Dell reported for the second quarter of 2021 above the expectations of market participants. The management gave a strong forecast for the next period.
The computer manufacturer's revenue grew by 15% YoY, 2.2% exceeding the consensus forecast. At the same time, diluted non-GAAP EPS increased by 16.6% YoY, exceeding market expectations by 10.3%.
Dell's sales were positively affected by the recovery of business activity, as well as the abolition of anti-covid restrictions, since these factors stimulate the expansion of corporate IT budgets.
According to the results of the second quarter, the growth rate of the infrastructure solutions segment decreased to 3% compared to 5% in the previous reporting period. This dynamics is due to a decrease in revenue from data storage solutions (-1%), as well as a slowdown in server sales to 6%. At the same time, it is necessary to note the high growth rates of demand for a new solution in the field of Powerstore storage. In addition, according to CEO Michael Dell, according to the results of the second quarter, the company increased its market share in the subsegment of server and data storage solutions. Dell is strengthening its position in the direction of aaS: for example, the Apex product has received a new customer in the person of GE. The CEO also pointed to a 34% increase in demand for VxRail (new hyperconvergent systems): this solution was delivered together with servers for small PowerEdge companies.
The main driver of Dell's revenue growth was the customer solutions segment, which grew by 27%. Commercial solutions added 32%, consumer solutions-17%. The CEO noted that Dell has increased its market share in the display market by 1 percentage point (to about 19-20%). It is important to note that Dell's results in the consumer segment were better compared to HP (+0%), Apple (+16%), but weaker than Lenovo's metrics (+28%).
The operating margin remained at the level of last year, amounting to about 11%, despite a decrease in the gross margin by 1.6% against the background of an increase in the share of client solutions in the revenue structure. The amount of obligations to be fulfilled (RPO) increased by 24% YoY at the end of the quarter.
Among the medium-term triggers for the company, Michael Dell noted the growth of the premium and gaming laptop markets (Alienware X-series was introduced in June), as well as the continued demand from service providers. In the future, until 2024, the CEO expects that the growth of the company's target markets will be about 3%. According to the management's forecast, revenue will grow by 15-18% in the next quarter (consensus: +15%).
In our opinion, Dell presented strong results for the quarter: revenue and margin were better than expected, management announced the start of deliveries of Open RAN solutions. Despite the continuing pressure from the growing share of competing cloud products, we believe that Dell will maintain its leadership position in the segment of external storage solutions, hyperconverged products, branded servers and business laptops. We have improved the short-term forecast on the background of high actual results and strong management guidance. However, the research company IDC lowered its forecast for the volume of PC shipments, which is a deterrent for the company's quotes. At the same time, we believe that the recovery of the server market is still at an early stage.