Dell (DELL) 31 Aug 232024 Q2 Earnings call transcript

Good afternoon, and welcome to the Fiscal Year 2024 Second Quarter Financial Results Conference Call for Dell Technologies Inc. I'd like to inform all participants this call is being recorded at the request of Dell Technologies. This broadcast is a copyrighted property of Dell Technologies Inc. Any rebroadcast of this information in whole or part without the prior written permission of Dell Technologies is prohibited.

Following prepared remarks, we will conduct a question-and-answer session. Instructions] [Operator

turn Mr. to Williams, to of Williams, call Relations. Investor you the like Rob over Head I'd may begin.

joining and for Clarke, everyone, us. today me Thanks, are Yvonne McGill Tyler Johnson. With Jeff

you to are covered available on will presentation, IR I materials Our earnings discussion to additional this on our content materials review includes be our website, today's our and call. encourage complement which Guidance and afternoon.

including A to non-GAAP otherwise unless unless all to Growth non-GAAP indicated, measures operating financial our found refer refer net otherwise their earnings measures, these year-over-year can margin During and this call, release. in GAAP percentages to to web income, gross financial references directly expenses, reconciliation operating diluted measures and comparable deck measures change press be most income per specified. of share. our

we referencing obligation be based made to Given forward-looking events we the quarter. statements. sequential this results are materially growth in future our of call discussed where update from cycle, number due Statements Actual a frequently that current which to uncertainties, assume and forward-looking risks relate expectations. our differ this and during events We no filings. web macro our will are results on deck in could more statements SEC those and projected and to are

I'll Now turn it over to Jeff.

and than benefits QX been selective deals, pricing into lower Thanks, rate were this our discipline particularly on input the were and costs. executed anticipated, on quarter, but results, our Operationally, sharpened we focus share temporary. environment with we quarter, demand would expense We pricing particularly and Rob. at where moved have given controls, July. the well we faster we Coming cautious into as improved a we June

and results. down was demand ahead EPS and expectations. extraordinary year-over-year, of of our billion, $X.XX, enabled operating income execution QX was revenue $XX.X initial with a $X diluted environment Revenue of billion While strong well better

in market the of second the are some better saw in move anticipated. was the macro environment EMEA signs We with we seeing U.S. into the and we as demand half. encouraged are than We underlying better

demand saw improved transactional also through and and our We SMB in the demand growth quarter. government

now of most levels. developers largest proprietary another and servers. now quarter. we quarters to our demand data rates our careful strength scientists will in as demand through bright can AI grown sequentially grew were demand and perspective, scale. models S&P has a And locally significant deploying saw Commercial from PowerFlex before and in more spending QX that grew doubling with From storage fine-tune AI-enabled continue software. improved solutions of PC portfolio. their the particularly strong, we benefit consecutive in and our solution year-over-year. move global remain software-defined However, PowerStore rise spot customers Workstation X with at demand Gen AI within than storage was PowerFlex, attach the them

continue to expand PCs. traditional servers ASPs and Our servers, across AI commercial

the and data we to scalable speed a the the other success and intelligence servers selling billion, Dell things AI saw to projected orders unprecedented the were XEXXXX. enterprise. modular, next years. Solutions and sequential spending CAGR of $XX The generative for grow you as been at workstations total XXXX and our XX% strong and given solutions. for for the potential of of the and Artificial PowerEdge growth from in alone, builds as XX% solution pleased interest about on think to eventually history a TAM in technology AI QX secure years is when our Generative AI ramping the the PCs. key fastest expanding services. in is for we a In for GPU-enabled is all Dell and couple element hardware platform growing to well strength CSG approximately a for compute deployment we've tailwind including It's strong of engineered new in is Overall, quarter with AI all

expectation inflection half AI sales was gains servers our factor. to Gen of we significant year innovation a the first service AI and revenue represents higher. improving substantially is XX% pipeline in billion order have XEXXXX big and increased in the productivity driving of to in while the ways XXXX work. the new the and Currently, of an of fundamental change point pace approximately enabling our $X customer backlog and orders

world's And Solutions be cost. As requirements. clearly the the will core the to using new Many the serve and and at these that Gen characterize are and the in the of own to Customers their and have from inference client. build incorporate help of AI data security infrastructure cost AI the and broadest security edge infrastructure Infrastructure importance into positioned solutions processes to We portfolio workloads business train, and business meet on-prem to that Dell efficiently. given big #X data small on we advanced way. provider, market spans context performance, unique their differentiated the fine-tune their size, are we a customers and effectively can or AI latency, Gen cloud

and cases, our development management, term, to products, how doing are seeing X the we And customer organizations build In software enhance we operations, and efficiency. customers service near concentrate and Gen are improve content sales. use we same internally, on the and AI creation productivity

growth and where we we As grew the off year, cash normal about of QX generate coming of seasonality the our we above a model a to the think power are half demonstrated back sequential environment. in

focus pools. the growing for the in our us disciplined and most business and I profit innovation technology to multi-cloud expect costs remain Deliver You Securities and with about and focus edge October. AI more strategy on to our views Meeting and our in forward talking our on I on hand tailwinds. as customers, Gen pricing attractive with trends, like at innovation areas Analyst extending on our our core should look

for Yvonne over Now financials. to a QX detailed

demand and strong QX revenue operating $X.X improving $XX.X Currency an our was with XX% down impacted delivered a net of revenue. margins Gross of We're gross on basis execution environment. management. by and and billion sequential approximately and headwind expense pleased XX% and remained a strong points. billion, XXX basis growth working capital margin revenue XX.X% and We up Thanks, Jeff. with

Our opportunity. rate pricing depending selective gross customer margin deals pressure points, was costs We we're increased see and basis discipline. pricing but up lower by the on input on and XXX did in QX, driven

maintain As focused opportunities the of gains. Jeff we discipline. than more the temporary expect to on and you are segments focus can on rather profitable continue And us profitable to share mentioned, pricing market

down spend gross lower of spend expense discretionary and revenue SG&A by we half. by was in was to $X.X will operating flat was the in billion, sequentially. an and billion, X% increase we in up revenue X% actively expense Operating impact move expense. rate our as second and driven Operating and through the continue $X manage decline Operating with lower was offset X.X% of income revenue, of margin XX.X% the

lower quarterly and XX.X%. up driven by Net to was $X.X up $X.XX, count net tax diluted rate due X% income Our income income. higher and billion, was was operating share EPS higher X%, primarily

up remaining increases in our $XX due in deferred the Deferred by was X%, and was X% revenue. revenue billion, $X.X obligations, software sequentially and quarter revenue to recurring RPO, or driven performance up up billion, on Our back We down was billion, improving storage and storage demand ISG was hardware XX% the $X.X growth XX% revenue $X.X but and agreements. of up revenue PowerFlex. server billion delivered in PowerStore maintenance of and with sequentially demand. primarily

$X given expand continue billion. revenue and revenue, up by or XX.X% income was in Generative Solutions. an saw XXX $X.X and up revenue to were recent revenue the customer margin decline and offset sequentially. server of AI storage mix and ISG by ASPs basis to points, service in of We Service revenue. increase interest and operating increase Both networking continued server rise gross AI server XX% networking our a rate, in billion was driven demand

Turning now up to signs XX% down PC sequentially. of calendar showing was X% The units improvement, CSG. is QX but in market

offset consumer sequentially by prices. higher in Our billion, XX%, $XX.X commercial by Revenue continues revenue growing billion. fiscal driven to than with selling Consumer commercial average to grew sequentially CSG $XX.X QX better primarily decline units, was strong and $X.X a revenue partially revenue input operating X.X% in fare down billion XXX driven QX, points, rate of basis by expense profitability discipline remained maintain and costs. lower with operating or income revenue, an we billion. as from margin gross of lower $X pricing up benefited CSG was in X% increase and

relative Customer provide interest predictability. direct profitable We both commercial remains peripherals and models and executing our for consumption payment and services, financing. high attach end the performance consumer, in high focused financing and that and remain software, of flexibility on motion

X%, ending strong losses overall while low $X.X were quality billion, Dell levels. reached QX Our portfolio Services $XX.X historically up up managed and DFS assets Financial billion, DFS remains X%. near credit originations the

in During new the to increase solutions momentum, see APEX that quarter, a offerings. our percentage as-a-service continued Flex Demand we in Data number to with double-digit a Center our subscribed of APEX have and Utility strength On including customers strong

and cash balance sheet. flow to our Turning

continued past working flow sequentially inventory strong operations with billion, improvement, performance cash due from reduced primarily Our and and capital, levels. Within collections sequential profitability. billion was at low $X.X $X.X capital record now by driven growth working we

driven investments line $X.XX free by offset X.X $X.X stock and pandemic, $XX.XX improved Cash cycle QX, million we've by generation billion of net shares price average with XX in was days post to work In we now paid of $X.X on conversion done negative the a flow cash cash returns. $X.X levels. dividend. repurchased in billion has an QX, paydown debt capital up of capital billion With and and sequentially share per working at our in pre-COVID

improved gives billion leverage quarter, return in $X.X of exiting going forward. and we and cash with investments. to flexibility capital ended core the which Our to our QX us increase X.Xx

our cash to and in current our share six investor returned framework of of capital repurchase dividends, adjusted XX% and ago, continue have to our free enhancements form we framework evaluate Since feedback. the over we implemented we quarters on allocation based flow

a signs of a enterprise a QX and spending We're XX impact a and business, of expecting Against in midpoint to largest flat Turning $XX we are revenue small with plans. point guidance. and areas their roughly be to and investments still IT project basis be $XX.X continues our we customers to million in and $XX.X range measured QX government. stability including billion, global billion Currency of medium sequentially. backdrop, are But revenue. of and our expect to within number across headwind, corporate the seeing business that

CSG sequentially. both flat and revenue roughly expect to We be ISG

environment. Although we deflation, XXX more competitive profitable more we pricing remain disciplined basis and be with Combined will muted expect share, focused expect gross component sequentially. down rate margin we on cost a points

offset lower cost drive operating that on expense dilution. will sequential controls margin focus continued Our gross partially expected

million XXX $X.XX. and our diluted EPS and QX plus shares to be expect between million or We count $X.XX minus be our share diluted $XXX to

For at year, million, raising midpoint. the and revenue in our 'XX $XX.X down the full we're the be XX% $XX.X range FY of billion to expectations

in Given this QX implies growth guidance, QX. sequential

expect interest other We flat be and to year-over-year. roughly

For plus XX.X%, tax or should basis rate, our points. you minus assume XXX

or diluted plus increasing earnings are share our minus We $X.XX, $X.XX. per to expectations for

have In with long strong our closing, TAM tailwinds. the as multi-cloud edge over the we AI, growth conviction term and in of

our generated and We model of expand core of to of We our the demonstrating executing our capital our investing our sequential from growth. including a to return to challenging edge, months, power XX TAM multi-cloud we demand when $X.X in strategy, cash underscores to during working efficiency performance on telco billion focused our innovation environment, last markets, and more generate the have drive winning flow operations in and ability cash AI. consolidation the QX over remain

on long-term delivering focusing and our our what shareholders. us business, the in forward be to and continue can value framework to we creation disciplined how you Securities Meeting and Expect we strategy, control in provide all where updates policy. we'll And our at customers look Analyst allocation we on October, manage capital to to seeing our

Rob Now I'll turn back Q&A. it begin to to

Thanks, Yvonne.

We Let's as get as possible. ask question you to each participant us allow get to that of to to many Q&A. ask one

the Let's to first question. go

our We with first Suisse. Cross will from Shannon Credit take question

positive and about more the about opportunity, more basis? about bit a can cases, a you've AI-oriented is going how can geographic about of a just Jeff, bit in for change storage it, I'm a on temporary drive should think in talk secular of can lot you but with versus to we you talk that and you is you And both spend think X hardware ASP wondering, core a potential AI talked maybe sort -- more a segment servers talk but a use solutions. nature? discuss AI

a let stab that. Shannon, me take at

the and last -- that asked reinforcing data workloads series a opportunity workload, this the PC, PC new and those to on center think across I've at whole AI X will the And inference incremental think Distinct of all, tune to it's smart the capability new where And it site customers' uniqueness absolutely domain-specific in drive out, is network. call, great experts edge, think think goes productivity the our it's a of worth the to we I being the model of I on transportation process-specific big actually opportunity we enterprise at on is models business a it's use it's happens in smart whether of then all to going and use of cloud we notion a said then they First be of be to the and how really the built because their that a will new cloud. and think use on is, and areas. device or type is, what opening productivity just these how field growth of a but sort distinctive run data scale. we as in the able in factory, level foundational hospital business data of study of AI, used

resources this So makes we and is environment. business going actually specific way really by be the data collecting is world, for I not geography. the in follows will that's to that again, sensors and specific work And nature think that is you going compute to that data real information think where not about think exciting about the the be application out really technology being where AI of when It's put are the to this. That vertical those created, us its created. size allows usage how to and the it the is edge, the to the of the way actually type driven what's of all to

not a data of the center tuning cluster edge. the size think big from a does could fit the all. solutions, there's our could We the fine running We what to think these server defined single a cloud at again, way workstations renew as in level to all one micro it's AI whole and models a or scale foundational be doing be slew PC center small It inference data the training. small will happens into

that We innings. if processing data data systems build parallel applications going think opportunity. servers? I guess distinctly We as course, do a in incremental. is I So different, at AI doesn't architectures workloads and say it I know versus early some we've The quickly in expense nutshell, how to distinctly that's know the are as we are built believe Of done different it and will massive, will, could for that's the describe come I it's in don't of different. Am for we the the historically the in center you data past the center. not.

next UBS. from our David take question We'll with Vogt

yourself how sort revenue order becomes that of expect Can competitively to sort And supply filter how ability to book. getting stick kind as your thinking servers allocation book? how you for in So right? bit us queue? it's and or seeing or are supply any a -- and available? order gating order to a sort sitting now GPU And that your we with billion just limited of AI book with into of $X about we about maybe some dig some see sort share get of of second of your talked through capabilities, factors, you're to in rush ample you you just should of that a and allocation on supply meet allocate Can you into right obviously, challenges

David. we Sure, easiest determine ahead measure the Maybe is where demand with of way to supply. are supply is

XX-week If be lead you year. of which last delivered of order a product a May week today, it's would next time, the

do. It's I'm I'm So more for what we parts. allocator, the we allocatee. more asking are parts working get to not the certainly

we're our in by coming was It proof AI, AI yesterday to folks the that I business billion our into to So we that's something to with business customers the earlier, do on Again, constantly their do providers that's business. to about a I discussion pipeline we're in different bigger the the our trying a on-premise beginning are of what actually winning two different before exactly backlog improve day cloud AI concept demand. with enterprises position figure signaled about building From drive data to significantly service use AI. opportunities. fielding to as advocating their now said today $X and they is how out just

work then the tell tracking and at to pipeline and that accelerator supply, also are for we're chips continue are least advocate We'll in that development you, XX coming. more different I'll in

there that many opportunity. the see So people are

are new that these new of of think frankly, technologies that exciting and businesses processors customers. technologies up and algorithms types we'll driving there's type to Some from the we obviously a fairly neuromorphic of new accelerators helping marketplace our across of watching open that be and quite and series

our take Chatterjee your JPMorgan. is line with Samik open. next We'll from question Samik

you mute If please could check your button?

Sorry that. the on results. about Congrats

understand Just of sort be maybe of look that macro the like shoots does large are a and I and might sort of green still I improvement. verticals other it seeing or servers there you're market of of you segments mention but seeing ISG of trying talk in when for measured, storage. macro improvement? sort did of enterprises mean more did spending, about be are orders you you what guidance talked are to sort the if during what about you terms quarter, the -- to And order the of can linearity both flat see square in

sort flattish of sort the guide square to please. So help Just that embeds of me of major how versus that pricing square much of like demand? being just flat guidance trying that, driver

go that, and me start Let Samik. ahead on

So about into we're quarter. external as we're looking And the the talking third environment.

near-term we're about stability business. confident We're the transactional in seen dynamics We have sequentially the through. at we've billion. $XX go navigating lot to flat forward, expecting a of We're that we're guiding but

government. normally bit So servers business we've mix, and leaning storage I but be on of of rest that in sequentially really portfolio. from quarter. in expecting improve talked about, a small got you're down medium rate seasonality, GPU ISG expecting the overall which much to in we're the But then business, on a third perspective, about asking with not decline flat that the the server particularly the better, space, And to a seasonally

And storage, so lower expecting a we're performance that quarter. that storage in

CSG, at have it also we flat. Now

We mix period. in dynamics mixing the have some there more with towards holiday

also we'll that TRU that we're have coming in. we'll external that pressure from the have with So And some environment. expecting

Yes. just said as might storage. add specifically complement, a Yvonne ISG the I on

mentioned, high-end P&L the to puts that and weakness down you band they the And concentration enterprise it's in the QX. or As our be on to sell with pressure in arrays we that seasonally QX. storage customers, happen high-priced greatest of QX the

That's right.

global haven't really We into back the come enterprise corporate yet. larger spending seen zone customers and those

next We'll Bernstein. with take question our Sacconaghi Toni from

quick question. a in have just clarification I the

your then in should of the you're that's control changing maybe XX% year sequential cost margin X% of was was normal quarter back quarter PSG said terms a next could XX% your even on anything given to this we unique ISG down in in be of that. maybe there strong backlog guidance, to my quarter picking you and growth percentage saw context, both the to or continue is question gross structurally of just is server kind levels above And operating there margins, or or to where what you're confirm X% might something either you participate, server we to businesses AI might margins ago? we you're about want XX%. in historical kinds wanted see. kind was revenues I in And this think quarter this something about the I to of accelerator how Is that levels historically, you revenue add just be of based. that terms was GPU as and GPU-based above a or

since it'd half I believe if XE cetera. orders of year the large the did question, of actually products of to on a big it, of percentage be I were in or half number, the And my take that's vast base. not XE servers, very I'll XX% a against majority were is the and most $X a servers I AI-based family ago Tony. remarks the you a backlog. the It's billion very noted the given did exist, et basis. family, first compare year-over-year of the first backlog it calculate but XEXXXX

question. I'll And in profitability then jump the on

our I we capture costs. And and a the in continue, with TRUs, QX with differentiated we QX saying third that a in expecting the QX. so environment expecting quarter higher now was more levels see and broader competitors P&L of on translate saw that less or component seeing we're and did stable few we access the In that was saw that than competitive really, that I rate. really think that And that right, example to I'd in think, a deflationary what right, component great what we're of though, that more ability lower environment more deliver let what think we saw we're have more see environment through to muted We our than that inventory margin it things, quite us QX, quickly. deflationary and wrap deflation but to better normalized. we'll model, a then anticipated

element both less as in the -- are in CSG third quarter in And through ISG competitive mix we quarter. and we're the -- how performed pressure mix second and in there back mix ISG So towards seasonally, the into the very quarter. that pleased fourth to and especially with storage we'll storage expecting we coming that dynamics,

our with Rakers Aaron from Wells question We'll Fargo. take next

Dell. balance away and going for bit the from of I'm Thanks maybe narrative equation and for sheet of the a AI to the talk also some side question Yes. results. about the the shift little

the billion one balance increased to you think of it or in flexibility your also prepared you've And you got, close I sheet. comments, return things the was cash flexibility improving of capital $X.X that was think side. on highlighted mentioned now on I

curious of on relative context think we about balance sheet capital of the much another you of about the much flow you're So necessarily or you're that for put cash how top And as the the free cash maybe capacity company. return operational thinking carrying I'm excess way, do any cash how need how generation on to M&A?

Yes, this our is and Tyler. Avon being I in. Maybe might think billion start it, billion. always step cash about I'll somewhere $X call to $X we've talked around, minimum But balances

Now it doesn't necessarily mean I'm going to we run at excess have those levels. But cash. clearly,

saw, working you $X of So As by quarter. at if really look cash strong we've first on. CFI, actually, teams the year record, that's And great it of focused the was something extremely been a you at on the half capital job a and billion right?

progress we So made. the to it's see that great

us like mentioned does opening the remarks Yvonne more just flexibility. give So during that

As I return has nothing framework, our think about capital changed there.

we're opportunistic So I through looking at look are on we're just buys. this then dilution flexibility think And that working we and example, first that. at. as gives We think we provide but share us at as guidance that, obviously look something we repurchase, for more don't

Woodring next We'll Erik our question take Morgan from with Stanley.

maybe to versus market? in you're just some the X% Can expected. that just storage than specific hope servers, cycle? well? you differently, you AI in seeing there down how is that pull-through walk I storage would storage we are better from imagine the revenue was in Maybe any could year-over-year. in Dell what the the time And much if through was market? said maybe us Where if think you do be XQ performance I Jeff, weave as helpful spend quarter, on the of in

Sure.

our and its proprietary ability most there. solution and embraced independently was HCI, marketplace. seeing our our applications. has We're in high-performance growth. great If We're by driven grown. you it -- technology storage mean, I for the storage clearly momentum our scale in which primarily PowerFlex, And that being Its is strength notably, software-defined performance seeing compute to

than triple made in I think the it X think I now more and digits, grown consecutive doubled grew that quarter. it's it's quarters, remark I a

was earlier in of that one going that mainframe digestion now of cycle the we time the in questions high-end through that buildup our the where COVID we down the their through the certainly to customers storage a so corporates, business, is saw XX in that saw very in that our or refresh was the a particularly capacity It mainstay given home and the storage So a able very quarters sell business. correlation That's side to midsized, online. be being brought mid-range row. to world AI I is the continues backdrop in PowerStore, should is the mentioned of portfolio object the large compute grown our buying, offering be the of has in midrange the tighter working are offer, unstructured of certainly to now highlight that guarded large storage strength medium-sized mid-range storage product our largest the side, get business. I'm is. optimistic. our multinational the where businesses, storage. of driving consecutive We're of side a our that ECS

will have more When you most data this broadly solutions, scalable, this really unstructured scalable looking see think unstructured for think data about going as in its market the the with forms large be we'll storage. and our the systems we structured is highly enterprises PowerScale all-in AI of through and in amounts I high-performance the and object various ECS that highly deploy

is I'm tight correlation tell So would of it compute. with the inside compute hope to that storage moment. there's software-defined helped. I you not Most I that optimistic a

We'll take Daryanani our Evercore. Amit from next with question

just accretive traditional to AI they're the server if Are what hyperscale I is? maybe from hoping I is go is the about ODMs help the nice that Because proposition when numbers and might get the just you to to the Dell then or talk customers? from prop the a just durability talk here. they that to you are be coming folks And value providing revenues, typically just are Jeff, was enterprises, And about could Can value are that you opportunity. are think who they GPU-enabled dilutive it due back who maybe Dell? but guess ISG this of set on of are is coming Congrats customers what's these I base allocations. us services? concern the Dell's understand your comes margins? can't buying this maybe customers GPU

or Must four five be questions question. in that

and So servers at are there of we've let words, our this architecture But a AI spot sweet of new We these three big well. believe mean, that in that my believe my technology. a workloads through for with hit type our is other new demand new resonated the today opening me incremental XEXXXX, with opportunity work that and as we the I type portfolio clearly, example. and hopefully, that. way

about XXXX, why is you performance. over buy mean, work it's years today. it believe an server I If clearly, performance, tuning three dense interesting can its product? AI we with most NVIDIA highest the closely think you the We

You work what we've product. it around with efficiency can for air ports a we've about ambient think with been temperature We high-performance XX it around side PCI-E as as of done it to clusters. we've XU XX what cooling able do degrees what connectivity the at give power Celsius, to done iDRAC,

So something we've purposely for built AI.

AI to the understand, the at think at That do data opportunity, lot the deploy with Technologies the types can where it's them buy to that a of data enterprises, models data long-term we're sort data and their the a implement of today World understand service that how of volumes density the as of run to early at how in edge if of track and But range of inference We're proof If a a beginning some today, so capabilities range is, the then edge test of this this, the selling prepared It's they services you that announced to begin tune types subsequently, small package the you of work. to customers data. or concept, we begin the wide just services the the in able it's at to their how companies. models, train with in cloud. ultimately places ability get infrastructure attributes there mentioned, of think is I a AI center. in we going help so seeing Helix, to enterprises as new we're about their look at of of do services they be center, broader with and can and in help ease Dell to

world. and certainly think going will looked cost together, it, are could the data. a be of unlikely do of equation think as a my the And with that's I be I we've on-prem. will least accelerated opportunity. some done factory that when what hybrid follow every set well to highly be matter. more will Latency I robots hit it's when but AI a put or detail, going or you're we the way compute at surface. away. ultimately done to classic the to in we way that this is questions, AI to smart look think will that go We'll be the we will that smart a to trained on a hospital In mind It's matter. very think going We at at some or series and into very, think AI will a done matter. There architecturally going as a nutshell, look performance it's this be long cloud. matter, in In heterogeneous We think going compute. of in think inference run We to you security way be we continuously have

question Mohan our take with We'll Wamsi Bank of next America. from

was the TAM could also a perspective consumer margin a wondering I PC challenging maybe, into Your and noted primary up talk USB-C in year year from PC next competitor Jeff, environment. from a TAM also component commercial and this the a lower perspective? rest set of backdrop you trends of a through more and XXXX, in about cost

Sure.

of I materially the that. call. our hasn't -- changed market scratch. to try I'll that's over on Our end, from view hear last talk maybe a our

compares. see That's in at tied units, second XX% the reflected would We see over last the have million Two for easier XXX slowing down, year. what into in just down half and QX us Yvonne roughly roughly year. both years which the against gave market it guidance we consecutive it

is PC into the point the and that PC we and there year. slowing optimistic next rate see decline of we're we So next growth to year, in where head

debate We digits. number. can single Low that

the this higher opportunity say, give the the a X% interesting we'd us, what to we range tend we're to today to be probably selling of in next at think types is told X% phase year. through you If you, PCs is grow What's really ASP.

as and That driven types at balance chrome, services. units a share of first have against units, of the also Xx a challenge as attach of been peripherals, the drives this units bit strong That's There served price focused generally have market half you profit industry, build If have low the frankly, strong is markets, by band, the We were year software all in ASP of in the the PCs, we year. commercial the the many our products our very where focused to which built It is the that ASP we've of consumer, which has again, been our in. attach, not pools why, that? and the pools two, of in a to quite and look consumer with One, premium profit industry, gaming. emerging lot we're particularly to been been a struggled Why recipe Xx. of into roughly driven where mix; well. leader. the commercial have the are we've we are a by not

year of AI-enabled call the with PC I'd us about we CoPilot, PCs, the edge and a think all is version on end a AI building with We it this the of app. new next at as think great, killer year Windows we

it CPU, mouthful. a it little proxy PC et cetera, memory, if That edge to we've increase. to And the applications at little seen do the I new ASPs. going more, time think And the a seen drive more drive that means display, is PC. a any market storage, We've a killer going driving for productivity was your that you're which needs ask bigger generally better rebound. a a to on productivity app is another cetera, et more bit

all. covered think in focus We're ASP are we're for optimistic to profit year. it on, in decline going not second change. the we I holding slows down. a I question, That's Thanks this and pools, which rate modest The half going is the growth to about the opportunities to of are weather in continue market storm calendar 'XX. It's the the

Asiya next with our question from Merchant Citigroup. take We'll

results. you're shape market Great. Dell's the terms Thank you of clearly, offerings great talk the opportunity Jeff, and excited of the in how market long-term core very as opportunity. for some and AI about growth the are guys PowerPoint, helping about well. you And

on about to talk of should just that higher your we when think could expect the you opportunity, growth, your given market in that you about we if edge -- ASPs forecast, as for that to growth the down growth to as we computer well calendar is higher that acceleration and relative calendar should the -- in a workload, expect something off 'XX maybe amount of So AI? think should face Is about how long-term in coming see your 'XX? market that just especially growing year the side something an

tend to these where opportunities expand. we model or Well, in our growth extends areas about think really

four it clearly are you chain do think off which organization. you storage our about advantage about across about you growth scaled them in go-to-market our, and scale PC very start. our think think, and We've you position to the supply to new think compute leadership side, the talked telco, apply attributes and opportunities. How those good large in a is if presence, picked past take So I as about service

think in stage We -- been product think that marketplace, I next which to it the very Is a the week. of we don't XXX% opportunity the at as know. need multi-cloud delivered think today, in and worth that's the just year. be we've new and about incremental a build on don't shortly tailwind about schedule. about is AI. workloads some ships architecture debating. talked there's have different. that And I data we again, that stage. demand is are but wholly the I of to an I clear, the on They're the build get different. cannibalizing platforms category, the We not opportunity. And multi-cloud talked NativeEdge through DTW that then we this know Edge. that here we've to They later out types engaged announced fourth the I on bit are partners already it serve I know products center?

that exciting. think is pretty I

Our model quite well plays there.

believe build momentum tend and firmly we the carrying even medium-sized the ones and today. have and hardware. build which the scale. AI We've just to cloud AI going on-prem of be and a significant edge. the in will next and adopters the before. we We on be think get said early data and of allocation the ones factories deployed service in of parts talked to little be at key a ones as with about and And going -- backlog think Given because everywhere, us, time our large at edge clear AI ones portfolio I That to to centers opportunity won't backlog for and now parts, to picture is this continue concentrated we've the this little I there's the enough year. to services, a we hyperscalers. think ones paints pretty and backlog big XX It's into be lead continues of to it's And it

the build then themselves. sure the So our our services making the application, source that's today, on services, run embedded hardware out great they open ultimately both platforms certification and of aligned with portfolio services XE or and there of community servers professional

Goldman Michael We'll take Ng our next from question with Sachs.

a accounted Or very year? on visibility next about if to accretive relates for it And next Or the for AI are Thank mix through success given in whether saw basis? server about it your we in margins just does AI lastly, the improving and backlog I servers? gross we then you could differently It's increased, improves Is you wondering had any done it things whether and that of just as servers I'm or just consignment the just year, are to revenue GPUs are seasonality there was I XEXXXX into normally? and And question. if much very storage Was server hear the on how just that ISG. servers encouraging increase, ASPs primarily discuss wondering should for ISG. to think talk margins. mix? AI to not flow AI

we think our on our And make a driven in and servers. cost in which through pack expansion to in saw growth and Yvonne was storage, had logical improvement both way When about questions by there, I the A few this, order. was QX in in because in margin storage try good. we will and a the environment, that we servers favorable maybe and sequential P&L both

that saw our You performance. in

AI greater AI the how you basis. from a of margin dollar than of a They're When are look from on center about computer, continuing accretive will. the That's and how view the sure role That's that view. think drive dilutive it's Yvonne a or a on They of percentage. margin data if portfolio, servers, significantly servers I point I to business. we look accretive gross at margin in general-purpose backdrop AI are that dollars, an our at of point servers ASP making

build selling deployment Much talked hardware about over an being these services remarks our the our the like Project to that sell grow of to that are when we years collect billion. Helix of handful the AI and grow we've deferred around more services I this innings, the I on these. That's XX% is entire to is believe next our that more is we provides that market opportunity service that $XX of Given the things think going of sheet ecosystem quoted these. early help when we which the service opportunity for our across customers able in around we balance can around service to us to part

that our as we'll strengthen And balance grows. sheet

opportunity. So that to looking forward

question our from Raymond next with We'll James. Leopold take Simon

in pricing year. supply to . that some demand margin up supply revenue maybe of about the for the I go will margin in memory talk on the related chain storage prices some expectations shift, think some just dynamics lower storage solid-state how and you that both could benefits guess, Great and for I think I you've effects see to are, memory. there your wondering And for to And if about had enterprise I'm your wanted NAND, from the next

Sure.

as her deflationary of far, couple a we in questions mentioned in remarks Yvonne thus a QX. had cost environment well As as to the

scale our do We increases of or try first, and not the difference cost and we getting passing tend uncompetitive our this. system cycle. prudent It is can assets, we've them as deflation price we when to the this move that we increase That's deflationary our change in we signal businesses in the are PCs to generally in tend given to our cost be Our along view the price, that to percentage ahead of in able rate of but half, mostly on in And be the The by become features, content here. in We second at all is are capability although that our it. material The over to storage the of believe value capabilities be time, pass servers, isn't able and we sensitive the have incremental to clearly to we see our business. of of a a storage. actual way of the The first. actually the that passing the where cost businesses. efficient we purchasing is won't from -- our sales of in benefited the we're and that spread smallest slowing. that see is that price we'll increase, environment and differentiated for we as time. done bring software. Typically, There in do through competitive how we X the we'll what's through any raising cost how price, nanosecond, X quotes or given but always is

and I will into reach You that. measured you not signals prices, Yvonne...? anticipate -- occur. a cycle or can really enough is correct. tell base will that's going the through the understand to way understanding our are good the pushed tell I'm cost and all to into future. day good, be I in you what our supply we increase and those

No, no.

you think I it. covered

Fox next our Steven take question Advisors. We'll Fox with from

you're here. Just pricing discipline exhibiting that on the

It than discipline For you margins. when And of rest for Can I through explain different expected income most about seemed of the would how year, the quarter, statement? the then fiscal expected. through? have flowed you it we had better-than-expected sort sales and where you of the gross little pricing the sort think see sort that of as would come a

macro then When We inventory from you and Well, weigh half, it's inventory a elastic. demand. point when see many see see we usual. to don't in excess as pockets to a try QX very view second in here, think ways, you of tend slowing market in and think generate Yvonne to the aggressiveness business move will you of the to is pricing certainly about in market

back, in as just marketplace result, mentioned, are As units the a not in which in go very there less There get, I pools, the to disciplined we're very were that that's profit pools. think -- attractive the profitable be regard. previous tend I several disciplined. disciplined were we question And for And very to near We're and zero. us. in

areas When of as look accurately you not I deals, many and more that Yvonne market several nature, tend described. the the times of have the that large be nature, and conservative is But cautious I aggressiveness. pockets they big to probably just deals, as at We QX. stated stable given see customers enterprise-class outside generally said now, of in

the know consumer old very getting a of second back half deals inventory in be not been. will exposed half continue those think they product time. promotion we'll the isn't inventory about. some consumer big it's in promos we levels, have into consumer think moving go any with that -- year, our aggressive lean the we aggressive to the We today, will run They issue. inventories when there inventory we of which historical As year, be always because the that's out We're to second see We model. of come

nothing there. really there's So new

as for you before. customers. Or we've disciplined. business it's pattern places to places as sense Just we And where just makes usual. are that want be a in There that similar There's us we'll if acquire new prefer a customers we seen that it customer's and where new disciplined cross-selling. and can We'll much customer judicious expand to it I very want our as sure address estate very can. with portfolio acquiring portfolio. of our making a in We we be possibly to... call

those and no, profit continue pools echo core to price we focused focused across disciplined I'd that on very the be market. on Yes. and No, say,

about where we good the balanced, return, And that. proper but investments there's feel very disciplined. always feel very So we like return, make future

we'll take can it question for back over -- we back and to if to if one turn Jeff it Cynthia, then you can closing turn over more remarks.

We take TD will our Sankar now Krish final question with from Cowen.

fiscal quick revenue looks the curious one relative seasonality? Based Kind CSG be A Is color revenue what's full of driving Any digits like your XQ for up of there to guide, low helpful. in your XQ? be Yvonne. single Q-over-Q, ISG, would it year it strength XQ should on kind

quarter, performance. the So thanks for we fourth question, storage In have do strong Krish. your seasonally a

And that expecting we're so year. again this

differential be fourth that's quarter. So driving really would the the what in

results. delivered Well, extraordinary everyone. Well, you, in thank executed well perfect. QX We and

starting you our I to October leading compute, from of Michael, service Securities all storage industry's competitive strength and advantages and of set focused Yvonne on world-class chain unique to of portfolio positions, Analyst engine, there. #X a by go-to-market Meeting at applying position driven go opportunities. is strategy our remain will new PCs, into our with positions leadership you. our detail the model Thank our technology's supply We and across X. other our and model see extending more largest broad Our of organization. on We a hope topics

conference appreciate participation. today's We concludes This your call.

disconnect You may at this time.