Dell Technologies reported QQ1 2026 results showing a modest revenue decline alongside sustained profitability and strong cash generation. Revenue totaled $23.378 billion, down 6.6% year-over-year and 2.3% quarter-over-quarter, while net income reached $0.965 billion and earnings per share (EPS) at $1.39. The company delivered free cash flow of $2.229 billion and operating cash flow of $2.796 billion, underscoring its ability to convert earnings into hard liquidity despite a competitive hardware environment. On the balance sheet, Dell carries a substantial debt load with total liabilities of $89.893 billion and negative shareholders’ equity of roughly $-3.024 billion, paired with a cash balance of about $7.70 billion, resulting in a net debt position of approximately $21.08 billion. Near-term pressures include PC cycle softness and competitive pricing in Client Solutions, even as the ESG and services mix supports margin resilience.
Key Performance Indicators
Revenue
23.38B
QoQ: -2.31% | YoY:-6.59%
Gross Profit
4.94B
21.12% margin
QoQ: -15.26% | YoY:-7.04%
Operating Income
1.17B
QoQ: -49.50% | YoY:-13.19%
Net Income
965.00M
QoQ: -41.66% | YoY:14.07%
EPS
1.39
QoQ: -36.82% | YoY:16.81%
Revenue Trend
Margin Analysis
Key Insights
Revenue: 23.378B
Cost of revenue: 18.441B
Gross profit: 4.937B; gross margin: 21.12%
R&D expenses: 0.808B; SG&A: 2.964B; total operating expenses: 3.772B
EBITDA: 2.182B; EBITDA margin: 9.33%
Financial Highlights
Overview of key metrics for QQ1 2026 (USD):
- Revenue: 23.378B
- Cost of revenue: 18.441B
- Gross profit: 4.937B; gross margin: 21.12%
- R&D expenses: 0.808B; SG&A: 2.964B; total operating expenses: 3.772B
- EBITDA: 2.182B; EBITDA margin: 9.33%
- Operating income: 1.165B; operating margin: 4.98%
- Total other income/expenses: -0.082B
- Income before tax: 1.083B; tax expense: 0.118B
- Net income: 0.965B; net margin: 4.13%
- Diluted EPS: 1.37; basic EPS: 1.39; weighted avg shares out: 692M; diluted: 702M
- Operating cash flow: 2.796B; capex: (0.568B); free cash flow: 2.229B
- Cash and equivalents: 7.70B; total assets: 86.87B; total liabilities: 89.89B; total stockholders’ equity: -3.02B
- Net debt: 21.08B; total debt: 28.78B
- Liquidity indicators: current assets 42.93B vs current liabilities 50.42B (current ratio ~0.85); quick ratio (cash+receivables)/current liabilities ~0.45
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
23.38B
-6.59%
-2.31%
Gross Profit
4.94B
-7.04%
-15.26%
Operating Income
1.17B
-13.19%
-49.50%
Net Income
965.00M
14.07%
-41.66%
EPS
1.39
16.81%
-36.82%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: No earnings-call transcript data was provided in the input. As a result, there are no management quotes to summarize. The synthesis below reflects observable financial data and typical strategic pivots discussed by management in similar quarters.
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Forward Guidance
No formal forward-looking guidance was issued in the QQ1 2026 materials provided. Based on the quarter’s dynamics and sector trends, the analysis suggests cautious near-term visibility with an emphasis on cost discipline, mix shift toward high-margin ESG and services, and continued optimization of working capital. Key factors to monitor include: (1) enterprise solutions and data-center demand trends, (2) stabilization or rebound in Client Solutions volumes, (3) trajectory of gross and operating margins as product mix shifts, and (4) deleveraging progress driven by free cash flow generation and any share buyback or capital allocation decisions.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
12DA.DE Focus
21.12%
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Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Dell’s QQ1 2026 results present a mixed near-term picture: revenues declined modestly, margins held relatively firm, and free cash flow remained robust, but the balance sheet shows significant leverage and negative equity. The outlook hinges on the pace of data-center and enterprise services growth offsetting PC demand softness, and on the company’s ability to deleverage through ongoing cash generation. Investors should be cautious but attentive to the cash conversion cycle, deleveraging progress, and the margin trajectory driven by product mix and cost discipline. A neutral to cautious stance is warranted until there is clearer evidence of sustained top-line stabilization and balance-sheet normalization.
Key Investment Factors
Growth Potential
Potential upside stems from a rebalanced mix toward ESG and enterprise solutions, where higher-margin servers, networking, and services can buoy margins. Continued free cash flow generation supports debt reduction and selective share repurchases, while data-center refresh cycles and growing cloud-enabled analytics offerings could expand services revenue.
Profitability Risk
Key risks include a sustained soft PC cycle reducing Client Solutions volumes, aggressive competition pressuring pricing, substantial leverage with negative equity raising balance-sheet risk, and macroeconomic volatility. Additionally, if supply chain normalization lags or if currency dynamics impact profitability, margin recovery could be delayed.
Financial Position
The company retains meaningful liquidity (cash ~$7.7B) and generated free cash flow (~$2.23B) in QQ1 2026 but carries a large liability base ($89.89B) and negative equity (~$-3.02B). The net debt of ~$21.08B and a below-one current ratio (~0.85x) suggest a constrained balance-sheet flexibility unless operating performance improves or capital allocation prioritizes deleveraging.
SWOT Analysis
Strengths
Strong brand presence and diversified portfolio across Client Solutions and ESG segments
Solid free cash flow generation supporting liquidity and potential deleveraging
Significant cash balance provides liquidity headroom for strategic initiatives and resilience in downturns
Weaknesses
Negative shareholders’ equity and a high debt burden posing balance-sheet fragility
Below-peer liquidity ratios (current ratio <1) indicating near-term liquidity pressure
Significant reliance on a cyclical hardware cycle (PC and enterprise hardware) with competitive pricing pressures
Opportunities
Margin uplift from mix shift toward higher-margin ESG and services
Growth in data-center, cloud, and analytics services through ESG products
Potential deleveraging through sustained free cash flow and disciplined capital allocation
Threats
Prolonged PC market weakness and price competition
Macro volatility and currency swings impacting real-time profitability
Industry consolidation and competitive intensity, including potential supplier and customer concentration risks