Executive Summary
Dell Technologies reported a solid Q3 FY2025 despite a complex demand backdrop. Revenue rose 9.2% YoY to $24.366B, with GAAP net income of $1.132B and GAAP diluted EPS of $1.58 (reporting basis). Management highlighted AI as a primary growth driver, notably in Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG), with AI server momentum contributing to a five-quarter backlog expansion of more than 50% sequentially and over 2,000 enterprise customers since launch. Combined ISG and CSG revenue grew 13% YoY, underscoring a broad-based AI-enabled data-center rebound even as traditional PC demand remained challenged in Consumer and some CSG segments. Gross margin stood at 22.3% (down 140 bp YoY) primarily due to AI server mix and pricing competition in CSG, while operating expenses declined 2%, supporting operating income growth to $1.668B (6.85% operating margin). Management also reiterated that the company is investing to extend AI leadership (GB200 NVL72, XE9712, NVL-4 with advanced cooling, and IR5000/ORv3 innovations) and that the AI opportunity remains robust but non-linear. Q4 guidance points to a continued AI-positive trajectory with revenue of $24–$25B and non-GAAP EPS of $2.50 ± $0.10, signaling disciplined balance between growth and profitability. A formal FY2026 view will be provided in Q4, but management cited multiple tailwinds: stronger AI demand, aging PC/server install bases primed for refresh, and continued cost efficiencies alongside strategic investments. Risks include a slower PC refresh cycle than anticipated, supply-chain dynamics for AI platforms, potential tariff impacts, and a non-linear AI investment cycle.Overall, Dell remains well-positioned to monetize AI workloads through an integrated hardware-software-services stack, supported by a strong cash position and a durable long-term cash flow profile.
Key Performance Indicators
Key Insights
Revenue: $24.366B, YoY +9.2%, QoQ -2.64%
GrossProfit: $5.307B, GrossMargin 21.78%, YoY -0.17%, QoQ -0.08%
OperatingIncome: $1.668B, OperatingMargin 6.85%, YoY +11.87%, QoQ +24.29%
NetIncome: $1.132B, NetMargin 4.63%, YoY -2.41%, QoQ +33.81%
EPS (GAAP Diluted): $1.58, EPS (GAAP): $1.61; YoY EPS -1.23%, QoQ +35.29%
CashFlow: CFO $1.553B; Free Cash Flow $0.914B; NetChangeInCash +$0.733B; CashAtEndOfPeriod $5.404B; CashAndCashEquivalents $5.225B; Capex $0.639B; OperatingCashFlowP/Sales ~0.067 (conte...
Financial Highlights
Revenue: $24.366B, YoY +9.2%, QoQ -2.64%
GrossProfit: $5.307B, GrossMargin 21.78%, YoY -0.17%, QoQ -0.08%
OperatingIncome: $1.668B, OperatingMargin 6.85%, YoY +11.87%, QoQ +24.29%
NetIncome: $1.132B, NetMargin 4.63%, YoY -2.41%, QoQ +33.81%
EPS (GAAP Diluted): $1.58, EPS (GAAP): $1.61; YoY EPS -1.23%, QoQ +35.29%
CashFlow: CFO $1.553B; Free Cash Flow $0.914B; NetChangeInCash +$0.733B; CashAtEndOfPeriod $5.404B; CashAndCashEquivalents $5.225B; Capex $0.639B; OperatingCashFlowP/Sales ~0.067 (contextual)
TotalAssets: $81.95B; TotalLiabilities: $84.14B; TotalStockholdersEquity: -$2.285B (negative equity)
TotalDebt: $25.022B; NetDebt: -$19.798B (net cash position)
Leverage: Core leverage 1.4x; Inventory elevated at $6.7B reflecting AI-order linearity
Guidance (Q4): Revenue $24–$25B; ISG+CSG growth midpoint ~13%; Q4 GAAP EPS not disclosed in call; Non-GAAP EPS guidance $2.50 ± $0.10; Full-year 2025 implied revenue growth ~9% and GAAP/Non-GAAP EPS trajectory consistent with mid-teens growth expectations
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
24.37B |
9.18% |
-2.64% |
| Gross Profit |
5.31B |
-0.17% |
-0.08% |
| Operating Income |
1.67B |
11.87% |
24.29% |
| Net Income |
1.13B |
-2.41% |
33.81% |
| EPS |
1.61 |
-1.23% |
35.29% |
Key Financial Ratios
operatingProfitMargin
6.85%
operatingCashFlowPerShare
$2.19
freeCashFlowPerShare
$1.29
dividendPayoutRatio
27.6%
Management Commentary
AI-driven momentum and backlog: Dell executives emphasized the strength of the AI opportunity across ISG and CSG, highlighting a five-quarter AI pipeline that expanded over 50% sequentially and an enterprise customer base exceeding 2,000 since launch. They noted robust designs and deployments at scale, including the GB200 NVL72 server racks with direct liquid cooling and the IR5000 platform capable of 96 GPUs per rack, reflecting a commitment to dense, high-performance AI infrastructure.
Operational excellence and margins: Dell attributed margin resilience to mix-shift toward AI-optimized servers and efficiency gains in operating expenses, resulting in ISG operating income of $1.5B (13.3% margin) and continued gross margin optimization, while noting AI-related margin dynamics as a variable in the near term. Management signaled expected further ISG margin improvement in Q4.
Strategic AI platform cadence and ecosystem: Jeff Clarke detailed ongoing AI platform evolution (Hopper to Blackwell) and the open architecture underpinning future capabilities (ORv3 chassis, NVL-based configurations, and integrated cooling/power solutions) to accelerate adoption and reduce time-to-deploy. He stressed that speed, scale, and services (L11/L12, DFS financing) differentiate Dell in AI deployments.
Market conditions and guidance: Yvonne McGill highlighted that PC refresh timing remains a caveat for revenue timing, with Windows 10 end-of-life approaching, and a modest-to-cautious consumer environment. Federal demand was strong, and Dell sees AI demand as a longer-tail, non-linear opportunity. The company plans to provide formal FY26 guidance in the Q4 call, with expectations of AI-driven growth supported by a robust five-quarter backlog and aging infrastructure across PCs and traditional servers.
"The five quarter pipeline grew more than 50% sequentially with growth across all customer types."
— Jeff Clarke
"AI is a robust opportunity for us in both ISG and CSG and interest in our portfolio is at an all-time high, with no signs of slowing down."
— Jeff Clarke
Forward Guidance
Near-term: Q4 revenue guidance of $24–$25B with ISG+CSG up about 13% at the midpoint; ISG growth expected to be in the mid- to high-20% range year-over-year, driven by AI servers and traditional servers; CSG up in the low single digits; OpEx to decline in the mid-single digits year-over-year; Q4 diluted non-GAAP EPS around $2.50 ± $0.10. The AI backlog mix (GB200/NVL designs) is pacing shipments into 4Q, but shipments may vary with component availability and supply-chain constraints. Long view: Dell anticipates multiple tailwinds into FY2026, including stronger AI demand, an aging install base in PCs and traditional servers, and continued AI-enabled storage/Networking solutions, with ISG led by AI servers before traditional servers and storage, and CSG benefiting from enterprise refresh cycles. The company will provide formal FY2026 guidance on the Q4 call. Key factors to monitor include: AI backlog conversion rates, GPU supply dynamics, PC refresh timing, Windows end-of-life pacing, tariff/supply-chain impacts, and the evolution of the enterprise AI adoption cycle.