Dell Technologies has continued to perform well despite the COVID-19 coronavirus pandemic, giving the company optimism that its business will remain strong no matter what the future new normal will be.
Jeff Clarke, chief operating officer and vice chairman of Dell Technologies, told analysts during prepared comments on the company‘s fiscal 2021 second quarter analyst conference call that, as of day 171 of working remotely, the novelty of the new normal has worn off.
“[Chairman] Michael [Dell] sent a note to our team members earlier this month that captures the situation quite well: ‘This is going to be a marathon and it’s going to be uneven and frustrating at times,’” Clarke said. ”What I can tell you--and what you will see in our results today--is that our team has continued to deliver in extraordinary ways in this unprecedented environment.”
The quarter, ended July 31, was a time for Dell to reflect on the racism issues, spurred by the death in late May of George Floyd while being restrained by a Minneapolis police officer, Clarke said.
“What we heard through a series of listening sessions was consistent: Our Black team members want better representation, equal opportunity, advocacy, and to see measurable progress against our Diversity & Inclusion 2030 goals,” he said. ”That’s what we all want. And the work of real change within our now-virtual walls is well underway.”
Because of the pandemic, the IT industry has moved beyond work as a location, Clarke said.
“COVID-19 has made one thing clear to us: Work is something you do, an outcome, not a place or a time, and it takes teamwork and a culture that prioritizes outcomes and results over effort,” he said. ”Though we have team members juggling many challenges--parenting, caregiving, citizens in countries still grappling with surges of the pandemic--our employee engagement and productivity is at an all-time high. We are seeing a human transformation right before our eyes, emphasizing trust, empathy, patience and flexibility that will serve society and business long after these tough times are over.”
Despite the work-from-home nature of the second quarter, Dell had nine product and solution launches and completed the modernization of its Infrastructure Solutions Group, Clarke said.
“We may even be building deeper relationships than we were pre-COVID,” he said. ”Customer engagements have become more frequent, richer in content while reaching a greater audience within accounts. Customers bring more decision makers and technologists to executive briefings and we respond with deep solution architecture and engineering to deliver better business outcomes.”
The pandemic as a whole was a significant driver of digitization for Dell and the IT industry as businesses and education organizations learned how to deal with the new work-from-home situation and learn from home requirements, Clarke said.
“While the pandemic didn’t start the remote learn-and-work trend, it is certainly accelerating it. ...Recent data shows that work from home is likely to increase by 20 points across all-size companies, across all sectors. I think that is understated.”
Despite the uncertainty of the current economic environment, the long-term trends in Dell‘s business are favorable and play into the company’s own competitive advantages, Clarke said.
“We’ve been talking about the fourth industrial revolution for a while, and now the pandemic has accelerated its arrival,” he said. ”Organizations have had to pivot quickly, first to work from home and then learn from home. And now businesses are taking this opportunity to reinvent their models for a more connected, digital, automated, data-intensive and distributed future, a future that is hybrid.”
Dell is positioned to deliver in this hybrid reality, including public clouds, private clouds, and on-premise infrastructures, with emerging technologies around 5G, data-driven insights at the edge, and expanding hybrid cloud capabilities, Clarke said.
“Combine these advantages with our purpose-driven culture and track record of consistently growing our core businesses while investing in the long-term future, I like our hand,” he said.
For its second fiscal quarter 2021, which ended July 31, Dell Technologies reported revenue of US$22.73 billion, down 3 percent compared to the US$23.37 billion the company reported for its fiscal 2020 second quarter.
While services revenue for the quarter was up 10 percent over last year to US$6.00 billion, that was more than offset by a 7-percent drop in product revenue to US$16.74 billion.
Revenue for Dell‘s Client Solutions Group was reported at US$11.20 billion, down slightly from the US$11.75 billion the company reported for the same period last year. This included commercial client revenue of US$8.04 billion, down 11 percent, and consumer revenue of US$3.16 billion, up 18 percent, as the company saw sales strength across its notebook and consumer client devices, including 25-percent growth in its XPS premium line and gaming systems including Alienware.
Revenue on Dell‘s Infrastructure Solutions Group side was US$8.21 billion, down from last year’s US$8.62 billion. This included storage revenue of US$4.01 billion, down 4 percent from last year’s US$4.18 billion, and server and networking revenue of US$4.20 billion, down 5 percent from last year’s US$4.44 billion.
Also include was VMware revenue of US$2.91 billion, which was up 10 percent over that of last year.
Dell‘s revenue did better than analyst expectations, according to Seeking Alpha. While Dell’s Client Solutions Group revenue of US$11.20 billion was below expectations of US$11.5 billion, the company’s Infrastructure Solutions Group revenue of US$8.21 billion beat expectations of US$7.7 billion.
For the quarter, Dell reported net income of US$1.05 billion on a GAAP basis, down a significant 69 percent from the US$3.42 billion the company reported last year. On a non-GAAP basis, Dell reported net income of US$1.62 billion, or US$1.92 per share, down from last year‘s US$1.75 billion, or US$2.15 per share.
Dell declined to provide specific guidance numbers for the fiscal 2021 third quarter or for the full fiscal year 2021, other than to say that it expects negative sequential growth.