Dell Technologies sees strong Q2 demand for its data center gear, PCs

The company also raised its outlook for the fiscal year and said it is benefiting from a strong upgrade cycle fueled by digital transformation.

Dell Technologies raised its fiscal year guidance after a strong second quarter fueled by double-digit growth for its data center unit as well as PCs.

The company reported second quarter sales of $22.9 billion, up 18 percent with non-GAAP operating income of $2.1 billion. The GAAP operating loss for the quarter was $13 million. Dell Technologies reported a net loss of $461 million for the second quarter and a non-GAAP profit of $1.35 billion.

CEO Michael Dell said that the company is benefiting from the "early stages of a global, technology-led investment cycle." Dell's comments echo what other tech CEOs have said. CEOs from major IT players have all been saying the same thing. IT spending is robust and digital transformation, Internet of things, analytics, cloud computing and artificial intelligence and machine learning are driving growth. U.S. Gross Domestic Product growth was 4.2 percent in the second quarter, up from 2.2 percent in the first, according to the Bureau of Economic Analysis.

Tech vendors reap gains from IT spending, digital transformation surge

Dell's infrastructure group reported second quarter revenue of $9.2 billion, up 24 percent from a year ago. Dell said storage revenue was up 13 percent and servers and networking sales jumped 34 percent in the second quarter. Dell's infrastructure group had operating income of $1 billion.

According to the company, x86 servers, VxRail and VxRack hyperconverged systems and storage systems sold well.

dell-q2-isg.png

Dell also saw strong commercial PC demand. Dell's client solutions group had revenue of $11.1 billion, up 13 percent. Commercial revenue was up 13 percent in the second quarter with consumer sales up 14 percent. PC unit operating income was $425 million.

dell-q2-2019-pc-unit.png

Other businesses such as Pivotal, RSA, Boomi and Virtustream had second quarter revenue of $574 million, up 6 percent from a year ago.

VMware, which is also rolled into Dell Technologies, delivered $2.2 billion in revenue with operating income of $736 million. VMware also reports its results separately.

As for the outlook, Dell said that it sees fiscal 2019 non-GAAP revenue between $90.5 billion to $92 billion with non-GAAP net income between $4.9 billion and $5.3 billion.

Dell Technologies total debt at the end of the quarter was $50.3 billion, down from $57.3 billion when the company closed its EMC purchase.

Tech Pro Research EBooks: Digital transformation: A guide for CXOs | IT leader's guide to achieving digital transformation TechRepublic: How to take digital transformation from buzzword to reality in your organization | How to kick-start digital transformation in your enterprise: 6 tips