Dell Technologies’ revenues took a 20 per cent hit due to poor performance in its commercial PC unit and the infrastructure business.
The grey box shifter said that its first quarter 2024 revenue came in at $20.9 billion which is $700 million more than the $20.2 billion Wall Street expected – but $5.19 billion off the same timeframe last year.
Dell’s co-COO Chuck Whitten told investors that demand remained challenged, and customers are staying cautious and deliberate across their IT spending.
“We continue to see softness across our major lines of business, all regions, all customer sizes, and most verticals,” he said.
The vendor’s commercial business was down 23 per cent, which Whitten said is now the fifth quarter of soft demand in the PC market.
He said the PCs that are currently in the market are beginning to age to the point of renewal which, historically has come between the fourth and sixth quarters of downturn.
“We at Dell have shipped over 160 million PCs over the last three years. All of our telemetry data says those devices are still in use. So you have a commercial PC install base that’s at the highest levels that we’ve seen since 2014. All of those points to improving sequential growth as the year progresses. When and how fast that recovers? To be determined,” he said.
On the infrastructure side, revenue fell 18 per cent year on year dropping to $7.5 billion.
The heaviest blow hit servers and networking, which tumbled 24 per cent, while storage fell 11 per cent as a category, making up $3.75 billion of Dell’s revenue compared to $4.23 billion in the same period last year.
“In storage we saw continued demand growth in PowerStore, our marquee mid-range offering, and in PowerFlex, our leading software-defined storage solution,” Whitten said.
Dell chief financial officer Tom Sweet updated investors on APEX and Dell Financial Services, which he grouped together.
“Turning to DFS and APEX, customer interest remains high in consumption and financing models that provide flexibility and predictability… During the quarter we continued to see APEX momentum, including an increase in the number of APEX customers that have subscribed to our as-a-service solutions,” Sweet said.
He stated Dell has executed on a sound APEX strategy and the company is pleased with its performance.
“We’re seeing really healthy customer interest and growth, particularly in this economic environment, where customers are looking to stretch every dollar, and they’re looking to optimise cloud spend.
“As we have highlighted in the past, our focus is on trying to offer our customers choice across the portfolio, and steadily building the customer base and our ARR, while building technical milestones,” Whitten continued.
