by **$1.2 billion** quarter-over-quarter, mainly due to ramping up the AI server business. Dell took ownership of AI gear components and holds inventory in backlog awaiting customer order fulfillment. No strategic purchases were made across the broader component base.  **[DELL_3391187_12]** 

9. **Backlog Conversion**  
   **Q:** How will AI server backlog convert to revenue?  
   **A:** The AI server backlog is complex, involving multiple technologies with different customer commitments and delivery dates. Backlog clearance depends on supply availability and customer priorities. Management has reflected their best estimate of backlog conversion in their outlook and continues to build backlog as they receive orders and await parts.  **[DELL_3391187_16]** 

10. **Inference Opportunity**  
    **Q:** When will enterprises adopt AI inference at scale?  
    **A:** Dell believes enterprises are at various stages of developing their AI strategies, focusing on data preparation and use cases like content creation and code generation. They are in early stages of inference deployment, and Dell sees a significant long-term opportunity as enterprises move from proof-of-concept to production, especially in AI inference, which they expect to be the **largest use case over the decade**.  **[DELL_3391187_15]** 

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Dell Technologies Inc (DELL)

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